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HOMB Home Bancshares

Filed: 4 Nov 21, 12:31pm
0001331520 us-gaap:ResidentialRealEstateMember us-gaap:StockholdersEquityTotalMember us-gaap:CreditConcentrationRiskMember 2021-01-01 2021-09-30

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549

FORM 10-Q

(Mark One)

 

Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the Quarterly Period Ended September 30, 2021

or

 

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

For the Transition period from           to           

Commission File Number:  000-51904

HOME BANCSHARES, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Arkansas

 

71-0682831

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

 

 

719 Harkrider, Suite 100, Conway, Arkansas

 

72032

(Address of principal executive offices)

 

(Zip Code)

 

 

 

(501) 339-2929

(Registrant's telephone number, including area code)

 

Not Applicable

Former name, former address and former fiscal year, if changed since last report

 

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

 

HOMB

 

NASDAQ Global Select 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      No  

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes     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 of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act:  

 

Large accelerated filer

Accelerated filer  

Non-accelerated filer

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  

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.  

Common Stock Issued and Outstanding: 163,845,498 shares as of November 4, 2021.


HOME BANCSHARES, INC.

FORM 10-Q

September 30, 2021

 

 

 

INDEX

 

 

 

 

 

Page No.

Part I:

Financial Information

 

 

 

 

Item 1:

Financial Statements

 

 

 

 

 

Consolidated Balance Sheets –

 

 

September 30, 2021 (Unaudited) and December 31, 2020

4

 

 

 

 

Consolidated Statements of Income (Unaudited) –

 

 

Three and nine months ended September 30, 2021 and 2020

5

 

 

 

 

Consolidated Statements of Comprehensive Income (Unaudited) –

 

 

Three and nine months ended September 30, 2021 and 2020

6

 

 

 

 

Consolidated Statements of Stockholders’ Equity (Unaudited) –

 

 

Three and nine months ended September 30, 2021 and 2020

7-8

 

 

 

 

Consolidated Statements of Cash Flows (Unaudited) –

 

 

Nine months ended September 30, 2021 and 2020

9

 

 

 

 

Condensed Notes to Consolidated Financial Statements (Unaudited)

10-49

 

 

 

 

Report of Independent Registered Public Accounting Firm

50

 

 

 

Item 2:

Management’s Discussion and Analysis of Financial Condition and Results of Operations

51-93

 

 

 

Item 3:

Quantitative and Qualitative Disclosures About Market Risk

93-96

 

 

 

Item 4:

Controls and Procedures

96

 

 

 

Part II:

Other Information

 

 

 

 

Item 1:

Legal Proceedings

97

 

 

 

Item 1A:

Risk Factors

97

 

 

 

Item 2:

Unregistered Sales of Equity Securities and Use of Proceeds

97

 

 

 

Item 3:

Defaults Upon Senior Securities

97

 

 

 

Item 4:

Mine Safety Disclosures

97

 

 

 

Item 5:

Other Information

97

 

 

 

Item 6:

Exhibits

98-99

 

 

 

Signatures

 

100

 

 

 

 

 


 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of our statements contained in this document, including matters discussed under the caption “Management's Discussion and Analysis of Financial Condition and Results of Operation,” are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements relate to future events or our future financial performance and include statements about the competitiveness of the banking industry, potential regulatory obligations, our entrance and expansion into other markets, including through prospective or potential acquisitions, our other business strategies and other statements that are not historical facts. Forward-looking statements are not guarantees of performance or results. When we use words like “may,” “plan,” “contemplate,” “anticipate,” “believe,” “intend,” “continue,” “expect,” “project,” “predict,” “estimate,” “could,” “should,” “would,” and similar expressions, you should consider them as identifying forward-looking statements, although we may use other phrasing. These forward-looking statements involve risks and uncertainties and are based on our beliefs and assumptions, and on the information available to us at the time that these disclosures were prepared. These forward-looking statements involve risks and uncertainties and may not be realized due to a variety of factors, including, but not limited to, the following:

 

the effects of future local, regional, national and international economic conditions, including inflation, a decrease in commercial real estate and residential housing values and unemployment;

 

changes in the level of nonperforming assets and charge-offs, and credit risk generally; 

 

the risks of changes in interest rates or the level and composition of deposits, loan demand and the values of loan collateral, securities and interest-sensitive assets and liabilities;

 

disruptions, uncertainties and related effects on credit quality, liquidity, other aspects of our business and our operations as a result of the ongoing COVID-19 pandemic and measures that have been or may be implemented or imposed in response to the pandemic, including the recently proposed federal vaccine and testing mandate for employers of 100 or more employees;

 

the effect of any mergers, acquisitions or other transactions to which we or our bank subsidiary may from time to time be a party, including our ability to successfully integrate any businesses that we acquire;

 

the risk that expected cost savings and other benefits from acquisitions may not be fully realized or may take longer to realize than expected;

 

the possibility that an acquisition does not close when expected or at all because required regulatory, shareholder or other approvals and other conditions to closing are not received or satisfied on a timely basis or at all;

 

the reaction to a proposed acquisition transaction of the respective companies’ customers, employees and counterparties;

 

diversion of management time on acquisition-related issues;

 

the ability to enter into and/or close additional acquisitions;

 

the availability of and access to capital on terms acceptable to us;

 

increased regulatory requirements and supervision that applies as a result of our exceeding $10 billion in total assets;

 

legislation and regulation affecting the financial services industry as a whole, and the Company and its subsidiaries in particular, including the effects resulting from the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), recent reforms to the Dodd-Frank Act, legislation and regulations in response to the COVID-19 pandemic and other future legislative and regulatory changes;

 

changes in governmental monetary and fiscal policies;

 

the effects of terrorism and efforts to combat it;

 

political instability;

 

risks associated with our customer relationship with the Cuban government and our correspondent banking relationship with Banco Internacional de Comercio, S.A. (BICSA), a Cuban commercial bank;

 

adverse weather events, including hurricanes, and other natural disasters;

 

the ability to keep pace with technological changes, including changes regarding cybersecurity;

 

an increase in the incidence or severity of fraud, illegal payments, cybersecurity breaches or other illegal acts impacting our bank subsidiary, our vendors or our customers;


 


 

 

the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in our market area and elsewhere, including institutions operating regionally, nationally and internationally, together with competitors offering banking products and services by mail, telephone and the Internet;

 

potential claims, expenses and other adverse effects related to current or future litigation, regulatory examinations or other government actions;

 

the effect of changes in accounting policies and practices and auditing requirements, as may be adopted by the regulatory agencies, as well as the Public Company Accounting Oversight Board, the Financial Accounting Standards Board, and other accounting standard setters;

 

higher defaults on our loan portfolio than we expect; and

 

the failure of assumptions underlying the establishment of our allowance for credit losses or changes in our estimate of the adequacy of the allowance for credit losses.

All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this Cautionary Note. Our actual results may differ significantly from those we discuss in these forward-looking statements. For other factors, risks and uncertainties that could cause our actual results to differ materially from estimates and projections contained in these forward-looking statements, see the “Risk Factors” section of our Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on February 26, 2021.

 

 

 


 

 

PART I: FINANCIAL INFORMATION

Item 1: Financial Statements

Home BancShares, Inc.

Consolidated Balance Sheets

 

(In thousands, except share data)

 

September 30, 2021

 

 

December 31, 2020

 

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

Cash and due from banks

 

$

146,378

 

 

$

242,173

 

Interest-bearing deposits with other banks

 

 

3,133,878

 

 

 

1,021,615

 

Cash and cash equivalents

 

 

3,280,256

 

 

 

1,263,788

 

Investment securities – available-for-sale, net of allowance for credit losses

 

 

3,150,608

 

 

 

2,473,781

 

Loans receivable

 

 

9,901,100

 

 

 

11,220,721

 

Allowance for credit losses

 

 

(238,673

)

 

 

(245,473

)

Loans receivable, net

 

 

9,662,427

 

 

 

10,975,248

 

Bank premises and equipment, net

 

 

276,972

 

 

 

278,614

 

Foreclosed assets held for sale

 

 

1,171

 

 

 

4,420

 

Cash value of life insurance

 

 

104,638

 

 

 

103,519

 

Accrued interest receivable

 

 

48,577

 

 

 

60,528

 

Deferred tax asset, net

 

 

69,724

 

 

 

70,249

 

Goodwill

 

 

973,025

 

 

 

973,025

 

Core deposit and other intangibles

 

 

26,466

 

 

 

30,728

 

Other assets

 

 

171,192

 

 

 

164,904

 

Total assets

 

$

17,765,056

 

 

$

16,398,804

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

Demand and non-interest-bearing

 

$

4,139,149

 

 

$

3,266,753

 

Savings and interest-bearing transaction accounts

 

 

8,813,326

 

 

 

8,212,240

 

Time deposits

 

 

1,050,896

 

 

 

1,246,797

 

Total deposits

 

 

14,003,371

 

 

 

12,725,790

 

Securities sold under agreements to repurchase

 

 

141,002

 

 

 

168,931

 

FHLB and other borrowed funds

 

 

400,000

 

 

 

400,000

 

Accrued interest payable and other liabilities

 

 

113,721

 

 

 

127,999

 

Subordinated debentures

 

 

370,900

 

 

 

370,326

 

Total liabilities

 

 

15,028,994

 

 

 

13,793,046

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

Common stock, par value $0.01; shares authorized 300,000,000 in 2021 and 2020;

   shares issued and outstanding 164,007,998 in 2021 and 165,095,252 in 2020

 

 

1,640

 

 

 

1,651

 

Capital surplus

 

 

1,492,588

 

 

 

1,520,617

 

Retained earnings

 

 

1,215,831

 

 

 

1,039,370

 

Accumulated other comprehensive income

 

 

26,003

 

 

 

44,120

 

Total stockholders’ equity

 

 

2,736,062

 

 

 

2,605,758

 

Total liabilities and stockholders’ equity

 

$

17,765,056

 

 

$

16,398,804

 

 

See Condensed Notes to Consolidated Financial Statements.

 

4

 


 

Home BancShares, Inc.

Consolidated Statements of Income

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

(In thousands, except per share data)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

(Unaudited)

 

Interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

$

142,609

 

 

$

154,787

 

 

$

435,210

 

 

$

471,931

 

Investment securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

 

8,495

 

 

 

7,227

 

 

 

21,933

 

 

 

25,696

 

Tax-exempt

 

 

4,839

 

 

 

4,367

 

 

 

14,815

 

 

 

11,179

 

Deposits – other banks

 

 

1,117

 

 

 

252

 

 

 

2,234

 

 

 

1,579

 

Federal funds sold

 

 

 

 

 

 

 

 

 

 

 

21

 

Total interest income

 

 

157,060

 

 

 

166,633

 

 

 

474,192

 

 

 

510,406

 

Interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest on deposits

 

 

5,642

 

 

 

13,200

 

 

 

19,781

 

 

 

52,514

 

Federal funds purchased

 

 

 

 

 

 

 

 

 

 

 

13

 

FHLB and other borrowed funds

 

 

1,917

 

 

 

2,235

 

 

 

5,688

 

 

 

7,589

 

Securities sold under agreements to repurchase

 

 

102

 

 

 

237

 

 

 

399

 

 

 

959

 

Subordinated debentures

 

 

4,788

 

 

 

4,823

 

 

 

14,373

 

 

 

14,801

 

Total interest expense

 

 

12,449

 

 

 

20,495

 

 

 

40,241

 

 

 

75,876

 

Net interest income

 

 

144,611

 

 

 

146,138

 

 

 

433,951

 

 

 

434,530

 

Provision for credit losses

 

 

 

 

 

14,000

 

 

 

 

 

 

112,264

 

Provision for credit losses - unfunded commitments

 

 

 

 

 

 

 

 

(4,752

)

 

 

16,989

 

Total credit loss (benefit) expense

 

 

 

 

 

14,000

 

 

 

(4,752

)

 

 

129,253

 

Net interest income after provision for credit losses

 

 

144,611

 

 

 

132,138

 

 

 

438,703

 

 

 

305,277

 

Non-interest income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service charges on deposit accounts

 

 

5,941

 

 

 

4,910

 

 

 

16,059

 

 

 

15,837

 

Other service charges and fees

 

 

8,051

 

 

 

8,539

 

 

 

25,318

 

 

 

22,261

 

Trust fees

 

 

479

 

 

 

378

 

 

 

1,445

 

 

 

1,213

 

Mortgage lending income

 

 

5,948

 

 

 

10,177

 

 

 

20,317

 

 

 

18,994

 

Insurance commissions

 

 

586

 

 

 

271

 

 

 

1,556

 

 

 

1,482

 

Increase in cash value of life insurance

 

 

509

 

 

 

548

 

 

 

1,548

 

 

 

1,666

 

Dividends from FHLB, FRB, FNBB & other

 

 

2,661

 

 

 

3,433

 

 

 

13,916

 

 

 

11,505

 

Gain on sale of SBA loans

 

 

439

 

 

 

 

 

 

1,588

 

 

 

341

 

(Loss) gain on sale of branches, equipment and other assets, net

 

 

(34

)

 

 

(27

)

 

 

(86

)

 

 

109

 

Gain on OREO, net

 

 

246

 

 

 

470

 

 

 

1,266

 

 

 

982

 

Gain on securities, net

 

 

 

 

 

 

 

 

219

 

 

 

 

Fair value adjustment for marketable securities

 

 

61

 

 

 

(1,350

)

 

 

7,093

 

 

 

(6,249

)

Other income

 

 

4,322

 

 

 

2,602

 

 

 

15,366

 

 

 

9,760

 

Total non-interest income

 

 

29,209

 

 

 

29,951

 

 

 

105,605

 

 

 

77,901

 

Non-interest expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

 

42,469

 

 

 

41,511

 

 

 

126,990

 

 

 

120,928

 

Occupancy and equipment

 

 

9,305

 

 

 

9,566

 

 

 

27,584

 

 

 

28,611

 

Data processing expense

 

 

6,024

 

 

 

4,921

 

 

 

17,787

 

 

 

13,861

 

Merger and acquisition expenses

 

 

1,006

 

 

 

 

 

 

1,006

 

 

 

711

 

Other operating expenses

 

 

16,815

 

 

 

15,714

 

 

 

48,100

 

 

 

49,033

 

Total non-interest expense

 

 

75,619

 

 

 

71,712

 

 

 

221,467

 

 

 

213,144

 

Income before income taxes

 

 

98,201

 

 

 

90,377

 

 

 

322,841

 

 

 

170,034

 

Income tax expense

 

 

23,209

 

 

 

21,057

 

 

 

77,177

 

 

 

37,380

 

Net income

 

$

74,992

 

 

$

69,320

 

 

$

245,664

 

 

$

132,654

 

Basic earnings per share

 

$

0.46

 

 

$

0.42

 

 

$

1.49

 

 

$

0.80

 

Diluted earnings per share

 

$

0.46

 

 

$

0.42

 

 

$

1.49

 

 

$

0.80

 

 

See Condensed Notes to Consolidated Financial Statements.

