☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
2020
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Texas | 75-0944023 | |
(State or
incorporation or | (I.R.S. Employer Identification No.) | |
400 Pine Street, Abilene, Texas | 79601 | |
(Address of | (Zip Code) | |
Registrant’s telephone number, including area code: | (325) 627-7155 |
Registrant’s telephone number, including area code: (325)627-7155
Title of | Trading Symbol(s) | Name of on | ||
Common Stock, par value $0.01 per share | FFIN | The Nasdaq Global Select Market |
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of RegulationS-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form10-K or any amendment to this Form10-K. ☐
Large accelerated filer | ☒ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||
Emerging growth company | ☐ |
2020.
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ITEM 4. | 36 | |||||||||
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PART II | ||||||||||
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ITEM 9B. | ||||||||||
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PART III | ||||||||||
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| PART IV | |||||||||
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ITEM 16. | 68 | |||||||||
68 |
FORWARD-LOOKING STATEMENTS
PART I
ITEM 1. | BUSINESS |
Through our subsidiaries, we conduct a full-service commercial banking business. Our banking centers are located primarily in Central, North Central, Southeast and West Texas. As of December 31, 2017,2020, we had 6978 financial centers across Texas, with eleven locations in Abilene, three locations in San AngeloBryan and Weatherford, two locations in Cleburne, College Station, Conroe, San Angelo, Stephenville, and Granbury, and one location each in Acton, Albany, Aledo, Alvarado, Beaumont, Boyd, Bridgeport, Brock, Burleson, Cisco, Clyde, Cut and Shoot, Decatur, Eastland, El Campo, Fort Worth, Fulshear, Glen Rose, Grapevine, Hereford, Huntsville, Keller, Kingwood, Magnolia, Mauriceville, Merkel, Midlothian, Mineral Wells, Montgomery, Moran, New Waverly, Newton, Odessa, Orange, Palacios, Port Arthur, Ranger, Rising Star, Roby, Southlake, Spring, Sweetwater, Tomball, Trent, Trophy Club, Vidor, Waxahachie, Willis and Willow Park, all in Texas. On January 1, 2018, we completed our acquisition of Commercial Bancshares, Inc. and its wholly owned bank subsidiary, Commercial State Bank and, as a result, added branch locations in Kingwood, Fulshear, El Campo and Palacios.
Park.
In the past, we
Bridgeport and Wise County | 13.5% | Weatherford, Willow Park, Aledo and Parker County | 23.6% | |||||||
Fort Worth and Tarrant County | 21.5% | Stephenville and Erath County | 18.0% | |||||||
Cleburne and Johnson County | 11.7% | Conroe and Montgomery County | 41.3% | |||||||
Granbury and Hood County | 31.1% | *Source: U. S. Census Bureau |
2009-2019 by City and County*
Bridgeport and Wise County | 16.8 | % | ||
Bryan/College Station and Brazos County | 26.7 | % | ||
Cleburne and Johnson County | 11.9 | % | ||
Conroe and Montgomery County | 36.1 | % | ||
*Source: U. S. Census Bureau |
Fort Worth and Tarrant County | 16.8 | % | ||
Granbury and Hood County | 19.1 | % | ||
Stephenville and Erath County | 17.7 | % | ||
Weatherford, Willow Park, Aledo and Parker County | 23.8 | % |
AssociationN.A. operates as a subsidiary of First Financial Bankshares, Inc. and First Technology Services, Inc. operates as a subsidiary of First Financial Bank, National Association, Abilene, Texas.N.A. Looking ahead, we intend to continue to grow organically by better serving the needs of our customers and putting them first in all of our decisions. We continually look for new branch locations, such as our latest branch opened in Spring, Texas which opened in January 2019, so we can provide more convenient service to our customers, and wecustomers. We are actively pursuing acquisition opportunities by calling on banks that we are interested in possibly acquiring.
Employees
Including
None of our employees are represented by collective bargaining agreements.
National Banking Associations.
of December 31, 2020, our subsidiary bank is no longer eligible to utilize credits to offset its FDIC assessment.
The Company subsequently updated its estimate of the impact to our deferred tax balances based on the proposed regulations issued to date and recorded an additional reduction of income tax expense for the year ended December 31, 2018 of $664 thousand. No additional adjustment amounts were recorded for the years ended December 31, 2019 and 2020.
Rules.
2020.
regulators.
enforcement authority with respect to depository institutions with $10 billion or more in assets. Smaller institutions are subject to rules promulgated by the CFPB but continue to be examined and supervised by federal banking regulators for consumer compliance purposes. Given the Bank has exceeded $10 billion in assets for each of the last three quarterly periods and expects to exceed $10 billion for the quarterly period ended March 31, 2021, the Bank will be subject to regulation by the CFPB going forward. The CFPB has authority to prevent unfair, deceptive or abusive practices in connection with the offering of consumer financial products. The Dodd-Frank Act permits states to adopt consumer protection laws and standards that are more stringent than those adopted at the federal level and, in certain circumstances, permits the state attorney general to enforce compliance with both the state and federal laws and regulations.
The CFPB has finalized rules relating to, among other things, remittance transfers under the Electronic Fund Transfer Act, which requires companies to provide consumers with certain disclosures before the consumer pays for a remittance transfer. These rules became effective in October 2013. The CFPB has also amended certain rules under Regulation C relating to home mortgage disclosure to reflect a change in theasset-size exemption threshold for depository institutions based on the annual percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers. In addition, on January 10, 2013, the CFPB released its final“Ability-to-Repay/Qualified Mortgage” rules, which amended the Truth in Lending Act (Regulation Z). Regulation Z prohibits a creditor from making a higher-priced mortgage loan without regard to the consumer’s ability to repay the loan. The final amended rule implemented sections 1411 and 1412 of the Dodd-Frank Act, which generally require creditors to make a reasonable, good faith determination of a consumer’s ability to repay any consumer credit transaction secured by a dwelling (excluding anopen-end credit plan, timeshare plan, reverse mortgage, or temporary loan) and establishes certain protections from liability under this requirement for “qualified mortgages.” The final rule also implemented section 1414 of the Dodd-Frank Act, which limits prepayment penalties. Finally, the final rule requires creditors to retain evidence of compliance with the rule for three years after a covered loan is consummated. This rule became effective January 10, 2014.
ITEM 1A. | RISK FACTORS |
General economic conditions impact the banking industry. The credit quality of our loan portfolio necessarily reflects, among other things, the general economic conditions in the areas in which we conduct our business. Our continued financial success depends somewhat on factors beyond our control, including:
Any substantial deterioration in any of the foregoing conditionsinvestment securities, which could have a material adverse effect on our financial condition, results of operations and liquidity, which would likely adversely affect the market price of our common stock.
Our business is concentrated in Texas and a downturn in the economy of Texas may adversely affect our business.
Our network of bank regions is concentrated in Texas, primarily in the Central, North Central, Southeast and Western regions of the state. Most of our customers and revenue are derived from this area. These economies include dynamic centers of higher education, agriculture, energy and natural resources, retail, military, healthcare, tourism, retirement living, manufacturing and distribution. Because we generally do not derive revenue or customers from other parts of the state or nation, our business and operations are dependent on economic conditions in our Texas markets. Any significant decline in one or more segments of the local economies could adversely affect our business, revenue, operations and properties.
The significant decline and volatility in oil and gas prices has resulted in uncertainty about the Texas economy. While we consider our exposure to credits related to the oil and gas industry to not be significant, at approximately 1.72% of total loans as of December 31, 2017, should the price of oil and gas decline further and/or remain at the current low price for an extended period, the general economic conditions in our Texas markets could be negatively affected, which could have a material adverse affect on our business,Company’s financial condition and results of operations.
Our Company lends primarily to small tomedium-sized businesses that may Although we have fewer resources to weather a downturnimplemented strategies which we believe reduce the potential effects of adverse changes in the economy, which could adversely impact the Company’s operating results.
The Company makes loans to privately-owned businesses, many of which are considered to be small tomedium-sized businesses. Small tomedium-sized businesses frequently have smaller market share than their competition, may be more vulnerable to economic downturns, often need additional capital to expand or compete and may experience more volatility in operating results. Any one or more of these factors may impair the borrower’s ability to repay a loan. In addition, the success of a small tomedium-sized businesses often dependsinterest rates on the management talents and efforts of a small group of persons, and the death, disability or resignation of one or more of these persons could have adverse impact on the business and its ability to repay our loans. Economic downturns, a sustained decline in commodity prices and other events that could negatively impact the businesses could cause the Company to incur credit losses that could negatively affect the Company’s results of operations, these strategies may not always be successful. Any of these events could adversely affect our results of operations, financial condition and liquidity.
arrangements, given LIBOR’s role in determining market interest rates globally. Uncertainty as to the nature of alternative reference rates and as to potential changes or other reforms to LIBOR may adversely affect LIBOR rates and the value of LIBOR-based loans and securities in our portfolio and may impact the availability and cost of hedging instruments and borrowings. If LIBOR rates are no longer available, and we are required to implement substitute indices for the calculation of interest rates under our loan agreements with our borrowers, we may incur significant expenses in effecting the transition, and may be subject to disputes or litigation with customers over the appropriateness or comparability to LIBOR of the substitute indices, which could have an effect on our financial condition or results of operations.
Hurricanes, extended drought conditions, severe weather and natural disasters could significantly impact the Company’s business.
Hurricanes, extended drought conditions, severe weather and natural disasters and other adverse external events could have a significant impact on the Company’s ability to conduct business. In late August 2017 and continuing into the fourth quarter of 2017, Houston and the surrounding area around the Gulf Coast were significantly affected by Hurricane Harvey. Our Orange and Conroe regions of the Company are in these areas and were impacted by the severe winds and floods. See Management’s Discussion and Analysis of Financial Condition and Results of Operations beginning on page 33 for specific information of the impact of Hurricane Harvey on our Company. Such events affect the stability of the Company’s deposit base, impair the ability of borrowers to repay outstanding loans, impair the value of the collateral securing our loans, cause significant property damage, result in loss of revenue and/or cause the Company to incur additional expenses. The occurrence of any such event in the future couldmay have a material adverse effectimpact on our financial condition or results of operations
Changes in economic conditions could cause an increase in delinquencies andnon-performing assets, including loan charge-offs, which could depress our net income and growth.
Our loan portfolio includes many real estate secured loans, demand for which may decrease during economic downturns as a result of, among other things, an increase in unemployment, a decrease in real estate values and a slowdown in housing. If we see negative economic conditions develop in the United States as a whole or in the portions of Texas that we serve, we could experience higher delinquencies and loan charge-offs, which would reduce our net income and adversely affect our financial condition. Furthermore, to the extent that real estate collateral is obtained through foreclosure, the costs of holding and marketing the real estate collateral, as well as the ultimate values obtained from disposition, could reduce our earnings and adversely affect our financial condition.
The value of real estate collateral may fluctuate significantly resulting in an under-collateralized loan portfolio.
The market value of real estate, particularly real estate held for investment, can fluctuate significantly in a short period of time as a result of market conditions in the geographic area in which the real estate is located. If the value of the real estate serving as collateral for our loan portfolio were to decline materially, a significant part of our loan portfolio could become under-collateralized. If the loans that are collateralized by real estate become troubled during a time when market conditions are declining or have declined, then, in the event of foreclosure, we may not be able to realize the amount of collateral that we anticipated at the time of originating the loan. This could have a material adverse effect on our provision for loan losses and our operating results and financial condition.
New lines of business or new products and services may subject the Company to additional risks.
From time to time, the Company may implement new lines of business or offer new products and services within existing lines of business. There are substantial risks and uncertainties associated with these efforts, particularly in instances where the markets are not fully developed. In developing and marketing new lines of business and/or products and services the Company may invest significant time and resources. External factors, such as compliance with regulations, competitive alternatives, and shifting market preferences, may also impact the successful implementation of a new line of business or a new product or service. If we are unable to successfully manage these risks in the development and implementation of new lines of business or new products or services, it could have a material adverse effect on the Company’s business, financial condition and result of operations.
The repeal of prohibitions on paying interest on demand deposits could increase our interest expense.
Effective July 2011, all federal prohibitions on financial institutions paying interest on demand deposit accounts were repealed as part of the Dodd-Frank Act. As a result, some financial institutions have commenced and are considering offering interest on demand deposits to compete for customers. If interest rates begin to rise, our interest expense could increase and our net interest margin could decrease if we begin offering interest on demand deposits to maintain current customers or attract new customers, which could have a material adverse effect on our financial condition and results of operations.
On July 2, 2013, the
capital. The final rule became effective for us on January 1, 2015. As of December 31, 2017,2020, we met all of these new requirements, including the full capital conservation buffer.
The trust wealth management fees we receive may decrease as a result of poor investment performance, in either relative or absolute terms, which could decrease our revenues and net earnings.
Our trust company subsidiary derives its revenues primarily from investment management fees based on assets under management. Our ability to maintain or increase assets under management is subject to a number of factors, including investors’ perception of our past performance, in either relative or absolute terms, market and economic conditions, including changes in oil and gas prices, and competition from investment management companies. Financial markets are affected by many factors, all of which are beyond our control, including general economic conditions, including changes in oil and gas prices; securities market conditions; the level and volatility of interest rates and equity prices; competitive conditions; liquidity of global markets; international and regional political conditions; regulatory and legislative developments; monetary and fiscal policy; investor sentiment; availability and cost of capital; technological changes and events; outcome of legal proceedings; changes in currency values; inflation; credit ratings; and the size, volume and timing of transactions. A decline in the fair value of the assets under management, caused by a decline in general economic conditions, would decrease our wealth management fee income.
Investment performance is one of the most important factors in retaining existing clients and competing for new wealth management clients. Poor investment performance could reduce our revenues and impair our growth in the following ways:
products;
Even when market conditions are generally favorable, our investment performance may be adversely affected by the investment style of our wealth management and investment advisors and the particular investments that they make. To the extent our future investment performance is perceived to be poor in either relative or absolute terms, the revenues and profitability of our wealth management business will likely be reduced and our ability to attract new clients will likely be impaired. As such, fluctuations in the equity and debt markets can have a direct impact upon our net earnings.
Certain of our investment advisory and wealth management contracts are subject to termination on short notice, and termination of a significant number of investment advisory contracts could have a material adverse impact on our revenue.
Certain of our investment advisory and wealth management clients can terminate, with little or no notice, their relationships with us, reduce their aggregate assets under management, or shift their funds to other types of accounts with different rate structures for any number of reasons, including investment performance, changes in prevailing interest rates, inflation, changes in investment preferences of clients, changes in our reputation in the marketplace, change in management or control of clients, loss of key investment management personnel and financial market performance. We cannot be certain that our trust company subsidiary will be able to retain all of its clients. If its clients terminate their investment advisory and wealth management contracts, our trust company subsidiary, and consequently we, could lose a substantial portion of our revenues.
We are subject to possible claims and litigation pertaining to fiduciary responsibility.
From time to time, customers could make claims and take legal action pertaining to our performance of our fiduciary responsibilities. Whether customer claims and legal action related to our performance of our fiduciary responsibilities are founded or unfounded, if such claims and legal actions are not resolved in a manner favorable to us, they may result in significant financial liability and/or adversely affect our market perception of our products and services as well as impact customer demand for those products and services. Any financial liability or reputation damage could have a material adverse effect on our business, which, in turn, could have a material adverse effect on our financial condition and results of operations.
Our business is subject to significant government regulation.
A new accounting standard will result in a significant change in how we recognize credit losses andwhich may have a material impact on our financial condition or results of operations.
In June 2016, the Financial Accounting Standards Board (“FASB”) issued an accounting standard update, “Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” which replaces the current “incurred loss” model for recognizing credit losses with an “expected loss” model referred to as the Current Expected Credit Loss (“CECL”) model. Under the CECL model, we will be required to present certain financial assets carried at amortized cost, such as loans held for investment andheld-to-maturity debt securities, at the net amount expected to be collected. The measurement of expected credit losses is to be based on information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. This measurement will take place at the time the financial asset is first added to the balance sheet and periodically thereafter. This differs significantly from the “incurred loss” model required under current generally accepted accounting principles (“GAAP”), which delays recognition until it is probable a loss has been incurred. Accordingly, we expect that the adoption of the CECL model will materially affect how we determine our allowance for loan losses and could require us to significantly increase our allowance. Moreover, the CECL model may create more volatility in the level of our allowance for loan losses. If we are required to materially increase our level of allowance for loan losses for any reason, such increase could adversely affect our business, financial condition and results of operations.
The new CECL standard will become effective for us for fiscal years beginning after December 15, 2019 and for interim periods within those fiscal years. We are currently evaluating the impact the CECL model will have on our accounting, but we expect to recognize aone-time cumulative-effect adjustment to our allowance for loan losses as of the beginning of the first reporting period in which the new standard is effective, consistent with regulatory expectations set forth in interagency guidance issued at the end of 2016. We cannot yet determine the magnitude of any suchone-time cumulative adjustment or of the overall impact of the new standardadverse effect on our business, financial conditionconditions and results of operations.
We compete with many larger financial institutions which have substantially greater financial resources than we have.
Competition among financial institutions in Texas is intense. We compete with other bank holding companies, state and national commercial banks, savings and loan associations, consumer financial companies, credit unions, securities brokers, insurance companies, mortgage banking companies, money market mutual funds, asset-basednon-bank lenders and other financial institutions. Many
We are subject to interest rate risk.
Our profitability is dependent to a large extent on our net interest income, which is the difference between interest income we earn as a result of interest paid to us on loans and investments and interest we pay to third parties such as our depositors and those from whom we borrow funds. Like most financial institutions, we are highly sensitive to many factors that are beyond our control, including general economic conditions and policies of various governmental and regulatory agencies and, in particular, the Federal Reserve Board. Changes in monetary policy, including changes in interest rates, could influence not only the interest we receive on loans and securities and the amount of interest we pay on deposits and borrowings, but such changes could also affect (i) our ability to originate loans and obtain deposits, (ii) the fair value of our financial assets and liabilities, and (iii) the average duration of the Company’s securities portfolio. If the interest rates paid on deposits and other borrowings increase at a faster rate than the interest rates received on loans and investments, our net interest income, and earnings, could be adversely affected. Earnings could also be adversely affected if the interest rates received on loans and investments fall more quickly than the interest rates paid on deposits and other borrowings.
Although we have implemented strategies which we believe reduce the potential effects of adverse changes in interest rates on our results of operations, these strategies may not always be successful. In addition, any substantial and prolonged increase in market interest rates could reduce our customers’ desire to borrow money from us or adversely affect their ability to repay their outstanding loans by increasing their credit costs since most of our loans have adjustable interest rates that reset periodically. Any of these events could adversely affect our results of operations, financial condition and liquidity.
We are subject to liquidity risk.
The Company requires liquidity to meet our deposit and other obligations as they come due. The Company’s access to funding sources in amounts adequate to finance its activities or on terms that are acceptable to it could be impaired by factors that affect it specifically or the financial services industry or the general economy. Factors that could reduce its access to liquidity sources include a downturn in the Texas market, difficult credit markets or adverse regulatory actions against the Company. The Company’s access to deposits may also be affected by the liquidity needs of its depositors. In particular, a substantial majority of the Company’s liabilities are demand, savings, interest checking and money market deposits, which are payable on demand or upon several days’ notice, while by comparison, a substantial portion of its assets are loans, which cannot be called or sold in the same time frame. The Company may not be able to replace maturing deposits and advances as necessary in the future, especially if a large number of its depositors sought to withdraw their accounts, regardless of the reason. A failure to maintain adequate liquidity could have a material adverse effect on the Company’s business, financial condition and result of operations.
The value of certain securities in our investment portfolio may be negatively affected by changes or disruptions in the market for these securities.
Our investment portfolio securities include obligations of, and mortgage-backed securities guaranteed by, government sponsored enterprises such as the Federal National Mortgage Association, referred to as Fannie Mae, the Government National Mortgage Association, referred to as Ginnie Mae, the Federal Home Loan Mortgage Corporation, referred to as Freddie Mac, and the Federal Home Loan Bank or otherwise backed by Federal Housing Administration or Veteran’s Administration guaranteed loans; however, volatility or illiquidity in financial markets may cause investment securities held within our investment portfolio to fall in value or become less liquid. The FRB’s actions to increase interest rates may cause a decline in the value of securities held by the Company. Uncertainty surrounding the credit risk associated with mortgage collateral or guarantors may cause material discrepancies in valuation estimates obtained from third parties. Volatile market conditions may reduce valuations due to the perception of heightened credit and liquidity risks in addition to interest rate risk typically associated with these securities. There can be no assurance that declines in market value associated with these disruptions will not result in impairments of these assets, which would lead to accounting charges that could have a material adverse effect on our results of operations, equity and capital ratios.
First Financial Bankshares, Inc. relies on dividends from its subsidiaries for most of its revenue.
First Financial Bankshares,Inc. is a separate and distinct legal entity from its subsidiaries. It receives substantially all of its revenue from dividends paid by its subsidiaries. These dividends are the principal source of funds to pay dividends on the Company’s common stock and interest and principal on First Financial Bankshares, Inc. debt (if we had balances outstanding). Various federal and/or state laws and regulations limit the amount of dividends that our bank and trust subsidiaries may pay to First Financial Bankshares, Inc. In the event our subsidiaries are unable to pay dividends to First Financial Bankshares, Inc., First Financial Bankshares, Inc. may not be able to service debt, if any, or pay dividends on the Company’s common stock. The inability to receive dividends from our subsidiaries could have a material adverse effect on the Company’s business, financial condition, results of operations and liquidity.
Acquisition Activities
Our accounting estimates and risk management processes rely on analytical and forecasting models.
The processes we use to estimate our allowance for loan losses and to measure the fair value of financial instruments, as well as the processes used to estimate the effects of changing interest rates depends upon the use of analytical and forecasting models. In addition, these models are used to calculate fair value of our assets and liabilities when we acquire other financial institutions. These models reflect assumptions that may not be accurate, particularly in times of market stress or other unforeseen circumstances. Even if these assumptions are adequate, the models may prove to be inadequate or inaccurate because of other flaws in their design or their implementation. If the models we use for interest rate risk and asset-liability management are inadequate, we may incur increased or unexpected losses upon changes in market interest rates or other market measures. If the models we use for determining our probable loan losses are inadequate, the allowance for loan losses may not be sufficient to support future charge-offs. If the models we use to measure the fair value financial instruments is inadequate, the fair value of such financial instruments may fluctuate unexpectedly or may not accurately reflect what we could realize upon sale or settlement of such financial instruments. Such failure in our analytical or forecasting models could have a material adverse effect on our business, financial condition and results of operations.
The value of our goodwill and other intangible assets may decline in the future.
As of December 31, 2017, we had $141.14 million of goodwill and other intangible assets and will add approximately $31.24 million of goodwill
We rely heavily on our management team, and the unexpected loss of key management or inability to recruit qualified personnel in the future may adversely affect our operations.
Our success to date has been strongly influenced by our ability to attract and to retain senior management experienced in banking in the markets we serve. Our ability to retain executive officers and the current management teams will continue to be important to the successful implementation of our strategies. We do not have employment agreements with these key employees other than executive agreements in the event of a change of control and a confidential information,non-solicitation andnon-competition agreements related to our stock options. The unexpected loss of services of any key management personnel, or the inability to recruit and retain qualified personnel in the future, could have an adverse effect on our business and financial results. In addition, the scope and content of U.S. banking regulators’ policies on incentive compensation, as well as changes to these policies, could adversely affect our ability to hire, retain and motivate our key employees.
The Company’s stock price can be volatile.
Stock price volatility may make it more difficult for our shareholders to resell their common stock when they want and at prices they find attractive. The Company’sis listed for trading on the Nasdaq Global Select Market, the trading volume in our common stock price can fluctuate significantly in response to a variety of factors including, among other things:
General market fluctuations, industry factorsindividual decisions of investors and general economic and politicalmarket conditions and events, such as economic slowdownsover which the Company has no control. Given the lower trading volume of the Company’s common stock, significant sales of the Company’s common stock, or recessions, interest rate changes or credit loss trendsthe expectation of these sales, could also cause the Company’s stock price to decrease regardlessfall.
Certain banking laws
Provisions of federal banking laws, including regulatory approval requirements, could make it more difficult for our shareholders to resell their common stock when they want and at prices they find attractive. The Company’s stock price can fluctuate significantly in response to a third partyvariety of factors including, among other things:
The trading volume in our common stock is less than other larger financial institutions.
Although
Breakdowns in our internal controls and procedures could have an adverse effect on us.
We believe our internal control system as currently documented and functioning is adequate to provide reasonable assurance over our internal controls. Nevertheless, because of the inherent limitation in administering a cost effective control system, misstatements due to error or fraud may occur and not be detected. Breakdowns in our internal controls and procedures could occurany such event in the future and any such breakdowns could have an adverse effect on us. See “Item 9A — Controls and Procedures” for additional information.
Our operations rely on certain external vendors.
We rely on certain external vendors to provide products and services necessary to maintain ourday-to-day operations. Accordingly, our operations are exposed to risk that these vendors will not perform in accordance with the contracted agreements under service level agreements. The failure of an external vendor to perform in accordance with the contracted arrangements under service level agreements, because of changes in the vendor’s organizational structure, financial condition, support for existing products or services or strategic focus or for any other reason, could be disruptive to our operations, which could have a material adverse effect on ourthe Company’s business, and,which in turn, could have a material adverse effect on the Company’s business, financial condition and result of operations.
operations and liquidity.
System failure
The computer systems and network infrastructure we use could be vulnerablethe unexpected loss of key management or inability to unforeseen hardware and cybersecurity issues, including “hacking” and “identity theft.” recruit qualified personnel in the future may adversely affect our operations.
Regardless of the scope or validity of such patents or other intellectual property rights, or the merits of any claims by potential or actual litigants, we may have to engage in litigation that could be expensive, time-consuming, disruptive to our operations, and distracting to management. If we are found to infringe one or more patents or other intellectual property rights, we may be required to pay substantial damages or royalties to a third-party. In certain cases, we may consider entering into licensing agreements for disputed intellectual property, although no assurance can be given that such licenses can be obtained on acceptable terms or that litigation will not occur. These licenses may also significantly increase our operating expenses. If legal matters related to intellectual property claims were resolved against us or settled, we could be required to make payments in amounts that could have a material adverse effect on our business, financial condition and results of operations.
An investment in our common stock is not an insured deposit.
Our common stock is not a bank deposit and, therefore, is not insured against loss by the FDIC, any other deposit insurance fund, or by any other public or private entity. Investment in our common stock is inherently risky for the reasons described in this “Risk Factors” section and elsewhere in this Report. As a result, if you acquire our common stock, you may lose some or all of your investment.
