FIRST FINANCIAL BANKSHARES INC - Quarter Report: 2019 March (Form 10-Q)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

Commission file number 0-7674

 

 

FIRST FINANCIAL BANKSHARES, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Texas		75-0944023
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
400 Pine Street, Abilene, Texas		79601
(Address of principal executive offices)		(Zip Code)

(325) 627-7155

(Registrant’s telephone number, including area code)

 

 

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 (§232.405 of this chapter) 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 the definitions 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 Act).    Yes  ☐    No  ☒

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

 

Class		Outstanding at April 30, 2019
Common Stock, $0.01 par value per share		135,702,134 (see note 2)

 

 

 

TABLE OF

CONTENTS

PART I

FINANCIAL INFORMATION

 

Item				Page
1.		Financial Statements			3
		Consolidated Balance Sheets – Unaudited			4
		Consolidated Statements of Earnings – Unaudited			5
		Consolidated Statements of Comprehensive Earnings – Unaudited			6
		Consolidated Statements of Shareholders’ Equity – Unaudited			7
		Consolidated Statements of Cash Flows – Unaudited			8
		Notes to Consolidated Financial Statements – Unaudited			9
2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			34
3.		Quantitative and Qualitative Disclosures About Market Risk			51
4.		Controls and Procedures			51
		PART II   OTHER INFORMATION
1.		Legal Proceedings			52
1A.		Risk Factors			52
2.		Unregistered Sales of Equity Securities and Use of Proceeds			52
3.		Defaults Upon Senior Securities			52
4.		Mine Safety Disclosures			52
5.		Other Information			52
6.		Exhibits			53
		Signatures			54

 

2

PART I

FINANCIAL INFORMATION

 

Item 1.

Financial Statements.

The consolidated balance sheets of First Financial Bankshares, Inc. (the “Company” or “we”) at March 31, 2019 and 2018 and December 31, 2018, and the consolidated statements of earnings, comprehensive earnings, shareholders’ equity and cash flows for the three months ended March 31, 2019 and 2018, follow on pages 4 through 8.

 

3

FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)

 

		March 31,								December 31,
		2019				2018				2018
		(Unaudited)
ASSETS
CASH AND DUE FROM BANKS		$	176,278			$	130,979			$	207,835
FEDERAL FUNDS SOLD			12,825				—				—
INTEREST-BEARING DEPOSITS IN BANKS			197,758				67,060				40,812
Total cash and cash equivalents			386,861				198,039				248,647
INTEREST-BEARING TIME DEPOSITS IN BANKS			1,458				1,458				1,458
SECURITIES AVAILABLE-FOR-SALE, at fair value			3,212,812				3,276,193				3,158,777
LOANS:
Held for investment			3,989,160				3,730,051				3,953,636
Less – allowance for loan losses			(51,585	)			(49,499	)			(51,202	)
Net loans held for investment			3,937,575				3,680,552				3,902,434
Held for sale ($12,007 at fair value at March 31, 2019; none at March 31, 2018; and $19,185 at December 31, 2018)			14,446				17,030				21,672
Net loans			3,952,021				3,697,582				3,924,106
BANK PREMISES AND EQUIPMENT, net			135,321				126,446				133,421
INTANGIBLE ASSETS			174,415				175,569				174,683
OTHER ASSETS			83,007				92,162				90,762
Total assets		$	7,945,895			$	7,567,449			$	7,731,854
LIABILITIES AND SHAREHOLDERS’ EQUITY
NONINTEREST-BEARING DEPOSITS		$	2,165,745			$	2,111,116			$	2,116,107
INTEREST-BEARING DEPOSITS			4,184,996				4,079,647				4,064,282
Total deposits			6,350,741				6,190,763				6,180,389
DIVIDENDS PAYABLE			14,244				12,589				14,227
BORROWINGS			382,711				372,155				468,706
OTHER LIABILITIES			90,677				22,128				15,237
Total liabilities			6,838,373				6,597,635				6,678,559
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY:
Common stock – ($0.01 par value, authorized 200,000,000 shares;
135,680,420, 67,612,760 and 67,753,133 shares issued at March 31, 2019 and 2018 and December 31, 2018, respectively)			1,356				676				678
Capital surplus			445,672				437,868				443,114
Retained earnings			629,988				533,427				606,658
Treasury stock (shares at cost: 928,678, 493,994 and 467,811 at March 31, 2019 and 2018, and December 31, 2018, respectively)			(7,660	)			(7,291	)			(7,507	)
Deferred compensation			7,660				7,291				7,507
Accumulated other comprehensive earnings (loss)			30,506				(2,157	)			2,845
Total shareholders’ equity			1,107,522				969,814				1,053,295
Total liabilities and shareholders’ equity		$	7,945,895			$	7,567,449			$	7,731,854

See notes to consolidated financial statements.

 

4

FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS – (UNAUDITED)

(Dollars in thousands, except per share amounts)

 