 

5

 


 

Home BancShares, Inc.

Consolidated Statements of Comprehensive Income

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

(In thousands)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

(Unaudited)

 

Net income

 

$

74,992

 

 

$

69,320

 

 

$

245,664

 

 

$

132,654

 

Net unrealized (loss) gain on available-for-sale securities

 

 

(4,218

)

 

 

(896

)

 

 

(24,527

)

 

 

29,952

 

Other comprehensive (loss) income. before tax effect

 

 

(4,218

)

 

 

(896

)

 

 

(24,527

)

 

 

29,952

 

Tax effect on other comprehensive (loss) income

 

 

1,102

 

 

 

234

 

 

 

6,410

 

 

 

(7,828

)

Other comprehensive (loss) income

 

 

(3,116

)

 

 

(662

)

 

 

(18,117

)

 

 

22,124

 

Comprehensive income

 

$

71,876

 

 

$

68,658

 

 

$

227,547

 

 

$

154,778

 

 

See Condensed Notes to Consolidated Financial Statements.

 

 

 

 

 

 

6

 


 

 

Home BancShares, Inc.

Consolidated Statements of Stockholders’ Equity

 

For the Three and Nine Months Ended September 30, 2021

 

(In thousands, except share data)

 

Common

Stock

 

 

Capital

Surplus

 

 

Retained

Earnings

 

 

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Total

 

Balances at January 1, 2021

 

$

1,651

 

 

$

1,520,617

 

 

$

1,039,370

 

 

$

44,120

 

 

$

2,605,758

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

91,602

 

 

 

 

 

 

91,602

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

(24,671

)

 

 

(24,671

)

Net issuance of 161,434 shares of common

   stock from exercise of stock options

 

 

1

 

 

 

2,321

 

 

 

 

 

 

 

 

 

2,322

 

Repurchase of 330,000 shares of common

   stock

 

 

(3

)

 

 

(8,767

)

 

 

 

 

 

 

 

 

(8,770

)

Share-based compensation net issuance of

   214,684 shares of restricted common stock

 

 

2

 

 

 

2,115

 

 

 

 

 

 

 

 

 

2,117

 

Cash dividends – Common Stock, $0.14

   per share

 

 

 

 

 

 

 

 

(23,154

)

 

 

 

 

 

(23,154

)

Balances at March 31, 2021 (unaudited)

 

$

1,651

 

 

$

1,516,286

 

 

$

1,107,818

 

 

$

19,449

 

 

$

2,645,204

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

 

 

 

 

 

 

79,070

 

 

 

 

 

 

79,070

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

9,670

 

 

 

9,670

 

Net issuance of 3,628 shares of common

   stock from exercise of stock options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Repurchase of 635,000 shares of common

   stock

 

 

(6

)

 

 

(16,947

)

 

 

 

 

 

 

 

 

(16,953

)

Share-based compensation net forfeiture of

   21,500 shares of restricted common stock

 

 

 

 

 

2,276

 

 

 

 

 

 

 

 

 

2,276

 

Cash dividends – Common Stock, $0.14

   per share

 

 

 

 

 

 

 

 

(23,078

)

 

 

 

 

 

(23,078

)

Balances at June 30, 2021 (unaudited)

 

$

1,645

 

 

$

1,501,615

 

 

$

1,163,810

 

 

$

29,119

 

 

$

2,696,189

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

 

 

 

 

 

 

 

 

74,992

 

 

 

 

 

 

74,992

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(3,116

)

 

 

(3,116

)

Repurchase of 476,500 shares of common stock

 

 

(5

)

 

 

(11,274

)

 

 

 

 

 

 

 

 

 

 

(11,279

)

Share-based compensation net forfeiture of

   4,000 shares of restricted stock

 

 

 

 

 

2,247

 

 

 

 

 

 

 

 

 

2,247

 

Cash dividends – Common Stock, $0.14

   per share

 

 

 

 

 

 

 

 

(22,971

)

 

 

 

 

 

(22,971

)

Balances at September 30, 2021 (unaudited)

 

$

1,640

 

 

$

1,492,588

 

 

$

1,215,831

 

 

$

26,003

 

 

$

2,736,062

 

 

See Condensed Notes to Consolidated Financial Statements.

 

7

 


 

Home BancShares, Inc.

Consolidated Statements of Stockholders’ Equity

 

For the Three and Nine Months Ended September 30, 2020

 

(In thousands, except share data)

 

Common

Stock

 

 

Capital

Surplus

 

 

Retained

Earnings

 

 

Accumulated

Other

Comprehensive

Income (Loss)

 

 

Total

 

Balances at January 1, 2020

 

$

1,664

 

 

$

1,537,091

 

 

$

956,555

 

 

$

16,221

 

 

$

2,511,531

 

Cumulative change in accounting principle

   (adoption of ASC 326)

 

 

 

 

 

 

 

 

(43,956

)

 

 

 

 

 

(43,956

)

Balance at January 1, 2020 (as adjusted for

   change in accounting principle)

 

$

1,664

 

 

$

1,537,091

 

 

$

912,599

 

 

$

16,221

 

 

$

2,467,575

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

507

 

 

 

 

 

 

507

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

4,750

 

 

 

4,750

 

Net issuance of 22,864 shares of common

   stock from exercise of stock options

 

 

 

 

 

422

 

 

 

 

 

 

 

 

 

422

 

Repurchase of 1,423,560 shares of common

   stock

 

 

(14

)

 

 

(23,843

)

 

 

 

 

 

 

 

 

(23,857

)

Share-based compensation net issuance of

   175,249 shares of restricted common stock

 

 

1

 

 

 

2,481

 

 

 

 

 

 

 

 

 

2,482

 

Cash dividends – Common Stock, $0.13 per

   share

 

 

 

 

 

 

 

 

(21,608

)

 

 

 

 

 

(21,608

)

Balances at March 31, 2020 (unaudited)

 

$

1,651

 

 

$

1,516,151

 

 

$

891,498

 

 

$

20,971

 

 

$

2,430,271

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

62,827

 

 

 

 

 

 

62,827

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

18,036

 

 

 

18,036

 

Share-based compensation net issuance of

  58,140 shares of restricted common stock

 

 

1

 

 

 

2,480

 

 

 

 

 

 

 

 

 

2,481

 

Cash dividends – Common Stock, $0.13 per

   share

 

 

 

 

 

 

 

 

(21,469

)

 

 

 

 

 

(21,469

)

Balances at June 30, 2020 (unaudited)

 

$

1,652

 

 

$

1,518,631

 

 

$

932,856

 

 

$

39,007

 

 

$

2,492,146

 

Comprehensive income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

 

 

 

 

 

 

 

69,320

 

 

 

 

 

 

69,320

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

(662

)

 

 

(662

)

Share-based compensation net forfeiture of

   43,500 shares of restricted stock

 

 

 

 

 

1,472

 

 

 

 

 

 

 

 

 

1,472

 

Cash dividends – Common Stock, $0.13 per

   share

 

 

 

 

 

 

 

 

(21,477

)

 

 

 

 

 

(21,477

)

Balances at September 30, 2020 (unaudited)

 

$

1,652

 

 

$

1,520,103

 

 

$

980,699

 

 

$

38,345

 

 

$

2,540,799

 

 

See Condensed Notes to Consolidated Financial Statements.

 

 

 

 

 

8

 


 

 

Home BancShares, Inc.

Consolidated Statements of Cash Flows

 

 

 

Nine Months Ended

September 30,

 

(In thousands)

 

2021

 

 

2020

 

 

 

(Unaudited)

 

Operating Activities

 

 

 

 

 

 

 

 

Net income

 

$

245,664

 

 

$

132,654

 

Adjustments to reconcile net income to net cash provided by operating

   activities:

 

 

 

 

 

 

 

 

Depreciation & amortization

 

 

14,457

 

 

 

15,236

 

(Increase) decrease in value of equity securities

 

 

(7,093

)

 

 

6,249

 

Amortization of securities, net

 

 

21,018

 

 

 

14,292

 

Accretion of purchased loans

 

 

(16,150

)

 

 

(21,640

)

Share-based compensation

 

 

6,640

 

 

 

6,435

 

Gain on assets

 

 

(2,987

)

 

 

(1,432

)

Provision for credit losses

 

 

 

 

 

112,264

 

Provision for credit losses - unfunded commitments

 

 

(4,752

)

 

 

16,989

 

Deferred income tax effect

 

 

6,936

 

 

 

(38,695

)

Increase in cash value of life insurance

 

 

(1,548

)

 

 

(1,666

)

Originations of mortgage loans held for sale

 

 

(599,787

)

 

 

(607,494

)

Proceeds from sales of mortgage loans held for sale

 

 

632,721

 

 

 

571,623

 

Changes in assets and liabilities:

 

 

 

 

 

 

 

 

Accrued interest receivable

 

 

11,951

 

 

 

(27,283

)

Other assets

 

 

3,891

 

 

 

2,552

 

Accrued interest payable and other liabilities

 

 

(9,526

)

 

 

20,086

 

Net cash provided by operating activities

 

 

301,435

 

 

 

200,170

 

Investing Activities

 

 

 

 

 

 

 

 

Net decrease (increase) in loans, excluding purchased loans

 

 

1,278,846

 

 

 

(372,691

)

Purchases of investment securities – available-for-sale

 

 

(1,227,507

)

 

 

(819,629

)

Proceeds from maturities of investment securities – available-for-sale

 

 

487,242

 

 

 

556,386

 

Proceeds from sales of investment securities – available-for-sale

 

 

18,112

 

 

 

 

Purchases of equity securities

 

 

(10,460

)

 

 

(15,015

)

Proceeds from sales of equity securities

 

 

15,354

 

 

 

 

(Purchase) redemption of other investments

 

 

(7,970

)

 

 

13,414

 

Proceeds from foreclosed assets held for sale

 

 

6,572

 

 

 

7,476

 

Proceeds from sale of SBA loans

 

 

16,722

 

 

 

4,057

 

Purchases of premises and equipment, net

 

 

(8,065

)

 

 

(10,282

)

Return of investment on cash value of life insurance

 

 

418

 

 

 

47,258

 

Net cash paid – market acquisitions

 

 

 

 

 

(421,211

)

Net cash provided by (used in) investing activities

 

 

569,264

 

 

 

(1,010,237

)

Financing Activities

 

 

 

 

 

 

 

 

Net increase in deposits

 

 

1,277,581

 

 

 

1,659,083

 

Net (decrease) increase in securities sold under agreements to repurchase

 

 

(27,929

)

 

 

14,720

 

Net decrease in federal funds purchased

 

 

 

 

 

(5,000

)

Net decrease in FHLB and other borrowed funds

 

 

 

 

 

(218,011

)

Proceeds from exercise of stock options

 

 

2,322

 

 

 

422

 

Repurchase of common stock

 

 

(37,002

)

 

 

(23,857

)

Dividends paid on common stock

 

 

(69,203

)

 

 

(64,554

)

Net cash provided by financing activities

 

 

1,145,769

 

 

 

1,362,803

 

Net change in cash and cash equivalents

 

 

2,016,468

 

 

 

552,736

 

Cash and cash equivalents – beginning of year

 

 

1,263,788

 

 

 

490,601

 

Cash and cash equivalents – end of period

 

$

3,280,256

 

 

$

1,043,337

 

 

See Condensed Notes to Consolidated Financial Statements.

 

 

 

9

 


 

 

Home BancShares, Inc.

Condensed Notes to Consolidated Financial Statements

(Unaudited)

 

1.  Nature of Operations and Summary of Significant Accounting Policies

Nature of Operations

Home BancShares, Inc. (the “Company” or “HBI”) is a bank holding company headquartered in Conway, Arkansas. The Company is primarily engaged in providing a full range of banking services to individual and corporate customers through its wholly-owned community bank subsidiary – Centennial Bank (sometimes referred to as “Centennial” or the “Bank”).  The Bank has branch locations in Arkansas, Florida, South Alabama and New York City.  The Company is subject to competition from other financial institutions. The Company also is subject to the regulation of certain federal and state agencies and undergoes periodic examinations by those regulatory authorities.

A summary of the significant accounting policies of the Company follows:

Operating Segments

Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.  The Bank is the only significant subsidiary upon which management makes decisions regarding how to allocate resources and assess performance. Each of the branches of the Bank provide a group of similar banking services, including such products and services as commercial, real estate and consumer loans, time deposits, checking and savings accounts. The individual bank branches have similar operating and economic characteristics.  While the chief decision maker monitors the revenue streams of the various products, services and branch locations, operations are managed, and financial performance is evaluated on a Company-wide basis.  Accordingly, all of the banking services and branch locations are considered by management to be aggregated into 1 reportable operating segment.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for credit losses, the valuation of investment securities, the valuation of foreclosed assets and the valuations of assets acquired, and liabilities assumed in business combinations. In connection with the determination of the allowance for credit losses and the valuation of foreclosed assets, management obtains independent appraisals for significant properties.

Principles of Consolidation

The consolidated financial statements include the accounts of HBI and its subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation.

Reclassifications

Various items within the accompanying consolidated financial statements for previous years have been reclassified to provide more comparative information. These reclassifications had no effect on net earnings or stockholders’ equity.

Interim financial information

The accompanying unaudited consolidated financial statements as of September 30, 2021 and 2020 have been prepared in condensed format, and therefore do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

The information furnished in these interim statements reflects all adjustments which are, in the opinion of management, necessary for a fair statement of the results for each respective period presented. Such adjustments are of a normal recurring nature. The results of operations in the interim statements are not necessarily indicative of the results that may be expected for any other quarter or for the full year. The interim financial information should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2020 Form 10-K, filed with the Securities and Exchange Commission.

