SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



¨☐			Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.



Delaware						75-2679109
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

~~214/~~(214)932-6600

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

TCBI

Nasdaq Stock Market

5.75% Non-Cumulative Perpetual Preferred Stock Series B, par value $0.01 per share

TCBIO

Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ý¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See ~~definition~~the definitions of “large accelerated filer,” “accelerated filer,” ~~"smaller~~“smaller reporting ~~company"~~company” and ~~"emerging~~“emerging growth ~~company"~~company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated Filer

¨☐

Non-Accelerated Filer

☐

~~(Do not check if a smaller reporting company)~~

Smaller Reporting Company

¨☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐ No ý

~~APPLICABLE ONLY TO CORPORATE ISSUERS:~~

On ~~October 18, 2017,~~April 20, 2022, the number of shares set forth below was outstanding with respect to each of the ~~issuer’s~~issuer's classes of common stock:

Common Stock, par value $0.01 per share ~~49,626,545~~50,723,232

Texas Capital Bancshares, Inc.

Quarter Ended ~~September 30, 2017~~March 31, 2022

PART ~~I –~~ I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TEXAS CAPITAL BANCSHARES, INC.

CONSOLIDATED BALANCE SHEETS

~~(In thousands except share data)~~

September 30,
2017 December 31,
2016
(Unaudited)
Assets
Cash and due from banks $ 143,616
$ 113,707
Interest-bearing deposits 2,332,537
2,700,645
Federal funds sold and securities purchased under resale agreements 25,000
25,000
Securities, available-for-sale 24,224
24,874
Loans held for sale, at fair value 955,983
968,929
Loans held for investment, mortgage finance 5,642,285
4,497,338
Loans held for investment (net of unearned income) 14,828,406
13,001,011
Less: Allowance for loan losses 182,929
168,126
Loans held for investment, net 20,287,762
17,330,223
Mortgage servicing rights, net 77,630
28,536
Premises and equipment, net 23,882
19,775
Accrued interest receivable and other assets 511,207
465,933
Goodwill and intangible assets, net 19,157
19,512
Total assets $ 24,400,998
$ 21,697,134
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest-bearing $ 8,263,202
$ 7,994,201
Interest-bearing 10,818,055
9,022,630
Total deposits 19,081,257
17,016,831
Accrued interest payable 4,562
5,498
Other liabilities 178,599
161,223
Federal funds purchased and repurchase agreements 83,496
109,575
Other borrowings 2,500,000
2,000,000
Subordinated notes, net 281,315
281,044
Trust preferred subordinated debentures 113,406
113,406
Total liabilities 22,242,635
19,687,577
Stockholders’ equity:
Preferred stock, $.01 par value, $1,000 liquidation value:
Authorized shares – 10,000,000
Issued shares – 6,000,000 shares issued at September 30, 2017 and December 31, 2016 150,000
150,000
Common stock, $.01 par value:
Authorized shares – 100,000,000
Issued shares – 49,622,242 and 49,504,079 at September 30, 2017 and December 31, 2016, respectively 496
495
Additional paid-in capital 959,251
955,468
Retained earnings 1,048,195
903,187
Treasury stock (shares at cost: 417 at September 30, 2017 and December 31, 2016) (8 ) (8 )
Accumulated other comprehensive income, net of taxes 429
415
Total stockholders’ equity 2,158,363
2,009,557
Total liabilities and stockholders’ equity $ 24,400,998
$ 21,697,134
- UNAUDITED


(in thousands except share data)	March 31, 2022		December 31, 2021
	(Unaudited)
Assets
Cash and due from banks	$	234,853	$	180,663
Interest-bearing cash and cash equivalents	5,136,680		7,765,996

Available-for-sale debt securities	2,591,218		3,538,201
Held-to-maturity debt securities	1,009,972		—
Equity securities	40,825		45,607
Investment securities	3,642,015		3,583,808
Loans held for sale	8,085		8,123

Loans held for investment, mortgage finance	5,827,965		7,475,497
Loans held for investment	15,849,434		15,331,457
Less: Allowance for credit losses on loans	211,151		211,866
Loans held for investment, net	21,466,248		22,595,088


Premises and equipment, net	24,181		20,901
Accrued interest receivable and other assets	556,154		559,897
Goodwill and intangible assets, net	17,161		17,262
Total assets	$	31,085,377	$	34,731,738

Liabilities and Stockholders’ Equity
Liabilities:
Non-interest bearing	$	13,434,723	$	13,390,370
Interest bearing	11,943,215		14,718,995

Total deposits	25,377,938		28,109,365
Accrued interest payable	8,560		7,699

Other liabilities	252,394		273,488
Short-term borrowings	1,427,033		2,202,832
Long-term debt	929,414		928,738


Total liabilities	27,995,339		31,522,122

Stockholders’ equity:
Preferred stock, $0.01 par value, $1,000 liquidation value:
Authorized shares - 10,000,000
Issued shares - 300,000 at March 31, 2022 and December 31, 2021	300,000		300,000
Common stock, $0.01 par value:
Authorized shares - 100,000,000
Issued shares - 50,710,858 and 50,618,911 at March 31, 2022 and December 31, 2021, respectively	507		506
Additional paid-in capital	1,011,353		1,008,559
Retained earnings	1,983,611		1,948,274
Treasury stock - 417 shares at cost at March 31, 2022 and December 31, 2021	(8)		(8)
Accumulated other comprehensive income/(loss), net of taxes	(205,425)		(47,715)
Total stockholders’ equity	3,090,038		3,209,616
Total liabilities and stockholders’ equity	$	31,085,377	$	34,731,738

See accompanying notes to consolidated financial statements.

TEXAS CAPITAL BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF INCOME AND OTHER

COMPREHENSIVE ~~INCOME –~~INCOME/(LOSS) - UNAUDITED

~~(In thousands except per share data)~~

See accompanying notes to consolidated financial statements.

TEXAS CAPITAL BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - UNAUDITED

~~(In thousands except share data)~~

Preferred Stock Common Stock Treasury Stock
Shares Amount Shares Amount
Additional
Paid-in
Capital

Retained
Earnings
Shares Amount
Accumulated
Other
Comprehensive
Income (Loss),
Net of Taxes
Total
Balance at December 31, 2015 (audited) 6,000,000
$ 150,000
45,874,224
$ 459
$ 714,546
$ 757,818
(417 ) $ (8 ) $ 718
$ 1,623,533
Comprehensive income:
Net income —
—
—
—
—
106,733
—
—
—
106,733
Change in unrealized gain on available-for-sale securities, net of taxes of $43 —
—
—
—
—
—
—
—
(78 ) (78 )
Total comprehensive income 106,655
Tax benefit related to exercise of stock-based awards —
—
—
—
1,213
—
—
—
—
1,213
Stock-based compensation expense recognized in earnings —
—
—
—
3,466
—
—
—
—
3,466
Preferred stock dividend —
—
—
—
—
(7,313 ) —
—
—
(7,313 )
Issuance of stock related to stock-based awards —
—
135,688
1
(1,773 ) —
—
—
—
(1,772 )
Balance at September 30, 2016 6,000,000
$ 150,000
46,009,912
$ 460
$ 717,452
$ 857,238
(417 ) $ (8 ) $ 640
$ 1,725,782

Balance at December 31, 2016 (audited) 6,000,000
$ 150,000
49,504,079
$ 495
$ 955,468
$ 903,187
(417 ) $ (8 ) $ 415
$ 2,009,557
Comprehensive income:
Net income —
—
—
—
—
152,321
—
—
—
152,321
Change in unrealized gain on available-for-sale securities, net of taxes of $8 —
—
—
—
—
—
—
—
14
14
Total comprehensive income 152,335
Stock-based compensation expense recognized in earnings —
—
—
—
5,717
—
—
—
—
5,717
Preferred stock dividend —
—
—
—
—
(7,313 ) —
—
—
(7,313 )
Issuance of stock related to stock-based awards —
—
84,568
1
(1,934 ) —
—
—
—
(1,933 )
Issuance of common stock related to warrants —
—
33,595
—
—
—
—
—
—
—
Balance at September 30, 2017 6,000,000
$ 150,000
49,622,242
$ 496
$ 959,251
$ 1,048,195
(417 ) $ (8 ) $ 429
$ 2,158,363


	Preferred Stock			Common Stock			Additional				Treasury Stock			Accumulated Other
							Paid-in		Retained					Comprehensive
(in thousands except share data)	Shares	Amount		Shares	Amount		Capital		Earnings		Shares	Amount		Income/(Loss)		Total
Balance at December 31, 2020 (audited)	6,000,000	$	150,000	50,470,867	$	504	$	991,898	$	1,713,056	(417)	$	(8)	$	15,774	$	2,871,224

Comprehensive income/(loss):
Net income	—	—		—	—		—		71,938		—	—		—		71,938
Change in unrealized gain/(loss) on available-for-sale debt securities, net of taxes	—	—		—	—		—		—		—	—		(72,211)		(72,211)
Total comprehensive loss																(273)

Stock-based compensation expense recognized in earnings	—	—		—	—		5,461		—		—	—		—		5,461
Issuance of preferred stock	300,000	300,000		—	—		(10,277)		—		—	—		—		289,723
Preferred stock dividend	—	—		—	—		—		(3,779)		—	—		—		(3,779)
Issuance of stock related to stock-based awards	—	—		87,317	1		(2,875)		—		—	—		—		(2,874)


Balance at March 31, 2021	6,300,000	$	450,000	50,558,184	$	505	$	984,207	$	1,781,215	(417)	$	(8)	$	(56,437)	$	3,159,482

Balance at December 31, 2021 (audited)	300,000	$	300,000	50,618,911	$	506	$	1,008,559	$	1,948,274	(417)	$	(8)	$	(47,715)	$	3,209,616

Comprehensive income/(loss):
Net income	—	—		—	—		—		39,650		—	—		—		39,650
Change in unrealized gain/(loss) on available-for-sale debt securities, net of taxes	—	—		—	—		—		—		—	—		(157,710)		(157,710)
Total comprehensive loss																(118,060)

Stock-based compensation expense recognized in earnings	—	—		—	—		5,407		—		—	—		—		5,407

Preferred stock dividend	—	—		—	—		—		(4,313)		—	—		—		(4,313)
Issuance of stock related to stock-based awards	—	—		91,947	1		(2,613)		—		—	—		—		(2,612)



Balance at March 31, 2022	300,000	$	300,000	50,710,858	$	507	$	1,011,353	$	1,983,611	(417)	$	(8)	$	(205,425)	$	3,090,038

See accompanying notes to consolidated financial statements.

TEXAS CAPITAL BANCSHARES, INC.

CONSOLIDATED STATEMENTS OF CASH ~~FLOWS—~~FLOWS - UNAUDITED

Nine months ended September 30,
2017 2016
Operating activities
Net income $ 152,321
$ 106,733
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses 42,000
68,000
Depreciation and amortization 19,624
16,179
Increase in valuation allowance on mortgage servicing rights 216
414
Bank owned life insurance (BOLI) income (1,562 ) (1,592 )
Stock-based compensation expense 15,021
6,175
Excess tax benefits from stock-based compensation arrangements —
(1,328 )
Purchases and originations of loans held for sale (4,315,065 ) (1,927,702 )
Proceeds from sales and repayments of loans held for sale 4,282,910
1,352,322
Net (gain) loss on sale of loans held for sale and other assets 1,005
(1,307 )
Technology write-off 5,285
—
Changes in operating assets and liabilities:
Accrued interest receivable and other assets (68,672 ) (79,267 )
Accrued interest payable and other liabilities 8,434
34,172
Net cash provided by (used in) operating activities 141,517
(427,201 )
Investing activities
Purchases of available-for-sale securities (97,381 ) (1,278 )
Maturities and calls of available-for-sale securities 94,775
265
Principal payments received on available-for-sale securities 3,278
4,528
Originations of mortgage finance loans (62,284,036 ) (74,594,117 )
Proceeds from pay-offs of mortgage finance loans 61,139,089
74,599,234
Net increase in loans held for investment, excluding mortgage finance loans (1,856,253 ) (943,534 )
Purchase of premises and equipment, net (9,056 ) (1,526 )
Proceeds from sale of foreclosed assets 767
62
Net cash used in investing activities (3,008,817 ) (936,366 )
Financing activities
Net increase in deposits 2,064,426
3,060,504
Costs from issuance of stock related to stock-based awards and warrants (1,933 ) (1,772 )
Preferred dividends paid (7,313 ) (7,313 )
Net increase in other borrowings 500,000
170,000
Excess tax benefits from stock-based compensation arrangements —
1,328
Decrease in Federal funds purchased and repurchase agreements (26,079 ) (61,631 )
Net cash provided by financing activities 2,529,101
3,161,116
Net increase (decrease) in cash and cash equivalents (338,199 ) 1,797,549
Cash and cash equivalents at beginning of period 2,839,352
1,790,870
Cash and cash equivalents at end of period $ 2,501,153
$ 3,588,419
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ 80,037
$ 48,119
Cash paid during the period for income taxes 72,485
68,716
Transfers from loans/leases to OREO and other repossessed assets —
18,822


	Three months ended March 31,
(in thousands)	2022		2021
Operating activities
Net income	$	39,650	$	71,938
Adjustments to reconcile net income to net cash provided by operating activities:
Provision/(benefit) for credit losses	(2,000)		(6,000)

Depreciation and amortization expense	10,604		26,067
Net (gain)/loss on sale of loans held for sale	—		(5,572)
Decrease in valuation allowance on mortgage servicing rights	—		(16,448)


Stock-based compensation expense	5,588		6,368

Purchases and originations of loans held for sale	—		(1,133,239)
Proceeds from sales and repayments of loans held for sale	571		1,233,725



Changes in operating assets and liabilities:
Accrued interest receivable and other assets	43,200		48,927
Accrued interest payable and other liabilities	(24,691)		(27,335)
Net cash provided by operating activities	72,922		198,431
Investing activities
Purchases of available-for-sale debt securities	(376,415)		(460,793)
Proceeds from maturities, redemptions and pay-downs of available-for-sale debt securities	104,338		118,316

Proceeds from maturities, redemptions and pay-downs of held-to-maturity debt securities	9,882		—
Sales/(purchases) of equity securities, net	940		(588)
Originations of loans held for investment, mortgage finance	(26,902,960)		(48,097,222)
Proceeds from pay-offs of loans held for investment, mortgage finance	28,550,492		48,167,550

Net (increase)/decrease in loans held for investment, excluding mortgage finance	(517,465)		(54,141)
Purchases of premises and equipment, net	(2,709)		(924)



Net cash provided by/(used in) investing activities	866,103		(327,802)
Financing activities
Net increase/(decrease) in deposits	(2,731,427)		2,395,381
Issuance of stock related to stock-based awards	(2,612)		(2,874)

Net proceeds from issuance of preferred stock	—		289,723

Preferred stock dividends paid	(4,313)		(3,779)
Net decrease in short-term borrowings	(775,799)		(596,164)


Net proceeds from issuance of long-term debt	—		268,815


Net cash provided by/(used in) financing activities	(3,514,151)		2,351,102
Net increase/(decrease) in cash and cash equivalents	(2,575,126)		2,221,731
Cash and cash equivalents at beginning of period	7,946,659		9,206,380
Cash and cash equivalents at end of period	$	5,371,533	$	11,428,111
Supplemental disclosures of cash flow information:
Cash paid during the period for interest	$	24,122	$	33,860
Cash paid during the period for income taxes	302		440
Transfers of debt securities from available-for-sale to held-to-maturity	1,019,365		—

See accompanying notes to consolidated financial statements.

~~TEXAS CAPITAL BANCSHARES, INC.~~

NOTES TO CONSOLIDATED FINANCIAL ~~STATEMENTS—~~STATEMENTS - UNAUDITED

(1) ~~OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~Operations and Summary of Significant Accounting Policies

Organization and Nature of Business

Texas Capital Bancshares, Inc. ~~(the~~(“we,” “us”, “TCBI” or the “Company”), a Delaware corporation, was incorporated in November 1996 and commenced banking operations in December 1998. The consolidated financial statements of the Company include the accounts of ~~Texas Capital Bancshares, Inc.~~the Company and its wholly owned subsidiary, Texas Capital Bank ~~National Association~~ (the “Bank”).

We serve the needs of commercial businesses and ~~successful~~ professionals and entrepreneurs located in Texas as well as operate several lines of business serving a regional ~~and~~or national ~~clientèle~~clientele of commercial borrowers. We are primarily a secured lender, with the majority of our ~~greatest concentration~~loans held for investment, excluding mortgage finance loans and other national lines of ~~loans~~business, being made to businesses headquartered or with operations in Texas. Our national lines of business provide specialized lending products to businesses throughout the United States.

Basis of Presentation

Our accounting and reporting policies conform to accounting principles generally accepted in the United States (“GAAP”) and to generally accepted practices within the banking industry. Certain prior period balances have been reclassified to conform to the current period presentation. ~~In that regard, ASU 2016-09,~~ ~~"Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,"~~ ("ASU 2016-09") became effective for us on January 1, 2017. ASU 2016-09 requires that excess tax benefits and deficiencies be recognized as a component of income taxes within the income statement. Additionally, ASU 2016-09 requires that all income tax-related cash flows resulting from share-based payments be reported as operating activities in the statement of cash flows. Previously, income tax benefits at award settlement were reported as a reduction to operating cash flows and an increase to financing cash flows to the extent that those benefits exceeded the income tax benefits reported in earnings during the award's vesting period. We have elected to apply that change in cash flow presentation on a prospective basis. ASU 2016-09 also requires that companies make an accounting policy election regarding forfeitures, to either estimate the number of awards that are expected to vest or account for them when they occur. We have elected to recognize forfeitures as they occur. The impact of this change and that of the remaining provisions of ASU 2016-09 did not have a significant impact on our financial statements.

The consolidated interim financial statements ~~have been prepared without audit. Certain~~are unaudited and certain information and ~~footnote~~ disclosures in the notes to consolidated unaudited financial statements that are presented in accordance with GAAP have been condensed or omitted. In the opinion of management, the interim financial statements include all normal and recurring adjustments and the disclosures made are adequate to make the interim financial information not misleading. The consolidated financial statements have been prepared in accordance with GAAP for interim financial information and the instructions to Form 10-Q adopted by the U.S. Securities and Exchange Commission (“SEC”). Accordingly, the financial statements do not include all of the information and ~~footnotes~~notes to the consolidated unaudited financial statements required by GAAP for complete annual financial statements and should be read in conjunction with our consolidated financial statements, and notes thereto, for the year ended December 31, ~~2016,~~2021, included in our Annual Report on Form 10-K ~~filed with~~for the ~~SEC on February 17, 2017~~year ended December 31, 2021 (the ~~“2016~~“2021 Form 10-K”). Operating results for the interim periods disclosed herein are not necessarily indicative of the results that may be expected for a full year or any future period.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. The allowance for ~~loan~~credit losses, the fair value of ~~stock-based compensation awards, the fair value of mortgage servicing rights ("MSRs")~~financial instruments and the status of contingencies are particularly susceptible to significant change.

(2) ~~EARNINGS PER COMMON SHARE~~

The following table presents the computation of basic and diluted earnings per ~~share (in thousands except per share data):~~share:


	Three months ended March 31,
(in thousands except share and per share data)		2022		2021
Numerator:
Net income		$	39,650	$	71,938
Preferred stock dividends		4,313		3,779
Net income available to common stockholders		$	35,337	$	68,159
Denominator:
Denominator for basic earnings per common share—weighted average common shares		50,667,090		50,513,277
Effect of dilutive outstanding stock-settled awards		656,937		556,234

Denominator for dilutive earnings per common share—weighted average diluted common shares		51,324,027		51,069,511

Basic earnings per common share		$	0.70	$	1.35
Diluted earnings per common share		$	0.69	$	1.33

Anti-dilutive outstanding stock-settled awards		229,488		80,263

Three months ended
September 30, Nine months ended
September 30,
2017 2016 2017 2016
Numerator:
Net income $ 58,684
$ 42,725
$ 152,321
$ 106,733
Preferred stock dividends 2,438
2,438
7,313
7,313
Net income available to common stockholders 56,246
40,287
$ 145,008
99,420
Denominator:
Denominator for basic earnings per share— weighted average shares 49,607,028
45,980,517
49,573,456
45,931,357
Effect of employee stock-based awards(1)
214,468
118,885
235,011
119,021
Effect of warrants to purchase common stock 429,370
410,281
431,551
382,578
Denominator for dilutive earnings per share—adjusted weighted average shares and assumed conversions 50,250,866
46,509,683
50,240,018
46,432,956
Basic earnings per common share $ 1.13
$ 0.88
$ 2.93
$ 2.16
Diluted earnings per common share $ 1.12
$ 0.87
$ 2.89
$ 2.14


~~(1)~~	SARs and RSUs outstanding of 6,200 at September 30, 2017 and 319,476 at September 30, 2016 have not been included in diluted earnings per share because to do so would have been anti-dilutive for the periods presented.