		Three Months Ended March 31,
		2019				2018
INTEREST INCOME:
Interest and fees on loans		$	53,232			$	46,746
Interest on investment securities:
Taxable			13,289				11,354
Exempt from federal income tax			9,763				10,341
Interest on federal funds sold and interest-bearing deposits in banks			617				641
Total interest income			76,901				69,082
INTEREST EXPENSE:
Interest on deposits			6,661				3,519
Other			726				114
Total interest expense			7,387				3,633
Net interest income			69,514				65,449
PROVISION FOR LOAN LOSSES			965				1,310
Net interest income after provision for loan losses			68,549				64,139
NONINTEREST INCOME:
Trust fees			6,979				6,904
Service charges on deposit accounts			5,176				4,884
ATM, interchange and credit card fees			6,840				6,996
Real estate mortgage operations			3,474				2,933
Net gain on sale of available-for-sale securities (includes $0 and $1,221 for the three months ended March 31, 2019 and 2018, respectively, related to accumulated other comprehensive earnings reclassifications)			—				1,221
Net gain on sale of foreclosed assets			69				99
Net (loss) gain on sale of assets			—				(91	)
Interest on loan recoveries			338				119
Other			1,561				1,358
Total noninterest income			24,437				24,423
NONINTEREST EXPENSE:
Salaries and employee benefits			27,424				26,203
Net occupancy expense			2,763				2,883
Equipment expense			3,127				3,516
FDIC insurance premiums			538				566
ATM, interchange and credit card expenses			2,383				2,143
Professional and service fees			1,832				2,413
Printing, stationery and supplies			366				486
Operational and other losses			266				566
Software amortization and expense			923				524
Amortization of intangible assets			269				387
Other			7,476				8,111
Total noninterest expense			47,367				47,798
EARNINGS BEFORE INCOME TAXES			45,619				40,764
INCOME TAX EXPENSE (includes $0 and $256 for the three months ended March 31, 2019 and 2018, respectively, related to income tax expense reclassification)			7,367				6,245
NET EARNINGS		$	38,252			$	34,519
EARNINGS PER SHARE, BASIC		$	0.28			$	0.26
EARNINGS PER SHARE, ASSUMING DILUTION		$	0.28			$	0.25
DIVIDENDS PER SHARE		$	0.11			$	0.10

See notes to consolidated financial statements.

 

5

FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS – (UNAUDITED)

(Dollars in thousands)

 

		Three Months Ended March 31,
		2019				2018
NET EARNINGS		$	38,252			$	34,519
OTHER ITEMS OF COMPREHENSIVE EARNINGS (LOSS):
Change in unrealized gain on investment securities available-for-sale, before income taxes			35,014				(42,706	)
Reclassification adjustment for realized gains on investment securities included in net earnings, before income taxes			—				(1,221	)
Total other items of comprehensive earnings (loss)			35,014				(43,927	)
Income tax benefit (expense) related to other items of comprehensive earnings			(7,353	)			9,225
Reclassification of certain income tax effects related to the change in the U.S. statutory federal income tax rate under the Tax Cuts and Jobs Act to retained earnings			—				5,759
COMPREHENSIVE EARNINGS		$	65,913			$	5,576

See notes to consolidated financial statements.

 

6

FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Dollars in thousands, except per share amounts)

 

																														Accumulated
																														Other				Total
		Common Stock								Capital				Retained				Treasury Stock								Deferred				Comprehensive				Shareholders’
		Shares				Amount				Surplus				Earnings				Shares				Amounts				Compensation				Earnings				Equity
Balances at December 31, 2017			66,260,444			$	663			$	378,062			$	517,257				(495,964	)		$	(7,148	)		$	7,148			$	26,786			$	922,768
Net earnings (unaudited)			—				—				—				34,519				—				—				—				—				34,519
Stock option exercises (unaudited)			62,945				—				1,355				—				—				—				—				—				1,355
Cash dividends declared, $0.10 per share (unaudited)			—				—				—				(12,590	)			—				—				—				—				(12,590	)
Stock issued in acquisition of Commercial Bancshares, Inc.			1,289,371				13				58,074				—				—				—				—				—				58,087
Change in unrealized gain in investment securities available-for-sale, net of related income taxes (unaudited)			—				—				—				—				—				—				—				(34,702	)			(34,702	)
Shares purchased (redeemed) in connection with directors’ deferred compensation plan, net (unaudited)			—				—				—				—				—   1,970				(143	)			143				—				—
Stock option expense (unaudited)			—				—				377				—				—				—				—				—				377
Reclassification of certain income tax effects related to the change in the U.S. statutory federal income tax rate under the Tax Cuts and Jobs Act to retained earnings			—				—				—				(5,759	)			—				—				—				5,759				—
Balances at March 31, 2018 (unaudited)			67,612,760			$	676			$	437,868			$	533,427				(493,994	)		$	(7,291	)		$	7,291			$	(2,157	)		$	969,814
Balances at December 31, 2018			67,753,133			$	678			$	443,114			$	606,658				(467,811	)		$	(7,507	)		$	7,507			$	2,845			$	1,053,295
Net earnings (unaudited)			—				—				—				38,252				—				—				—				—				38,252
Stock option exercises (unaudited)			87,077				—				2,246				—				—				—				—				—				2,246
Cash dividends declared, $0.11 per share (unaudited)			—				—				—				(14,244	)			—				—				—				—				(14,244	)
Change in unrealized gain in investment securities available-for-sale, net of related income taxes (unaudited)			—				—				—				—				—				—				—				27,661				27,661
Shares purchased (redeemed) in connection with directors’ deferred compensation plan, net (unaudited)			—				—				—				—				3,472				(153	)			153				—				—
Stock option expense (unaudited)			—				—				312				—				—				—				—				—				312
Two-for-one stock spllit in the form of a 100% stock dividend (unaudited)			67,840,210				678								(678	)			(464,339	)			—				—				—				—
Balances at March 31, 2019 (unaudited)			135,680,420			$	1,356			$	445,672			$	629,988				(928,678	)		$	(7,660	)		$	7,660			$	30,506			$	1,107,522

See notes to consolidated financial statements.

 

7

FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS – (UNAUDITED)

(Dollars in thousands)

 

