Loans | Loans Loans were as follows: March 31, Percentage of Total December 31, Percentage of Total Commercial and industrial $ 4,402,276 36.2 % $ 4,344,000 36.3 % Energy: Production 982,266 8.0 971,767 8.1 Service 204,797 1.7 221,213 1.8 Other 175,493 1.5 193,081 1.7 Total energy 1,362,556 11.2 1,386,061 11.6 Commercial real estate: Commercial mortgages 3,602,100 29.6 3,481,157 29.1 Construction 1,063,894 8.7 1,043,261 8.7 Land 322,790 2.6 311,030 2.6 Total commercial real estate 4,988,784 40.9 4,835,448 40.4 Consumer real estate: Home equity loans 346,632 2.8 345,130 2.9 Home equity lines of credit 269,813 2.2 264,862 2.2 Other 332,531 2.7 326,793 2.7 Total consumer real estate 948,976 7.7 936,785 7.8 Total real estate 5,937,760 48.6 5,772,233 48.2 Consumer and other 483,053 4.0 473,098 3.9 Total loans $ 12,185,645 100.0 % $ 11,975,392 100.0 % Concentrations of Credit. Most of our lending activity occurs within the State of Texas, including the four largest metropolitan areas of Austin, Dallas/Ft. Worth, Houston and San Antonio, as well as other markets. The majority of our loan portfolio consists of commercial and industrial and commercial real estate loans. As of March 31, 2017 , there were no concentrations of loans related to any single industry in excess of 10% of total loans other than energy loans, which totaled 11.2% of total loans. Unfunded commitments to extend credit and standby letters of credit issued to customers in the energy industry totaled $1.2 billion and $38.4 million , respectively, as of March 31, 2017 . Foreign Loans. We have U.S. dollar denominated loans and commitments to borrowers in Mexico. The outstanding balance of these loans and the unfunded amounts available under these commitments were not significant at March 31, 2017 or December 31, 2016 . Non-Accrual and Past Due Loans. Non-accrual loans, segregated by class of loans, were as follows: March 31, December 31, Commercial and industrial $ 26,531 $ 31,475 Energy 78,747 57,571 Commercial real estate: Buildings, land and other 7,608 8,550 Construction — — Consumer real estate 2,987 2,130 Consumer and other 303 425 Total $ 116,176 $ 100,151 As of March 31, 2017 , non-accrual loans reported in the table above included $11.2 million related to loans that were restructured as “troubled debt restructurings” during 2017 . See the section captioned “Troubled Debt Restructurings” elsewhere in this note. Had non-accrual loans performed in accordance with their original contract terms, we would have recognized additional interest income, net of tax, of approximately $851 thousand for the three months ended March 31, 2017 , compared to $844 thousand for three months ended March 31, 2016 . An age analysis of past due loans (including both accruing and non-accruing loans), segregated by class of loans, as of March 31, 2017 was as follows: Loans 30-89 Days Past Due Loans 90 or More Days Past Due Total Past Due Loans Current Loans Total Loans Accruing Loans 90 or More Days Past Due Commercial and industrial $ 20,566 $ 23,787 $ 44,353 $ 4,357,923 $ 4,402,276 $ 3,014 Energy 2,941 29,467 32,408 1,330,148 1,362,556 628 Commercial real estate: Buildings, land and other 6,243 5,214 11,457 3,913,433 3,924,890 1,834 Construction 2,115 113 2,228 1,061,666 1,063,894 113 Consumer real estate 5,145 2,230 7,375 941,601 948,976 695 Consumer and other 4,598 668 5,266 477,787 483,053 530 Total $ 41,608 $ 61,479 $ 103,087 $ 12,082,558 $ 12,185,645 $ 6,814 Impaired Loans. Impaired loans are set forth in the following table. No interest income was recognized on impaired loans subsequent to their classification as impaired. Unpaid Contractual Principal Balance Recorded Investment With No Allowance Recorded Investment With Allowance Total Recorded Investment Related Allowance March 31, 2017 Commercial and industrial $ 35,005 $ 18,113 $ 5,763 $ 23,876 $ 2,751 Energy 84,912 53,313 25,326 78,639 850 Commercial real estate: Buildings, land and other 11,635 6,453 — 6,453 — Construction — — — — — Consumer real estate 1,881 1,548 — 1,548 — Consumer and other 75 23 — 23 — Total $ 133,508 $ 79,450 $ 31,089 $ 110,539 $ 3,601 December 31, 2016 Commercial and industrial $ 40,288 $ 19,862 $ 9,047 $ 28,909 $ 5,436 Energy 60,522 27,759 29,804 57,563 3,750 Commercial real estate: Buildings, land and other 11,369 6,866 — 6,866 — Construction — — — — — Consumer real estate 977 655 — 655 — Consumer and other 32 30 — 30 — Total $ 113,188 $ 55,172 $ 38,851 $ 94,023 $ 9,186 The average recorded investment in impaired loans was as follows: Three Months Ended 2017 2016 Commercial and industrial $ 26,393 $ 23,809 Energy 