(3) ~~SECURITIES~~Investment Securities

The following is a summary of our investment securities:


(in thousands)	Amortized Cost(1)		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
March 31, 2022
Available-for-sale debt securities:
U.S. Treasury securities	$	376,569	$	—	$	(8,715)	$	367,854
U.S. government agency securities	125,000		—		(11,484)		113,516
Residential mortgage-backed securities	2,099,900		46		(167,844)		1,932,102

Tax-exempt asset-backed securities	166,889		926		(1,970)		165,845
Credit risk transfer (“CRT”) securities	14,713		—		(2,812)		11,901
Total available-for-sale debt securities	2,783,071		972		(192,825)		2,591,218
Held-to-maturity debt securities:
Residential mortgage-backed securities	1,009,972		—		(36,381)		973,591
Total held-to-maturity debt securities	1,009,972		—		(36,381)		973,591
Equity securities							40,825
Total investment securities(2)							$	3,642,015

December 31, 2021
Available-for-sale debt securities:
U.S. government agency securities	$	125,000	$	—	$	(4,056)	$	120,944
Residential mortgage-backed securities	3,288,261		156		(63,039)		3,225,378
Tax-exempt asset-backed securities	170,626		9,407		—		180,033
CRT securities	14,713		—		(2,867)		11,846
Total available-for-sale debt securities	3,598,600		9,563		(69,962)		3,538,201
Equity securities							45,607
Total investment securities(2)							$	3,583,808

(1)Excludes accrued interest receivable of $5.5 million and $6.6 million at March 31, 2022 and December 31, 2021, respectively, related to available-for-sale debt securities, ~~(in thousands):~~and $1.6 million at March 31, 2022 related to held-to-maturity debt securities that is recorded in accrued interest receivable and other assets on the consolidated balance sheets.

(2)Includes available-for-sale debt securities and equity securities at estimated fair value and held-to-maturity debt securities at amortized cost.

September 30, 2017

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Estimated
Fair
Value
Available-for-sale securities:

Residential mortgage-backed securities $ 11,402

$ 756
$ —
$ 12,158
Equity securities(1) 12,161

266
(361 ) 12,066

$ 23,563

$ 1,022
$ (361 ) $ 24,224

December 31, 2016
Amortized Cost
Gross Unrealized Gains
Gross Unrealized Losses
Estimated
Fair
Value
Available-for-sale securities:

Residential mortgage-backed securities $ 14,680
$ 972
$ —
$ 15,652
Municipals 275
—
—
275
Equity securities(1) 9,280
27
(360 ) 8,947

$ 24,235
$ 999
$ (360 ) $ 24,874
Debt Securities


~~(1)~~	~~Equity securities consist of Community Reinvestment Act funds and investments related to our non-qualified deferred compensation plan.~~

In the first quarter of 2022, we transferred $1.0 billion of available-for-sale debt securities to held-to-maturity at fair value. The transfer was the result of deliberate actions taken to execute on our asset-liability management strategies in response to rising interest rates. Management determined that it has both the positive intent and ability to hold these securities to maturity. On the date of transfer, the difference between the carrying value and fair value of these securities, which was recorded, net of tax, as a loss in accumulated other comprehensive income/(loss) (“AOCI”), resulted in the securities transferring at a discount of $69.2 million. The discount and unrealized loss, net of tax, in AOCI will be amortized to interest income over the remaining life of the securities using the interest method. There were no gains or losses recognized as a result of this transfer.

The amortized cost and estimated fair value as of March 31, 2022, excluding accrued interest receivable, of available-for-sale and held-to-maturity debt securities are presented below by contractual ~~maturity (in thousands, except percentage data):~~maturity. Actual maturities may differ from contractual maturities of mortgage-backed securities because borrowers may have the right to call or prepay obligations with or without prepayment penalties.


	Available-for-sale				Held-to-maturity
(in thousands)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within one year	$	95	$	101	$	—	$	—
Due after one year through five years	376,612		367,899		—		—
Due after five years through ten years	156,492		140,462		—		—
Due after ten years	2,249,872		2,082,756		1,009,972		973,591
Total	$	2,783,071	$	2,591,218	$	1,009,972	$	973,591

September 30, 2017

Less Than
One Year

After One
Through
Five Years

After Five
Through
Ten Years

After Ten
Years

Total
Available-for-sale:

Residential mortgage-backed securities:(1)

Amortized cost 689
396
2,177
8,140
11,402
Estimated fair value 708
440
2,405
8,605
12,158
Weighted average yield(3)
4.53 % 5.97 % 5.48 % 3.01 % 3.68 %
Equity securities:(4)

Amortized cost 12,161
—
—
—
12,161
Estimated fair value 12,066
—
—
—
12,066
Total available-for-sale securities:
Amortized cost $ 23,563
Estimated fair value $ 24,224

December 31, 2016

Less Than
One Year

After One
Through
Five Years

After Five
Through
Ten Years

After Ten
Years

Total
Available-for-sale:

Residential mortgage-backed securities:(1)

Amortized cost $ 9
$ 2,047
$ 3,147
$ 9,477
$ 14,680
Estimated fair value 9
2,104
3,495
10,044
15,652
Weighted average yield(3)
5.50 % 4.70 % 5.55 % 2.84 % 3.68 %
Municipals:(2)

Amortized cost 275
—
—
—
275
Estimated fair value 275
—
—
—
275
Weighted average yield(3)
5.61 % — % — % — % 5.61 %
Equity securities:(4)

Amortized cost 9,280
—
—
—
9,280
Estimated fair value 8,947
—
—
—
8,947
Total available-for-sale securities:
Amortized cost $ 24,235
Estimated fair value $ 24,874


~~(1)~~	~~Actual maturities may differ from contractual maturities because borrowers may have the right to prepay obligations with or without prepayment penalties.~~


~~(2)~~	~~Yields have been adjusted to a tax equivalent basis assuming a 35% federal tax rate.~~


~~(3)~~	~~Yields are calculated based on amortized cost.~~


~~(4)~~	~~These equity securities do not have a stated maturity.~~

~~At September 30, 2017, securities with carrying values of $2.7 million and $8.0 million were pledged to secure certain deposits and repurchase agreements, respectively.~~

The following table discloses ~~as of September 30, 2017 and December 31, 2016,~~ our ~~investment~~available-for-sale debt securities that have been in a continuous unrealized loss position for less than 12 months and those that have been in a continuous unrealized loss position for 12 or more ~~months (in thousands):~~months:

September 30, 2017 Less Than 12 Months
12 Months or Longer
Total

Fair
Value

Unrealized
Loss

Fair
Value

Unrealized
Loss

Fair
Value

Unrealized
Loss
Equity securities $ —
$ —
$ 6,139
$ (361 ) $ 6,139
$ (361 )

Less Than 12 Months
12 Months or Longer
Total
December 31, 2016
Fair
Value

Unrealized
Loss

Fair
Value

Unrealized
Loss

Fair
Value

Unrealized
Loss
Equity securities $ 1,015
$ (6 ) $ 6,146
$ (354 ) $ 7,161
$ (360 )


	Less Than 12 Months				12 Months or Longer				Total
(in thousands)	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
March 31, 2022
U.S. treasury securities	$	367,854	$	(8,715)	$	—	$	—	$	367,854	$	(8,715)
U.S. government agency securities	—		—		113,516		(11,484)		113,516		(11,484)
Residential mortgage-backed securities	962,312		(77,250)		967,491		(90,594)		1,929,803		(167,844)
Tax-exempt asset-backed securities	70,464		(1,970)		—		—		70,464		(1,970)
CRT securities	—		—		11,901		(2,812)		11,901		(2,812)
Total	$	1,400,630	$	(87,935)	$	1,092,908	$	(104,890)	$	2,493,538	$	(192,825)
December 31, 2021
U.S. government agency securities	$	24,085	$	(915)	$	96,859	$	(3,141)	$	120,944	$	(4,056)
Residential mortgage-backed securities	2,871,052		(50,721)		303,491		(12,318)		3,174,543		(63,039)
CRT securities	—		—		11,846		(2,867)		11,846		(2,867)
Total	$	2,895,137	$	(51,636)	$	412,196	$	(18,326)	$	3,307,333	$	(69,962)

At ~~September 30, 2017,~~March 31, 2022, we ~~owned one security~~had 81 available-for-sale debt securities in an unrealized loss ~~position.~~position, comprised of 5 U.S. treasury securities, 5 U.S. government agency securities, 68 residential mortgage-backed securities, 1 tax-exempt asset-backed security and 2 CRT securities. The ~~security is a publicly traded equity fund and is subject~~unrealized losses on the available-for-sale debt securities were the result of changes in market interest rates compared to ~~market pricing volatility.~~the date the securities were acquired rather than the credit quality of the issuers or underlying loans. We do not ~~believe this~~intend to sell and it is not more likely than not that we will be required to sell before recovery of the amortized cost of the available-for-sale debt securities in an unrealized loss position and have recorded the unrealized losses related to this portfolio in AOCI. Held-to-maturity debt securities consist of government guaranteed securities for which no loss is “other-than-temporary” as of September 30, 2017. We have evaluated the near-term prospects of the investment in relation to the severity and duration of the impairment and based on that evaluation we have the ability and intent to hold the investment until recovery of fair value.

~~(4) LOANS HELD FOR INVESTMENT AND ALLOWANCE FOR LOAN LOSSES~~

expected. At ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016, loans held~~2021, no allowance for ~~investment~~credit losses was established for available-for-sale or held-to-maturity debt securities.

Debt securities with carrying values of approximately $19.5 million and $1.9 million were ~~as follows (in thousands)~~pledged to secure certain customer repurchase agreements and deposits, respectively, at March 31, 2022. The comparative amounts at December 31, 2021 were $22.0 million and $2.0 million, respectively.

Equity Securities

Equity securities consist of investments that qualify for consideration under the regulations implementing the Community Reinvestment Act and investments related to our non-qualified deferred compensation plan. The following is a summary of unrealized and realized gains/(losses) recognized on equity securities included in other non-interest income on the consolidated statements of income and other comprehensive income/(loss):


	Three months ended March 31,
(in thousands)		2022		2021
Net gains/(losses) recognized during the period		$	(3,640)	$	378
Less: Realized net gains/(losses) recognized on securities sold		202		398
Unrealized net gains/(losses) recognized on securities held		$	(3,842)	$	(20)

September 30,
2017 December 31,
2016
Commercial $ 8,810,825
$ 7,291,545
Mortgage finance 5,642,285
4,497,338
Construction 2,099,355
2,098,706
Real estate 3,683,564
3,462,203
Consumer 70,436
34,587
Leases 259,720
185,529
Gross loans held for investment 20,566,185
17,569,908
Deferred income (net of direct origination costs) (95,494 ) (71,559 )
Allowance for loan losses (182,929 ) (168,126 )
Total loans held for investment $ 20,287,762
$ 17,330,223

~~Commercial~~(4) Loans and ~~Leases.~~ ~~Our commercial loan~~Allowance for Credit Losses on Loans

Loans are summarized by portfolio segment as follows:


(in thousands)	March 31, 2022		December 31, 2021
Loans held for investment:
Commercial	$	10,175,668	$	9,897,561
Energy	797,191		721,373
Mortgage finance	5,827,965		7,475,497
Real estate	4,943,195		4,777,530
Gross loans held for investment(1)	21,744,019		22,871,961
Unearned income (net of direct origination costs)	(66,620)		(65,007)
Total loans held for investment(1)	21,677,399		22,806,954
Allowance for credit losses on loans	(211,151)		(211,866)
Total loans held for investment, net(1)	$	21,466,248	$	22,595,088

Loans held for sale:
Mortgage loans, at fair value	$	8,085	$	8,123

Total loans held for sale	$	8,085	$	8,123

(1) Excludes accrued interest receivable of $49.7 million and $50.3 million at March 31, 2022 and December 31, 2021, respectively, that is comprised of lines of credit for working capital and term loans and leases to finance equipment and other business assets. Our energy production loans are generally collateralized with proven reserves based on appropriate valuation standards and take into account the risk of oil and gas price volatility. Our commercial loans and leases are underwritten after carefully evaluating and understanding the borrower’s ability to operate profitably. Our underwriting standards are designed to promote relationship banking rather than to make loans on a transaction basis. Our lines of credit typically are limited to a percentage of the value of the assets securing the line. Lines of credit and term loans typically are reviewed annually, or more frequently, as needed, and are supported by accountsrecorded in accrued interest receivable ~~inventory, equipment~~ and other assets ~~of our clients’ businesses.~~on the consolidated balance sheets.

~~Mortgage Finance Loans.~~ Our mortgage finance loans consist of ownership interests purchased in single-family residential mortgages funded through our mortgage finance group. These loans are typically held on our balance sheet for

10 to 20 days. We have agreements with mortgage lenders and purchase interests in individual loans they originate. All loans are underwritten consistent with established programs for permanent financing with financially sound investors. Substantially all loans are conforming loans. Balances as of September 30, 2017 and December 31, 2016 are stated net of $150.7 million and $839.0 million participations sold, respectively.

~~Construction Loans.~~ Our construction loan portfolio consists primarily of single- and multi-family residential properties and commercial projects used in manufacturing, warehousing, service or retail businesses. Our construction loans generally have terms of one to three years. We typically make construction loans to developers, builders and contractors that have an established record of successful project completion and loan repayment and have a substantial equity investment in the borrowers. Loan amounts are derived primarily from the Bank's evaluation of expected cash flows available to service debt from stabilized projects under hypothetically stressed conditions. Construction loans are also based in part upon estimates of costs and value associated with the completed project. Sources of repayment for these types of loans may be pre-committed permanent loans from other lenders, sales of developed property, or an interim loan commitment from us until permanent financing is obtained. The nature of these loans makes ultimate repayment sensitive to overall economic conditions. Borrowers may not be able to correct conditions of default in loans, increasing risk of exposure to classification, non-performing status, reserve allocation and actual credit loss and foreclosure. These loans typically have floating rates and commitment fees.

~~Real Estate Loans.~~ A portion of our real estate loan portfolio is comprised of loans secured by properties other than market risk or investment-type real estate. Market risk loans are real estate loans where the primary source of repayment is expected to come from the sale, permanent financing or lease of the real property collateral. We generally provide temporary financing for commercial and residential property. These loans are viewed primarily as cash flow loans and secondarily as loans secured by real estate. Our real estate loans generally have maximum terms of five to seven years, and we provide loans with both floating and fixed rates. We generally avoid long-term loans for commercial real estate held for investment. Real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. Appraised values may be highly variable due to market conditions and the impact of the inability of potential purchasers and lessees to obtain financing and a lack of transactions at comparable values.

At September 30, 2017 and December 31, 2016, we had a blanket floating lien on certain real estate-secured loans, mortgage finance loans and certain securities used as collateral for Federal Home Loan Bank (“FHLB”) borrowings.

~~Summary of Loan Loss Experience~~

The allowance for loan losses is comprised of general reserves, specific reserves for impaired loans and an additional qualitative reserve based on our estimate of losses inherent in the portfolio at the balance sheet date, but not yet identified with specified loans. We consider the allowance at September 30, 2017 to be appropriate, given management's assessment of losses inherent in the portfolio as of the evaluation date, the significant growth in the loan and lease portfolio, current economic conditions in our market areas and other factors.

The following tables summarize ~~the credit risk profile~~our gross loans held for investment by year of ~~our loan portfolio by~~origination and internally assigned ~~grades and non-accrual status as of September 30, 2017 and December 31, 2016 (in thousands):~~credit grades:


(in thousands)	2022		2021		2020		2019		2018		2017 and prior		Revolving lines of credit		Revolving lines of credit converted to term loans		Total
March 31, 2022
Commercial
(1-7) Pass	$	234,841	$	3,863,274	$	330,939	$	453,566	$	305,767	$	430,483	$	4,264,331	$	34,280	$	9,917,481
(8) Special mention	3,118		26,848		4,077		26,776		—		5,043		28,622		3,907		98,391
(9) Substandard - accruing	—		666		3,410		77,915		24,366		16,847		9,458		1,664		134,326
(9+) Non-accrual	—		2,003		—		44		12,898		6,918		3,607		—		25,470
Total commercial	$	237,959	$	3,892,791	$	338,426	$	558,301	$	343,031	$	459,291	$	4,306,018	$	39,851	$	10,175,668
Energy
(1-7) Pass	$	34,710	$	61,000	$	—	$	—	$	—	$	1,581	$	673,649	$	—	$	770,940
(8) Special mention	—		—		—		—		—		—		—		—		—
(9) Substandard - accruing	—		—		—		—		—		7,984		—		—		7,984
(9+) Non-accrual	—		8,584		—		—		—		—		9,683		—		18,267
Total energy	$	34,710	$	69,584	$	—	$	—	$	—	$	9,565	$	683,332	$	—	$	797,191
Mortgage finance
(1-7) Pass	$	—	$	385,449	$	599,899	$	512,708	$	550,246	$	3,779,663	$	—	$	—	$	5,827,965
(8) Special mention	—		—		—		—		—		—		—		—		—
(9) Substandard - accruing	—		—		—		—		—		—		—		—		—
(9+) Non-accrual	—		—		—		—		—		—		—		—		—
Total mortgage finance	$	—	$	385,449	$	599,899	$	512,708	$	550,246	$	3,779,663	$	—	$	—	$	5,827,965
Real estate
CRE
(1-7) Pass	$	152,474	$	548,881	$	640,761	$	602,864	$	277,042	$	552,259	$	100,734	$	25,101	$	2,900,116
(8) Special mention	—		—		—		—		—		39,697		—		451		40,148
(9) Substandard - accruing	—		17,850		—		—		40,658		40,292		—		411		99,211
(9+) Non-accrual	—		—		—		—		—		194		—		—		194
RBF
(1-7) Pass	23,129		138,381		27,533		13,382		10,434		9,080		471,488		—		693,427
(8) Special mention	—		—		—		—		—		—		—		—		—
(9) Substandard - accruing	—		—		—		—		—		—		—		—		—
(9+) Non-accrual	—		—		—		—		—		—		—		—		—
Other
(1-7) Pass	61,121		167,638		146,058		112,818		89,998		197,678		37,600		29,107		842,018
(8) Special mention	—		—		6,698		—		—		16,217		—		—		22,915
(9) Substandard - accruing	—		—		6,373		—		—		4,816		—		—		11,189
(9+) Non-accrual	—		—		—		—		—		2,544		—		12,666		15,210
Secured by 1-4 family
(1-7) Pass	21,493		95,823		58,845		29,654		21,551		84,616		4,035		—		316,017
(8) Special mention	—		1,084		—		—		—		289		—		—		1,373
(9) Substandard - accruing	—		—		—		—		—		1,191		—		—		1,191
(9+) Non-accrual	—		—		—		—		—		186		—		—		186
Total real estate	$	258,217	$	969,657	$	886,268	$	758,718	$	439,683	$	949,059	$	613,857	$	67,736	$	4,943,195
Total	$	530,886	$	5,317,481	$	1,824,593	$	1,829,727	$	1,332,960	$	5,197,578	$	5,603,207	$	107,587	$	21,744,019

September 30, 2017
Commercial
Mortgage
Finance
Construction Real Estate Consumer Leases Total
Grade:
Pass $ 8,541,821
$ 5,642,285
$ 2,085,300
$ 3,611,667
$ 69,974
$ 242,335
$ 20,193,382
Special mention 28,288
—
14,055
34,804
369
—
77,516
Substandard-accruing 124,329
—
—
35,275
93
17,385
177,082
Non-accrual 116,387
—
—
1,818
—
—
118,205
Total loans held for investment $ 8,810,825
$ 5,642,285
$ 2,099,355
$ 3,683,564
$ 70,436
$ 259,720
$ 20,566,185

December 31, 2016
Commercial
Mortgage
Finance
Construction Real Estate Consumer Leases Total
Grade:
Pass $ 6,941,310
$ 4,497,338
$ 2,074,859
$ 3,430,346
$ 34,249
$ 181,914
$ 17,160,016
Special mention 69,447
—
10,901
21,932
—
3,532
105,812
Substandard-accruing 115,848
—
12,787
7,516
138
—
136,289
Non-accrual 164,940
—
159
2,409
200
83
167,791
Total loans held for investment $ 7,291,545
$ 4,497,338
$ 2,098,706
$ 3,462,203
$ 34,587
$ 185,529
$ 17,569,908


(in thousands)	2021		2020		2019		2018		2017		2016 and prior		Revolving lines of credit		Revolving lines of credit converted to term loans		Total
December 31, 2021
Commercial
(1-7) Pass	$	1,133,013	$	3,157,150	$	546,520	$	319,246	$	200,478	$	289,795	$	3,960,706	$	41,377	$	9,648,285
(8) Special mention	2,650		5,277		23,129		8,697		39		5,322		5,120		7,883		58,117
(9) Substandard - accruing	—		7,705		102,619		25,010		6,202		6,962		14,742		2,007		165,247
(9+) Non-accrual	736		1,191		49		12,955		1,166		6,196		3,619		—		25,912
Total commercial	$	1,136,399	$	3,171,323	$	672,317	$	365,908	$	207,885	$	308,275	$	3,984,187	$	51,267	$	9,897,561
Energy
(1-7) Pass	$	71,750	$	—	$	—	$	3	$	—	$	7,188	$	577,988	$	—	$	656,929
(8) Special mention	—		—		—		—		—		—		27,421		—		27,421
(9) Substandard - accruing	—		—		—		—		—		8,643		—		—		8,643
(9+) Non-accrual	—		—		—		—		—		—		28,380		—		28,380
Total energy	$	71,750	$	—	$	—	$	3	$	—	$	15,831	$	633,789	$	—	$	721,373
Mortgage finance
(1-7) Pass	$	289,042	$	590,616	$	656,445	$	754,507	$	332,001	$	4,852,886	$	—	$	—	$	7,475,497
(8) Special mention	—		—		—		—		—		—		—		—		—
(9) Substandard - accruing	—		—		—		—		—		—		—		—		—
(9+) Non-accrual	—		—		—		—		—		—		—		—		—
Total mortgage finance	$	289,042	$	590,616	$	656,445	$	754,507	$	332,001	$	4,852,886	$	—	$	—	$	7,475,497
Real estate
CRE
(1-7) Pass	$	497,462	$	576,344	$	600,005	$	294,005	$	155,252	$	451,042	$	73,988	$	25,970	$	2,674,068
(8) Special mention	—		—		291		8,827		20,089		26,344		—		—		55,551
(9) Substandard - accruing	17,850		—		—		40,900		37,393		38,188		—		2,308		136,639
(9+) Non-accrual	—		—		—		—		—		198		—		—		198
RBF
(1-7) Pass	155,595		44,362		9,693		8,565		—		12,732		460,888		—		691,835
(8) Special mention	—		—		—		—		—		—		—		—		—
(9) Substandard - accruing	—		—		—		—		—		—		—		—		—
(9+) Non-accrual	—		—		—		—		—		—		—		—		—
Other
(1-7) Pass	166,202		148,811		119,017		106,343		61,723		139,723		47,653		29,595		819,067
(8) Special mention	—		7,365		—		—		845		4,982		—		—		13,192
(9) Substandard - accruing	—		6,424		—		—		16,922		20,184		—		—		43,530
(9+) Non-accrual	—		—		—		—		2,641		1,450		—		13,741		17,832
Secured by 1-4 family
(1-7) Pass	96,899		60,659		40,586		22,976		31,826		65,910		4,535		—		323,391
(8) Special mention	—		553		—		—		—		291		—		—		844
(9) Substandard - accruing	—		—		—		—		—		1,203		—		—		1,203
(9+) Non-accrual	—		—		—		—		—		180		—		—		180
Total real estate	$	934,008	$	844,518	$	769,592	$	481,616	$	326,691	$	762,427	$	587,064	$	71,614	$	4,777,530
Total	$	2,431,199	$	4,606,457	$	2,098,354	$	1,602,034	$	866,577	$	5,939,419	$	5,205,040	$	122,881	$	22,871,961

The following table details activity in the allowance for ~~loan~~credit losses ~~by portfolio segment for the nine months ended September 30, 2017 and 2016.~~on loans. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.


