Loans Held for Investment and Allowance for Credit Losses | Note 3 – Loans Held-for-Investment and Allowance for Credit Losses For the periods ended March 31, 2023 and 2022, and December 31, 2022, the following tables outline the Company’s loan portfolio by the ten portfolio segments where applicable. Loans held-for-investment by portfolio segment are as follows (dollars in thousands): March 31, December 31, 2023 2022 2022 Commercial: C&I* $ 954,686 $ 838,049 $ 917,317 Municipal 221,379 191,799 221,090 Total Commercial 1,176,065 1,029,848 1,138,407 Agricultural 77,017 82,883 76,947 Real Estate: Construction & Development 921,190 806,211 959,426 Farm 307,706 225,942 306,322 Non-Owner Occupied CRE 737,117 636,160 732,089 Owner Occupied CRE 1,043,018 881,181 954,400 Residential 1,628,841 1,352,162 1,575,758 Total Real Estate 4,637,872 3,901,656 4,527,995 Consumer: Auto 537,410 419,818 550,635 Non-Auto 147,851 131,964 147,884 Total Consumer 685,261 551,782 698,519 Total Loans 6,576,215 5,566,169 6,441,868 Less: Allowance for credit losses ( 80,818 ) ( 66,913 ) ( 75,834 ) Loans, net $ 6,495,397 $ 5,499,256 $ 6,366,034 * All disclosures for the C&I loan segment include PPP loan balances, net of deferred fees and costs, as disclosed on the face of the consolidated balance sheet. Outstanding loan balances at March 31, 2023 and 2022, and December 31, 2022, are net of unearned income, including net deferred loan fees. At March 31, 2023, $ 4,230,606,000 in loans held by our bank subsidiary were subject to blanket liens as security for a line of credit with the Federal Home Loan Bank of Dallas ("FHLB"). At March 31, 2023, this available line of credit was $ 2,396,844,000 . At March 31, 2023 , there was no balance outstanding under this line of credit. The Company’s nonaccrual loans and loans still accruing and past due 90 days or more are as follows (dollars in thousands): March 31, December 31, 2023 2022 2022 Nonaccrual loans $ 24,171 $ 28,743 $ 24,325 Loans still accruing and past due 90 days or more 22 11 — Total nonperforming loans (1) $ 24,193 $ 28,754 $ 24,325 (1) With the adoption of ASU 2022-02, effective January 1, 2023, troubled debt restructuring ("TDR") accounting has been eliminated. The Company ha d $ 24,389,000 , $ 28,754,000 and $ 24,325,000 in nonaccrual, past due 90 days or more and still accruing, and foreclosed assets at March 31, 2023 and 2022, and December 31, 2022 , respectively. Nonaccrual loans at March 31, 2023 and 2022, and December 31, 2022, consisted of the following (dollars in thousands): March 31, December 31, 2023 2022 2022 Commercial: C&I $ 5,343 $ 4,711 $ 5,057 Municipal — — — Total Commercial 5,343 4,711 5,057 Agricultural 161 4,338 324 Real Estate: Construction & Development 773 594 1,567 Farm 452 1,209 85 Non-Owner Occupied CRE 2,907 2,574 2,321 Owner Occupied CRE 6,823 7,288 7,092 Residential 7,232 7,587 7,419 Total Real Estate 18,187 19,252 18,484 Consumer: Auto 398 402 429 Non-Auto 82 40 31 Total Consumer 480 442 460 Total $ 24,171 $ 28,743 $ 24,325 No significant additional funds are committed to be advanced in connection with nonaccrual loans as of March 31, 2023. Summary information on the allowance for credit losses for the three-months ended March 31, 2023 and 2022, are outlined by portfolio segment in the following tables (dollars in thousands): Three-Months Ended March 31, 2023 C&I Municipal Agricultural Construction Farm Beginning balance $ 16,129 $ 1,026 $ 1,041 $ 26,443 $ 1,957 Provision for loan losses ( 64 ) 41 ( 28 ) 2,084 ( 20 ) Recoveries 52 — 201 100 — Charge-offs ( 34 ) — — — — Ending balance $ 