 

10

 


 

New Accounting Pronouncements

The Company adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”), effective January 1, 2020. The guidance replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology.  The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held-to-maturity debt securities. It also applies to off-balance sheet credit exposures not accounted for as insurance (loan commitments, standby letters of credits, financial guarantees, and other similar instruments) and net investments in leases recognized by a lessor in accordance with Topic 842 on leases. ASC 326 requires enhanced disclosures related to the significant estimates and judgments used in estimating credit losses as well as the credit quality and underwriting standards of a company’s portfolio.  In addition, ASC 326 made changes to the accounting for available-for-sale debt securities. One such change is to require credit losses to be presented as an allowance rather than as a write-down on available-for-sale debt securities management does not intend to sell or believes that it is more likely than not they will be required to sell.

The Company adopted ASC 326 using the modified retrospective method for loans and off-balance-sheet (“OBS”) credit exposures.  Results for reporting periods beginning after January 1, 2020 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP.  The Company recorded a one-time cumulative-effect adjustment to the allowance for credit losses of $44.0 million which was recognized through a $32.5 million adjustment to retained earnings, net of tax. This adjustment brought the beginning balance of the allowance for credit losses to $146.1 million  as of January 1, 2020.  In addition, the Company recorded a $15.5 million reserve on unfunded commitments which was recognized through an $11.5 million adjustment to retained earnings, net of tax.

The Company adopted ASC 326 using the prospective transition approach for financial assets purchased with credit deterioration (“PCD”) that were previously classified as purchased credit impaired (“PCI”) and accounted for under ASC 310-30.  In 2019, the Company reevaluated its loan pools of purchased loans with deteriorated credit quality. These loans pools related specifically to acquired loans from the Heritage, Liberty, Landmark, Bay Cities, Bank of Commerce, Premier Bank, Stonegate and Shore Premier Finance acquisitions. At acquisition, a portion of these loans was recorded as purchased credit impaired loans on a pool by pool basis. Through the reevaluation of these loan pools, management determined that estimated losses for purchase credit impaired loans should be processed against the credit mark of the applicable pools.  The remaining non-accretable mark was then moved to accretable mark to be recognized over the remaining weighted average life of the loan pools.  The projected losses for these loans were less than the total credit mark.  As such, the remaining $107.6 million of loans in these pools along with the $29.3 million in accretable yield was deemed to be immaterial and was reclassified out of the purchased credit impaired loans category.  As of December 31, 2019, the Company no longer held any purchased loans with deteriorated credit quality. Therefore, the Company did not have any PCI loans upon adoption on of ASC 326 as of January 1, 2020.

The Company has purchased loans, some of which have experienced more than insignificant credit deterioration since origination.  PCD loans are recorded at the amount paid. An allowance for credit losses is determined using the same methodology as other loans. The initial allowance for credit losses determined on a collective basis is allocated to individual loans. The sum of the loan’s purchase price and allowance for credit losses becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the life of the loan. Subsequent changes to the allowance for credit losses are recorded through the provision for credit loss.

The Company adopted ASC 326 using the prospective transition approach for debt securities for which other-than-temporary impairment had been recognized prior to January 1, 2020. As of December 31, 2019, the Company did not have any other-than-temporarily impaired investment securities. Therefore, upon adoption of ASC 326, the Company determined than an allowance for credit losses on available-for-sale securities was not deemed material. However, the Company evaluated the investment portfolio during the first quarter of 2020 and determined that an $842,000 provision for credit losses was necessary. NaN additional provision was deemed necessary during the remaining quarters of 2020 or the first three quarters of 2021. See Note 3 for further discussion.

 


 

11

 


 

 

The following table illustrates the impact of the adoption of ASC 326 on the Company’s 2020 consolidated balance sheet.

 

 

 

January 1, 2020

 

 

 

As Reported Under ASC 326

 

 

Pre-ASC 326 Adoption

 

 

Impact of ASC 326 Adoption

 

 

 

(In thousands)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

    Allowance for credit losses on loans

 

$

146,110

 

 

$

102,122

 

 

$

43,988

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

    Allowance for credit losses on OBS

       credit exposures

       (included in other liabilities)

 

 

15,521

 

 

 

 

 

 

15,521

 

 

Revenue Recognition

Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers ("ASC Topic 606"), establishes principles for reporting information about the nature, amount, timing and uncertainty of revenue and cash flows arising from the entity's contracts to provide goods or services to customers. The core principle requires an entity to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration that it expects to be entitled to receive in exchange for those goods or services recognized as performance obligations are satisfied. The majority of our revenue-generating transactions are not subject to ASC Topic 606, including revenue generated from financial instruments, such as our loans, letters of credit, investment securities and mortgage lending income, as these activities are subject to other GAAP discussed elsewhere within our disclosures. Descriptions of our significant revenue-generating activities that are within the scope of ASC Topic 606, which are presented in our income statements as components of non-interest income are as follows:

 

Service charges on deposit accounts – These represent general service fees for monthly account maintenance and activity or transaction-based fees and consist of transaction-based revenue, time-based revenue (service period), item-based revenue or some other individual attribute-based revenue. Revenue is recognized when our performance obligation is completed which is generally monthly for account maintenance services or when a transaction has been completed (such as a wire transfer). Payment for such performance obligations are generally received at the time the performance obligations are satisfied.

 

Other service charges and fees – These represent credit card interchange fees and Centennial Commercial Finance Group (“Centennial CFG”) loan fees. The interchange fees are recorded in the period the performance obligation is satisfied which is generally the cash basis based on agreed upon contracts. The Centennial CFG loan fees are based on loan or other negotiated agreements with customers and are accounted for under ASC Topic 310.  

Earnings per Share

Basic earnings per share is computed based on the weighted-average number of shares outstanding during each year.  Diluted earnings per share is computed using the weighted-average shares and all potential dilutive shares outstanding during the period.  The following table sets forth the computation of basic and diluted earnings per share (“EPS”) for the following periods:

 

 

 

Three Months Ended

September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

(In thousands)

 

Net income

 

$

74,992

 

 

$

69,320

 

 

$

245,664

 

 

$

132,654

 

Average shares outstanding

 

 

164,126

 

 

 

165,200

 

 

 

164,717

 

 

 

165,458

 

Effect of common stock options

 

 

477

 

 

 

 

 

 

333

 

 

 

 

Average diluted shares outstanding

 

 

164,603

 

 

 

165,200

 

 

 

165,050

 

 

 

165,458

 

Basic earnings per share

 

$

0.46

 

 

$

0.42

 

 

$

1.49

 

 

$

0.80

 

Diluted earnings per share

 

$

0.46

 

 

$

0.42

 

 

$

1.49

 

 

$

0.80

 

 

As of September 30, 2020, options to purchase 3.3 million shares of common stock with a weighted average exercise price of $19.56 were excluded from the computation of diluted earnings per share as the majority of the options had an exercise price which was greater than the average market price of the common stock.

 

12

 


 

2.  Business Combinations

Acquisition of LH-Finance

On February 29, 2020, the Company completed the acquisition of LH-Finance, the marine lending division of People’s United Bank, N.A. The Company paid a purchase price of approximately $421.2 million in cash. LH-Finance provides direct consumer financing for United States Coast Guard (“USCG”) registered high-end sail and power boats. Additionally, LH-Finance provides inventory floor plan lines of credit to marine dealers, primarily those selling USCG documented vessels.

Including the purchase accounting adjustments, as of the acquisition date, LH-Finance had approximately $409.1 million in total assets, including $407.4 million in total loans, which resulted in goodwill of $14.6 million being recorded.

The acquired portfolio of loans is now housed in the Shore Premier Finance (“SPF”) division.  The SPF division of Centennial is responsible for servicing the acquired loan portfolio and originating new loan production. In connection with this acquisition, Centennial opened a loan production office in Baltimore, Maryland.

Future Acquisition of Happy Bancshares, Inc.

On September 15, 2021, the Company and Centennial entered into an Agreement and Plan of Merger (the “Agreement”) with Happy Bancshares, Inc., a Texas corporation (“Happy”), and its wholly-owned bank subsidiary, Happy State Bank, a Texas banking association (“HSB”), under which the Company and Centennial will acquire Happy and HSB. The Agreement, as amended on October 18, 2021, provides that, in a series of transactions, an acquisition subsidiary of the Company will merge into Happy and Happy will merge into the Company, with the Company as the surviving entity (collectively, the “Merger”). As soon as reasonably practicable following the Merger, HSB will merge into Centennial, with Centennial as the surviving entity.

 

Under the terms of the Agreement, as amended, the Company will issue approximately 42.3 million shares of its common stock to the shareholders of Happy upon the completion of the Merger, for a purchase price of approximately $1.02 billion, valued based on the volume-weighted average closing price per share of the Company’s common stock as reported on the Nasdaq Global Select Market (“Nasdaq”) for the 20 consecutive trading day period ending on November 1, 2021. NaN cash consideration will be paid in connection with the Merger, except that holders of outstanding shares of Happy common stock at the time of the Merger will receive cash payments in lieu of any fractional shares of Company common stock to which they are otherwise entitled in connection with the Merger. In addition, the Company expects to pay an aggregate of up to approximately $11.0 million in cash in cancellation of certain stock appreciation rights issued by Happy that remain outstanding at the time of the Merger.  

 

Subject to the terms and conditions set forth in the Agreement, as amended, at the effective time of the Merger (the “Effective Time”), each outstanding share of common stock of Happy will be converted into the right to receive, without interest, 2.17 shares of the Company’s common stock (the “Merger Consideration”). Each unvested restricted share of Happy common stock outstanding at the Effective Time will fully vest and be converted into the right to receive the Merger Consideration. In addition, at the Effective Time, each outstanding option to purchase Happy common stock will be cancelled and converted into the right to receive the number of whole shares of the Company’s common stock, together with any cash in lieu of fractional shares, equal to the product of (i) the number of shares of Happy common stock subject to the option, multiplied by (ii) the excess, if any, of the Merger Consideration value over the exercise price of the option, less applicable tax withholdings, divided by (iii) the Company’s Average Closing Price (defined below). Similarly, each stock appreciation right of Happy outstanding at the Effective Time will be cancelled and converted into the right to receive a cash payment, without interest, equal to the product of (i) the number of shares of Happy common stock subject to the stock appreciation right, multiplied by (ii) the excess, if any, of the Merger Consideration value over the grant price of the stock appreciation right, less applicable tax withholdings. For purposes of these calculations, the Merger Consideration value will be determined using a volume-weighted average closing price of the Company’s common stock as reported on Nasdaq over the 20 consecutive trading day period ending on the third business day prior to the closing of the Merger (“the Company’s Average Closing Price”), multiplied by 2.17.

The Merger is expected to close during the first quarter of 2022, and is subject to the approval of the shareholders of the Company and Happy, regulatory approvals, and other conditions set forth in the Agreement. 

 

 

 

13

 


 

 

3.  Investment Securities

  The following table summarizes the amortized cost and fair value of securities available-for-sale and the corresponding amounts of gross unrealized gains and losses recognized in accumulated other comprehensive income (loss):

 

 

 

September 30, 2021

 

 

 

Available-for-Sale

 

 

 

Amortized

Cost

 

 

Gross

Unrealized

Gains

 

 

Gross

Unrealized

(Losses)

 

 

Estimated

Fair Value

 

 

 

(In thousands)

 

U.S. government-sponsored enterprises

 

$

439,181

 

 

$

2,702

 

 

$

(1,720

)

 

$

440,163

 

Residential mortgage-backed securities

 

 

1,198,016

 

 

 

6,812

 

 

 

(9,064

)

 

 

1,195,764

 

Commercial mortgage-backed securities

 

 

403,840

 

 

 

10,656

 

 

 

(922

)

 

 

413,574

 

State and political subdivisions

 

 

965,993

 

 

 

27,356

 

 

 

(2,205

)

 

 

991,144

 

Other securities

 

 

109,216

 

 

 

1,137

 

 

 

(390

)

 

 

109,963

 

Total

 

$

3,116,246

 

 

$

48,663

 

 

$

(14,301

)

 

$

3,150,608

 

 

 

 

December 31, 2020

 

 

 

Available-for-Sale

 

 

 

Amortized

Cost

 

 

Gross

Unrealized

Gains

 

 

Gross

Unrealized

(Losses)

 

 

Estimated

Fair Value

 

 

 

(In thousands)

 

U.S. government-sponsored enterprises

 

$

325,860

 

 

$

2,338

 

 

$

(1,207

)

 

$

326,991

 

Residential mortgage-backed securities

 

 

703,138

 

 

 

10,607

 

 

 

(688

)

 

 

713,057

 

Commercial mortgage-backed securities

 

 

446,964

 

 

 

18,048

 

 

 

(126

)

 

 

464,886

 

State and political subdivisions

 

 

898,174

 

 

 

31,173

 

 

 

(1,454

)

 

 

927,893

 

Other securities

 

 

40,755

 

 

 

434

 

 

 

(235

)

 

 

40,954

 

Total

 

$

2,414,891

 

 

$

62,600

 

 

$

(3,710

)

 

$

2,473,781

 

 

Assets, principally investment securities, having a carrying value of approximately $1.17 billion and $1.08 billion at September 30, 2021 and December 31, 2020, respectively, were pledged to secure public deposits, as collateral for repurchase agreements, and for other purposes required or permitted by law. Investment securities pledged as collateral for repurchase agreements totaled approximately $141.0 million and $168.9 million at September 30, 2021 and December 31, 2020, respectively.

The amortized cost and estimated fair value of securities classified as available-for-sale at September 30, 2021, by contractual maturity, are shown below. Expected maturities could differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date are shown separately.

 

 

 

Available-for-Sale

 

 

 

Amortized

Cost

 

 

Estimated

Fair Value

 

 

 

(In thousands)

 

Due in one year or less

 

$

9,391

 

 

$

9,399

 

Due after one year through five years

 

 

78,839

 

 

 

79,824

 

Due after five years through ten years

 

 

348,801

 

 

 

350,567

 

Due after ten years

 

 

1,075,359

 

 

 

1,099,480

 

Mortgage - backed securities: Residential

 

 

1,198,016

 

 

 

1,195,764

 

Mortgage - backed securities: Commercial

 

 

403,840

 

 

 

413,574

 

Other

 

 

2,000

 

 

 

2,000

 

Total

 

$

3,116,246

 

 

$

3,150,608

 

During the three months ended September 30, 2021, 0 available-for-sale securities were sold. There were 0 realized gains or losses recorded on sales for the three months ended September 30, 2021. During the nine months ended September 30, 2021, $17.9 million in available-for-sale securities were sold. The gross realized gains on the sales totaled $219,000 for the nine months ended September 30, 2021.