ITEM 1B. | UNRESOLVED STAFF COMMENTS |
ITEM 2. | PROPERTIES |
ITEM 3. | LEGAL PROCEEDINGS |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Record Holders
Period Ending | ||||||||||||||||||||||||
Index | 12/31/12 | 12/31/13 | 12/31/14 | 12/31/15 | 12/31/16 | 12/31/17 | ||||||||||||||||||
First Financial Bankshares, Inc. | 100.00 | 172.67 | 158.94 | 163.76 | 250.31 | 253.94 | ||||||||||||||||||
Russell 3000 | 100.00 | 133.55 | 150.32 | 151.04 | 170.28 | 206.26 | ||||||||||||||||||
SNL Bank$5B-$10B Index | 100.00 | 154.28 | 158.92 | 181.04 | 259.37 | 258.40 |
Source : SNL Financial, an offering ofInc
Period Ending | ||||||||||||||||||||||||
Index | 12/31/15 | 12/31/16 | 12/31/17 | 12/31/18 | 12/31/19 | 12/31/20 | ||||||||||||||||||
First Financial Bankshares, Inc. | 100.00 | 152.85 | 155.07 | 201.53 | 248.81 | 260.80 | ||||||||||||||||||
Russell 3000 Index | 100.00 | 112.74 | 136.56 | 129.40 | 169.54 | 204.95 | ||||||||||||||||||
SNL Bank $5B-$10B Index | 100.00 | 143.27 | 142.73 | 129.17 | 160.06 | 145.37 |
www.snl.com
2021
ITEM 6. | SELECTED FINANCIAL DATA |
Year Ended December 31, | ||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
(dollars in thousands, except per share data) | ||||||||||||||||||||
Summary Income Statement Information: | ||||||||||||||||||||
Interest income | $ | 245,975 | $ | 232,288 | $ | 221,623 | $ | 198,539 | $ | 176,369 | ||||||||||
Interest expense | 9,288 | 5,451 | 4,088 | 4,181 | 4,088 | |||||||||||||||
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Net interest income | 236,687 | 226,837 | 217,535 | 194,358 | 172,281 | |||||||||||||||
Provision for loan losses | 6,530 | 10,212 | 9,685 | 4,465 | 3,753 | |||||||||||||||
Noninterest income | 91,017 | 85,132 | 73,432 | 66,624 | 62,052 | |||||||||||||||
Noninterest expense | 173,986 | 165,830 | 149,464 | 137,925 | 126,012 | |||||||||||||||
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Earnings before income taxes | 147,188 | 135,927 | 131,818 | 118,592 | 104,568 | |||||||||||||||
Income tax expense | 26,817 | 31,153 | 31,437 | 29,033 | 25,700 | |||||||||||||||
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Net earnings | $ | 120,371 | $ | 104,774 | $ | 100,381 | $ | 89,559 | $ | 78,868 | ||||||||||
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Per Share Data: | ||||||||||||||||||||
Earnings per share, basic | $ | 1.82 | $ | 1.59 | $ | 1.55 | $ | 1.40 | $ | 1.24 | ||||||||||
Earnings per share, assuming dilution | 1.81 | 1.59 | 1.54 | 1.39 | 1.24 | |||||||||||||||
Cash dividends declared | 0.75 | 0.70 | 0.62 | 0.55 | 0.52 | |||||||||||||||
Book value atperiod-end | 13.93 | 12.68 | 12.20 | 10.63 | 9.18 | |||||||||||||||
Earnings performance ratios: | ||||||||||||||||||||
Return on average assets | 1.72 | % | 1.59 | % | 1.61 | % | 1.65 | % | 1.64 | % | ||||||||||
Return on average equity | 13.63 | 12.36 | 13.60 | 14.00 | 13.75 | |||||||||||||||
Summary Balance Sheet Data(Period-end): | ||||||||||||||||||||
Securities | $ | 3,087,473 | $ | 2,860,958 | $ | 2,734,177 | $ | 2,416,297 | $ | 2,058,407 | ||||||||||
Loans | 3,500,699 | 3,384,205 | 3,350,593 | 2,937,991 | 2,689,448 | |||||||||||||||
Total assets | 7,254,715 | 6,809,931 | 6,665,070 | 5,848,202 | 5,222,208 | |||||||||||||||
Deposits | 5,962,961 | 5,478,539 | 5,190,169 | 4,750,255 | 4,135,075 | |||||||||||||||
Total liabilities | 6,331,947 | 5,972,046 | 5,860,084 | 5,166,665 | 4,634,561 | |||||||||||||||
Total shareholders’ equity | 922,768 | 837,885 | 804,986 | 681,537 | 587,647 | |||||||||||||||
Asset quality ratios: | ||||||||||||||||||||
Allowance for loanlosses/period-end loans | 1.38 | % | 1.35 | % | 1.25 | % | 1.25 | % | 1.26 | % | ||||||||||
Nonperformingassets/period-end loans plus foreclosed assets | 0.57 | 0.86 | 0.89 | 0.74 | 1.16 | |||||||||||||||
Net charge offs/average loans | 0.12 | 0.19 | 0.15 | 0.06 | 0.15 | |||||||||||||||
Capital ratios: | ||||||||||||||||||||
Average shareholders’ equity/average assets | 12.65 | % | 12.85 | % | 11.86 | % | 11.78 | % | 11.95 | % | ||||||||||
Leverage ratio (1) | 11.09 | 10.71 | 9.96 | 9.89 | 9.84 | |||||||||||||||
Tier 1 risk-based capital (2) | 18.66 | 17.30 | 15.90 | 16.05 | 15.82 | |||||||||||||||
Common equity tier 1 capital (3) | 18.66 | 17.30 | 15.90 | — | — | |||||||||||||||
Total risk-based capital (4) | 19.85 | 18.45 | 16.97 | 17.16 | 16.92 | |||||||||||||||
Dividend payout ratio | 41.24 | 44.14 | 40.20 | 39.34 | 41.62 |
Year Ended December 31, | ||||||||||||||||||||
2020 | 2019 | 2018 | 2017 | 2016 | ||||||||||||||||
(dollars in thousands, except per share data) | ||||||||||||||||||||
Summary Income Statement Information: | ||||||||||||||||||||
Interest income | $ | 364,128 | $ | 319,192 | $ | 291,690 | $ | 245,975 | $ | 232,288 | ||||||||||
Interest expense | 14,243 | 30,102 | 18,930 | 9,288 | 5,451 | |||||||||||||||
Net interest income | 349,885 | 289,090 | 272,760 | 236,687 | 226,837 | |||||||||||||||
Provision for credit losses | 19,517 | 2,965 | 5,665 | 6,530 | 10,212 | |||||||||||||||
Noninterest income | 139,935 | 108,428 | 101,764 | 91,017 | 85,132 | |||||||||||||||
Noninterest expense | 227,938 | 196,521 | 190,684 | 173,986 | 165,830 | |||||||||||||||
Earnings before income taxes | 242,365 | 198,032 | 178,175 | 147,188 | 135,927 | |||||||||||||||
Income tax expense | 40,331 | 33,220 | 27,537 | 26,817 | 31,153 | |||||||||||||||
Net earnings | $ | 202,034 | $ | 164,812 | $ | 150,638 | $ | 120,371 | $ | 104,774 | ||||||||||
Per Share Data: | ||||||||||||||||||||
Earnings per share, basic | $ | 1.42 | $ | 1.22 | $ | 1.11 | $ | 0.91 | $ | 0.80 | ||||||||||
Earnings per share, diluted | 1.42 | 1.21 | 1.11 | 0.91 | 0.80 | |||||||||||||||
Cash dividends declared | 0.51 | 0.47 | 0.41 | 0.38 | 0.35 | |||||||||||||||
Book value at period-end | 11.80 | 9.03 | 7.77 | 6.97 | 6.34 | |||||||||||||||
Earnings performance ratios: | ||||||||||||||||||||
Return on average assets | 1.98 | % | 2.08 | % | 1.98 | % | 1.72 | % | 1.59 | % | ||||||||||
Return on average equity | 12.93 | 14.37 | 15.37 | 13.63 | 12.36 | |||||||||||||||
Dividend payout ratio | 35.88 | 38.31 | 36.84 | 41.24 | 44.14 | |||||||||||||||
Summary Balance Sheet Data (Period-end): | ||||||||||||||||||||
Securities | $ | 4,393,029 | $ | 3,413,317 | $ | 3,158,777 | $ | 3,087,473 | $ | 2,860,958 | ||||||||||
Loans, held-for-investment | 5,171,033 | 4,194,969 | 3,953,636 | 3,485,569 | 3,357,307 | |||||||||||||||
Total assets | 10,904,500 | 8,262,227 | 7,731,854 | 7,254,715 | 6,809,931 | |||||||||||||||
Deposits | 8,675,817 | 6,603,806 | 6,180,389 | 5,962,961 | 5,478,539 | |||||||||||||||
Total liabilities | 9,226,310 | 7,035,030 | 6,678,559 | 6,331,947 | 5,972,046 | |||||||||||||||
Total shareholders’ equity | 1,678,190 | 1,227,197 | 1,053,295 | 922,768 | 837,885 | |||||||||||||||
Asset quality ratios: | ||||||||||||||||||||
Allowance for credit losses/period-end loansheld-for-investment | 1.29 | % | 1.25 | % | 1.30 | % | 1.38 | % | 1.36 | % | ||||||||||
Nonperforming assets/period-end loansheld-for-investment plus foreclosed assets | 0.83 | 0.61 | 0.75 | 0.58 | 0.86 | |||||||||||||||
Net charge offs/average loans | 0.06 | 0.04 | 0.07 | 0.12 | 0.19 | |||||||||||||||
Capital ratios: | ||||||||||||||||||||
Average shareholders’ equity/average assets | 15.32 | % | 14.44 | % | 12.89 | % | 12.65 | % | 12.85 | % | ||||||||||
Leverage ratio (1) | 11.86 | 12.60 | 11.85 | 11.09 | 10.71 | |||||||||||||||
Tier 1 risk-based capital (2) | 20.79 | 20.06 | 19.47 | 18.66 | 17.30 | |||||||||||||||
Common equity tier 1 capital (3) | 20.79 | 20.06 | 19.47 | 18.66 | 17.30 | |||||||||||||||
Total risk-based capital (4) | 22.03 | 21.13 | 20.61 | 19.85 | 18.45 |
(1) | Calculated by dividing at period-end, shareholders’ equity (before accumulated other comprehensive earnings/loss) less intangible assets by fourth quarter average assets less intangible assets. |
(2) | Calculated by dividing at period-end, shareholders’ equity (before accumulated other comprehensive earnings/loss) less intangible assets by risk-adjusted assets. |
(3) | Calculated by dividing at period-end, shareholders’ equity (before accumulated other comprehensive earnings/loss) less intangible assets by risk-adjusted assets. |
(4) | Calculated by dividing at period-end, shareholders’ equity (before accumulated other comprehensive earnings/loss) less intangible assets plus allowance for loan losses to the extent allowed under regulatory guidelines by risk-adjusted assets. |
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Hurricane Harvey
Houston and the surrounding Gulf Coast region were significantly affected by Hurricane Harvey beginning in late August 2017 and continuing into the fourth quarter of 2017. Our Company has locations (i) north of Houston in Conroe, Willis, Tomball, Huntsville, Montgomery, Magnolia, New Waverly and Cut and Shoot and (ii) in Southeast Texas in Orange, Beaumont, Vidor, Newton, Mauriceville and Port Arthur. We continue to evaluate the effect of the hurricane on our branch facilities and our loan and investment portfolios. Our initial assessment of our physical buildings and equipment indicates damage primarily at our Mauriceville branch, and amounts not covered by insurance do not appear to be significant. At December 31, 2017, we had loans totaling $446.62 million in our Conroe region and $396.55 million in the Southeast Texas/Orange region. We are evaluating these loans and the related collateral and business operations underlying such loans. At December 31, 2017, we provided additional
allowance for loan losses as deemed appropriate based on this analysis. We continue to evaluate these loans as we learn more information about the damage caused by the hurricane. Our tax exempt municipal bonds in the counties of Texas effected by the hurricane have been evaluated, including insurance on the bonds. At December 31, 2017, our municipal bonds in these counties totaled $458.16 million, but only $92.75 million do not have bond insurance. Based on analysis of these bonds and the related municipality, at December 31, 2017, we do not believe we have any credit related losses other than temporary impairment.
2020.
On April 8, 2015,an available benchmark rate. The standard is elective and provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, or other transactions that reference LIBOR, or another reference rate expected to be discontinued. The amendments in the update are effective for all entities between March 12, 2020 and December 31, 2022. The Company announcedhas established a cross-functional working group to guide the Company’s transition from LIBOR and has begun efforts to transition to alternative rates consistent with industry timelines. The Company has identified its products that it had entered into an asset purchase agreement with 4Trust Mortgage, Inc. for a cash purchase price of $1.90 million.utilize LIBOR and has implemented enhanced fallback language to facilitate the transition to alternative reference rates. The asset purchase was finalized on June 1, 2015, which we referCompany is evaluating existing platforms and systems and preparing to herein as the “4Trust asset purchase.”The total asset purchase price exceeded the estimated fair value net of assets purchased by approximately $1.75 million and the Company recorded such excess as goodwill.
offer new rates.
Net earnings in 2020 also include a provision for credit losses of $19.52 million compared to $2.97 million in 2019 and $5.67 million in 2018. The provision for credit losses in 2020 reflects primarily the stress on our loan portfolio from the increase in unemployment and economic effects of the COVID pandemic.
2018.
investment securities. Our liabilities to fund those assets consist primarily of noninterest-bearing and interest-bearing deposits.
points.
2017 Compared to 2016 | 2016 Compared to 2015 | |||||||||||||||||||||||
Change Attributable to | Total Change | Change Attributable to | Total Change | |||||||||||||||||||||
Volume | Rate | Volume | Rate | |||||||||||||||||||||
Short-term investments | $ | 443 | $ | 899 | $ | 1,342 | $ | 23 | $ | 111 | $ | 134 | ||||||||||||
Taxable investment securities | 3,464 | 1,735 | 5,199 | (1,218 | ) | (829 | ) | (2,047 | ) | |||||||||||||||
Tax-exempt investment securities (1) | 1,173 | 677 | 1,850 | 6,548 | (1,687 | ) | 4,861 | |||||||||||||||||
Loans (1) (2) | 4,998 | 851 | 5,849 | 12,037 | (2,320 | ) | 9,717 | |||||||||||||||||
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Interest income | 10,078 | 4,162 | 14,240 | 17,390 | (4,725 | ) | 12,665 | |||||||||||||||||
Interest-bearing deposits | 409 | 3,300 | 3,709 | 219 | 643 | 862 | ||||||||||||||||||
Short-term borrowings | (223 | ) | 351 | 128 | 24 | 477 | 501 | |||||||||||||||||
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Interest expense | 186 | 3,651 | 3,837 | 243 | 1,120 | 1,363 | ||||||||||||||||||
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Net interest income | $ | 9,892 | $ | 511 | $ | 10,403 | $ | 17,147 | $ | (5,845 | ) | $ | 11,302 | |||||||||||
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2020 Compared to 2019 | 2019 Compared to 2018 | |||||||||||||||||||||||
Change Attributable to | Total Change | Change Attributable to | Total Change | |||||||||||||||||||||
Volume | Rate | Volume | Rate | |||||||||||||||||||||
Short-term investments | $ | 3,689 | $ | (4,628 | ) | $ | (939 | ) | $ | (106 | ) | $ | 367 | $ | 261 | |||||||||
Taxable investment securities | 3,812 | (8,026 | ) | (4,214 | ) | 4,045 | 1,573 | 5,618 | ||||||||||||||||
Tax-exempt investment securities (1) | 24,671 | (8,932 | ) | 15,739 | (2,634 | ) | (2,203 | ) | (4,837 | ) | ||||||||||||||
Loans (1) (2) | 59,719 | (20,900 | ) | 38,819 | 12,983 | 11,276 | 24,259 | |||||||||||||||||
Interest income | 91,891 | (42,486 | ) | 49,405 | 14,288 | 11,013 | 25,301 | |||||||||||||||||
Interest-bearing deposits | 6,379 | (20,382 | ) | (14,003 | ) | 654 | 9,523 | 10,177 | ||||||||||||||||
Short-term borrowings | 1,223 | (3,079 | ) | (1,856 | ) | (99 | ) | 1,095 | 996 | |||||||||||||||
Interest expense | 7,602 | (23,461 | ) | (15,859 | ) | 555 | 10,618 | 11,173 | ||||||||||||||||
Net interest income | $ | 84,289 | $ | (19,025 | ) | $ | 65,264 | $ | 13,733 | $ | 395 | $ | 14,128 | |||||||||||
(1) | Computed on a tax-equivalent basis assuming a marginal tax rate of |
(2) | Nonaccrual loans are included in loans. |
25 basis points.
2020.
2017 | 2016 | 2015 | ||||||||||||||||||||||||||||||||||
Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | ||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||||
Short-term investments (1) | $ | 144,464 | $ | 1,684 | 1.17 | % | $ | 63,882 | $ | 342 | 0.54 | % | $ | 57,500 | $ | 208 | 0.36 | % | ||||||||||||||||||
Taxable investment securities (2) | 1,479,698 | 32,825 | 2.22 | 1,314,820 | 27,626 | 2.10 | 1,371,110 | 29,673 | 2.16 | |||||||||||||||||||||||||||
Tax-exempt investment securities (2)(3) | 1,484,952 | 68,118 | 4.59 | 1,459,121 | 66,268 | 4.54 | 1,318,531 | 61,407 | 4.66 | |||||||||||||||||||||||||||
Loans (3)(4) | 3,435,447 | 168,843 | 4.91 | 3,333,241 | 162,994 | 4.89 | 3,090,538 | 153,277 | 4.96 | |||||||||||||||||||||||||||
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Total earning assets | 6,544,561 | $ | 271,470 | 4.15 | % | 6,171,064 | $ | 257,230 | 4.17 | % | 5,837,679 | $ | 244,565 | 4.19 | % | |||||||||||||||||||||
Cash and due from banks | 162,255 | 152,648 | 148,369 | |||||||||||||||||||||||||||||||||
Bank premises and equipment, net | 123,595 | 120,538 | 109,725 | |||||||||||||||||||||||||||||||||
Other assets | 56,007 | 55,694 | 49,647 | |||||||||||||||||||||||||||||||||
Goodwill and other intangible assets, net | 142,473 | 143,986 | 117,491 | |||||||||||||||||||||||||||||||||
Allowance for loan losses | (47,380 | ) | (44,811 | ) | (39,107 | ) | ||||||||||||||||||||||||||||||
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Total assets | $ | 6,981,511 | $ | 6,599,119 | $ | 6,223,804 | ||||||||||||||||||||||||||||||
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Liabilities and Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||
Interest-bearing deposits | $ | 3,783,960 | $ | 8,213 | 0.22 | % | $ | 3,469,005 | $ | 4,504 | 0.13 | % | $ | 3,272,150 | $ | 3,642 | 0.11 | % | ||||||||||||||||||
Short-term borrowings | 422,285 | 1,075 | 0.25 | 552,041 | 947 | 0.17 | 524,365 | 446 | 0.08 | |||||||||||||||||||||||||||
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Total interest-bearing liabilities | 4,206,245 | $ | 9,288 | 0.22 | % | 4,021,046 | $ | 5,451 | 0.14 | % | 3,796,515 | $ | 4,088 | 0.11 | % | |||||||||||||||||||||
Noninterest-bearing deposits | 1,843,973 | 1,666,598 | 1,634,669 | |||||||||||||||||||||||||||||||||
Other liabilities | 48,480 | 63,609 | 54,331 | |||||||||||||||||||||||||||||||||
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Total liabilities | 6,098,698 | 5,751,253 | 5,485,515 | |||||||||||||||||||||||||||||||||
Shareholders’ equity | 882,813 | 847,866 | 738,289 | |||||||||||||||||||||||||||||||||
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Total liabilities and shareholders’ equity | $ | 6,981,511 | $ | 6,599,119 | $ | 6,223,804 | ||||||||||||||||||||||||||||||
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Net interest income | $ | 262,182 | $ | 251,779 | $ | 240,477 | ||||||||||||||||||||||||||||||
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Rate Analysis: | ||||||||||||||||||||||||||||||||||||
Interest income/earning assets | 4.15 | % | 4.17 | % | 4.19 | % | ||||||||||||||||||||||||||||||
Interest expense/earning assets | 0.14 | 0.09 | 0.07 | |||||||||||||||||||||||||||||||||
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Net yield on earning assets | 4.01 | % | 4.08 | % | 4.12 | % | ||||||||||||||||||||||||||||||
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2020 | 2019 | 2018 | ||||||||||||||||||||||||||||||||||
Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | ||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||||
Short-term investments (1) | $ | 251,086 | $ | 953 | 0.38 | % | $ | 84,430 | $ | 1,892 | 2.24 | % | $ | 90,374 | $ | 1,631 | 1.80 | % | ||||||||||||||||||
Taxable investment securities (2) | 2,233,634 | 51,456 | 2.30 | 2,090,490 | 55,670 | 2.66 | 1,934,160 | 50,052 | 2.59 | |||||||||||||||||||||||||||
Tax-exempt investment securities (2)(3) | 1,882,711 | 58,403 | 3.10 | 1,192,908 | 42,664 | 3.58 | 1,262,947 | 47,501 | 3.76 | |||||||||||||||||||||||||||
Loans (3)(4) | 5,152,531 | 264,576 | 5.13 | 4,074,667 | 225,757 | 5.54 | 3,828,040 | 201,498 | 5.26 | |||||||||||||||||||||||||||
Total earning assets | 9,519,962 | $ | 375,388 | 3.94 | % | 7,442,495 | $ | 325,983 | 4.38 | % | 7,115,521 | $ | 300,682 | 4.23 | % | |||||||||||||||||||||
Cash and due from banks | 189,849 | 175,417 | 176,799 | |||||||||||||||||||||||||||||||||
Bank premises and equipment, net | 139,880 | 133,239 | 129,715 | |||||||||||||||||||||||||||||||||
Other assets | 92,612 | 66,003 | 62,595 | |||||||||||||||||||||||||||||||||
Goodwill and other intangible assets, net | 318,818 | 174,138 | 172,425 | |||||||||||||||||||||||||||||||||
Allowance for credit losses | (67,606 | ) | (52,170 | ) | (50,323 | ) | ||||||||||||||||||||||||||||||
Total assets | $ | 10,193,515 | $ | 7,939,122 | $ | 7,606,732 | ||||||||||||||||||||||||||||||
Liabilities and Shareholders’ Equity | ||||||||||||||||||||||||||||||||||||
Interest-bearing deposits | $ | 5,198,554 | $ | 13,119 | 0.25 | % | $ | 4,208,666 | $ | 27,122 | 0.64 | % | $ | 4,052,614 | $ | 16,945 | 0.42 | % | ||||||||||||||||||
Short-term borrowings | 561,505 | 1,124 | 0.20 | 398,142 | 2,980 | 0.75 | 418,977 | 1,984 | 0.47 | |||||||||||||||||||||||||||
Total interest-bearing liabilities | 5,760,059 | $ | 14,243 | 0.25 | % | 4,606,808 | $ | 30,102 | 0.65 | % | 4,471,591 | $ | 18,929 | 0.42 | % | |||||||||||||||||||||
Noninterest-bearing deposits | 2,782,896 | 2,137,089 | 2,124,004 | |||||||||||||||||||||||||||||||||
Other liabilities | 88,550 | 48,658 | 30,931 | |||||||||||||||||||||||||||||||||
Total liabilities | 8,631,505 | 6,792,555 | 6,626,526 | |||||||||||||||||||||||||||||||||
Shareholders’ equity | 1,562,010 | 1,146,567 | 980,206 | |||||||||||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 10,193,515 | $ | 7,939,122 | $ | 7,606,732 | ||||||||||||||||||||||||||||||
Net interest income | $ | 361,145 | $ | 295,881 | $ | 281,753 | ||||||||||||||||||||||||||||||
Rate Analysis: | ||||||||||||||||||||||||||||||||||||
Interest income/earning assets | 3.94 | % | 4.38 | % | 4.23 | % | ||||||||||||||||||||||||||||||
Interest expense/earning assets | 0.15 | 0.40 | 0.27 | |||||||||||||||||||||||||||||||||
Net interest margin | 3.79 | % | 3.98 | % | 3.96 | % | ||||||||||||||||||||||||||||||
(1) | Short-term investments are comprised of |
(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 |
(4) | Nonaccrual loans are included in loans. |
related stimulus programs.20172020 was $91.02$139.94 million, an increase of $5.89$31.51 million, or 6.91%29.06%, as compared to 2016.2019. Increases in certain categories of noninterest income included (1) trust fees (1) real estate mortgage operations income of $4.06$25.73 million, (2) gain on sale of$1.78$2.61 million, (4) miscellaneous income of $2.12 million which includes $1.40 million in Main Street Lending Program fees and (3) service charges on deposit accounts(5) trust fees of $1.03$1.13 million when compared to 2016.2019. The mortgage related income increase was mainly due to a significant increase in the volume of loans originated to $1.21 billion in 2020 up from $551.77 million in 2019 driven by the lower rate environment and a strong housing market in Texas. The increase in ATM, interchange and credit card fees was driven by continued growth in the number of debit cards issued as well as our TB&T acquisition. The increase in trust fees resulted from an increase in assets under management over the prior year and higher oil and gas prices that increased related to trust fees by $364 thousand over 2016.year. The fair value of our trust assets managed, which are not reflected in our consolidated balance sheets, totaled $5.13$7.51 billion at December 31, 2017,2020, as compared to $4.37$6.75 billion at December 31, 2016. The2019. Offsetting these increases was a decline in ATM, interchange and credit cardservice charge revenue in 2020 when compared with 2019 of $1.47 million that was primarily driven by lower overdraft fees and service charges on deposit accounts are primarilyin the current year as a result of increases in the numbereffects of net new accountsthe pandemic and debit cards. Offsetting these increases were decreases in net recoveries of $984 thousand and real estate mortgage fees of $977 thousand.20162019 was $85.13$108.43 million, an increase of $11.70$6.66 million, or 15.93%6.55%, as compared to 2015.2018. Increases in certain categories of noninterest income included(1)included (1) real estate mortgage feesoperations income of $5.68$2.99 million, (2) ATM, interchange and credit card fees of $2.05$1.33 million, (3) interest on loan recoveries of $1.15 million, (4) service charges on deposit accounts of $1.22 million$376 thousand, and (4)(5) trust fees of $384$220 thousand when compared to 2015.2018. The increase in real estate mortgage fees primarily resulted fromwas a stronger mortgage marketresult of an increase in the volume of loans originated and the 4Trust asset purchase on June 1, 2015.Company’s decision to move to mandatory delivery from best efforts. The increasesincrease in ATM, interchange and credit
2018. Offsetting these increases was a decrease in net gains on sales of
threshold, due primarily to the effect of the Company’s participation in the PPP loan program and growth in deposits from related activities. However, on November 20, 2020, the federal bank regulatory agencies announced an interim final rule that provides temporary relief for certain community banking organizations that have crossed this threshold as of December 31, 2020 if they had less than $10 billion in assets as of December 31, 2019. Under the interim final rule, these banks, which includes us, will generally have until 2022 to either reduce their size, or to prepare for the regulatory and reporting standards under the Dodd-Frank Act. Management will continue to monitor the Company’s balance sheet levels and prepare for the effects of this future loss of debit card income.
2017 | Increase (Decrease) | 2016 | Increase (Decrease) | 2015 | ||||||||||||||||
Trust fees | $ | 23,694 | $ | 4,058 | $ | 19,636 | $ | 384 | $ | 19,252 | ||||||||||
Service charges on deposit accounts | 19,416 | 1,030 | 18,386 | 1,215 | 17,171 | |||||||||||||||
ATM, interchange and credit card fees | 25,686 | 1,776 | 23,910 | 2,050 | 21,860 | |||||||||||||||
Real estate mortgage operations | 15,109 | (977 | ) | 16,086 | 5,677 | 10,409 | ||||||||||||||
Net gain on sale ofavailable-for-sale securities | 1,828 | 558 | 1,270 | 838 | 432 | |||||||||||||||
Net gain (loss) on sale of foreclosed assets | (50 | ) | (506 | ) | 456 | (82 | ) | 538 | ||||||||||||
Net gain (loss) on sale of assets | (396 | ) | (564 | ) | 168 | 988 | (820 | ) | ||||||||||||
Interest on loan recoveries | 1,128 | (984 | ) | 2,112 | 1,062 | 1,050 | ||||||||||||||
Other: | ||||||||||||||||||||
Check printing fees | 173 | (17 | ) | 190 | (40 | ) | 230 | |||||||||||||
Safe deposit rental fees | 529 | (2 | ) | 531 | 7 | 524 | ||||||||||||||
Credit life and debt protection fees | 617 | (2 | ) | 619 | (44 | ) | 663 | |||||||||||||
Brokerage commissions | 1,290 | 717 | 573 | (190 | ) | 763 | ||||||||||||||
Miscellaneous income | 1,993 | 798 | 1,195 | (165 | ) | 1,360 | ||||||||||||||
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| |||||||||||
Total other | 4,602 | 1,494 | 3,108 | (432 | ) | 3,540 | ||||||||||||||
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| |||||||||||
Total Noninterest Income | $ | 91,017 | $ | 5,885 | $ | 85,132 | $ | 11,700 | $ | 73,432 | ||||||||||
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2020 | Increase (Decrease) | 2019 | Increase (Decrease) | 2018 | ||||||||||||||||
Trust fees | $ | 29,531 | $ | 1,130 | $ | 28,401 | $ | 220 | $ | 28,181 | ||||||||||
Service charges on deposit accounts | 20,572 | (1,467 | ) | 22,039 | 376 | 21,663 | ||||||||||||||
ATM, interchange and credit card fees | 32,469 | 2,606 | 29,863 | 1,331 | 28,532 | |||||||||||||||
Gain on sale and fees of mortgage loans | 43,872 | 25,728 | 18,144 | 2,987 | 15,157 | |||||||||||||||
Net gain on sale of available-for-sale | 3,633 | 2,900 | 733 | (621 | ) | 1,354 | ||||||||||||||
Net gain (loss) on sale of foreclosed assets | 159 | (115 | ) | 274 | 158 | 116 | ||||||||||||||
Net gain (loss) on sale of assets | 112 | (207 | ) | 319 | 466 | (147 | ) | |||||||||||||
Interest on loan recoveries | 856 | (1,236 | ) | 2,092 | 1,154 | 938 | ||||||||||||||
Other: | ||||||||||||||||||||
Wire transfer fees | 1,153 | 141 | 1,012 | 110 | 902 | |||||||||||||||
Check printing fees | 293 | 82 | 211 | (5 | ) | 216 | ||||||||||||||
Safe deposit rental fees | 732 | 197 | 535 | (9 | ) | 544 | ||||||||||||||
Credit life and debt protection fees | 876 | (102 | ) | 978 | 237 | 741 | ||||||||||||||
Brokerage commissions | 1,310 | (271 | ) | 1,581 | (126 | ) | 1,707 | |||||||||||||
Miscellaneous income | 4,367 | 2,121 | 2,246 | 386 | 1,860 | |||||||||||||||
Total other | 8,731 | 2,168 | 6,563 | 593 | 5,970 | |||||||||||||||
Total Noninterest Income | $ | 139,935 | $ | 31,507 | $ | 108,428 | $ | 6,664 | $ | 101,764 | ||||||||||
2018. The reduction in the Company’s efficiency ratio during 2020 primarily resulted from the growth in the Company’s balance sheet and interest-earning assets as a result of the Company’s participation in the PPP loan program and the deferral of $3.62 million in noninterest expenses related to PPP loan origination costs during the second quarter of 2020.
medical insurance costs.
All other categories of noninterest expense for 2016 totaled $75.09 million, an increase of $6.63 million, or 9.68%, as compared to 2015. The increase in noninterest expense was largely attributable to increases in equipment expense of $1.26 million, largely resulting from the Company’s acquisition of Conroe. Telephone expenses increased $1.05 million due to costs to improve our technology infrastructure and professional and service fees increased $2.05 million due primarily to outsourcing expenses for certain technology providers, which offset salary costs. Offsetting these increases in 2016 were a decrease of $473 thousand in FDIC insurance due to the lower rate charged by the FDIC beginning in the third quarter of 2016.
2017 | Increase (Decrease) | 2016 | Increase (Decrease) | 2015 | ||||||||||||||||
Salaries | $ | 72,132 | $ | 2,135 | $ | 69,997 | $ | 7,294 | $ | 62,703 | ||||||||||
Medical | 8,585 | (174 | ) | 8,759 | 3,066 | 5,693 | ||||||||||||||
Profit sharing | 4,735 | 1,514 | 3,221 | (2,234 | ) | 5,455 | ||||||||||||||
Pension | 127 | (232 | ) | 359 | 342 | 17 | ||||||||||||||
401(k) match expense | 2,392 | 61 | 2,331 | 288 | 2,043 | |||||||||||||||
Payroll taxes | 5,009 | 200 | 4,809 | 427 | 4,382 | |||||||||||||||
Stock option expense | 1,745 | 863 | 882 | 238 | 644 | |||||||||||||||
Restricted stock expense | 562 | 181 | 381 | 319 | 62 | |||||||||||||||
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| |||||||||||
Total salaries and employee benefits | 95,287 | 4,548 | 90,739 | 9,740 | 80,999 | |||||||||||||||
Loss from partial settlement of pension plan | — | (267 | ) | 267 | 267 | — | ||||||||||||||
Net occupancy expense | 10,521 | 101 | 10,420 | 106 | 10,314 | |||||||||||||||
Equipment expense | 13,765 | 286 | 13,479 | 1,257 | 12,222 | |||||||||||||||
FDIC insurance premiums | 2,217 | (463 | ) | 2,680 | (473 | ) | 3,153 | |||||||||||||
ATM, interchange and credit card expenses | 7,452 | 221 | 7,231 | 847 | 6,384 | |||||||||||||||
Professional and service fees | 8,063 | 1,186 | 6,877 | 2,046 | 4,831 | |||||||||||||||
Printing, stationery and supplies | 1,989 | (104 | ) | 2,093 | (185 | ) | 2,278 | |||||||||||||
Amortization of intangible assets | 613 | (125 | ) | 738 | 177 | 561 | ||||||||||||||
Other: | ||||||||||||||||||||
Data processing fees | 1,119 | 656 | 463 | 63 | 400 | |||||||||||||||
Postage | 1,663 | (1 | ) | 1,664 | (41 | ) | 1,705 | |||||||||||||
Advertising | 3,515 | (21 | ) | 3,536 | 353 | 3,183 | ||||||||||||||
Correspondent bank service charges | 868 | (96 | ) | 964 | 39 | 925 | ||||||||||||||
Telephone | 3,108 | (145 | ) | 3,253 | 1,053 | 2,200 | ||||||||||||||
Public relations and business development | 2,819 | 71 | 2,748 | 48 | 2,700 | |||||||||||||||
Directors’ fees | 1,553 | 233 | 1,320 | 218 | 1,102 | |||||||||||||||
Audit and accounting fees | 1,629 | (83 | ) | 1,712 | 55 | 1,657 | ||||||||||||||
Legal fees | 1,780 | (316 | ) | 2,096 | 95 | 2,001 | ||||||||||||||
Regulatory exam fees | 1,177 | 46 | 1,131 | 43 | 1,088 | |||||||||||||||
Travel | 1,210 | (32 | ) | 1,242 | 28 | 1,214 | ||||||||||||||
Courier expense | 879 | 31 | 848 | 39 | 809 | |||||||||||||||
Operational and other losses | 3,192 | 1,022 | 2,170 | 281 | 1,889 | |||||||||||||||
Other real estate | 188 | 6 | 182 | 58 | 124 | |||||||||||||||
Software amortization and expense | 3,294 | 1,288 | 2,006 | (116 | ) | 2,122 | ||||||||||||||
Other miscellaneous expense | 6,085 | 114 | 5,971 | 368 | 5,603 | |||||||||||||||
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|
| |||||||||||
Total other | 34,079 | 2,773 | 31,306 | 2,584 | 28,722 | |||||||||||||||
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|
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|
| |||||||||||
Total Noninterest Expense | $ | 173,986 | $ | 8,156 | $ | 165,830 | $ | 16,366 | $ | 149,464 | ||||||||||
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|
|
2020 | Increase (Decrease) | 2019 | Increase (Decrease) | 2018 | ||||||||||||||||
Salaries | $ | 101,360 | $ | 17,079 | $ | 84,281 | $ | 4,807 | $ | 79,474 | ||||||||||
Medical | 10,406 | 1,281 | 9,125 | 426 | 8,699 | |||||||||||||||
Profit sharing | 10,740 | 3,079 | 7,661 | 612 | 7,049 | |||||||||||||||
Pension | — | (351 | ) | 351 | 529 | (178 | ) | |||||||||||||
401(k) match expense | 3,374 | 615 | 2,759 | 171 | 2,588 | |||||||||||||||
Payroll taxes | 6,565 | 890 | 5,675 | 306 | 5,369 | |||||||||||||||
Stock option expense | 1,377 | (112 | ) | 1,489 | (19 | ) | 1,508 | |||||||||||||
Restricted stock expense | 1,301 | 306 | 995 | 315 | 680 | |||||||||||||||
Total salaries and employee benefits | 135,123 | 22,787 | 112,336 | 7,147 | 105,189 | |||||||||||||||
Cost related to termination of pension plan | — | (2,673 | ) | 2,673 | 1,127 | 1,546 | ||||||||||||||
Net occupancy expense | 12,388 | 1,232 | 11,156 | (17 | ) | 11,173 | ||||||||||||||
Equipment expense | 8,396 | (656 | ) | 9,052 | (1,066 | ) | 10,118 | |||||||||||||
FDIC insurance premiums | 1,758 | 667 | 1,091 | (1,242 | ) | 2,333 | ||||||||||||||
ATM, interchange and credit card expenses | 11,235 | 1,379 | 9,856 | 574 | 9,282 | |||||||||||||||
Professional and service fees | 9,346 | 1,493 | 7,853 | (1,041 | ) | 8,894 | ||||||||||||||
Printing, stationery and supplies | 2,163 | 351 | 1,812 | (185 | ) | 1,997 | ||||||||||||||
Amortization of intangible assets | 1,990 | 974 | 1,016 | (256 | ) | 1,272 | ||||||||||||||
Other: | ||||||||||||||||||||
Data processing fees | 1,619 | 69 | 1,550 | 88 | 1,462 | |||||||||||||||
Postage | 1,446 | (101 | ) | 1,547 | (202 | ) | 1,749 | |||||||||||||
Advertising | 1,952 | (1,655 | ) | 3,607 | 4 | 3,603 | ||||||||||||||
Correspondent bank service charges | 908 | 201 | 707 | (65 | ) | 772 | ||||||||||||||
Telephone | 3,819 | 141 | 3,678 | 116 | 3,562 | |||||||||||||||
Public relations and business development | 2,650 | (556 | ) | 3,206 | 145 | 3,061 | ||||||||||||||
Directors’ fees | 2,363 | 391 | 1,972 | 227 | 1,745 | |||||||||||||||
Audit and accounting fees | 2,232 | 772 | 1,460 | (165 | ) | 1,625 | ||||||||||||||
Legal fees | 1,276 | 62 | 1,214 | 66 | 1,148 | |||||||||||||||
Regulatory exam fees | 1,105 | (74 | ) | 1,179 | (96 | ) | 1,275 | |||||||||||||
Travel | 967 | (674 | ) | 1,641 | 176 | 1,465 | ||||||||||||||
Courier expense | 855 | (3 | ) | 858 | 28 | 830 | ||||||||||||||
Operational and other losses | 2,462 | 583 | 1,879 | (309 | ) | 2,188 | ||||||||||||||
Other real estate | 83 | (119 | ) | 202 | 73 | 129 | ||||||||||||||
Software amortization and expense | 8,862 | 1,557 | 7,305 | 1,285 | 6,020 | |||||||||||||||
Other miscellaneous expense | 12,940 | 5,269 | 7,671 | (575 | ) | 8,246 | ||||||||||||||
Total other | 45,539 | 5,863 | 39,676 | 796 | 38,880 | |||||||||||||||
Total Noninterest Expense | $ | 227,938 | $ | 31,417 | $ | 196,521 | $ | 5,837 | $ | 190,684 | ||||||||||
plan.