(in thousands)																					(in thousands)	Commercial		Energy		Mortgage Finance		Real Estate		Total
Three months ended March 31, 2022																					Three months ended March 31, 2022
Beginning balance																					Beginning balance	$	102,202	$	52,568	$	6,083	$	51,013	$	211,866

September 30, 2017
(in thousands)	Commercial		Mortgage Finance		Construction			Real Estate		Consumer			Leases			Additional Qualitative Reserve			Total
Beginning balance	$	128,768	$	—	$	13,144		$	19,149	$	241		$	1,124		$	5,700		$	168,126
Provision for loan losses	21,388		—		4,431			12,948		221			2,774			1,899			43,661
Provision for credit losses on loans																					Provision for credit losses on loans	5,437		(24,522)		4,159		13,699		(1,227)
Charge-offs	32,146		—		59			290		180			—			—			32,675		Charge-offs	110		—		—		350		460
Recoveries	3,574		—		104			74		56			9			—			3,817		Recoveries	217		755��		—		—		972
Net charge-offs (recoveries)	28,572		—		(45		)	216		124			(9		)	—			28,858		Net charge-offs (recoveries)	(107)		(755)		—		350		(512)
Ending balance	$	121,584	$	—	$	17,620		$	31,881	$	338		$	3,907		$	7,599		$	182,929	Ending balance	$	107,746	$	28,801	$	10,242	$	64,362	$	211,151
Period end amount allocated to:
Loans individually evaluated for impairment	$	24,410	$	—	$	—		$	26	$	—		$	—		$	—		$	24,436
Loans collectively evaluated for impairment	97,174		—		17,620			31,855		338			3,907			7,599			158,493
Ending balance	$	121,584	$	—	$	17,620		$	31,881	$	338		$	3,907		$	7,599		$	182,929

September 30, 2016
(in thousands)	Commercial		Mortgage Finance		Construction			Real Estate		Consumer			Leases			Additional Qualitative Reserve			Total

Three months ended March 31, 2021																					Three months ended March 31, 2021
Beginning balance	$	112,446	$	—	$	6,836		$	13,381	$	338		$	3,931		$	4,179		$	141,111	Beginning balance	$	73,061	$	84,064	$	4,699	$	92,791	$	254,615
Provision for loan losses	65,446		—		1,607			1,981		(23		)	(2,646		)	(226		)	66,139

Provision for credit losses on loans																					Provision for credit losses on loans	(1,001)		(5,852)		211		929		(5,713)
Charge-offs	34,232		—		—			528		40			—			—			34,800		Charge-offs	2,451		5,732		—		—		8,183
Recoveries	7,829		—		34			36		16			71			—			7,986		Recoveries	1,050		715		—		—		1,765
Net charge-offs (recoveries)	26,403		—		(34		)	492		24			(71		)	—			26,814		Net charge-offs (recoveries)	1,401		5,017		—		—		6,418
Ending balance	$	151,489	$	—	$	8,477		$	14,870	$	291		$	1,356		$	3,953		$	180,436	Ending balance	$	70,659	$	73,195	$	4,910	$	93,720	$	242,484
Period end amount allocated to:
Loans individually evaluated for impairment	$	42,674	$	—	$	24		$	136	$	30		$	—		$	—		$	42,864
Loans collectively evaluated for impairment	108,815		—		8,453			14,734		261			1,356			3,953			137,572
Ending balance	$	151,489	$	—	$	8,477		$	14,870	$	291		$	1,356		$	3,953		$	180,436

~~The table below presents the activity in the portion of the allowance~~We recorded a negative $2.0 million provision for credit losses ~~related to losses on unfunded commitments~~ for the three ~~and nine~~ months ended ~~September 30, 2017 and 2016 (in thousands). This liability is recorded in other liabilities in the consolidated balance sheet.~~

Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Beginning balance $ 9,205
$ 9,355
$ 11,422
$ 9,011
Provision for off-balance sheet credit losses 556
1,517
(1,661 ) 1,861
Ending balance $ 9,761
$ 10,872
$ 9,761
$ 10,872

~~We have traditionally maintained an additional qualitative reserve component~~March 31, 2022, compared to ~~compensate~~a negative provision of $6.0 million for the ~~uncertainty and complexity~~same period in ~~estimating loan and lease losses including factors and conditions that may not be fully reflected~~2021, resulting from a decline in ~~the determination and application of the allowance allocation percentages. The~~criticized loans, partially offset by an increase in loans held for investment, excluding mortgage finance. We recorded $512,000 in net recoveries during the additional qualitative reserve at September 30, 2017 was primarily driven by a $4.5 million provision related to the potential impact to our loan portfolio from Hurricanes Harvey and Irma ("Hurricanes"). This qualitative factor serves to measure 1) the impact on incurred credit losses resulting from the Hurricanes and 2) the imprecision in the identification and measurement of loans impacted by the Hurricanes. We believe the level of additional qualitative reserve at September 30, 2017 is warranted due to the continued uncertain economic environment which has produced losses, including those resulting from borrowers' misstatement of financial information or inaccurate certification of collateral values. Such losses are not necessarily correlated with historical loss trends or general economic conditions. Our methodology used to calculate the allowance considers historical losses; however, the historical loss rates for specific product types or credit risk grades may not fully incorporate the effects of continued uncertainty regarding the economy or the complete identification of loans impacted by the aforementioned weather events.

~~Our recorded investment in loans as of September 30, 2017, December~~three months ended March 31, ~~2016 and September 30, 2016 related to each balance in the allowance for loan losses by portfolio segment and disaggregated on the basis of our impairment methodology was as follows (in thousands):~~

September 30, 2017
Commercial
Mortgage
Finance
Construction Real Estate Consumer Leases Total
Loans individually evaluated for impairment $ 117,426
$ —
$ —
$ 2,117
$ —
$ —
$ 119,543
Loans collectively evaluated for impairment 8,693,399
5,642,285
2,099,355
3,681,447
70,436
259,720
20,446,642
Total $ 8,810,825
$ 5,642,285
$ 2,099,355
$ 3,683,564
$ 70,436
$ 259,720
$ 20,566,185

December 31, 2016
Commercial
Mortgage
Finance
Construction Real Estate Consumer Leases Total
Loans individually evaluated for impairment $ 166,669
$ —
$ 159
$ 3,751
$ 200
$ 83
$ 170,862
Loans collectively evaluated for impairment 7,124,876
4,497,338
2,098,547
3,458,452
34,387
185,446
17,399,046
Total $ 7,291,545
$ 4,497,338
$ 2,098,706
$ 3,462,203
$ 34,587
$ 185,529
$ 17,569,908

September 30, 2016
Commercial
Mortgage
Finance
Construction Real Estate Consumer Leases Total
Loans individually evaluated for impairment $ 168,014
$ —
$ 159
$ 3,787
$ 200
$ —
$ 172,160
Loans collectively evaluated for impairment 6,885,965
4,961,159
2,150,294
3,388,044
27,354
96,878
17,509,694
Total $ 7,053,979
$ 4,961,159
$ 2,150,453
$ 3,391,831
$ 27,554
$ 96,878
$ 17,681,854

Generally we place loans on non-accrual when there is a clear indication that the borrower’s cash flow may not be sufficient to meet payments as they become due, which is generally when a loan is 90 days past due. When a loan is placed on non-accrual status, all previously accrued and unpaid interest is reversed. Interest income is subsequently recognized on a cash basis as long as the remaining unpaid principal amount of the loan is deemed to be fully collectible. If collectability is questionable, then cash payments are applied to principal. As of September 30, 2017, none of our non-accrual loans were earning on a cash basis2022, compared to ~~$811,000~~net charge-offs of $6.4 million during the same period in 2021. Criticized loans totaled $476.1 million at ~~December~~March 31, ~~2016.~~ 2022, compared to $945.1 million at March 31, 2021.

A loan is ~~placed back on accrual status~~considered collateral-dependent when ~~both principal~~the borrower is experiencing financial difficulty and ~~interest are current and it~~repayment is ~~probable that we will~~expected to be ~~able to collect all amounts due (both principal and interest) according to~~provided substantially through the ~~terms~~operation or sale of the ~~loan agreement.~~collateral. At March 31, 2021, we had $12.7 million in collateral-dependent real estate loans, collateralized by real estate property.

A loan held for investment is considered impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due (both principal and interest) according to the terms of the original loan agreement. In accordance with ASC 310, ~~Receivables~~, we have also included all restructured and formerly restructured loans in our impaired loan totals. The following tables detail our impaired loans, by portfolio class, as of September 30, 2017 and December 31, 2016 (in thousands):

September 30, 2017

Recorded
Investment

Unpaid
Principal
Balance

Related
Allowance

Average
Recorded
Investment

Interest
Income
Recognized
With no related allowance recorded:
Commercial
Business loans $ 23,561
$ 24,983
$ —
$ 23,513
$ —
Energy 32,378
37,221
—
39,196
—
Construction
Market risk —
—
—
—
—
Real estate
Market risk —
—
—
—
—
Commercial 1,700
1,700
—
2,388
—
Secured by 1-4 family —
—
—
—
—
Consumer —
—
—
—
—
Leases —
—
—
—
—
Total impaired loans with no allowance recorded $ 57,639
$ 63,904
$ —
$ 65,097
$ —
With an allowance recorded:
Commercial
Business loans $ 12,267
$ 12,267
$ 3,226
$ 15,689
$ —
Energy 49,220
62,259
21,184
53,839
6
Construction
Market risk —
—
—
35
—
Real estate
Market risk 299
299
6
548
—
Commercial —
—
—
—
—
Secured by 1-4 family 118
118
20
649
—
Consumer —
—
—
44
—
Leases —
—
—
18
—
Total impaired loans with an allowance recorded $ 61,904
$ 74,943
$ 24,436
$ 70,822
$ 6
Combined:
Commercial
Business loans $ 35,828
$ 37,250
$ 3,226
$ 39,202
$ —
Energy 81,598
99,480
21,184
93,035
6
Construction
Market risk —
—
—
35
—
Real estate
Market risk 299
299
6
548
—
Commercial 1,700
1,700
—
2,388
—
Secured by 1-4 family 118
118
20
649
—
Consumer —
—
—
44
—
Leases —
—
—
18
—
Total impaired loans $ 119,543
$ 138,847
$ 24,436
$ 135,919
$ 6

December 31, 2016

Recorded
Investment

Unpaid
Principal
Balance

Related
Allowance

Average
Recorded
Investment

Interest
Income
Recognized
With no related allowance recorded:
Commercial
Business loans $ 23,868
$ 27,992
$ —
$ 12,361
$ —
Energy 46,753
54,522
—
54,075
—
Construction
Market risk —
—
—
2,778
—
Real estate
Market risk —
—
—
—
—
Commercial 2,083
2,083
—
4,483
38
Secured by 1-4 family —
—
—
—
—
Consumer —
—
—
—
—
Leases —
—
—
403
—
Total impaired loans with no allowance recorded $ 72,704
$ 84,597
$ —
$ 74,100
$ 38
With an allowance recorded:
Commercial
Business loans $ 21,303
$ 21,303
$ 7,055
$ 22,277
$ —
Energy 74,745
88,987
27,350
73,637
24
Construction
Market risk 159
159
24
53
—
Real estate
Market risk 1,342
1,342
20
3,000
—
Commercial —
—
—
—
—
Secured by 1-4 family 326
326
113
435
—
Consumer 200
200
30
67
—
Leases 83
83
13
548
—
Total impaired loans with an allowance recorded $ 98,158
$ 112,400
$ 34,605
$ 100,017
$ 24
Combined:
Commercial
Business loans $ 45,171
$ 49,295
$ 7,055
$ 34,638
$ —
Energy 121,498
143,509
27,350
127,712
24
Construction
Market risk 159
159
24
2,831
—
Real estate
Market risk 1,342
1,342
20
3,000
—
Commercial 2,083
2,083
—
4,483
38
Secured by 1-4 family 326
326
113
435
—
Consumer 200
200
30
67
—
Leases 83
83
13
951
—
Total impaired loans $ 170,862
$ 196,997
$ 34,605
$ 174,117
$ 62

~~Average impaired loans outstanding during the nine months ended September 30, 2017 and 2016 totaled $135.9 million and $174.9 million, respectively.~~

The table below provides an age analysis of our gross loans held for ~~investment as~~investment:


(in thousands)	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due(1)		Total Past Due		Non-Accrual Loans(2)		Current		Total		Non-Accrual With No Allowance
March 31, 2022
Commercial	$	13,349	$	2,142	$	3,808	$	19,299	$	25,470	$	10,130,899	$	10,175,668	$	4,277


Energy	—		—		—		—		18,267		778,924		797,191		8,584
Mortgage finance	—		—		—		—		—		5,827,965		5,827,965		—




Real estate:
CRE	187		194		1,986		2,367		194		3,037,108		3,039,669		—
RBF	—		—		—		—		—		693,427		693,427		—
Other	—		—		—		—		15,210		876,122		891,332		15,210


Secured by 1-4 family	—		—		237		237		186		318,344		318,767		—


Total	$	13,536	$	2,336	$	6,031	$	21,903	$	59,327	$	21,662,789	$	21,744,019	$	28,071

(1)Loans past due 90 days and still accruing includes premium finance loans of ~~September 30, 2017 (in thousands):~~

30-59 Days
Past Due

60-89 Days
Past Due

Greater
Than 90
Days and
Accruing(1)

Total Past
Due
Non-accrual Current Total
Commercial
Business loans $ 25,301
$ 18,704
$ 8,892
$ 52,897
$ 34,789
$ 7,635,061
$ 7,722,747
Energy 9,950
4,484
—
14,434
81,598
992,046
1,088,078
Mortgage finance loans —
—
—
—
—
5,642,285
5,642,285
Construction
Market risk 663
—
—
663
—
2,074,537
2,075,200
Secured by 1-4 family —
—
—
—
—
24,155
24,155
Real estate
Market risk 1,301
—
—
1,301
—
2,639,169
2,640,470
Commercial 1,839
—
—
1,839
1,700
782,185
785,724
Secured by 1-4 family 2,798
—
—
2,798
118
254,454
257,370
Consumer —
—
—
—
—
70,436
70,436
Leases 11,701
—
—
11,701
—
248,019
259,720
Total loans held for investment $ 53,553
$ 23,188
$ 8,892
$ 85,633
$ 118,205
$ 20,362,347
$ 20,566,185


~~(1)~~	~~Loans past due 90 days and still accruing includes premium finance loans of $8.4~~$3.2 million. These loans are generally secured by obligations of insurance carriers to refund premiums on canceled insurance policies. The refund of premiums from the insurance carriers can take 180 days or longer from the cancellation date.

~~Restructured~~ loans are ~~loans~~generally secured by obligations of insurance carriers to refund premiums on ~~which, due to~~canceled insurance policies. The receipt of the ~~borrower’s financial difficulties, we have granted a concession that we would not otherwise consider for borrowers~~refund of ~~similar credit quality. This may include a transfer of real estate or other assets~~premiums from the ~~borrower, a modification~~insurance carriers can take 180 days or longer from the cancellation date.

(2)As of loan terms, or a combination of the two. Modifications of terms that could potentially qualify as a restructuring include reduction of the contractual interest rate, extension of the maturity date at a contractual interest rate lower than the current rate for new debt with similar risk, a reduction of the face amount of debt or forgiveness of either principal or accrued interest. At September 30, 2017March 31, 2022 and December 31, ~~2016,~~2021, none of our non-accrual loans were earning interest income on a cash basis. Additionally, no interest income was recognized on non-accrual loans for the three months ended March 31, 2022. Accrued interest of $4,000 was reversed during the three months ended March 31, 2022.

As of March 31, 2022 and December 31, 2021, we did not have any loans considered restructured that were not on non-accrual. Of the non-accrual loans at ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016, $12.0~~2021, $18.0 million and ~~$18.1~~$19.4 million, respectively, met the criteria for restructured. These loans had no unfunded commitments at their respective balance sheet dates. A loan continues to qualify as restructured until a consistent payment history or change in borrower’s financial condition has been evidenced, generally over no less than twelve months. Assuming that the restructuring agreement specifies an interest rate at the time of the restructuring that is greater than or equal to the rate that we are willing to accept for a new extension of credit with comparable risk, then the loan no longer has to be considered a restructuring if it is in compliance with the modified terms in calendar years after the year of the restructure.

~~The following table summarizes, for the nine months ended September 30, 2017 and 2016, loans that were restructured during 2017 and 2016 (in thousands):~~

September 30, 2017
Number of Restructured Loans Balance at Restructure Balance at Period-End
Energy loans 1
$ 1,070
$ —
Commercial business loans 1
$ 599
$ 721
Total new restructured loans in 2017 2
$ 1,669
$ 721

September 30, 2016
Number of Restructured Loans Balance at Restructure Balance at Period-End
Energy loans 2
$ 14,235
$ 13,289
Total new restructured loans in 2016 2
$ 14,235
$ 13,289

~~The restructured loans generally include terms to temporarily place loans on interest only, extend the payment terms or reduce the interest rate.~~ We ~~did not forgive any principal on the above loans. The restructuring of the loans did not have a significant impact on our allowance for loan losses at September 30, 2017 or 2016.~~

~~The following table provides information on how restructured loans were modified during the nine months ended September 30, 2017 and 2016 (in thousands):~~

Nine months ended September 30,
2017 2016
Extended maturity $ 721
$ —
Adjusted payment schedule —
12,647
Combination of maturity extension and payment schedule adjustment —
642
Other —
—
Total $ 721
$ 13,289

~~As of September 30, 2017 and 2016, we~~ did not have any loans that were restructured ~~within~~during the ~~last 12~~three months ~~that subsequently defaulted.~~ended March 31, 2022 or 2021.

(5) ~~OREO AND VALUATION ALLOWANCE FOR LOSSES ON OREO~~Short-term Borrowings and Long-term Debt

The table below presents a summary of ~~the activity related to OREO (in thousands):~~short-term borrowings:

Three months ended September 30, Nine months ended September 30,
2017 2016 2017 2016
Beginning balance $ 18,689
$ 18,727
$ 18,961
$ 278
Additions —
282
—
18,822
Sales (457 ) —
(729 ) (91 )
Valuation allowance for OREO (101 ) —
(101 ) —
Ending balance $ 18,131
$ 19,009
$ 18,131
$ 19,009

When foreclosure occurs, the acquired asset is recorded at fair value less selling costs, generally based on appraised value, which may result in partial charge-off of the loan. Subsequent write-downs required for declines in value are recorded through a valuation allowance or taken directly to the assets and charged to other non-interest expense.