		Three Months Ended March 31,
		2019				2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings		$	38,252			$	34,519
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization			2,982				3,178
Provision for loan losses			965				1,310
Securities premium amortization (discount accretion), net			6,132				7,185
Gain (loss) on sale of assets, net			83				(1,229	)
Deferred federal income tax benefit			—				261
Change in loans held-for-sale			6,953				(1,901	)
Change in other assets			7,927				(4,462	)
Change in other liabilities			8,972				6,269
Total adjustments			34,014				10,611
Net cash provided by operating activities			72,266				45,130
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash received in acquisition of Commercial Bancshares, Inc.			—				18,653
Activity in available-for-sale securities:
Sales			231				91,445
Maturities			106,188				107,980
Purchases			(72,142	)			(373,547	)
Net decrease (increase) in loans			(36,070	)			21,753
Purchases of bank premises and equipment and other assets			(4,700	)			(1,808	)
Proceeds from sale of bank premises and equipment and other assets			65				266
Net cash used in investing activities			(6,428	)			(135,258	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in noninterest-bearing deposits			49,638				(92,574	)
Net increase (decrease) in interest-bearing deposits			120,714				(21,526	)
Net increase (decrease) in borrowings			(85,995	)			41,155
Common stock transactions:
Proceeds from stock issuances			2,246				1,355
Dividends paid			(14,227	)			(12,590	)
Net cash provided by (used in) financing activities			72,376				(84,180	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			138,214				(174,308	)
CASH AND CASH EQUIVALENTS, beginning of period			248,647				372,347
CASH AND CASH EQUIVALENTS, end of period		$	386,861			$	198,039
SUPPLEMENTAL INFORMATION AND NONCASH TRANSACTIONS:
Interest paid		$	7,220			$	3,635
Transfer of loans and bank premises to other real estate			237				126
Investment securities purchased but not settled			59,397				—

See notes to consolidated financial statements.

 

8

FIRST FINANCIAL BANKSHARES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1 – Basis of Presentation

The unaudited interim consolidated financial statements include the accounts of the Company, a Texas corporation and a financial holding company registered under the Bank Holding Company Act of 1956, as amended, or BHCA, and its wholly-owned subsidiaries: First Financial Bank, National Association, Abilene, Texas; First Technology Services, Inc.; First Financial Trust & Asset Management Company, National Association; First Financial Investments, Inc.; and First Financial Insurance Agency, Inc.

Through our subsidiary bank, we conduct a full-service commercial banking business. Our banking centers are located primarily in Central, North Central, Southeast and West Texas. As of March 31, 2019, we had 73 financial centers across Texas, with eleven locations in Abilene, three locations in Weatherford, two locations in Cleburne, Conroe, San Angelo, Stephenville and Granbury, and one location each in Acton, Albany, Aledo, Alvarado, Beaumont, Boyd, Bridgeport, Brock, Burleson, Cisco, Clyde, Cut and Shoot, Decatur, Eastland, El Campo, Fort Worth, Fulshear, Glen Rose, Grapevine, Hereford, Huntsville, Keller, Kingwood, Magnolia, Mauriceville, Merkel, Midlothian, Mineral Wells, Montgomery, Moran, New Waverly, Newton, Odessa, Orange, Palacios, Port Arthur, Ranger, Rising Star, Roby, Southlake, Spring, Sweetwater, Tomball, Trent, Trophy Club, Vidor, Waxahachie, Willis and Willow Park, all in Texas. Our trust subsidiary has eight locations which are located in Abilene, Fort Worth, Houston, Odessa, Beaumont, San Angelo, Stephenville and Sweetwater.

In the opinion of management, the unaudited interim consolidated financial statements reflect all adjustments necessary for a fair presentation of the Company’s financial position and unaudited results of operations and should be read in conjunction with the Company’s audited consolidated financial statements, and notes thereto in the Company’s Annual Report on Form 10-K, for the year ended December 31, 2018. All adjustments were of a normal recurring nature. However, the results of operations for the three months ended March 31, 2019, are not necessarily indicative of the results to be expected for the year ending December 31, 2019, due to seasonality, changes in economic conditions and loan credit quality, interest rate fluctuations, regulatory and legislative changes and other factors. The preparation of financial statements in conformity with United States generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the financial statement date. Actual results could vary. Certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted under U.S. Securities and Exchange Commission (“SEC”) rules and regulations. The Company evaluated subsequent events for potential recognition and/or disclosure through the date the consolidated financial statements were issued.

Goodwill and other intangible assets are evaluated annually for impairment as of the end of the second quarter. No such impairment has been noted in connection with the current or any prior evaluations.

Note 2 – Stock Split and Stock Repurchase

On April 23, 2019, the Company’s Board of Directors declared a two-for-one stock split in the form of a 100% stock dividend effective for shareholders of record on May 15, 2019 to be distributed on June 3, 2019. All per share amounts in this report have been restated to reflect this stock split. An amount equal to the par value of the additional common shares to be issued pursuant to the stock split was reflected as a transfer from retained earnings to common stock on the consolidated financial statements as of and for the three months ended March 31, 2019.

On July 25, 2017, the Company’s Board of Directors authorized the repurchase of up to 2,000,000 common shares through September 30, 2020. The shares buyback plan authorizes management to repurchase the shares at such time as repurchases are considered beneficial to shareholders. Any

 

9

repurchase of shares will be made through the open market, block trades or in privately negotiated transactions in accordance with applicable laws and regulations. Under the repurchase plan, there is no minimum number of shares that the Company is required to repurchase. Through March 31, 2019, no shares were repurchased under this authorization.

Note 3 – Earnings Per Share

Basic earnings per common share is computed by dividing net income available to common shareholders by the weighted average number of shares outstanding during the periods presented. In computing diluted earnings per common share for the three months ended March 31, 2019 and 2018, the Company assumes that all dilutive outstanding options to purchase common shares have been exercised at the beginning of the period (or the time of issuance, if later). The dilutive effect of these outstanding options and the restricted shares is reflected by application of the treasury stock method, whereby the proceeds from exercised options and restricted shares are assumed to be used to purchase common shares at the average market price during the respective periods. The weighted average common shares outstanding used in computing basic earnings per common share for the three months ended March 31, 2019 and 2018 were 135,494,254 and 135,054,020 shares, respectively. The weighted average common shares outstanding used in computing fully diluted earnings per common share for the three months ended March 31, 2019 and 2018 were 136,286,862 and 135,599,090 shares, respectively. For the three months ended March 31, 2019 and 2018, there were no stock options that were anti-dilutive that have been excluded from the EPS calculation.

Note 4 – Interest-bearing Time Deposits in Banks and Securities

Interest-bearing time deposits in banks totaled $1,458,000 at March 31, 2019 and 2018 and December 31, 2018, respectively, and at March 31, 2019 have original maturities within twelve months.