During the three and nine months ended September 30, 2020, 0 available-for-sale securities were sold. There were 0 realized gains or losses recorded on the sales for the three and nine months ended September 30, 2020.

 

14

 


 

The following table shows gross unrealized losses and estimated fair value of investment securities classified as available-for-sale, aggregated by investment category and length of time that individual investment securities have been in a continuous loss position as of September 30, 2021 and December 31, 2020.

 

 

 

September 30, 2021

 

 

 

Less Than 12 Months

 

 

12 Months or More

 

 

Total

 

 

 

Fair

Value

 

 

Unrealized

Losses

 

 

Fair

Value

 

 

Unrealized

Losses

 

 

Fair

Value

 

 

Unrealized

Losses

 

 

 

(In thousands)

 

U.S. government-sponsored enterprises

 

$

80,986

 

 

$

(1,015

)

 

$

56,150

 

 

$

(705

)

 

$

137,136

 

 

$

(1,720

)

Residential mortgage-backed securities

 

 

762,805

 

 

 

(8,216

)

 

 

31,319

 

 

 

(848

)

 

 

794,124

 

 

 

(9,064

)

Commercial mortgage-backed securities

 

 

81,615

 

 

 

(906

)

 

 

6,245

 

 

 

(16

)

 

 

87,860

 

 

 

(922

)

State and political subdivisions

 

 

149,056

 

 

 

(980

)

 

 

16,887

 

 

 

(1,225

)

 

 

165,943

 

 

 

(2,205

)

Other securities

 

 

41,421

 

 

 

(340

)

 

 

4,263

 

 

 

(50

)

 

 

45,684

 

 

 

(390

)

Total

 

$

1,115,883

 

 

$

(11,457

)

 

$

114,864

 

 

$

(2,844

)

 

$

1,230,747

 

 

$

(14,301

)

 

 

 

December 31, 2020

 

 

 

Less Than 12 Months

 

 

12 Months or More

 

 

Total

 

 

 

Fair

Value

 

 

Unrealized

Losses

 

 

Fair

Value

 

 

Unrealized

Losses

 

 

Fair

Value

 

 

Unrealized

Losses

 

 

 

(In thousands)

 

U.S. government-sponsored enterprises

 

$

54,611

 

 

$

(383

)

 

$

95,249

 

 

$

(824

)

 

$

149,860

 

 

$

(1,207

)

Residential mortgage-backed securities

 

 

143,458

 

 

 

(643

)

 

 

4,900

 

 

 

(45

)

 

 

148,358

 

 

 

(688

)

Commercial mortgage-backed securities

 

 

26,886

 

 

 

(126

)

 

 

 

 

 

 

 

 

26,886

 

 

 

(126

)

State and political subdivisions

 

 

78,349

 

 

 

(1,454

)

 

 

 

 

 

 

 

 

78,349

 

 

 

(1,454

)

Other securities

 

 

5,434

 

 

 

(100

)

 

 

8,748

 

 

 

(135

)

 

 

14,182

 

 

 

(235

)

Total

 

$

308,738

 

 

$

(2,706

)

 

$

108,897

 

 

$

(1,004

)

 

$

417,635

 

 

$

(3,710

)

 

The Company evaluates all securities quarterly to determine if any debt securities in a loss position require a provision for credit losses in accordance with ASC 326, Measurement of Credit Losses on Financial Instruments. The Company first assesses whether it intends to sell or is more likely than not that the Company will be required to sell the security before recovery of its amortized cost basis. If either of the criteria regarding intent or requirement to sell is met, the security’s amortized cost basis is written down to fair value through income. For securities that do not meet this criteria, the Company evaluates whether the decline in fair value has resulted from credit losses or other factors. In making this assessment, the Company considers the extent to which fair value is less than amortized cost, changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. If this assessment indicates that a credit loss exists, the present value of cash flows expected to be collected from the security are compared to the amortized cost basis of the security. If the present value of cash flows expected to be collected is less than the amortized cost basis, a credit loss exists and an allowance for credit losses is recorded for the credit loss, limited by the amount that the fair value is less than the amortized cost basis. Any impairment that has not been recorded through an allowance for credit losses is recognized in other comprehensive income. Changes in the allowance for credit losses are recorded as provision for (or reversal of) credit loss expense. Losses are charged against the allowance when management believes the uncollectability of a security is confirmed or when either of the criteria regarding intent or requirement to sell is met. At September 30, 2021, the Company determined that the allowance for credit losses of $842,000, resulting from economic uncertainties related to the COVID-19 pandemic, was adequate for the investment portfolio. No additional provision for credit losses was considered necessary for the portfolio.

 

 

September 30, 2021

 

 

December 31, 2020

 

 

(In thousands)

 

Allowance for credit losses:

 

 

 

 

 

 

 

Beginning balance

$

842

 

 

$

 

Provision for credit loss - investment securities

 

 

 

 

842

 

Balance, September 30

$

842

 

 

$

842

 

Provision for credit loss - investment securities

 

 

 

 

 

 

Balance, December 31, 2020

 

 

 

 

$

842

 

 

 

 

 

 

 

15

 


 

 

For the nine months ended September 30, 2021, the Company had investment securities with approximately $2.8 million in unrealized losses, which have been in continuous loss positions for more than twelve months.  The Company’s assessments indicated that the cause of the market depreciation was primarily due to the change in interest rates and not the issuer’s financial condition or downgrades by rating agencies. In addition, approximately 58.6% of the principal balance from the Company’s investment portfolio will mature and be repaid to the Company within five years or less. As a result, the Company has the ability and intent to hold such securities until maturity.

As of September 30, 2021, the Company's securities portfolio consisted of 1,335 investment securities, 304 of which were in an unrealized loss position. As noted in the table above, the total amount of the unrealized loss was $14.3 million. The U.S government-sponsored enterprises portfolio contained unrealized losses of $1.7 million on 44 securities. The residential mortgage-backed securities portfolio contained $9.1 million of unrealized losses on 161 securities, and the commercial mortgage-backed securities portfolio contained $922,000 of unrealized losses on 35 securities. The state and political subdivisions portfolio contained $2.2 million of unrealized losses on 51 securities. In addition, the other securities portfolio contained $390,000 of unrealized losses on 13 securities. The unrealized losses on the Company's investments were a result of interest rate changes. The Company expects to recover the amortized cost basis over the term of the securities. As of September 30, 2021, the Company does not consider an allowance for credit losses on the other portions of the investment portfolio because the decline in market value was attributable to changes in interest rates and not credit quality, the Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before recovery of their amortized cost basis, which may be maturity.

Income earned on available-for sale securities for the three and nine months ended September 30, 2021 and 2020, is as follows:

 

 

 

For the Three Months

Ended September 30,

 

 

For the Nine Months

Ended September 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

 

 

(In thousands)

 

Taxable

 

$

8,495

 

 

$

7,227

 

 

$

21,933

 

 

$

25,696

 

Non-taxable

 

 

4,839

 

 

 

4,367

 

 

 

14,815

 

 

 

11,179

 

Total

 

$

13,334

 

 

$

11,594

 

 

$

36,748

 

 

$

36,875

 

 

4.  Loans Receivable

The various categories of loans receivable are summarized as follows:

 

 

 

September 30,

 

 

December 31,

 

 

 

2021

 

 

2020

 

 

 

(In thousands)

 

Real estate:

 

 

 

 

 

 

 

 

Commercial real estate loans

 

 

 

 

 

 

 

 

Non-farm/non-residential

 

$

4,005,841

 

 

$

4,429,060

 

Construction/land development

 

 

1,742,687

 

 

 

1,562,298

 

Agricultural

 

 

138,881

 

 

 

114,431

 

Residential real estate loans

 

 

 

 

 

 

 

 

Residential 1-4 family

 

 

1,273,988

 

 

 

1,536,257

 

Multifamily residential

 

 

274,131

 

 

 

536,538

 

Total real estate

 

 

7,435,528

 

 

 

8,178,584

 

Consumer

 

 

814,732

 

 

 

864,690

 

Commercial and industrial

 

 

1,414,079

 

 

 

1,896,442

 

Agricultural

 

 

68,272

 

 

 

66,869

 

Other

 

 

168,489

 

 

 

214,136

 

Total loans receivable

 

 

9,901,100

 

 

 

11,220,721

 

Allowance for credit losses

 

 

(238,673

)

 

 

(245,473

)

Loans receivable, net

 

$

9,662,427

 

 

$

10,975,248

 

 

During the three and nine months ended September 30, 2021, the Company sold $3.9 million and $15.0 million of the guaranteed portions of certain SBA loans, which resulted in a gain of approximately $440,000 and $1.6 million. During the three months ended September 30, 2020, the Company did 0t sell any guaranteed portions of certain SBA loans. During the nine months ended September 30, 2020, the Company sold $3.7  million of the guaranteed portions of certain SBA loans, which resulted in a gain of approximately $341,000.

 

16

 


 

Mortgage loans held for sale of approximately $81.9 million and $114.8 million at September 30, 2021 and December 31, 2020, respectively, are included in residential 1-4 family loans.   Mortgage loans held for sale are carried at the lower of cost or fair value, determined using an aggregate basis.  Gains and losses resulting from sales of mortgage loans are recognized when the respective loans are sold to investors.  Gains and losses are determined by the difference between the selling price and the carrying amount of the loans sold, net of discounts collected or paid.  The Company obtains forward commitments to sell mortgage loans to reduce market risk on mortgage loans in the process of origination and mortgage loans held for sale.  The forward commitments acquired by the Company for mortgage loans in process of origination are considered mandatory forward commitments.  Because these commitments are structured on a mandatory basis, the Company is required to substitute another loan or to buy back the commitment if the original loan does not fund.  These commitments are derivative instruments and their fair values at September 30, 2021 and December 31, 2020 were not material.

The Company adopted ASC 326 using the prospective transition approach for financial assets purchased with credit deterioration (“PCD”) that were previously classified as purchased credit impaired (“PCI”) and accounted for under ASC 310-30.  In 2019, the Company reevaluated its loan pools of purchased loans with deteriorated credit quality. These loans pools related specifically to acquired loans from the Heritage, Liberty, Landmark, Bay Cities, Bank of Commerce, Premier Bank, Stonegate and Shore Premier Finance acquisitions. At acquisition, a portion of these loans was recorded as purchased credit impaired loans on a pool by pool basis. Through the reevaluation of these loan pools, management determined that estimated losses for purchase credit impaired loans should be processed against the credit mark of the applicable pools.  The remaining non-accretable mark was then moved to accretable mark to be recognized over the remaining weighted average life of the loan pools.  The projected losses for these loans were less than the total credit mark.  As such, the remaining $107.6 million of loans in these pools along with the $29.3 million in accretable yield was deemed to be immaterial and was reclassified out of the purchased credit impaired loans category.  As of December 31, 2019, the Company 0 longer held any purchased loans with deteriorated credit quality. Therefore, the Company did not have any PCI loans upon adoption on of ASC 326 as of January 1, 2020.

The Company has purchased loans, some of which have experienced more than insignificant credit deterioration since origination.  PCD loans are recorded at the amount paid. An allowance for credit losses is determined using the same methodology as other loans. The initial allowance for credit losses determined on a collective basis is allocated to individual loans. The sum of the loan’s purchase price and allowance for credit losses becomes its initial amortized cost basis. The difference between the initial amortized cost basis and the par value of the loan is a noncredit discount or premium, which is amortized into interest income over the life of the loan. Subsequent changes to the allowance for credit losses are recorded through the provision for credit losses. As a result of the acquisition of LH-Finance in 2020, the Company held approximately $454,000 and $760,000 in PCD loans, as of September 30, 2021 and  December 31, 2020, respectively.

A description of our accounting policies for loans, impaired loans and non-accrual loans are set forth in our 2020 Form 10-K filed with the SEC on February 26, 2021. The Company adopted ASC 326 effective January 1, 2020. See Notes 1 and 5 for further discussion.

5.  Allowance for Credit Losses, Credit Quality and Other

The Company adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, effective January 1, 2020. The guidance replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology.  The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables. It also applies to off-balance sheet credit exposures not accounted for as insurance, including loan commitments, standby letters of credits, financial guarantees, and other similar instruments. The Company adopted ASC 326 using the modified retrospective method for loans and off-balance-sheet credit exposures.  Results for reporting periods beginning after January 1, 2020 are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP.  The Company recorded a one-time cumulative-effect adjustment to the allowance for credit losses of $44.0 million which was recognized through a $32.5 million adjustment to retained earnings, net of tax. This adjustment brought the beginning balance of the allowance for credit losses to $146.1 million  as of January 1, 2020.  In addition, the Company recorded a $15.5 million reserve on unfunded commitments as of January 1, 2020, which was recognized through an $11.5 million adjustment to retained earnings, net of tax.

The Company uses the discounted cash flow (“DCF”) method to estimate expected losses for all of Company’s loan pools. These pools are as follows: construction & land development; other commercial real estate; residential real estate; commercial & industrial; and consumer & other. The loan portfolio pools were selected in order to generally align with the loan categories specified in the quarterly call reports required to be filed with the Federal Financial Institutions Examination Council. For each of these loan pools, the Company generates cash flow projections at the instrument level wherein payment expectations are adjusted for estimated prepayment speed, curtailments, time to recovery, probability of default, and loss given default. The modeling of expected prepayment speeds, curtailment rates, and time to recovery are based on historical internal data. The Company uses regression analysis of historical internal and peer data to determine suitable loss drivers to utilize when modeling lifetime probability of default and loss given default. This analysis also determines how expected probability of default and loss given default will react to forecasted levels of the loss drivers.