However, the Company updated its estimate of the impact to our deferred tax balances based on the proposed regulations issued to date and recorded an additional reduction of income tax expense for the year ended December 31, 2018 of $664 thousand. No additional adjustment amounts were recorded for the years ended December 31, 2019 and 2020.
December 31, | ||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
Commercial | $ | 684,099 | $ | 674,410 | $ | 696,163 | $ | 639,954 | $ | 596,730 | ||||||||||
Agricultural | 94,543 | 84,021 | 102,351 | 105,694 | 75,928 | |||||||||||||||
Real estate | 2,302,998 | 2,189,844 | 2,136,233 | 1,822,854 | 1,678,514 | |||||||||||||||
Consumer | 403,929 | 409,032 | 382,303 | 360,686 | 333,113 | |||||||||||||||
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| |||||||||||
Total loansheld-for-investment | $ | 3,485,569 | $ | 3,357,307 | $ | 3,317,050 | $ | 2,929,188 | $ | 2,684,285 | ||||||||||
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|
As
December 31, | ||||||||||||||||||||
2020 | 2019 | 2018 | 2017 | 2016 | ||||||||||||||||
Commercial: | ||||||||||||||||||||
C&I | $ | 1,131,382 | $ | N/A | $ | N/A | $ | N/A | $ | N/A | ||||||||||
Municipal | 181,325 | N/A | N/A | N/A | N/A | |||||||||||||||
Total Commercial | 1,312,707 | 856,326 | 844,953 | 684,099 | 674,410 | |||||||||||||||
Agricultural | 94,864 | 103,640 | 96,677 | 94,543 | 84,021 | |||||||||||||||
Real Estate: | ||||||||||||||||||||
Construction & Development | 553,959 | N/A | N/A | N/A | N/A | |||||||||||||||
Farm | 152,237 | N/A | N/A | N/A | N/A | |||||||||||||||
Non-Owner Occupied CRE | 617,686 | N/A | N/A | N/A | N/A | |||||||||||||||
Owner Occupied CRE | 746,974 | N/A | N/A | N/A | N/A | |||||||||||||||
Residential | 1,248,409 | N/A | N/A | N/A | N/A | |||||||||||||||
Total Real Estate | 3,319,265 | 2,823,372 | 2,639,346 | 2,302,998 | 2,189,844 | |||||||||||||||
Consumer: | ||||||||||||||||||||
Auto | 353,595 | N/A | N/A | N/A | N/A | |||||||||||||||
Non-Auto | 90,602 | N/A | N/A | N/A | N/A | |||||||||||||||
Total Consumer | 444,197 | 411,631 | 372,660 | 403,929 | 409,032 | |||||||||||||||
Total | $ | 5,171,033 | $ | 4,194,969 | $ | 3,953,636 | $ | 3,485,569 | $ | 3,357,307 | ||||||||||
fair value, and the remaining amount is valued under the fair value option.
the Company’s real estate portfolio are generally diverse in terms of type and geographic location within Texas. This diversity helps reduce the exposure to adverse economic events that affect any single market or industry. Generally, real estate loans are owner-occupied which further reduces the Company’s risk.
One Year or less | After One Year Through Five Years | After Five Years | Total | |||||||||||||
Commercial and agricultural | $ | 348,129 | $ | 222,342 | $ | 208,171 | $ | 778,642 | ||||||||
Real estate — construction | 133,621 | 64,896 | 210,911 | 409,428 |
Maturities After One Year | ||||
Loans with fixed interest rates | $ | 414,091 | ||
Loans with floating or adjustable interest rates | 292,229 |
2020:
One Year or less | After One Year Through Five Years | After Five Years | Total | |||||||||||||
Commercial and agricultural | $ | 362,416 | $ | 803,779 | $ | 241,376 | $ | 1,407,571 | ||||||||
Real estate – construction and development | 255,960 | 91,816 | 206,183 | 553,959 |
Maturities After One Year | ||||||
Loans with fixed interest rates | $ | 892,141 | ||||
Loans with floating or adjustable interest rates | 451,013 |
2020.
2017,2020, the Company’s exposure to the oil and gas industry was 1.72%2.27% of grossloans$60.16$106.24 million, down 23.34% fromcompared to 2.86% of loans2016year-end levels,2019. These oil and gas loans consisted (based on collateral supporting the loan) of (i) development and production loans of 2.72%11.99%, (ii) oil and gas field servicing loans of 7.51%6.62%, (iii) real estate loans of 47.28%57.40%, (iv) accounts receivable and inventory of 24.47%4.04%, (v) automobile of 12.09% and (v)(vi) other of 18.02%7.86%. These loans have experienced increased stress due to lowerwarranted additional scrutiny because of fluctuating oil and gas prices although such prices improved in 2017.and the COVID pandemic. The Company instituted additional monitoring procedures for these loans and has classified and downgraded andcharged-off loans as appropriate. The following oil and gas information is as of and for the years ended December 31, 20172020 and 2016:
December 31, | ||||||||
2017 | 2016 | |||||||
Oil and gas related loans | $ | 60,164 | $ | 78,483 | ||||
Oil and gas related loans as a % of total loans | 1.72 | % | 2.32 | % | ||||
Classified oil and gas related loans | $ | 20,346 | $ | 32,518 | ||||
Nonaccrual oil and gas related loans | 1,414 | 4,092 | ||||||
Net charge-offs for oil and gas related loans | 50 | 1,145 | ||||||
Allowance for oil and gas related loans as a % of oil and gas loans | 7.90 | % | 6.28 | % |
2019:
December 31, | ||||||||
2020 | 2019 | |||||||
Oil and gas related loans, excluding PPP loans | $ | 106,237 | $ | 119,789 | ||||
Oil and gas related loans as a % of total loans held-for-investment, | 2.27 | % | 2.86 | % | ||||
Classified oil and gas related loans | $ | 13,298 | $ | 7,041 | ||||
Nonaccrual oil and gas related loans | $ | 4,774 | $ | 481 | ||||
Net charge-offs for oil and gas related loans for year then ended | $ | 825 | $ | — |
December 31, 2020 | ||||
Retail loans | $ | 216,244 | ||
Restaurant loans | 48,618 | |||
Hotel loans | 71,716 | |||
Other hospitality loans | 21,970 | |||
Travel loans | 780 | |||
Total Retail/Restaurant/Hospitality loans, excluding PPP loans | $ | 359,328 | ||
Retail/Restaurant/Hospitality loans as a % of total loans held-for-investment, | 7.67 | % | ||
Classified Retail/Restaurant/Hospitality loans | $ | 31,192 | ||
Nonaccrual Retail/Restaurant/Hospitality loans | 5,975 | |||
Net Charge-Offs for Retail/Restaurant/Hospitality loans | 895 |
At December 31, | ||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
Nonaccrual loans* | $ | 17,670 | $ | 27,371 | $ | 28,601 | $ | 20,194 | $ | 27,926 | ||||||||||
Loans still accruing and past due 90 days or more | 288 | 284 | 341 | 261 | 133 | |||||||||||||||
Troubled debt restructured loans** | 627 | 701 | 199 | 226 | — | |||||||||||||||
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| |||||||||||
Nonperforming loans | 18,585 | 28,356 | 29,141 | 20,681 | 28,059 | |||||||||||||||
Foreclosed assets | 1,532 | 644 | 627 | 1,035 | 3,069 | |||||||||||||||
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| |||||||||||
Total nonperforming assets | $ | 20,117 | $ | 29,000 | $ | 29,768 | $ | 21,716 | $ | 31,128 | ||||||||||
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| |||||||||||
As a % of loans and foreclosed assets | 0.57 | % | 0.86 | % | 0.89 | % | 0.74 | % | 1.16 | % | ||||||||||
As a % of total assets | 0.28 | 0.43 | 0.45 | 0.37 | 0.60 |
At December 31, | ||||||||||||||||||||
2020 | 2019 | 2018 | 2017 | 2016 | ||||||||||||||||
Nonaccrual loans | $ | 42,619 | $ | 24,582 | $ | 27,534 | $ | 17,670 | $ | 27,371 | ||||||||||
Loans still accruing and past due 90 days or more | 113 | 153 | 1,008 | 288 | 284 | |||||||||||||||
Troubled debt restructured loans* | 24 | 26 | 513 | 627 | 701 | |||||||||||||||
Nonperforming loans | 42,756 | 24,761 | 29,055 | 18,585 | 28,356 | |||||||||||||||
Foreclosed assets | 142 | 1,009 | 577 | 1,532 | 644 | |||||||||||||||
Total nonperforming assets | $ | 42,898 | $ | 25,770 | $ | 29,632 | $ | 20,117 | $ | 29,000 | ||||||||||
As a % of loans held-for-investment | 0.83 | % | 0.61 | % | 0.75 | % | 0.58 | % | 0.86 | % | ||||||||||
As a % of total assets | 0.39 | 0.31 | 0.38 | 0.28 | 0.43 |
* |
Troubled debt restructured loans of $7.41 million, $4.79 million, $3.84 million, $4.63 million |
See Note 3 to the Consolidated Financial Statements beginning on pageF-16 for more information on these assets.
Provision and Allowance for Loan Losses. The allowance for loan losses is the amount we determine as of a specific date to be appropriate to absorb probable losses on existing loans in which full collectability is unlikely based on our review and evaluation of the loan portfolio. For a discussion of our methodology, see our accounting policies in Note 1 to the Consolidated Financial Statements beginning on pageF-7. The provision for loan losses was $6.53 million in 2017, as compared to $10.21 million in 2016 and $9.69 million in 2015. The continued provision for loan losses in 2017 reflects the continued growth in the loan portfolio, the continued levels of gross charge-offs and the effects related to Hurricane Harvey on the loan portfolio. As a percent of average loans, net loan charge-offs were 0.12% during 2017, 0.19% during 2016 and 0.15% during 2015. The allowance for loan losses as a percent of loans was 1.38% as of December 31, 2017, as compared to 1.35% as of December 31, 2016, and 1.25% as of December 31, 2015. Included in Tables 8 and 9 are further analysis of our allowance for loan losses.
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 downturn in the economy or lower employment could result in increased levels of nonaccrual, past due 90 days or more and still accruing, restructured loans, foreclosed assets, charge-offs, increased loan loss provisions and reductions in income. Additionally, as an integral part of their examination process, bank regulatory agencies periodically review the adequacy of our allowance for loan losses. The banking agencies could require additions to the loan loss allowance based on their judgment of information available to them at the time of their examinations of our bank subsidiary.
Table 8 — Loan Loss Experience and Allowance for Loan Losses (in thousands, except percentages):
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
Balance at January 1, | $ | 45,779 | $ | 41,877 | $ | 36,824 | $ | 33,900 | $ | 34,839 | ||||||||||
Charge-offs: | ||||||||||||||||||||
Commercial | 3,018 | 6,990 | 3,734 | 583 | 1,283 | |||||||||||||||
Agricultural | 71 | 219 | 164 | 2 | 100 | |||||||||||||||
Real estate | 1,215 | 682 | 441 | 1,075 | 1,970 | |||||||||||||||
Consumer | 1,517 | 1,925 | 1,700 | 1,222 | 1,268 | |||||||||||||||
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Total charge-offs | 5,821 | 9,816 | 6,039 | 2,882 | 4,621 | |||||||||||||||
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Recoveries: | ||||||||||||||||||||
Commercial | 942 | 952 | 344 | 346 | 402 | |||||||||||||||
Agricultural | 33 | 25 | 55 | 18 | 39 | |||||||||||||||
Real estate | 192 | 2,021 | 558 | 505 | 239 | |||||||||||||||
Consumer | 501 | 508 | 450 | 472 | 337 | |||||||||||||||
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Total recoveries | 1,668 | 3,506 | 1,407 | 1,341 | 1,017 | |||||||||||||||
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Net charge-offs | 4,153 | 6,310 | 4,632 | 1,541 | 3,604 | |||||||||||||||
Transfer ofoff-balance sheet exposure to other liabilities | — | — | — | — | (1,088 | ) | ||||||||||||||
Provision for loan losses | 6,530 | 10,212 | 9,685 | 4,465 | 3,753 | |||||||||||||||
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Balance at December 31, | $ | 48,156 | $ | 45,779 | $ | 41,877 | $ | 36,824 | $ | 33,900 | ||||||||||
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Loans atyear-end | $ | 3,500,699 | $ | 3,384,205 | $ | 3,350,593 | $ | 2,937,991 | $ | 2,689,448 | ||||||||||
Average loans | 3,435,447 | 3,333,241 | 3,090,538 | 2,786,011 | 2,431,872 | |||||||||||||||
Net charge-offs/average loans | 0.12 | % | 0.19 | % | 0.15 | % | 0.06 | % | 0.15 | % | ||||||||||
Allowance for loanlosses/year-end loans* | 1.38 | 1.35 | 1.25 | 1.25 | 1.26 | |||||||||||||||
Allowance for loan losses/nonaccrual, past due 90 days still accruing and restructured loans | 259.11 | 161.44 | 143.70 | 178.06 | 120.82 |
Table 9 — Allocation of Allowance for Loan Losses (in thousands):
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
Allocation Amount | Allocation Amount | Allocation Amount | Allocation Amount | Allocation Amount | ||||||||||||||||
Commercial | $ | 10,865 | $ | 11,707 | $ | 12,644 | $ | 7,990 | $ | 6,440 | ||||||||||
Agricultural | 1,305 | 1,101 | 1,191 | 527 | 383 | |||||||||||||||
Real estate | 29,896 | 26,864 | 24,375 | 26,657 | 24,940 | |||||||||||||||
Consumer | 6,090 | 6,107 | 3,667 | 1,650 | 2,137 | |||||||||||||||
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Total | $ | 48,156 | $ | 45,779 | $ | 41,877 | $ | 36,824 | $ | 33,900 | ||||||||||
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Percent of Loans in Each Category of Total Loans:
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
Commercial | 19.63 | % | 20.09 | % | 20.99 | % | 21.84 | % | 22.23 | % | ||||||||||
Agricultural | 2.71 | 2.50 | 3.09 | 3.61 | 2.83 | |||||||||||||||
Real estate | 66.07 | 65.23 | 64.40 | 62.23 | 62.53 | |||||||||||||||
Consumer | 11.59 | 12.18 | 11.52 | 12.32 | 12.41 |
Included in our loan portfolio are certain other loans not included in Table 7 that are deemed to be potential problem loans. Potential problem loans are those loans that are currently performing, but for which known information about trends, uncertainties or possible credit problems of the borrowers causes management to have serious doubts as to the ability of such borrowers to comply with present repayment terms, possibly resulting in the transfer of such loans to nonperforming status. These potential problem loans totaled $4.37$10.76 million as of December 31, 2017.
2020.
2020 | 2019 | 2018 | 2017 | 2016 | ||||||||||||||||
Balance at January 1, | $ | 52,499 | $ | 51,202 | $ | 48,156 | $ | 45,779 | $ | 41,877 | ||||||||||
Impact of adopting ASC 326 | (619 | ) | — | — | — | — | ||||||||||||||
Initial allowance on acquired TB&T PCD loans | 1,678 | — | — | — | — | |||||||||||||||
Charge-offs: | ||||||||||||||||||||
Commercial: | ||||||||||||||||||||
C&I | 2,516 | N/A | N/A | N/A | N/A | |||||||||||||||
Municipal | — | N/A | N/A | N/A | N/A | |||||||||||||||
Total Commercial | 2,516 | 1,545 | 1,418 | 3,018 | 6,990 | |||||||||||||||
Agricultural | 372 | 319 | — | 71 | 219 | |||||||||||||||
Real estate: | ||||||||||||||||||||
Construction & Development | — | N/A | N/A | N/A | N/A | |||||||||||||||
Farm | — | N/A | N/A | N/A | N/A | |||||||||||||||
Non-Owner Occupied CRE | 563 | N/A | N/A | N/A | N/A | |||||||||||||||
Owner Occupied CRE | 567 | N/A | N/A | N/A | N/A | |||||||||||||||
Residential real estate | 373 | N/A | N/A | N/A | N/A | |||||||||||||||
Total real estate | 1,503 | 1,335 | 1,479 | 1,215 | 682 | |||||||||||||||
Consumer: | ||||||||||||||||||||
Auto | 548 | N/A | N/A | N/A | N/A | |||||||||||||||
Non-Auto | 375 | N/A | N/A | N/A | N/A | |||||||||||||||
Total Consumer | 923 | 927 | 1,550 | 1,517 | 1,925 | |||||||||||||||
Total charge-offs | 5,314 | 4,126 | 4,447 | 5,821 | 9,816 | |||||||||||||||
Recoveries: | ||||||||||||||||||||
Commercial: | ||||||||||||||||||||
C&I | 1,315 | N/A | N/A | N/A | N/A | |||||||||||||||
Municipal | — | N/A | N/A | N/A | N/A | |||||||||||||||
Total Commercial | 1,315 | 1,364 | 839 | 942 | 952 | |||||||||||||||
Agricultural | 31 | 158 | 15 | 33 | 25 | |||||||||||||||
Real estate: | ||||||||||||||||||||
Construction & Development | — | N/A | N/A | N/A | N/A | |||||||||||||||
Farm | 157 | N/A | N/A | N/A | N/A | |||||||||||||||
Non-Owner Occupied CRE | 131 | N/A | N/A | N/A | N/A | |||||||||||||||
Owner Occupied CRE | 17 | N/A | N/A | N/A | N/A | |||||||||||||||
Residential real estate | 151 | N/A | N/A | N/A | N/A | |||||||||||||||
Total Real Estate | 456 | 404 | 462 | 192 | 2,021 | |||||||||||||||
Consumer: | ||||||||||||||||||||
Auto | 269 | N/A | N/A | N/A | N/A | |||||||||||||||
Non-Auto | 171 | N/A | N/A | N/A | N/A | |||||||||||||||
Total Consumer | 440 | 532 | 512 | 501 | 508 | |||||||||||||||
Total recoveries | 2,242 | 2,458 | 1,828 | 1,668 | 3,506 | |||||||||||||||
Net charge-offs | 3,072 | 1,668 | 2,619 | 4,153 | 6,310 | |||||||||||||||
Provision for credit losses (excluding provision for unfunded commitment) | 16,048 | 2,965 | 5,665 | 6,530 | 10,212 | |||||||||||||||
Balance at December 31, | $ | 66,534 | $ | 52,499 | $ | 51,202 | $ | 48,156 | $ | 45,779 | ||||||||||
2020 | 2019 | 2018 | 2017 | 2016 | ||||||||||||||||
Loans, held-for-investment year-end | $ | 5,171,033 | $ | 4,194,969 | $ | 3,953,636 | $ | 3,485,569 | $ | 3,357,307 | ||||||||||
Average loans | 5,152,531 | 4,074,667 | 3,828,040 | 3,435,447 | 3,333,241 | |||||||||||||||
Net charge-offs/average loans | 0.06 | % | 0.04 | % | 0.07 | % | 0.12 | % | 0.19 | % | ||||||||||
Allowance for credit losses/year-end loansheld-for- | 1.29 | % | 1.25 | % | 1.30 | % | 1.38 | % | 1.36 | % | ||||||||||
Allowance for credit losses/nonaccrual, past due 90 days still accruing and restructured loans | 155.61 | 212.02 | 176.22 | 259.11 | 161.44 |
At December 31, | ||||||||||||||||||||
2020 | 2019 | 2018 | 2017 | 2016 | ||||||||||||||||
Allocation Amount | Allocation Amount | Allocation Amount | Allocation Amount | Allocation Amount | ||||||||||||||||
Commercial: | ||||||||||||||||||||
C&I | $ | 13,609 | $ | N/A | $ | N/A | $ | N/A | $ | N/A | ||||||||||
Municipal | 1,552 | N/A | N/A | N/A | N/A | |||||||||||||||
Total Commercial | 15,161 | 12,122 | 11,948 | 10,865 | 11,707 | |||||||||||||||
Agricultural | 1,255 | 1,206 | 1,446 | 1,305 | 1,101 | |||||||||||||||
Real estate: | ||||||||||||||||||||
Construction & Development | 13,512 | N/A | N/A | N/A | N/A | |||||||||||||||
Farm | 1,876 | N/A | N/A | N/A | N/A | |||||||||||||||
Non-Owner Occupied CRE | 8,391 | N/A | N/A | N/A | N/A | |||||||||||||||
Owner Occupied CRE | 12,347 | N/A | N/A | N/A | N/A | |||||||||||||||
Residential real estate | 12,601 | N/A | N/A | N/A | N/A | |||||||||||||||
Total Real Estate | 48,727 | 33,974 | 32,342 | 29,896 | 26,864 | |||||||||||||||
Consumer: | ||||||||||||||||||||
Auto | 1,020 | N/A | N/A | N/A | N/A | |||||||||||||||
Non-Auto | 371 | N/A | N/A | N/A | N/A | |||||||||||||||
Total Consumer | 1,391 | 5,197 | 5,466 | 6,090 | 6,107 | |||||||||||||||
Total | $ | 66,534 | $ | 52,499 | $ | 51,202 | $ | 48,156 | $ | 45,779 | ||||||||||
2020 | 2019 | 2018 | 2017 | 2016 | ||||||||||||||||
Commercial: | ||||||||||||||||||||
C&I | 21.78 | % | N/A | N/A | N/A | N/A | ||||||||||||||
Municipal | 3.51 | % | N/A | N/A | N/A | N/A | ||||||||||||||
Total Commercial | 25.29 | % | 20.41 | % | 21.37 | % | 19.63 | % | 20.09 | % | ||||||||||
Agricultural | 1.83 | % | 2.47 | % | 2.45 | % | 2.71 | % | 2.50 | % | ||||||||||
Real estate: | ||||||||||||||||||||
Construction & Development | 10.72 | % | N/A | N/A | N/A | N/A | ||||||||||||||
Farm | 2.94 | % | N/A | N/A | N/A | N/A | ||||||||||||||
Non-Owner Occupied CRE | 10.55 | % | N/A | N/A | N/A | N/A | ||||||||||||||
Owner Occupied CRE | 14.45 | % | N/A | N/A | N/A | N/A | ||||||||||||||
Residential real estate | 25.59 | % | N/A | N/A | N/A | N/A | ||||||||||||||
Total Real Estate | 64.25 | % | 67.31 | % | 66.75 | % | 66.07 | % | 65.23 | % | ||||||||||
Consumer: | ||||||||||||||||||||
Auto | 6.89 | % | N/A | N/A | N/A | N/A | ||||||||||||||
Non-Auto | 1.74 | % | N/A | N/A | N/A | N/A | ||||||||||||||
Total Consumer | 8.63 | % | 9.81 | % | 9.43 | % | 11.59 | % | 12.18 | % | ||||||||||
Total | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | 100.00 | % | ||||||||||
2019.
Maturing | ||||||||||||||||||||||||||||||||||||||||
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 U.S. government sponsored enterprises and agencies | $ | 34,981 | 1.30 | % | $ | 25,349 | 1.51 | % | $ | — | — | % | $ | — | — | % | $ | 60,330 | 1.39 | % | ||||||||||||||||||||
Obligations of states and political subdivisions | 139,568 | 5.03 | 628,506 | 5.13 | 650,699 | 4.74 | 2,077 | 6.68 | 1,420,850 | 4.94 | ||||||||||||||||||||||||||||||
Corporate bonds and other securities | 10,998 | 2.96 | 237 | 1.15 | 224 | 2.64 | — | — | 11,459 | 2.92 | ||||||||||||||||||||||||||||||
Mortgage-backed securities | 55,430 | 1.66 | 1,027,515 | 2.31 | 459,286 | 2.69 | 52,603 | 2.93 | 1,594,834 | 2.42 | ||||||||||||||||||||||||||||||
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| |||||||||||||||||||||
Total | $ | 240,977 | 3.62 | % | $ | 1,681,607 | 3.35 | % | $ | 1,110,209 | 3.89 | % | $ | 54,680 | 3.08 | % | $ | 3,087,473 | 3.56 | % | ||||||||||||||||||||
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|
|
Amounts forheld-to-maturity securities are not included herein due to insignificance.
Maturing | ||||||||||||||||||||||||||||||||||||||||
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 | $ | 98,345 | 4.71 | % | $ | 673,036 | 4.01 | % | $ | 1,647,476 | 2.85 | % | $ | 8,019 | 2.39 | % | $ | 2,426,876 | 3.25 | % | ||||||||||||||||||||
Corporate bonds and other securities | 4,557 | 1.86 | — | — | — | — | — | — | 4,557 | 1.86 | ||||||||||||||||||||||||||||||
Mortgage-backed securities | 186,698 | 2.02 | 1,514,743 | 2.27 | 260,155 | 1.68 | — | — | 1,961,596 | 2.17 | ||||||||||||||||||||||||||||||
Total | $ | 289,600 | 2.93 | % | $ | 2,187,779 | 2.81 | % | $ | 1,907,631 | 2.69 | % | $ | 8,019 | 2.39 | % | $ | 4,393,029 | 2.76 | % | ||||||||||||||||||||
2017 | 2016 | 2015 | ||||||||||||||||||||||
Average Balance | Average Rate | Average Balance | Average Rate | Average Balance | Average Rate | |||||||||||||||||||
Noninterest-bearing deposits | $ | 1,843,973 | — | $ | 1,666,598 | — | $ | 1,634,669 | — | |||||||||||||||
Interest-bearing deposits | ||||||||||||||||||||||||
Interest-bearing checking | 1,902,699 | 0.27 | % | 1,713,498 | 0.12 | % | 1,622,331 | 0.09 | % | |||||||||||||||
Savings and money market accounts | 1,401,804 | 0.13 | 1,195,671 | 0.09 | 1,021,222 | 0.05 | ||||||||||||||||||
Time deposits under $100,000 | 267,754 | 0.13 | 237,419 | 0.18 | 261,255 | 0.20 | ||||||||||||||||||
Time deposits of $100,000 or more | 211,703 | 0.40 | 322,417 | 0.31 | 367,342 | 0.31 | ||||||||||||||||||
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| |||||||||||||
Total interest-bearing deposits | 3,783,960 | 0.22 | % | 3,469,005 | 0.13 | % | 3,272,150 | 0.11 | % | |||||||||||||||
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| |||||||||||||
Total average deposits | $ | 5,627,933 | $ | 5,135,603 | $ | 4,906,819 | ||||||||||||||||||
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|
As of December 31, 2017 | ||||
Three months or less | $ | 81,918 | ||
Over three through six months | 64,396 | |||
Over six through twelve months | 70,470 | |||
Over twelve months | 33,670 | |||
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| |||
Total time deposits of $100,000 or more | $ | 250,454 | ||
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2020 | 2019 | 2018 | ||||||||||||||||||||||
Average Balance | Average Rate | Average Balance | Average Rate | Average Balance | Average Rate | |||||||||||||||||||
Noninterest-bearing deposits | $ | 2,782,896 | — | % | $ | 2,137,089 | — | % | $ | 2,124,005 | — | % | ||||||||||||
Interest-bearing deposits | ||||||||||||||||||||||||
Interest-bearing checking | 2,513,627 | 0.21 | 2,097,109 | 0.68 | 2,025,810 | 0.53 | ||||||||||||||||||
Savings and money market accounts | 2,214,569 | 0.20 | 1,679,168 | 0.54 | 1,558,889 | 0.28 | ||||||||||||||||||
Time deposits under $100,000 | 195,425 | 0.43 | 186,709 | 0.70 | 204,929 | 0.25 | ||||||||||||||||||
Time deposits of $100,000 or more | 274,933 | 0.88 | 245,680 | 1.04 | 262,986 | 0.48 | ||||||||||||||||||
Total interest-bearing deposits | 5,198,554 | 0.25 | % | 4,208,666 | 0.64 | % | 4,052,614 | 0.42 | % | |||||||||||||||
Total average deposits | $ | 7,981,450 | $ | 6,345,755 | $ | 6,176,619 | ||||||||||||||||||
Total cost of deposits | 0.16 | % | 0.42 | % | 0.27 | % | ||||||||||||||||||
As of December 31, 2020 | ||||
Three months or less | $ | 109,096 | ||
Over three through six months | 54,915 | |||
Over six through twelve months | 79,159 | |||
Over twelve months | 43,142 | |||
Total time deposits of $100,000 or more | $ | 286,312 | ||
Total shareholders’ equity was $922.77 million,$1.68 billion, or 12.72%15.39% of total assets at December 31, 2017,2020, as compared to $837.89 million,$1.23 billion, or 12.30%14.85% of total assets at December 31, 2016.2019. Included in shareholders’ equity at December 31, 2020 and 2019 were $170.40 million and $67.51 million, respectively, in unrealized gains on investment securities
2019.
We performed a preliminary assessment using the regulatory capital estimation tool made available by the OCC and believe the Company and Bank are prepared to meet the new requirements upon full implementation of the Basel III rules that will be effective December 31, 2019.
instantaneous and sustained across the yield curve regardless of duration of pricing characteristics on specific assets or liabilities. Also, this analysis does not contemplate any actions that we might undertake in response to changes in market interest rates. We believe these estimates are not necessarily indicative of what actually could occur in the event of immediate interest rate increases or decreases of this magnitude. As interest-bearing assets and liabilitiesre-price reprice in different time frames and proportions to market interest rate movements, various assumptions must be made based on historical relationships of these variables in reaching any conclusion. Since these correlations are based on competitive and market conditions, we anticipate that our future results will likely be different from the foregoing estimates, and such differences could be material.
2019.
Payment Due by Period | ||||||||||||||||||||
Total Amounts | Less than 1 year | More than 1 year but less than 3 years | More than 3 year but less than 5 years | Over 5 years | ||||||||||||||||
Deposits with stated maturity dates | $ | 451,255 | $ | 384,668 | $ | 52,638 | $ | 13,949 | $ | — | ||||||||||
Pension obligation | 10,567 | 1,064 | 2,054 | 2,140 | 5,309 | |||||||||||||||
Operating leases | 909 | 385 | 476 | 48 | — | |||||||||||||||
Outsourcing service contracts | 3,610 | 2,077 | 1,533 | — | — | |||||||||||||||
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| |||||||||||
Total Contractual Obligations | $ | 466,341 | $ | 388,194 | $ | 56,701 | $ | 16,137 | $ | 5,309 | ||||||||||
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|
Payment Due by Period | ||||||||||||||||||||
Total Amounts | Less than 1 year | More than 1 year but less than 3 years | More than 3 years but less than 5 years | Over 5 years | ||||||||||||||||
Deposits with stated maturity dates | $ | 475,425 | $ | 391,638 | $ | 64,495 | $ | 19,267 | $ | 25 | ||||||||||
Operating leases | 2,577 | 1,094 | 870 | 535 | 78 | |||||||||||||||
Outsourcing service contracts | 15,278 | 7,469 | 6,002 | 1,807 | — | |||||||||||||||
Total Contractual Obligations | $ | 493,280 | $ | 400,201 | $ | 71,367 | $ | 21,609 | $ | 103 | ||||||||||
The above table also does not include balances related to the Company’s interest rate locks commitments (“IRLCs”) and forward mortgage-backed security trades.