Management classifies debt and equity securities as held-to-maturity, available-for-sale, or trading based on its intent. Debt securities that management has the positive intent and ability to hold to maturity are classified as held-to-maturity and recorded at cost, adjusted for amortization of premiums and accretion of discounts, which are recognized as adjustments to interest income using the interest method. Debt securities not classified as held-to-maturity or trading are classified as available-for-sale and recorded at fair value, with all unrealized gains and unrealized losses judged to be temporary, net of deferred income taxes, excluded from earnings and reported in the consolidated statements of comprehensive earnings. Available-for-sale debt securities that have unrealized gains and losses are excluded from earnings and reported net of tax in accumulated other comprehensive income until realized. Declines in the fair value of available-for-sale debt securities below their cost that are deemed to be other-than-temporary are reflected in earnings as a realized loss if there is no ability or intent to hold to recovery. If the Company does not intend to sell and will not be required to sell prior to recovery of its amortized cost basis, only the credit component of the impairment is reflected in earnings as a realized loss with the noncredit portion recognized in other comprehensive income. In estimating other-than-temporary impairment losses, we consider (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) our intent and ability to retain our investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

Effective January 1, 2018, in accordance with ASU 2016-01 (see note 13), increases or decreases in the fair value of equity securities are recorded in earnings. Prior to January 1, 2018, such increases or decreases were recorded similar to increases or decreases in debt securities.

The Company records its available-for-sale and equity securities portfolio at fair value. Fair values of these securities are determined based on methodologies in accordance with current authoritative accounting guidance. Fair values are volatile and may be influenced by a number of factors, including market interest rates, prepayment speeds, discount rates, credit ratings and yield curves. Fair values for investment securities are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on the quoted prices of similar instruments or an estimate of fair value by using a range of fair value estimates in the market place as a result of the illiquid market specific to the type of security.

 

10

When the fair value of a debt security is below its amortized cost, and depending on the length of time the condition exists and the extent the fair value is below amortized cost, additional analysis is performed to determine whether an other-than-temporary impairment condition exists. Available-for-sale and held-to-maturity debt securities are analyzed quarterly for possible other-than-temporary impairment. The analysis considers (i) whether we have the intent to sell our debt securities prior to recovery and/or maturity, (ii) whether it is more likely than not that we will have to sell our debt securities prior to recovery and/or maturity, (iii) the length of time and extent to which the fair value has been less than amortized cost, and (iv) the financial condition of the issuer. Often, the information available to conduct these assessments is limited and rapidly changing, making estimates of fair value subject to judgment. If actual information or conditions are different than estimated, the extent of the impairment of the debt security may be different than previously estimated, which could have a material effect on the Company’s results of operations and financial condition.

The Company’s investment portfolio consists of U.S. Treasury securities, obligations of U.S. government sponsored enterprises and agencies, obligations of state and political subdivisions, mortgage pass-through securities, corporate bonds and general obligation or revenue based municipal bonds. Pricing for such securities is generally readily available and transparent in the market. The Company utilizes independent third-party pricing services to value its investment securities, which the Company reviews as well as the underlying pricing methodologies for reasonableness and to ensure such prices are aligned with pricing matrices. The Company validates prices supplied by the independent pricing services by comparison to prices obtained from other third-party sources on a quarterly basis.

A summary of the Company’s available-for-sale securities follows (in thousands):

 

		March 31, 2019
		Amortized Cost Basis				Gross Unrealized Holding Gains				Gross Unrealized Holding Losses				Estimated Fair Value
U.S. Treasury securities		$	9,977			$	14			$	—			$	9,991
Obligations of states and political subdivisions			1,196,111				44,155				(536	)			1,239,730
Corporate bonds and other			4,874				—				(15	)			4,859
Residential mortgage-backed securities			1,519,004				8,506				(11,222	)			1,516,288
Commercial mortgage-backed securities			442,569				1,771				(2,396	)			441,944
Total securities available-for-sale		$	3,172,535			$	54,446			$	(14,169	)		$	3,212,812

 

11

		March 31, 2018
		Amortized Cost Basis				Gross Unrealized Holding Gains				Gross Unrealized Holding Losses				Estimated Fair Value
Obligations of U.S. government sponsored enterprises and agencies		$	50,467			$	—			$	(252	)		$	50,215
Obligations of states and political subdivisions			1,289,886				33,014				(2,767	)			1,320,133
Corporate bonds and other			9,382				—				(55	)			9,327
Residential mortgage-backed securities			1,449,482				2,912				(24,622	)			1,427,772
Commercial mortgage-backed securities			476,060				235				(7,549	)			468,746
Total securities available-for-sale		$	3,275,277			$	36,161			$	(35,245	)		$	3,276,193

 

		December 31, 2018
		Amortized Cost Basis				Gross Unrealized Holding Gains				Gross Unrealized Holding Losses				Estimated Fair Value
U.S. Treasury securities		$	9,970			$	—			$	(8	)		$	9,962
Obligations of U.S. government sponsored enterprises and agencies			301				—				—				301
Obligations of states and political subdivisions			1,229,828				30,013				(1,970	)			1,257,871
Corporate bonds and other			4,875				—				(77	)			4,798
Residential mortgage-backed securities			1,472,228				3,928				(21,611	)			1,454,545
Commercial mortgage-backed securities			436,366				670				(5,736	)			431,300
Total securities available-for-sale		$	3,153,568			$	34,611			$	(29,402	)		$	3,158,777

The Company invests in mortgage-backed securities that have expected maturities that differ from their contractual maturities. These differences arise because borrowers may have the right to call or prepay obligations with or without a prepayment penalty. These securities include collateralized mortgage obligations (CMOs) and other asset backed securities. The expected maturities of these securities at March 31, 2019 were computed by using scheduled amortization of balances and historical prepayment rates. At March 31, 2019 and 2018, and December 31, 2018, the Company did not hold CMOs that entail higher risks than standard mortgage-backed securities.