 

17

 


 

Each year management evaluates the performance of the selected models used in the CECL calculation through backtesting. Based on the results of the testing, management determines if the various models produced accurate results compared to the actual losses incurred for the current economic environment. Management then determines if changes to the input assumptions and economic factors would produce a stronger overall calculation that is more responsive to changes in economic conditions. The Company continues to use regression analysis to determine suitable loss drivers to utilize when modeling lifetime probability of default and loss given default for the changes in the economic factors for the loss driver segments. Based on this analysis during the first quarter of 2021, management determined that changes to several of the economic factors for the various loss driver segments were necessary. The identified loss drivers by segment are included below as of September 30, 2021 and December 31, 2020, respectively.

 

September 30, 2021

Loss Driver Segment

Call Report Segment(s)

Modeled Economic Factors

1-4 Family Construction

1a1

National Unemployment (%) & Housing Price Index (%)

All Other Construction

1a2

National Unemployment (%) & Gross Domestic Product (%)

1-4 Family Revolving HELOC & Junior Liens

1c1

National Unemployment (%) & Housing Price Index – CoreLogic (%)

1-4 Family Revolving HELOC & Junior Liens

1c2b

National Unemployment (%) & Gross Domestic Product (%)

1-4 Family Senior Liens

1c2a

National Unemployment (%) & Gross Domestic Product (%)

Multifamily

1d

Rental Vacancy Rate (%) & Housing Price Index – Case-Schiller (%)

Owner Occupied CRE

1e1

National Unemployment (%) & Gross Domestic Product (%)

Non-Owner Occupied CRE

1e2,1b,8

National Unemployment (%) & Gross Domestic Product (%)

Commercial & Industrial, Agricultural, Non-Depository Financial Institutions, Purchase/Carry Securities, Other

4a, 3, 9a, 9b1, 9b2, Other

National Unemployment (%) & National Retail Sales (%)

Consumer Auto

6c

National Unemployment (%) & National Retail Sales (%)

Other Consumer

6b, 6d

National Unemployment (%) & National Retail Sales (%)

Other Consumer - SPF

6d

National Unemployment (%)

 



December 31, 2020



Loss Driver Segment

Call Report Segment(s)

Modeled Economic Factors

1-4 Family Construction

1a1

National Unemployment (%) & Housing Price Index (%)

All Other Construction

1a2

National Unemployment (%) & Commercial Real Estate Price Index (%)

1-4 Family Revolving HELOC & Junior Liens

1c1, 1c2b

National Unemployment (%) & Housing Price Index (%)

1-4 Family Senior Liens

1c2a

National Unemployment (%) & Housing Price Index (%)

Multifamily

1d

National Unemployment (%) & Housing Price Index (%)

Owner Occupied CRE

1e1

National Unemployment (%) & Commercial Real Estate Price Index (%)

Non-Owner Occupied CRE

1e2,1b,8

National Unemployment (%) & Commercial Real Estate Price Index (%)

Commercial & Industrial, Agricultural, Non-Depository Financial Institutions, Purchase/Carry Securities, Other

4a, 3, 9a, 9b1, 9b2, Other

National Unemployment (%) & National Retail Sales (%)

Consumer Auto

6c

National Unemployment (%) & National Retail Sales (%)

Other Consumer

6b, 6d

National Unemployment (%) & National Retail Sales (%)

Other Consumer - SPF

6d

National Unemployment (%)

For all DCF models, management has determined that four quarters represents a reasonable and supportable forecast period and reverts to a historical loss rate over four quarters on a straight-line basis. Management leverages economic projections from a reputable and independent third party to inform its loss driver forecasts over the four-quarter forecast period. Other internal and external indicators of economic forecasts are also considered by management when developing the forecast metrics.

The combination of adjustments for credit expectations (default and loss) and time expectations prepayment, curtailment, and time to recovery produces an expected cash flow stream at the instrument level. Instrument effective yield is calculated, net of the impacts of prepayment assumptions, and the instrument expected cash flows are then discounted at that effective yield to produce an instrument-level net present value of expected cash flows (“NPV”). An allowance for credit loss is established for the difference between the instrument’s NPV and amortized cost basis.  

 


 

18

 


 

 

Construction/Land Development and Other Commercial Real Estate Loans.  We originate non-farm and non-residential loans (primarily secured by commercial real estate), construction/land development loans, and agricultural loans, which are generally secured by real estate located in our market areas. Our commercial mortgage loans are generally collateralized by first liens on real estate and amortized (where defined) over a 15 to 30 year period with balloon payments due at the end of one to five years. These loans are generally underwritten by assessing cash flow (debt service coverage), primary and secondary source of repayment, the financial strength of any guarantor, the strength of the tenant (if any), the borrower’s liquidity and leverage, management experience, ownership structure, economic conditions and industry specific trends and collateral. Generally, we will loan up to 85% of the value of improved property, 65% of the value of raw land and 75% of the value of land to be acquired and developed. A first lien on the property and assignment of lease is required if the collateral is rental property, with second lien positions considered on a case-by-case basis.

Residential Real Estate Loans.  We originate one to four family, residential mortgage loans generally secured by property located in our primary market areas.  Residential real estate loans generally have a loan-to-value ratio of up to 90%. These loans are underwritten by giving consideration to many factors including the borrower’s ability to pay, stability of employment or source of income, debt-to-income ratio, credit history and loan-to-value ratio.

Commercial and Industrial Loans.  Commercial and industrial loans are made for a variety of business purposes, including working capital, inventory, equipment and capital expansion. The terms for commercial loans are generally one to seven years. Commercial loan applications must be supported by current financial information on the borrower and, where appropriate, by adequate collateral. Commercial loans are generally underwritten by addressing cash flow (debt service coverage), primary and secondary sources of repayment, the financial strength of any guarantor, the borrower’s liquidity and leverage, management experience, ownership structure, economic conditions and industry specific trends and collateral. The loan to value ratio depends on the type of collateral. Generally, accounts receivable are financed at between 50% and 80% of accounts receivable less than 60 days past due. Inventory financing will range between 50% and 80% (with no work in process) depending on the borrower and nature of inventory. We require a first lien position for those loans.

Consumer & Other Loans.  Our consumer & other loans are primarily composed of loans to finance USCG registered high-end sail and power boats as a result of our acquisitions of SPF on June 30, 2018 and LH-Finance on February 29, 2020. The performance of consumer & other loans will be affected by the local and regional economies as well as the rates of personal bankruptcies, job loss, divorce and other individual-specific characteristics.

Off-Balance Sheet Credit Exposures. The Company estimates expected credit losses over the contractual period in which the Company is exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by the Company. The allowance for credit loss on off-balance sheet credit exposures is adjusted as a provision for credit loss expense. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life. The Company uses the DCF method to estimate expected losses for all of Company’s off-balance sheet credit exposures through the use of the existing DCF models for the Company’s loan portfolio pools. The off-balance sheet credit exposures exhibit similar risk characteristics as loans currently in the Company’s loan portfolio.

As of September 30, 2021, the Company remains optimistic that the markets in which it operates will experience continued economic recovery as long as unemployment rates continue to decline, more COVID-19 vaccinations are administered, and communities continue to reopen for business activity.  Uncertainty remains about the duration of the pandemic as well as the timing and extent of the economic recovery. The Company determined that an additional provision for credit losses on loans was not necessary as the current level of the allowance for credit losses was considered adequate as of September 30, 2021. During the nine-month period ended September 30, 2021, the Company recorded a negative provision for unfunded commitments of $4.8 million. This was  primarily due to a single commercial & industrial loan for which a reserve was no longer considered necessary due to the borrower’s current cash flow position.

ASC 326 requires that both a discount and an allowance for credit losses be recorded on loans during an acquisition.  During the first quarter of 2020, we completed the acquisition of $406.2 million of loans from LH-Finance.  As a result, the Company recorded a $6.6 million loan discount and a $9.3 million increase in the allowance for credit losses for this acquisition. A small portion of the loans acquired during the quarter were purchase credit deteriorated (“PCD”) loans, so the Company recorded a $357,000 allowance for credit losses on these loans.


 

19

 


 

 

The following tables present the activity in the allowance for credit losses for the three and nine months ended September 30, 2021:

 

 

 

Three Months Ended September 30, 2021

 

 

 

Construction/

Land

Development

 

 

Other

Commercial

Real Estate

 

 

Residential

Real Estate

 

 

Commercial

& Industrial

 

 

Consumer

& Other

 

 

Total

 

 

 

(In thousands)

 

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

22,145

 

 

$

93,127

 

 

$

51,182

 

 

$

52,282

 

 

$

21,715

 

 

$

240,451

 

Loans charged off

 

 

 

 

 

(9

)

 

 

(220

)

 

 

(1,682

)

 

 

(558

)

 

 

(2,469

)

Recoveries of loans previously

   charged off

 

 

8

 

 

 

44

 

 

 

388

 

 

 

80

 

 

 

171

 

 

 

691

 

Net loans recovered

   (charged off)

 

 

8

 

 

 

35

 

 

 

168

 

 

 

(1,602

)

 

 

(387

)

 

 

(1,778

)

Provision for credit losses

 

 

3,830

 

 

 

(4,664

)

 

 

(447

)

 

 

1,922

 

 

 

(641

)

 

 

 

Balance, September 30

 

$

25,983

 

 

$

88,498

 

 

$

50,903

 

 

$

52,602

 

 

$

20,687

 

 

$

238,673

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30, 2021

 

 

 

Construction/

Land

Development

 

 

Other

Commercial

Real Estate

 

 

Residential

Real Estate

 

 

Commercial

& Industrial

 

 

Consumer

& Other

 

 

Total

 

 

 

(In thousands)

 

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

32,861

 

 

$

88,453

 

 

$

53,216

 

 

$

46,530

 

 

$

24,413

 

 

$

245,473

 

Loans charged off

 

 

 

 

 

(646

)

 

 

(543

)

 

 

(5,892

)

 

 

(1,458

)

 

 

(8,539

)

Recoveries of loans previously

   charged off

 

 

47

 

 

 

112

 

 

 

554

 

 

 

382

 

 

 

644

 

 

 

1,739

 

Net loans recovered

   (charged off)

 

 

47

 

 

 

(534

)

 

 

11

 

 

 

(5,510

)

 

 

(814

)

 

 

(6,800

)

Provision for credit losses

 

 

(6,925

)

 

 

579

 

 

 

(2,324

)

 

 

11,582

 

 

 

(2,912

)

 

 

 

Balance, September 30

 

$

25,983

 

 

$

88,498

 

 

$

50,903

 

 

$

52,602

 

 

$

20,687

 

 

$

238,673

 

The following tables present the balances in the allowance for credit losses for the nine-month period ended September 30, 2020 and the year ended December 31, 2020.

 

 

Nine Months Ended September 30, 2020 and Year Ended December 31, 2020

 

 

 

Construction/

Land

Development

 

 

Other

Commercial

Real Estate

 

 

Residential

Real Estate

 

 

Commercial

& Industrial

 

 

Consumer

& Other

 

 

Total

 

 

 

(In thousands)

 

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance

 

$

26,433

 

 

$

33,529

 

 

$

20,135

 

 

$

16,615

 

 

$

5,410

 

 

$

102,122

 

Impact of adoption ASC 326

 

 

(5,296

)

 

 

15,912

 

 

 

16,680

 

 

 

11,584

 

 

 

5,108

 

 

 

43,988

 

Allowance for credit losses on

   PCD loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

357

 

 

 

357

 

Loans charged off

 

 

(443

)

 

 

(3,003

)

 

 

(450

)

 

 

(6,207

)

 

 

(1,343

)

 

 

(11,446

)

Recoveries of loans previously

   charged off

 

 

94

 

 

 

614

 

 

 

305

 

 

 

142

 

 

 

626

 

 

 

1,781

 

Net loans charged off

 

 

(349

)

 

 

(2,389

)

 

 

(145

)

 

 

(6,065

)

 

 

(717

)

 

 

(9,665

)

Provision for credit loss - loans

 

 

18,027

 

 

 

50,912

 

 

 

8,550

 

 

 

18,023

 

 

 

6,601

 

 

 

102,113

 

Provision for credit loss -

   acquired loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9,309

 

 

 

9,309

 

Balance, September 30

 

 

38,815

 

 

 

97,964

 

 

 

45,220

 

 

 

40,157

 

 

 

26,068

 

 

 

248,224

 

Loans charged off

 

 

(775

)

 

 

(38

)

 

 

(35

)

 

 

(1,557

)

 

 

(635

)

 

 

(3,040

)

Recoveries of loans previously

    charged off

 

 

13

 

 

 

33

 

 

 

32

 

 

 

76

 

 

 

135

 

 

 

289

 

Net loans charged off

 

 

(762

)

 

 

(5

)

 

 

(3

)

 

 

(1,481

)

 

 

(500

)

 

 

(2,751

)

Provision for credit loss - loans

 

 

(5,192

)

 

 

(9,506

)

 

 

7,999

 

 

 

7,854

 

 

 

(1,155

)

 

 

 

Balance, December 31

 

$

32,861

 

 

$

88,453

 

 

$

53,216

 

 

$

46,530

 

 

$

24,413

 

 

$

245,473

 

 

20

 


 

 

 

The following table presents the amortized cost basis of loans on nonaccrual status and loans past due over 90 days still accruing as of September 30, 2021 and December 31, 2020:

 

 

 

September 30, 2021

 

 

 

Nonaccrual

 

 

Nonaccrual

with Reserve

 

 

Loans Past Due

Over 90 Days

Still Accruing

 

 

(In thousands)

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

Non-farm/non-residential

 

$

8,819

 

 

$

2,244

 

 

$

2,413

 

Construction/land development

 

 

1,870

 

 

 

 

 

 

 

Agricultural

 

 

743

 

 

 

 

 

 

 

Residential real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

Residential 1-4 family

 

 

17,495

 

 

 

2,984

 

 

 

855

 

Multifamily residential

 

 

161

 

 

 

 

 

 

 

Total real estate

 

 

29,088

 

 

 

5,228

 

 

 

3,268

 

Consumer

 

 

1,921

 

 

 

 

 

 

2

 

Commercial and industrial

 

 

15,989

 

 

 

4,272

 

 

 

41

 

Agricultural & other

 

 

606

 

 

 

 

 

 

 

Total

 

$

47,604

 

 

$

9,500

 

 

$

3,311

 

 

 

 

December 31, 2020

 

 

 

Nonaccrual

 

 

Nonaccrual

with Reserve

 

 

Loans Past Due

Over 90 Days

Still Accruing

 

 

(In thousands)

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

Non-farm/non-residential

 

$

20,947

 

 

$

6,794

 

 

$

6,088

 

Construction/land development

 

 

1,381

 

 

 

2,089

 

 

 

1,296

 

Agricultural

 

 

879

 

 

 

 

 

 

 

Residential real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

Residential 1-4 family

 

 

19,334

 

 

 

3,000

 

 

 

1,821

 

Multifamily residential

 

 

173

 

 

 

 

 

 

 

Total real estate

 

 

42,714

 

 

 

11,883

 

 

 

9,205

 

Consumer

 

 

3,506

 

 

 

 

 

 

174

 

Commercial and industrial

 

 

17,251

 

 

 

 

 

 

231

 

Agricultural & other

 

 

1,057

 

 

 

 

 

 

 

Total

 

$

64,528

 

 

$

11,883

 

 

$

9,610

 

 

21

 


 

 

The Company had $47.6 million and $64.5 million in nonaccrual loans for the periods ended September 30, 2021 and December 31, 2020, respectively. In addition, the Company had $3.3 million and $9.6 million in loans past due 90 days or more and still accruing for the periods ended September 30, 2021 and December 31, 2020, respectively.  