At December 31, 2020, the Company’s reserve for unfunded commitments totaled $5.49 million which is recorded in other liabilities.
Total Notional Amounts Committed | Less than 1 year | More than 1 year but less than 3 years | More than 3 year but less than 5 years | Over 5 years | ||||||||||||||||
Unfunded lines of credit | $ | 534,468 | $ | 492,138 | $ | 24,394 | $ | 13,327 | $ | 4,609 | ||||||||||
Unfunded commitments to extend credit | 244,658 | 147,735 | 18,401 | 11,781 | 66,741 | |||||||||||||||
Standby letters of credit | 28,858 | 22,245 | 6,613 | — | — | |||||||||||||||
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| |||||||||||
Total Commercial Commitments | $ | 807,984 | $ | 662,118 | $ | 49,408 | $ | 25,108 | $ | 71,350 | ||||||||||
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Total Notional Amounts Committed | Less than 1 year | More than 1 year but less than 3 years | More than 3 years but less than 5 years | Over 5 years | ||||||||||||||||
Unfunded lines of credit | $ | 871,960 | $ | 608,972 | $ | 152,592 | $ | 20,846 | $ | 89,550 | ||||||||||
Unfunded commitments to extend credit | 742,538 | 426,108 | 42,010 | 51,757 | 222,663 | |||||||||||||||
Standby letters of credit | 40,050 | 36,849 | 3,166 | 5 | 30 | |||||||||||||||
Total Commercial Commitments | $ | 1,654,548 | $ | 1,071,929 | $ | 197,768 | $ | 72,608 | $ | 312,243 | ||||||||||
The above table also does not include balances related to the Company’s IRLCs and forward mortgage-backed security trades.
2017, approximately $205.752020, $289.68 million was available for the payment of intercompany dividends by our subsidiaries without the prior approval of regulatory agencies. Our subsidiaries paid aggregate dividends to us of $30.80$87.50 million in 20172020 and $48.80$84.50 million in 2016.
2019.
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
2017 | ||||||||||||||||
4th | 3rd | 2nd | 1st | |||||||||||||
(dollars in thousands, except per share amounts) | ||||||||||||||||
Summary Income Statement Information: | ||||||||||||||||
Interest income | $ | 63,456 | $ | 62,554 | $ | 61,182 | $ | 58,783 | ||||||||
Interest expense | 2,562 | 2,866 | 2,097 | 1,763 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net interest income | 60,894 | 59,688 | 59,085 | 57,020 | ||||||||||||
Provision for loan losses | 1,440 | 1,415 | 1,725 | 1,950 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net interest income after provision for loan losses | 59,454 | 58,273 | 57,360 | 55,070 | ||||||||||||
Noninterest income | 22,298 | 23,185 | 22,423 | 21,283 | ||||||||||||
Net gain on securities transactions | 3 | 1,075 | 747 | 3 | ||||||||||||
Noninterest expense | 44,095 | 43,964 | 43,775 | 42,152 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Earnings before income taxes | 37,660 | 38,569 | 36,755 | 34,204 | ||||||||||||
Income tax expense | 1,517 | 9,195 | 8,500 | 7,605 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net earnings | $ | 36,143 | $ | 29,374 | $ | 28,255 | $ | 26,599 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Per Share Data: | ||||||||||||||||
Earnings per share, basic | $ | 0.55 | $ | 0.44 | $ | 0.43 | $ | 0.40 | ||||||||
Earnings per share, assuming dilution | 0.54 | 0.44 | 0.43 | 0.40 | ||||||||||||
Cash dividends declared | 0.19 | 0.19 | 0.19 | 0.18 | ||||||||||||
Book value atperiod-end | 13.93 | 13.69 | 13.41 | 12.99 | ||||||||||||
Common stock sales price: | ||||||||||||||||
High | $ | 48.85 | $ | 46.00 | $ | 44.80 | $ | 46.45 | ||||||||
Low | 43.05 | 37.31 | 36.85 | 37.55 | ||||||||||||
Close | 45.05 | 45.20 | 44.20 | 40.10 |
2020 | ||||||||||||||||
4 th | 3 rd | 2 nd | 1 st | |||||||||||||
(dollars in thousands, except per share amounts) | ||||||||||||||||
Summary Income Statement Information: | ||||||||||||||||
Interest income | $ | 92,457 | $ | 91,373 | $ | 92,197 | $ | 88,100 | ||||||||
Interest expense | 1,920 | 2,163 | 2,962 | 7,198 | ||||||||||||
Net interest income | 90,537 | 89,210 | 89,235 | 80,902 | ||||||||||||
Provision for credit losses | (8,033 | ) | 9,000 | 8,700 | 9,850 | |||||||||||
Net interest income after provision for credit losses | 98,570 | 80,210 | 80,535 | 71,052 | ||||||||||||
Noninterest income | 35,686 | 38,539 | 35,407 | 26,670 | ||||||||||||
Net gain on securities transactions | 23 | 36 | 1,512 | 2,062 | ||||||||||||
Noninterest expense | 63,705 | 55,593 | 53,321 | 55,318 | ||||||||||||
Earnings before income taxes | 70,574 | 63,192 | 64,133 | 44,466 | ||||||||||||
Income tax expense | 12,099 | 10,335 | 10,663 | 7,234 | ||||||||||||
Net earnings | $ | 58,475 | $ | 52,857 | $ | 53,470 | $ | 37,232 | ||||||||
Per Share Data: | ||||||||||||||||
Earnings per share, basic | $ | 0.41 | $ | 0.37 | $ | 0.38 | $ | 0.26 | ||||||||
Earnings per share, diluted | 0.41 | 0.37 | 0.38 | 0.26 | ||||||||||||
Cash dividends declared | 0.13 | 0.13 | 0.13 | 0.12 | ||||||||||||
Book value at period-end | 11.80 | 11.40 | 11.14 | 9.03 | ||||||||||||
Common stock sales price: | ||||||||||||||||
High | $ | 36.43 | $ | 32.80 | $ | 33.81 | $ | 35.94 | ||||||||
Low | 27.49 | 26.71 | 23.44 | 20.70 | ||||||||||||
Close | 36.17 | 27.91 | 28.89 | 26.84 |
2016 | ||||||||||||||||
4th | 3rd | 2nd | 1st | |||||||||||||
(dollars in thousands, except per share amounts) | ||||||||||||||||
Summary Income Statement Information: | ||||||||||||||||
Interest income | $ | 57,979 | $ | 58,093 | $ | 57,881 | $ | 58,335 | ||||||||
Interest expense | 1,443 | 1,366 | 1,330 | 1,312 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net interest income | 56,536 | 56,727 | 56,551 | 57,023 | ||||||||||||
Provision for loan losses | 1,993 | 3,833 | 2,058 | 2,328 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net interest income after provision for loan losses | 54,543 | 52,894 | 54,493 | 54,695 | ||||||||||||
Noninterest income | 21,604 | 21,913 | 20,526 | 19,819 | ||||||||||||
Net gain (loss) on securities transactions | 117 | 239 | 912 | 2 | ||||||||||||
Noninterest expense | 41,990 | 42,003 | 40,756 | 41,081 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Earnings before income taxes | 34,274 | 33,043 | 35,175 | 33,435 | ||||||||||||
Income tax expense | 7,608 | 7,440 | 8,366 | 7,739 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Net earnings | $ | 26,666 | $ | 25,603 | $ | 26,809 | $ | 25,696 | ||||||||
|
|
|
|
|
|
|
| |||||||||
Per Share Data: | ||||||||||||||||
Earnings per share, basic | $ | 0.40 | $ | 0.39 | $ | 0.41 | $ | 0.39 | ||||||||
Earnings per share, assuming dilution | 0.40 | 0.39 | 0.41 | 0.39 | ||||||||||||
Cash dividends declared | 0.18 | 0.18 | 0.18 | 0.16 | ||||||||||||
Book value atperiod-end | 12.68 | 13.14 | 13.11 | 12.70 | ||||||||||||
Common stock sales price: | ||||||||||||||||
High | $ | 46.70 | $ | 37.06 | $ | 34.50 | $ | 30.75 | ||||||||
Low | 35.05 | 30.95 | 27.72 | 24.12 | ||||||||||||
Close | 45.20 | 36.44 | 32.79 | 29.58 |
2019 | ||||||||||||||||
4 th | 3 rd | 2 nd | 1 st | |||||||||||||
(dollars in thousands, except per share amounts) | ||||||||||||||||
Summary Income Statement Information: | ||||||||||||||||
Interest income | $ | 82,123 | $ | 80,591 | $ | 79,576 | $ | 76,901 | ||||||||
Interest expense | 6,801 | 7,953 | 7,961 | 7,387 | ||||||||||||
Net interest income | 75,322 | 72,638 | 71,615 | 69,514 | ||||||||||||
Provision for loan losses | 950 | 450 | 600 | 965 | ||||||||||||
Net interest income after provision for loan losses | 74,372 | 72,188 | 71,015 | 68,549 | ||||||||||||
Noninterest income | 27,342 | 28,617 | 27,300 | 24,437 | ||||||||||||
Net gain on securities transactions | 5 | 52 | 676 | — | ||||||||||||
Noninterest expense | 51,938 | 48,910 | 48,304 | 47,367 | ||||||||||||
Earnings before income taxes | 49,781 | 51,947 | 50,687 | 45,619 | ||||||||||||
Income tax expense | 8,393 | 8,867 | 8,594 | 7,367 | ||||||||||||
Net earnings | $ | 41,388 | $ | 43,080 | $ | 42,093 | $ | 38,252 | ||||||||
Per Share Data: | ||||||||||||||||
Earnings per share, basic | $ | 0.30 | $ | 0.32 | $ | 0.31 | $ | 0.28 | ||||||||
Earnings per share, diluted | 0.30 | 0.32 | 0.31 | 0.28 | ||||||||||||
Cash dividends declared | 0.12 | 0.12 | 0.12 | 0.11 | ||||||||||||
Book value at period-end | 9.03 | 8.87 | 8.58 | 8.16 | ||||||||||||
Common stock sales price: | ||||||||||||||||
High | $ | 36.45 | $ | 33.97 | $ | 31.54 | $ | 32.65 | ||||||||
Low | 32.01 | 29.50 | 28.00 | 27.13 | ||||||||||||
Close | 35.10 | 33.33 | 30.79 | 28.89 |
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
ITEM 9A. | CONTROLS AND PROCEDURES |
due to error or fraud may occur and not be detected. Our principal executive officer and principal financial officer have concluded, based on our evaluation of our disclosure controls and procedures, that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2017.
2020.
REPORT OF INDEPENDENT PUBLIC ACCOUNTING FIRM
2020.
ITEM 9B. | OTHER INFORMATION |
None.
ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
ITEM 11. | EXECUTIVE COMPENSATION |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
Number of Securities To be Issued Upon Exercise of Outstanding Options, Warrants and Rights | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Far Left Column) | ||||||||||
Equity compensation plans approved by security holders | 1,325,965 | $ | 33.01 | 2,267,193 | ||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
|
|
|
|
|
| |||||||
Total | 1,325,965 | $ | 33.01 | 2,267,193 | ||||||||
|
|
|
|
|
|
2020. Additional information regarding stock-based compensation plans is presented in Note 18 – Stock Option Plan and Restricted Stock Plan in the notes to consolidated financial statements.
Number of Shares To be Issued Upon Exercise of Outstanding Awards | Weighted Average Exercise Price of Outstanding Awards | Number of Shares Remaining Available For Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Far Left Column) | ||||||||||
Equity compensation plans approved by security holders | 1,928,945 | (1) | $ | 20.85 | (2) | 4,177,826 | ||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 1,928,945 | $ | 20.85 | 4,177,826 | ||||||||
(1) | Includes 1,833,057 shares related to the Company’s stock option plan and 95,888 shares related to the Company’s restricted stock plan. |
(2) | Excludes outstanding restricted stock which are granted for no consideration. |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE |
ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
2020.
ITEM 15. | EXHIBIT AND FINANCIAL STATEMENT SCHEDULES |
(a) | The following documents are filed as part of this report: |
(1) | Financial Statements: |
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2017 and 2016
Consolidated Statements of Earnings for the years ended December 31, 2017, 2016 and 2015
Consolidated Statements of Comprehensive Earnings for the years ended December 31, 2017, 2016 and 2015
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2017, 2016 and 2015
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015
Notes to the Consolidated Financial Statements
(2) | Financial Statement Schedules: |
(3) | Exhibits: |
The information required by this Item 15(a)(3) is set forth in the Exhibit Index immediately following our signature pages. The exhibits listed herein will be furnished upon written request to J. Bruce Hildebrand, Executive Vice President, First Financial Bankshares, Inc., 400 Pine Street, Abilene, Texas 79601, and payment of a reasonable fee that will be limited to our reasonable expense in furnishing such exhibits.
* | 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. |
ITEM 16. | FORM 10-K SUMMARY |
FIRST FINANCIAL BANKSHARES, INC. | ||||||
Date: February | By: | /s/ F. | ||||
F. SCOTT DUESER | ||||||
Chairman of the Board, Director, President and | ||||||
Chief Executive Officer | ||||||
(Principal Executive Officer) |
Name | Title | Date | ||
/s/ F. Scott Dueser F. Scott Dueser | Chairman of the Board, Director, President, and Chief Executive Officer
| February | ||
/s/
James R. Gordon | Executive Vice President and Chief
Treasurer (Principal Financial Officer and Principal Accounting Officer) | February | ||
/s/ April K. Anthony April K. Anthony | Director | February | ||
/s/
Vianei Lopez Braun | Director | February | ||
/s/ Tucker S. Bridwell Tucker S. Bridwell | Director | February | ||
/s/ David L. Copeland David L. Copeland | Director | February |
Name | Title | Date | ||
/s/
Michael B. Denny | Director | February | ||
/s/
Murray H. Edwards | Director | February | ||
/s/ I. Tim Lancaster I. Tim Lancaster | Director | February | ||
/s/ Kade Kade Matthews | Director | February | ||
/s/
Robert C. Nickles | Director | February | ||
/s/ Johnny Trotter Johnny Trotter | Director | February |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Allowance for Loan Losses | ||
Description of the Matter | As of December 31, 2020, the Company’s loan portfolio totaled $5.2 billion and the related allowance for loan losses (ALL) was $66.5 million. As noted above and in Note 1, as of January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments – Credit Losses, which introduces a forward-looking expected loss model (the “Current Expected Credit Losses (CECL)” model) to estimate credit losses over the remaining expected life of the Company’s loan portfolio. As discussed in Notes 1 and 3 of the consolidated financial statements, the ALL is an amount which represents management’s best estimate of expected credit losses over the contractual life of the Company’s loan portfolio as of the balance sheet date. The ALL includes credit loss estimates for loans evaluated using common risk characteristics such as financial asset type, collateral type and industry of the borrower. Historical losses are correlated to economic variables that are determined to be the most relevant indicators of expected losses. Those economic variables are forecasted over the reasonable and supportable forecast period to determine the current expected credit losses. Qualitative adjustments are then made to account for factors that management does not believe are captured in the CECL quantitative models. Management applies judgment in estimating the ALL and, in particular, in identifying and quantifying qualitative adjustments included within the ALL.Auditing management’s estimate of the allowance for loan losses involved a high degree of subjectivity due to the complexity of the models and the qualitative adjustments included in the estimate. Management’s identification and measurement of the qualitative adjustments is highly judgmental and could have a significant impact on the allowance for loan losses. | |
How We Addressed the Matter in Our Audit | We obtained an understanding of the Company’s process for establishing the allowance for loan losses, including the models used and the qualitative adjustments made to the ALL. We evaluated the design and tested the operating effectiveness of the controls and governance over the model methodology and qualitative adjustment methodology, including the validation and monitoring procedures performed over the models, the identification and the assessment of the need for qualitative adjustments, the reliability and accuracy of data used to estimate the various components of the qualitative adjustments, and management’s review and approval of the qualitative adjustments. To test the models, with the support of specialists, we evaluated the model methodology and design, including the Company’s selection of economic variables that were deemed to be the most relevant indicators of expected credit losses, as well as performed procedures over the Company’s correlation of those economic variables to historical losses. On a sample basis, we independently tested and agreed the key inputs used in the models to internal and external sources. Additionally, on a sample basis, we performed an independent recalculation of the models’ output. To test the qualitative adjustments, we evaluated the identification and measurement of the adjustments, including the basis for concluding the adjustments were warranted when considering the model methodology and the historical data used in the adjustments. We tested the completeness and accuracy of data used by the Company to estimate the qualitative adjustments by agreeing underlying data to internal sources and recalculated the analyses used by the Company to measure the adjustments. We also reviewed peer-bank allowance coverage ratios and subsequent event information and considered whether it corroborated or contradicted the Company’s overall estimate of the ALL. |
/s/ Ernst & Young LLP
22, 2021
2019
ASSETS | 2017 | 2016 | ||||||
CASH AND DUE FROM BANKS | $ | 209,583 | $ | 204,782 | ||||
FEDERAL FUNDS SOLD | — | 3,130 | ||||||
INTEREST-BEARING DEPOSITS IN BANKS | 162,764 | 48,574 | ||||||
|
|
|
| |||||
Total cash and cash equivalents | 372,347 | 256,486 | ||||||
INTEREST-BEARING TIME DEPOSITS IN BANKS | 1,458 | 1,707 | ||||||
SECURITIESAVAILABLE-FOR-SALE, at fair value | 3,087,473 | 2,860,837 | ||||||
SECURITIESHELD-TO-MATURITY (fair value of $- and $124 at December 31, 2017 and 2016, respectively) | — | 121 | ||||||
LOANS: | ||||||||
Held for investment | 3,485,569 | 3,357,307 | ||||||
Less — allowance for loan losses | (48,156 | ) | (45,779 | ) | ||||
|
|
|
| |||||
Net loans held for investment | 3,437,413 | 3,311,528 | ||||||
Held for sale | 15,130 | 26,898 | ||||||
|
|
|
| |||||
Net loans | 3,452,543 | 3,338,426 | ||||||
BANK PREMISES AND EQUIPMENT, net | 124,026 | 122,685 | ||||||
INTANGIBLE ASSETS | 141,143 | 143,603 | ||||||
OTHER ASSETS | 75,725 | 86,066 | ||||||
|
|
|
| |||||
Total assets | $ | 7,254,715 | $ | 6,809,931 | ||||
|
|
|
| |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
NONINTEREST-BEARING DEPOSITS | $ | 2,041,650 | $ | 1,717,722 | ||||
INTEREST-BEARING DEPOSITS | 3,921,311 | 3,760,817 | ||||||
|
|
|
| |||||
Total deposits | 5,962,961 | 5,478,539 | ||||||
DIVIDENDS PAYABLE | 12,589 | 11,897 | ||||||
BORROWINGS | 331,000 | 445,770 | ||||||
OTHER LIABILITIES | 25,397 | 35,840 | ||||||
|
|
|
| |||||
Total liabilities | 6,331,947 | 5,972,046 | ||||||
|
|
|
| |||||
COMMITMENTS AND CONTINGENCIES | ||||||||
SHAREHOLDERS’ EQUITY: | ||||||||
Common stock — $0.01 par value; authorized 120,000,000 shares; 66,260,444 and 66,094,695 shares issued at December 31, 2017 and 2016, respectively | 663 | 661 | ||||||
Capital surplus | 378,062 | 372,245 | ||||||
Retained earnings | 517,257 | 446,534 | ||||||
Treasury stock (shares at cost: 495,964 and 507,409 at December 31, 2017 and 2016, respectively) | (7,148 | ) | (6,671 | ) | ||||
Deferred Compensation | 7,148 | 6,671 | ||||||
Accumulated other comprehensive earnings | 26,786 | 18,445 | ||||||
|
|
|
| |||||
Total shareholders’ equity | 922,768 | 837,885 | ||||||
|
|
|
| |||||
Total liabilities and shareholders’ equity | $ | 7,254,715 | $ | 6,809,931 | ||||
|
|
|
|
2020 | 2019 | |||||||
ASSETS | ||||||||
CASH AND DUE FROM BANKS | $ | 211,113 | $ | 231,534 | ||||
FEDERAL FUNDS SOLD | — | 3,150 | ||||||
INTEREST-BEARING DEMAND DEPOSITS IN BANKS | 517,971 | 47,920 | ||||||
Total cash and cash equivalents | 729,084 | 282,604 | ||||||
SECURITIES AVAILABLE-FOR-SALE, securities was $4,177,179 and$3,327,805 as of December 31, 2020 and 2019, respectively) | 4,393,029 | 3,413,317 | ||||||
LOANS: | ||||||||
Held-for-investment | 5,171,033 | 4,194,969 | ||||||
Less – allowance for loan losses | (66,534 | ) | (52,499 | ) | ||||
Net loans held - for- investment | 5,104,499 | 4,142,470 | ||||||
Held-for-sale 2019 respectively), | 83,969 | 28,228 | ||||||
BANK PREMISES AND EQUIPMENT, net | 142,269 | 131,022 | ||||||
INTANGIBLE ASSETS , net | 318,392 | 173,667 | ||||||
OTHER ASSETS | 133,258 | 90,919 | ||||||
Total assets | $ | 10,904,500 | $ | 8,262,227 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
NONINTEREST-BEARING DEPOSITS | $ | 2,982,697 | $ | 2,065,128 | ||||
INTEREST-BEARING DEPOSITS | 5,693,120 | 4,538,678 | ||||||
Total deposits | 8,675,817 | 6,603,806 | ||||||
DIVIDENDS PAYABLE | 18,484 | 16,306 | ||||||
BORROWINGS | 430,093 | 381,356 | ||||||
OTHER LIABILITIES | 101,916 | 33,562 | ||||||
Total liabilities | 9,226,310 | 7,035,030 | ||||||
COMMITMENTS AND CONTINGENCIES | 0 | 0 | ||||||
SHAREHOLDERS’ EQUITY: | ||||||||
Common stock—$0.01 par value; authorized 200,000,000 shares; 142,161,834 and 135,891,755 shares issued at December 31, 2020 and 2019, respectively | 1,422 | 1,359 | ||||||
Capital surplus | 669,644 | 450,676 | ||||||
Retained earnings | 836,729 | 707,656 | ||||||
Treasury stock (shares at cost: 938,591 and 927,408 at | ||||||||
December 31, 2020 and 2019, respectively) | (9,126 | ) | (8,222 | ) | ||||
Deferred c ompensation | 9,126 | 8,222 | ||||||
Accumulated other comprehensive earnings | 170,395 | 67,506 | ||||||
Total shareholders’ equity | 1,678,190 | 1,227,197 | ||||||
Total liabilities and shareholders’ equity | $ | 10,904,500 | $ | 8,262,227 | ||||
F-2
2018
2017 | 2016 | 2015 | ||||||||||
INTEREST INCOME: | ||||||||||||
Interest and fees on loans | $ | 166,807 | $ | 161,018 | $ | 151,662 | ||||||
Interest on investment securities: | ||||||||||||
Taxable | 32,825 | 27,626 | 29,673 | |||||||||
Exempt from federal income tax | 44,659 | 43,302 | 40,080 | |||||||||
Interest on federal funds sold and interest-bearing deposits in banks | 1,684 | 342 | 208 | |||||||||
|
|
|
|
|
| |||||||
Total interest income | 245,975 | 232,288 | 221,623 | |||||||||
|
|
|
|
|
| |||||||
INTEREST EXPENSE: | ||||||||||||
Interest on deposits | 8,213 | 4,503 | 3,642 | |||||||||
Other | 1,075 | 948 | 446 | |||||||||
|
|
|
|
|
| |||||||
Total interest expense | 9,288 | 5,451 | 4,088 | |||||||||
|
|
|
|
|
| |||||||
Net interest income | 236,687 | 226,837 | 217,535 | |||||||||
PROVISION FOR LOAN LOSSES | 6,530 | 10,212 | 9,685 | |||||||||
|
|
|
|
|
| |||||||
Net interest income after provision for loan losses | 230,157 | 216,625 | 207,850 | |||||||||
|
|
|
|
|
| |||||||
NONINTEREST INCOME: | ||||||||||||
Trust fees | 23,694 | 19,636 | 19,252 | |||||||||
Service charges on deposit accounts | 19,416 | 18,386 | 17,171 | |||||||||
ATM, interchange and credit card fees | 25,686 | 23,910 | 21,860 | |||||||||
Real estate mortgage operations | 15,109 | 16,086 | 10,409 | |||||||||
Net gain on sale ofavailable-for-sale securities (includes $1,828, $1,270 and $432 for the years ended December 31, 2017, 2016 and 2015, respectively, related to accumulated comprehensive earnings reclassifications) | 1,828 | 1,270 | 432 | |||||||||
Net gain (loss) on sale of foreclosed assets | (50 | ) | 456 | 538 | ||||||||
Net gain (loss) on sale of assets | (396 | ) | 168 | (820 | ) | |||||||
Interest on loan recoveries | 1,128 | 2,112 | 1,050 | |||||||||
Other | 4,602 | 3,108 | 3,540 | |||||||||
|
|
|
|
|
| |||||||
Total noninterest income | 91,017 | 85,132 | 73,432 | |||||||||
|
|
|
|
|
| |||||||
NONINTEREST EXPENSE: | ||||||||||||
Salaries and employee benefits | 95,287 | 90,739 | 80,999 | |||||||||
Loss from partial settlement of pension plan | — | 267 | — | |||||||||
Net occupancy expense | 10,521 | 10,420 | 10,314 | |||||||||
Equipment expense | 13,765 | 13,479 | 12,222 | |||||||||
FDIC insurance premiums | 2,217 | 2,680 | 3,153 | |||||||||
ATM, interchange and credit card expenses | 7,452 | 7,231 | 6,384 | |||||||||
Professional and service fees | 8,063 | 6,877 | 4,831 | |||||||||
Printing, stationery and supplies | 1,989 | 2,093 | 2,278 | |||||||||
Operational and other losses | 3,192 | 2,170 | 1,889 | |||||||||
Amortization of intangible assets | 613 | 738 | 561 | |||||||||
Other | 30,887 | 29,136 | 26,833 | |||||||||
|
|
|
|
|
| |||||||
Total noninterest expense | 173,986 | 165,830 | 149,464 | |||||||||
|
|
|
|
|
| |||||||
EARNINGS BEFORE INCOME TAXES | 147,188 | 135,927 | 131,818 | |||||||||
INCOME TAX EXPENSE (includes $640, $445 and $151 for the years ended December 31, 2017, 2016 and 2015, respectively, related to income tax expense from reclassification items) | 26,817 | 31,153 | 31,437 | |||||||||
|
|
|
|
|
| |||||||
NET EARNINGS | $ | 120,371 | $ | 104,774 | $ | 100,381 | ||||||
|
|
|
|
|
| |||||||
NET EARNINGS PER SHARE, BASIC | $ | 1.82 | $ | 1.59 | $ | 1.55 | ||||||
|
|
|
|
|
| |||||||
NET EARNINGS PER SHARE, ASSUMING DILUTION | $ | 1.81 | $ | 1.59 | $ | 1.54 | ||||||
|
|
|
|
|
|
2020 | 2019 | 2018 | ||||||||||
INTEREST INCOME: | ||||||||||||
Interest and fees on loans | $ | 263,320 | $ | 224,556 | $ | 200,347 | ||||||
Interest on investment securities: | ||||||||||||
Taxable | 51,456 | 55,670 | 50,052 | |||||||||
Exempt from federal income tax | 48,399 | 37,075 | 39,661 | |||||||||
Interest on federal funds sold and interest-bearing deposits in banks | 953 | 1,891 | 1,630 | |||||||||
364,128 | 319,192 | 291,690 | ||||||||||
INTEREST EXPENSE: | ||||||||||||
Interest on deposits | 13,118 | 27,122 | 16,946 | |||||||||
Other | 1,125 | 2,980 | 1,984 | |||||||||
Total interest expense | 14,243 | 30,102 | 18,930 | |||||||||
349,885 | 289,090 | 272,760 | ||||||||||
PROVISION FOR CREDIT LOSSES | 19,517 | 2,965 | 5,665 | |||||||||
330,368 | 286,125 | 267,095 | ||||||||||
NONINTEREST INCOME: | ||||||||||||
Trust fees | 29,531 | 28,401 | 28,181 | |||||||||
Service charges on deposit accounts | 20,572 | 22,039 | 21,663 | |||||||||
ATM, interchange and credit card fees | 32,469 | 29,863 | 28,532 | |||||||||
Gain on sale and fees on mortgage loans | 43,872 | 18,144 | 15,157 | |||||||||
Net gain on sale of available-for-sale | 3,633 | 733 | 1,354 | |||||||||
Net gain (loss) on sale of foreclosed assets | 159 | 274 | 116 | |||||||||
Net gain (loss) on sale of assets | 112 | 319 | (147 | ) | ||||||||
Interest on loan recoveries | 856 | 2,092 | 938 | |||||||||
Other | 8,731 | 6,563 | 5,970 | |||||||||
139,935 | 108,428 | 101,764 | ||||||||||
NONINTEREST EXPENSE: | ||||||||||||
Salaries and employee benefits | 135,123 | 112,336 | 105,189 | |||||||||
Cost related to termination of pension plan | — | 2,673 | 1,546 | |||||||||
Net occupancy expense | 12,388 | 11,156 | 11,173 | |||||||||
Equipment expense | 8,396 | 9,052 | 10,118 | |||||||||
FDIC insurance premiums | 1,758 | 1,091 | 2,333 | |||||||||
ATM, interchange and credit card expenses | 11,235 | 9,856 | 9,282 | |||||||||
Professional and service fees | 9,346 | 7,853 | 8,894 | |||||||||
Printing, stationery and supplies | 2,163 | 1,812 | 1,997 | |||||||||
Operational and other losses | 2,462 | 1,879 | 2,188 | |||||||||
Software amortization and expense | 8,862 | 7,305 | 6,020 | |||||||||
Amortization of intangible assets | 1,990 | 1,016 | 1,272 | |||||||||
Other | 34,215 | 30,492 | 30,672 | |||||||||
227,938 | 196,521 | 190,684 | ||||||||||
EARNINGS BEFORE INCOME TAXES | 242,365 | 198,032 | 178,175 | |||||||||
INCOME TAX EXPENSE | 40,331 | 33,220 | 27,537 | |||||||||
NET EARNINGS | $ | 202,034 | $ | 164,812 | $ | 150,638 | ||||||
NET EARNINGS PER SHARE, BASIC | $ | 1.42 | $ | 1.22 | $ | 1.11 | ||||||
NET EARNINGS PER SHARE, DILUTED | $ | 1.42 | $ | 1.21 | $ | 1.11 | ||||||
F-3
2018
2017 | 2016 | 2015 | ||||||||||
NET EARNINGS | $ | 120,371 | $ | 104,774 | $ | 100,381 | ||||||
OTHER ITEMS OF COMPREHENSIVE EARNINGS (LOSS): | ||||||||||||
Change in unrealized gain (loss) on investment securitiesavailable-for-sale, before income tax | 23,266 | (44,679 | ) | 2,273 | ||||||||
Reclassification adjustment for realized losses (gains) on investment securities included in net earnings, before income tax | (1,828 | ) | (1,270 | ) | (432 | ) | ||||||
Minimum liability pension adjustment, before income tax | 257 | 1,410 | (1,986 | ) | ||||||||
|
|
|
|
|
| |||||||
Total other items of comprehensive earnings (losses) | 21,695 | (44,539 | ) | (145 | ) | |||||||
Income tax benefit (expense) related to: | ||||||||||||
Investment securities | (13,774 | ) | 16,082 | (644 | ) | |||||||
Minimum liability pension adjustment | 420 | (493 | ) | 695 | ||||||||
|
|
|
|
|
| |||||||
Total income tax benefit (expense) | (13,354 | ) | 15,589 | 51 | ||||||||
|
|
|
|
|
| |||||||
COMPREHENSIVE EARNINGS | $ | 128,712 | $ | 75,824 | $ | 100,287 | ||||||
|
|
|
|
|
|
2020 | 2019 | 2018 | ||||||||||
NET EARNINGS | $ | 202,034 | $ | 164,812 | $ | 150,638 | ||||||
OTHER ITEMS OF COMPREHENSIVE EARNINGS (LOSS): | ||||||||||||
Change in unrealized gain (loss) on investment securities available-for-sale, | 133,872 | 80,906 | (38,185 | ) | ||||||||
Reclassification adjustment for realized gains on investment securities included in net earnings, before income tax | (3,633 | ) | (733 | ) | (1,354 | ) | ||||||
Minimum liability pension adjustment, before income tax | — | 1,676 | 1,970 | |||||||||
Total other items of comprehensive earnings (losses) | 130,239 | 81,849 | (37,569 | ) | ||||||||
Income tax benefit (expense) related to: | ||||||||||||
Investment securities | (28,113 | ) | (16,990 | ) | 8,019 | |||||||
Reclassification adjustment for realized gains on investment securities included in net earnings | 763 | 154 | 284 | |||||||||
Minimum liability pension adjustment | — | (352 | ) | (414 | ) | |||||||
Total income tax benefit (expense) | (27,350 | ) | (17,188 | ) | 7,889 | |||||||
COMPREHENSIVE EARNINGS | $ | 304,923 | $ | 229,473 | $ | 120,958 | ||||||
F-4
2018
Common Stock | Capital Surplus | Retained Earnings |
Treasury Stock | Deferred Compensation | Accumulated Other Comprehensive Earnings (Losses) | Total Shareholders’ Equity | ||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amounts | |||||||||||||||||||||||||||||||||
BALANCE, December 31, 2014 | 64,089,921 | $ | 641 | $ | 305,429 | $ | 327,978 | (529,563 | ) | $ | (5,878 | ) | $ | 5,878 | $ | 47,489 | $ | 681,537 | ||||||||||||||||||
Net earnings | — | — | — | 100,381 | — | — | — | — | 100,381 | |||||||||||||||||||||||||||
Stock issued in acquisition of FBC Bancshares, Inc. | 1,755,374 | 18 | 59,630 | — | — | — | — | — | 59,648 | |||||||||||||||||||||||||||
Stock option exercises | 105,121 | 1 | 1,544 | — | — | — | — | — | 1,545 | |||||||||||||||||||||||||||
Restricted Stock grant | 39,818 | — | 1,350 | — | — | — | — | — | 1,350 | |||||||||||||||||||||||||||
Cash dividends declared, $0.62 per share | — | — | — | (40,353 | ) | — | — | — | — | (40,353 | ) | |||||||||||||||||||||||||
Minimum liability pension adjustment, net of related income taxes | — | — | — | — | — | — | — | (1,291 | ) | (1,291 | ) | |||||||||||||||||||||||||
Change in unrealized gain (loss) in investment securitiesavailable-for-sale, net of related income taxes | — | — | — | — | — | — | — | 1,197 | 1,197 | |||||||||||||||||||||||||||
Additional tax benefit related to directors’ deferred compensation plan | — | — | 328 | — | — | — | — | — | 328 | |||||||||||||||||||||||||||
Shares purchased in connection with directors’ deferred compensation plan, net | — | — | — | — | 8,912 | (418 | ) | 418 | — | — | ||||||||||||||||||||||||||
Stock option expense | — | — | 644 | — | — | — | — | — | 644 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
BALANCE, December 31, 2015 | 65,990,234 | $ | 660 | $ | 368,925 | $ | 388,006 | (520,651 | ) | $ | (6,296 | ) | $ | 6,296 | $ | 47,395 | $ | 804,986 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net earnings | — | — | — | 104,774 | — | — | — | — | 104,774 | |||||||||||||||||||||||||||
Stock option exercises | 82,871 | 1 | 1,259 | — | — | — | — | — | 1,260 | |||||||||||||||||||||||||||
Restricted Stock grant | 21,590 | — | 809 | — | — | — | — | — | 809 | |||||||||||||||||||||||||||
Cash dividends declared, $0.70 per share | — | — | — | (46,246 | ) | — | — | — | — | (46,246 | ) | |||||||||||||||||||||||||
Minimum liability pension adjustment, net of related income taxes | — | — | — | — | — | — | — | 917 | 917 | |||||||||||||||||||||||||||
Change in unrealized gain (loss) in investment securitiesavailable-for-sale, net of related income taxes | — | — | — | — | — | — | — | (29,867 | ) | (29,867 | ) | |||||||||||||||||||||||||