16,083 $ 1,067 $ 1,214 $ 28,627 $ 1,937 Three-Months Ended March 31, 2023 (continued) Non-Owner Owner Residential Auto Non-Auto Total Beginning balance $ 9,075 $ 9,928 $ 9,075 $ 845 $ 315 $ 75,834 Provision for loan losses ( 49 ) 2,013 624 70 36 4,707 Recoveries 25 7 3 132 45 565 Charge-offs — — — ( 190 ) ( 64 ) ( 288 ) Ending balance $ 9,051 $ 11,948 $ 9,702 $ 857 $ 332 $ 80,818 Three-Months Ended March 31, 2022 C&I Municipal Agricultural Construction Farm Beginning balance $ 12,280 $ 348 $ 1,597 $ 17,627 $ 663 Provision for loan losses 3,455 1,070 289 360 210 Recoveries 156 — 25 — — Charge-offs ( 154 ) — — ( 100 ) — Ending balance $ 15,737 $ 1,418 $ 1,911 $ 17,887 $ 873 Three-Months Ended March 31, 2022 (continued) Non-Owner Owner Residential Auto Non-Auto Total Beginning balance $ 10,722 $ 10,828 $ 8,133 $ 896 $ 371 $ 63,465 Provision for loan losses ( 2,278 ) 789 ( 163 ) ( 20 ) 35 3,747 Recoveries 55 7 5 66 46 360 Charge-offs — ( 88 ) ( 146 ) ( 73 ) ( 98 ) ( 659 ) Ending balance $ 8,499 $ 11,536 $ 7,829 $ 869 $ 354 $ 66,913 Additionally, the Company records a reserve for unfunded commitments in other liabilities which totaled $ 10,397,000 , $ 7,471,000 and $ 12,323,000 at March 31, 2023 and 2022, and December 31, 2022, respectively. The provision for loan losses of $ 4,707,000 for the three-months ended March 31, 2023 is combined with the reversal of the provision for unfunded commitments of $ 1,926,000 and reported in the net aggregate of $ 2,781,000 under the provision for credit losses in the consolidated statement of earnings for the three-months ended March 31, 2023. The $ 3,747,000 provision for loan losses for the three-months ended March 31, 2022 above is combined with the provision for unfunded commitments of $ 1,035,000 and reported in the aggregate of $ 4,782,000 under the provision for credit losses for the three-months ended March 31, 2022. The Company’s loans that are ind ividually evaluated for credit losses (both collateral and non-collateral dependent) and their related allowances as of March 31, 2023 and 2022, and December 31, 2022, are summarized in the following tables by loan segment (dollars in thousands): March 31, 2023 Collateral Collateral Non-Collateral Total Loans Related Related Total Commercial: C&I $ — $ 5,343 $ 20,141 $ 25,484 $ 3,582 $ 3,941 $ 7,523 Municipal — — 907 907 — — — Total Commercial — 5,343 21,048 26,391 3,582 3,941 7,523 Agricultural — 161 912 1,073 86 485 571 Real Estate: Construction & Development 397 376 18,813 19,586 57 2,340 2,397 Farm 452 — 1,232 1,684 — — — Non-Owner Occupied CRE 2,136 771 28,557 31,464 152 1,929 2,081 Owner Occupied CRE 4,111 2,712 31,978 38,801 297 2,308 2,605 Residential 4,771 2,461 28,463 35,695 259 1,404 1,663 Total Real Estate 11,867 6,320 109,043 127,230 765 7,981 8,746 Consumer: Auto — 398 1,250 1,648 1 2 3 Non-Auto — 82 632 714 — 2 2 Total Consumer — 480 1,882 2,362 1 4 5 Total $ 11,867 $ 12,304 $ 132,885 $ 157,056 $ 4,434 $ 12,411 $ 16,845 March 31, 2022 Collateral Collateral Non-Collateral Total Loans Related Related Total Commercial: C&I $ 95 $ 4,616 $ 20,620 $ 25,331 $ 2,525 $ 5,268 $ 7,793 Municipal — — 96 96 — — — Total Commercial 95 4,616 20,716 25,427 2,525 5,268 7,793 Agricultural 2,349 1,989 411 4,749 946 276 1,222 Real Estate: Construction & Development — 594 9,632 10,226 44 1,446 1,490 Farm 1,209 — 1,214 2,423 — — — Non-Owner Occupied CRE 2,463 111 32,705 35,279 10 3,006 3,016 Owner Occupied CRE 6,187 1,101 29,608 36,896 96 3,149 3,245 Residential 4,954 2,633 27,689 35,276 306 1,668 1,974 Total Real Estate 14,813 4,439 100,848 120,100 456 9,269 9,725 