The amortized cost and estimated fair value of available-for-sale securities at March 31, 2019, by contractual and expected maturity, are shown below (in thousands):

 

		Amortized Cost Basis				Estimated Fair Value
Due within one year		$	176,257			$	177,722
Due after one year through five years			554,136				575,051
Due after five years through ten years			478,849				499,689
Due after ten years			1,720				2,118
Mortgage-backed securities			1,961,573				1,958,232
Total		$	3,172,535			$	3,212,812

 

12

The following tables disclose the Company’s investment securities that have been in a continuous unrealized-loss position for less than 12 months and for 12 or more months (in thousands):

 

		Less than 12 Months								12 Months or Longer								Total
March 31, 2019		Fair Value				Unrealized Loss				Fair Value				Unrealized Loss				Fair Value				Unrealized Loss
Obligations of states and political subdivisions		$	2,807			$	13			$	48,068			$	523			$	50,875			$	536
Corporate bonds and other			—				—				4,873				15				4,873				15
Residential mortgage-backed securities			2,473				17				854,482				11,205				856,955				11,222
Commercial mortgage-backed securities			—				—				303,637				2,396				303,637				2,396
Total		$	5,280			$	30			$	1,211,060			$	14,139			$	1,216,340			$	14,169

 

		Less than 12 Months								12 Months or Longer								Total
March 31, 2018		Fair Value				Unrealized Loss				Fair Value				Unrealized Loss				Fair Value				Unrealized Loss
Obligations of U.S. government sponsored enterprises and agencies		$	50,215			$	252			$	—			$	—			$	50,215			$	252
Obligations of states and political subdivisions			156,791				1,103				43,335				1,664				200,126				2,767
Corporate bonds and other			9,135				51				235				4				9,370				55
Residential mortgage-backed securities			963,962				16,825				224,777				7,797				1,188,739				24,622
Commercial mortgage-backed securities			319,062				6,056				89,801				1,493				408,863				7,549
Total		$	1,499,165			$	24,287			$	358,148			$	10,958			$	1,857,313			$	35,245

 

		Less than 12 Months								12 Months or Longer								Total
December 31, 2018		Fair Value				Unrealized Loss				Fair Value				Unrealized Loss				Fair Value				Unrealized Loss
U.S. Treasury securities		$	9,962			$	8			$	—			$	—			$	9,962			$	8
Obligations of U.S. government sponsored enterprises and agencies			—				—				301				—				301				—
Obligations of state and political subdivisions			27,489				107				114,461				1,863				141,950				1,970
Corporate bonds and other			4,348				68				450				9				4,798				77
Residential mortgage-backed securities			119,584				483				922,289				21,128				1,041,873				21,611
Commercial mortgage-backed securities			1,994				5				343,015				5,731				345,009				5,736
Total		$	163,377			$	671			$	1,380,516			$	28,731			$	1,543,893			$	29,402

 

13

The number of investments in an unrealized loss position totaled 245 at March 31, 2019. We do not believe these unrealized losses are “other-than-temporary” as (i) we do not have the intent to sell our securities prior to recovery and/or maturity and (ii) it is more likely than not that we will not have to sell our securities prior to recovery and/or maturity. In making this determination, we also consider the length of time and extent to which fair value has been less than cost and the financial condition of the issuer. The unrealized losses noted are interest rate related due to the level of interest rates at March 31, 2019 compared to the time of purchase. We have reviewed the ratings of the issuers and have not identified any issues related to the ultimate repayment of principal as a result of credit concerns on these securities. Our mortgage related securities are backed by GNMA, FNMA and FHLMC or are collateralized by securities backed by these agencies. At March 31, 2019, 84.98% of our available-for-sale securities that are obligations of states and political subdivisions were issued within the State of Texas, of which 33.90% are guaranteed by the Texas Permanent School Fund.

At March 31, 2019, $2,119,995,000 of the Company’s securities were pledged as collateral for public or trust fund deposits, repurchase agreements and for other purposes required or permitted by law.

During the quarters ended March 31, 2019 and 2018, sales of investment securities that were classified as available-for-sale totaled $231,000 and $91,445,000, respectively. Gross realized gains from security sales during the first quarter of 2019 and 2018 totaled $4,000 and $1,242,000, respectively. Gross realized losses from security sales during the first quarter of 2019 and 2018 totaled $4,000 and $21,000, respectively.

The specific identification method was used to determine cost in order to compute the realized gains and losses.

Note 5 – Loans Held for Investment and Allowance for Loan Losses

Loans held for investment are stated at the amount of unpaid principal, reduced by unearned income and an allowance for loan losses. Interest on loans is calculated by using the simple interest method on daily balances of the principal amounts outstanding. The Company defers and amortizes net loan origination fees and costs as an adjustment to yield. The allowance for loan losses is established through a provision for loan losses charged to expense. Loans are charged against the allowance for loan losses when management believes the collectability of the principal is unlikely.

The Company has certain lending policies and procedures in place that are designed to maximize loan income with an acceptable level of risk. Management reviews and approves these policies and procedures on an annual basis and makes changes as appropriate. Management receives and reviews monthly reports related to loan originations, quality, concentrations, delinquencies, nonperforming and potential problem loans. Diversification in the loan portfolio is a means of managing risk associated with fluctuations in economic conditions, both by type of loan and geographic location.

Commercial loans are underwritten after evaluating and understanding the borrower’s ability to operate profitably and effectively. Underwriting standards are designed to determine whether the borrower possesses sound business ethics and practices and to evaluate current and projected cash flows to determine the ability of the borrower to repay their obligations as agreed. Commercial loans are primarily made based on the identified cash flows of the borrower and, secondarily, on the underlying collateral provided by the borrower. Most commercial loans are secured by the assets being financed or other business assets, such as accounts receivable or inventory, and include personal guarantees.

Agricultural loans are subject to underwriting standards and processes similar to commercial loans. These agricultural loans are based primarily on the identified cash flows of the borrower and secondarily on the underlying collateral provided by the borrower. Most agricultural loans are secured by the agriculture related assets being financed, such as farm land, cattle or equipment, and include personal guarantees.