~~(6) CERTAIN TRANSFERS OF FINANCIAL ASSETS~~

Through our Mortgage Correspondent Aggregation ("MCA") business, we commit to purchase residential mortgage loans from independent correspondent lenders and deliver those loans into the secondary market via whole loan sales to independent third parties or in securitization transactions to Ginnie Mae and government sponsored entities ("GSEs") such as Fannie Mae and Freddie Mac. We have elected to carry these loans at fair value based on sales commitments and market quotes. Gains and losses on the sale of mortgage loans held for sale and changes in the fair value of the loans held for sale are included in other non-interest income on the consolidated income statement.

Residential mortgage loans held for sale are subject to both credit and interest rate risk. Credit risk is managed through underwriting policies and procedures, including collateral requirements, which are generally accepted by the secondary loan markets. Exposure to interest rate fluctuations is partially mitigated through forward sales contracts, which set the price for loans that will be delivered in the next 60 to 90 days.

~~The table below presents the unpaid principal balance of loans held for sale and related fair values at September 30, 2017 and December 31, 2016 (in thousands):~~

September 30, 2017 December 31, 2016
Outstanding balance $ 957,560
$ 980,414
Fair value 955,983
968,929
Fair value over/(under) outstanding balance $ (1,577 ) $ (11,485 )

~~No loans held for sale were 90 days or more past due or on non-accrual as of September 30, 2017 and December 31, 2016.~~


(in thousands)	March 31, 2022		December 31, 2021

Customer repurchase agreements	$	2,033	$	2,832
Federal Home Loan Bank borrowings	1,425,000		2,200,000
Total short-term borrowings	$	1,427,033	$	2,202,832

The table below presents a ~~reconciliation of the changes in loans held for sale for the nine months ended September 30, 2017 and 2016 (in thousands):~~

Nine months ended September 30,
2017 2016
Beginning balance $ 968,929
$ 86,075
Loans purchased 4,315,065
1,927,702
Payments and loans sold (4,337,919 ) (1,368,987 )
Change in fair value 9,908
3,894
Ending balance $ 955,983
$ 648,684

~~We generally retain the right to service the loans sold, creating MSRs which are recorded as assets on our balance sheet. A~~ summary of ~~MSR activity for the nine months ended September 30, 2017 and 2016 is as follows (in thousands):~~long-term debt:


(in thousands)	March 31, 2022		December 31, 2021
Bank-issued floating rate senior unsecured credit-linked notes due 2024	$	270,988	$	270,487
Bank-issued 5.75% fixed rate subordinated notes due 2026	174,000		173,935
Company-issued 4.00% fixed rate subordinated notes due 2031	371,020		370,910
Trust preferred floating rate subordinated debentures due 2032 to 2036	113,406		113,406
Total long-term debt	$	929,414	$	928,738

(6) Financial Instruments with Off-Balance Sheet Risk

Nine months ended September 30,
2017 2016
MSRs:
Balance, beginning of year(1) $ 28,536
$ 423
    Capitalized servicing rights 54,614
16,344
    Amortization (5,304 ) (891 )
Balance, end of period $ 77,846
$ 15,876
Valuation allowance:
Balance, beginning of year $ —
$ —
    Increase in valuation allowance 216
414
Balance, end of period $ 216
$ 414
MSRs, net(1) $ 77,630
$ 15,462
MSRs, fair value $ 78,940
$ 15,970


~~(1)~~	~~MSRs are reported on the consolidated balance sheets at lower of amortized cost or market.~~

~~At September 30, 2017 and December 31, 2016,~~The table below presents our ~~servicing portfolio of residential mortgage loans had an outstanding principal balance of $6.1 billion and $2.2 billion, respectively. In connection with the servicing of these loans, we maintain~~

escrow funds for taxes and insurance in the name of investors, as well as collections in transit to investors. These escrow funds are segregated and held in separate non-interest-bearing accounts at the Bank. These deposits, included in total non-interest-bearing deposits on the consolidated balance sheets, were $81.4 million at September 30, 2017 and $21.0 million at December 31, 2016.

The estimated fair value of the MSR assets is obtained from an independent third party and reviewed by management on a quarterly basis. MSRs do not trade in an active, open market with readily observable prices; as such, the fair value of MSRs is determined using a discounted cash flow model to calculate the present value of the estimated future net servicing income. The assumptions utilized in the discounted cash flow model are based on market data for comparable collateral, where available. Each quarter, management and the independent third party discuss the key assumptions used in the discounted cash flow model and make adjustments as necessary to estimate the fair value of the MSRs. As of September 30, 2017 and December 31, 2016, management used the following assumptions to determine the fair value of MSRs:

September 30, 2017 December 31, 2016
Average discount rates 9.95 % 9.96 %
Expected prepayment speeds 9.79 % 7.91 %
Weighted average life, in years 7.1
8.0

~~A sensitivity analysis of changes in the fair value of our MSR portfolio resulting from certain key assumptions is presented in the following table (in thousands):~~

September 30, 2017 December 31, 2016
50 bp adverse change in prepayment speed $ (10,667 ) $ (2,833 )
100 bp adverse change in prepayment speed (25,043 ) (6,812 )

These sensitivities are hypothetical and actual results may differ materially due to a number of factors. The effect on fair value of a 10% variation in assumptions generally cannot be determined because the relationship of the change in assumptions to the fair value may not be linear. Additionally, the impact of a variation in a particular assumption on the fair value is calculated while holding other assumptions constant. In reality, changes in one factor may lead to changes in other factors, which could impact the above hypothetical effects.

In conjunction with the sale and securitization of loans held for sale, we may be exposed to liability resulting from recourse agreements and repurchase agreements. If it is determined subsequent to our sale of a loan that the loan sold is in breach of the representations or warranties made in the applicable sale agreement, we may have an obligation to either (a) repurchase the loan for the unpaid principal balance, accrued interest and related advances, (b) indemnify the purchaser against any loss it suffers or (c) make the purchaser whole for the economic benefits of the loan.

Our repurchase, indemnification and make whole obligations vary based upon the terms of the applicable agreements, the nature of the asserted breach and the status of the mortgage loan at the time a claim is made. We establish reserves for estimated losses of this nature inherent in the origination of mortgage loans by estimating the losses inherent in the population of all loans sold based on trends in claims and actual loss severities experienced. The reserve includes accruals for probable contingent losses in addition to those identified in the pipeline of claims received. The estimation process is designed to include amounts based on any actual losses experienced from actual repurchase activity.

Because the MCA business commenced in late 2015, we have limited historical data to support the establishment of a reserve. The baseline for the repurchase reserve uses historical loss factors obtained from industry data that are applied to loan pools originated and sold during the nine months ended September 30, 2017 and 2016. The historical industry data loss factors and experienced losses are accumulated for each sale vintage and applied to more recent sale vintages to estimate inherent losses not yet realized. Our estimated exposure related to these loans was $1.2 million at September 30, 2017 and $621,000 at September 30, 2016 and is recorded in other liabilities in the consolidated balance sheets. We had $14,000 in losses due to repurchase, indemnification or make-whole obligations during the nine months ended September 30, 2017 and no losses during the nine months ended 2016.

~~(7) FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK~~

~~The Bank is a party to~~ financial instruments with off-balance sheet risk, as well as the activity in the ~~normal course of business~~allowance for off-balance sheet credit losses related to ~~meet the financing needs of its customers. These~~those financial ~~instruments include commitments to extend credit and standby letters of credit that involve varying degrees of credit risk~~instruments. This allowance is recorded in ~~excess of the amount recognized in~~other liabilities on the consolidated balance sheets. The Bank’s exposure to credit loss in the event of non-performance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of these instruments. The Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. The amount of collateral obtained, if deemed necessary, is based on management’s credit evaluation of the borrower.




	Three months ended March 31,
(in thousands)				2022				2021
Beginning balance of allowance for off-balance sheet credit losses				$	17,265			$	17,434

Provision for off-balance sheet credit losses				(773)				(287)
Ending balance of allowance for off-balance sheet credit losses				$	16,492			$	17,147

(in thousands)				March 31, 2022				December 31, 2021
Commitments to extend credit - period end balance		$	9,917,556			$	9,445,763
Standby letters of credit - period end balance		364,765				357,672

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Bank evaluates each customer’s credit-worthiness on a case-by-case basis.

Standby letters of credit are conditional commitments issued by the Bank to guarantee the performance of a customer to a third party. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

~~The table below summarizes our off-balance sheet financial instruments whose contract amounts represented credit risk (in thousands):~~

September 30, 2017 December 31, 2016
Commitments to extend credit $ 6,539,498
$ 5,704,381
Standby letters of credit 203,070
171,266

~~(8) REGULATORY MATTERS~~(7) Regulatory Restrictions

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory (and possibly additional discretionary) actions by regulators that, if undertaken, could have a direct material adverse effect on the Company’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of the Company’s and the Bank’s assets, liabilities, and certain off-balance sheet items as calculated under regulatory accounting practices. The Company’s and the Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

The Basel III regulatory capital framework (the ~~"Basel~~“Basel III Capital ~~Rules"~~Rules”) adopted by U.S. federal regulatory authorities, among other things, (i) ~~establish~~establishes the capital measure called ~~"Common~~“Common Equity Tier ~~1" ("CET1"~~1” (“CET1”), (ii) ~~specify~~specifies that Tier 1 capital consist of CET1 and ~~"Additional~~“Additional Tier 1 ~~Capital"~~Capital” instruments meeting stated requirements, (iii) ~~define CET1 narrowly by requiring~~requires that most deductions/adjustments to regulatory capital measures be made to CET1 and not to ~~the~~ other components of capital and (iv) ~~set forth~~defines the ~~acceptable~~ scope of the deductions/adjustments to the ~~specified~~ capital measures. ~~The Basel III Capital Rules became effective for us on January 1, 2015 with certain transition provisions fully phased in on January 1, 2019.~~

Additionally, the Basel III Capital Rules require that we maintain a 2.5% capital conservation buffer with respect to each of ~~the~~ CET1, Tier 1 and total capital to risk-weighted assets, which provides for capital levels that exceed the minimum risk-based capital adequacy requirements. The capital conservation buffer is subject to a three year phase-in period that began on January 1, 2016 and will be fully phased in on January 1, 2019 at 2.5%. The required phase-in capital conservation buffer during 2017 is 1.25% and was 0.625% during 2016. A financial institution with a conservation buffer of less than the required amount is subject to limitations on capital distributions, including dividend payments and stock repurchases, and certain discretionary bonus payments to executive officers.

In February 2019, the federal bank regulatory agencies issued a final rule (the “2019 CECL Rule”) that revised certain capital regulations to account for changes to credit loss accounting under GAAP. The 2019 CECL Rule included a transition option that allows banking organizations to phase in, over a three-year period, the day-one adverse effects of adopting the new accounting standard related to the measurement of current expected credit losses on their regulatory capital ratios (three-year transition option). In March 2020, the federal bank regulatory agencies issued an interim final rule that maintains the three-year

transition option of the 2019 CECL Rule and also provides banking organizations that were required under GAAP to implement CECL before the end of 2020 the option to delay for two years an estimate of the effect of CECL on regulatory capital, relative to the incurred loss methodology's effect on regulatory capital, followed by a three-year transition period (five-year transition option). We adopted CECL on January 1, 2020 and have elected to utilize the five-year transition option.

Quantitative measures established by ~~these regulations~~regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of CET1, Tier 1 and total capital to risk-weighted assets, and of Tier 1 capital to average assets, each as defined in the regulations. Management believes, as of ~~September 30, 2017,~~March 31, 2022, that the Company and the Bank ~~met~~meet all capital adequacy requirements to which they are subject.

Financial institutions are categorized as well capitalized ~~or adequately capitalized,~~ based on ~~minimum~~ total risk-based, ~~capital,~~ Tier 1 risk-based, ~~capital,~~ CET1 and Tier 1 leverage ratios. As shown in the table below, the Company’s and the Bank’s capital ratios exceeded the regulatory definition of ~~adequately~~well capitalized as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016. Based upon the~~

~~information in its most recently filed call report, the Bank met the capital ratios necessary to be well capitalized.~~2021. The regulatory authorities can apply changes in classification of assets and such changes may retroactively subject the Company and the Bank to changes in capital ratios. Any such ~~changes~~change could ~~result in reducing~~reduce one or more capital ratios below well-capitalized status. In addition, a change may result in imposition of additional assessments by the FDIC or could result in regulatory actions that could have a material ~~adverse~~ effect on our ~~financial~~ condition and results of operations.

Because our Bank had less than $15.0 billion in total consolidated assets as of December 31, 2009, we are allowed to continue to classify our trust preferred securities, all of which were issued prior to May 19, 2010, as Tier 1 capital.

The table below summarizes our actual and required capital ratios under the Basel III Capital ~~Rules:~~Rules. The ratios presented below include the effects of our election to utilize the five-year CECL transition described above.


	Actual				Minimum Capital Required(2)					Capital Required to be Well Capitalized
(dollars in thousands)	Capital Amount		Ratio			Capital Amount		Ratio			Capital Amount	Ratio
March 31, 2022
CET1
Company	$	2,987,142	11.46	%		$	1,824,684	7.00	%		N/A	N/A
Bank	3,059,948		11.74	%		1,824,675		7.00	%		1,694,341	6.50	%
Total capital (to risk-weighted assets)
Company	4,087,685		15.68	%		2,737,026		10.50	%		2,606,691	10.00	%
Bank	3,589,472		13.77	%		2,737,013		10.50	%		2,606,679	10.00	%
Tier 1 capital (to risk-weighted assets)
Company	3,397,142		13.03	%		2,215,688		8.50	%		1,564,015	6.00	%
Bank	3,219,948		12.35	%		2,215,677		8.50	%		2,085,343	8.00	%
Tier 1 capital (to average assets)(1)
Company	3,397,142		9.89	%		1,373,788		4.00	%		N/A	N/A
Bank	3,219,948		9.38	%		1,373,632		4.00	%		1,717,040	5.00	%
December 31, 2021
CET1
Company	$	2,949,785	11.06	%		$	1,866,444	7.00	%		N/A	N/A
Bank	3,013,170		11.30	%		1,866,303		7.00	%		1,732,996	6.50	%
Total capital (to risk-weighted assets)
Company	4,085,540		15.32	%		2,799,666		10.50	%		2,666,348	10.00	%
Bank	3,578,014		13.42	%		2,799,455		10.50	%		2,666,148	10.00	%
Tier 1 capital (to risk-weighted assets)
Company	3,359,785		12.60	%		2,266,396		8.50	%		1,599,809	6.00	%
Bank	3,173,170		11.90	%		2,266,225		8.50	%		2,132,918	8.00	%
Tier 1 capital (to average assets)(1)
Company	3,359,785		9.01	%		1,490,902		4.00	%		N/A	N/A
Bank	3,173,170		8.51	%		1,490,677		4.00	%		1,863,346	5.00	%

Actual Minimum Capital Required - Basel III Phase-In Schedule Minimum capital Required - Basel III Fully Phased-In Required to be Considered Well Capitalized
Capital Amount Ratio Capital Amount Ratio Capital Amount Ratio Capital Amount Ratio
As of September 30, 2017:
CET1
    Company $ 1,989,547
8.35 % $ 1,369,699
5.75 % $ 1,667,460
7.00 % N/A
N/A
    Bank 1,930,836
8.11 % 1,369,659
5.75 % 1,667,411
7.00 % 1,548,311
6.50 %
Total capital (to risk-weighted assets)
    Company 2,722,408
11.43 % 2,203,429
9.25 % 2,501,189
10.50 % N/A
N/A
    Bank 2,505,209
10.52 % 2,203,365
9.25 % 2,501,117
10.50 % 2,382,016
10.00 %
Tier 1 capital (to risk-weighted assets)
    Company 2,248,403
9.44 % 1,727,012
7.25 % 2,024,772
8.50 % N/A
N/A
    Bank 2,089,692
8.77 % 1,726,962
7.25 % 2,024,714
8.50 % 1,905,613
8.00 %
Tier 1 capital (to average assets)(1)
    Company 2,248,403
9.57 % 939,319
4.00 % 939,319
4.00 % N/A
N/A
    Bank 2,089,692
8.90 % 939,139
4.00 % 939,139
4.00 % 1,173,924
5.00 %
As of December 31, 2016:
CET1
    Company $ 1,841,219
8.97 % $ 1,052,205
5.13 % $ 1,437,159
7.00 % N/A
N/A
    Bank 1,735,496
8.45 % 1,051,989
5.13 % 1,436,863
7.00 % 1,334,244
6.50 %
Total capital (to risk-weighted assets)
    Company 2,561,663
12.48 % 1,770,766
8.63 % 2,155,715
10.50 % N/A
N/A
    Bank 2,297,528
11.19 % 1,770,421
8.63 % 2,155,295
10.50 % 2,052,683
10.00 %
Tier 1 capital (to risk-weighted assets)
    Company 2,101,071
10.23 % 1,360,154
6.63 % 1,745,103
8.50 % N/A
N/A
    Bank 1,895,348
9.23 % 1,359,888
6.63 % 1,744,762
8.50 % 1,642,147
8.00 %
Tier 1 capital (to average assets)(1)
    Company 2,101,071
9.34 % 900,268
4.00 % 900,268
4.00 % N/A
N/A
    Bank 1,895,348
8.42 % 900,070
4.00 % 900,070
4.00 % 1,125,087
5.00 %


~~(1)~~	(1) The Tier 1 capital ratio (to average assets) is not impacted by the Basel III Capital Rules; however, it should be noted that the Federal Reserve Board and the FDIC may require the Company and the Bank, respectively, to maintain a Tier 1 capital ratio (to average assets) above the required minimum.

Our mortgage finance loan volumes can increase significantly at month end, causing a meaningful difference between ending balance and average balance for any period. At September 30, 2017, our total mortgage finance loans were $5.6 billion compared to the average for the three months ended September 30, 2017 of $4.8 billion. As CET1, Tier 1 capital ratio (to average assets) is not impacted by the Basel III Capital Rules; however, the Federal Reserve Board and ~~total~~the FDIC may require the Company and the Bank, respectively, to maintain a Tier 1 capital ratio (to average assets) above the required minimum.

(2) Percentages represent the minimum capital ratios ~~are calculated using quarter-end risk-weighted assets and our mortgage finance loans are 100% risk-weighted,~~plus, as applicable, the ~~quarter-end fluctuation in these balances can significantly impact our reported ratios. We manage~~fully phased-in 2.5% CET1 capital ~~allocated to mortgage finance~~

~~loans based on changing trends in average balances, as well as~~buffer under the inherent risk associated with the assets which implies a risk weight that is significantly different than the regulatory risk weight, and do not believe that the quarter-end balance is representative of risk characteristics that would justify higher capital allocations. However, we continue to monitor our capital allocation to confirm that all capital levels remain above well-capitalized levels.Basel III Capital Rules.

Dividends that may be paid by ~~subsidiary~~ banks are routinely restricted by various regulatory ~~authorities. The amount that can be paid in any calendar year without prior approval~~authorities, including federal banking law requirements concerning the payment of ~~the Bank’s regulatory agencies cannot exceed the lesser of the net profits (as defined) for that year plus the net profits for the preceding two calendar years, or retained earnings.~~dividends. The Basel III Capital Rules further limit the amount of dividends that may

be paid by us or our Bank. No dividends were declared or paid on our common stock during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2022, or ~~2016.~~during the year ended December 31, 2021.

On April 19, 2022, our board of directors authorized a new share repurchase program under which we may repurchase up to $150.0 million in shares of our outstanding common stock. Any repurchases under the repurchase program will be made in accordance with applicable securities laws from time to time in open market or private transactions. The extent to which we repurchase shares, and the timing of such repurchases, will be at management’s discretion and will depend upon a variety of factors, including market conditions, our capital position and amount of retained earnings, regulatory requirements and other considerations. No time limit was set for the completion of the share repurchase program, and the program may be suspended or discontinued at any time.

~~(9) STOCK-BASED COMPENSATION~~

(8) Stock-based Compensation

We have long-term incentive plans under which stock-based compensation awards are granted to employees and directors by the board of directors, or its designated committee. Grants are subject to vesting requirements and may include, among other things, nonqualified stock options, stock appreciation rights ~~("SARs"~~(“SARs”), restricted stock units ~~("RSUs"~~(“RSUs”), restricted stock and performance units, or any combination thereof. ~~There are 2,550,000 total~~On April 19, 2022, the Company’s stockholders approved the Texas Capital Bancshares, Inc. 2022 Long-Term Incentive Plan, which provides for the issuance of 1,124,880 shares ~~authorized under~~of common stock for compensation to the ~~plans.~~Company’s key employees and non-employee directors.