68,101 67,615 Commercial real estate: Buildings, land and other 6,660 31,985 Construction — 770 Consumer real estate 1,102 471 Consumer and other 27 — Total $ 102,283 $ 124,650 Troubled Debt Restructurings . Troubled debt restructurings during the three months ended March 31, 2017 and March 31, 2016 are set forth in the following table. Three Months Ended Three Months Ended Balance at Restructure Balance at Period-End Balance at Restructure Balance at Period-End Commercial and industrial $ — $ — $ 19 $ 17 Energy 11,262 11,212 62,546 61,095 Commercial real estate: Construction — — 243 235 $ 11,262 $ 11,212 $ 62,808 $ 61,347 Loan modifications are typically related to extending amortization periods, converting loans to interest only for a limited period of time, deferral of interest payments, waiver of certain covenants, consolidating notes and/or reducing collateral or interest rates. The modifications during the reported periods did not significantly impact our determination of the allowance for loan losses. As of March 31, 2017, there was one loan restructured during the last year totaling $747 thousand that was in excess of 90 days past due. During the first quarter of 2017, we recognized a charge-off of $2.0 million related to a loan restructured during the third quarter of 2016. Credit Quality Indicators. As part of the on-going monitoring of the credit quality of our loan portfolio, management tracks certain credit quality indicators including trends related to (i) the weighted-average risk grade of commercial loans, (ii) the level of classified commercial loans, (iii) the delinquency status of consumer loans (see details above), (iv) net charge-offs, (v) non-performing loans (see details above) and (vi) the general economic conditions in the State of Texas. We utilize a risk grading matrix to assign a risk grade to each of our commercial loans. Loans are graded on a scale of 1 to 14. A description of the general characteristics of the 14 risk grades is set forth in our 2016 Form 10-K. In monitoring credit quality trends in the context of assessing the appropriate level of the allowance for loan losses, we monitor portfolio credit quality by the weighted-average risk grade of each class of commercial loan. Individual relationship managers review updated financial information for all pass grade loans to reassess the risk grade on at least an annual basis. When a loan has a risk grade of 9, it is still considered a pass grade loan; however, it is considered to be on management’s “watch list,” where a significant risk-modifying action is anticipated in the near term. When a loan has a risk grade of 10 or higher, a special assets officer monitors the loan on an on-going basis. The following tables present weighted-average risk grades for all commercial loans by class. March 31, 2017 December 31, 2016 Weighted Loans Weighted Loans Commercial and industrial: Risk grades 1-8 6.00 $ 3,981,338 6.01 $ 3,989,722 Risk grade 9 9.00 194,639 9.00 106,988 Risk grade 10 10.00 87,107 10.00 115,420 Risk grade 11 11.00 112,511 11.00 100,245 Risk grade 12 12.00 23,681 12.00 25,939 Risk grade 13 13.00 3,000 13.00 5,686 Total 6.38 $ 4,402,276 6.35 $ 4,344,000 Energy Risk grades 1-8 6.33 $ 876,206 6.34 $ 854,688 Risk grade 9 9.00 55,136 9.00 78,524 Risk grade 10 10.00 152,360 10.00 150,872 Risk grade 11 11.00 199,479 11.00 244,406 Risk grade 12 12.00 78,525 12.00 53,821 Risk grade 13 13.00 850 13.00 3,750 Total 7.86 $ 1,362,556 7.95 $ 1,386,061 Commercial real estate: Buildings, land and other Risk grades 1-8 6.69 $ 3,605,460 6.67 $ 3,463,064 Risk grade 9 9.00 107,441 9.00 109,110 Risk grade 10 10.00 132,850 10.00 145,067 Risk grade 11 11.00 71,531 11.00 66,396 Risk grade 12 12.00 7,608 12.00 8,550 Risk grade 13 13.00 — 13.00 — Total 6.96 $ 3,924,890 6.95 $ 3,792,187 Construction Risk grades 1-8 7.06 $ 1,037,166 6.97 $ 1,023,194 Risk grade 9 9.00 21,193 9.00 15,829 Risk grade 10 10.00 446 10.00 2,889 Risk grade 11 11.00 5,089 11.00 1,349 Risk grade 12 12.00 — 12.00 — Risk grade 13 13.00 — 13.00 — Total 7.12 $ 1,063,894 7.01 $ 1,043,261 Net (charge-offs)/recoveries, segregated by class of loans, were as follows: Three Months Ended 2017 2016 Commercial and industrial $ (2,729 ) $ (1,132 ) Energy (4,225 ) (1,011 ) Commercial real estate: Buildings, land and other 42 61 Construction 3 7 Consumer real estate 96 99 Consumer and other (1,128 ) (503 ) Total $ (7,941 ) $ (2,479 ) In assessing the general economic conditions in the State of Texas, management monitors and tracks the Texas Leading Index (“TLI”), which is produced by the Federal Reserve Bank of Dallas. The