Additional tax benefit related to directors’ deferred compensation plan | — | — | 370 | — | — | — | — | — | 370 | |||||||||||||||||||||||||||
Shares purchased in connection with directors’ deferred compensation plan, net | — | — | — | — | 13,242 | (375 | ) | 375 | — | — | ||||||||||||||||||||||||||
Stock option expense | — | — | 882 | — | — | — | — | — | 882 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
BALANCE, December 31, 2016 | 66,094,695 | $ | 661 | $ | 372,245 | $ | 446,534 | (507,409 | ) | $ | (6,671 | ) | $ | 6,671 | $ | 18,445 | $ | 837,885 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
Net earnings | — | — | — | 120,371 | — | — | — | — | 120,371 | |||||||||||||||||||||||||||
Stock option exercises | 140,250 | 2 | 2,933 | — | — | — | — | 2,935 | ||||||||||||||||||||||||||||
Restricted Stock grant | 25,499 | — | 1,139 | — | — | — | — | 1,139 | ||||||||||||||||||||||||||||
Cash dividends declared, $0.75 per share | — | — | — | (49,648 | ) | — | — | — | — | (49,648 | ) | |||||||||||||||||||||||||
Minimum liability pension adjustment, net of related income taxes | — | — | — | — | — | — | — | 677 | 677 | |||||||||||||||||||||||||||
Change in unrealized gain (loss) in investment securitiesavailable-for-sale, net of related income taxes | — | — | — | — | — | — | — | 7,664 | 7,664 | |||||||||||||||||||||||||||
Shares purchased (redeemed) in connection with directors’ deferred compensation plan, net | — | — | — | — | 11,445 | (477 | ) | 477 | — | — | ||||||||||||||||||||||||||
Stock option expense | — | — | 1,745 | — | — | — | — | — | 1,745 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||
BALANCE, December 31, 2017 | 66,260,444 | $ | 663 | $ | 378,062 | $ | 517,257 | (495,964 | ) | $ | (7,148 | ) | $ | 7,148 | $ | 26,786 | $ | 922,768 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock | Capital Surplus | Retained Earnings | Treasury Stock | Deferred Compensation | Accumulated Other Total Comprehensive Earnings (Losses) | Shareholders’ Equity | ||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amounts | |||||||||||||||||||||||||||||||||
BALANCE, December 31, 2017 | 66,260,444 | $ | 663 | $ | 378,062 | $ | 517,257 | (495,964 | ) | $ | (7,148 | ) | $ | 7,148 | $ | 26,786 | $ | 922,768 | ||||||||||||||||||
Net earnings | — | — | — | 150,638 | — | — | — | — | 150,638 | |||||||||||||||||||||||||||
Stock option exercises | 173,822 | 2 | 3,861 | — | — | — | 3,863 | |||||||||||||||||||||||||||||
Restricted stock grant, net | 29,496 | — | 1,609 | — | — | — | — | 1,609 | ||||||||||||||||||||||||||||
Cash dividends declared, $0.41 per share | — | — | — | (55,499 | ) | — | — | — | — | (55,499 | ) | |||||||||||||||||||||||||
Stock issued in acquisition of Bancshares, Inc. | 1,289,371 | 13 | 58,074 | — | — | — | — | — | 58,087 | |||||||||||||||||||||||||||
Minimum liability pension adjustment, net of related income taxes | — | — | — | — | — | — | — | 1,556 | 1,556 | |||||||||||||||||||||||||||
Change in unrealized gain (loss) in investment securities available-for-sale, | — | — | — | — | — | — | — | (31,235 | ) | (31,235 | ) | |||||||||||||||||||||||||
Shares purchased in connection with directors’ deferred compensation plan, net | — | — | — | — | 28,153 | (359 | ) | 359 | — | — | ||||||||||||||||||||||||||
Stock option expense | — | — | 1,508 | — | — | — | — | — | 1,508 | |||||||||||||||||||||||||||
Reclassification of certain income tax effects related to the U.S. statutory federal income tax rate under the Tax Cuts and Jobs Acts to retained earnings | — | — | — | (5,759 | ) | — | — | 0 | 5,759 | — | ||||||||||||||||||||||||||
Reclassification of unrealized gain in equity securities At December 31, 2017 from accumulated other Comprehensive earnings to retained earnings | — | — | — | 21 | — | — | — | (21 | ) | — | ||||||||||||||||||||||||||
BALANCE, December 31, 2018 | 67,753,133 | $ | 678 | $ | 443,114 | $ | 606,658 | (467,811 | ) | $ | (7,507 | ) | $ | 7,507 | $ | 2,845 | $ | 1,053,295 | ||||||||||||||||||
Net earnings | — | — | — | 164,812 | — | — | — | — | 164,812 | |||||||||||||||||||||||||||
Stock option exercises | 241,725 | 2 | 4,291 | — | — | — | — | — | 4,293 | |||||||||||||||||||||||||||
Restricted stock grant, net | 56,687 | — | 1,782 | — | — | — | — | — | 1,782 | |||||||||||||||||||||||||||
Cash dividends declared, $0.47 per share | — | — | — | (63,135 | ) | — | — | — | — | (63,135 | ) | |||||||||||||||||||||||||
Minimum liability pension adjustment, net of related income taxes | — | — | — | — | — | — | — | 1,324 | 1,324 | |||||||||||||||||||||||||||
Change in unrealized gain in investment securities available-for-sale, | — | — | — | — | — | — | — | 63,337 | 63,337 | |||||||||||||||||||||||||||
Shares purchased in connection with directors’ deferred compensation plan, net | — | — | — | — | 4,742 | (715 | ) | 715 | — | — | ||||||||||||||||||||||||||
Stock option expense | — | — | 1,489 | — | — | — | — | — | 1,489 | |||||||||||||||||||||||||||
Two-for-one | 67,840,210 | 679 | — | (679 | ) | (464,339 | ) | — | — | 0 | — | |||||||||||||||||||||||||
BALANCE, December 31, 2019 | 135,891,755 | $ | 1,359 | $ | 450,676 | $ | 707,656 | (927,408 | ) | $ | (8,222 | ) | �� | $ | 8,222 | $ | 67,506 | $ | 1,227,197 |
Shareholders’ Equity
2018
2017 | 2016 | 2015 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
Net earnings | $ | 120,371 | $ | 104,774 | $ | 100,381 | ||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 12,916 | 11,573 | 11,145 | |||||||||
Provision for loan losses | 6,530 | 10,212 | 9,685 | |||||||||
Securities premium amortization, net | 30,310 | 29,005 | 27,705 | |||||||||
Gain on sale of assets, net | (1,167 | ) | (1,894 | ) | (150 | ) | ||||||
Deferred federal income tax expense (benefit) | (53 | ) | 673 | 320 | ||||||||
Change in loans held for sale | 11,769 | 6,645 | (24,739 | ) | ||||||||
Change in other assets | 9,313 | 2,397 | (16,919 | ) | ||||||||
Change in other liabilities | 285 | (2,643 | ) | 1,664 | ||||||||
|
|
|
|
|
| |||||||
Total adjustments | 69,903 | 55,968 | 8,711 | |||||||||
|
|
|
|
|
| |||||||
Net cash provided by operating activities | 190,274 | 160,742 | 109,092 | |||||||||
|
|
|
|
|
| |||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
Cash paid for asset acquisition of 4Trust Mortgage, Inc., net | — | — | (1,931 | ) | ||||||||
Cash received in acquisition of FBC Bancshares, Inc., net | — | — | 65,197 | |||||||||
Net decrease in interest-bearing time deposits in banks | 249 | 1,788 | 13,507 | |||||||||
Activity inavailable-for-sale securities: | ||||||||||||
Sales | 120,576 | 40,510 | 35,580 | |||||||||
Maturities | 4,392,131 | 3,509,113 | 2,717,724 | |||||||||
Purchases | (4,768,420 | ) | (3,737,865 | ) | (3,055,117 | ) | ||||||
Activity inheld-to-maturity securities — maturities | 124 | 157 | 163 | |||||||||
Net increase in loans | (134,627 | ) | (48,836 | ) | (144,320 | ) | ||||||
Purchases of bank premises and equipment and other assets | (14,162 | ) | (20,399 | ) | (17,433 | ) | ||||||
Proceeds from sale of bank premises and equipment and other assets | 6,085 | 3,572 | 2,405 | |||||||||
|
|
|
|
|
| |||||||
Net cash used in investing activities | (398,044 | ) | (251,960 | ) | (384,225 | ) | ||||||
|
|
|
|
|
| |||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
Net increase (decrease) in noninterest-bearing deposits | 323,928 | (28,230 | ) | 23,473 | ||||||||
Net increase in interest-bearing deposits | 160,494 | 316,600 | 72,857 | |||||||||
Net increase (decrease) in borrowings | (114,770 | ) | (169,905 | ) | 235,440 | |||||||
Common stock transactions: | ||||||||||||
Proceeds from stock issuances | 2,934 | 1,260 | 1,545 | |||||||||
Dividends paid | (48,955 | ) | (44,907 | ) | (38,767 | ) | ||||||
|
|
|
|
|
| |||||||
Net cash provided by financing activities | 323,631 | 74,818 | 294,548 | |||||||||
|
|
|
|
|
| |||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 115,861 | (16,400 | ) | 19,415 | ||||||||
CASH AND CASH EQUIVALENTS, beginning of year | 256,486 | 272,886 | 253,471 | |||||||||
|
|
|
|
|
| |||||||
CASH AND CASH EQUIVALENTS, end of year | $ | 372,347 | $ | 256,486 | $ | 272,886 | ||||||
|
|
|
|
|
|
Cumulative effect of adopting ASC 326 on January 1, 2020, net of related income taxes | — | — | — | (466 | ) | — | — | — | — | (466 | ) | |||||||||||||||||||||||||
Total shareholders’ equity at beginning of period, as adjusted | 135,891,755 | 1,359 | 450,676 | 707,190 | (927,408 | ) | (8,222 | ) | 8,222 | 67,506 | 1,226,731 | |||||||||||||||||||||||||
Stock issued in acquisition of TB&T Bancshares, Inc. | 6,275,574 | 63 | 220,210 | — | — | — | — | — | 220,273 | |||||||||||||||||||||||||||
Net earnings | — | — | — | 202,034 | — | — | — | — | 202,034 | |||||||||||||||||||||||||||
Stock option exercises | 295,093 | 3 | 4,714 | — | — | — | — | — | 4,717 | |||||||||||||||||||||||||||
Restricted stock grant, net | 24,214 | — | 672 | — | — | — | — | — | 672 | |||||||||||||||||||||||||||
Cash dividends declared, $0.51 per share | — | — | — | (72,495 | ) | — | — | — | — | (72,495 | ) | |||||||||||||||||||||||||
Change in unrealized gain in investment securities available-for-sale, | — | — | — | — | — | — | — | 102,889 | 102,889 | |||||||||||||||||||||||||||
Shares purchased in connection with directors’ deferred compensation plan, net | — | — | — | — | (11,183 | ) | (904 | ) | 904 | — | — | |||||||||||||||||||||||||
Stock option expense | — | — | 1,377 | — | — | — | — | — | 1,377 | |||||||||||||||||||||||||||
Shares repurchased and retired under stock repurchase authorization | (324,802 | ) | (3 | ) | (8,005 | ) | — | — | — | — | — | (8,008 | ) | |||||||||||||||||||||||
BALANCE, December 31, 2020 | 142,161,834 | $ | 1,422 | $ | 669,644 | $ | 836,729 | (938,591 | ) | $ | (9,126 | ) | $ | 9,126 | $ | 170,395 | $ | 1,678,190 |
2020 | 2019 | 2018 | ||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
Net earnings | $ | 202,034 | $ | 164,812 | $ | 150,638 | ||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 12,793 | 11,665 | 12,549 | |||||||||
Provision for credit losses | 19,517 | 2,965 | 5,665 | |||||||||
Securities premium amortization, net | 41,959 | 25,788 | 27,467 | |||||||||
Discount accretion on purchased loans | (3,780 | ) | (1,666 | ) | (2,636 | ) | ||||||
Gain on sale of assets, net | (4,001 | ) | (1,477 | ) | (1,216 | ) | ||||||
Deferred federal income tax (expense) benefit | (5,249 | ) | (29 | ) | (250 | ) | ||||||
Change in loans held-for-sale | (53,494 | ) | (5,830 | ) | (5,791 | ) | ||||||
Change in other assets | (23,233 | ) | 1,851 | (1,697 | ) | |||||||
Change in other liabilities | 24,122 | 4,374 | 1,621 | |||||||||
Total adjustments | 8,634 | 37,641 | 35,712 | |||||||||
Net cash provided by operating activities | 210,668 | 202,453 | 186,350 | |||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||
Cash received in acquisition of TB&T Bancshares, Inc., net | 61,028 | — | — | |||||||||
Cash received in acquisition of Commercial Bancshares, Inc., net | — | — | 18,653 | |||||||||
Net decrease in interest-bearing time deposits in banks | — | 1,458 | — | |||||||||
Activity in available-for-sale | ||||||||||||
Sales | 263,042 | 67,414 | 220,259 | |||||||||
Maturities | 6,075,017 | 4,460,703 | 3,439,028 | |||||||||
Purchases | (7,117,151 | ) | (4,727,430 | ) | (3,731,821 | ) | ||||||
Net increase in loans held-for-investment | (529,144 | ) | (243,524 | ) | (202,602 | ) | ||||||
Purchases of bank premises and equipment | (16,450 | ) | (8,671 | ) | (17,646 | ) | ||||||
Proceeds from sale of bank premises and equipment and other assets | 1,456 | 2,249 | 844 | |||||||||
Net cash used in investing activities | (1,262,202 | ) | (447,801 | ) | (273,285 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||
Net increase (decrease) in noninterest-bearing deposits | 679,744 | (50,979 | ) | (87,583 | ) | |||||||
Net increase (decrease) in interest-bearing deposits | 843,142 | 474,396 | (36,891 | ) | ||||||||
Net increase (decrease) in borrowings | 48,737 | (87,350 | ) | 137,706 | ||||||||
Common stock transactions: | ||||||||||||
Proceeds from stock option exercises | 4,717 | 4,294 | 3,864 | |||||||||
Dividends paid | (70,318 | ) | (61,056 | ) | (53,861 | ) | ||||||
Repurchase of stock | (8,008 | ) | — | — | ||||||||
Net cash provided by (used in) financing activities | 1,498,014 | 279,305 | (36,765 | ) | ||||||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 446,480 | 33,957 | (123,700 | ) | ||||||||
CASH AND CASH EQUIVALENTS, beginning of year | 282,604 | 248,647 | 372,347 | |||||||||
CASH AND CASH EQUIVALENTS, end of year | $ | 729,084 | $ | 282,604 | $ | 248,647 | ||||||
2018
Split and Increase in Authorized Shares
Acquisitions2020.
2018
date of adoption. For the periods ended December 31, 2020 and 2019, amounts related to the Company’s PCD and PCI loans were insignificant and disclosures related to these balances have been omitted.
Increase in Authorized Shares
On April 28, 2015, the Company’s shareholders approved an amendment to the Company’s Amended and Restated Certificate of Formation to increase the number of authorized common shares to 120,000,000.
2018
the year ended December 31, 2020.
When the fair value of a 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 andheld-to-maturity securities are analyzed quarterly for possible other-than-temporary impairment. The analysis considers (i) whether we have the intent to sell our securities prior to recovery and/or maturity, (ii) whether it is more likely than not that we will have to sell our securities prior to recovery and/or maturity, (iii) the length of time and extent to which the fair value has been less than amortized cost, and (iv) the financial condition of the issuer. Often, the information available to conduct these assessments is limited and rapidly changing, making estimates of fair value subject to judgment. If actual information or conditions are different than estimated, the extent of the impairment of the security may be different than previously estimated, which could have a material effect on the Company’s results of operations and financial condition.
Loans and third-party sources on a quarterly basis.
Loans held –
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2017, 2016 and 2015
the principal amounts outstanding. The Company defers and amortizes net loan origination fees and costs as an adjustment to yield. The allowance for loan losses is established through a provision for loan losses charged to expense.
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 portfolioand interest payments have not been received as of the balance sheet date. The allowance for loan losses is comprised of three elements: (i) specific reserves determined baseddate such payments were due. Loans are placed 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 externalnonaccrual status when, in management’s opinion, the borrower may be unable to the Company. The allowance for loan losses is increased by charges to income and decreased bycharge-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. 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 qualitative factors suchmeet payment obligations 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 and employment could result in increased levels ofnon-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 examinationthey become due, as well as changeswhen required by regulatory provisions. In determining whether or not a borrower may be unable to meet payment obligations for each class of loans, we consider the borrower’s debt service capacity through the analysis of current financial information, if available, and/or current information with regards to our methodology.
Accrualcollateral position. Regulatory provisions would typically require the placement of a loan on nonaccrual status if principal or interest has been in default for a period of 90 days or more unless the loan is both well secured and in the process of collection or full payment of principal and interest is not expected. Loans may be placed on nonaccrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income on a loan andnonaccrual loans is recognized only to the extent that cash payments are applied toreceived in excess of 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 onnon-accrual. Loans aredue. A loan may be returned to accrual status when all the principal and interest amounts contractually due are brought current and future paymentsprincipal and interest amounts contractually due are reasonably assured. Consumer
Loans are consideredwere reported as impaired when, based on then current information and events, management determines that it iswas probable we willwould be unable to collect all amounts due in accordance with the original contractual terms of the loan agreement, including scheduled principal and interest payments. Impairment was evaluated in total for smaller-balance loans of a similar nature and on an individual loan basis for other loans. If a loan iswas impaired, a specific valuation allowance iswas allocated, if necessary.necessary, so that the loan was reported net, at the present value of estimated future cash flows using the loan’s existing rate or at the fair value of collateral if repayment was expected solely from the collateral. Interest payments on impaired loans arewere typically applied to principal unless collectabilitycollectibility of the principal amount iswas reasonably assured, in which case interest iswas recognized on a cash basis. Impaired loans, or portions thereof, arewere charged off when deemed uncollectable.
uncollectible.
From time to time,expected credit losses within our loan pools. These qualitative factor
longer term to maturity. For all impaired loans, including2018
The Company originates certain mortgage loans for sale in the secondary market. Accordingly, these loans are classified asheld-for-sale and are carried at the lower of cost or fair value on an aggregate basis. 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.
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 asportfolio can vary significantly from the amounts actually observed. While management uses available information to recognize expected losses, future additions to the allowance may be necessary based on changes in the loans comprising the portfolio, changes in the current and forecasted economic conditions, changes to the interest income on a level-yield method overrate environment which may directly impact prepayment and curtailment rate assumptions, and changes in the lifefinancial condition of borrowers.
2020, the Company’s reserve for unfunded commitments totaled $5,486,000.
shorter
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2017, 2016 and 2015
2018.
Also included in other intangible assets are mortgage servicing rights totaling $1,795,000 at December 31, 2016. These servicing rights were sold to an unrelated third party in 2017 resulting in a loss on sale of approximately $215,000.
There were 0 amounts under the minimum pension liability at December 31, 2020 or 2019 (see Note 14).
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2017, 2016 and 2015
vesting period which generally is six years. 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 $483,000 and $562,000, respectively, for the year ended December 31, 2017, $278,000 and $381,000, respectively, for the year ended December 31, 2016, and $139,000 and $62,000, respectively, for the year ended December 31, 2015.
shares which generally vests over periods of one to three years. See Note 1518 for further information.
Net Earnings (in thousands) | Weighted Average Shares | Per Share Amount | ||||||||||
For the year ended December 31, 2017: | ||||||||||||
Net earnings per share, basic | $ | 120,371 | 66,126,863 | $ | 1.82 | |||||||
Effect of stock options and stock grants | — | 197,467 | (0.01 | ) | ||||||||
|
|
|
|
|
| |||||||
Net earnings per share, assuming dilution | $ | 120,371 | 66,324,330 | $ | 1.81 | |||||||
|
|
|
|
|
| |||||||
For the year ended December 31, 2016: | ||||||||||||
Net earnings per share, basic | $ | 104,774 | 66,013,004 | $ | 1.59 | |||||||
Effect of stock options and stock grants | — | 89,882 | — | |||||||||
|
|
|
|
|
| |||||||
Net earnings per share, assuming dilution | $ | 104,774 | 66,102,886 | $ | 1.59 | |||||||
|
|
|
|
|
| |||||||
For the year ended December 31, 2015: | ||||||||||||
Net earnings per share, basic | $ | 100,381 | 64,892,934 | $ | 1.55 | |||||||
Effect of stock options and stock grants | — | 175,096 | (0.01 | ) | ||||||||
|
|
|
|
|
| |||||||
Net earnings per share, assuming dilution | $ | 100,381 | 65,068,030 | $ | 1.54 | |||||||
|
|
|
|
|
|
For the year ended December 31, 2020: | Net Earnings (in thousands) | Weighted Average Shares | Per Share Amount | |||||||||
Net earnings per share, basic | $ | 202,034 | 142,032,420 | $ | 1.42 | |||||||
Effect of stock options and stock grants | 0 | 512,571 | 0 | |||||||||
Net earnings per share, diluted | $ | 202,034 | 142,544,991 | $ | 1.42 | |||||||
For the year ended December 31, 2019: | ||||||||||||
Net earnings per share, basic | $ | 164,812 | 135,647,354 | $ | 1.22 | |||||||
Effect of stock options and stock grants | 0 | 698,665 | (0.01 | ) | ||||||||
Net earnings per share, diluted | $ | 164,812 | 136,346,019 | $ | 1.21 | |||||||
For the year ended December 31, 2018: | ||||||||||||
Net earnings per share, basic | $ | 150,638 | 135,218,734 | $ | 1.11 | |||||||
Effect of stock options and stock grants | 0 | 747,294 | 0 | |||||||||
Net earnings per share, diluted | $ | 150,638 | 135,966,028 | $ | 1.11 | |||||||
Accounting Standards Update (“ASU”)2014-09, “Revenue from Contracts with Customers.”ASU2014-09 implements a comprehensive new revenue recognition standard that will supersede substantially all existing revenue recognition guidance. The new standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should apply the following steps: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract and (v) recognize revenue when (or as) the entity satisfies a performance obligation. ASU2015-4 “Revenue from Contracts with Customers – Deferral of the Effective Date” deferred the effective date of ASU2014-09 by one year and as a result, the new standard will be effective the first quarter of 2018. The Company’s revenue is comprised of net interest income on financial assets and financial liabilities, which is explicitly excluded from the scope of ASU2014-09, andnon-interest income. Based on the Company’s analysis of the effect of the new standard on its recurring revenue streams, the Company did not expect and did not experience an impact on the Company’s financial statements upon adoption in the first quarter of 2018. No adjustments to opening retained earnings was recorded on January 1, 2018.
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2017, 2016 and 2015
ASU2014-15, “Presentation of Financial Statements — Going Concern.”ASU2014-15 requires management to evaluate an entity’s ability to continue as a going concern within one year after the date that the financial statements are issued. Management must evaluate whether conditions and events raise substantial doubt about an entity’s ability to continue as a going concern and then whether its plans alleviate that doubt. ASU2014-15 was effective in 2016 and management has performed and continues to perform such required evaluation and has concluded there were no such conditions or events that raised substantial doubt about the Company’s ability to continue as a going concern.
ASU2015-01, “Income Statement — Extraordinary and Unusual Items.” ASU2015-01 eliminated from U.S. GAAP the concept of extraordinary items, which, among other things, required an entity to show the item separately in the income statement, net of tax, after income from continuing operations. The new guidance became effective for the Company beginning January 1, 2016, and did not have a significant impact on the Company’s financial statements.
ASU2015-05, “Intangibles — Goodwill and Other —Internal-Use Software — Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement.”ASU2015-05 addresses accounting for fees paid by a customer in cloud computing arrangements such as (i) software as a service, (ii) platform as a service, (iii) infrastructure as a service and (iv) other similar hosting arrangements. ASU2015-05 provides guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. ASU2015-05 became effective on January 1, 2016 and did not have a significant impact on the Company’s financial statements.
ASU2015-16, “Business Combinations — Simplifying the Accounting Measurement Period Adjustments.” ASU2015-16 amended business combination guidance to require that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The acquirer must record, in the same period’s financial statements, the effect of earnings on changes in depreciation, amortization, or other income effects, if any, as a result of the changes to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. Additionally, the entity is required to present separately on the face of the income statement or disclose in the notes the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. The amended guidance became effective for the Company on January 1, 2016, and did not have a significant impact on the Company’s financial statements.
ASU2016-1, “Financial Instruments — Overall: Recognition and Measurement of Financial Assets and Financial Liabilities.”ASU2016-1, among other things, (i) requires equity investments, with certain exceptions, to be measured at fair value with changes in fair value recognized in net income, (ii) simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment, (iii) eliminates the requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, (iv) requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, (v) requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option for financial instruments, (vi) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset on the balance sheet or the accompanying notes to the financial statements and (vii) clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related toavailable-for-sale securities. ASU2016-1 became effective on January 1, 2018 and did not have a significant impact on the Company’s financial statements.
ASU2016-02, “Leases.”ASU2016-02 will amend 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) aright-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2017, 2016 and 2015
specified asset for the lease term.
ASU2016-09, “Compensation — Stock Compensation: Improvements to Employee Share-Based Payment Accounting.”ASU2016-09 will amend current guidance such that all excess tax benefits and tax deficiencies related to share-based payment awards will be recognized as income tax expense or benefit in the income statement during the period in which they occur. Additionally, excess tax benefits will be classified along with other income tax cash flows as an operating activity rather than a financing activity. ASU2016-09 also provides that any entity can make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest, which is the current requirement, or account for forfeitures when they occur. ASU2016-09 became effective January 1, 2017 and did not have a significant impact on the Company’s financial statements.
ASU2016-13, “Financial Instruments — Credit Losses.” ASU2016-13 implements a comprehensive change in estimating the allowances for loan losses from the current model of losses inherent in the loan portfolio to a current expected credit loss model that generally is expected to result in earlier recognition of allowances for losses. Additionally, purchase accounting rules have been modified as well as credit losses onheld-to-maturity debt securities. ASU2016-13 will be effective in the first quarter of 2020. While the Company generally expects that the implementation of ASU2016-13 will increase their allowance for loan losses balance, the Company is continuing to evaluate the potential impact on the Company’s financial statements.
ASU “Intangibles —
ASU 2018-02, “Income Statement — Reporting Comprehensive Income (Topic 220): Reclassificationstatements and related disclosures.
2018
Interest-bearing time deposits
A summarythe fair value of the Company’s as of December 31, 2017 and 2016 are as follows (in(dollars in thousands):
December 31, 2017 | ||||||||||||||||
Amortized Cost Basis | Gross Unrealized Holding Gains | Gross Unrealized Holding Losses | Estimated Fair Value | |||||||||||||
Securitiesavailable-for-sale: | ||||||||||||||||
Obligations of U.S. government sponsored enterprises and agencies | $ | 60,516 | $ | — | $ | (186 | ) | $ | 60,330 | |||||||
Obligations of state and political subdivisions | 1,369,295 | 52,491 | (936 | ) | 1,420,850 | |||||||||||
Corporate bonds and other | 11,421 | 43 | (5 | ) | 11,459 | |||||||||||
Residential mortgage-backed securities | 1,223,452 | 4,561 | (8,916 | ) | 1,219,097 | |||||||||||
Commercial mortgage-backed securities | 377,934 | 263 | (2,460 | ) | 375,737 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total securitiesavailable-for-sale | $ | 3,042,618 | $ | 57,358 | $ | (12,503 | ) | $ | 3,087,473 | |||||||
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|
|
|
|
| |||||||||
December 31, 2016 | ||||||||||||||||
Amortized Cost Basis | Gross Unrealized Holding Gains | Gross Unrealized Holding Losses | Estimated Fair Value | |||||||||||||
Securitiesavailable-for-sale: | ||||||||||||||||
U.S. Treasury securities | $ | 10,649 | $ | 19 | $ | — | $ | 10,668 | ||||||||
Obligations of U.S. government sponsored enterprises and agencies | 113,450 | 253 | — | 113,703 | ||||||||||||
Obligations of state and political subdivisions | 1,534,095 | 40,194 | (10,013 | ) | 1,564,276 | |||||||||||
Corporate bonds and other | 51,920 | 476 | (3 | ) | 52,393 | |||||||||||
Residential mortgage-backed securities | 848,614 | 8,260 | (5,513 | ) | 851,361 | |||||||||||
Commercial mortgage-backed securities | 269,044 | 622 | (1,230 | ) | 268,436 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Total securitiesavailable-for-sale | $ | 2,827,772 | $ | 49,824 | $ | (16,759 | ) | $ | 2,860,837 | |||||||
|
|
|
|
|
|
|
|
Disclosures related to
December 31, 2020 | ||||||||||||||||
Amortized Cost Basis | Gross Unrealized Holding Gains | Gross Unrealized Holding Losses | Estimated Value | |||||||||||||
Securities available-for-sale: | ||||||||||||||||
Obligations of state and political subdivisions | $ | 2,283,616 | $ | 143,339 | $ | (79 | ) | $ | 2,426,876 | |||||||
Residential mortgage-backed securities | 1,421,922 | 50,473 | (115 | ) | 1,472,280 | |||||||||||
Commercial mortgage-backed securities | 467,243 | 22,077 | (4 | ) | 489,316 | |||||||||||
Corporate bonds and other | 4,398 | 159 | 0 | 4,557 | ||||||||||||
Total securities available-for-sale | $ | 4,177,179 | $ | 216,048 | $ | (198 | ) | $ | 4,393,029 | |||||||
December 31, 2019 | ||||||||||||||||
Amortized Cost Basis | Gross Unrealized Holding Gains | Gross Unrealized Holding Losses | Estimated Fair Value | |||||||||||||
Securities available-for-sale: | ||||||||||||||||
U.S. Treasury securities | $ | 9,997 | $ | 22 | $ | — | $ | 10,019 | ||||||||
Obligations of state and | 1,231,619 | 57,764 | (400 | ) | 1,288,983 | |||||||||||
Corporate bonds and other | 4,643 | 65 | — | 4,708 | ||||||||||||
Residential mortgage-backed securities | 1,586,872 | 23,139 | (1,148 | ) | 1,608,863 | |||||||||||
Commercial mortgage-backed securities | 494,674 | 6,356 | (286 | ) | 500,744 | |||||||||||
Total securities available-for-sale | $ | 3,327,805 | $ | 87,346 | $ | (1,834 | ) | $ | 3,413,317 | |||||||
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2017, 20162020 and 2015
2019.