~~Stock-based~~The table below summarizes our stock-based compensation ~~expense presented below consists of awards granted from 2011 through September 30, 2017.~~expense:


	Three months ended September 30,				Nine months ended September 30,					Three months ended March 31,
(in thousands)	2017		2016		2017		2016		(in thousands)		2022		2021
Stock-settled awards:									Stock-settled awards:
SARs	$	64	$	74	$	210	$	233

RSUs	2,184		1,145		5,491		3,223		RSUs		$	5,407	$	5,460
Restricted stock	8		4		16		10		Restricted stock		—		1
Cash-settled performance units	3,811		1,227		9,304		2,709
Cash-settled units									Cash-settled units		181		907
Total	$	6,067	$	2,450	$	15,021	$	6,175	Total		$	5,588	$	6,368


(in thousands except period data)	March 31, 2022
Unrecognized compensation expense related to unvested stock-settled awards	$	46,901
Weighted average period over which expense is expected to be recognized, in years	2.7

(in thousands) September 30, 2017
Unrecognized compensation expense related to unvested stock-settled awards $ 19,426
Weighted average period over which expense is expected to be recognized, in years 3.1

~~(10) FAIR VALUE DISCLOSURES~~

~~ASC 820,~~ (9) Fair Value ~~Measurements and~~ Disclosures (“ASC 820”), defines fair value, establishes a framework for measuring fair value under GAAP and requires enhanced disclosures about fair value measurements. Fair value is defined under ASC 820 as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal market for the asset or liability in an orderly transaction between market participants on the measurement date.

hierarchy and a description of the methods and significant assumptions used by the Company in estimating its fair value disclosures for financial instruments.

Assets and liabilities measured at fair value ~~at September 30, 2017 and December 31, 2016~~ are as ~~follows (in thousands):~~

follows:

Fair Value Measurements Using
September 30, 2017 Level 1 Level 2 Level 3
Available-for-sale securities:(1)
Residential mortgage-backed securities $ —
$ 12,158
$ —
Equity securities(2) 4,905
7,161
—
Loans held for sale (3) —
955,983
—
Loans held for investment(4) (6) —
—
21,022
OREO(5) (6) —
—
18,131
Derivative assets(7) —
25,130
—
Derivative liabilities(7) —
24,048
—
Non-qualified deferred compensation plan liabilities (8) 4,961
—
—

December 31, 2016
Available-for-sale securities:(1)
Residential mortgage-backed securities $ —
$ 15,652
$ —
Municipals —
275
—
Equity securities(2) 1,786
7,161
—
Loans held for sale(3) —
968,929
—
Loans held for investment(4) (6) —
—
52,323
OREO(5) (6) —
—
18,961
Derivative assets(7) —
37,878
—
Derivative liabilities(7) —
26,240
—
Non-qualified deferred compensation plan liabilities (8) 1,811
—
—


	Fair Value Measurements Using
(in thousands)	Level 1		Level 2		Level 3
March 31, 2022
Available-for-sale debt securities:(1)
U.S. Treasury securities	$	367,854	$	—	$	—
U.S. government agency securities	—		113,516		—
Residential mortgage-backed securities	—		1,932,102		—

Tax-exempt asset-backed securities	—		—		165,845
CRT securities	—		—		11,901
Equity securities(1)(2)	29,154		11,671		—
Loans held for sale(3)	—		—		8,085


Derivative assets(4)	—		30,238		—
Derivative liabilities(4)	—		30,238		—
Non-qualified deferred compensation plan liabilities(5)	26,474		—		—

December 31, 2021
Available-for-sale debt securities:(1)
U.S. government agency securities	$	—	$	120,944	$	—
Residential mortgage-backed securities	—		3,225,378		—
Tax-exempt asset-backed securities	—		—		180,033
CRT securities	—		—		11,846
Equity securities(1)(2)	33,589		12,018		—
Loans held for sale(3)	—		465		7,658


Derivative assets(4)	—		37,788		—
Derivative liabilities(4)	—		37,788		—
Non-qualified deferred compensation plan liabilities(5)	29,695		—		—

(1)Investment securities are measured at fair value on a recurring basis, generally monthly, except for tax-exempt asset-backed securities and CRT securities which are measured quarterly.

(2)Equity securities consist of investments that qualify for consideration under the regulations implementing the Community Reinvestment Act and investments related to our non-qualified deferred compensation plan.

(3)Mortgage loans held for sale are measured at fair value on a recurring basis, generally monthly.

(4)Derivative assets and liabilities are measured at fair value on a recurring basis, generally quarterly.

(5)Non-qualified deferred compensation plan liabilities represent ~~the fair value of the obligation to the employee, which corresponds to the fair value of the invested assets, and are measured at fair value on a recurring basis, generally monthly.~~

~~Level 3 Valuations~~

Financial instruments are considered Level 3 when their values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable. Level 3 financial instruments include those for which the determination of fair value requires significant management judgment or estimation. Currently, we measure the fair value for certain collateral dependent impaired loans and OREO on a nonrecurring basis as described below.

~~Loans held for investment~~

~~At September 30, 2017 and December 31, 2016, certain impaired loans held for investment were reported at fair value through a specific allocation of the allowance for loan losses based upon~~ the fair value of the ~~underlying collateral.~~ obligation to the employee, which generally corresponds to the fair value of the invested assets, and are measured at fair value on a recurring basis, generally monthly.

The ~~$21.0 million~~following table summarizes the changes in Level 3 assets measured at fair value on a recurring basis:


							Net Gains (Losses)
(in thousands)	Balance at Beginning of Period		Purchases / Additions		Sales / Reductions		Realized		Unrealized		Balance at End of Period











Three months ended March 31, 2022
Available-for-sale debt securities:(1)
Tax-exempt asset-backed securities	$	180,033	$	—	$	(3,736)	$	—	$	(10,452)	$	165,845
CRT securities	11,846		—		—		—		55		11,901
Loans held for sale(2)	7,658		933		(41)		—		(465)		8,085
Three months ended March 31, 2021
Available-for-sale debt securities:(1)
Tax-exempt asset-backed securities	$	199,176	$	—	$	(11,371)	$	—	$	(6,239)	$	181,566
CRT securities	11,417		—		—		—		48		11,465
Loans held for sale(2)	6,933		537		(279)		5		79		7,275

(1)Unrealized gains/(losses) on available-for-sale debt securities are recorded in AOCI and relate to assets that remain outstanding at period end. Realized gains/(losses) are recorded in other non-interest income on the consolidated statements of income and other comprehensive income/(loss).

(2)Realized and unrealized gains/(losses) on loans held for sale are recorded in net gain/(loss) on sale of loans held for sale on the consolidated statements of income and other comprehensive income/(loss).

Tax-exempt asset-backed securities

The fair value of tax-exempt asset-backed securities is based on a discounted cash flow model, which utilizes Level 3, or unobservable, inputs, the most significant of which were a discount rate and a weighted-average life. At March 31, 2022, the discount rates utilized ranged from 4.09% to 4.16% and the weighted-average life ranged from 4.33 years to 4.40 years. On a combined amortized cost weighted-average basis a discount rate of 4.12% and weighted-average life of 4.36 years were utilized to determine the fair value of these securities at March 31, 2022. At December 31, 2021, the combined weighted-average discount rate and weighted-average life utilized were 2.60% and 4.61 years, respectively.

The fair value of CRT securities is based on a discounted cash flow model, which utilizes Level 3, or unobservable, inputs, the most significant of which were a discount rate and a weighted-average life. At March 31, 2022, the discount rates utilized ranged from 4.57% to 9.54% and the weighted-average life ranged from 4.84 years to 9.38 years. On a combined amortized cost weighted-average basis a discount rate of 6.23% and a weighted-average life of 6.35 years were utilized to determine the fair value of these securities at March 31, 2022. At December 31, 2021, the combined weighted-average discount rate and combined weighted-average life utilized were 4.97% and 6.35 years, respectively.

The fair value of loans held for investment at September 30, 2017 reported above includes impaired loans held for investment with a carrying value of $28.3 million that were reduced by specific allowance allocations totaling $7.3 million based on collateral valuations utilizingsale using Level 3 ~~valuation inputs. The $52.3 million~~inputs include loans that cannot be sold through normal sale channels and thus require significant management judgment or estimation when determining the fair value of loans held for investment at December 31, 2016 reported above includes impaired loans with a carrying value of $74.1 million that were reduced by specific valuation allowance allocations totaling $21.8 million based on collateral valuations utilizing Level 3 valuation inputs. Fair values were based on third party appraisals.

Certain foreclosed assets, upon initial recognition, are recorded at fair value less estimated selling costs. At September 30, 2017 and December 31, 2016, OREO had a carrying value of $18.1 million million and $19.0 million, respectively, with a valuation allowance of $101,000 at September 30, 2017 and none at December 31, 2016.value. The fair value of ~~OREO~~such loans is generally based upon quoted prices of comparable loans with a liquidity discount applied. At March 31, 2022, the fair value of these loans was ~~computed based on third party appraisals, which are Level 3 valuation inputs.~~calculated using a weighted-average discounted price of 92.3% compared to 97.8% at December 31, 2021.

Fair Value of Financial Instruments

GAAP requires disclosure of fair value information about financial instruments, whether or not recognized on the balance sheet, for which it is practical to estimate that value. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. This disclosure does not and is not intended to represent the fair value of the Company.

A summary of the carrying amounts and estimated fair values of financial instruments is as ~~follows (in thousands):~~follows:


			Estimated Fair Value
(in thousands)	Carrying Amount		Total		Level 1		Level 2		Level 3
March 31, 2022
Financial assets:
Cash and cash equivalents	$	5,371,533	$	5,371,533	$	5,371,533	$	—	$	—
Available-for-sale debt securities	2,591,218		2,591,218		367,854		2,045,618		177,746
Held-to-maturity debt securities	1,009,972		973,591		—		973,591		—
Equity securities	40,825		40,825		29,154		11,671		—
Loans held for sale	8,085		8,085		—		—		8,085

Loans held for investment, net	21,466,248		21,436,263		—		—		21,436,263
Derivative assets	30,238		30,238		—		30,238		—
Financial liabilities:
Total deposits	25,377,938		25,378,165		—		—		25,378,165
Short-term borrowings	1,427,033		1,427,033		—		1,427,033		—
Long-term debt	929,414		913,678		—		913,678		—
Derivative liabilities	30,238		30,238		—		30,238		—

December 31, 2021
Financial assets:
Cash and cash equivalents	$	7,946,659	$	7,946,659	$	7,946,659	$	—	$	—
Available-for-sale debt securities	3,538,201		3,538,201		—		3,346,322		191,879

Equity securities	45,607		45,607		33,589		12,018		—
Loans held for sale	8,123		8,123		—		465		7,658

Loans held for investment, net	22,595,088		22,631,252		—		—		22,631,252
Derivative assets	37,788		37,788		—		37,788		—
Financial liabilities:
Total deposits	28,109,365		28,109,762		—		—		28,109,762
Short-term borrowings	2,202,832		2,202,832		—		2,202,832		—
Long-term debt	928,738		952,404		—		952,404		—
Derivative liabilities	37,788		37,788		—		37,788		—

September 30, 2017 December 31, 2016

Carrying
Amount

Estimated
Fair Value
Carrying
Amount Estimated
Fair Value
Financial assets:
   Level 1 inputs:
Cash and cash equivalents $ 2,501,153
$ 2,501,153
$ 2,839,352
$ 2,839,352
Securities, available-for-sale 4,905
4,905
1,786
1,786
   Level 2 inputs:
Securities, available-for-sale 19,319
19,319
23,088
23,088
Loans held for sale 955,983
955,983
968,929
968,929
Derivative assets 25,130
25,130
37,878
37,878
   Level 3 inputs:
Loans held for investment, net 20,287,762
20,274,939
17,330,223
17,347,199
Financial liabilities:
   Level 2 inputs:
Federal funds purchased 75,800
75,800
101,800
101,800
Customer repurchase agreements 7,696
7,696
7,775
7,775
Other borrowings 2,500,000
2,500,000
2,000,000
2,000,000
Subordinated notes 281,315
287,686
281,044
304,672
Derivative liabilities 24,048
24,048
26,240
26,240
   Level 3 inputs:
Deposits 19,081,257
19,081,954
17,016,831
17,017,221
Trust preferred subordinated debentures 113,406
113,406
113,406
113,406

~~The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments:~~

~~Cash and cash equivalents~~

The carrying amounts reported in the consolidated balance sheets for cash and cash equivalents approximate their fair value, and these financial instruments are characterized as Level 1 assets in the fair value hierarchy.

~~Securities available-for-sale~~

Within the securities available-for-sale portfolio, we hold equity securities related to our non-qualified deferred compensation plan which are valued using quoted market prices for identical equity securities in an active market. These financial instruments are classified as Level 1 assets in the fair value hierarchy. The fair value of the remaining investment portfolio is based on prices obtained from independent pricing services which are based on quoted market prices for the same or similar securities, and these financial instruments are characterized as Level 2 assets in the fair value hierarchy. We have obtained documentation from the primary pricing service we use about their processes and controls over pricing. In addition, on a quarterly basis we independently verify the prices that we receive from the service provider using two additional independent pricing sources. Any significant differences are investigated and resolved.

~~Loans held for sale~~

~~Fair value for loans held for sale is derived from quoted market prices for similar loans, and these financial instruments are characterized as Level 2 assets in the fair value hierarchy.~~

~~Loans held for investment, net~~

Loans held for investment are characterized as Level 3 assets in the fair value hierarchy. For variable-rate loans held for investment that reprice frequently with no significant change in credit risk, fair values are generally based on carrying values. The fair value for all other loans held for investment is estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. The carrying amount of accrued interest approximates its fair value.

The estimated fair value of the interest rate swaps and caps is obtained from independent pricing services based on quoted market prices for similar derivative contracts and these financial instruments are characterized as Level 2 assets and liabilities in the fair value hierarchy. On a quarterly basis, we independently verify the fair value using an additional independent pricing source. Any significant differences are investigated and resolved. The derivative instruments related to the loans held for sale portfolio include loan purchase commitments and forward sales commitments. Loan purchase commitments are valued based upon the fair value of the underlying mortgage loans to be purchased, which is based on observable market data for similar loans. Forward sales commitments are valued based upon the quoted market prices from brokers. As such, these loan purchase commitments and forward sales commitments are classified as Level 2 assets or liabilities in the fair value hierarchy.

Deposits are characterized as Level 3 liabilities in the fair value hierarchy. The carrying amounts for variable-rate money market accounts approximate their fair value. The fair values of fixed-term certificates of deposit are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities.

~~Federal funds purchased, customer repurchase agreements, other borrowings, subordinated notes and trust preferred subordinated debentures~~

The carrying value reported in the consolidated balance sheets for Federal funds purchased, customer repurchase agreements and other short-term, floating rate borrowings approximates their fair value, and these financial instruments are characterized as Level 2 liabilities in the fair value hierarchy. The fair value of any fixed rate short-term borrowings and trust preferred subordinated debentures are estimated using a discounted cash flow calculation that applies interest rates currently being offered on similar borrowings, and these financial instruments are characterized as Level 3 liabilities in the fair value hierarchy. The subordinated notes are publicly, though infrequently, traded, are valued based on market prices and are characterized as Level 2 liabilities in the fair value hierarchy.

~~(11) DERIVATIVE FINANCIAL INSTRUMENTS~~

The fair value of derivative positions outstanding is included in accrued interest receivable and other assets and other liabilities in the accompanying consolidated balance sheets on a net basis when a right of offset exists, based on transactions with a single counterparty that are subject to a legally enforceable master netting agreement.

During the three and nine months ended September 30, 2017 and 2016, we entered into certain interest rate derivative positions that were not designated as hedging instruments. These derivative positions relate to transactions in which we enter into an interest rate swap, cap and/or floor with a customer while at the same time entering into an offsetting interest rate swap, cap and/or floor with another financial institution. In connection with each swap transaction, we agree to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on a similar notional amount at a fixed interest rate. At the same time, we agree to pay another financial institution the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. The transaction allows our customer to effectively convert a variable rate loan to a fixed rate. Because we act as an intermediary for our customer, changes in the fair value of the underlying derivative contracts substantially offset each other and do not have a material impact on our results of operations.

During the three and nine months ended September 30, 2017 and 2016, we entered into loan purchase commitment contracts with mortgage originators to purchase residential mortgage loans at a future date, as well as forward sales commitment contracts to sell residential mortgage loans at a future date.

(10) Derivative Financial Instruments

The notional amounts and estimated fair values of ~~interest rate~~ derivative positions outstanding ~~at September 30, 2017 and December 31, 2016~~ are presented in the following ~~tables (in thousands):~~table.

September 30, 2017 December 31, 2016
Estimated Fair Value Estimated Fair Value

Notional
Amount
Asset Derivative Liability Derivative
Notional
Amount
Asset Derivative Liability Derivative
Non-hedging interest rate derivatives:
Financial institution counterparties:
Commercial loan/lease interest rate swaps $ 1,376,915
$ 1,650
$ 23,390
$ 1,144,367
$ 1,754
$ 25,421
Commercial loan/lease interest rate caps 267,765
295
1
210,996
819
—
Customer counterparties:
Commercial loan/lease interest rate swaps 1,376,915
23,390
1,650
1,144,367
25,421
1,754
Commercial loan/lease interest rate caps 267,765
1
295
210,996
—
819
Economic hedging interest rate derivatives:
Loan purchase commitments 168,784
279
363
237,805
1,351
—
Forward sales commitments 1,022,613
1,166
—
1,218,000
10,287
—
Gross derivatives 26,781
25,699
39,632
27,994
Offsetting derivative assets/liabilities (1,651 ) (1,651 ) (1,754 ) (1,754 )
Net derivatives included in the consolidated balance sheets $ 25,130
$ 24,048
$ 37,878
$ 26,240

The ~~weighted average~~weighted-average received and paid interest rates for interest rate swaps outstanding ~~at September 30, 2017 and December 31, 2016~~ were as follows:

The ~~weighted average~~weighted-average strike rate for outstanding interest rate caps was ~~2.50%~~2.47% at ~~September 30, 2017~~March 31, 2022 and ~~2.45%~~2.54% at December 31, ~~2016.~~2021.

Our credit exposure on derivative instruments is limited to the net favorable value and interest payments by each counterparty. In ~~such~~some cases collateral may be required from the counterparties involved if the net value of the derivative instruments ~~exceed~~exceeds a nominal ~~amount considered to be immaterial.~~amount. Our credit exposure associated with these instruments, net of any collateral pledged, was approximately ~~$25.1~~$30.2 million at ~~September 30, 2017~~March 31, 2022, and approximately ~~$37.9~~$37.8 million at December 31, ~~2016, which primarily relates to Bank customers.~~2021. Collateral levels are monitored and adjusted on a regular basis for changes in interest rate swap ~~values. At September 30, 2017, we~~and cap values, as well as for changes in the value of forward sale commitments. We had ~~$35.1~~$14.3 million and $40.3 million in cash collateral pledged for these derivatives ~~of which $28.0 million was~~at March 31, 2022 and December 31, 2021, respectively, included in interest-bearing ~~deposits~~cash and ~~$7.1~~cash equivalents on the consolidated balance sheets.

We also enter into credit risk participation agreements with financial institution counterparties for interest rate swaps related to loans in which we are either a participant or a lead bank. The risk participation agreements entered into by us as a participant bank provide credit protection to the financial institution counterparty should the borrower fail to perform on its interest rate derivative contract with that financial institution. We are party to 12 risk participation agreements where we are a participant bank with a notional amount of $126.8 million ~~was included in accrued interest receivable and other assets. At~~at March 31, 2022, compared to 7 risk participation agreements having a notional amount of $79.2 million at December 31, ~~2016,~~2021. The maximum estimated exposure to these agreements, assuming 100% default by all obligors, was approximately $750,000 at March 31, 2022 and $2.3 million at December 31, 2021. The fair value of these exposures was insignificant to the consolidated financial statements at both March 31, 2022 and December 31, 2021. Risk participation agreements entered into by us as the lead bank provide credit protection to us should the borrower fail to perform on its interest rate derivative contract with us. We are party to 17 risk participation agreements where we ~~had $24.8~~are the lead bank having a notional amount of $197.8 million ~~in cash collateral pledged for these derivatives, all~~at March 31, 2022, compared to 15 agreements having a notional amount of ~~which was included in interest-bearing deposits.~~

$156.1 million at December 31, 2021.

~~(12) NEW ACCOUNTING PRONOUNCEMENTS~~(11) New Accounting Standards

~~ASU 2016-15~~ ~~"Statement of Cash Flows (Topic 230)"~~ ("ASU 2016-15") is intended to reduce the diversity in practice around how certain transactions are classified within the statement of cash flows. ASU 2016-15 will be effective for us on January 1, 20182023 and is not expected to have a significant impact on our consolidated financial statements.

~~ASU 2016-02 "Leases (Topic 842)~~" ("ASU 2016-02") requires that lessees and lessors recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. ASU 2016-02 will be effective for us on January 1, 2019. We have not yet selected a transition method as we are in the process of determining the effect of the standard on our consolidated financial statements and disclosures.

~~ASU 2014-09 "Revenue from Contracts with Customers (Topic 606)"~~ ~~("ASU 2014-09") implements a common revenue standard that clarifies the principles for recognizing revenue. The core principle of ASU 2014-09 is that~~ an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 establishes a five-step model which entities must follow to recognize revenue and removes inconsistencies and weaknesses in existing guidance. The guidance does not apply to revenue associated with financial instruments, including loans and securities that are accounted for under other GAAP, which comprises a significant portion of our revenue stream. Adoption of ASU 2014-09 may require us to amend how we recognize certain recurring revenue streams related to trust fees, which are recorded in non-interest income; however, we do not expect adoption of ASU 2014-09 to have a material impact on our ~~consolidated~~ financial ~~statements and~~statement disclosures. We plan to adopt the revenue recognition guidance in the first quarter of 2018 with a cumulative effect adjustment to opening retained earnings, if management deems such adjustment significant. Our implementation efforts to date include identification of revenue streams within the scope of the guidance, and we are in the process of reviewing revenue contracts.