Consumer: Auto — 402 1,092 1,494 1 2 3 Non-Auto — 40 350 390 — 1 1 Total Consumer — 442 1,442 1,884 1 3 4 Total $ 17,257 $ 11,486 $ 123,417 $ 152,160 $ 3,928 $ 14,816 $ 18,744 December 31, 2022 Collateral Collateral Non-Collateral Total Loans Related Related Total Commercial: C&I $ — $ 5,057 $ 24,325 $ 29,382 $ 3,513 $ 4,885 $ 8,398 Municipal — — 58 58 — — — Total Commercial — 5,057 24,383 29,440 3,513 4,885 8,398 Agricultural 116 209 354 679 122 276 398 Real Estate: Construction & Development 577 990 4,873 6,440 193 112 305 Farm — 85 1,578 1,663 2 34 36 Non-Owner Occupied CRE 2,062 259 36,037 38,358 16 2,341 2,357 Owner Occupied CRE 4,363 2,728 29,115 36,206 91 1,509 1,600 Residential 5,132 2,287 28,564 35,983 229 1,215 1,444 Total Real Estate 12,134 6,349 100,167 118,650 531 5,211 5,742 Consumer: Auto — 429 931 1,360 1 1 2 Non-Auto — 31 538 569 — 1 1 Total Consumer — 460 1,469 1,929 1 2 3 Total $ 12,250 $ 12,075 $ 126,373 $ 150,698 $ 4,167 $ 10,374 $ 14,541 The Company’s allowance for loans that are individually evaluated for credit losses and collectively evaluated for credit losses as of March 31, 2023 and 2022, and December 31, 2022, are summarized in the following table by loan segment (dollars in thousands). Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories. March 31, 2023 C&I Municipal Agricultural Construction Farm Loans individually evaluated for credit losses $ 7,523 $ — $ 571 $ 2,397 $ — Loans collectively evaluated for credit losses 8,560 1,067 643 26,230 1,937 Total $ 16,083 $ 1,067 $ 1,214 $ 28,627 $ 1,937 March 31, 2023 (continued) Non-Owner Owner Residential Auto Non-Auto Total Loans individually evaluated for credit losses $ 2,081 $ 2,605 $ 1,663 $ 3 $ 2 $ 16,845 Loans collectively evaluated for credit losses 6,970 9,343 8,039 854 330 63,973 Total $ 9,051 $ 11,948 $ 9,702 $ 857 $ 332 $ 80,818 March 31, 2022 C&I Municipal Agricultural Construction Farm Loans individually evaluated for credit losses $ 7,793 $ — $ 1,222 $ 1,490 $ — Loans collectively evaluated for credit losses 7,944 1,418 689 16,397 873 Total $ 15,737 $ 1,418 $ 1,911 $ 17,887 $ 873 March 31, 2022 (continued) Non-Owner Owner Residential Auto Non-Auto Total Loans individually evaluated for credit losses $ 3,016 $ 3,245 $ 1,974 $ 3 $ 1 $ 18,744 Loans collectively evaluated for credit losses 5,483 8,291 5,855 866 353 48,169 Total $ 8,499 $ 11,536 $ 7,829 $ 869 $ 354 $ 66,913 December 31, 2022 C&I Municipal Agricultural Construction Farm Loans individually evaluated for credit losses $ 8,398 $ — $ 398 $ 305 $ 36 Loans collectively evaluated for credit losses 7,731 1,026 643 26,138 1,921 Total $ 16,129 $ 1,026 $ 1,041 $ 26,443 $ 1,957 December 31, 2022 (continued) Non-Owner Owner Residential Auto Non-Auto Total Loans individually evaluated for credit losses $ 2,357 $ 1,600 $ 1,444 $ 2 $ 1 $ 14,541 Loans collectively evaluated for credit losses 6,718 8,328 7,631 843 314 61,293 Total $ 9,075 $ 9,928 $ 9,075 $ 845 $ 315 $ 75,834 The Company’s recorded investment in loans as of March 31, 2023 and 2022, and December 31, 2022, related to the balance in the allowance for credit losses follows below (dollars in thousands): March 31, 2023 C&I Municipal Agricultural Construction Farm Loans individually evaluated for credit losses $ 25,484 $ 907 $ 1,073 $ 19,586 $ 1,684 Loans collectively evaluated for credit losses 929,202 220,472 75,944 901,604 306,022 Total $ 954,686 $ 221,379 $ 77,017 $ 921,190 $ 307,706 March 31, 2023 (continued) Non-Owner Owner Residential Auto Non-Auto Total Loans individually evaluated for credit losses $ 31,464 $ 38,801 $ 35,695 $ 1,648 $ 