Amortized Cost Basis | Estimated Fair Value | |||||||
Due within one year | $ | 184,538 | $ | 185,547 | ||||
Due after one year through five years | 631,376 | 654,092 | ||||||
Due after five years through ten years | 623,628 | 650,923 | ||||||
Due after ten years | 1,690 | 2,077 | ||||||
Mortgage-backed securities | 1,601,386 | 1,594,834 | ||||||
|
|
|
| |||||
Total | $ | 3,042,618 | $ | 3,087,473 | ||||
|
|
|
|
Amortized Cost Basis | Estimated Fair Value | |||||||
Due within one year | $ | 285,774 | $ | 289,600 | ||||
Due after one year through five years | 2,078,388 | 2,187,779 | ||||||
Due after five years through ten years | 1,805,324 | 1,907,631 | ||||||
Due after ten years | 7,693 | 8,019 | ||||||
Total | $ | 4,177,179 | $ | 4,393,029 | ||||
Less than 12 Months | 12 Months or Longer | Total | ||||||||||||||||||||||
December 31, 2017 | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||
Obligations of U.S. government sponsored enterprises and agencies | $ | 60,329 | $ | 186 | $ | — | $ | — | $ | 60,329 | $ | 186 | ||||||||||||
Obligations of state and political subdivisions | 66,361 | 219 | 44,938 | 717 | 111,299 | 936 | ||||||||||||||||||
Corporate bonds and other | 224 | 2 | 237 | 3 | 461 | 5 | ||||||||||||||||||
Residential mortgage-backed securities | 701,252 | 3,988 | 239,641 | 4,928 | 940,893 | 8,916 | ||||||||||||||||||
Commercial mortgage-backed securities | 239,548 | 1,500 | 92,549 | 960 | 332,097 | 2,460 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 1,067,714 | $ | 5,895 | $ | 377,365 | $ | 6,608 | $ | 1,445,079 | $ | 12,503 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Less than 12 Months | 12 Months or Longer | Total | ||||||||||||||||||||||
December 31, 2016 | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||
Obligations of state and political subdivisions | $ | 446,052 | $ | 9,997 | $ | 1,209 | $ | 16 | $ | 447,261 | $ | 10,013 | ||||||||||||
Corporate bonds and other | 244 | 3 | — | — | 244 | 3 | ||||||||||||||||||
Residential mortgage-backed securities | 372,331 | 4,532 | 33,227 | 981 | 405,558 | 5,513 | ||||||||||||||||||
Commercial mortgage-backed securities | 193,495 | 1,180 | 13,263 | 50 | 206,758 | 1,230 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 1,012,122 | $ | 15,712 | $ | 47,699 | $ | 1,047 | $ | 1,059,821 | $ | 16,759 | ||||||||||||
|
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|
|
|
|
|
|
|
|
|
|
Less than 12 Months | 12 Months or Longer | Total | ||||||||||||||||||||||
December 31, 2020 | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||
Obligations of state and political subdivisions | $ | 25,214 | $ | 79 | $ | 0 | $ | 0 | $ | 25,214 | $ | 79 | ||||||||||||
Residential mortgage-backed securities | 36,017 | 96 | 3,156 | 19 | 39,173 | 115 | ||||||||||||||||||
Commercial mortgage-backed securities | 16,218 | 4 | 0 | 0 | 16,218 | 4 | ||||||||||||||||||
Total | $ | 77,449 | $ | 179 | $ | 3,156 | $ | 19 | $ | 80,605 | $ | 198 | ||||||||||||
Less than 12 Months | 12 Months or Longer | Total | ||||||||||||||||||||||
December 31, 2019 | Fair | Unrealized Loss | Fair Value | Unrealized Loss | Fair Value | Unrealized Loss | ||||||||||||||||||
Obligations of state and political subdivisions | $ | 65,787 | $ | 400 | | $ | 326 | $ | 0 | $ | 66,113 | $ | 400 | |||||||||||
Residential mortgage-backed securities | 100,004 | 306 | 103,983 | 842 | 203,987 | 1,148 | ||||||||||||||||||
Commercial mortgage-backed securities | 74,560 | 178 | 35,178 | 108 | 109,738 | 286 | ||||||||||||||||||
Total | $ | 240,351 | $ | 884 | $ | 139,487 | $ | 950 | $ | 379,838 | $ | 1,834 | ||||||||||||
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2017, 2016 and 2015
less than cost is not indicative of recoverability. The unrealized losses noted are interest rate related due to the level of interest rates at December 31, 2017 compared2020 are due to thechanges in interest rates and not credit-related events. As such, no allowance for credit losses is required at December 31, 2020. Unrealized losses on investment securities are expected to recover over 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.securities approach maturity. Our mortgage related securities are backed by GNMA, FNMA and FHLMC or are collateralized by securities backed by these agencies. At December 31, 2017, 82.98%2020 and 2019, 80.87% and 86.34%, respectively, of our31.21% are51.57% and 41.35%, respectively, were guaranteed by the Texas Permanent School Fund.
Loansheld-for-investment
December 31, | ||||||||
2017 | 2016 | |||||||
Commercial | $ | 684,099 | $ | 674,410 | ||||
Agricultural | 94,543 | 84,021 | ||||||
Real estate | 2,302,998 | 2,189,844 | ||||||
Consumer | 403,929 | 409,032 | ||||||
|
|
|
| |||||
Total loansheld-for-investment | $ | 3,485,569 | $ | 3,357,307 | ||||
|
|
|
|
Loansheld-for-sale totaled $15,130,000 and $26,898,000
December 31, | ||||||||
2020 | 2019 | |||||||
Commercial: | ||||||||
C&I | $ | 1,131,382 | $ | N/A | ||||
Municipal | 181,325 | N/A | ||||||
Total Commercial | 1,312,707 | 856,326 | ||||||
Agricultural | 94,864 | 103,640 | ||||||
Real Estate: | ||||||||
Construction & Development | 553,959 | N/A | ||||||
Farm | 152,237 | N/A | ||||||
Non-Owner OccupiedCRE | 617,686 | N/A | ||||||
Owner Occupied CRE | 746,974 | N/A | ||||||
Residential | 1,248,409 | N/A | ||||||
Total Real Estate | 3,319,265 | 2,823,372 | ||||||
Consumer: | ||||||||
Auto | 353,595 | N/A | ||||||
Non-Auto | 90,602 | N/A | ||||||
Total Consumer | 444,197 | 411,631 | ||||||
Total Loans | 5,171,033 | 4,194,969 | ||||||
Less: Allowance for credit losses | (66,534 | ) | (52,499 | ) | ||||
Loans, net | $ | 5,104,499 | $ | 4,142,470 |
Dallas (“FHLB”) to provide liquidity and meet pledging requirements for those customers eligible to have securities pledged to secure certain uninsured deposits. At December 31, 2020, $3,239,207,000 in loans held by our bank subsidiary were subject to blanket liens as security for this line of credit. At December 31, 2020, there was no balance outstanding under this line of credit.
December 31, | ||||||||
2017 | 2016 | |||||||
Non-accrual loans* | $ | 17,670 | $ | 27,371 | ||||
Loans still accruing and past due 90 days or more | 288 | 284 | ||||||
Troubled debt restructured loans** | 627 | 701 | ||||||
|
|
|
| |||||
Total | $ | 18,585 | $ | 28,356 | ||||
|
|
|
|
December 31, | ||||||||
2020 | 2019 | |||||||
Nonaccrual loans | $ | 42,619 | $ | 24,582 | ||||
Loans still accruing and past due 90 days or more | 113 | 153 | ||||||
Troubled debt restructured loans* | 24 | 26 | ||||||
Total | $ | 42,756 | $ | 24,761 | ||||
* | Troubled debt restructured loans of $7,407,000 and |
The Company’s recorded investment in impaired loans and the related valuation allowance are as follows (in thousands):
December 31, 2017 | December 31, 2016 | |||||||||||||
Recorded Investment | Valuation Allowance | Recorded Investment | Valuation Allowance | |||||||||||
$17,670 | $ | 3,996 | $ | 27,371 | $ | 5,012 | ||||||||
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|
|
|
|
2018
December 31, | ||||||||
2017 | 2016 | |||||||
Commercial | $ | 3,612 | $ | 7,284 | ||||
Agricultural | 134 | 99 | ||||||
Real Estate | 12,838 | 18,754 | ||||||
Consumer | 1,086 | 1,234 | ||||||
|
|
|
| |||||
Total | $ | 17,670 | $ | 27,371 | ||||
|
|
|
|
No
December 31, | ||||||||
2020 | 2019 | |||||||
Commercial: | ||||||||
C&I | $ | 5,015 | $ | N/A | ||||
Municipal | — | N/A | ||||||
Total Commercial | 5,015 | 3,093 | ||||||
Agricultural | 1,076 | 1,376 | ||||||
Real Estate: | ||||||||
Construction & Development | 3,838 | N/A | ||||||
Farm | 7,299 | N/A | ||||||
Non-Owner OccupiedCRE | 5,243 | N/A | ||||||
Owner Occupied CRE | 10,797 | N/A | ||||||
Residential | 8,851 | N/A | ||||||
Total Real Estate | 36,028 | 19,787 | ||||||
Consumer: | ||||||||
Auto | 407 | N/A | ||||||
Non-Auto | 93 | N/A | ||||||
Total Consumer | 500 | 326 | ||||||
$ | 42,619 | $ | 24,582 | |||||
The Company’s impaired loans and related2020.
December 31, 2020 | C&I | Municipal | Agricultural | Construction & Development | Farm | |||||||||||||||
Beginning balance, prior to adoption of ASC 326 | $ | 11,010 | $ | 1,112 | $ | 1,206 | $ | 6,045 | $ | 663 | ||||||||||
Impact of adopting ASC 326 | (155 | ) | (16 | ) | (8 | ) | (75 | ) | (8 | ) | ||||||||||
Initial allowance on acquired TB&T PCD loans | — | — | — | — | 727 | |||||||||||||||
Provision for loan losses | 3,955 | 456 | 398 | 7,542 | 337 | |||||||||||||||
Recoveries | 1,315 | — | 31 | — | 157 | |||||||||||||||
Charge-offs | (2,516 | ) | — | (372 | ) | — | — | |||||||||||||
Ending balance | $ | 13,609 | $ | 1,552 | $ | 1,255 | $ | 13,512 | $ | 1,876 | ||||||||||
December 31, 2017 | Unpaid Contractual Principal Balance | Recorded Investment With No Allowance* | Recorded Investment With Allowance | Total Recorded Investment | Related Allowance | 12 Month Average Recorded Investment | ||||||||||||||||||
Commercial | $ | 5,597 | $ | 518 | $ | 3,094 | $ | 3,612 | $ | 1,194 | $ | 4,849 | ||||||||||||
Agricultural | 147 | — | 134 | 134 | 31 | 120 | ||||||||||||||||||
Real Estate | 16,823 | 2,348 | 10,490 | 12,838 | 2,316 | 13,835 | ||||||||||||||||||
Consumer | 1,284 | 143 | 943 | 1,086 | 455 | 1,258 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 23,851 | $ | 3,009 | $ | 14,661 | $ | 17,670 | $ | 3,996 | $ | 20,062 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2016 | Unpaid Contractual Principal Balance | Recorded Investment With No Allowance* | Recorded Investment With Allowance | Total Recorded Investment | Related Allowance | 12 Month Average Recorded Investment | ||||||||||||||||||
Commercial | $ | 13,389 | $ | 1,148 | $ | 6,136 | $ | 7,284 | $ | 2,128 | $ | 4,921 | ||||||||||||
Agricultural | 103 | — | 99 | 99 | 25 | 50 | ||||||||||||||||||
Real Estate | 23,466 | 6,229 | 12,525 | 18,754 | 2,428 | 16,170 | ||||||||||||||||||
Consumer | 1,421 | 280 | 954 | 1,234 | 431 | 914 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | $ | 38,379 | $ | 7,657 | $ | 19,714 | $ | 27,371 | $ | 5,012 | $ | 22,055 | ||||||||||||
|
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|
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|
|
Contents
The Company recognized interest income2018
December 31, 2020 (continued) | Non-Owner Occupied CRE | Owner Occupied CRE | Residential | Auto | Non- Auto | Total | ||||||||||||||||||
Beginning balance, prior to adoption of ASC 326 | $ | 7,341 | $ | 9,533 | $ | 10,392 | $ | 3,900 | $ | 1,297 | $ | 52,499 | ||||||||||||
Impact of adopting ASC 326 | (91 | ) | (118 | ) | (129 | ) | (14 | ) | (5 | ) | (619 | ) | ||||||||||||
Initial allowance on acquired TB&T PCD loans | — | 847 | 104 | — | — | 1,678 | ||||||||||||||||||
Provision for loan losses | 1,573 | 2,635 | 2,456 | (2,587 | ) | (717 | ) | 16,048 | ||||||||||||||||
Recoveries | 131 | 17 | 151 | 269 | 171 | 2,242 | ||||||||||||||||||
Charge-offs | (563 | ) | (567 | ) | (373 | ) | (548 | ) | (375 | ) | (5,314 | ) | ||||||||||||
Ending balance | $ | 8,391 | $ | 12,347 | $ | 12,601 | $ | 1,020 | $ | 371 | $ | 66,534 | ||||||||||||
December 31, 2019 | Commercial | Agricultural | Real Estate | Consumer | Total | |||||||||||||||
Beginning balance | $ | 11,948 | $ | 1,446 | $ | 32,342 | $ | 5,466 | $ | 51,202 | ||||||||||
Provision for loan losses | 398 | (79 | ) | 2,520 | 126 | 2,965 | ||||||||||||||
Recoveries | 1,364 | 158 | 404 | 532 | 2,458 | |||||||||||||||
Charge-offs | (1,588 | ) | (319 | ) | (1,292 | ) | (927 | ) | (4,126 | ) | ||||||||||
Ending balance | $ | 12,122 | $ | 1,206 | $ | 33,974 | $ | 5,197 | $ | 52,499 | ||||||||||
December 31, 2020 | Collateral Dependent Loans Individually Evaluated for Credit Losses Without an Allowance | Collateral Dependent Loans Individually Evaluated for Credit Losses With an Allowance | Non-Collateral Dependent Loans Individually Evaluated for Credit Losses | Total Loans Individually Evaluated for Credit Losses | Related Allowance on Collateral Dependent Loans | Related Allowance on Non- Collateral Dependent Loans | Total Allowance for Credit Losses on Loans Individually Evaluated for Credit Losses | |||||||||||||||||||||
Commercial: | ||||||||||||||||||||||||||||
C&I | $ | 1,544 | $ | 3,471 | $ | 25,629 | $ | 30,644 | $ | 799 | $ | 4,592 | $ | 5,391 | ||||||||||||||
Municipal | — | — | 9,439 | 9,439 | — | 1,435 | 1,435 | |||||||||||||||||||||
Total Commercial | 1,544 | 3,471 | 35,068 | 40,083 | 799 | 6,027 | 6,826 | |||||||||||||||||||||
Agricultural | 470 | 606 | 5,572 | 6,648 | 96 | 886 | 982 | |||||||||||||||||||||
Real Estate: | ||||||||||||||||||||||||||||
Construction & Development | 1,176 | 2,661 | 11,368 | 15,205 | 35 | 617 | 652 | |||||||||||||||||||||
Farm | 2,614 | 4,685 | 3,349 | 10,648 | 654 | 658 | 1,312 | |||||||||||||||||||||
Non-Owner OccupiedCRE | 4,009 | 1,234 | 17,383 | 22,626 | 500 | 1,421 | 1,921 | |||||||||||||||||||||
Owner Occupied CRE | 7,279 | 3,518 | 51,933 | 62,730 | 657 | 5,172 | 5,829 | |||||||||||||||||||||
Residential | 4,347 | 4,504 | 28,196 | 37,047 | 676 | 2,431 | 3,107 | |||||||||||||||||||||
Total Real Estate | 19,425 | 16,602 | 112,229 | 148,256 | 2,522 | 10,299 | 12,821 | |||||||||||||||||||||
Consumer: | ||||||||||||||||||||||||||||
Auto | — | 407 | 1,523 | 1,930 | 1 | 5 | 6 | |||||||||||||||||||||
Non-Auto | — | 94 | 440 | 534 | 1 | 1 | 2 | |||||||||||||||||||||
Total Consumer | — | 501 | 1,963 | 2,464 | 2 | 6 | 8 | |||||||||||||||||||||
Total | $ | 21,439 | $ | 21,180 | $ | 154,832 | $ | 197,451 | $ | 3,419 | $ | 17,218 | $ | 20,637 | ||||||||||||||
December 31, 2019 | Unpaid Contractual Principal Balance | Recorded Investment With No Allowance | Recorded Investment With Allowance | Total Recorded Investment | Related Allowance | 12 Month Average Recorded Investment | ||||||||||||||||||
Commercial | $ | 4,511 | $ | 630 | $ | 2,463 | $ | 3,093 | $ | 1,042 | $ | 3,488 | ||||||||||||
Agricultural | 1,603 | 658 | 718 | 1,376 | 235 | 1,644 | ||||||||||||||||||
Real Estate | 27,366 | 7,081 | 12,706 | 19,787 | 1,950 | 21,726 | ||||||||||||||||||
Consumer | 469 | — | 326 | 326 | 1 | 449 | ||||||||||||||||||
Total | $ | 33,949 | $ | 8,369 | $ | 16,213 | $ | 24,582 | $ | 3,228 | $ | 27,307 | ||||||||||||
December 31, 2020 | C&I | Municipal | Agricultural | Construction & Development | Farm | ||||||||||||||||||
Loans individually evaluated for credit losses | $ | 5,391 | $ | 1,435 | $ | 982 | $ | 652 | $ | 1,312 | |||||||||||||
Loans collectively evaluated for credit losses | 8,218 | 117 | 273 | 12,860 | 564 | ||||||||||||||||||
Total | $ | 13,609 | $ | 1,552 | $ | 1,255 | $ | 13,512 | $ | 1,876 | |||||||||||||
December 31, 2020 (continued) | Non-Owner Occupied C RE | Owner Occupied C R E | Residential | Auto | Non-Auto | Total | ||||||||||||||||||
Loans individually evaluated for credit losses | $ | 1,921 | $ | 5,829 | $ | 3,107 | $ | 6 | $ | 2 | $ | 20,637 | ||||||||||||
Loans collectively evaluated for credit losses | 6,470 | 6,518 | 9,494 | 1,014 | 369 | 45,897 | ||||||||||||||||||
Total | $ | 8,391 | $ | 12,347 | $ | 12,601 | $ | 1,020 | $ | 371 | $ | 66,534 | ||||||||||||
December 31, 2019 | Commercial | Agricultural | Real | Consumer | Total | ||||||||||||||||||
Loans individually evaluated for impairment | $ | 1,042 | $ | 235 | $ | 1,950 | $ | 1 | $ | 3,228 | |||||||||||||
Loan collectively evaluated for impairment | 11,080 | 971 | 32,024 | 5,196 | 49,271 | ||||||||||||||||||
Total | $ | 12,122 | $ | 1,206 | $ | 33,974 | $ | 5,197 | $ | 52,499 | |||||||||||||
December 31, 2020 | C&I | Municipal | Agriculture | Construction & Development | Farm | ||||||||||||||||||
Loans individually evaluated for credit losses | $ | 30,644 | $ | 9,439 | $ | 6,648 | $ | 15,205 | $ | 10,648 | |||||||||||||
Loans collectively evaluated for credit losses | 1,100,738 | 171,886 | 88,216 | 538,754 | 141,589 | ||||||||||||||||||
Total | $ | 1,131,382 | $ | 181,325 | $ | 94,864 | $ | 553,959 | $ | 152,237 | |||||||||||||
December 31, 2020 (continued) | Non - OwnerOccupied CRE | Owner Occupied CRE | Residential | Auto | Non-Auto | Total | ||||||||||||||||||
Loans individually evaluated for credit losses | $ | 22,626 | $ | 62,730 | $ | 37,047 | $ | 1,930 | $ | 534 | $ | 197,451 | ||||||||||||
Loans collectively evaluated for credit losses | 595,060 | 684,244 | 1,211,362 | 351,665 | 90,068 | 4,973,582 | ||||||||||||||||||
Total | $ | 617,686 | $ | 746,974 | $ | 1,248,409 | $ | 353,595 | $ | 90,602 | $ | 5,171,033 | ||||||||||||
December 31, 2019 | Commercial | Agricultural | Real Estate | Consumer | Total | |||||||||||||||
Loans individually evaluated for impairment | $ | 3,093 | $ | 1,376 | $ | 19,787 | $ | 326 | $ | 24,582 | ||||||||||
Loan collectively evaluated for impairment | 853,233 | 102,264 | 2,803,585 | 411,305 | 4,170,387 | |||||||||||||||
Total | $ | 856,326 | $ | 103,640 | $ | 2,823,372 | $ | 411,631 | $ | 4,194,969 | ||||||||||
nonaccrual.
December 31, 2017 | Pass | Special Mention | Substandard | Doubtful | Total | |||||||||||||||
Commercial | $ | 649,166 | $ | 6,282 | $ | 28,651 | $ | — | $ | 684,099 | ||||||||||
Agricultural | 90,457 | 1,527 | 2,559 | — | 94,543 | |||||||||||||||
Real Estate | 2,227,302 | 29,089 | 46,607 | — | 2,302,998 | |||||||||||||||
Consumer | 401,434 | 181 | 2,314 | — | 403,929 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 3,368,359 | $ | 37,079 | $ | 80,131 | $ | — | $ | 3,485,569 | ||||||||||
|
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|
|
|
|
|
|
|
|
December 31, 2016 | Pass | Special Mention | Substandard | Doubtful | Total | |||||||||||||||
Commercial | $ | 629,756 | $ | 5,769 | $ | 38,885 | $ | — | $ | 674,410 | ||||||||||
Agricultural | 81,620 | 715 | 1,686 | — | 84,021 | |||||||||||||||
Real Estate | 2,111,947 | 18,091 | 59,806 | — | 2,189,844 | |||||||||||||||
Consumer | 406,182 | 212 | 2,638 | — | 409,032 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 3,229,505 | $ | 24,787 | $ | 103,015 | $ | — | $ | 3,357,307 | ||||||||||
|
|
|
|
|
|
|
|
|
|
December 31, | 2020 | 2019 | 2018 | 2017 | 2016 | Prior | Revolving Loans Amort Cost Basis | Total | ||||||||||||||||||||||||
C&I | ||||||||||||||||||||||||||||||||
Risk rating: | ||||||||||||||||||||||||||||||||
Pass | $ | 874 | $ | 101 | $ | 70 | $ | 28 | $ | 10 | $ | 16 | $ | — | $ | 1,099 | ||||||||||||||||
Special mention | 9 | 2 | — | 1 | — | — | — | 12 | ||||||||||||||||||||||||
Substandard | 12 | 4 | 4 | — | — | — | — | 20 | ||||||||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Total | $ | 895 | $ | 107 | $ | 74 | $ | 29 | $ | 10 | $ | 16 | $ | — | $ | 1,131 | ||||||||||||||||
2018
December 31, | 2020 | 2019 | 2018 | 2017 | 2016 | Prior | Revolving Loans Amort Cost Basis | Total | |||||||||||||||||||||||||
Municipal | |||||||||||||||||||||||||||||||||
Risk rating: | |||||||||||||||||||||||||||||||||
Pass | $ | 26 | $ | 19 | $ | 29 | $ | 14 | $ | 13 | $ | 71 | $ | — | $ | 172 | |||||||||||||||||
Special mention | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Substandard | 2 | — | — | 5 | 1 | 1 | — | 9 | |||||||||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Total | $ | 28 | $ | 19 | $ | 29 | $ | 19 | $ | 14 | $ | 72 | $ | — | $ | 181 | |||||||||||||||||
December 31, | 2020 | 2019 | 2018 | 2017 | 2016 | Prior | Revolving Loans Amort Cost | Total | |||||||||||||||||||||||||
Agricultural | |||||||||||||||||||||||||||||||||
Risk rating: | |||||||||||||||||||||||||||||||||
Pass | $ | 57 | $ | 19 | $ | 9 | $ | 3 | $ | 1 | $ | — | $ | — | $ | 89 | |||||||||||||||||
Special mention | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Substandard | 6 | — | — | — | — | — | — | 6 | |||||||||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Total | $ | 63 | $ | 19 | $ | 9 | $ | 3 | $ | 1 | $ | 0 | $ | — | $ | 95 | |||||||||||||||||
December 31, | 2020 | 2019 | 2018 | 2017 | 2016 | Prior | Revolving Loans Amort Cost Basis | Total | |||||||||||||||||||||||||
Construction & Development | |||||||||||||||||||||||||||||||||
Risk rating: | |||||||||||||||||||||||||||||||||
Pass | $ | 371 | $ | 97 | $ | 36 | $ | 19 | $ | 7 | $ | 9 | $ | — | $ | 539 | |||||||||||||||||
Special mention | 2 | 4 | — | — | — | — | — | 6 | |||||||||||||||||||||||||
Substandard | 4 | 1 | — | 3 | — | 1 | — | 9 | |||||||||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Total | $ | 377 | $ | 102 | $ | 36 | $ | 22 | $ | 7 | $ | 10 | $ | — | $ | 554 | |||||||||||||||||
December 31, | 2020 | 2019 | 2018 | 2017 | 2016 | Prior | Revolving Loans Amort Cost Basis | Total | |||||||||||||||||||||||||
Farm | |||||||||||||||||||||||||||||||||
Risk rating: | |||||||||||||||||||||||||||||||||
Pass | $ | 57 | $ | 22 | $ | 18 | $ | 11 | $ | 11 | $ | 23 | $ | — | $ | 142 | |||||||||||||||||
Special mention | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Substandard | 7 | 1 | 0 | 1 | — | 1 | — | 10 | |||||||||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||
Total | $ | 64 | $ | 23 | $ | 18 | $ | 12 | $ | 11 | $ | 24 | $ | — | $ | 152 | |||||||||||||||||
December 31, | 2020 | 2019 | 2018 | 2017 | 2016 | Prior | Revolving Loans Amort Cost Basis | Total | ||||||||||||||||||||||||
Non-Owner Occupied CRE | ||||||||||||||||||||||||||||||||
Risk rating: | ||||||||||||||||||||||||||||||||
Pass | $ | 197 | $ | 117 | $ | 93 | $ | 44 | $ | 55 | $ | 88 | $ | — | $ | 594 | ||||||||||||||||
Special mention | 1 | — | 1 | 8 | 1 | — | — | 11 | ||||||||||||||||||||||||
Substandard | — | 2 | — | — | — | 11 | — | 13 | ||||||||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | 0 | ||||||||||||||||||||||||
Total | $ | 198 | $ | 119 | $ | 94 | $ | 52 | $ | 56 | $ | 99 | $ | — | $ | 618 | ||||||||||||||||
December 31, | 2020 | 2019 | 2018 | 2017 | 2016 | Prior | Revolving Loans Amort Cost Basis | Total | ||||||||||||||||||||||||
Owner Occupied CRE | ||||||||||||||||||||||||||||||||
Risk rating: | ||||||||||||||||||||||||||||||||
Pass | $ | 176 | $ | 132 | $ | 105 | $ | 75 | $ | 65 | $ | 132 | $ | — | $ | 685 | ||||||||||||||||
Special mention | 5 | 5 | 2 | 4 | 1 | 1 | — | 18 | ||||||||||||||||||||||||
Substandard | 5 | 4 | 20 | 4 | 1 | 10 | — | 44 | ||||||||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Total | $ | 186 | $ | 141 | $ | 127 | $ | 83 | $ | 67 | $ | 143 | $ | — | $ | 747 | ||||||||||||||||
December 31, | 2020 | 2019 | 2018 | 2017 | 2016 | Prior | Revolving Loans Amort Cost Basis | Total | ||||||||||||||||||||||||
Residential | ||||||||||||||||||||||||||||||||
Risk rating: | ||||||||||||||||||||||||||||||||
Pass | $ | 373 | $ | 172 | $ | 134 | $ | 101 | $ | 101 | $ | 237 | $ | 93 | $ | 1,211 | ||||||||||||||||
Special mention | 3 | 1 | 1 | 1 | 1 | 3 | — | 10 | ||||||||||||||||||||||||
Substandard | 5 | 3 | 3 | 3 | 1 | 10 | 2 | 27 | ||||||||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Total | $ | 381 | $ | 176 | $ | 138 | $ | 105 | $ | 103 | $ | 250 | $ | 95 | $ | 1,248 | ||||||||||||||||
December 31, | 2020 | 2019 | 2018 | 2017 | 2016 | Prior | Revolving Loans Amort Cost Basis | Total | ||||||||||||||||||||||||
Auto | ||||||||||||||||||||||||||||||||
Risk rating: | ||||||||||||||||||||||||||||||||
Pass | $ | 177 | $ | 104 | $ | 39 | $ | 21 | $ | 9 | $ | 2 | $ | — | $ | 352 | ||||||||||||||||
Special mention | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Substandard | 1 | 1 | — | — | — | — | — | 2 | ||||||||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Total | $ | 178 | $ | 105 | $ | 39 | $ | 21 | $ | 9 | $ | 2 | $ | — | $ | 354 | ||||||||||||||||
December 31, | 2020 | 2019 | 2018 | 2017 | 2016 | Prior | Revolving Loans Amort Cost Basis | Total | ||||||||||||||||||||||||
Non-Auto | ||||||||||||||||||||||||||||||||
Risk rating: | ||||||||||||||||||||||||||||||||
Pass | $ | 48 | $ | 21 | $ | 7 | $ | 4 | $ | 1 | $ | 2 | $ | 7 | $ | 90 | ||||||||||||||||
Special mention | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Substandard | — | — | — | — | — | 1 | — | 1 | ||||||||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Total | $ | 48 | $ | 21 | $ | 7 | $ | 4 | $ | 1 | $ | 3 | $ | 7 | $ | 91 | ||||||||||||||||
December 31, | 2020 | 2019 | 2018 | 2017 | 2016 | Prior | Revolving Loans Amort Cost Basis | Total | ||||||||||||||||||||||||
Total Loans | ||||||||||||||||||||||||||||||||
Risk rating: | ||||||||||||||||||||||||||||||||
Pass | $ | 2,356 | $ | 804 | $ | 540 | $ | 320 | $ | 273 | $ | 580 | $ | 100 | $ | 4,973 | ||||||||||||||||
Special mention | 20 | 12 | 4 | 14 | 3 | 4 | — | 57 | ||||||||||||||||||||||||
Substandard | 42 | 16 | 27 | 16 | 3 | 35 | 2 | 141 | ||||||||||||||||||||||||
Doubtful | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Total | $ | 2,417 | $ | 834 | $ | 571 | $ | 349 | $ | 280 | $ | 619 | $ | 102 | $ | 5,171 | ||||||||||||||||
December 31, 2019 | Pass | Special Mention | Substandard | Doubtful | Total | |||||||||||||||
Commercial | $ | 825 | $ | 21 | $ | 10 | $ | — | $ | 856 | ||||||||||
Agricultural | 102 | — | 2 | — | 104 | |||||||||||||||
Real Estate | 2,717 | 42 | 64 | — | 2,823 | |||||||||||||||
Consumer | 411 | — | 1 | — | 412 | |||||||||||||||
Total | $ | 4,055 | $ | 63 | $ | 77 | $ | — | $ | 4,195 | ||||||||||
December 31, 2017 | 15-59 Days Past Due* | 60-89 Days Past Due | Greater Than 90 Days | Total Past Due | Total Current | Total Loans | Total 90 Days Past Due Still Accruing | |||||||||||||||||||||
Commercial | $ | 2,039 | $ | 1,104 | $ | 1,081 | $ | 4,224 | $ | 679,875 | $ | 684,099 | $ | 7 | ||||||||||||||
Agricultural | 640 | — | — | 640 | 93,903 | 94,543 | — | |||||||||||||||||||||
Real Estate | 12,308 | 511 | 1,198 | 14,017 | 2,288,981 | 2,302,998 | 216 | |||||||||||||||||||||
Consumer | 1,360 | 361 | 135 | 1,856 | 402,073 | 403,929 | 65 | |||||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total | $ | 16,347 | $ | 1,976 | $ | 2,414 | $ | 20,737 | $ | 3,464,832 | $ | 3,485,569 | $ | 288 | ||||||||||||||
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December 31, 2016 | 15-59 Days Past Due* | 60-89 Days Past Due | Greater Than 90 Days | Total Past Due | Total Current | Total Loans | Total 90 Days Past Due Still Accruing | |||||||||||||||||||||
Commercial | $ | 3,908 | $ | 1,122 | $ | 2,220 | $ | 7,250 | $ | 667,160 | $ | 674,410 | $ | 10 | ||||||||||||||
Agricultural | 185 | — | — | 185 | 83,836 | 84,021 | — | |||||||||||||||||||||
Real Estate | 13,172 | 1,301 | 5,268 | 19,741 | 2,170,103 | 2,189,844 | 272 | |||||||||||||||||||||
Consumer | 1,845 | 368 | 122 | 2,335 | 406,697 | 409,032 | 2 | |||||||||||||||||||||
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|
|
|
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| |||||||||||||||
Total | $ | 19,110 | $ | 2,791 | $ | 7,610 | $ | 29,511 | $ | 3,327,796 | $ | 3,357,307 | $ | 284 | ||||||||||||||
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December 31, 2020 | 15-59 Days Past Due* | 60-89 Days Past | Greater Than Days | Total Due | Current | Total Loans | 90 Days Past Due Still Accruing | |||||||||||||||||||||
Commercial: | ||||||||||||||||||||||||||||
C&I | $ | 3,647 | $ | 406 | $ | 576 | $ | 4,629 | $ | 1,126,753 | $ | 1,131,382 | $ | 21 | ||||||||||||||
Municipal | — | — | — | — | 181,325 | 181,325 | — | |||||||||||||||||||||
Total Commercial | 3,647 | 406 | 576 | 4,629 | 1,308,078 | 1,312,707 | 21 | |||||||||||||||||||||
Agricultural | 193 | 95 | 0 | 288 | 94,576 | 94,864 | — | |||||||||||||||||||||
Real Estate: | ||||||||||||||||||||||||||||
Construction & Development | 4,775 | 44 | — | 4,819 | 549,140 | 553,959 | — | |||||||||||||||||||||
Farm | 708 | — | — | 708 | 151,529 | 152,237 | — | |||||||||||||||||||||
Non-Owner OccupiedCRE | 613 | — | — | 613 | 617,073 | 617,686 | — | |||||||||||||||||||||
Owner Occupied CRE | 1,393 | 322 | 133 | 1,848 | 745,126 | 746,974 | — | |||||||||||||||||||||
Residential | 8,072 | 18 | 275 | 8,365 | 1,240,044 | 1,248,409 | 33 | |||||||||||||||||||||
Total Real Estate | 15,561 | 384 | 408 | 16,353 | 3,302,912 | 3,319,265 | 33 | |||||||||||||||||||||
Consumer: | ||||||||||||||||||||||||||||
Auto | 551 | 158 | 75 | 784 | 352,811 | 353,595 | 59 | |||||||||||||||||||||
Non-Auto | 214 | 24 | — | 238 | 90,364 | 90,602 | — | |||||||||||||||||||||
Total Consumer | 765 | 182 | 75 | 1,022 | 443,175 | 444,197 | 59 | |||||||||||||||||||||
Total | $ | 20,166 | $ | 1,067 | $ | 1,059 | $ | 22,292 | $ | 5,148,741 | $ | 5,171,033 | $ | 113 | ||||||||||||||
December 31, 2019 | 15-59 Days Past | 60-89 Days Past Due | Greater Than 90 Days | Total Past Due | Current | Total Loans | Total 90 Days e StillAccruing | |||||||||||||||||||||
Commercial | $ | 3,257 | $ | 557 | $ | 722 | $ | 4,536 | $ | 851,790 | $ | 856,326 | $ | 112 | ||||||||||||||
Agricultural | 183 | 44 | 400 | 627 | 103,013 | 103,640 | — | |||||||||||||||||||||
Real Estate | 12,890 | 288 | 195 | 13,373 | 2,809,999 | 2,823,372 | — | |||||||||||||||||||||
Consumer | 572 | 151 | 45 | 768 | 410,863 | 411,631 | 41 | |||||||||||||||||||||
Total | $ | 16,902 | $ | 1,040 | $ | 1,362 | $ | 19,304 | $ | 4,175,665 | $ | 4,194,969 | $ | 153 | ||||||||||||||
* | 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. |
The following table details the allowance for loan losses at December 31, 2017 and 2016 by portfolio segment (in thousands). There were no allowances for purchased credit impaired loans at December 31, 2017 or 2016. Allocation
December 31, 2016 | Commercial | Agricultural | Real Estate | Consumer | Total | |||||||||||||||
Beginning balance | $ | 12,644 | $ | 1,191 | $ | 24,375 | $ | 3,667 | $ | 41,877 | ||||||||||
Provision for loan losses | 5,101 | 104 | 1,150 | 3,857 | 10,212 | |||||||||||||||
Recoveries | 952 | 25 | 2,021 | 508 | 3,506 | |||||||||||||||
Charge-offs | (6,990 | ) | (219 | ) | (682 | ) | (1,925 | ) | (9,816 | ) | ||||||||||
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|
|
|
|
|
|
|
| |||||||||||
Ending balance | $ | 11,707 | $ | 1,101 | $ | 26,864 | $ | 6,107 | $ | 45,779 | ||||||||||
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2018
December 31, 2017 | Commercial | Agricultural | Real Estate | Consumer | Total | |||||||||||||||
Loans individually evaluated for impairment | $ | 3,612 | $ | 134 | $ | 12,838 | $ | 1,086 | $ | 17,670 | ||||||||||
Loan collectively evaluated for impairment | 680,487 | 94,409 | 2,290,160 | 402,843 | 3,467,899 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 684,099 | $ | 94,543 | $ | 2,302,998 | $ | 403,929 | $ | 3,485,569 | ||||||||||
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|
December 31, 2016 | Commercial | Agricultural | Real Estate | Consumer | Total | |||||||||||||||
Loans individually evaluated for impairment | $ | 7,284 | $ | 99 | $ | 18,754 | $ | 1,234 | $ | 27,371 | ||||||||||
Loan collectively evaluated for impairment | 667,126 | 83,922 | 2,171,090 | 407,798 | 3,329,936 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total | $ | 674,410 | $ | 84,021 | $ | 2,189,844 | $ | 409,032 | $ | 3,357,307 | ||||||||||
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minimize potential losses.