~~QUARTERLY FINANCIAL SUMMARIES – UNAUDITED~~

~~Consolidated Daily Average Balances, Average Yields and Rates~~

For the three months ended
September 30, 2017 For the three months ended
September 30, 2016

Average
Balance

Revenue/
Expense

Yield/
Rate

Average
Balance
Revenue/
Expense
Yield/
Rate
Assets
Securities – taxable $ 86,087
$ 340
1.57 % $ 26,051
$ 228
3.47 %
Securities – non-taxable(2)
—
—
— % 564
8
5.82 %
Federal funds sold and securities purchased under resale agreements 205,938
642
1.24 % 369,215
455
0.49 %
Deposits in other banks 2,383,060
7,544
1.26 % 3,192,141
4,080
0.51 %
Loans held for sale 1,009,703
9,882
3.88 % 430,869
3,662
3.38 %
Loans held for investment, mortgage finance 4,847,530
42,294
3.46 % 4,658,804
36,655
3.13 %
Loans held for investment(1)(2)
14,427,980
178,839
4.92 % 12,591,561
137,407
4.34 %
Less reserve for loan losses 172,774
—
—
168,086
—
—
Loans held for investment, net 19,102,736
221,133
4.59 % 17,082,279
174,062
4.05 %
Total earning assets 22,787,524
239,541
4.17 % 21,101,119
182,495
3.44 %
Cash and other assets 713,778
588,440

Total assets $ 23,501,302
$ 21,689,559

Liabilities and Stockholders’ Equity
Transaction deposits $ 2,145,324
$ 4,359
0.81 % $ 2,301,362
$ 1,960
0.34 %
Savings deposits 7,618,843
17,152
0.89 % 6,177,681
6,228
0.40 %
Time deposits 496,076
924
0.74 % 501,701
763
0.61 %
Total interest-bearing deposits 10,260,243
22,435
0.87 % 8,980,744
8,951
0.40 %
Other borrowings 1,821,837
5,726
1.25 % 1,607,613
1,860
0.46 %
Subordinated notes 281,256
4,191
5.91 % 280,895
4,191
5.94 %
Trust preferred subordinated debentures 113,406
930
3.25 % 113,406
752
2.64 %
Total interest-bearing liabilities 12,476,742
33,282
1.06 % 10,982,658
15,754
0.57 %
Demand deposits 8,764,263
8,849,725

Other liabilities 116,998
135,141

Stockholders’ equity 2,143,299
1,722,035

Total liabilities and stockholders’ equity $ 23,501,302
$ 21,689,559

Net interest income(2)
$ 206,259
$ 166,741

Net interest margin 3.59 % 3.14 %
Net interest spread 3.11 % 2.87 %
Loan spread(3)
4.02 % 3.83 %

For the nine months ended September 30, 2017 For the nine months ended September 30, 2016

Average
Balance

Revenue/
Expense

Yield/
Rate

Average
Balance

Revenue/
Expense

Yield/
Rate
Assets
Securities – taxable $ 61,212
$ 851
1.86 % $ 27,160
$ 722
3.55 %
Securities – non-taxable(2)
74
3
4.85 % 629
27
5.74 %
Federal funds sold and securities purchased under resale agreements 218,777
1,606
0.98 % 328,971
1,209
0.49 %
Deposits in other banks 2,645,145
19,935
1.01 % 2,905,251
11,115
0.51 %
Loans held for sale 973,016
27,652
3.80 % 238,987
6,106
3.41 %
Loans held for investment, mortgage finance 3,811,298
98,798
3.47 % 4,266,573
99,666
3.12 %
Loans held for investment(1)(2) 13,714,390
485,226
4.73 % 12,260,752
395,901
4.31 %
Less reserve for loan losses 171,029
—
—
157,880
—
—
Loans held for investment, net 17,354,659
584,024
4.50 % 16,369,445
495,567
4.04 %
Total earning assets 21,252,883
634,071
3.99 % 19,870,443
514,746
3.46 %
Cash and other assets 651,270
546,553

Total assets $ 21,904,153
$ 20,416,996

Liabilities and Stockholders’ Equity
Transaction deposits $ 2,054,701
$ 9,445
0.61 % $ 2,171,776
$ 5,085
0.31 %
Savings deposits 7,189,274
40,575
0.75 % 6,299,965
19,441
0.41 %
Time deposits 460,046
2,241
0.65 % 499,366
2,217
0.59 %
Total interest-bearing deposits 9,704,021
52,261
0.72 % 8,971,107
26,743
0.40 %
Other borrowings 1,539,208
11,626
1.01 % 1,455,888
4,628
0.25 %
Subordinated notes 281,167
12,573
5.98 % 280,805
12,573
5.98 %
Trust preferred subordinated debentures 113,406
2,641
3.11 % 113,406
2,203
2.59 %
Total interest-bearing liabilities 11,637,802
79,101
0.91 % 10,821,206
46,147
0.55 %
Demand deposits 8,062,792
7,786,562

Other liabilities 112,505
132,506

Stockholders’ equity 2,091,054
1,676,722

Total liabilities and stockholders’ equity $ 21,904,153
$ 20,416,996

Net interest income(2)
$ 554,970
$ 468,599

Net interest margin 3.49 % 3.15 %
Net interest spread 3.08 % 2.91 %
Loan spread(3) 4.02 % 3.82 %

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations for the three months ended March 31, 2022 and 2021 should be read in conjunction with our audited consolidated financial statements and the related notes to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”). Operating results for the three months ended March 31, 2022 are not necessarily indicative of the results for the year ending December 31, 2022 or any future period.

Forward-Looking Statements

~~Certain statements and financial analysis contained in this report that are not historical facts are forward-looking statements made pursuant to~~This Quarterly Report on Form 10-Q contains “forward-looking statements” within the ~~safe harbor provisions~~meaning of federal securities laws. Forward-looking statements may also be contained in our future filings with SEC, in press releases and in oral and written statements made by us or with our approval that are not statementsthe Private Securities Litigation Reform Act of ~~historical fact.~~1995. These forward-looking statements are based on our beliefs, assumptions and expectations of our future performance taking into account all information ~~currently~~ available to ~~us. Words~~us at the time such statements are made. Forward-looking statements may often be identified by the use of words such as ~~“believes,”~~ “expects,” “estimates,” “anticipates,” “plans,” “goals,” “objectives,” ~~“expects,”~~ “intends,” “seeks,” “likely,” ~~“targeted,” “continue,” “remain,” “will,”~~ “should,” “may” “could” and other similar ~~expressions are intended to identify~~expressions. These forward-looking statements ~~but are not the exclusive means of identifying such statements.~~

Forward-looking statements may include, among other things, statements about the credit quality of our loan portfolio, economic conditions, including the continued impact on our customers from declines and volatility in oil and gas prices, the impact on our loan and deposit portfolios as a result of Hurricanes Harvey and Irma, expectations regarding rates of default or loan losses, volatility in the mortgage industry, our business strategies and our expectations about future financial performance, future growth and earnings, the appropriateness of our allowance for loan losses and provision for credit losses, the impact of increased regulatory requirements on our business, increased competition, interest rate risk, new lines of business, new product or service offerings and new technologies.

~~Forward-looking statements are subject to various risks and uncertainties, which change over time,~~ are based on management’s expectations and assumptions at the time the statements are made and are not guarantees of future results. Important factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to, the following:

~~Actual outcomes and results may differ materially from what is expressed in our~~this forward-looking statements and from our historical financial results due to the factors discussed elsewhere in this report or disclosed in our other SEC filings. Forward-looking statements included herein speak only as of the date hereof andinformation should not be relied upon as representing our expectations or beliefs as of any date subsequent to the date of this report. Except as required by law, we undertake no obligation to revise any forward-looking statements contained in this report, whetherregarded as a ~~result of new information,~~representation by the Company that the future ~~events~~plans, estimates or ~~otherwise. The factors discussed herein are not intended to~~expectations so contemplated will be a complete summary of all risks and uncertainties that may affect our businesses. For a more detailed discussion of these and other factors that may affect our business, see "Risk Factors" in the 2016 Form 10-K and other filings we have made with the SEC. Though we strive to monitor and mitigate risk, we cannot anticipate all potential economic, operational and financial developments that may adversely impact our operations and our financial results. Forward-looking statements should not be viewed as predictionsachieved, and should not be the primary basis upon which investors evaluate an investment in our securities.

~~Overview of Our Business Operations~~

~~We commenced our banking operations in December 1998. An important aspect of our growth strategy has been our ability to service~~ Certain risks, uncertainties and manage effectively a large number of loans and deposit accounts in multiple markets in Texas, as well as several lines of business serving a regional or national clientele of commercial borrowers. Accordingly, we have created an operations infrastructure sufficient to support our lending and banking operations that we continue to build out as needed to serve a larger customer base and specialized industries.

Outstanding energy loans totaled $1.2 billion, or approximately 6% of total loans, at September 30, 2017. Unfunded energy loan commitments increased by $93.5 million to $624.3 million (51% of outstanding energy loans) at September 30, 2017 compared to $530.8 million at December 31, 2016. We recorded $19.8 million in energy net charge-offs during the nine months ended September 30, 2017 compared to $19.8 million for the same period in 2016. Energy non-accruals decreased to $81.6 million at September 30, 2017 compared to $82.6 million at June 30, 2017 and $129.3 million at September 30, 2016. We continue to proactively manage our energy portfolio and overall credit quality, and we believe we are appropriately reserved against further energy-related losses.

~~The following discussion and analysis presents the significant~~other factors, affecting our financial condition as of September 30, 2017 and December 31, 2016 and results of operations for the three and nine months in the periods ended September 30, 2017 and 2016. This discussion should be read in conjunction with our consolidated financial statements and notes to the financial statements appearingincluding those set forth under “Risk Factors” in Part I, Item 11A of the 2021 Form 10-K and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K may cause actual results to differ materially from the results discussed in the forward-looking statements appearing in this ~~report.~~discussion and analysis and may include factors such as, but not limited to, credit quality and risk, the COVID-19 pandemic, industry and technological changes, cyber incidents or other failures, disruptions or security breaches, interest rates, commercial and residential real estate values, economic and market conditions in Texas, the United States or internationally, fund availability, accounting estimates and risk management processes, the transition away from the London Interbank Offered Rate (LIBOR), legislative and regulatory changes, business strategy execution, key personnel, competition, mortgage markets, fraud, environmental liability and severe weather, natural disasters, acts of war or terrorism or other external events. The Company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

Results of Operations

~~Summary~~Three months ended March 31, 2022 compared to three months ended March 31, 2021

Selected income statement data and key performance indicators are presented in the table below:

(1) Non-interest expense divided by the sum of ~~Performance~~net interest income and non-interest income.

We reported net income of ~~$58.7~~$39.7 million and net income available to common stockholders of ~~$56.2~~$35.3 million ~~or $1.12 per diluted common share,~~ for the ~~third~~first quarter of ~~2017~~2022 compared to net income of ~~$42.7~~$71.9 million and net income available to common stockholders of ~~$40.3~~$68.2 million ~~or $0.87~~for the first quarter of 2021. On a fully diluted basis, earnings per ~~diluted~~ common share were $0.69 for the ~~third~~first quarter of ~~2016.~~2022, compared to $1.33 for the first quarter of 2021. Return on average common equity (“ROE”) was ~~11.20%~~4.97% and return on average assets ~~("ROA"~~(“ROA”) was ~~0.99%~~0.47% for the ~~third~~first quarter of ~~2017,~~2022, compared to ~~10.20%~~10.08% and ~~0.78%~~0.73%, respectively, for the ~~third~~first quarter of ~~2016.~~2021. The ~~increase~~decrease in ~~ROE and ROA~~net income for the first quarter of 2022 compared to the first quarter of 2021 resulted primarily from ~~increases~~decreases in net interest income and non-interest income and a decrease in the provision for credit losses that exceeded growth in non-interest expense. ROA also benefited from more effective utilization of liquidity balances as balances were deployed into higher yielding loan categories.

Net income and net income available to common stockholders for the nine months ended September 30, 2017 totaled $152.3 million and $145.0 million, respectively, or $2.89 per diluted common share, compared to net income and net income available to common stockholders of $106.7 million and $99.4 million, respectively, or $2.14 per diluted common share, for the same period in 2016. ROE was 9.99% and ROA was 0.93% for the nine months ended September 30, 2017 compared to 8.70% and 0.70%, respectively, for the nine months ended September 30, 2016. The increase in ROE and ROA for the first nine months of 2017 resulted from increases in net interest income and non-interest income and a decrease in the provision for credit losses that exceeded growth in non-interest expense. ROA also benefited from more effective utilization of liquidity balances and an increase in net interest margin.

Net income increased $16.0 million, or 37%, for the three months ended September 30, 2017, as compared to the same period in 2016. The increase was primarily the result of a $37.6 million increase in net interest income, a $2.0 million decrease in the provision for credit losses and a $2.3 million increase in non-interest income, offset by a $20.0 million increase in non-interest expense and a $5.9 million increase in income tax expense. Net income increased $45.6 million, or 43%, for the nine months ended September 30, 2017, as compared to the same period in 2016. The increase was primarily the result of an $82.1 million increase in net interest income, a $26.0 million decrease in the provision for credit losses and a $12.9 million increase in non-interest income, offset by a $56.9 million increase in non-interest expense and a $18.6 million increase in income tax expense.income.

Details of the changes in the various components of net income are discussed below.

Taxable Equivalent Net Interest Income Analysis

~~Net interest income was $204.4 million for the third quarter~~

(1)Taxable equivalent rates used where applicable.

(2)Average balances include non-accrual loans which are stated net of 2017, compared to $166.7 million for the third quarter of 2016. The increase was due to an increase in average earning assets of $1.7 billion as compared to the third quarter of 2016, as well as the effect of increases in interest rates on loan yields. The increase in average earning assets included a $578.8 million increase in average loans held for sale, a $2.0 billion increase in average net loans held for investment and a $59.5 million increase in average securities, offset by a $972.4 million decrease in average liquidity assets. For the quarter ended September 30, 2017, average net loans held for investment, liquidity assets and loans held for sale represented approximately 84%, 11% and 5%, respectively, of average earning assets compared to approximately 81%, 17% and 2% for the same quarter of 2016.unearned income.

Average interest-bearing liabilities for the quarter ended September 30, 2017 increased $1.5 billion from the third quarter of 2016, which included a $1.3 billion increase in average interest-bearing deposits and a $214.2 million increase in other borrowings. Average demand deposits were $8.8 billion for the quarter ended September 30, 2016, compared to $8.8 billion for the same period at 2017. The average cost of total deposits and borrowed funds increased to 0.54% for the third quarter of 2017 compared to 0.22% for the same period of 2016. The cost of interest-bearing liabilities increased from 0.57% for the quarter ended September 30, 2016 to 1.06% for the same period of 2017.

Net interest income was $550.7 million for the nine months ended September 30, 2017, compared to $468.6 million for the same period of 2016. The increase was due to an increase in average earning assets of $1.4 billion as compared to the nine months ended September 30, 2016, as well as the effect of increases in interest rates on loan yields. The increase in average earning assets included a $734.0 million increase in average loans held for sale, a $985.2 million increase in average net loans held for investment and a $33.5 million increase in average securities, offset by a $370.3 million decrease in average liquidity assets. For the nine months ended September 30, 2017, average net loans held for investment, liquidity assets and loans held for sale represented approximately 82%, 13% and 5%, respectively, of average earning assets compared to approximately 83%, 16% and 1% for the same period of 2016.

Average interest-bearing liabilities for the nine months ended September 30, 2017 increased $816.6 million from the same period of 2016, which included a $732.9 million increase in average interest-bearing deposits and a $83.3 million increase in other borrowings. Average demand deposits increased from $7.8 billion for the nine months ended September 30, 2016 to $8.1 billion for the nine months ended September 30, 2017. The average cost of total deposits and borrowed funds increased to 0.44% for the nine months ended September 30, 2017 compared to 0.23% for the same period of 2016. The cost of interest-bearing liabilities increased from 0.55% for the nine months ended September 30, 2016 to 0.91% for the same period of 2017.Volume/Rate Analysis

The following table ~~(in thousands)~~ presents the changes in taxable-equivalent net interest income ~~between the three and nine month periods ended September 30, 2017 and September 30, 2016~~ and identifies the changes due to differences in the average volume of earning assets and interest-bearing liabilities and the changes due to differences in the average interest rate on those assets and liabilities.

(1)Yield/rate and volume variances are allocated to yield/rate.

(2)Taxable equivalent rates used where applicable assuming a 21% tax rate.

Three months ended
September 30, 2017/2016

Nine months ended
September 30, 2017/2016
Net Change Due To(1) Net Change Due To(1)
Change Volume Yield/Rate Change Volume Yield/Rate
Interest income:
Securities(2)
$ 104
$ 517
$ (413 ) $ 105
$ 888
$ (783 )
Loans held for sale 6,220
4,931
1,289
21,546
18,737
2,809
Loans held for investment, mortgage finance loans 5,639
1,489
4,150
(868 ) (10,625 ) 9,757
Loans held for investment(2) 41,432
20,089
21,343
89,325
46,895
42,430
Federal funds sold 187
(202 ) 389
397
(404 ) 801
Deposits in other banks 3,464
(1,040 ) 4,504
8,820
(994 ) 9,814
Total 57,046
25,784
31,262
119,325
54,497
64,828
Interest expense:
Transaction deposits 2,399
(134 ) 2,533
4,355
(274 ) 4,629
Savings deposits 10,924
1,453
9,471
21,139
2,741
18,398
Time deposits 161
(9 ) 170
23
(174 ) 197
Borrowed funds 3,866
248
3,618
6,998
265
6,733
Long-term debt 178
5
173
439
—
439
Total 17,528
1,563
15,965
32,954
2,558
30,396
Net interest income $ 39,518
$ 24,221
$ 15,297
$ 86,371
$ 51,939
$ 34,432

Net interest ~~margin, which is defined as the ratio of net interest~~ income ~~to average earning assets,~~ was ~~3.59%~~$183.5 million for the ~~third quarter of 2017~~three months ended March 31, 2022, compared to ~~3.14%~~$194.8 million for the ~~third quarter of 2016.~~same period in 2021. The ~~year-over-year increase~~decrease was primarily due to a decrease in average loans held for investment, mortgage finance, partially offset by an increase in investment securities yields.

Average earning assets for the ~~effect~~three months ended March 31, 2022 decreased $5.5 billion compared to the same period in 2021, and included a $3.3 billion decrease in average interest-bearing cash and cash equivalents and a $2.4 billion decrease in average loans held for investment, mortgage finance. The decrease in average interest bearing cash and cash equivalents resulted primarily from our proactive exit of ~~increases~~certain high-cost indexed deposit products in the second half of 2021. The decrease in average loans held for investment, mortgage finance, was primarily due to reduced volumes as a result of the rising interest ~~rates on loan yields attributable~~rate environment. Average interest-bearing liabilities for the three months ended March 31, 2022 decreased $5.6 billion compared to ~~our highly asset-sensitive balance sheet.~~ the same period in 2021, primarily due to a $5.2 billion decrease in average interest-bearing deposits. Average demand deposits for the three months ended March 31, 2022 decreased $185.8 million compared to the same period in 2021.

Net interest margin for the three months ended March 31, 2022 was 2.23% compared to 2.04% for the same period in 2021, primarily due to a shift in the composition of earning assets, primarily declines in interest-bearing cash and cash equivalents and LHI, mortgage finance.

The yield on total loans held for investment ~~increased~~decreased to ~~4.59%~~3.59% for the ~~third quarter of 2017~~three months ended March 31, 2022 compared to ~~4.05%~~3.62% for the ~~third quarter of 2016~~same period in 2021, and the yield on earning assets increased to ~~4.17%~~2.54% for the ~~third quarter of 2017~~three months ended March 31, 2022 compared to ~~3.44%~~2.33% for the ~~third quarter~~same period in 2021. The average cost of ~~2016. Funding costs, including demand~~total deposits ~~and borrowed funds, increased~~decreased to ~~0.54%~~0.20% for the ~~third quarter of 2017 compared to 0.22%~~three months ended March 31, 2022 from 0.24% for the ~~third quarter of 2016. The spread on~~same period in 2021, and total earning assets, net of the cost of deposits and borrowed funds, was 3.63% for the third quarter of 2017 compared to 3.22% for the third quarter of 2016. The increase resulted primarily from increases in interest rates and increases in the higher yielding loan components of earning assets. Total funding costs, including all deposits, long-term debt and ~~stockholders’~~stockholders' equity, increased to ~~0.56%~~0.30% for the ~~third quarter of 2017~~three months ended March 31, 2022 compared to ~~.29%~~0.29% for the ~~third quarter of 2016.~~same period in 2021.

Non-interest income ~~increased $2.3~~decreased $24.1 million during the three months ended ~~September 30, 2017~~March 31, 2022 compared to the same period in 2021. The decrease was primarily due to decreases in brokered loan fees, servicing fee income and net gain/(loss) on sale of ~~2016. This~~loans held for sale all as a result of the sale of our mortgage servicing rights portfolio and transition of the mortgage correspondent aggregation program in 2021.