 

14

Real estate loans are also subject to underwriting standards and processes similar to commercial and agricultural loans. These loans are underwritten primarily based on projected cash flows and, secondarily, as loans secured by real estate. The repayment of real estate loans is generally largely dependent on the successful operation of the property securing the loans or the business conducted on the property securing the loan. Real estate loans may be more adversely affected by conditions in the real estate markets or in the general economy. The properties securing the Company’s real estate portfolio are generally diverse in terms of type and geographic location within Texas. This diversity helps reduce the exposure to adverse economic events that affect any single market or industry. Generally, real estate loans are owner occupied which further reduces the Company’s risk.

Consumer loan underwriting utilizes methodical credit standards and analysis to supplement the Company’s underwriting policies and procedures. The Company’s loan policy addresses types of consumer loans that may be originated and the collateral, if secured, which must be perfected. The relatively smaller individual dollar amounts of consumer loans that are spread over numerous individual borrowers also minimize the Company’s risk.

The allowance for loan losses is an amount which represents management’s best estimate of probable losses that are inherent in the Company’s loan portfolio as of the balance sheet date. The allowance for loan losses is comprised of three elements: (i) specific reserves determined based on probable losses on specific classified loans; (ii) a historical valuation reserve component that considers historical loss rates and estimated loss emergence periods; and (iii) qualitative reserves based upon general economic conditions and other qualitative risk factors both internal and external to the Company. The allowance for loan losses is increased by charges to income and decreased by charge-offs (net of recoveries). Management’s periodic evaluation of the appropriateness of the allowance is based on general economic conditions, the financial condition of borrowers, the value and liquidity of collateral, delinquency, prior loan loss experience, and the results of periodic reviews of the portfolio. For purposes of determining our historical valuation reserve, the loan portfolio, less cash secured loans, government guaranteed loans and classified loans, is multiplied by the Company’s historical loss rate adjusted for the estimated loss emergence period. Specific allocations are increased or decreased in accordance with deterioration or improvement in credit quality and a corresponding increase or decrease in risk of loss on a particular loan. In addition, we adjust our allowance for qualitative factors such as current local economic conditions and trends, including, without limitations, unemployment, oil and gas prices, drought conditions, changes in lending staff, policies and procedures, changes in credit concentrations, changes in the trends and severity of problem loans and changes in trends in volume and terms of loans. This qualitative reserve serves to estimate for additional areas of losses inherent in our portfolio that are not reflected in our historic loss factors.

Although we believe we use the best information available to make loan loss allowance determinations, future adjustments could be necessary if circumstances or economic conditions differ substantially from the assumptions used in making our initial determinations. A decline in the economy could result in increased levels of non-performing assets and charge-offs, increased loan provisions and reductions in income. Additionally, bank regulatory agencies periodically review our allowance for loan losses and methodology and could require, in accordance with U.S. GAAP, additional provisions to the allowance for loan losses based on their judgment of information available to them at the time of their examination as well as changes to our methodology.

Accrual of interest is discontinued on a loan and payments are applied to principal when management believes, after considering economic and business conditions and collection efforts, the borrower’s financial condition is such that collection of interest is doubtful. Except consumer loans, generally all loans past due greater than 90 days, based on contractual terms, are placed on non-accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured. Consumer loans are generally charged-off when a loan becomes past due 90 days. For other loans in the portfolio, facts and circumstances are evaluated in making charge-off decisions.

 

15

Loans are considered impaired when, based on current information and events, management determines that it is probable we will be unable to collect all amounts due in accordance with the loan agreement, including scheduled principal and interest payments. If a loan is impaired, a specific valuation allowance is allocated, if necessary. Interest payments on impaired loans are typically applied to principal unless collectability of the principal amount is reasonably assured, in which case interest is recognized on a cash basis. Impaired loans, or portions thereof, are charged off when deemed uncollectable.

The Company’s policy requires measurement of the allowance for an impaired, collateral dependent loan based on the fair value of the collateral less cost to sell. Other loan impairments for non-collateral dependent loans are measured based on the present value of expected future cash flows or the loan’s observable market price. At March 31, 2019 and 2018 and December 31, 2018, all significant impaired loans have been determined to be collateral dependent and the allowance for loss has been measured utilizing the estimated fair value of the collateral less cost to sell.

From time to time, the Company modifies its loan agreement with a borrower. A modified loan is considered a troubled debt restructuring when two conditions are met: (i) the borrower is experiencing financial difficulty and (ii) concessions are made by the Company that would not otherwise be considered for a borrower with similar credit risk characteristics. Modifications to loan terms may include a lower interest rate, a reduction of principal, or a longer term to maturity. For all impaired loans, including the Company’s troubled debt restructurings, the Company performs a periodic, well-documented credit evaluation of the borrower’s financial condition and prospects for repayment to assess the likelihood that all principal and interest payments required under the terms of the agreement will be collected in full. When doubt exists about the ultimate collectability of principal and interest, the troubled debt restructuring remains on non-accrual status and payments received are applied to reduce principal to the extent necessary to eliminate such doubt. This determination of accrual status is judgmental and is based on facts and circumstances related to each troubled debt restructuring. Each of these loans is individually evaluated for impairment and a specific reserve is recorded based on probable losses, taking into consideration the related collateral, modified loan terms and cash flow. As of March 31, 2019 and 2018 and December 31, 2018, substantially all of the Company’s troubled debt restructured loans are included in the non-accrual totals.

Loans acquired, including loans acquired in a business combination, are initially recorded at fair value with no valuation allowance. Acquired loans are segregated between those considered to be credit impaired and those deemed performing. To make this determination, management considers such factors as past due status, non-accrual status and credit risk ratings. The fair value of acquired performing loans is determined by discounting expected cash flows, both principal and interest, at prevailing market interest rates. The difference between the fair value and principal balances at acquisition date, the fair value discount, is accreted into interest income over the estimated life of the acquired portfolio.