The Company had $9.5 million and $11.9 million in nonaccrual loans with a specific reserve as of September 30, 2021 and December 31, 2020, respectively. The Company did 0t recognize any interest income on nonaccrual loans during the period ended September 30, 2021 or September 30, 2020.

The following table presents the amortized cost basis of collateral-dependent impaired loans by class of loans as of September 30, 2021 and December 31, 2020:

 

 

 

September 30, 2021

 

 

 

Commercial

 

 

Residential

 

 

 

 

 

 

 

Real Estate

 

 

Real Estate

 

 

Other

 

 

 

(In thousands)

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

Non-farm/non-residential

 

$

249,783

 

 

$

 

 

$

 

Construction/land development

 

 

5,201

 

 

 

 

 

 

 

Agricultural

 

 

743

 

 

 

 

 

 

 

Residential real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

Residential 1-4 family

 

 

 

 

 

21,393

 

 

 

 

Multifamily residential

 

 

 

 

 

161

 

 

 

 

Total real estate

 

 

255,727

 

 

 

21,554

 

 

 

 

Consumer

 

 

 

 

 

 

 

 

1,936

 

Commercial and industrial

 

 

 

 

 

 

 

 

20,264

 

Agricultural & other

 

 

 

 

 

 

 

 

607

 

Total

 

$

255,727

 

 

$

21,554

 

 

$

22,807

 

 

 

 

December 31, 2020

 

 

 

Commercial

 

 

Residential

 

 

 

 

 

 

 

Real Estate

 

 

Real Estate

 

 

Other

 

 

 

(In thousands)

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

Non-farm/non-residential

 

$

47,429

 

 

$

 

 

$

 

Construction/land development

 

 

6,012

 

 

 

 

 

 

 

Agricultural

 

 

879

 

 

 

 

 

 

 

Residential real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

Residential 1-4 family

 

 

 

 

 

32,413

 

 

 

 

Multifamily residential

 

 

 

 

 

173

 

 

 

 

Total real estate

 

 

54,320

 

 

 

32,586

 

 

 

 

Consumer

 

 

 

 

 

 

 

 

3,694

 

Commercial and industrial

 

 

 

 

 

 

 

 

21,027

 

Agricultural & other

 

 

 

 

 

 

 

 

1,057

 

Total

 

$

54,320

 

 

$

32,586

 

 

$

25,778

 

The Company had $300.1 million and $112.7 million in collateral-dependent impaired loans for the periods ended September 30, 2021 and December 31, 2020, respectively. The increase in collateral-dependent impaired loans was due to the Company changing the valuation method for lodging and assisted living loans to a market price valuation methodology. This involved assigning a 15% discount of par for these impaired loans. The 15% figure was derived based on knowledge of current hotel and assisted living offerings in the loan sale market. In the event of default, liquidation would be achieved through a loan sale. The Company is continuing to monitor these impaired loans and will adjust the discount as necessary.


 

22

 


 

 

Loans that do not share risk characteristics are evaluated on an individual basis. For collateral-dependent impaired loans, excluding lodging and assisted living loans, where the Company has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the financial asset to be provided substantially through the operation or sale of the collateral, the allowance for credit losses is measured based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. When repayment is expected to be from the operation of the collateral, expected credit losses are calculated as the amount by which the amortized cost basis of the loan exceeds the present value of expected cash flows from the operation of the collateral. When repayment is expected to be from the sale of the collateral, expected credit losses are calculated as the amount by which the amortized cost basis of the loan exceeds the fair value of the underlying collateral less estimated costs to sell. The allowance for credit losses may be zero if the fair value of the collateral at the measurement date exceeds the amortized cost basis of the loan.

The following is an aging analysis for loans receivable as of September 30, 2021 and December 31, 2020:

 

 

 

September 30, 2021

 

 

 

Loans

Past Due

30-59 Days

 

 

Loans

Past Due

60-89 Days

 

 

Loans

Past Due

90 Days

or More

 

 

Total

Past Due

 

 

Current

Loans

 

 

Total

Loans

Receivable

 

 

Accruing

Loans

Past Due

90 Days

or More

 

 

 

(In thousands)

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-farm/non-residential

 

$

2,213

 

 

$

 

 

$

11,232

 

 

$

13,445

 

 

$

3,992,396

 

 

$

4,005,841

 

 

$

2,413

 

Construction/land development

 

 

66

 

 

 

171

 

 

 

1,870

 

 

 

2,107

 

 

 

1,740,580

 

 

 

1,742,687

 

 

 

 

Agricultural

 

 

434

 

 

 

295

 

 

 

743

 

 

 

1,472

 

 

 

137,409

 

 

 

138,881

 

 

 

 

Residential real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential 1-4 family

 

 

2,452

 

 

 

3,072

 

 

 

18,350

 

 

 

23,874

 

 

 

1,250,114

 

 

 

1,273,988

 

 

 

855

 

Multifamily residential

 

 

 

 

 

 

 

 

161

 

 

 

161

 

 

 

273,970

 

 

 

274,131

 

 

 

 

Total real estate

 

 

5,165

 

 

 

3,538

 

 

 

32,356

 

 

 

41,059

 

 

 

7,394,469

 

 

 

7,435,528

 

 

 

3,268

 

Consumer

 

 

401

 

 

 

12

 

 

 

1,923

 

 

 

2,336

 

 

 

812,396

 

 

 

814,732

 

 

 

2

 

Commercial and industrial

 

 

752

 

 

 

592

 

 

 

16,030

 

 

 

17,374

 

 

 

1,396,705

 

 

 

1,414,079

 

 

 

41

 

Agricultural & other

 

 

619

 

 

 

1

 

 

 

606

 

 

 

1,226

 

 

 

235,535

 

 

 

236,761

 

 

 

 

Total

 

$

6,937

 

 

$

4,143

 

 

$

50,915

 

 

$

61,995

 

 

$

9,839,105

 

 

$

9,901,100

 

 

$

3,311

 

 

 

 

December 31, 2020

 

 

 

Loans

Past Due

30-59

Days

 

 

Loans

Past Due

60-89

Days

 

 

Loans

Past Due

90 Days

or More

 

 

Total

Past Due

 

 

Current

Loans

 

 

Total

Loans

Receivable

 

 

Accruing

Loans

Past Due

90 Days

or More

 

 

 

(In thousands)

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-farm/non-residential

 

$

3,856

 

 

$

68

 

 

$

27,035

 

 

$

30,959

 

 

$

4,398,101

 

 

$

4,429,060

 

 

$

6,088

 

Construction/land development

 

 

178

 

 

 

44

 

 

 

2,677

 

 

$

2,899

 

 

 

1,559,399

 

 

 

1,562,298

 

 

 

1,296

 

Agricultural

 

 

522

 

 

 

 

 

 

879

 

 

 

1,401

 

 

 

113,030

 

 

 

114,431

 

 

 

 

Residential real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential 1-4 family

 

 

4,833

 

 

 

7,787

 

 

 

21,155

 

 

 

33,775

 

 

 

1,502,482

 

 

 

1,536,257

 

 

 

1,821

 

Multifamily residential

 

 

111

 

 

 

 

 

 

173

 

 

 

284

 

 

 

536,254

 

 

 

536,538

 

 

 

 

Total real estate

 

 

9,500

 

 

 

7,899

 

 

 

51,919

 

 

 

69,318

 

 

 

8,109,266

 

 

 

8,178,584

 

 

 

9,205

 

Consumer

 

 

2,899

 

 

 

802

 

 

 

3,680

 

 

 

7,381

 

 

 

857,309

 

 

 

864,690

 

 

 

174

 

Commercial and industrial

 

 

960

 

 

 

515

 

 

 

17,482

 

 

 

18,957

 

 

 

1,877,485

 

 

 

1,896,442

 

 

 

231

 

Agricultural and other

 

 

1,125

 

 

 

3,713

 

 

 

1,057

 

 

 

5,895

 

 

 

275,110

 

 

 

281,005

 

 

 

 

Total

 

$

14,484

 

 

$

12,929

 

 

$

74,138

 

 

$

101,551

 

 

$

11,119,170

 

 

$

11,220,721

 

 

$

9,610

 

 

Non-accruing loans at September 30, 2021 and December 31, 2020 were $47.6 million and $64.5 million, respectively.

 

23

 


 

Interest recognized on impaired loans, including those loans with a specific reserve, during the three and nine months ended September 30, 2021 was approximately $3.3 million and $9.8 million, respectively. Interest recognized on impaired loans, including those loans with a specific reserve, during the three and nine months ended September 30, 2020 was approximately $694,000 and $2.1 million, respectively. The amount of interest recognized on impaired loans on the cash basis is not materially different than the accrual basis.

Credit Quality Indicators. As part of the on-going monitoring of the credit quality of the Company’s loan portfolio, management tracks certain credit quality indicators including trends related to (i) the risk rating of loans, (ii) the level of classified loans, (iii) net charge-offs, (iv) non-performing loans and (v) the general economic conditions in Arkansas, Florida, Alabama and New York.

The Company utilizes a risk rating matrix to assign a risk rating to each of its loans. Loans are rated on a scale from 1 to 8. Descriptions of the general characteristics of the 8 risk ratings are as follows:

 

Risk rating 1 – Excellent.  Loans in this category are to persons or entities of unquestionable financial strength, a highly liquid financial position, with collateral that is liquid and well margined.  These borrowers have performed without question on past obligations, and the Bank expects their performance to continue.  Internally generated cash flow covers current maturities of long-term debt by a substantial margin.  Loans secured by bank certificates of deposit and savings accounts, with appropriate holds placed on the accounts, are to be rated in this category.

 

Risk rating 2 – Good.  These are loans to persons or entities with strong financial condition and above-average liquidity that have previously satisfactorily handled their obligations with the Bank.  Collateral securing the Bank’s debt is margined in accordance with policy guidelines.  Internally generated cash flow covers current maturities of long-term debt more than adequately.  Unsecured loans to individuals supported by strong financial statements and on which repayment is satisfactory may be included in this classification.

 

Risk rating 3 – Satisfactory.  Loans to persons or entities with an average financial condition, adequate collateral margins, adequate cash flow to service long-term debt, and net worth comprised mainly of fixed assets are included in this category.  These entities are minimally profitable now, with projections indicating continued profitability into the foreseeable future.  Closely held corporations or businesses where a majority of the profits are withdrawn by the owners or paid in dividends are included in this rating category.  Overall, these loans are basically sound.

 

Risk rating 4 – Watch.  Borrowers who have marginal cash flow, marginal profitability or have experienced an unprofitable year and a declining financial condition characterize these loans.  The borrower has in the past satisfactorily handled debts with the Bank, but in recent months has either been late, delinquent in making payments, or made sporadic payments.  While the Bank continues to be adequately secured, margins have decreased or are decreasing, despite the borrower’s continued satisfactory condition.  Other characteristics of borrowers in this class include inadequate credit information, weakness of financial statement and repayment capacity, but with collateral that appears to limit exposure. 

 

Risk rating 5 – Other Loans Especially Mentioned (“OLEM”).  A loan criticized as OLEM has potential weaknesses that deserve management’s close attention.  If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in the institution’s credit position at some future date.  OLEM assets are not adversely classified and do not expose the institution to sufficient risk to warrant adverse classification.

 

Risk rating 6 – Substandard.  A loan classified as substandard is inadequately protected by the sound worth and paying capacity of the borrower or the collateral pledged.  Loss potential, while existing in the aggregate amount of substandard loans, does not have to exist in individual assets.

 

Risk rating 7 – Doubtful.  A loan classified as doubtful has all the weaknesses inherent in a loan classified as substandard with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.  These are poor quality loans in which neither the collateral, if any, nor the financial condition of the borrower presently ensure collectability in full in a reasonable period of time; in fact, there is permanent impairment in the collateral securing the loan.

 

Risk rating 8 – Loss. Assets classified as loss are considered uncollectible and of such little value that the continuance as bankable assets is not warranted.  This classification does not mean that the asset has absolutely no recovery or salvage value, but rather, it is not practical or desirable to defer writing off this basically worthless asset, even though partial recovery may occur in the future.  This classification is based upon current facts, not probabilities.  Assets classified as loss should be charged-off in the period in which they became uncollectible.


 

24

 


 

 

The Company’s classified loans include loans in risk ratings 6, 7 and 8. Loans may be classified, but not considered impaired, due to one of the following reasons: (1) The Company has established minimum dollar amount thresholds for loan impairment testing.  All loans over $2.0 million that are rated 5 – 8 are individually assessed for impairment on a quarterly basis.  Loans rated 5 – 8 that fall under the threshold amount are not individually tested for impairment and therefore are not included in impaired loans; (2) of the loans that are above the threshold amount and tested for impairment, after testing, some are considered to not be impaired and are not included in impaired loans.