Non-interest Expense

Non-interest expense for the three months ended March 31, 2022 increased $2.8 million compared to the same period in 2021. The increase was primarily due to ~~a $4.2 million increase~~increases in servicing income during the three months ended September 30, 2017 compared to the same period of 2016 primarily attributable to an increase in MSRs. Offsetting this increase was a $1.4 million decrease in brokered loan fees compared to the three months ended September 30, 2016 resulting fromsalaries and benefits, partially offset by a decrease in ~~total mortgage finance volumes.~~

~~Non-interest income increased $12.9 million during the nine months ended September 30, 2017 compared to the same period of 2016. This increase was primarily due to a $10.1 million~~servicing-related expenses. The increase in ~~servicing income during the nine months ended September 30, 2017 compared to the same period of 2016~~salaries and benefits expense was primarily attributable to an increase in MSRs. Service charges increased $1.9 million during the nine months ended September 30, 2017 compared to the same period of 2016 as a result of the increase in deposit balances and improved pricing of treasury services. Wealth management and trust fee income increased $1.4 million during the nine months ended September 30, 2017 compared to the same period of 2016 due to an increase in ~~assets under management. Swap fees increased $1.1 million during~~headcount, while the ~~nine months ended September 30, 2017 compared to the same period of 2016. Swap fees relate to customer swap transactions and are received~~decrease in service-related expenses resulted primarily from the ~~institution that is~~sale of our ~~counterparty on the transaction. These fees fluctuate from quarter to quarter based on the volume and size of transactions closed during the quarter. These increases were offset by minor decreases~~mortgage servicing rights portfolio in ~~brokered loan fees, BOLI income and other non-interest income compared to the same period of 2016.~~2021.

While management expects continued growth in certain components of non-interest income, the future rate of growth could be affected by increased competition from nationwide and regional financial institutions among other factors. In order to achieve growth in non-interest income, management from time to time evaluates new products, new lines of business and the expansion of existing lines of business. Any new product introduction or new market entry could place additional demands on capital and managerial resources.

~~Non-interest Expense~~

~~The components of non-interest expense were as follows (in thousands):~~

Non-interest expense for the third quarter of 2017 increased $20.0 million, or 21%, to $114.8 million from $94.8 million in the third quarter of 2016. The increase is primarily due to increases of $11.2 million in salaries and employee benefits expense, $3.0 million in marketing expense and $1.1 million in legal and professional expense, all of which were due to general business growth and continued build-out. Also contributing to the year-over-year increase in non-interest expense was a $3.3 million increase in servicing related expenses resulting from an increase in MSRs, which are being amortized.

Non-interest expense for the nine months ended September 30, 2017 increased $56.9 million, or 21%, to $332.7 million from $275.9 million for the nine months ended September 30, 2016. The increase is primarily attributable to increases of $31.1 million in salaries and employee benefits expense, $5.7 million in marketing expense, $4.1 million in legal and professional expense, and $1.8 million in net occupancy expense, all of which were due to general business growth and continued build-out. The $5.2 million increase in communications and technology expense primarily relates to the $5.3 million technology write-off taken in the second quarter of 2017, as well as general business growth and continued build-out. The $7.0 million increase in servicing related expenses resulting from an increase in MSRs, which are being amortized.

Analysis of Financial Condition

Loans Held for Investment

~~Loans~~The following table summarizes our loans held for investment by portfolio segment:

Total loans held for investment were ~~as follows as~~$21.7 billion at March 31, 2022, a decline of ~~the dates indicated (in thousands):~~

~~Our business plan focuses~~$1.1 billion from December 31, 2021. The decline in total loans held for investment was primarily ~~on lending~~due to ~~middle market businesses~~a decline in mortgage finance loans, partially offset by increases in commercial and ~~successful professionals and entrepreneurs, and as such, commercial,~~ real estate ~~and construction loans have comprised a majority of our loan portfolio. Consumer loans generally have represented 1% or less of the portfolio.~~loans. Mortgage finance loans relate to our mortgage warehouse lending

operations in which we ~~invest in~~purchase mortgage loan ownership interests that are typically sold within 10 to 20 ~~days.~~days and represent 27% of total loans held for investment at March 31, 2022 compared to 33% at December 31, 2021. Volumes fluctuate based on the level of market

demand for the product and the number of days between purchase and sale of the loans, ~~as well as~~which can be affected by changes in overall market interest rates, and tend to peak at the end of each month. The balances of mortgage finance loans have continued to decline in the first quarter of 2022 as interest rates have continued to rise.

We originate a substantial majority of all loans held for ~~investment (excluding mortgage finance loans).~~investment. We also participate in syndicated loan relationships, both as a participant and as an agent. As of ~~September 30, 2017,~~March 31, 2022, we had ~~$2.6~~$2.7 billion in syndicated loans, ~~$797.4~~$649.5 million of which we administer as agent. All syndicated loans, whether we act as agent or participant, are underwritten to the same standards as all other loans we originate. As of ~~September 30, 2017, $23.6 million~~March 31, 2022, none of our syndicated loans were on non-accrual.

Portfolio ~~Geographic Concentration~~Concentrations

~~When considering our mortgage finance loans and other national lines of business,~~Although more than 50% of our total loan exposure is outside of Texas and more than 50% of our deposits are sourced outside of ~~Texas. However, as~~Texas, our Texas concentration remains significant. As of ~~September 30, 2017,~~March 31, 2022, a majority of our loans held for investment, excluding ~~our~~ mortgage finance loans and other national lines of business, were to businesses with headquarters ~~and~~or operations in Texas. This geographic concentration subjects the loan portfolio to the general economic conditions within this ~~area. We also make loans to these customers that are secured by assets located outside of Texas.~~state. The risks created by this concentration have been considered by management in the determination of the appropriateness of the allowance for ~~loan~~credit losses.

~~Summary of Loan Loss Experience~~

The provision for credit losses, which includes a provision for losses on unfunded commitments, is a charge to earnings to maintain the allowance for loan losses at a level consistent with management’s assessment of the collectability of the loan portfolio in light of current economic conditions and market trends. We recorded a provision for credit losses of $20.0 million during the third quarter of 2017 compared to $22.0 million in the third quarter of 2016 and $13.0 million in the second quarter of 2017. The decrease in provision recorded during the third quarter of 2017 compared to the same period in 2016 was primarily related to improvements in the composition of our pass-rated and classified loan portfolios, including energy loans, offset by a $4.5 million provision related to the potential impact to our loan portfolio from Hurricanes Harvey and Irma and increased provision for loan growth.

The allowance for credit losses, which includes a liability for losses on unfunded commitments, totaled $192.7 million at September 30, 2017, $179.5 million at December 31, 2016 and $191.3 million at September 30, 2016. The combined allowance as a percentage of loans held for investment excluding mortgage finance loans decreased to 1.30% at September 30, 2017 from 1.38% and1.51% at December 31, 2016 and September 30, 2016, respectively, as a result of strong loan growth.

The allowance for credit losses results from consistent application of our loan loss reserve methodology. At September 30, 2017, we believe the allowance is sufficient to cover all inherent losses in the portfolio and has been derived from consistent application of our methodology. Should any of the factors considered by management in evaluating the appropriateness of the allowance for loan losses change, our estimate of inherent losses in the portfolio could also change, which would affect the level of future provisions for loan losses.

~~Activity in the allowance for loan losses is presented in the following table (in thousands, except percentage and multiple data):~~

Nine months ended
September 30, 2017 Year ended
December 31,
2016 Nine months ended
September 30, 2016
Allowance for loan losses:
Beginning balance $ 168,126
$ 141,111
$ 141,111
Loans charged-off:
Commercial 32,146
56,558
34,232
Construction 59
—
—
Real estate 290
528
528
Consumer 180
47
40
Leases —
—
—
Total charge-offs 32,675
57,133
34,800
Recoveries:
Commercial 3,574
9,364
7,829
Construction 104
34
34
Real estate 74
63
36
Consumer 56
21
16
Leases 9
77
71
Total recoveries 3,817
9,559
7,986
Net charge-offs 28,858
47,574
26,814
Provision for loan losses 43,661
74,589
66,139
Ending balance $ 182,929
$ 168,126
$ 180,436
Allowance for off-balance sheet credit losses:
Beginning balance $ 11,422
$ 9,011
$ 9,011
Provision for off-balance sheet credit losses (1,661 ) 2,411
1,861
Ending balance $ 9,761
$ 11,422
$ 10,872
Total allowance for credit losses $ 192,690
$ 179,548
$ 191,308
Total provision for credit losses $ 42,000
$ 77,000
$ 68,000
Allowance for loan losses to LHI 0.89 % 0.96 % 1.02 %
Allowance for loan losses to LHI excluding mortgage finance loans 1.23 % 1.29 % 1.42 %
Net charge-offs to average LHI(1)
0.22 % 0.29 % 0.22 %
Net charge-offs to average LHI excluding mortgage finance loans(1)
0.28 % 0.38 % 0.29 %
Total provision for credit losses to average LHI(1)
0.32 % 0.46 % 0.55 %
Total provision for credit losses to average LHI excluding mortgage finance loans(1)
0.41 % 0.62 % 0.74 %
Recoveries to total charge-offs 11.68 % 16.73 % 22.95 %
Allowance for off-balance sheet credit losses to off-balance sheet credit commitments 0.14 % 0.19 % 0.19 %
Combined allowance for credit losses to LHI 0.94 % 1.03 % 1.09 %
Combined allowance for credit losses to LHI excluding mortgage finance loans 1.30 % 1.38 % 1.51 %
Non-performing assets:
Non-accrual loans(2)
$ 118,205
$ 167,791
$ 169,113
OREO(3)
18,131
18,961
19,009
Total $ 136,336
$ 186,752
$ 188,122
Loans past due 90 days and still accruing(4)
8,892
10,729
9,706
Allowance for loan losses to non-accrual loans 1.5x
1.0x
1.1x

Non-performing Assets

Non-performing assets include non-accrual loans and leases and repossessed assets. The table below summarizes our ~~non-accrual loans~~non-performing assets by type and by type of property securing the ~~credit~~credit.

(1)As of March 31, 2022 and ~~OREO (in thousands):~~

~~Total non-performing assets at September 30, 2017 decreased $51.8 million from September 30, 2016 and $50.4 million from~~ December 31, ~~2016. We experienced a significant decrease~~2021, non-accrual loans included $18.0 million and 19.4 million, respectively, in ~~levels of non-performing assets during~~loans that met the nine months ended September 30, 2017 compared to the same period in 2016, primarily related to improvements in our energy portfolio. Energy non-performing assets totaled $81.6 million at September 30, 2017 compared to $121.5 million atcriteria for restructured.

(2)At March 31, 2022 and December 31, ~~2016~~2021, loans past due 90 days and ~~$129.3~~still accruing includes premium finance loans of $3.2 million and $3.3 million, respectively.

(3)Includes loans guaranteed by U.S. government agencies that were repurchased out of Ginnie Mae securities. Loans are recorded as loans held for sale and carried at ~~September 30, 2016. Our~~fair value on the balance sheet. Interest on these past due loans accrues at the debenture rate guaranteed by the U.S. government.

Summary of Credit Loss Experience

The provision for credit losses, ~~decreased as~~comprised of a ~~result~~provision for loans and off-balance sheet credit losses, is a charge to earnings to maintain the allowance for credit losses at a level consistent with management’s assessment of ~~these improvements, as well as improvements in~~expected losses at each balance sheet date.

We recorded a $2.0 million negative provision for credit losses for the ~~composition of our pass-rated and classified loan portfolios. This resulted in a decrease in the reserve for loan losses as a percent of loans excluding mortgage finance loans for September 30, 2017~~three months ended March 31, 2022, compared to ~~December~~a negative provision of $6.0 million for the three months ended March 31, ~~2016 and September 30, 2016.~~

~~Potential problem~~2021. The $2.0 million negative provision for credit losses resulted from a decline in criticized loans, ~~consist of loans that are performing~~partially offset by an increase in accordance with contractual terms but for which we have concerns about the borrower’s ability to comply with repayment terms because of the borrower’s potential financial difficulties. We monitor these loans closely and review their performance on a regular basis. At September 30, 2017, we had $34.6 million in loans of this type, compared to $19.3 million at December 31, 2016, which were not included in either non-accrual or 90 days past due categories.

~~Loans Held for Sale~~

We launched our MCA business in the third quarter of 2015. In that business, we commit to purchase residential mortgage loans from independent correspondent lenders and deliver those loans into the secondary market via whole loan sales to independent third parties or in securitization transactions to Ginnie Mae and GSEs such as Fannie Mae and Freddie Mac. For additional information on our loans held for ~~sale portfolio, see Note 6 - Certain Transfers~~investment, excluding mortgage finance. We recorded $512,000 in net recoveries during the three months ended March 31, 2022, compared to net charge-offs of ~~Financial Assets in~~$6.4 million during the ~~accompanying notes~~three months ended March 31, 2021. Criticized loans totaled $476.1 million at March 31, 2022, compared to ~~the consolidated financial statements included elsewhere in this report.~~$945.1 million at March 31, 2021.

(1) Interim period ratios are annualized.

The table below details net charge-offs (recoveries) as a percentage of average total loans by loan category:

(1) Interim period ratios are annualized.

Liquidity and Capital Resources

In general terms, liquidity is a measurement of our ability to meet our cash needs. Our ~~objective~~objectives in managing our liquidity isare to maintain our ability to meet loan commitments, ~~purchase~~repurchase investment securities orand repay deposits and other liabilities in accordance with their terms, without an adverse impact on our current or future earnings. Our liquidity strategy is guided by policies, formulated and monitored by our senior management and our ~~Balance Sheet~~Asset and Liability Management Committee (“~~BSMC”~~ALCO”), which take into account the demonstrated marketability of our assets, the sources and stability of our funding and the level of unfunded commitments. We regularly evaluate all of our various funding sources with an emphasis on accessibility, stability, reliability and ~~cost effectiveness. For the year ended December 31, 2016 and for the nine months ended September 30, 2017 our~~cost-effectiveness. Our principal source of funding ~~has been our~~is customer deposits, supplemented by ~~our~~ short-term ~~and long-term~~ borrowings, primarily ~~from Federal~~federal funds purchased and ~~Federal Home Loan Bank ("FHLB")~~FHLB borrowings, which are generally used to fund mortgage finance ~~assets.~~

~~Liquidity~~ assets, ~~were $2.4 billion at September 30, 2017,~~as well as long-term debt. We also rely on the availability of the mortgage secondary market provided by Ginnie Mae and ~~continue~~the government-sponsored enterprises to ~~be significant as a result~~support the liquidity of ~~deposit growth and increases in borrowing capacity related to~~ our mortgage finance ~~loans.~~assets.

During 2020 and into the first half of 2021, we significantly increased our interest-bearing cash and cash equivalents to ensure that we had the balance sheet strength to serve our clients during the COVID-19 pandemic. In the second half of 2021 and continuing into the first three months of 2022, these balances have run off as we have purchased investment securities and proactively exited certain high-cost indexed deposit products. The following table summarizes ~~the composition of liquidity assets (in thousands):~~these balances:

Our liquidity needs to support growth in loans held for investment have been fulfilled primarily through growth in our core customer deposits. Our goal is to obtain as much of our funding for loans held for investment and other earning assets as possible from deposits of these core customers. These deposits are generated principally through development of long-term customer relationships, ~~with customers,~~ with a significant focus on treasury management products. In addition to deposits from our core customers, we also have access to deposits through brokered customer relationships. For regulatory purposes, these relationship brokered deposits are categorized as brokered deposits; however, since these deposits arise from a customer relationship, which involves extensive treasury services, we consider these deposits to be core deposits for our reporting purposes.

We also have access to incremental deposits through brokered retail certificates of deposit, or CDs. These traditional brokered deposits are generally of short maturities ~~30 to 90 days,~~ and are used to fund temporary differences in the growth in ~~loans~~loan balances ~~including growth in loans held for sale or other specific categories of loans~~ as compared to customer deposits. The following table summarizes our period-end and average ~~year-to-date~~ core customer deposits, relationship brokered deposits and traditional brokered ~~deposits (in millions):~~deposits:



(in thousands)	March 31, 2022			December 31, 2021			March 31, 2021
Deposits from core customers	$	24,020,695		$	25,409,180		$	30,102,156
Deposits from core customers as a percent of total deposits	94.7		%	90.4		%	90.1		%
Relationship brokered deposits	$	812,108		$	1,855,892		$	1,933,376
Relationship brokered deposits as a percent of average total deposits	3.2		%	6.6		%	5.8		%
Traditional brokered deposits	$	545,135		$	844,293		$	1,356,438
Traditional brokered deposits as a percent of total deposits	2.1		%	3.0		%	4.1		%
Average deposits from core customers(1)	$	25,906,368		$	28,734,460		$	29,980,945
Average deposits from core customers as a percent of average total deposits	92.1		%	91.1		%	89.5		%
Average relationship brokered deposits(1)	$	1,517,430		$	1,608,587		$	1,912,099
Average relationship brokered deposits as a percent of average total deposits	5.4		%	5.1		%	5.7		%
Average traditional brokered deposits(1)	$	703,905		$	1,188,544		$	1,614,643
Average traditional brokered deposits as a percent of average total deposits	2.5		%	3.8		%	4.8		%


												Three months ended March 31,
	Three months ended September 30,					Nine months ended September 30,
	2017		2016			2017		2016
(in thousands except per share data)											(in thousands except per share data)		2022		2021
Interest income											Interest income
Interest and fees on loans	$	229,116	$	177,724		$	607,386	$	501,673		Interest and fees on loans		$	187,657	$	210,331
Securities	341		232			853		739
Federal funds sold and securities purchased under resale agreements	642		455			1,606		1,209
Deposits in other banks	7,544		4,081			19,935		11,116
Investment securities											Investment securities		17,302		9,887

Interest-bearing cash and cash equivalents											Interest-bearing cash and cash equivalents		3,571		2,933
Total interest income	237,643		182,492			629,780		514,737			Total interest income		208,530		223,151
Interest expense											Interest expense
Deposits	22,435		8,950			52,261		26,743			Deposits		13,630		20,004
Federal funds purchased	891		126			1,869		362
Other borrowings	4,835		1,733			9,757		4,265
Subordinated notes	4,191		4,191			12,573		12,573
Trust preferred subordinated debentures	930		753			2,641		2,203

Short-term borrowings											Short-term borrowings		758		2,592
Long-term debt											Long-term debt		10,595		5,743

Total interest expense	33,282		15,753			79,101		46,146			Total interest expense		24,983		28,339
Net interest income	204,361		166,739			550,679		468,591			Net interest income		183,547		194,812
Provision for credit losses	20,000		22,000			42,000		68,000			Provision for credit losses		(2,000)		(6,000)
Net interest income after provision for credit losses	184,361		144,739			508,679		400,591			Net interest income after provision for credit losses		185,547		200,812
Non-interest income											Non-interest income
Service charges on deposit accounts	3,211		2,880			9,323		7,401			Service charges on deposit accounts		6,022		4,716
Wealth management and trust fee income	1,627		1,113			4,386		3,024			Wealth management and trust fee income		3,912		2,855
Bank owned life insurance (BOLI) income	615		520			1,562		1,592

Brokered loan fees	6,152		7,581			17,639		18,090			Brokered loan fees		3,970		9,311
Servicing income	4,486		310			10,387		305			Servicing income		237		9,009
Swap fees	647		918			3,404		2,330
Investment banking and trading income											Investment banking and trading income		4,179		5,787
Net gain/(loss) on sale of loans held for sale											Net gain/(loss) on sale of loans held for sale		—		5,572
Other	2,265		3,394			8,181		9,203			Other		1,962		7,103
Total non-interest income	19,003		16,716			54,882		41,945			Total non-interest income		20,282		44,353
Non-interest expense											Non-interest expense
Salaries and employee benefits	67,882		56,722			194,039		162,904
Net occupancy expense	6,436		5,634			19,062		17,284
Salaries and benefits											Salaries and benefits		100,098		87,522
Occupancy expense											Occupancy expense		8,885		8,274
Marketing	7,242		4,292			18,349		12,686			Marketing		4,977		1,697
Legal and professional	6,395		5,333			20,975		16,883			Legal and professional		10,302		8,277
Communications and technology	6,002		6,620			24,414		19,228			Communications and technology		14,700		15,969
FDIC insurance assessment	6,203		6,355			16,800		17,867
Servicing related expenses	3,897		620			8,329		1,305
Federal Deposit Insurance Corporation (“FDIC”) insurance assessment											Federal Deposit Insurance Corporation (“FDIC”) insurance assessment		3,981		6,613
Servicing-related expenses											Servicing-related expenses		—		12,989

Other	10,773		9,223			30,770		27,717			Other		10,149		8,975
Total non-interest expense	114,830		94,799			332,738		275,874			Total non-interest expense		153,092		150,316
Income before income taxes	88,534		66,656			230,823		166,662			Income before income taxes		52,737		94,849
Income tax expense	29,850		23,931			78,502		59,929			Income tax expense		13,087		22,911
Net income	58,684		42,725			152,321		106,733			Net income		39,650		71,938
Preferred stock dividends	2,438		2,438			7,313		7,313			Preferred stock dividends		4,313		3,779
Net income available to common stockholders	$	56,246	$	40,287		$	145,008	$	99,420		Net income available to common stockholders		$	35,337	$	68,159
Other comprehensive income (loss)
Change in net unrealized gain on available-for-sale securities arising during period, before-tax	$	52	$	(63	)	$	22	$	(121	)
Income tax benefit related to net unrealized gain on available-for-sale securities	18		(23		)	8		(43		)
Other comprehensive income/(loss):											Other comprehensive income/(loss):
Change in unrealized gain/(loss) on available-for-sale debt securities, before tax											Change in unrealized gain/(loss) on available-for-sale debt securities, before tax		$	(199,633)	$	(91,407)
Income tax benefit											Income tax benefit		(41,923)		(19,196)
Other comprehensive loss, net of tax	34		(40		)	14		(78		)	Other comprehensive loss, net of tax		(157,710)		(72,211)
Comprehensive income	$	58,718	$	42,685		$	152,335	$	106,655

Comprehensive loss											Comprehensive loss		$	(118,060)	$	(273)
Basic earnings per common share	$	1.13	$	0.88		$	2.93	$	2.16		Basic earnings per common share		$	0.70	$	1.35
Diluted earnings per common share	$	1.12	$	0.87		$	2.89	$	2.14		Diluted earnings per common share		$	0.69	$	1.33



ý☒			Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.