714 $ 157,056 Loans collectively evaluated for credit losses 705,653 1,004,217 1,593,146 535,762 147,137 6,419,159 Total $ 737,117 $ 1,043,018 $ 1,628,841 $ 537,410 $ 147,851 $ 6,576,215 March 31, 2022 C&I Municipal Agricultural Construction Farm Loans individually evaluated for credit losses $ 25,331 $ 96 $ 4,749 $ 10,226 $ 2,423 Loans collectively evaluated for credit losses 812,718 191,703 78,134 795,985 223,519 Total $ 838,049 $ 191,799 $ 82,883 $ 806,211 $ 225,942 March 31, 2022 (continued) Non-Owner Owner Residential Auto Non-Auto Total Loans individually evaluated for credit losses $ 35,279 $ 36,896 $ 35,276 $ 1,494 $ 390 $ 152,160 Loans collectively evaluated for credit losses 600,881 844,285 1,316,886 418,324 131,574 5,414,009 Total $ 636,160 $ 881,181 $ 1,352,162 $ 419,818 $ 131,964 $ 5,566,169 December 31, 2022 C&I Municipal Agricultural Construction Farm Loans individually evaluated for credit losses $ 29,382 $ 58 $ 679 $ 6,440 $ 1,663 Loans collectively evaluated for credit losses 887,935 221,032 76,268 952,986 304,659 Total $ 917,317 $ 221,090 $ 76,947 $ 959,426 $ 306,322 December 31, 2022 (continued) Non-Owner Owner Residential Auto Non-Auto Total Loans individually evaluated for credit losses $ 38,358 $ 36,206 $ 35,983 $ 1,360 $ 569 $ 150,698 Loans collectively evaluated for credit losses 693,731 918,194 1,539,775 549,275 147,315 6,291,170 Total $ 732,089 $ 954,400 $ 1,575,758 $ 550,635 $ 147,884 $ 6,441,868 From a credit risk standpoint, the Company rates its loans in one of five categories: (i) pass, (ii) special mention, (iii) substandard, (iv) doubtful or (v) loss (which are charged-off). The ratings of loans reflect a judgment about the risks of default and loss associated with the loan. The Company reviews the ratings on our credits as part of our ongoing monitoring of the credit quality of our loan portfolio. Ratings are adjusted to reflect the degree of risk and loss that are felt to be inherent in each credit as of each reporting period. Our methodology is structured so that specific allocations are increased in accordance with deterioration in credit quality (and a corresponding increase in risk and loss) or decreased in accordance with improvement in credit quality (and a corresponding decrease in risk and loss). Credits rated special mention show clear signs of financial weaknesses or deterioration in credit worthiness, however, such concerns are not so pronounced that the Company generally expects to experience significant loss within the short-term. Such credits typically maintain the ability to perform within standard credit terms and credit exposure is not as prominent as credits rated more harshly. Credits rated substandard are those in which the normal repayment of principal and interest may be, or has been, jeopardized by reason of adverse trends or developments of a financial, managerial, economic or political nature, or important weaknesses exist in collateral. A protracted workout on these credits is a distinct possibility. Prompt corrective action is therefore required to strengthen the Company’s position, and/or to reduce exposure and to assure that adequate remedial measures are taken by the borrower. Credit exposure becomes more likely in such credits and a serious evaluation of the secondary support to the credit is performed. Credits rated doubtful are those in which full collection of principal appears highly questionable, and which some degree of loss is anticipated, even though the ultimate amount of loss may not yet be certain and/or other factors exist which could affect collection of debt. Based