Purchased credit impaired loans are those loans that showed evidence of deterioration of credit quality since origination and for which it is probable, at acquisition, that the Company will be unable to collect all amounts contractually owed. Their acquisition fair value, which includes a credit component at the acquisition date, was based on the estimate of cash flows, both principal and interest, expected to be collected or estimated collateral values if cash flows are not estimable, discounted at prevailing market rates of interest. The difference between the discounted cash flows expected at acquisition and the investment in the loan is recognized as interest income on a level-yield method over the life of the loan, unless management was unable to reasonably forecast cash flows in which case the loans were placed on nonaccrual. Subsequent to the acquisition date, increases in expected cash flows will generally result in a recovery of any previously recorded allowance for loan loss, to the extent applicable, and/or a reclassification from the nonaccretable difference to accretable yield, which will be recognized prospectively. Decreases in expected cash flows subsequent to acquisition are recognized as impairment. Valuation allowances on these impaired loans reflect only losses incurred after the acquisition. The carrying amount of purchased credit impaired loans at March 31, 2019 and 2018 and December 31, 2018 were $859,000, $3,201,000 and $827,000, respectively, compared to a contractual balance of $1,196,000, $4,129,000 and $1,157,000, respectively. Other purchased credit impaired loan disclosures were omitted due to immateriality.

 

16

Loans held-for-investment by class of financing receivables are as follows (in thousands):

 

		March 31,								December 31,
		2019				2018				2018
Commercial		$	826,886			$	734,156			$	844,953
Agricultural			91,336				95,958				96,677
Real estate			2,684,207				2,502,904				2,639,346
Consumer			386,731				397,033				372,660
Total loans held-for-investment		$	3,989,160			$	3,730,051			$	3,953,636

The Company’s non-accrual loans, loans still accruing and past due 90 days or more and restructured loans are as follows (in thousands):

 

		March 31,								December 31,
		2019				2018				2018
Non-accrual loans*		$	28,508			$	22,752			$	27,534
Loans still accruing and past due 90 days or more			97				327				1,008
Troubled debt restructured loans**			472				514				513
Total		$	29,077			$	23,593			$	29,055

 

*	Includes $859,000, $3,201,000 and $827,000 of purchased credit impaired loans as of March 31, 2019 and 2018, and December 31, 2018, respectively.

**	Troubled debt restructured loans of $4,566,000, $4,608,000 and $3,840,000, whose interest collection, after considering economic and business conditions and collection efforts, is doubtful are included in non-accrual loans at March 31, 2019 and 2018, and December 31, 2018, respectively.

The Company’s recorded investment in impaired loans and the related valuation allowance are as follows (in thousands):

 

March 31, 2019								March 31, 2018								December 31, 2018
Recorded Investment				Valuation Allowance				Recorded Investment				Valuation Allowance				Recorded Investment				Valuation Allowance
$	28,508			$	4,472			$	22,752			$	4,365			$	27,534			$	4,069

The Company had $29,724,000, $24,869,000 and $29,632,000 in non-accrual, past due 90 days or more and still accruing, restructured loans and foreclosed assets at March 31, 2019 and 2018, and December 31, 2018, respectively. Non-accrual loans at March 31, 2019 and 2018, and December 31, 2018, consisted of the following by class of financing receivables (in thousands):

 

		March 31,								December 31,
		2019				2018				2018
Commercial		$	8,897			$	5,351			$	9,334
Agricultural			831				143				759
Real estate			18,254				16,161				16,714
Consumer			526				1,097				727
Total		$	28,508			$	22,752			$	27,534

 

17

No significant additional funds are committed to be advanced in connection with impaired loans as of March 31, 2019.

The Company’s impaired loans and related allowance are summarized in the following tables by class of financing receivables (in thousands). No interest income was recognized on impaired loans subsequent to their classification as impaired.

 

March 31, 2019		Unpaid Contractual Principal Balance				Recorded Investment With No Allowance*				Recorded Investment With Allowance				Total Recorded Investment				Related Allowance				Three- Month Average Recorded Investment
Commercial		$	10,227			$	6,129			$	2,768			$	8,897			$	1,184			$	9,292
Agricultural			892				179				652				831				130				859
Real Estate			26,528				6,444				11,810				18,254				2,901				19,268
Consumer			689				27				499				526				257				577
Total		$	38,336			$	12,779			$	15,729			$	28,508			$	4,472			$	29,996

 

*	Includes $859,000 of purchased credit impaired loans.

 

March 31, 2018		Unpaid Contractual Principal Balance				Recorded Investment With No Allowance*				Recorded Investment With Allowance				Total Recorded Investment				Related Allowance				Three- Month Average Recorded Investment
Commercial		$	7,360			$	1,754			$	3,597			$	5,351			$	1,306			$	5,725
Agricultural			159				12				131				143				30				146
Real Estate			20,168				3,799				12,362				16,161				2,580				16,751
Consumer			1,292				117				980				1,097				449				1,149
Total		$	28,979			$	5,682			$	17,070			$	22,752			$	4,365			$	23,771

 

*	Includes $3,201,000 of purchased credit impaired loans.

 

December 31, 2018		Unpaid Contractual Principal Balance				Recorded Investment With No Allowance*				Recorded Investment With Allowance				Total Recorded Investment				Related Allowance				12 Month Average Recorded Investment
Commercial		$	10,808			$	6,728			$	2,606			$	9,334			$	1,133			$	7,986
Agricultural			799				213				546				759				170				842
Real Estate			24,072				6,699				10,015				16,714				2,409				16,042
Consumer			935				101				626				727				357				914
Total		$	36,614			$	13,741			$	13,793			$	27,534			$	4,069			$	25,784

 

*	Includes $827,000 of purchased credit impaired loans.

The Company recognized interest income on impaired loans prior to being recognized as impaired of approximately $948,000 during the year ended December 31, 2018. Such amounts for the three-month period ended March 31, 2019 and 2018 were not significant.

From a credit risk standpoint, the Company rates its loans in one of four categories: (i) pass, (ii) special mention, (iii) substandard or (iv) doubtful. Loans rated as loss are charged-off.