Year Ended December 31, 2017 | Year Ended December 31, 2016 | |||||||||||||||||||||||
Number | Pre-Modification Recorded Investment | Post- Modification Recorded Investment | Number | Pre-Modification Recorded Investment | Post- Modification Recorded Investment | |||||||||||||||||||
Commercial | 11 | $ | 895 | $ | 895 | 15 | $ | 3,208 | $ | 3,208 | ||||||||||||||
Agricultural | — | — | — | — | — | — | ||||||||||||||||||
Real Estate | 5 | 625 | 625 | 6 | 1,460 | 1,460 | ||||||||||||||||||
Consumer | 1 | 25 | 25 | 7 | 189 | 189 | ||||||||||||||||||
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|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Total | 17 | $ | 1,545 | $ | 1,545 | 28 | $ | 4,857 | $ | 4,857 | ||||||||||||||
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|
Year Ended December 31, 2020 | ||||||||||||
Pre-Modification | Post- Modification | |||||||||||
Recorded | Recorded | |||||||||||
Number | Investment | Investment | ||||||||||
Commercial: | ||||||||||||
C&I | 11 | $ | 1,151 | $ | 1,151 | |||||||
Municipal | — | — | — | |||||||||
Total Commercial | 11 | 1,151 | 1,151 | |||||||||
Agricultural | 1 | 134 | 134 | |||||||||
Real Estate: | ||||||||||||
Construction & Development | 1 | 81 | 81 | |||||||||
Farm | — | — | — | |||||||||
Non-Owner OccupiedCRE | — | — | — | |||||||||
Owner Occupied CRE | 3 | 3,508 | 3,508 | |||||||||
Residential | 2 | 152 | 152 | |||||||||
Total Real Estate | 6 | 3,741 | 3,741 | |||||||||
Consumer: | ||||||||||||
Auto | — | — | — | |||||||||
Non-Auto | 1 | 14 | 14 | |||||||||
Total Consumer | 1 | 14 | 14 | |||||||||
Total | 19 | $ | 5,040 | $ | 5,040 | |||||||
Year Ended December 31, 2019 | ||||||||||||
Number | Pre-Modification Recorded Investment | Post- Modification Recorded Investment | ||||||||||
Commercial | 7 | $ | 551 | $ | 551 | |||||||
Agricultural | 11 | 812 | 812 | |||||||||
Real Estate | 7 | 1,397 | 1,397 | |||||||||
Consumer | — | — | — | |||||||||
Total | 25 | $ | 2,760 | $ | 2,760 | |||||||
Year Ended December 31, 2017 | Year Ended December 31, 2016 | |||||||||||||||||||||||
Adjusted Interest Rate | Extended Maturity | Combined Rate and Maturity | Adjusted Interest Rate | Extended Maturity | Combined Rate and Maturity | |||||||||||||||||||
Commercial | $ | — | $ | 195 | $ | 700 | $ | — | $ | 2,560 | $ | 648 | ||||||||||||
Agricultural | — | — | — | — | — | — | ||||||||||||||||||
Real Estate | — | 312 | 313 | — | 298 | 1,162 | ||||||||||||||||||
Consumer | — | 25 | — | — | 70 | 119 | ||||||||||||||||||
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Total | $ | — | $ | 532 | $ | 1,013 | $ | — | $ | 2,928 | $ | 1,929 | ||||||||||||
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Year Ended December 31, 2020 | ||||||||||||
Adjusted | Combined | |||||||||||
Interest | Extended | Rate and | ||||||||||
Rate | Maturity | Maturity | ||||||||||
Commercial: | ||||||||||||
C&I | $ | — | $ | 918 | $ | 233 | ||||||
Municipal | — | — | — | |||||||||
Total Commercial | — | 918 | 233 | |||||||||
Agricultural | — | 134 | — | |||||||||
Real Estate: | ||||||||||||
Construction & Development | — | — | 81 | |||||||||
Farm | — | — | — | |||||||||
Non-Owner OccupiedCRE | — | — | — | |||||||||
Owner OccupiedCRE | — | 1,546 | 1,962 | |||||||||
Residential | — | — | 152 | |||||||||
Total Real Estate | — | 1,546 | 2,195 | |||||||||
Consumer: | ||||||||||||
Auto | — | — | — | |||||||||
Non-Auto | — | 14 | — | |||||||||
Total Consumer | — | 14 | — | |||||||||
Total | $ | — | $ | 2,612 | $ | 2,428 | ||||||
Year Ended December 31, 2019 | ||||||||||||
Adjusted Interest Rate | Extended Maturity | Combined Rate and Maturity | ||||||||||
Commercial | $ | — | $ | 389 | $ | 162 | ||||||
Agricultural | — | 354 | 458 | |||||||||
Real Estate | — | 494 | 903 | |||||||||
Consumer | — | — | — | |||||||||
Total | $ | — | $ | 1,237 | $ | 1,523 | ||||||
2018
Year Ended December 31, 2017 | Year Ended December 31, 2016 | |||||||||||||||
Number | Balance | Number | Balance | |||||||||||||
Commercial | 2 | $ | 88 | 4 | $ | 1,690 | ||||||||||
Agriculture | — | — | — | — | ||||||||||||
Real Estate | — | — | 3 | 921 | ||||||||||||
Consumer | — | — | — | — | ||||||||||||
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|
|
|
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|
|
| |||||||||
Total | 2 | $ | 88 | 7 | $ | 2,611 | ||||||||||
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As of
Year Ended December 31, 2019 | ||||||||
Number | Balance | |||||||
Commercial | — | $ | — | |||||
Agriculture | 7 | 267 | ||||||
Real Estate | — | — | ||||||
Consumer | — | — | ||||||
Total | 7 | $ | 267 | |||||
Beginning Balance | Additional Loans | Payments | Ending Balance | |||||
Year ended December 31, 2017 | $44,429 | $58,420 | $46,945 | $55,904 |
Beginning Balance | Additional Loans | Payments | Ending Balance | |||||||||||||
Year ended December 31, 2020 | $ | 85,364 | $ | 107,837 | $ | 102,237 | $ | 90,964 |
Our subsidiary bank has established a line of credit with the Federal Home Loan Bank of Dallas (FHLB) to provide liquidity
December 31, 2020: | Outstanding Notional Balance | Asset Derivative Fair Value | Liability Derivative Fair Value | |||||||||
IRLCs | $ | 202,906 | $ | 4,618 | $ | 0 | ||||||
Forward mortgage-backed securities trades | 198,000 | 0 | 1,560 |
December 31, 2019: | Outstanding Notional Balance | Asset Derivative Fair Value | Liability Derivative Fair Value | |||||||||
IRLCs | $ | 47,415 | $ | 886 | $ | 0 | ||||||
Forward mortgage-backed securities trades | 78,500 | 0 | 152 |
4.2020, 2019 and 2018
Useful Life | December 31, | |||||||||
2017 | 2016 | |||||||||
Land | — | $ | 29,508 | $ | 28,266 | |||||
Buildings | 20 to 40 years | 119,728 | 115,566 | |||||||
Furniture and equipment | 3 to 10 years | 58,672 | 58,145 | |||||||
Leasehold improvements | Lesser of lease term or 5 to 15 years | 4,118 | 4,783 | |||||||
|
|
|
| |||||||
212,026 | 206,760 | |||||||||
Less-accumulated depreciation and amortization | (88,000 | ) | (84,075 | ) | ||||||
|
|
|
| |||||||
Total Bank Premises and Equipment | $ | 124,026 | $ | 122,685 | ||||||
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|
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2017, 2016 and 2015
Useful Life | December 31, | |||||||||||
2020 | 2019 | |||||||||||
Land | – | $ | 34,266 | $ | 30,800 | |||||||
Buildings | 20 to 40 years | 148,630 | 138,110 | |||||||||
Furniture and equipment | 3 to 10 years | 57,283 | 60,200 | |||||||||
Leasehold improvements | Lesser of lease or 5 to 15 years | 3,016 | 3,364 | |||||||||
243,195 | 232,474 | |||||||||||
Less : accumulated depreciation and amortization | (100,926 | ) | (101,452 | ) | ||||||||
Total Bank Premises and Equipment | $ | 142,269 | $ | 131,022 | ||||||||
During the years ended December 31, 2017, 2016 and 2015, the Company recorded gains (losses) on sale of the bank premises and equipment totaling ($396,000), $168,000 and ($820,000)2018, respectivel
5.
Year ending December 31, | ||||
2018 | $ | 384,668 | ||
2019 | 38,031 | |||
2020 | 14,607 | |||
2021 | 6,645 | |||
2022 | 7,304 | |||
Thereafter | — | |||
|
| |||
$ | 451,255 | |||
|
|
Year ending December 31, | ||||
2021 | $ | 391,638 | ||
2022 | 46,762 | |||
2023 | 17,733 | |||
2024 | 9,838 | |||
2025 | 9,429 | |||
Thereafter | 25 | |||
$ | 475,425 | |||
December 31, | ||||||||
2017 | 2016 | |||||||
Securities sold under agreements with customers to repurchase | $ | 320,450 | $ | 360,820 | ||||
Federal funds purchased | 10,550 | 9,950 | ||||||
Advances from Federal Home Loan Bank of Dallas | — | 75,000 | ||||||
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|
| |||||
Total | $ | 331,000 | $ | 445,770 | ||||
|
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|
|
December 31, | ||||||||
2020 | 2019 | |||||||
Securities sold under agreements with customers to repurchase. | $ | 412,743 | $ | 375,106 | ||||
Federal funds purchased | 17,350 | 6,250 | ||||||
Advances from Federal Home Loan Bank of Dallas | 0 | 0 | ||||||
Total | $ | 430,093 | $ | 381,356 |
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2017, 2016 and 2015
At December 31, 2016, the Company had advances from the Federal Home Loan Bank of Dallas of $75,000,000 that were repaid in 2017. The interest rate on this advance was 0.46% at December 31, 2016. There were no such advances outstanding at December 31, 2017.
Current federal income tax Current state income tax Deferred federal income tax expense (benefit) Restatement of net deferred tax liability due to change in income tax rate Income tax expense 6.2017,2019, with Frost Bank. Under the loan agreement, as renewed and amended, we are permitted to draw up to $25,000,000 on a revolving line of credit. Prior to June 30, 2019,2021, interest iswill be paid quarterly at2019.2021. If a balance exists at June 30, 2019,2021, the principal balance converts to a term facility payable quarterly over five years and interest is paid quarterly at our election atRate plus 50 basis points or LIBOR plus 250 basis points.Rate. The line of credit is unsecured. Among other provisions in the credit agreement, we must satisfy certain financial covenants during the term of the loan agreement, including, without limitation, covenants that require us to maintain certain capital, tangible net worth, loan loss reserve,2017.2020. There was no0 outstanding balance under the line of credit as of December 31, 20172020 or 2016.7.2019.However, the Company continues to analyze certain aspects of the Act resulting in refinement of the calculations which could potentially affect the measurement of these balances or potentially give rise to new deferred tax amounts. The provisional amount recorded related to the(dollars in(in thousands): Year Ended December 31, 2017 2016 2015 $ 34,421 $ 30,381 $ 31,014 99 99 103 (53 ) 673 320 (7,650 ) — — $ 26,817 $ 31,153 $ 31,437 Year Ended December 31, 2020 2019 2018 $ 45,133 $ 33,099 $ 28,359 447 150 92 (5,249 ) (29 ) (250 ) — — (664 ) $ 40,331 $ 33,220 $ 27,537
2018
As a Percent of Pretax Earnings | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Statutory federal income tax rate | 35.0 | % | 35.0 | % | 35.0 | % | ||||||
Restatement of net deferred tax liability due to change in income tax rate | (5.3 | ) | — | — | ||||||||
Reductions in tax rate resulting from interest income exempt from federal income tax | (11.5 | ) | (12.1 | ) | (11.4 | ) | ||||||
Effect of state income tax | 0.1 | 0.1 | 0.1 | |||||||||
ESOP tax deduction | (0.2 | ) | (0.2 | ) | (0.2 | ) | ||||||
Other | 0.1 | 0.1 | 0.3 | |||||||||
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|
| |||||||
Effective income tax rate | 18.2 | % | 22.9 | % | 23.8 | % | ||||||
|
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|
|
As a Percent of Pretax Earnings | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Statutory federal income tax rate | 21.0 | % | 21.0 | % | 21.0 | % | ||||||
Restatement of net deferred tax liability due to change in income tax rate | — | — | (0.4 | ) | ||||||||
Reductions in tax rate resulting from interest income exempt from federal income tax | (4.6 | ) | (4.5 | ) | (5.2 | ) | ||||||
Effect of state income tax | 0.2 | 0.1 | 0.1 | |||||||||
ESOP tax deduction | (0.1 | ) | (0.1 | ) | (0.1 | ) | ||||||
Other | 0.1 | 0.3 | 0.1 | |||||||||
Effective income tax rate | 16.6 | % | 16.8 | % | 15.5 | % | ||||||
2017 | 2016 | |||||||
Deferred tax assets: | ||||||||
Tax basis of loans in excess of financial statement basis | $ | 10,550 | $ | 17,006 | ||||
Minimum liability in defined benefit plan | 766 | 1,641 | ||||||
Recognized for financial reporting purposes but not yet for tax purposes: | ||||||||
Deferred compensation | 1,818 | 2,807 | ||||||
Write-downs and adjustments to other real estate owned and repossessed assets | 11 | 9 | ||||||
Other deferred tax assets | 79 | 226 | ||||||
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|
| |||||
Total deferred tax assets | $ | 13,224 | $ | 21,689 | ||||
|
|
|
| |||||
Deferred tax liabilities: | ||||||||
Financial statement basis of fixed assets in excess of tax basis | $ | 3,343 | 5,870 | |||||
Intangible asset amortization deductible for tax purposes, but not for financial reporting purposes | 9,926 | 15,191 | ||||||
Recognized for financial reporting purposes but not yet for tax purposes: | ||||||||
Accretion on investment securities | 1,039 | 1,788 | ||||||
Pension plan contributions | 1,086 | 1,799 | ||||||
Net unrealized gain on investment securitiesavailable-for-sale | 9,420 | 11,573 | ||||||
Other deferred tax liabilities | 31 | 83 | ||||||
|
|
|
| |||||
Total deferred tax liabilities | $ | 24,845 | $ | 36,304 | ||||
|
|
|
| |||||
Net deferred tax asset (liability) | $ | (11,621 | ) | $ | (14,615 | ) | ||
|
|
|
|
2020 | 2019 | |||||||
Deferred tax assets: | ||||||||
Tax basis of loans in excess of financial statement basis | $ | 19,193 | $ | 12,245 | ||||
Recognized for financial reporting purposes but not yet for tax purposes: Deferred compensation | 2,479 | 2,254 | ||||||
Write-downs and adjustments to other real estate owned and repossessed assets | — | 48 | ||||||
Other deferred tax assets | 746 | 157 | ||||||
Total deferred tax assets | $ | 22,418 | $ | 14,704 | ||||
Deferred tax liabilities: | ||||||||
Financial statement basis of fixed assets in excess of tax basis | $ | 5,712 | $ | 4,651 | ||||
Intangible asset amortization deductible for tax purposes, but not for financial reporting purposes | 13,400 | 11,935 | ||||||
Recognized for financial reporting purposes but not yet for tax purposes: | ||||||||
Accretion on investment securities | 698 | 755 | ||||||
Net unrealized gain on investment securities available-for-sale | 45,295 | 17,945 | ||||||
Other deferred tax liabilities | 46 | 51 | ||||||
Total deferred tax liabilities | $ | 65,151 | $ | 35,337 | ||||
Net deferred tax asset (liability) | $ | (42,733 | ) | $ | (20,633 | ) | ||
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2017, 2016 and 2015
recognized tax positions that no longer meet themore-likely-than-not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. Current authoritative accounting guidance also provides guidance on the accounting for and disclosure of unrecognized tax benefits, interest and penalties. The Company concluded the tax
8.
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2017, 2016 and 2015
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.
2018.
December 31, 2017 | Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | Total Fair Value | ||||||||||||
Available-for-sale investment securities: | ||||||||||||||||
Obligations of U.S. government sponsored enterprises and agencies | $ | — | $ | 60,330 | $ | — | $ | 60,330 | ||||||||
Obligations of state and political subdivisions | — | 1,420,850 | — | 1,420,850 | ||||||||||||
Corporate bonds | — | 7,031 | — | 7,031 | ||||||||||||
Residential mortgage-backed securities | — | 1,219,097 | — | 1,219,097 | ||||||||||||
Commercial mortgage-backed securities | — | 375,737 | — | 375,737 | ||||||||||||
Other securities | 4,428 | — | — | 4,428 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 4,428 | $ | 3,083,045 | $ | — | $ | 3,087,473 | ||||||||
|
|
|
|
|
|
|
|
December 31, 2016 | Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | Total Fair Value | ||||||||||||
Available-for-sale investment securities: | ||||||||||||||||
U.S. Treasury securities | $ | 10,668 | $ | — | $ | — | $ | 10,668 | ||||||||
Obligations of U.S. government sponsored enterprises and agencies | — | 113,703 | — | 113,703 | ||||||||||||
Obligations of state and political subdivisions | — | 1,564,276 | — | 1,564,276 | ||||||||||||
Corporate bonds | — | 47,965 | — | 47,965 | ||||||||||||
Residential mortgage-backed securities | — | 851,361 | — | 851,361 | ||||||||||||
Commercial mortgage-backed securities | — | 268,436 | — | 268,436 | ||||||||||||
Other securities | 4,428 | — | — | 4,428 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 15,096 | $ | 2,845,741 | $ | — | $ | 2,860,837 | ||||||||
|
|
|
|
|
|
|
|
December 31, 2020 | Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | Total Fair Value | ||||||||||||
Available-for-sale | ||||||||||||||||
Obligations of state and political subdivisions | $ | — | $ | 2,426,876 | $ | — | $ | 2,426,876 | ||||||||
Residential mortgage-backed securities | — | 1,472,280 | — | 1,472,280 | ||||||||||||
Commercial mortgage-backed securities | — | 489,316 | — | 489,316 | ||||||||||||
Other securities | 4,557 | — | — | 4,557 | ||||||||||||
Total | $ | 4,557 | $ | 4,388,472 | $ | — | $ | 4,393,029 | ||||||||
Loans held-for-sale | $ | — | $ | 79,585 | $ | — | $ | 79,585 | ||||||||
IRLCs | $ | — | $ | 4,618 | $ | — | $ | 4,618 | ||||||||
Forward mortgage-backed securities traded | $ | — | $ | (1,560 | ) | $ | — | $ | (1,560 | ) |
December 31, 2019 | Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | Total Fair Value | ||||||||||||
Available-for-sale | ||||||||||||||||
U.S Treasury securities | $ | 10,019 | $ | — | $ | — | $ | 10,019 | ||||||||
Obligations of state and political subdivisions | — | 1,288,983 | — | 1,288,983 | ||||||||||||
Corporate bonds | — | 230 | — | 230 | ||||||||||||
Residential mortgage-backed securities | — | 1,608,863 | — | 1,608,863 | ||||||||||||
Commercial mortgage-backed securities | — | 500,744 | — | 500,744 | ||||||||||||
Other securities | 4,478 | — | — | 4,478 | ||||||||||||
Total | $ | 14,497 | $ | 3,398,820 | $ | — | $ | 3,413,317 | ||||||||
Loans held-for-sale | $ | — | $ | 23,076 | $ | — | $ | 23,076 | ||||||||
IRLCs | $ | — | $ | 886 | $ | — | $ | 886 | ||||||||
Forward mortgage-backed securities traded | $ | — | $ | (152 | ) | $ | — | $ | (152 | ) |
December 31, | ||||||||
2020 | 2019 | |||||||
Unpaid principal balance on loans held-for-sale | $ | 76,602 | $ | 22,340 | ||||
Net unrealized gains on loans held-for-sale | 2,983 | 736 | ||||||
Loans held-for-sale | $ | 79,585 | $ | 23,076 | ||||
Years ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Realized gain on sale and fees on mortgage loans* | $ | 39,378 | $ | 17,748 | $ | 14,595 | ||||||
Change in fair value on loans held-for-sale | 5,900 | 145 | 919 | |||||||||
Change in forward mortgage-backed securities trades | (1,406 | ) | 251 | (357 | ) | |||||||
Total gain on sale of mortgage loans | $ | 43,872 | $ | 18,144 | $ | 15,157 | ||||||
Impaired Loans — 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 December 31, 2017, impaired loans with a carrying value of $17,670,000 were reduced by specific valuation reserves totaling $3,996,000 resulting in a net fair value of $13,674,000.
LoansHeld-for-Sale — Loansheld-for-sale are reported at the lower of cost or fair value. The Company originates conforming loans that are sold in the secondary market in which loan pricing is available. In
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2017, 2016 and 2015
determining whether the fair value of loansheld-for-sale is less than cost and quoted prices are available for similar assets. These loans are considered Level 2 of the fair value hierarchy. At December 31, 2017, the Company’s mortgage loansheld-for-sale was recorded at cost as fair value exceeded cost.
Certainnon-financial assets andnon-financial liabilities measured at fair value on anon-recurring basis include other real estate owned, goodwill and other intangible assets and othernon-recurring nonrecurring basis during the yearyears ended December 31, 20172020 and 20162019 include other real estate owned which, subsequent to their initial transfer to other real estate owned from loans, were Reevaluation The following table presentsThere were no other real estate owned properties that were(dollars in thousands):
Year Ended December 31, | ||||||||
2017 | 2016 | |||||||
Carrying value of other real estate owned prior tore-measurement | $ | 1,067 | $ | — | ||||
Write-downs included in gain (loss) on sale of other real estate owned | (306 | ) | — | |||||
|
|
|
| |||||
Fair value | $ | 761 | $ | — | ||||
|
|
|
|
during the years ended December 31, 2020 and 2019.
hierarch
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2017, 2016 and 2015
.
2017 | 2016 | Fair Value Hierarchy | ||||||||||||||||
Carrying Value | Estimated Fair Value | Carrying Value | Estimated Fair Value | |||||||||||||||
Cash and due from banks | $ | 209,583 | $ | 209,583 | $ | 204,782 | $ | 204,782 | Level 1 | |||||||||
Federal funds sold | — | — | 3,130 | 3,130 | Level 1 | |||||||||||||
Interest-bearing deposits in banks | 162,764 | 162,764 | 48,574 | 48,574 | Level 1 | |||||||||||||
Interest-bearing time deposits in banks | 1,458 | 1,458 | 1,707 | 1,709 | Level 2 | |||||||||||||
Available-for-sale securities | 3,087,473 | 3,087,473 | 2,860,837 | 2,860,837 | Levels 1 and 2 | |||||||||||||
Held-to-maturity securities | — | — | 121 | 124 | Level 2 | |||||||||||||
Loans | 3,452,543 | 3,470,133 | 3,338,426 | 3,361,735 | Level 3 | |||||||||||||
Accrued interest receivable | 36,081 | 36,081 | 36,469 | 36,469 | Level 2 | |||||||||||||
Deposits with stated maturities | 451,255 | 452,000 | 508,996 | 510,304 | Level 2 | |||||||||||||
Deposits with no stated maturities | 5,511,706 | 5,511,706 | 4,969,543 | 4,969,543 | Level 1 | |||||||||||||
Borrowings | 331,000 | 331,000 | 445,770 | 445,770 | Level 2 | |||||||||||||
Accrued interest payable | 197 | 197 | 225 | 225 | Level 2 |
9.
2020 | 2019 | |||||||||||||||||||
Carrying | Estimated | Carrying | Estimated | Fair Value | ||||||||||||||||
Value | Fair Value | Value | Fair Value | Hierarchy | ||||||||||||||||
Cash and due from banks | $ | 211,113 | $ | 211,113 | $ | 231,534 | $ | 231,534 | Level 1 | |||||||||||
Federal funds sold | — | — | 3,150 | 3,150 | Level 1 | |||||||||||||||
Interest-bearing demand deposits in banks | 517,971 | 517,971 | 47,920 | 47,920 | Level 1 | |||||||||||||||
Available-for-sale | 4,393,029 | 4,393,029 | 3,413,317 | 3,413,317 | Levels 1 and 2 | |||||||||||||||
Loans held-for-investment, | 5,104,499 | 5,109,885 | 4,142,470 | 4,157,327 | Level 3 | |||||||||||||||
Loans held-for-sale | 83,969 | 84,233 | 28,228 | 28,343 | Level 2 | |||||||||||||||
Accrued interest receivable | 53,433 | 53,433 | 36,894 | 36,894 | Level 2 | |||||||||||||||
Deposits with stated maturities | 475,542 | 477,218 | 420,013 | 421,397 | Level 2 | |||||||||||||||
Deposits with no stated maturities | 8,200,275 | 8,200,275 | 6,183,793 | 6,183,793 | Level 1 | |||||||||||||||
Borrowings | 430,093 | 430,093 | 381,356 | 381,356 | Level 2 | |||||||||||||||
Accrued interest payable | 377 | 377 | 628 | 628 | Level 2 | |||||||||||||||
IRLCs | 4,618 | 4,618 | 886 | 886 | Level 2 | |||||||||||||||
Forward mortgage-backed securities trades | (1,560 | ) | (1,560 | ) | (152 | ) | (152 | ) | Level 2 |
10.2025 $218,000 and thereafter - $78,000.