upon available information, positive action by the Company is required to avert or minimize loss. Credits rated doubtful are generally also placed on nonaccrual. The following summarizes the Company’s internal ratings of its loans held-for-investment, including the year of origination, by portfolio segments, at March 31, 2023 (dollars in millions): March 31, 2023 2022 2021 2020 2019 Prior Revolving Total C&I Risk rating: Pass $ 155 $ 548 $ 132 $ 48 $ 19 $ 28 $ — $ 930 Special mention 1 3 1 2 1 — — 8 Substandard 1 6 4 2 1 3 — 17 Doubtful — — — — — — — — Total $ 157 $ 557 $ 137 $ 52 $ 21 $ 31 $ — $ 955 Year-to-Date Gross Charge-Offs $ — $ — $ — $ — $ — $ — $ — $ — March 31, 2023 2022 2021 2020 2019 Prior Revolving Total Municipal Risk rating: Pass $ 3 $ 82 $ 19 $ 15 $ 2 $ 99 $ — $ 220 Special mention — — — — 1 — — 1 Substandard — — — — — — — — Doubtful — — — — — — — — Total $ 3 $ 82 $ 19 $ 15 $ 3 $ 99 $ — $ 221 Year-to-Date Gross Charge-Offs $ — $ — $ — $ — $ — $ — $ — $ — March 31, 2023 2022 2021 2020 2019 Prior Revolving Total Agricultural Risk rating: Pass $ 16 $ 51 $ 5 $ 2 $ 1 $ 1 $ — $ 76 Special mention — 1 — — — — — 1 Substandard — — — — — — — — Doubtful — — — — — — — — Total $ 16 $ 52 $ 5 $ 2 $ 1 $ 1 $ — $ 77 Year-to-Date Gross Charge-Offs $ — $ — $ — $ — $ — $ — $ — $ — March 31, 2023 2022 2021 2020 2019 Prior Revolving Total Construction & Development Risk rating: Pass $ 111 $ 586 $ 124 $ 56 $ 12 $ 13 $ — $ 902 Special mention 3 9 — — — — — 12 Substandard 2 4 1 — — — — 7 Doubtful — — — — — — — — Total $ 116 $ 599 $ 125 $ 56 $ 12 $ 13 $ — $ 921 Year-to-Date Gross Charge-Offs $ — $ — $ — $ — $ — $ — $ — $ — March 31, 2023 2022 2021 2020 2019 Prior Revolving Total Farm Risk rating: Pass $ 12 $ 142 $ 82 $ 31 $ 11 $ 28 $ — $ 306 Special mention — — — — — — — — Substandard — 2 — — — — — 2 Doubtful — — — — — — — — Total $ 12 $ 144 $ 82 $ 31 $ 11 $ 28 $ — $ 308 Year-to-Date Gross Charge-Offs $ — $ — $ — $ — $ — $ — $ — $ — March 31, 2023 2022 2021 2020 2019 Prior Revolving Total Non-Owner Occupied CRE Risk rating: Pass $ 36 $ 244 $ 192 $ 96 $ 47 $ 91 $ — $ 706 Special mention — — 1 — 11 6 — 18 Substandard — 2 2 1 2 6 — 13 Doubtful — — — — — — — — Total $ 36 $ 246 $ 195 $ 97 $ 60 $ 103 $ — $ 737 Year-to-Date Gross Charge-Offs $ — $ — $ — $ — $ — $ — $ — $ — March 31, 2023 2022 2021 2020 2019 Prior Revolving Total Owner Occupied CRE Risk rating: Pass $ 73 $ 316 $ 247 $ 124 $ 74 $ 170 $ — $ 1,004 Special mention — 3 1 2 6 1 — 13 Substandard 1 3 2 1 3 16 — 26 Doubtful — — — — — — — — Total $ 74 $ 322 $ 250 $ 127 $ 83 $ 187 $ — $ 1,043 Year-to-Date Gross Charge-Offs $ — $ — $ — $ — $ — $ — $ — $ — March 31, 2023 2022 2021 2020 2019 Prior Revolving Total Residential Risk rating: Pass $ 95 $ 479 $ 355 $ 181 $ 78 $ 268 $ 137 $ 1,593 Special mention — 1 3 2 — 4 1 11 Substandard 1 5 2 3 2 9 3 25 Doubtful — — — — — — — — Total $ 96 $ 485 $ 360 $ 186 $ 80 $ 281 $ 141 $ 1,629 Year-to-Date Gross Charge-Offs $ — $ — $ — $ — $ — $ — $ — $ — March 31, 2023 2022 2021 2020 2019 Prior Revolving Total Auto Risk rating: Pass $ 51 $ 296 $ 116 $ 46 $ 20 $ 6 $ — $ 535 Special mention — — — — — — — — Substandard — 1 — 1 — — — 2 Doubtful — — — — — — — — Total $ 51 $ 297 $ 116 $ 47 $ 20 $ 6 $ — $ 537 Year-to-Date Gross Charge-Offs $ — $ — $ — $ — $ — $ — $ — $ — March 31, 2023 2022 2021 2020 2019 Prior Revolving Total Non-Auto Risk rating: Pass $ 21 $ 74 $ 34 $ 7 $ 2 $ 2 $ 7 $ 147 Special mention — — — — — — — — Substandard — — 1 — — — — 1 Doubtful — — — — — — — — Total $ 21 $ 74 $ 35 $ 7 $ 2 $ 2 $ 7 $ 148 Year-to-Date Gross Charge-Offs $ — $ — $ — $ — $ — $ — $ — $ — March 31, 2023 2022 2021 2020 2019 Prior Revolving Total Total Loans Risk rating: Pass $ 573 $ 2,818 $ 1,306 $ 606 $ 266 $ 706 $ 144 $ 6,419 Special mention 4 17 6 6 19 11 1 64 Substandard 5 23 12 8 8 34 3 93 Doubtful — — — — — — — — Total $ 582 $ 2,858 $ 1,324 $ 620 $ 293 $ 751 $ 148 $ 6,576 Year-to-Date Gross Charge-Offs $ — $ — $ — $ — $ — $ — $ — $ — The following summarizes the Company’s internal ratings of its loans held-for-investment, including the year of origination, by portfolio segments, at March 31, 2022 (dollars in millions): March 31, 2022 2021 2020 2019 2018 Prior Revolving Total C&I Risk rating: Pass $ 163 $ 438 $ 121 $ 42 $ 24 $ 26 $ — $ 814 Special mention — 4 — 3 — — — 7 Substandard 3 7 3 2 2 — — 17 Doubtful — — — — — — — — Total $ 166 $ 449 $ 124 $ 47 $ 26 $ 26 $ — $ 838 March 31, 2022 2021 2020 2019 2018 Prior Revolving Total Municipal Risk rating: Pass $ 25 $ 33 $ 15 $ 5 $ 21 $ 93 $ — $ 192 Special mention — — — — — — — — Substandard — — — — — — — — Doubtful — — — — — — — — Total $ 25 $ 33 $ 15 $ 5 $ 21 $ 93 $ — $ 192 March 31, 2022 2021 2020 2019 2018 Prior Revolving Total Agricultural Risk rating: Pass $ 20 $ 47 $ 6 $ 4 $ 1 $ 1 $ — $ 79 Special mention — — — — — — — — Substandard — 4 — — — — — 4 Doubtful — — — — — — — — Total $ 20 $ 51 $ 6 $ 4 $ 1 $ 1 $ — $ 83 March 31, 2022 2021 2020 2019 2018 Prior Revolving Total Construction & Development Risk rating: Pass $ 118 $ 524 $ 106 $ 21 $ 13 $ 13 $ — $ 795 Special mention — 2 — — — — — 2 Substandard 1 6 1 1 — — — 9 Doubtful — — — — — — — — Total $ 119 $ 532 $ 107 $ 22 $ 13 $ 13 $ — $ 806 March 31, 2022 2021 2020 2019 2018 Prior Revolving Total Farm Risk rating: Pass $ 25 $ 110 $ 39 $ 13 $ 8 $ 28 $ — $ 223 Special mention — — — — — — — — Substandard — — 1 — 1 1 — 3 Doubtful — — — — — — — — Total $ 25 $ 110 $ 40 $ 13 $ 9 $ 29 $ — $ 226 March 31, 2022 2021 2020 2019 2018 Prior Revolving Total Non-Owner Occupied CRE Risk rating: Pass $ 52 $ 211 $ 123 $ 62 $ 52 $ 101 $ — $ 601 Special mention — — 1 11 1 8 — 21 Substandard — — 5 3 1 5 — 14 Doubtful — — — — — — — Total $ 52 $ 211 $ 129 $ 76 $ 54 $ 114 $ — $ 636 March 31, 2022 2021 2020 2019 2018 Prior Revolving Total Owner Occupied CRE Risk rating: Pass $ 100 $ 258 $ 136 $ 97 $ 88 $ 166 $ — $ 845 Special mention — 1 2 1 — 1 — 5 Substandard 2 4 2 3 9 11 — 31 Doubtful — — — — — — — — Total $ 102 $ 263 $ 140 $ 101 $ 97 $ 178 $ — $ 881 March 31, 2022 2021 2020 2019 2018 Prior Revolving Total Residential Risk rating: Pass $ 107 $ 441 $ 208 $ 106 $ 78 $ 266 $ 109 $ 1,315 Special mention — 3 4 — 1 4 1 13 Substandard 1 4 3 2 2 11 1 24 Doubtful — — — — — — — — Total $ 108 $ 448 $ 215 $ 108 $ 81 $ 281 $ 111 $ 1,352 March 31, 2022 2021 2020 2019 2018 Prior Revolving Total Auto Risk rating: Pass $ 68 $ 197 $ 89 $ 44 $ 14 $ 6 $ — $ 418 Special mention — — — — — — — — Substandard — — 1 1 — — — 2 Doubtful — — — — — — — — Total $ 68 $ 197 $ 90 $ 45 $ 14 $ 6 $ — $ 420 March 31, 2022 2021 2020 2019 2018 Prior Revolving Total Non-Auto Risk rating: Pass $ 26 $ 68 $ 19 $ 6 $ 3 $ 2 $ 7 $ 131 Special mention — — — — — — — — Substandard — 1 — — — — — 1 Doubtful — — — — — — — — Total $ 26 $ 69 $ 19 $ 6 $ 3 $ 2 $ 7 $ 132 March 31, 2022 2021 2020 2019 2018 Prior Revolving Total Total Loans Risk rating: Pass $ 704 $ 2,327 $ 862 $ 400 $ 302 $ 702 $ 116 $ 5,413 Special mention — 10 7 15 2 13 1 48 Substandard 7 26 16 12 15 28 1 105 Doubtful — — — — — — — — Total $ 711 $ 2,363 $ 885 $ 427 $ 319 $ 743 $ 118 $ 5,566 The following summarizes the Company’s internal ratings of its loans held-for-investment, including the year of origination, by portfolio