	September 30, 2017			December 31, 2016
	(Unaudited)
Assets
Cash and due from banks	$	143,616		$	113,707
Interest-bearing deposits	2,332,537			2,700,645
Federal funds sold and securities purchased under resale agreements	25,000			25,000
Securities, available-for-sale	24,224			24,874
Loans held for sale, at fair value	955,983			968,929
Loans held for investment, mortgage finance	5,642,285			4,497,338
Loans held for investment (net of unearned income)	14,828,406			13,001,011
Less: Allowance for loan losses	182,929			168,126
Loans held for investment, net	20,287,762			17,330,223
Mortgage servicing rights, net	77,630			28,536
Premises and equipment, net	23,882			19,775
Accrued interest receivable and other assets	511,207			465,933
Goodwill and intangible assets, net	19,157			19,512
Total assets	$	24,400,998		$	21,697,134
Liabilities and Stockholders’ Equity
Liabilities:
Deposits:
Non-interest-bearing	$	8,263,202		$	7,994,201
Interest-bearing	10,818,055			9,022,630
Total deposits	19,081,257			17,016,831
Accrued interest payable	4,562			5,498
Other liabilities	178,599			161,223
Federal funds purchased and repurchase agreements	83,496			109,575
Other borrowings	2,500,000			2,000,000
Subordinated notes, net	281,315			281,044
Trust preferred subordinated debentures	113,406			113,406
Total liabilities	22,242,635			19,687,577
Stockholders’ equity:
Preferred stock, $.01 par value, $1,000 liquidation value:
Authorized shares – 10,000,000
Issued shares – 6,000,000 shares issued at September 30, 2017 and December 31, 2016	150,000			150,000
Common stock, $.01 par value:
Authorized shares – 100,000,000
Issued shares – 49,622,242 and 49,504,079 at September 30, 2017 and December 31, 2016, respectively	496			495
Additional paid-in capital	959,251			955,468
Retained earnings	1,048,195			903,187
Treasury stock (shares at cost: 417 at September 30, 2017 and December 31, 2016)	(8		)	(8		)
Accumulated other comprehensive income, net of taxes	429			415
Total stockholders’ equity	2,158,363			2,009,557
Total liabilities and stockholders’ equity	$	24,400,998		$	21,697,134



	Three months ended September 30,				Nine months ended September 30,
	2017		2016		2017		2016
Numerator:
Net income	$	58,684	$	42,725	$	152,321	$	106,733
Preferred stock dividends	2,438		2,438		7,313		7,313
Net income available to common stockholders	56,246		40,287		$	145,008	99,420
Denominator:
Denominator for basic earnings per share— weighted average shares	49,607,028		45,980,517		49,573,456		45,931,357
Effect of employee stock-based awards(1)	214,468		118,885		235,011		119,021
Effect of warrants to purchase common stock	429,370		410,281		431,551		382,578
Denominator for dilutive earnings per share—adjusted weighted average shares and assumed conversions	50,250,866		46,509,683		50,240,018		46,432,956
Basic earnings per common share	$	1.13	$	0.88	$	2.93	$	2.16
Diluted earnings per common share	$	1.12	$	0.87	$	2.89	$	2.14



	September 30, 2017
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Available-for-sale securities:
Residential mortgage-backed securities	$	11,402	$	756	$	—		$	12,158
Equity securities(1)	12,161		266		(361		)	12,066
	$	23,563	$	1,022	$	(361	)	$	24,224

	December 31, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Available-for-sale securities:
Residential mortgage-backed securities	$	14,680	$	972	$	—		$	15,652
Municipals	275		—		—			275
Equity securities(1)	9,280		27		(360		)	8,947
	$	24,235	$	999	$	(360	)	$	24,874



	September 30, 2017
	Less Than One Year		After One Through Five Years		After Five Through Ten Years		After Ten Years		Total
Available-for-sale:
Residential mortgage-backed securities:(1)
Amortized cost	689		396		2,177		8,140		11,402
Estimated fair value	708		440		2,405		8,605		12,158
Weighted average yield(3)	4.53	%	5.97	%	5.48	%	3.01	%	3.68		%
Equity securities:(4)
Amortized cost	12,161		—		—		—		12,161
Estimated fair value	12,066		—		—		—		12,066
Total available-for-sale securities:
Amortized cost									$	23,563
Estimated fair value									$	24,224



September 30, 2017
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial
Business loans	$	23,561	$	24,983	$	—	$	23,513	$	—
Energy	32,378		37,221		—		39,196		—
Construction
Market risk	—		—		—		—		—
Real estate
Market risk	—		—		—		—		—
Commercial	1,700		1,700		—		2,388		—
Secured by 1-4 family	—		—		—		—		—
Consumer	—		—		—		—		—
Leases	—		—		—		—		—
Total impaired loans with no allowance recorded	$	57,639	$	63,904	$	—	$	65,097	$	—
With an allowance recorded:
Commercial
Business loans	$	12,267	$	12,267	$	3,226	$	15,689	$	—
Energy	49,220		62,259		21,184		53,839		6
Construction
Market risk	—		—		—		35		—
Real estate
Market risk	299		299		6		548		—
Commercial	—		—		—		—		—
Secured by 1-4 family	118		118		20		649		—
Consumer	—		—		—		44		—
Leases	—		—		—		18		—
Total impaired loans with an allowance recorded	$	61,904	$	74,943	$	24,436	$	70,822	$	6
Combined:
Commercial
Business loans	$	35,828	$	37,250	$	3,226	$	39,202	$	—
Energy	81,598		99,480		21,184		93,035		6
Construction
Market risk	—		—		—		35		—
Real estate
Market risk	299		299		6		548		—
Commercial	1,700		1,700		—		2,388		—
Secured by 1-4 family	118		118		20		649		—
Consumer	—		—		—		44		—
Leases	—		—		—		18		—
Total impaired loans	$	119,543	$	138,847	$	24,436	$	135,919	$	6



	30-59 Days Past Due		60-89 Days Past Due		Greater Than 90 Days and Accruing(1)		Total Past Due		Non-accrual		Current		Total
Commercial
Business loans	$	25,301	$	18,704	$	8,892	$	52,897	$	34,789	$	7,635,061	$	7,722,747
Energy	9,950		4,484		—		14,434		81,598		992,046		1,088,078
Mortgage finance loans	—		—		—		—		—		5,642,285		5,642,285
Construction
Market risk	663		—		—		663		—		2,074,537		2,075,200
Secured by 1-4 family	—		—		—		—		—		24,155		24,155
Real estate
Market risk	1,301		—		—		1,301		—		2,639,169		2,640,470
Commercial	1,839		—		—		1,839		1,700		782,185		785,724
Secured by 1-4 family	2,798		—		—		2,798		118		254,454		257,370
Consumer	—		—		—		—		—		70,436		70,436
Leases	11,701		—		—		11,701		—		248,019		259,720
Total loans held for investment	$	53,553	$	23,188	$	8,892	$	85,633	$	118,205	$	20,362,347	$	20,566,185



September 30, 2017
	Number of Restructured Loans	Balance at Restructure		Balance at Period-End
Energy loans	1	$	1,070	$	—
Commercial business loans	1	$	599	$	721
Total new restructured loans in 2017	2	$	1,669	$	721

September 30, 2016
	Number of Restructured Loans	Balance at Restructure		Balance at Period-End
Energy loans	2	$	14,235	$	13,289
Total new restructured loans in 2016	2	$	14,235	$	13,289



	September 30, 2017			December 31, 2016
Outstanding balance	$	957,560		$	980,414
Fair value	955,983			968,929
Fair value over/(under) outstanding balance	$	(1,577	)	$	(11,485	)



	September 30, 2017		December 31, 2016
Average discount rates	9.95	%	9.96	%
Expected prepayment speeds	9.79	%	7.91	%
Weighted average life, in years	7.1		8.0



	September 30, 2017			December 31, 2016
50 bp adverse change in prepayment speed	$	(10,667	)	$	(2,833	)
100 bp adverse change in prepayment speed	(25,043		)	(6,812		)



	September 30, 2017		December 31, 2016
Commitments to extend credit	$	6,539,498	$	5,704,381
Standby letters of credit	203,070		171,266



	Actual				Minimum Capital Required - Basel III Phase-In Schedule				Minimum capital Required - Basel III Fully Phased-In				Required to be Considered Well Capitalized
	Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount		Ratio		Capital Amount	Ratio
As of September 30, 2017:
CET1
Company	$	1,989,547	8.35	%	$	1,369,699	5.75	%	$	1,667,460	7.00	%	N/A	N/A
Bank	1,930,836		8.11	%	1,369,659		5.75	%	1,667,411		7.00	%	1,548,311	6.50	%
Total capital (to risk-weighted assets)
Company	2,722,408		11.43	%	2,203,429		9.25	%	2,501,189		10.50	%	N/A	N/A
Bank	2,505,209		10.52	%	2,203,365		9.25	%	2,501,117		10.50	%	2,382,016	10.00	%
Tier 1 capital (to risk-weighted assets)
Company	2,248,403		9.44	%	1,727,012		7.25	%	2,024,772		8.50	%	N/A	N/A
Bank	2,089,692		8.77	%	1,726,962		7.25	%	2,024,714		8.50	%	1,905,613	8.00	%
Tier 1 capital (to average assets)(1)
Company	2,248,403		9.57	%	939,319		4.00	%	939,319		4.00	%	N/A	N/A
Bank	2,089,692		8.90	%	939,139		4.00	%	939,139		4.00	%	1,173,924	5.00	%
As of December 31, 2016:
CET1
Company	$	1,841,219	8.97	%	$	1,052,205	5.13	%	$	1,437,159	7.00	%	N/A	N/A
Bank	1,735,496		8.45	%	1,051,989		5.13	%	1,436,863		7.00	%	1,334,244	6.50	%
Total capital (to risk-weighted assets)
Company	2,561,663		12.48	%	1,770,766		8.63	%	2,155,715		10.50	%	N/A	N/A
Bank	2,297,528		11.19	%	1,770,421		8.63	%	2,155,295		10.50	%	2,052,683	10.00	%
Tier 1 capital (to risk-weighted assets)
Company	2,101,071		10.23	%	1,360,154		6.63	%	1,745,103		8.50	%	N/A	N/A
Bank	1,895,348		9.23	%	1,359,888		6.63	%	1,744,762		8.50	%	1,642,147	8.00	%
Tier 1 capital (to average assets)(1)
Company	2,101,071		9.34	%	900,268		4.00	%	900,268		4.00	%	N/A	N/A
Bank	1,895,348		8.42	%	900,070		4.00	%	900,070		4.00	%	1,125,087	5.00	%


~~Level 1~~	Quoted prices in active markets for identical assets or liabilities. This category includes the assets and liabilities related to our non-qualified deferred compensation plan where values are based on quoted market prices for identical equity securities in an active market.


~~(1)~~	~~Securities are measured at fair value on a recurring basis, generally monthly.~~


~~(3)~~	~~Loans held for sale, excluding Small Business Administration loans, are measured at fair value on a recurring basis, generally monthly.~~


~~(4)~~	~~Includes impaired loans that have been measured for impairment at the fair value of the loan’s collateral.~~


~~(5)~~	~~OREO is transferred from loans to OREO at fair value less selling costs.~~


~~(6)~~	~~Loans held for investment and OREO are measured on a nonrecurring basis, generally annually or more often as warranted by market and economic conditions.~~


~~(7)~~	~~Derivative assets and liabilities are measured at fair value on a recurring basis, generally quarterly.~~



	September 30, 2017 Weighted Average Interest Rate				December 31, 2016 Weighted Average Interest Rate
	Received		Paid		Received		Paid
Non-hedging interest rate swaps	3.46	%	4.43	%	3.17	%	4.58	%



	For the three months ended September 30, 2017						For the three months ended September 30, 2016
	Average Balance		Revenue/ Expense		Yield/ Rate		Average Balance		Revenue/ Expense		Yield/ Rate
Assets
Securities – taxable	$	86,087	$	340	1.57	%	$	26,051	$	228	3.47	%
Securities – non-taxable(2)	—		—		—	%	564		8		5.82	%
Federal funds sold and securities purchased under resale agreements	205,938		642		1.24	%	369,215		455		0.49	%
Deposits in other banks	2,383,060		7,544		1.26	%	3,192,141		4,080		0.51	%
Loans held for sale	1,009,703		9,882		3.88	%	430,869		3,662		3.38	%
Loans held for investment, mortgage finance	4,847,530		42,294		3.46	%	4,658,804		36,655		3.13	%
Loans held for investment(1)(2)	14,427,980		178,839		4.92	%	12,591,561		137,407		4.34	%
Less reserve for loan losses	172,774		—		—		168,086		—		—
Loans held for investment, net	19,102,736		221,133		4.59	%	17,082,279		174,062		4.05	%
Total earning assets	22,787,524		239,541		4.17	%	21,101,119		182,495		3.44	%
Cash and other assets	713,778						588,440
Total assets	$	23,501,302					$	21,689,559
Liabilities and Stockholders’ Equity
Transaction deposits	$	2,145,324	$	4,359	0.81	%	$	2,301,362	$	1,960	0.34	%
Savings deposits	7,618,843		17,152		0.89	%	6,177,681		6,228		0.40	%
Time deposits	496,076		924		0.74	%	501,701		763		0.61	%
Total interest-bearing deposits	10,260,243		22,435		0.87	%	8,980,744		8,951		0.40	%
Other borrowings	1,821,837		5,726		1.25	%	1,607,613		1,860		0.46	%
Subordinated notes	281,256		4,191		5.91	%	280,895		4,191		5.94	%
Trust preferred subordinated debentures	113,406		930		3.25	%	113,406		752		2.64	%
Total interest-bearing liabilities	12,476,742		33,282		1.06	%	10,982,658		15,754		0.57	%
Demand deposits	8,764,263						8,849,725
Other liabilities	116,998						135,141
Stockholders’ equity	2,143,299						1,722,035
Total liabilities and stockholders’ equity	$	23,501,302					$	21,689,559
Net interest income(2)			$	206,259					$	166,741
Net interest margin					3.59	%					3.14	%
Net interest spread					3.11	%					2.87	%
Loan spread(3)					4.02	%					3.83	%


~~(1)~~	~~The loan averages include non-accrual loans and are stated net of unearned income.~~


~~(3)~~	~~Yield on loans, net of reserves, less funding cost including all deposits and borrowed funds.~~


~~ITEM 2.~~	~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~


	For the Three Months Ended
(dollars in thousands except per share data)	March 31, 2022			March 31, 2021
Net interest income	$	183,547		$	194,812
Provision for credit losses	(2,000)			(6,000)
Non-interest income	20,282			44,353
Non-interest expense	153,092			150,316
Income before income taxes	52,737			94,849
Income tax expense	13,087			22,911
Net income	39,650			71,938
Preferred stock dividends	4,313			3,779
Net income available to common stockholders	$	35,337		$	68,159
Earnings per common share - basic	$	0.70		$	1.35
Earnings per common share - diluted	$	0.69		$	1.33
Net interest margin	2.23		%	2.04		%
Return on average assets	0.47		%	0.73		%
Return on average common equity	4.97		%	10.08		%
Non-interest income to average earning assets	0.25		%	0.46		%
Efficiency ratio(1)	75.1		%	62.9		%
Non-interest expense to average earning assets	1.86		%	1.57		%


	Three months ended March 31, 2022						Three months ended March 31, 2021
(in thousands except percentages)	Average Balance		Income/ Expense		Yield/ Rate			Average Balance		Income/ Expense		Yield/ Rate
Assets
Investment securities(1)	$	3,669,257	$	17,743	1.96	%		$	3,422,571	$	10,359	1.23	%
Interest bearing cash and cash equivalents	8,552,300		3,571		0.17	%		11,845,547		2,933		0.10	%
Loans held for sale	7,633		113		6.01	%		243,326		1,595		2.66	%
Loans held for investment, mortgage finance	5,732,901		43,466		3.07	%		8,177,759		64,942		3.22	%
Loans held for investment(1)(2)	15,686,319		144,134		3.73	%		15,457,888		143,935		3.78	%
Less: Allowance for credit losses on loans	212,612		—		—			254,697		—		—
Loans held for investment, net	21,206,608		187,600		3.59	%		23,380,950		208,877		3.62	%
Total earning assets	33,435,798		209,027		2.54	%		38,892,394		223,764		2.33	%
Cash and other assets	819,486							1,064,679
Total assets	$	34,255,284						$	39,957,073
Liabilities and Stockholders’ Equity
Transaction deposits	$	2,432,687	$	3,962	0.66	%		$	3,991,966	$	5,861	0.60	%
Savings deposits	10,420,545		8,583		0.33	%		12,889,974		10,788		0.34	%
Time deposits	1,038,722		1,085		0.42	%		2,204,242		3,355		0.62	%
Total interest bearing deposits	13,891,954		13,630		0.40	%		19,086,182		20,004		0.43	%
Short-term borrowings	1,770,781		758		0.17	%		2,686,398		2,592		0.39	%
Long-term debt	929,005		10,595		4.63	%		464,731		5,743		5.01	%


Total interest bearing liabilities	16,591,740		24,983		0.61	%		22,237,311		28,339		0.52	%
Non-interest bearing deposits	14,235,749							14,421,505
Other liabilities	243,141							309,644
Stockholders’ equity	3,184,654							2,988,613
Total liabilities and stockholders’ equity	$	34,255,284						$	39,957,073
Net interest income(1)			$	184,044						$	195,425
Net interest margin					2.23	%						2.04	%
Net interest spread					1.93	%						1.81	%



	Three months ended March 31, 2022/2021
	Net Change		Change due to(1)
(in thousands)			Volume		Yield/Rate(2)
Interest income:
Investment securities	$	7,384	$	748	$	6,636
Interest bearing cash and cash equivalents	638		(812)		1,450
Loans held for sale	(1,482)		(1,546)		64
Loans held for investment, mortgage finance loans	(21,476)		(19,412)		(2,064)
Loans held for investment	199		2,129		(1,930)

Total	(22,759)		(18,829)		(3,930)
Interest expense:
Transaction deposits	(1,899)		(2,307)		408
Savings deposits	(2,205)		(2,070)		(135)
Time deposits	(2,270)		(1,782)		(488)
Short-term borrowings	(1,834)		(880)		(954)
Long-term debt	4,852		5,735		(883)
Total	(3,356)		(1,304)		(2,052)
Net interest income	$	(19,403)	$	(17,525)	$	(1,878)



	Three months ended September 30, 2017/2016								Nine months ended September 30, 2017/2016
	Net		Change Due To(1)						Net			Change Due To(1)
	Change		Volume			Yield/Rate			Change			Volume			Yield/Rate
Interest income:
Securities(2)	$	104	$	517		$	(413	)	$	105		$	888		$	(783	)
Loans held for sale	6,220		4,931			1,289			21,546			18,737			2,809
Loans held for investment, mortgage finance loans	5,639		1,489			4,150			(868		)	(10,625		)	9,757
Loans held for investment(2)	41,432		20,089			21,343			89,325			46,895			42,430
Federal funds sold	187		(202		)	389			397			(404		)	801
Deposits in other banks	3,464		(1,040		)	4,504			8,820			(994		)	9,814
Total	57,046		25,784			31,262			119,325			54,497			64,828
Interest expense:
Transaction deposits	2,399		(134		)	2,533			4,355			(274		)	4,629
Savings deposits	10,924		1,453			9,471			21,139			2,741			18,398
Time deposits	161		(9		)	170			23			(174		)	197
Borrowed funds	3,866		248			3,618			6,998			265			6,733
Long-term debt	178		5			173			439			—			439
Total	17,528		1,563			15,965			32,954			2,558			30,396
Net interest income	$	39,518	$	24,221		$	15,297		$	86,371		$	51,939		$	34,432


~~(1)~~	~~Yield/rate and volume variances are allocated to yield/rate.~~