TLI, the components of which are more fully described in our 2016 Form 10-K, totaled 123.4 at February 28, 2017 (most recent date available) and 123.1 at December 31, 2016 . A higher TLI value implies more favorable economic conditions. Allowance for Loan Losses . The allowance for loan losses is a reserve established through a provision for loan losses charged to expense, which represents management’s best estimate of inherent losses that have been incurred within the existing portfolio of loans. The allowance, in the judgment of management, is necessary to reserve for estimated loan losses and risks inherent in the loan portfolio. Our allowance for loan loss methodology, which is more fully described in our 2016 Form 10-K, follows the accounting guidance set forth in U.S. generally accepted accounting principles and the Interagency Policy Statement on the Allowance for Loan and Lease Losses, which was jointly issued by U.S. bank regulatory agencies. The level of the allowance reflects management’s continuing evaluation of industry concentrations, specific credit risks, loan loss and recovery experience, current loan portfolio quality, present economic, political and regulatory conditions and unidentified losses inherent in the current loan portfolio. Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit that, in management’s judgment, should be charged off. The following table presents details of the allowance for loan losses allocated to each portfolio segment as of March 31, 2017 and December 31, 2016 and detailed on the basis of the impairment evaluation methodology we used: Commercial and Industrial Energy Commercial Real Estate Consumer Real Estate Consumer and Other Total March 31, 2017 Historical valuation allowances $ 26,216 $ 38,666 $ 17,932 $ 2,329 $ 5,297 $ 90,440 Specific valuation allowances 2,751 850 — — — 3,601 General valuation allowances 8,072 5,255 6,333 1,939 19 21,618 Macroeconomic valuation allowances 8,544 17,022 9,744 555 1,532 37,397 Total $ 45,583 $ 61,793 $ 34,009 $ 4,823 $ 6,848 $ 153,056 Allocated to loans: Individually evaluated $ 2,751 $ 850 $ — $ — $ — $ 3,601 Collectively evaluated 42,832 60,943 34,009 4,823 6,848 149,455 Total $ 45,583 $ 61,793 $ 34,009 $ 4,823 $ 6,848 $ 153,056 December 31, 2016 Historical valuation allowances $ 33,251 $ 34,626 $ 16,976 $ 2,225 $ 4,585 $ 91,663 Specific valuation allowances 5,436 3,750 — — — 9,186 General valuation allowances 6,708 3,769 5,004 1,506 (144 ) 16,843 Macroeconomic valuation allowances 7,520 18,508 8,233 507 585 35,353 Total $ 52,915 $ 60,653 $ 30,213 $ 4,238 $ 5,026 $ 153,045 Allocated to loans: Individually evaluated $ 5,436 $ 3,750 $ — $ — $ — $ 9,186 Collectively evaluated 47,479 56,903 30,213 4,238 5,026 143,859 Total $ 52,915 $ 60,653 $ 30,213 $ 4,238 $ 5,026 $ 153,045 Our recorded investment in loans as of March 31, 2017 and December 31, 2016 related to each balance in the allowance for loan losses by portfolio segment and detailed on the basis of the impairment methodology we used was as follows: Commercial and Industrial Energy Commercial Consumer Consumer Total March 31, 2017 Individually evaluated $ 23,876 $ 78,639 $ 6,453 $ 1,548 $ 23 $ 110,539 Collectively evaluated 4,378,400 1,283,917 4,982,331 947,428 483,030 12,075,106 Total $ 4,402,276 $ 1,362,556 $ 4,988,784 $ 948,976 $ 483,053 $ 12,185,645 December 31, 2016 Individually evaluated $ 28,909 $ 57,563 $ 6,866 $ 655 $ 30 $ 94,023 Collectively evaluated 4,315,091 1,328,498 4,828,582 936,130 473,068 11,881,369 Total $ 4,344,000 $ 1,386,061 $ 4,835,448 $ 936,785 $ 473,098 $ 11,975,392 The following table details activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2017 and 2016 . Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories. Commercial and Industrial Energy Commercial Real Estate Consumer Real Estate Consumer and Other Total Three months ended: March 31, 2017 Beginning balance $ 52,915 $ 60,653 $ 30,213 $ 4,238 $ 5,026 $ 153,045 Provision for loan losses (4,603 ) 5,365 3,751 489 2,950 7,952 Charge-offs (3,527 ) (4,278 ) — (11 ) (3,548 ) (11,364 ) Recoveries 798 53 45 107 2,420 3,423 Net charge-offs (2,729 ) (4,225 ) 45 96 (1,128 ) (7,941 ) Ending balance $ 45,583 $ 61,793 $ 34,009 $ 4,823 $ 6,848 $ 153,056 March 31, 2016 Beginning balance $ 42,993 $ 54,696 $ 24,313 $ 4,659 $ 9,198 $ 135,859 Provision for loan losses 3,223 31,288 (794 ) (972 ) (4,245 ) 28,500 Charge-offs (1,861 ) (1,011 ) (28 ) (154 ) (2,724 ) (5,778 ) Recoveries 729 — 96 253 2,221 3,299 Net charge-offs (1,132 ) (1,011 ) 68 99 (503 ) (2,479 ) Ending balance $ 45,084 $ 84,973 $ 23,587 $ 3,786 $ 4,450 $ 161,880 |