segments, at December 31, 2022 (dollars in millions): December 31, 2022 2021 2020 2019 2018 Prior Revolving Total C&I Risk rating: Pass $ 627 $ 157 $ 52 $ 22 $ 16 $ 13 $ — $ 887 Special mention 4 1 2 1 — — — 8 Substandard 13 5 2 1 1 — — 22 Doubtful — — — — — — — — Total $ 644 $ 163 $ 56 $ 24 $ 17 $ 13 $ — $ 917 December 31, 2022 2021 2020 2019 2018 Prior Revolving Total Municipal Risk rating: Pass $ 79 $ 19 $ 15 $ 4 $ 20 $ 84 $ — $ 221 Special mention — — — — — — — — Substandard — — — — — — — — Doubtful — — — — — — — — Total $ 79 $ 19 $ 15 $ 4 $ 20 $ 84 $ — $ 221 December 31, 2022 2021 2020 2019 2018 Prior Revolving Total Agricultural Risk rating: Pass $ 60 $ 9 $ 3 $ 2 $ 1 $ 1 $ — $ 76 Special mention — — — — — — — — Substandard — 1 — — — — — 1 Doubtful — — — — — — — — Total $ 60 $ 10 $ 3 $ 2 $ 1 $ 1 $ — $ 77 December 31, 2022 2021 2020 2019 2018 Prior Revolving Total Construction & Development Risk rating: Pass $ 638 $ 218 $ 70 $ 13 $ 8 $ 7 $ — $ 954 Special mention 1 — — — — — — 1 Substandard 4 1 — — — — — 5 Doubtful — — — — — — — — Total $ 643 $ 219 $ 70 $ 13 $ 8 $ 7 $ — $ 960 December 31, 2022 2021 2020 2019 2018 Prior Revolving Total Farm Risk rating: Pass $ 147 $ 85 $ 32 $ 11 $ 8 $ 21 $ — $ 304 Special mention — — — — — — — — Substandard 1 — — — — 1 — 2 Doubtful — — — — — — — — Total $ 148 $ 85 $ 32 $ 11 $ 8 $ 22 $ — $ 306 December 31, 2022 2021 2020 2019 2018 Prior Revolving Total Non-Owner Occupied CRE Risk rating: Pass $ 258 $ 191 $ 100 $ 49 $ 21 $ 75 $ — $ 694 Special mention — 1 1 11 — 7 — 20 Substandard 8 1 1 2 1 5 — 18 Doubtful — — — — — — — — Total $ 266 $ 193 $ 102 $ 62 $ 22 $ 87 $ — $ 732 December 31, 2022 2021 2020 2019 2018 Prior Revolving Total Owner Occupied CRE Risk rating: Pass $ 316 $ 224 $ 128 $ 74 $ 63 $ 113 $ — $ 918 Special mention 1 — 1 8 — 1 — 11 Substandard 1 2 1 2 9 10 — 25 Doubtful — — — — — — — — Total $ 318 $ 226 $ 130 $ 84 $ 72 $ 124 $ — $ 954 December 31, 2022 2021 2020 2019 2018 Prior Revolving Total Residential Risk rating: Pass $ 513 $ 355 $ 173 $ 82 $ 64 $ 214 $ 139 $ 1,540 Special mention 1 3 2 — — 3 1 10 Substandard 6 3 2 2 1 9 3 26 Doubtful — — — — — — — — Total $ 520 $ 361 $ 177 $ 84 $ 65 $ 226 $ 143 $ 1,576 December 31, 2022 2021 2020 2019 2018 Prior Revolving Total Auto Risk rating: Pass $ 331 $ 131 $ 55 $ 25 $ 6 $ 2 $ — $ 550 Special mention — — — — — — — — Substandard — — 1 — — — — 1 Doubtful — — — — — — — — Total $ 331 $ 131 $ 56 $ 25 $ 6 $ 2 $ — $ 551 December 31, 2022 2021 2020 2019 2018 Prior Revolving Total Non-Auto Risk rating: Pass $ 85 $ 41 $ 9 $ 3 $ 1 $ 1 $ 7 $ 147 Special mention — — — — — — — — Substandard — 1 — — — — — 1 Doubtful — — — — — — — — Total $ 85 $ 42 $ 9 $ 3 $ 1 $ 1 $ 7 $ 148 December 31, 2022 2021 2020 2019 2018 Prior Revolving Total Total Loans Risk rating: Pass $ 3,054 $ 1,430 $ 637 $ 285 $ 208 $ 531 $ 146 $ 6,291 Special mention 7 5 6 20 — 11 1 50 Substandard 33 14 7 7 12 25 3 101 Doubtful — — — — — — — — Total $ 3,094 $ 1,449 $ 650 $ 312 $ 220 $ 567 $ 150 $ 6,442 At March 31, 2023 and 2022, and December 31, 2022, the Company’s past due loans are as follows (dollars in thousands): March 31, 2023 15-59 60-89 Greater Total Past Current Total Loans 90 Days Commercial: C&I $ 3,952 $ 292 $ 1,825 $ 6,069 $ 948,617 $ 954,686 $ 14 Municipal 209 — — 209 221,170 221,379 — Total Commercial 4,161 292 1,825 6,278 1,169,787 1,176,065 14 Agricultural 816 25 24 865 76,152 77,017 — Real Estate: Construction & Development 7,058 332 — 7,390 913,800 921,190 — Farm 264 — 372 636 307,070 307,706 — Non-Owner Occupied CRE 3,183 — 695 3,878 733,239 737,117 — Owner Occupied CRE 3,886 — — 3,886 