 

 

25

 


 

 

Based on the most recent analysis performed, the risk category of loans by class of loans as of September 30, 2021 and December 31, 2020 is as follows:

 

 

 

September 30, 2021

 

 

 

Term Loans Amortized Cost Basis by Origination Year

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

2019

 

 

2018

 

 

2017

 

 

Prior

 

 

 

 

Revolving Loans Amortized Cost Basis

 

 

Total

 

 

 

(In thousands)

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-farm/non-residential

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 1

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

$

 

 

$

 

    Risk rating 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

209,027

 

 

 

209,027

 

    Risk rating 3

 

 

182,402

 

 

 

280,163

 

 

 

314,000

 

 

 

396,848

 

 

 

247,852

 

 

 

981,970

 

 

 

 

 

68,510

 

 

 

2,471,745

 

    Risk rating 4

 

 

106,983

 

 

 

35,274

 

 

 

120,584

 

 

 

257,933

 

 

 

112,120

 

 

 

358,937

 

 

 

 

 

87

 

 

 

991,918

 

    Risk rating 5

 

 

 

 

 

10,825

 

 

 

2,308

 

 

 

20,791

 

 

 

37,848

 

 

 

197,539

 

 

 

 

 

 

 

 

269,311

 

    Risk rating 6

 

 

 

 

 

 

 

 

15,219

 

 

 

1,803

 

 

 

11,939

 

 

 

34,797

 

 

 

 

 

 

 

 

63,758

 

    Risk rating 7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

82

 

 

 

 

 

 

 

 

82

 

Total non-farm/non-residential

 

 

289,385

 

 

 

326,262

 

 

 

452,111

 

 

 

677,375

 

 

 

409,759

 

 

 

1,573,325

 

 

 

 

 

277,624

 

 

 

4,005,841

 

Construction/land development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 1

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

$

 

 

$

 

    Risk rating 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

235

 

 

 

 

 

 

 

 

235

 

    Risk rating 3

 

 

150,620

 

 

 

228,246

 

 

 

100,935

 

 

 

33,933

 

 

 

23,005

 

 

 

42,863

 

 

 

 

 

166,151

 

 

 

745,753

 

    Risk rating 4

 

 

117,314

 

 

 

215,084

 

 

 

501,761

 

 

 

45,824

 

 

 

40,377

 

 

 

39,461

 

 

 

 

 

23,650

 

 

 

983,471

 

    Risk rating 5

 

 

 

 

 

 

 

 

416

 

 

 

 

 

 

 

 

 

1,177

 

 

 

 

 

1

 

 

 

1,594

 

    Risk rating 6

 

 

 

 

 

115

 

 

 

874

 

 

 

8

 

 

 

 

 

 

10,636

 

 

 

 

 

 

 

 

11,633

 

    Risk rating 7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

1

 

Total construction/land development

 

 

267,934

 

 

 

443,445

 

 

 

603,986

 

 

 

79,765

 

 

 

63,383

 

 

 

94,372

 

 

 

 

 

189,802

 

 

 

1,742,687

 

Agricultural

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 1

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

$

 

 

$

 

    Risk rating 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 3

 

 

18,093

 

 

 

30,708

 

 

 

8,005

 

 

 

6,673

 

 

 

5,412

 

 

 

21,538

 

 

 

 

 

6,616

 

 

 

97,045

 

    Risk rating 4

 

 

4,389

 

 

 

2,120

 

 

 

367

 

 

 

1,164

 

 

 

771

 

 

 

30,233

 

 

 

 

 

1,388

 

 

 

40,432

 

    Risk rating 5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 6

 

 

 

 

 

45

 

 

 

 

 

 

 

 

 

 

 

 

1,359

 

 

 

 

 

 

 

 

1,404

 

    Risk rating 7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total agricultural

 

 

22,482

 

 

 

32,873

 

 

 

8,372

 

 

 

7,837

 

 

 

6,183

 

 

 

53,130

 

 

 

 

 

8,004

 

 

 

138,881

 

Total commercial real estate loans

 

$

579,801

 

 

$

802,580

 

 

$

1,064,469

 

 

$

764,977

 

 

$

479,325

 

 

$

1,720,827

 

 

 

 

$

475,430

 

 

$

5,887,409

 

Residential real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential 1-4 family

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 1

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

80

 

 

 

 

$

90

 

 

$

170

 

    Risk rating 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

29

 

 

 

 

 

 

 

 

29

 

    Risk rating 3

 

 

173,712

 

 

 

153,260

 

 

 

140,787

 

 

 

111,458

 

 

 

89,445

 

 

 

324,888

 

 

 

 

 

86,267

 

 

 

1,079,817

 

    Risk rating 4

 

 

8,346

 

 

 

4,250

 

 

 

6,071

 

 

 

17,677

 

 

 

23,144

 

 

 

60,710

 

 

 

 

 

30,830

 

 

 

151,028

 

    Risk rating 5

 

 

 

 

 

 

 

 

3,064

 

 

 

1,506

 

 

 

529

 

 

 

5,114

 

 

 

 

 

197

 

 

 

10,410

 

    Risk rating 6

 

 

788

 

 

 

2,003

 

 

 

2,406

 

 

 

1,931

 

 

 

1,525

 

 

 

16,914

 

 

 

 

 

6,933

 

 

 

32,500

 

    Risk rating 7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

 

 

28

 

 

 

 

 

 

 

 

34

 

Total residential 1-4 family

 

 

182,846

 

 

 

159,513

 

 

 

152,328

 

 

 

132,572

 

 

 

114,649

 

 

 

407,763

 

 

 

 

 

124,317

 

 

 

1,273,988

 

Multifamily residential

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 1

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

$

 

 

$

 

    Risk rating 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 3

 

 

8,496

 

 

 

10,243

 

 

 

35,143

 

 

 

34,974

 

 

 

9,825

 

 

 

46,473

 

 

 

 

 

7,782

 

 

 

152,936

 

    Risk rating 4

 

 

 

 

 

11,271

 

 

 

27,202

 

 

 

3,435

 

 

 

3,009

 

 

 

21,128

 

 

 

 

 

37,047

 

 

 

103,092

 

    Risk rating 5

 

 

 

 

 

 

 

 

 

 

 

7,621

 

 

 

8,170

 

 

 

 

 

 

 

 

 

 

 

15,791

 

    Risk rating 6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

897

 

 

 

1,415

 

 

 

 

 

 

 

 

2,312

 

    Risk rating 7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total multifamily residential

 

 

8,496

 

 

 

21,514

 

 

 

62,345

 

 

 

46,030

 

 

 

21,901

 

 

 

69,016

 

 

 

 

 

44,829

 

 

 

274,131

 

Total real estate

 

$

771,143

 

 

$

983,607

 

 

$

1,279,142

 

 

$

943,579

 

 

$

615,875

 

 

$

2,197,606

 

 

 

 

$

644,576

 

 

$

7,435,528

 

 

26

 


 

 

 

 

 

September 30, 2021

 

 

 

Term Loans Amortized Cost Basis by Origination Year, Continued

 

 

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

2019

 

 

2018

 

 

2017

 

 

 

 

Prior

 

 

 

 

Revolving Loans Amortized Cost Basis

 

 

Total

 

 

 

(In thousands)

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 1

 

$

2,930

 

 

$

2,109

 

 

$

1,556

 

 

$

1,064

 

 

$

259

 

 

 

 

$

1,777

 

 

 

 

$

1,753

 

 

$

11,448

 

    Risk rating 2

 

 

 

 

 

 

 

 

45

 

 

 

647

 

 

 

 

 

 

 

 

9

 

 

 

 

 

 

 

 

701

 

    Risk rating 3

 

 

153,432

 

 

 

189,046

 

 

 

147,510

 

 

 

116,833

 

 

 

72,351

 

 

 

 

 

102,108

 

 

 

 

 

6,801

 

 

 

788,081

 

    Risk rating 4

 

 

2,993

 

 

 

1,107

 

 

 

3,110

 

 

 

1,908

 

 

 

185

 

 

 

 

 

2,407

 

 

 

 

 

74

 

 

 

11,784

 

    Risk rating 5

 

 

 

 

 

116

 

 

 

 

 

 

99

 

 

 

172

 

 

 

 

 

134

 

 

 

 

 

 

 

 

521

 

    Risk rating 6

 

 

 

 

 

46

 

 

 

347

 

 

 

120

 

 

 

 

 

 

 

 

1,641

 

 

 

 

 

41

 

 

 

2,195

 

    Risk rating 7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

1

 

 

 

 

 

 

 

 

2

 

Total consumer

 

 

159,355

 

 

 

192,424

 

 

 

152,568

 

 

 

120,671

 

 

 

72,968

 

 

 

 

 

108,077

 

 

 

 

 

8,669

 

 

 

814,732

 

Commercial and industrial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 1

 

$

210,222

 

 

$

28,846

 

 

$

371

 

 

$

157

 

 

$

169

 

 

 

 

$

21,457

 

 

 

 

$

11,885

 

 

$

273,107

 

    Risk rating 2

 

 

19

 

 

 

19

 

 

 

 

 

 

 

 

 

87

 

 

 

 

 

280

 

 

 

 

 

175

 

 

 

580

 

    Risk rating 3

 

 

75,240

 

 

 

77,113

 

 

 

95,166

 

 

 

52,322

 

 

 

25,516

 

 

 

 

 

55,060

 

 

 

 

 

148,891

 

 

 

529,308

 

    Risk rating 4

 

 

132,855

 

 

 

35,907

 

 

 

107,294

 

 

 

98,787

 

 

 

35,085

 

 

 

 

 

37,893

 

 

 

 

 

75,883

 

 

 

523,704

 

    Risk rating 5

 

 

6,197

 

 

 

158

 

 

 

2,019

 

 

 

8,387

 

 

 

5,725

 

 

 

 

 

3,077

 

 

 

 

 

672

 

 

 

26,235

 

    Risk rating 6

 

 

1,222

 

 

 

15,430

 

 

 

6,736

 

 

 

25,441

 

 

 

5,570

 

 

 

 

 

4,633

 

 

 

 

 

330

 

 

 

59,362

 

    Risk rating 7

 

 

 

 

 

 

 

 

 

 

 

1,777

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,777

 

    Risk rating 8

 

 

 

 

 

2

 

 

 

1

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

2

 

 

 

6

 

Total commercial and industrial

 

 

425,755

 

 

 

157,475

 

 

 

211,587

 

 

 

186,871

 

 

 

72,152

 

 

 

 

 

122,401

 

 

 

 

 

237,838

 

 

 

1,414,079

 

Agricultural and other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 1

 

$

11,231

 

 

$

203

 

 

$

43

 

 

$

 

 

$

 

 

 

 

$

112

 

 

 

 

$

375

 

 

$

11,964

 

    Risk rating 2

 

 

 

 

 

 

 

 

3,467

 

 

 

 

 

 

 

 

 

 

 

908

 

 

 

 

 

809

 

 

 

5,184

 

    Risk rating 3

 

 

58,313

 

 

 

60,137

 

 

 

5,395

 

 

 

7,572

 

 

 

2,187

 

 

 

 

 

50,145

 

 

 

 

 

14,162

 

 

 

197,911

 

    Risk rating 4

 

 

6,034

 

 

 

376

 

 

 

157

 

 

 

1,542

 

 

 

1,408

 

 

 

 

 

1,487

 

 

 

 

 

9,441

 

 

 

20,445

 

    Risk rating 5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

597

 

 

 

 

 

 

 

 

597

 

    Risk rating 6

 

 

 

 

 

 

 

 

27

 

 

 

14

 

 

 

33

 

 

 

 

 

586

 

 

 

 

 

 

 

 

660

 

    Risk rating 7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total agricultural and other

 

 

75,578

 

 

 

60,716

 

 

 

9,089

 

 

 

9,128

 

 

 

3,628

 

 

 

 

 

53,835

 

 

 

 

 

24,787

 

 

 

236,761

 

Total

 

$

1,431,831

 

 

$

1,394,222

 

 

$

1,652,386

 

 

$

1,260,249

 

 

$

764,623

 

 

 

 

$

2,481,919

 

 

 

 

$

915,870

 

 

$

9,901,100

 

 

27

 


 

 

 

 

 

December 31, 2020

 

 

 

Term Loans Amortized Cost Basis by Origination Year

 

 

 

 

 

 

 

 

 

 

 

 

 

2020

 

 

2019

 

 

2018

 

 

2017

 

 

2016

 

 

Prior

 

 

 

 

Revolving Loans Amortized Cost Basis

 

 

Total

 

 

 

(In thousands)

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-farm/non-residential

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 1

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

$

 

 

$

 

    Risk rating 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

25

 

 

 

25

 

    Risk rating 3

 

 

301,237

 

 

 

340,562

 

 

 

546,670

 

 

 

286,173

 

 

 

289,483

 

 

 

942,449

 

 

 

 

 

266,867

 

 

 

2,973,441

 

    Risk rating 4

 

 

27,239

 

 

 

139,354

 

 

 

161,461

 

 

 

265,684

 

 

 

197,979

 

 

 

300,055

 

 

 

 

 

17,305

 

 

 

1,109,077

 

    Risk rating 5

 

 

10,591

 

 

 

16,865

 

 

 

67,089

 

 

 

7,764

 

 

 

108,885

 

 

 

84,609

 

 

 

 

 

750

 

 

 

296,553

 

    Risk rating 6

 

 

 

 

 

859

 

 

 

2,289

 

 

 

987

 

 

 

4,577

 

 

 

40,600

 

 

 

 

 

86

 

 

 

49,398

 

    Risk rating 7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

552

 

 

 

 

 

 

 

 

552

 

    Risk rating 8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14

 

 

 

 

 

 

 

 

14

 

Total non-farm/non-residential

 

 

339,067

 

 

 

497,640

 

 

 

777,509

 

 

 

560,608

 

 

 

600,924

 

 

 

1,368,279

 

 

 

 

 

285,033

 

 

 

4,429,060

 

Construction/land development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 1

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

$

 

 

$

 

    Risk rating 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

283

 

 

 

 

 

 

 

 

283

 

    Risk rating 3

 

 

211,567

 

 

 

181,257

 

 

 

91,323

 

 

 

33,986

 

 

 

25,600

 

 

 

54,245

 

 

 

 

 

115,120

 

 

 

713,098

 

    Risk rating 4

 

 

129,599

 

 

 

417,737

 

 

 

92,032

 

 

 

46,249

 

 

 

17,161

 

 

 

32,060

 

 

 

 

 

76,845

 

 

 

811,683

 

    Risk rating 5

 