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
At December 31, 2017, 2016 and 2015
2020, the Company’s reserve for unfunded commitments totaled $5,486,000 which is recorded in other liabilities.
Total Notional Amounts Committed December 31, 2017 (in thousands) | ||||
Financial instruments whose contract amounts represent credit risk: | ||||
Unfunded lines of credit | $ | 534,468 | ||
Unfunded commitments to extend credit | 244,658 | |||
Standby letters of credit | 28,858 | |||
|
| |||
Total commercial commitments | $ | 807,984 | ||
|
|
December 31, 2020 (in thousands) | ||||
Financial instruments whose contract amounts represent credit risk: | ||||
Unfunded lines of credit | $ | 871,960 | ||
Unfunded commitments to extend credit | 742,538 | |||
Standby letters of credit | 40,050 | |||
Total commercial commitments | $ | 1,654,548 | ||
11.
12.
PLAN:
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2017, 2016 and 2015
Using an actuarial measurement date of December 31, 2017 and 2016, benefit obligation activityat that time and fair value of plan assetsrecorded a loss on settlement totaling $1,546,000 for the yearsyear ended December 31, 20172018. In 2019, the Company continued to take steps to completely settle and 2016,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 statement ofgain on hedging instrument entered into to minimize interest rate movement during the funded status as oftermination period. At December 31, 2017 and 2016, are as follows (dollars in thousands):
2017 | 2016 | |||||||
Reconciliation of benefit obligations: | ||||||||
Benefit obligation at January 1 | $ | 15,453 | $ | 16,002 | ||||
Interest cost on projected benefit obligation | 635 | 665 | ||||||
Actuarial loss | 486 | 139 | ||||||
Benefits paid, including partial settlement of certain participant balances | (1,043 | ) | (1,353 | ) | ||||
|
|
|
| |||||
Benefit obligation at December 31 | $ | 15,531 | $ | 15,453 | ||||
|
|
|
| |||||
Reconciliation of fair value of plan assets: | ||||||||
Fair value of plan assets at January 1 | $ | 15,787 | $ | 14,820 | ||||
Actual return on plan assets | 2,302 | 1,820 | ||||||
Employer contributions | — | 500 | ||||||
Benefits paid, including partial settlement of certain participant balances | (1,043 | ) | (1,353 | ) | ||||
|
|
|
| |||||
Fair value of plan assets at December 31 | 17,046 | 15,787 | ||||||
|
|
|
| |||||
Funded status | $ | 1,515 | $ | 334 | ||||
|
|
|
|
Amounts recognized as a component of accumulated other comprehensive earnings as ofyear-end that have not been recognized as a component of the net period benefit cost of the Company’s defined benefit pension plan are as follows (in thousands):
2017 | 2016 | |||||||
Net actuarial loss | $ | (3,597 | ) | $ | (4,688 | ) | ||
Deferred tax benefit | 1,227 | 1,641 | ||||||
|
|
|
| |||||
Amounts included in accumulated other comprehensive earnings, net of tax | $ | (2,370 | ) | $ | (3,047 | ) | ||
|
|
|
|
Net periodic benefit cost for the years ended December 31, 2017, 2016 and 2015, are as follows (dollars in thousands):
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Service cost — benefits earned during the period | $ | — | $ | — | $ | — | ||||||
Interest cost on projected benefit obligation | 635 | 665 | 622 | |||||||||
Expected return on plan assets | (974 | ) | (912 | ) | (948 | ) | ||||||
Amortization of unrecognized net loss | 249 | 375 | 222 | |||||||||
Recognized loss on partial settlement of certain participant balances | — | 267 | — | |||||||||
|
|
|
|
|
| |||||||
Net periodic pension benefit expense (benefit) | $ | (90 | ) | $ | 395 | $ | (104 | ) | ||||
|
|
|
|
|
|
The following table sets forth the rates used in the actuarial calculations of the present value of benefit obligations and net periodic pension cost and the rate of return on plan assets:
2017 | 2016 | 2015 | ||||||||||
Weighted average discount rate | 3.50 | % | 4.25 | % | 4.25 | % | ||||||
Expected long-term rate of return on assets | 6.25 | % | 6.25 | % | 6.25 | % |
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2017, 2016 and 2015
The weighted average discount rate is estimated based on setting a discount rate to establish an obligation for pension benefits equivalent to an amount that, if invested in high quality fixed income securities, would produce a return that matches the expected benefit payment stream. The expected long-term rate of return on plan assets is based on historical returns and expectations of future returns based on asset mix, after consultation with our investment advisors and actuaries.
The major type of plan assets2019, all balances in the pension plan were zero and the targeted allocation percentage as of December 31, 2017 and 2016 is as follows:
December 31, 2017 Allocation | December 31, 2016 Allocation | Targeted Allocation | ||||||||||
Equity securities | 75 | % | 77 | % | 75 | % | ||||||
Debt securities | 24 | % | 22 | % | 25 | % | ||||||
Cash and equivalents | 1 | % | 1 | % | — |
The range and weighted average final maturities of debt securities held in the pension plan as of December 31, 2017 are 1.52 to 19.76 years and approximately 5.64 years, respectively. Assets held in the pension plan are considered either Level 1 consisting of the money market funds, publicly traded common stocks and publicly traded mutual funds or Level 2 consisting of obligations of state and political subdivisions, corporate bonds and mortgage-backed securities. There were no Level 3 securities. See note 8 for a discussion of the fair value hierarchy. The breakdown by level is as follows (dollars in thousands):
Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | Total Fair Value | |||||||||||||
Money market fund | $ | 274 | $ | — | $ | — | $ | 274 | ||||||||
U.S. Treasury notes | — | 149 | — | 149 | ||||||||||||
Obligations of state and political subdivisions | — | 634 | — | 634 | ||||||||||||
Corporate bonds | — | 868 | — | 868 | ||||||||||||
Mortgage-backed securities | — | 1,130 | — | 1,130 | ||||||||||||
Corporate stocks and mutual funds | 13,991 | — | — | 13,991 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | 14,265 | $ | 2,781 | — | $ | 17,046 | |||||||||
|
|
|
|
|
|
|
|
First Financial Trust & Asset Management Company, National Association, a wholly owned subsidiary of the Company, manages the pension plan assets as well as the profit sharing plan assets (see below). The investment strategy and targeted allocations are based on similar strategies First Financial Trust & Asset Management Company, National Association employs for most of its managed accounts whereby appropriate diversification is achieved. First Financial Trust & Asset Management Company, National Association is prohibited from holding investments deemed to be high risk by the Office of the Comptroller of the Currency.
An estimate of the undiscounted projected future payments to eligible participants for the next five years and the following five years in the aggregate is as follows (in thousands):
Year Ending December 31, | ||||
2018 | $ | 1,064 | ||
2019 | $ | 1,018 | ||
2020 | $ | 1,036 | ||
2021 | $ | 1,077 | ||
2022 | $ | 1,063 | ||
2023 forward | $ | 5,309 |
Company’s obligation has been extinguished.
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2017, 2016 and 2015
As of December 31, 2017 and 2016, the pension plan’s total assets included First Financial Bankshares, Inc. common stock valued at approximately $2,776,000 and $2,786,000, respectively.
13.DIVIDENDS FROM SUBSIDIARIES:
As of December 31, 2020 and 2019, the rabbi trust held 938,591 and 927,408 shares, respectively, in trust for the Company’s directors
14.
2018
Actual | Minimum Capital Required Under Basel IIIPhase-In | Minimum Capital Required-Basel III FullyPhased-In | Required to be Considered Well- Capitalized | |||||||||||||||||||||||||||||
As of December 31, 2017: | Amount | Ratio | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||||||||
Total Capital to Risk-Weighted Assets: | ||||||||||||||||||||||||||||||||
Consolidated | $ | 814,634 | 19.85 | % | $ | 379,578 | 9.250 | % | $ | 430,872 | 10.50 | % | — | N/A | ||||||||||||||||||
First Financial Bank, N.A | $ | 723,563 | 17.68 | % | $ | 378,614 | 9.250 | % | $ | 429,777 | 10.50 | % | $ | 409,312 | 10.00 | % | ||||||||||||||||
Tier 1 Capital to Risk-Weighted Assets: | ||||||||||||||||||||||||||||||||
Consolidated | $ | 765,882 | 18.66 | % | $ | 297,507 | 7.250 | % | $ | 348,801 | 8.50 | % | — | N/A | ||||||||||||||||||
First Financial Bank, N.A | $ | 674,811 | 16.49 | % | $ | 296,751 | 7.250 | % | $ | 347,915 | 8.50 | % | $ | 327,450 | 8.00 | % | ||||||||||||||||
Common Equity Tier 1 Capital to Risk-Weighted Assets: | ||||||||||||||||||||||||||||||||
Consolidated | $ | 765,882 | 18.66 | % | $ | 235,954 | 5.750 | % | $ | 287,248 | 7.00 | % | — | N/A | ||||||||||||||||||
First Financial Bank, N.A | $ | 674,811 | 16.49 | % | $ | 235,354 | 5.750 | % | $ | 286,518 | 7.00 | % | $ | 266,053 | 6.50 | % | ||||||||||||||||
Leverage Ratio: | ||||||||||||||||||||||||||||||||
Consolidated | $ | 765,882 | 11.09 | % | $ | 276,296 | 4.000 | % | $ | 276,296 | 4.00 | % | — | N/A | ||||||||||||||||||
First Financial Bank, N.A | $ | 674,811 | 9.80 | % | $ | 275,320 | 4.000 | % | $ | 275,320 | 4.00 | % | $ | 344,151 | 5.00 | % |
Actual | Minimum Capital Required Under Basel IIIPhase-In | Minimum Capital Required-Basel III FullyPhased-In | Required to be Considered Well- Capitalized | |||||||||||||||||||||||||||||
As of December 31, 2016: | Amount | Ratio | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||||||||
Total Capital to Risk-Weighted Assets: | ||||||||||||||||||||||||||||||||
Consolidated | $ | 739,959 | 18.45 | % | $ | 345,827 | 8.625 | % | $ | 421,007 | 10.50 | % | — | N/A | ||||||||||||||||||
First Financial Bank, N.A | $ | 633,403 | 15.84 | % | $ | 344,930 | 8.625 | % | $ | 419,915 | 10.50 | % | $ | 399,919 | 10.00 | % | ||||||||||||||||
Tier 1 Capital to Risk-Weighted Assets: | ||||||||||||||||||||||||||||||||
Consolidated | $ | 693,584 | 17.30 | % | $ | 265,635 | 6.625 | % | $ | 340,815 | 8.50 | % | — | N/A | ||||||||||||||||||
First Financial Bank, N.A | $ | 587,028 | 14.68 | % | $ | 264,946 | 6.625 | % | $ | 339,931 | 8.50 | % | $ | 319,935 | 8.00 | % | ||||||||||||||||
Common Equity Tier 1 Capital to Risk-Weighted Assets: | ||||||||||||||||||||||||||||||||
Consolidated | $ | 693,584 | 17.30 | % | $ | 205,491 | 5.125 | % | $ | 280,671 | 7.00 | % | — | N/A | ||||||||||||||||||
First Financial Bank, N.A | $ | 587,028 | 14.68 | % | $ | 204,959 | 5.125 | % | $ | 279,943 | 7.00 | % | $ | 259,947 | 6.50 | % | ||||||||||||||||
Leverage Ratio: | ||||||||||||||||||||||||||||||||
Consolidated | $ | 693,584 | 10.71 | % | $ | 258,978 | 4.00 | % | $ | 258,978 | 4.00 | % | — | N/A | ||||||||||||||||||
First Financial Bank, N.A | $ | 587,028 | 9.10 | % | $ | 257,941 | 4.00 | % | $ | 257,941 | 4.00 | % | $ | 322,426 | 5.00 | % |
We have performed a preliminary assessment using the regulatory capital estimation tool made available by the OCC and believe the Company and Bank are prepared to meet the new requirements upon full adoption of Basel III that will be effective December 31, 2019.
Actual | Minimum Capital Required-Basel III Fully Phased-In* | Required to be Considered Well- Capitalized | ||||||||||||||||||||||
As of December 31, 2020: | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||
Total Capital to Risk-Weighted Assets: | ||||||||||||||||||||||||
Consolidated | $ | 1,273,749 | 22.03 | % | $ | 607,038 | 10.50 | % | $ | 578,131 | 10.00 | % | ||||||||||||
First Financial Bank, N.A | $ | 1,123,275 | 19.47 | % | $ | 605,830 | 10.50 | % | $ | 576,981 | 10.00 | % | ||||||||||||
Tier 1 Capital to Risk-Weighted Assets: | ||||||||||||||||||||||||
Consolidated | $ | 1,201,729 | 20.79 | % | $ | 491,412 | 8.50 | % | $ | 346,879 | 6.00 | % | ||||||||||||
First Financial Bank, N.A | $ | 1,051,255 | 18.22 | % | $ | 490,434 | 8.50 | % | $ | 461,585 | 8.00 | % | ||||||||||||
Common Equity Tier 1 Capital | ||||||||||||||||||||||||
Consolidated | $ | 1,201,729 | 20.79 | % | $ | 404,692 | 7.00 | % | — | N/A | ||||||||||||||
First Financial Bank, N.A | $ | 1,051,255 | 18.22 | % | $ | 403,887 | 7.00 | % | $ | 375,038 | 6.50 | % | ||||||||||||
Leverage Ratio: | ||||||||||||||||||||||||
Consolidated | $ | 1,201,729 | 11.86 | % | $ | 405,268 | 4.00 | % | — | N/A | ||||||||||||||
First Financial Bank, N.A | $ | 1,051,255 | 10.41 | % | $ | 404,002 | 4.00 | % | $ | 505,002 | 5.00 | % |
*At | December 31, 2020 the Capital Conservative Buffer Basel III has been fully phased-in. |
Actual | Minimum Capital Required-Basel III Fully Phased-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 | ||||||||||||||||||||||||
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 | % |
$33,513,000.
2018
15.balance required was
Shares | Weighted- Average Ex. Price | Weighted- Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value ($000) | |||||||||||||
Outstanding, beginning of year | 1,094,035 | $ | 27.40 | |||||||||||||
Granted | 452,450 | 42.35 | ||||||||||||||
Exercised | (140,250 | ) | 20.92 | |||||||||||||
Cancelled | (80,270 | ) | 30.33 | |||||||||||||
|
|
|
| |||||||||||||
Outstanding, end of year | 1,325,965 | 33.01 | 7.12 | $ | 15,966 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
Exercisable at end of year | 458,715 | $ | 23.94 | 4.66 | $ | 9,684 | ||||||||||
|
|
|
|
|
|
|
|
Shares | Weighted- Average Ex. Price | Weighted- Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value ($000) | |||||||||||||
Outstanding, beginning of year | 2,138,196 | $ | 20.12 | |||||||||||||
Granted | 11,250 | 34.55 | ||||||||||||||
Exercised | (294,645 | ) | 15.96 | |||||||||||||
Cancelled | (21,744 | ) | 22.04 | |||||||||||||
Outstanding, end of year | 1,833,057 | 20.85 | 5.81 | $ | 28,098 | |||||||||||
Exercisable at end of year | 892,957 | $ | 17.20 | 4.46 | $ | 16,936 | ||||||||||
split
Exercise Price | Number Outstanding | Remaining Contracted Life (Years) | Number Vested | |||||||
$16.78 | 87,640 | 1.4 | 87,640 | |||||||
15.73 | 142,620 | 3.8 | 142,620 | |||||||
30.85 | 270,505 | 5.8 | 156,225 | |||||||
33.89 | 382,750 | 7.8 | 72,230 | |||||||
$42.35 | 442,450 | 9.5 | — |
2020:
Exercise Price | Number Outstanding | Remaining Contracted Life (Years) | Number Vested | |||||||||||
$ | 7.87 | 42,020 | 0.8 | 42,020 | ||||||||||
$ | 15.43 | 258,507 | 2.8 | 258,507 | ||||||||||
$ | 16.95 | 477,294 | 4.8 | 355,654 | ||||||||||
$ | 21.18 | 656,736 | 6.4 | 236,776 | ||||||||||
$ | 29.70 | 388,050 | 8.5 | — | ||||||||||
$ | 34.55 | 11,250 | 9.1 | — |
26.69%.
The Company recorded stock option expense totaling $1,377,000, $1,489,000 and $1,508,000 for the years ended December 31, 2020, 2019 and 2018, respectively.
The aggregate intrinsic value$888,000.
2018
On July 21, 2015, 7,070 shares were granted to the tennon-employee directors. Total
For the year ended | For the year ended | For the year ended | ||||||||||||||||||||||
2020 | 2019 | 2018 | ||||||||||||||||||||||
Restricted Stock Outstanding | Weighted Average Grant Date Fair Value | Restricted Stock Outstanding | Weighted Average Grant Date Fair Value | Restricted Stock Outstanding | Weighted Average Grant Date Fair Value | |||||||||||||||||||
Balance at beginning of period | 105,309 | $ | 29.93 | 97,192 | $ | 25.45 | 94,679 | $ | 20.12 | |||||||||||||||
Grants | 56,480 | 29.22 | 67,331 | 31.80 | 73,470 | 26.95 | ||||||||||||||||||
Vesting | (65,662 | ) | 29.39 | (57,406 | ) | 31.49 | (65,411 | ) | 25.79 | |||||||||||||||
Forfeited/expired | (239 | ) | 29.70 | (1,808 | ) | 27.67 | (5,546 | ) | 22.85 | |||||||||||||||
Balance at end of period | 95,888 | $ | 29.89 | 105,309 | $ | 29.93 | 97,192 | $ | 25.45 |
On October 27, 2015, the Company granted 31,273 shares with
16.2019, there was $49,000 and $46,000, respectively, accrued in other liabilities related to dividends declared to be paid upon vesting.
2017 | 2016 | |||||||
ASSETS | ||||||||
Cash in subsidiary bank | $ | 14,272 | $ | 15,070 | ||||
Cash in unaffiliated banks | 2 | 2 | ||||||
Interest-bearing deposits in subsidiary bank | 64,195 | 78,179 | ||||||
|
|
|
| |||||
Total cash and cash equivalents | 78,469 | 93,251 | ||||||
Securitiesavailable-for-sale, at fair value | 8,515 | 11,593 | ||||||
Investment in and advances to subsidiaries, at equity | 847,445 | 744,971 | ||||||
Intangible assets | 723 | 723 | ||||||
Other assets | 2,654 | 2,668 | ||||||
|
|
|
| |||||
Total assets | $ | 937,806 | $ | 853,206 | ||||
|
|
|
| |||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Total liabilities | $ | 15,038 | $ | 15,321 | ||||
Shareholders’ equity: | ||||||||
Common stock | 663 | 661 | ||||||
Capital surplus | 378,062 | 372,245 | ||||||
Retained earnings | 517,257 | 446,534 | ||||||
Treasury stock | (7,148 | ) | (6,671 | ) | ||||
Deferred compensation | 7,148 | 6,671 | ||||||
Accumulated other comprehensive earnings | 26,786 | 18,445 | ||||||
|
|
|
| |||||
Total shareholders’ equity | 922,768 | 837,885 | ||||||
|
|
|
| |||||
Total liabilities and shareholders’ equity | $ | 937,806 | $ | 853,206 | ||||
|
|
|
|
2019
ASSETS | 2020 | 2019 | ||||||
Cash in subsidiary bank (1) | $ | 67,904 | $ | 44,422 | ||||
Cash in unaffiliated banks (1) | 2 | 2 | ||||||
Interest-bearing deposits in subsidiary bank (1) | 68,760 | 80,652 | ||||||
Total cash and cash equivalents | 136,666 | 125,076 | ||||||
Securities available-for-sale, | 2,610 | 6,297 | ||||||
Investment in and advances to subsidiaries, at equity (1) | 1,558,851 | 1,111,955 | ||||||
Intangible assets | 723 | 723 | ||||||
Other assets | 2,982 | 2,701 | ||||||
Total assets | $ | 1,701,832 | $ | 1,246,752 | ||||
2018
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Total liabilities | $ | 23,642 | $ | 19,555 | ||||
Shareholders’ equity: | ||||||||
Common stock | 1,422 | 1,359 | ||||||
Capital surplus | 669,644 | 450,676 | ||||||
Retained earnings | 836,729 | 707,656 | ||||||
Treasury stock | (9,126 | ) | (8,222 | ) | ||||
Deferred compensation | 9,126 | 8,222 | ||||||
Accumulated other comprehensive earnings | 170,395 | 67,506 | ||||||
Total shareholders’ equity | 1,678,190 | 1,227,197 | ||||||
Total liabilities and shareholders’ equity | $ | 1,701,832 | $ | 1,246,752 | ||||
(1) | Eliminates in consolidation. |
2017 | 2016 | 2015 | ||||||||||
Income: | ||||||||||||
Cash dividends from subsidiaries | $ | 30,800 | $ | 48,800 | $ | 51,200 | ||||||
Excess of earnings over dividends of subsidiaries | 92,929 | 58,809 | 52,911 | |||||||||
Other | 6,590 | 4,184 | 4,185 | |||||||||
|
|
|
|
|
| |||||||
Total Income | 130,319 | 111,793 | 108,296 | |||||||||
|
|
|
|
|
| |||||||
Expenses: | ||||||||||||
Salaries and employee benefits | 8,606 | 5,655 | 6,067 | |||||||||
Other operating expenses | 3,871 | 3,531 | 4,439 | |||||||||
|
|
|
|
|
| |||||||
Total Expense | 12,477 | 9,186 | 10,506 | |||||||||
|
|
|
|
|
| |||||||
Earnings before income taxes | 117,842 | 102,607 | 97,790 | |||||||||
Income tax benefit | 2,529 | 2,167 | 2,591 | |||||||||
|
|
|
|
|
| |||||||
Net earnings | $ | 120,371 | $ | 104,774 | $ | 100,381 | ||||||
|
|
|
|
|
|
2018
2020 | 2019 | 2018 | ||||||||||
Income: | ||||||||||||
Cash dividends from subsidiaries (1) | $ | 87,500 | $ | 84,500 | $ | 74,100 | ||||||
Excess of earnings over dividends of subsidiaries (1) | 122,997 | 86,956 | 82,323 | |||||||||
Other | 8,368 | 7,937 | 7,269 | |||||||||
Total income | 218,865 | 179,393 | 163,692 | |||||||||
Expenses: | ||||||||||||
Salaries and employee benefits | 13,795 | 11,963 | 9,966 | |||||||||
Other operating expenses | 5,599 | 4,756 | 4,781 | |||||||||
Total expense | 19,394 | 16,719 | 14,747 | |||||||||
Earnings before income taxes | 199,471 | 162,674 | 148,945 | |||||||||
Income tax benefit | 2,563 | 2,138 | 1,693 | |||||||||
Net earnings | $ | 202,034 | $ | 164,812 | $ | 150,638 | ||||||
(1) | Eliminates in consolidation. |
2018
2017 | 2016 | 2015 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net earnings | $ | 120,371 | $ | 104,774 | $ | 100,381 | ||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||||
Excess of earnings over dividends of subsidiary bank | (92,929 | ) | (58,809 | ) | (52,911 | ) | ||||||
Depreciation and amortization, net | 207 | 208 | 197 | |||||||||
Decrease (increase) in other assets | 438 | 1,702 | 507 | |||||||||
Increase (decrease) in other liabilities | 183 | (1,374 | ) | 3,743 | ||||||||
Other | 2 | 8 | — | |||||||||
|
|
|
|
|
| |||||||
Net cash provided by operating activities | 28,272 | 46,509 | 51,917 | |||||||||
|
|
|
|
|
| |||||||
Cash flows from investing activities: | ||||||||||||
Cash received in connection with acquisition of banks | — | — | 13,125 | |||||||||
Maturity ofavailable-for-sale security | 2,997 | — | — | |||||||||
Purchases of bank premises and equipment | (30 | ) | (94 | ) | (107 | ) | ||||||
Repayment from investment in and advances to subsidiaries, net | — | — | 5,800 | |||||||||
Other | — | 10 | — | |||||||||
|
|
|
|
|
| |||||||
Net cash used in (provided by) investing activities | 2,967 | (84 | ) | 18,818 | ||||||||
|
|
|
|
|
| |||||||
Cash flows from financing activities: | ||||||||||||
Repayment of subordinated debt | — | — | (13,125 | ) | ||||||||
Proceeds of stock issuances | 2,934 | 1,260 | 1,545 | |||||||||
Cash dividends paid | (48,955 | ) | (44,907 | ) | (38,767 | ) | ||||||
|
|
|
|
|
| |||||||
Net cash used in financing activities | (46,021 | ) | (43,647 | ) | (50,347 | ) | ||||||
|
|
|
|
|
| |||||||
Net increase (decrease) in cash and cash equivalents | (14,782 | ) | 2,778 | 20,388 | ||||||||
Cash and cash equivalents, beginning of year | 93,251 | 90,473 | 70,085 | |||||||||
|
|
|
|
|
| |||||||
Cash and cash equivalents, end of year | $ | 78,469 | $ | 93,251 | $ | 90,473 | ||||||
|
|
|
|
|
|
2018
2020 | 2019 | 2018 | ||||||||||
Cash flows from operating activities: | ||||||||||||
Net earnings | $ | 202,034 | $ | 164,812 | $ | 150,638 | ||||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | ||||||||||||
Excess of earnings over dividends of subsidiary bank | (122,997 | ) | (86,956 | ) | (82,323 | ) | ||||||
Depreciation and amortization, net | 198 | 246 | 331 | |||||||||
Gain on sale of assets, net | (38 | ) | — | — | ||||||||
Decrease (increase) in other assets | 164 | 1,508 | 560 | |||||||||
Increase (decrease) in other liabilities | 2,083 | 990 | 1,932 | |||||||||
Other | 35 | — | (2 | ) | ||||||||
81,479 | 80,600 | 71,136 | ||||||||||
Cash flows from investing activities: | ||||||||||||
Maturity of available-for-sale | 3,720 | — | 2,000 | |||||||||
Purchases of bank premises and equipment and software | — | (24 | ) | (346 | ) | |||||||
Net cash provided by (used in) investing activities | 3,720 | (24 | ) | 1,654 | ||||||||
Cash flows from financing activities: | ||||||||||||
Proceeds of stock issuances | 4,717 | 4,294 | 3,864 | |||||||||
Cash dividends paid | (70,318 | ) | (61,056 | ) | (53,861 | ) | ||||||
Repurchase of stock | (8,008 | ) | — | — | ||||||||
Net cash used in financing activities | (73,609 | ) | (56,762 | ) | (49,997 | ) | ||||||
Net increase in cash and cash equivalents | 11,590 | 23,814 | 22,793 | |||||||||
Cash and cash equivalents, beginning of year | 125,076 | 101,262 | 78,469 | |||||||||
Cash and cash equivalents, end of year | $ | 136,666 | $ | 125,076 | $ | 101,262 | ||||||
17.CASH FLOW INFORMATION:
2018
20. | CASH FLOW INFORMATION: |
Year Ended December 31, | ||||||||||||
2017 | 2016 | 2015 | ||||||||||
Supplemental cash flow information: | ||||||||||||
Interest paid | $ | 9,316 | $ | 5,465 | $ | 4,085 | ||||||
Federal income taxes paid | 29,695 | 28,348 | 29,674 | |||||||||
Schedule of noncash investing and financing activities: | ||||||||||||
Assets acquired through foreclosure | 2,211 | 2,269 | 203 | |||||||||
Investment securities purchased but not settled | — | 12,381 | — | |||||||||
Restricted stock grant to officers and directors | 1,139 | 810 | 1,310 |
18.ACQUISITIONS AND ASSET PURCHASE:
Year Ended December 31, | ||||||||||||
2020 | 2019 | 2018 | ||||||||||
Supplemental cash flow information: | ||||||||||||
Interest paid | $ | 14,494 | $ | 29,882 | $ | 18,709 | ||||||
Federal income taxes paid | 44,381 | 30,726 | 26,578 | |||||||||
Schedule of noncash investing and financing activities: | ||||||||||||
Assets acquired through foreclosure | 164 | 1,463 | 126 | |||||||||
Investment securities purchased but not settled | 14,641 | — | — | |||||||||
Restricted stock granted to officers and directors | 672 | 1,782 | 1,609 | |||||||||
Stock issued in acquisition of TB&T Bancshares, Inc. | 220,273 | — | — | |||||||||
Stock issued in acquisition of Commercial Bancshares, Inc. | — | — | 58,087 |
21. | ACQUISITIONS |
The assets acquired and liabilities assumed were recorded on the consolidated balance sheet at estimated fair value on the acquisition date. The acquisition was not considered to be a significant business combination. The following table presents the amounts recorded on the consolidated balance sheet on the acquisition date (dollars in thousands):
Fair value of consideration paid: | ||||
Common stock issued (1,755,374 shares) | $ | 59,648 | ||
|
| |||
Fair value of identifiable assets acquired: | ||||
Cash and cash equivalents | 65,197 | |||
Securitiesavailable-for-sale | 42,903 | |||
Loans | 248,380 | |||
Identifiable intangible assets | 2,343 | |||
Other assets | 15,262 | |||
|
| |||
Total identifiable assets acquired | 374,085 | |||
|
| |||
Fair value of liabilities assumed: | ||||
Deposits | 343,583 | |||
Subordinated debt | 13,125 | |||
Other liabilities | 1,651 | |||
|
| |||
Total liabilities assumed | 358,359 | |||
|
| |||
Fair value of net identifiable assets acquired | 15,726 | |||
|
| |||
Goodwill resulting from acquisition | $ | 43,922 | ||
|
|
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.
FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2017, 2016 and 2015
The subordinated debt of $13,125,000 was paid off August 3, 2015, subsequent to closing.
The fair value of total loans acquired was $248,380,000 at acquisition compared to contractual amounts of $252,458,000. The fair value of purchased credit impaired loans at acquisition was $1,398,000 compared to contractual amounts of $1,704,000. Additional purchased credit impaired loan disclosures were omitted due to immateriality. All other acquired loans were considered performing loans.
First Bank, N.A. had branches in Conroe, Magnolia, Tomball, Willis, Cut and Shoot and Huntsville, all located north of Houston, Texas. In February 2016, the Company closed First Bank’s Huntsville location and consolidated the branch with the Company’s existing Huntsville location.
On April 8, 2015, the Company announced that it had entered into an asset purchase agreement with 4Trust Mortgage, Inc. for a cash purchase price of $1,900,000. The asset purchase was finalized on June 1, 2015. The total asset purchase price exceeded the estimated fair value of assets purchased by approximately $1,750,000 and the Company recorded such excess as goodwill.
19.SUBSEQUENT EVENT
On January 1, 2018, the Company acquired 100% of the outstanding capital stock of Commercial Bancshares, Inc. through the merger of a wholly owned subsidiary with and into Commercial Bancshares, Inc. Following such merger, Commercial Bancshares, Inc. and its wholly owned subsidiary, Commercial State Bank, Kingwood, Texas, were merged into the Company and First Financial Bank, National Association, respectively. Considerations paid to the shareholders of Commercial Bancshares, Inc. totaled 1,289,371 shares of the company’s common stock with an aggregate value of $59,400,000 at January 1, 2018.
In addition, Commercial Bancshares, Inc. made a $22,075,000 special dividend to its shareholders prior to closing of the transaction, which was increased for the amount by which Commercial Bancshares, Inc.’s consolidated shareholders’ equity as of January 1, 2018 exceeded $42,402,000, after certain adjustments per the merger agreement.
Fair value of consideration paid: | ||||
Common stock issued (1,289,371 shares) | $ | 58,087 | ||
Fair value of identifiable assets acquired: | ||||
Cash and cash equivalents | 18,653 | |||
Securities available-for-sale | 64,501 | |||
Loans | 266,327 | |||
Identifiable intangible assets | 3,167 | |||
Other assets | 15,375 | |||
Total identifiable assets acquired | 368,023 | |||
Fair value of liabilities assumed: | ||||
Deposits | 341,902 | |||
Other liabilities | (373 | ) | ||
Total liabilities assumed | 341,529 | |||
Fair value of net identifiable assets acquired | 26,494 | |||
Goodwill resulting from acquisition | $ | 31,593 | ||
Fair value of consideration paid: | ||||
Common stock issued (6,275,574 shares) | $ | 220,273 | ||
Fair value of identifiable assets acquired: | ||||
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 | ||
Fair value of liabilities assumed: | ||||
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 | ||
F-40