1,039,132 1,043,018 — Residential 7,484 744 767 8,995 1,619,846 1,628,841 Total Real Estate 21,875 1,076 1,834 24,785 4,613,087 4,637,872 — Consumer: Auto 683 41 9 733 536,677 537,410 8 Non-Auto 136 — — 136 147,715 147,851 — Total Consumer 819 41 9 869 684,392 685,261 8 Total $ 27,671 $ 1,434 $ 3,692 $ 32,797 $ 6,543,418 $ 6,576,215 $ 22 March 31, 2022 15-59 60-89 Greater Total Past Current Total Loans 90 Days Commercial: C&I $ 8,971 $ 36 $ 1,658 $ 10,665 $ 827,384 $ 838,049 $ — Municipal 153 — — 153 191,646 191,799 — Total Commercial 9,124 36 1,658 10,818 1,019,030 1,029,848 — Agricultural 4,846 — — 4,846 78,037 82,883 — Real Estate: Construction & Development 3,562 — 37 3,599 802,612 806,211 — Farm 7 — 445 452 225,490 225,942 — Non-Owner Occupied CRE 5,066 108 — 5,174 630,986 636,160 — Owner Occupied CRE 2,789 1,028 525 4,342 876,839 881,181 — Residential 6,757 224 250 7,231 1,344,931 1,352,162 — Total Real Estate 18,181 1,360 1,257 20,798 3,880,858 3,901,656 — Consumer: Auto 302 49 20 371 419,447 419,818 8 Non-Auto 125 — 3 128 131,836 131,964 3 Total Consumer 427 49 23 499 551,283 551,782 11 Total $ 32,578 $ 1,445 $ 2,938 $ 36,961 $ 5,529,208 $ 5,566,169 $ 11 December 31, 2022 15-59 60-89 Greater Total Past Current Total Loans 90 Days Commercial: C&I $ 3,924 $ 297 $ 1,646 $ 5,867 $ 911,450 $ 917,317 $ — Municipal 76 783 — 859 220,231 221,090 — Total Commercial 4,000 1,080 1,646 6,726 1,131,681 1,138,407 — Agricultural 243 — — 243 76,704 76,947 — Real Estate: Construction & Development 3,751 — 175 3,926 955,500 959,426 — Farm 668 — — 668 305,654 306,322 — Non-Owner Occupied CRE 1,444 160 — 1,604 730,485 732,089 — Owner Occupied CRE 1,151 — — 1,151 953,249 954,400 — Residential 8,720 707 266 9,693 1,566,065 1,575,758 — Total Real Estate 15,734 867 441 17,042 4,510,953 4,527,995 — Consumer: Auto 779 30 — 809 549,826 550,635 — Non-Auto 50 — — 50 147,834 147,884 — Total Consumer 829 30 — 859 697,660 698,519 — Total $ 20,806 $ 1,977 $ 2,087 $ 24,870 $ 6,416,998 $ 6,441,868 $ — * The Company monitors commercial, agricultural and real estate loans after such loans are 15 days past due. Consumer loans are monitored after such loans are 30 days past due. Modifications of receivables to debtors experiencing financial difficulty On January 1, 2023, the Company adopted the accounting guidance in ASU 2022-02, which eliminates the recognition and measurement of a TDR. Due to the removal of the TDR designation, the Company evaluates all loan restructurings according to the accounting guidance for loan modifications to determine if the restructuring results in a new loan or a continuation of the existing loan. Loan modifications to borrowers experiencing financial difficulty that result in a direct change in the timing or amount of contractual cash flows include situations where there is principal forgiveness, term extensions, interest rate reduction, and combinations of the listed modifications. Therefore, the disclosures related to loan restructurings are only for modifications that directly affect cash flows. An assessment of whether a borrower is experiencing financial difficulty is made on the date of a modification. Because the effect of most modifications made to borrowers experiencing financial difficulty is already included in the allowance for credit losses due to the measurement methodologies used to estimate the allowance, a change to the allowance for credit losses is generally not recorded upon modification. During the three-months ended March 31, 2023, loan modifications made to borrowers experiencing financial difficulty was insignificant. |