 

 

 

 

 

 

 

392

 

 

 

21,892

 

 

 

 

 

 

1,227

 

 

 

 

 

545

 

 

 

24,056

 

    Risk rating 6

 

 

 

 

 

763

 

 

 

98

 

 

 

63

 

 

 

157

 

 

 

12,065

 

 

 

 

 

 

 

 

13,146

 

    Risk rating 7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 8

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

31

 

 

 

 

 

 

 

 

32

 

Total construction/land development

 

 

341,166

 

 

 

599,757

 

 

 

183,845

 

 

 

102,191

 

 

 

42,918

 

 

 

99,911

 

 

 

 

 

192,510

 

 

 

1,562,298

 

Agricultural

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 1

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

$

 

 

$

 

    Risk rating 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 3

 

 

33,428

 

 

 

8,885

 

 

 

9,119

 

 

 

5,397

 

 

 

3,935

 

 

 

25,159

 

 

 

 

 

5,538

 

 

 

91,461

 

    Risk rating 4

 

 

2,141

 

 

 

535

 

 

 

1,206

 

 

 

681

 

 

 

5,499

 

 

 

10,735

 

 

 

 

 

665

 

 

 

21,462

 

    Risk rating 5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

116

 

 

 

 

 

 

 

 

116

 

    Risk rating 6

 

 

47

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,345

 

 

 

 

 

 

 

 

1,392

 

    Risk rating 7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total agricultural

 

 

35,616

 

 

 

9,420

 

 

 

10,325

 

 

 

6,078

 

 

 

9,434

 

 

 

37,355

 

 

 

 

 

6,203

 

 

 

114,431

 

Total commercial real estate loans

 

$

715,849

 

 

$

1,106,817

 

 

$

971,679

 

 

$

668,877

 

 

$

653,276

 

 

$

1,505,545

 

 

 

 

$

483,746

 

 

$

6,105,789

 

Residential real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential 1-4 family

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 1

 

$

 

 

$

47

 

 

$

 

 

$

 

 

$

76

 

 

$

12

 

 

 

 

$

120

 

 

$

255

 

    Risk rating 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

423

 

 

 

 

 

1,540

 

 

 

1,963

 

    Risk rating 3

 

 

237,991

 

 

 

184,578

 

 

 

151,478

 

 

 

139,096

 

 

 

119,642

 

 

 

343,381

 

 

 

 

 

119,186

 

 

 

1,295,352

 

    Risk rating 4

 

 

4,626

 

 

 

12,716

 

 

 

32,594

 

 

 

20,687

 

 

 

16,148

 

 

 

68,328

 

 

 

 

 

30,137

 

 

 

185,236

 

    Risk rating 5

 

 

 

 

 

 

 

 

1,363

 

 

 

4,700

 

 

 

383

 

 

 

5,344

 

 

 

 

 

516

 

 

 

12,306

 

    Risk rating 6

 

 

554

 

 

 

5,973

 

 

 

829

 

 

 

2,084

 

 

 

3,222

 

 

 

18,074

 

 

 

 

 

10,257

 

 

 

40,993

 

    Risk rating 7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

 

 

 

 

 

144

 

 

 

152

 

Total residential 1-4 family

 

 

243,171

 

 

 

203,314

 

 

 

186,264

 

 

 

166,567

 

 

 

139,471

 

 

 

435,570

 

 

 

 

 

161,900

 

 

 

1,536,257

 

Multifamily residential

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 1

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

$

 

 

$

 

    Risk rating 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 3

 

 

19,033

 

 

 

60,175

 

 

 

87,104

 

 

 

11,477

 

 

 

8,092

 

 

 

59,592

 

 

 

 

 

6,386

 

 

 

251,859

 

    Risk rating 4

 

 

477

 

 

 

6,358

 

 

 

101,364

 

 

 

93,475

 

 

 

1,924

 

 

 

17,672

 

 

 

 

 

37,286

 

 

 

258,556

 

    Risk rating 5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

24,945

 

 

 

 

 

 

 

 

24,945

 

    Risk rating 6

 

 

 

 

 

 

 

 

 

 

 

894

 

 

 

 

 

 

284

 

 

 

 

 

 

 

 

1,178

 

    Risk rating 7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total multifamily residential

 

 

19,510

 

 

 

66,533

 

 

 

188,468

 

 

 

105,846

 

 

 

10,016

 

 

 

102,493

 

 

 

 

 

43,672

 

 

 

536,538

 

Total real estate

 

$

978,530

 

 

$

1,376,664

 

 

$

1,346,411

 

 

$

941,290

 

 

$

802,763

 

 

$

2,043,608

 

 

 

 

$

689,318

 

 

$

8,178,584

 

 

28

 


 

 

 

 

 

December 31, 2020

 

 

 

Term Loans Amortized Cost Basis by Origination Year, Continued

 

 

 

 

 

 

 

 

 

 

 

 

 

2020

 

 

2019

 

 

2018

 

 

2017

 

 

2016

 

 

 

 

Prior

 

 

 

 

Revolving Loans Amortized Cost Basis

 

 

Total

 

 

 

(In thousands)

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 1

 

$

3,389

 

 

$

2,375

 

 

$

1,596

 

 

$

485

 

 

$

828

 

 

 

 

$

1,428

 

 

 

 

$

1,957

 

 

$

12,058

 

    Risk rating 2

 

 

 

 

 

47

 

 

 

931

 

 

 

 

 

 

 

 

 

 

 

12

 

 

 

 

 

57

 

 

 

1,047

 

    Risk rating 3

 

 

229,189

 

 

 

192,054

 

 

 

152,646

 

 

 

97,812

 

 

 

68,585

 

 

 

 

 

68,871

 

 

 

 

 

20,094

 

 

 

829,251

 

    Risk rating 4

 

 

3,699

 

 

 

3,479

 

 

 

2,769

 

 

 

1,411

 

 

 

1,371

 

 

 

 

 

1,991

 

 

 

 

 

117

 

 

 

14,837

 

    Risk rating 5

 

 

144

 

 

 

737

 

 

 

22

 

 

 

198

 

 

 

568

 

 

 

 

 

321

 

 

 

 

 

 

 

 

1,990

 

    Risk rating 6

 

 

12

 

 

 

361

 

 

 

566

 

 

 

3

 

 

 

2,052

 

 

 

 

 

2,468

 

 

 

 

 

45

 

 

 

5,507

 

    Risk rating 7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total consumer

 

 

236,433

 

 

 

199,053

 

 

 

158,530

 

 

 

99,909

 

 

 

73,404

 

 

 

 

 

75,091

 

 

 

 

 

22,270

 

 

 

864,690

 

Commercial and industrial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 1

 

$

632,735

 

 

$

506

 

 

$

271

 

 

$

183

 

 

$

20,199

 

 

 

 

$

1,445

 

 

 

 

$

10,023

 

 

$

665,362

 

    Risk rating 2

 

 

29

 

 

 

187

 

 

 

2

 

 

 

96

 

 

 

67

 

 

 

 

 

623

 

 

 

 

 

268

 

 

 

1,272

 

    Risk rating 3

 

 

80,586

 

 

 

131,717

 

 

 

62,814

 

 

 

35,651

 

 

 

39,502

 

 

 

 

 

52,743

 

 

 

 

 

135,590

 

 

 

538,603

 

    Risk rating 4

 

 

68,032

 

 

 

144,867

 

 

 

149,445

 

 

 

42,416

 

 

 

15,138

 

 

 

 

 

43,065

 

 

 

 

 

115,341

 

 

 

578,304

 

    Risk rating 5

 

 

3,195

 

 

 

16,341

 

 

 

11,283

 

 

 

346

 

 

 

251

 

 

 

 

 

448

 

 

 

 

 

10,637

 

 

 

42,501

 

    Risk rating 6

 

 

1,261

 

 

 

4,086

 

 

 

30,834

 

 

 

22,992

 

 

 

2,615

 

 

 

 

 

5,198

 

 

 

 

 

3,405

 

 

 

70,391

 

    Risk rating 7

 

 

 

 

 

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

 

    Risk rating 8

 

 

1

 

 

 

 

 

 

1

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

 

 

 

 

6

 

Total commercial and industrial

 

 

785,839

 

 

 

297,707

 

 

 

254,650

 

 

 

101,684

 

 

 

77,776

 

 

 

 

 

103,522

 

 

 

 

 

275,264

 

 

 

1,896,442

 

Agricultural and other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 1

 

$

59,248

 

 

$

51

 

 

$

53

 

 

$

 

 

$

110

 

 

 

 

$

27

 

 

 

 

$

1,036

 

 

$

60,525

 

    Risk rating 2

 

 

16

 

 

 

4,571

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,859

 

 

 

 

 

1,159

 

 

 

8,605

 

    Risk rating 3

 

 

78,305

 

 

 

7,045

 

 

 

5,050

 

 

 

5,045

 

 

 

18,445

 

 

 

 

 

36,925

 

 

 

 

 

42,401

 

 

 

193,216

 

    Risk rating 4

 

 

1,043

 

 

 

5,041

 

 

 

1,592

 

 

 

1,096

 

 

 

895

 

 

 

 

 

1,703

 

 

 

 

 

4,600

 

 

 

15,970

 

    Risk rating 5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

605

 

 

 

 

 

 

 

 

605

 

    Risk rating 6

 

 

 

 

 

219

 

 

 

18

 

 

 

 

 

 

223

 

 

 

 

 

1,624

 

 

 

 

 

 

 

 

2,084

 

    Risk rating 7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Risk rating 8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total agricultural and other

 

 

138,612

 

 

 

16,927

 

 

 

6,713

 

 

 

6,141

 

 

 

19,673

 

 

 

 

 

43,743

 

 

 

 

 

49,196

 

 

 

281,005

 

Total

 

$

2,139,414

 

 

$

1,890,351

 

 

$

1,766,304

 

 

$

1,149,024

 

 

$

973,616

 

 

 

 

$

2,265,964

 

 

 

 

$

1,036,048

 

 

$

11,220,721

 

 

29

 


 

 

The Company considers the performance of the loan portfolio and its impact on the allowance for credit losses. The Company also evaluates credit quality based on the aging status of the loan, which was previously presented and by payment activity. The following tables present the amortized cost of performing and nonperforming loans as of September 30, 2021 and December 31, 2020.

 

 

 

September 30, 2021

 

 

 

Term Loans Amortized Cost Basis by Origination Year

 

 

 

 

 

 

 

 

 

 

 

2021

 

 

2020

 

 

2019

 

 

2018

 

 

2017

 

 

Prior

 

 

Revolving Loans Amortized Cost Basis

 

 

Total

 

 

 

(In thousands)

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-farm/non-residential

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Performing

 

$

289,385

 

 

$

316,115

 

 

$

437,231

 

 

$

657,174

 

 

$

371,874

 

 

$

1,406,655

 

 

$

277,624

 

 

$

3,756,058

 

    Non-performing

 

 

 

 

 

10,147

 

 

 

14,880

 

 

 

20,201

 

 

 

37,885

 

 

 

166,670

 

 

 

 

 

 

249,783

 

Total non-farm/

    non-residential

 

 

289,385

 

 

 

326,262

 

 

 

452,111

 

 

 

677,375

 

 

 

409,759

 

 

 

1,573,325

 

 

 

277,624

 

 

 

4,005,841

 

Construction/land

    development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Performing

 

$

267,934

 

 

$

443,330

 

 

$

602,793

 

 

$

79,757

 

 

$

63,382

 

 

$

90,488

 

 

$

189,802

 

 

$

1,737,486

 

    Non-performing

 

 

 

 

 

115

 

 

 

1,193

 

 

 

8

 

 

 

1

 

 

 

3,884

 

 

 

 

 

 

5,201

 

Total construction/

    land development

 

 

267,934

 

 

 

443,445

 

 

 

603,986

 

 

 

79,765

 

 

 

63,383

 

 

 

94,372

 

 

 

189,802

 

 

 

1,742,687

 

Agricultural

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Performing

 

$

22,482

 

 

$

32,873

 

 

$

8,372

 

 

$

7,837

 

 

$

6,183

 

 

$

52,387

 

 

$

8,004

 

 

$

138,138

 

    Non-performing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

743

 

 

 

 

 

 

743

 

Total agricultural

 

 

22,482

 

 

 

32,873

 

 

 

8,372

 

 

 

7,837

 

 

 

6,183

 

 

 

53,130

 

 

 

8,004

 

 

 

138,881

 

Total commercial real estate

    loans

 

$

579,801

 

 

$

802,580

 

 

$

1,064,469

 

 

$

764,977

 

 

$

479,325

 

 

$

1,720,827

 

 

$

475,430

 

 

$

5,887,409

 

Residential real estate loans

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential 1-4 family

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Performing

 

$

182,588

 

 

$

156,843

 

 

$

150,130

 

 

$

131,375

 

 

$

113,265

 

 

$

400,128

 

 

$

118,266

 

 

$

1,252,595

 

    Non-performing

 

 

258

 

 

 

2,670

 

 

 

2,198

 

 

 

1,197

 

 

 

1,384

 

 

 

7,635

 

 

 

6,051

 

 

 

21,393

 

Total residential 1-4

    family

 

 

182,846

 

 

 

159,513

 

 

 

152,328

 

 

 

132,572

 

 

 

114,649

 

 

 

407,763

 

 

 

124,317

 

 

 

1,273,988

 

Multifamily residential

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Performing

 

$

8,496

 

 

$

21,514

 

 

$

62,345

 

 

$

46,030

 

 

$

21,901

 

 

$

68,855

 

 

$

44,829

 

 

$

273,970

 

    Non-performing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

161

 

 

 

 

 

 

161

 

Total multifamily

    residential

 

 

8,496

 

 

 

21,514

 

 

 

62,345

 

 

 

46,030

 

 

 

21,901

 

 

 

69,016

 

 

 

44,829

 

 

 

274,131

 

Total real estate

 

$

771,143

 

 

$

983,607

 

 

$

1,279,142

 

 

$

943,579

 

 

$

615,875

 

 

$

2,197,606

 

 

$

644,576

 

 

$

7,435,528

 

Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    Performing

 

$

159,355

 

 

$

192,386

 

 

$

152,253

 

 

$

120,554

 

 

$

72,967

 

 

$

106,619

 

 

$

8,662

 

 

$</