The ratings of loans reflect a judgment about the risks of default and loss associated with the loan. The Company reviews the ratings on our credits as part of our on-going monitoring of the credit quality of our loan portfolio. Ratings are adjusted to reflect the degree of risk and loss that are felt to be inherent in each

 

18

credit as of each reporting period. Our methodology is structured so that specific allocations are increased in accordance with deterioration in credit quality (and a corresponding increase in risk and loss) or decreased in accordance with improvement in credit quality (and a corresponding decrease in risk and loss).

Credits rated special mention show clear signs of financial weaknesses or deterioration in credit worthiness, however, such concerns are not so pronounced that the Company generally expects to experience significant loss within the short-term. Such credits typically maintain the ability to perform within standard credit terms and credit exposure is not as prominent as credits rated more harshly.

Credits rated substandard are those in which the normal repayment of principal and interest may be, or has been, jeopardized by reason of adverse trends or developments of a financial, managerial, economic or political nature, or important weaknesses exist in collateral. A protracted workout on these credits is a distinct possibility. Prompt corrective action is therefore required to strengthen the Company’s position, and/or to reduce exposure and to assure that adequate remedial measures are taken by the borrower. Credit exposure becomes more likely in such credits and a serious evaluation of the secondary support to the credit is performed.

Credits rated doubtful are those in which full collection of principal appears highly questionable, and which some degree of loss is anticipated, even though the ultimate amount of loss may not yet be certain and/or other factors exist which could affect collection of debt. Based upon available information, positive action by the Company is required to avert or minimize loss. Credits rated doubtful are generally also placed on non-accrual.

The following summarizes the Company’s internal ratings of its loans held-for-investment by class of financing receivables and portfolio segments, which are the same (in thousands):

 

March 31, 2019		Pass				Special Mention				Substandard				Doubtful				Total
Commercial		$	787,651			$	23,182			$	16,053			$	—			$	826,886
Agricultural			87,151				20				4,165				—				91,336
Real Estate			2,611,139				21,827				51,241				—				2,684,207
Consumer			384,786				246				1,699				—				386,731
Total		$	3,870,727			$	45,275			$	73,158			$	—			$	3,989,160

 

March 31, 2018		Pass				Special Mention				Substandard				Doubtful				Total
Commercial		$	705,251			$	9,401			$	19,504			$	—			$	734,156
Agricultural			90,975				1,755				3,228				—				95,958
Real Estate			2,415,458				28,638				58,808				—				2,502,904
Consumer			394,312				285				2,436				—				397,033
Total		$	3,605,996			$	40,079			$	83,976			$	—			$	3,730,051

 

December 31, 2018		Pass				Special Mention				Substandard				Doubtful				Total
Commercial		$	804,584			$	23,392			$	16,977			$	—			$	844,953
Agricultural			92,864				46				3,767				—				96,677
Real Estate			2,559,379				26,626				53,341				—				2,639,346
Consumer			370,510				315				1,835				—				372,660
Total		$	3,827,337			$	50,379			$	75,920			$	—			$	3,953,636

 

19

The Company’s past due loans are as follows (in thousands):

 

March 31, 2019		15-59 Days Past Due*				60-89 Days Past Due				Greater Than 90 Days				Total Past Due				Current				Total Loans				90 Days Past Due Still Accruing
Commercial		$	4,123			$	239			$	885			$	5,247			$	821,639			$	826,886			$	63
Agricultural			323				17				—				340				90,996				91,336				—
Real Estate			15,649				671				1,541				17,861				2,666,346				2,684,207				8
Consumer			1,003				96				26				1,125				385,606				386,731				26
Total		$	21,098			$	1,023			$	2,452			$	24,573			$	3,964,587			$	3,989,160			$	97

 

March 31, 2018		15-59 Days Past Due*				60-89 Days Past Due				Greater Than 90 Days				Total Past Due				Current				Total Loans				90 Days Past Due Still Accruing
Commercial		$	4,639			$	760			$	1,066			$	6,465			$	727,691			$	734,156			$	204
Agricultural			332				—				—				332				95,626				95,958				—
Real Estate			16,037				544				748				17,329				2,485,575				2,502,904				76
Consumer			824				221				161				1,206				395,827				397,033				47
Total		$	21,832			$	1,525			$	1,975			$	25,332			$	3,704,719			$	3,730,051			$	327

 

December 31, 2018		15-59 Days Past Due*				60-89 Days Past Due				Greater Than 90 Days				Total Past Due				Total Current				Total Loans				Total 90 Days Past Due Still Accruing
Commercial		$	3,546			$	682			$	677			$	4,905			$	840,048			$	844,953			$	—
Agricultural			791				19				26				836				95,841				96,677				—
Real Estate			13,185				881				2,020				16,086				2,623,260				2,639,346				960
Consumer			782				263				54				1,099				371,561				372,660				48
Total		$	18,304			$	1,845			$	2,777			$	22,926			$	3,930,710			$	3,953,636			$	1,008

 

*	The Company monitors commercial, agricultural and real estate loans after such loans are 15 days past due. Consumer loans are monitored after such loans are 30 days past due.

The following table details the allowance for loan losses by portfolio segment (in thousands). There were no allowances for purchased credit impaired loans at March 31, 2019 and 2018, and December 31, 2018. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.

 

March 31, 2019		Commercial				Agricultural				Real Estate				Consumer				Total
Loans individually evaluated for impairment		$	1,184			$	130			$	2,901			$	257			$	4,472
Loans collectively evaluated for impairment			11,291				1,300				28,986				5,536				47,113
Total		$	12,475			$	1,430			$	31,887			$	5,793			$	51,585

 

March 31, 2018		Commercial				Agricultural				Real Estate				Consumer				Total
Loans individually evaluated for impairment		$	1,306			$	30			$	2,580			$	449			$	4,365
Loans collectively evaluated for impairment			7,971				1,482				29,959				5,722				45,134
Total		$	9,277			$	1,512			$	32,539			$	6,171			$	49,499

 

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