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Loans | 12 Months Ended
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Dec. 31, 2024
Receivables [Abstract] |
Financing Receivables | Loans Year-end loans, including leases net of unearned discounts, consisted of the following:
| 2024 |  | 2023
Commercial and industrial | $ | 6,109,532 |  |  | $ | 5,967,182 |
Energy: |  |  |
Production | 903,654 |  |  | 681,568 |
Service | 203,629 |  |  | 194,126 |
Other | 21,612 |  |  | 61,043 |
Total energy | 1,128,895 |  |  | 936,737 |
Commercial real estate: |  |  |
Commercial mortgages | 7,165,220 |  |  | 6,746,709 |
Construction | 2,264,076 |  |  | 1,680,724 |
Land | 539,227 |  |  | 555,211 |
Total commercial real estate | 9,968,523 |  |  | 8,982,644 |
Consumer real estate: |  |  |
Home equity lines of credit | 911,239 |  |  | 792,876 |
Home equity loans | 914,738 |  |  | 694,966 |
Home improvement loans | 852,536 |  |  | 765,887 |
1-4 family mortgage loans | 259,456 |  |  | 38,923 |
Other | 165,420 |  |  | 168,074 |
Total consumer real estate | 3,103,389 |  |  | 2,460,726 |
Total real estate | 13,071,912 |  |  | 11,443,370 |
Consumer and other | 444,474 |  |  | 476,962 |
Total loans | $ | 20,754,813 |  |  | $ | 18,824,251 |
Concentrations of Credit. Most of our lending activity occurs within the State of Texas, including the four largest metropolitan areas of Austin, Dallas/Ft. Worth, Houston and San Antonio, as well as other markets. The majority of our loan portfolio consists of commercial and industrial and commercial real estate loans. As of December 31, 2024, the largest industry concentrations were related to the automobile dealerships industry, which totaled 6.0% of total loans and the energy industry, which totaled 5.4% of total loans. Unfunded commitments to extend credit and standby letters of credit issued to customers in the automobile dealership industry totaled $535.5 million and $20.2 million, respectively, as of December 31, 2024, while unfunded commitments to extend credit and standby letters of credit issued to customers in the energy industry totaled $1.0 billion and $62.8 million, respectively, as of December 31, 2024. Foreign Loans. We have U.S. dollar denominated loans and commitments to borrowers in Mexico. The outstanding balance of these loans and the unfunded amounts available under these commitments were not significant at December 31, 2024 or 2023. Overdrafts. Deposit account overdrafts reported as loans totaled $14.6 million and $13.4 million at December 31, 2024 and 2023. Related Party Loans. In the ordinary course of business, we have granted loans to certain directors, executive officers and their affiliates (collectively referred to as “related parties”). Activity in related party loans during 2024 is presented in the following table. Other changes were primarily related to changes in related-party status.
Beginning balance | $ | 416,107 |
Principal additions | 306,414 |
Principal payments | (296,754) |
Other changes | (129,931) |
Ending balance | $ | 295,836 |
Accrued Interest Receivable. Accrued interest receivable on loans totaled $86.8 million and $90.8 million at December 31, 2024 and 2023, respectively and is included in accrued interest receivable and other assets in the accompany consolidated balance sheets. Non-Accrual and Past Due Loans. Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. Loans are placed on non-accrual status when, in management’s opinion, the borrower may be unable to meet payment obligations as they become due, as well as when required by regulatory provisions. In determining whether or not a borrower may be unable to meet payment obligations for each class of loans, we consider the borrower’s debt service capacity through the analysis of current financial information, if available, and/or current information with regards to our collateral position. Regulatory provisions would typically require the placement of a loan on non-accrual status if (i) principal or interest has been in default for a period of 90 days or more unless the loan is both well secured and in the process of collection or (ii) full payment of principal and interest is not expected. Loans may be placed on non-accrual status regardless of whether or not such loans are considered past due. When interest accrual is discontinued, all unpaid accrued interest is reversed. Interest income on non-accrual loans is recognized only to the extent that cash payments are received in excess of principal due. A loan may be returned to accrual status when all the principal and interest amounts contractually due are brought current and future principal and interest amounts contractually due are reasonably assured, which is typically evidenced by a sustained period (at least six months) of repayment performance by the borrower. Year-end non-accrual loans, segregated by class of loans, were as follows:
| December 31, 2024 |  | December 31, 2023
| Total Non-Accrual |  | Non-Accrual with No Credit Loss Allowance |  | Total Non-Accrual |  | Non-Accrual with No Credit Loss Allowance
Commercial and industrial | $ | 46,004 |  |  | $ | 8,800 |  |  | $ | 19,545 |  |  | $ | 5,391 |
Energy | 4,079 |  |  | 1,377 |  |  | 11,500 |  |  | 7,398 |
Commercial real estate: |  |  |  |  |  |  |
Buildings, land and other | 21,920 |  |  | 18,660 |  |  | 22,420 |  |  | 4,983 |
Construction | — |  |  | — |  |  | — |  |  | — |
Consumer real estate | 6,511 |  |  | 4,048 |  |  | 7,442 |  |  | 5,160 |
Consumer and other | 352 |  |  | — |  |  | — |  |  | — |
Total | $ | 78,866 |  |  | $ | 32,885 |  |  | $ | 60,907 |  |  | $ | 22,932 |
The following tables present non-accrual loans as of December 31, 2024 and December 31, 2023 by class and year of origination.
| December 31, 2024
| 2024 |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | Prior |  | Revolving Loans |  | Revolving Loans Converted to Term |  | Total
Commercial and industrial | $ | 20,819 |  |  | $ | 2,915 |  |  | $ | 4,053 |  |  | $ | 1,592 |  |  | $ | 335 |  |  | $ | 2,144 |  |  | $ | 1,186 |  |  | $ | 12,960 |  |  | $ | 46,004 |
Energy | — |  |  | — |  |  | — |  |  | — |  |  | 56 |  |  | 1,321 |  |  | 2,702 |  |  | — |  |  | 4,079 |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Buildings, land and other | 7,856 |  |  | 2,671 |  |  | 3,233 |  |  | 2,753 |  |  | 1,248 |  |  | 1,505 |  |  | — |  |  | 2,654 |  |  | 21,920 |
Construction | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Consumer real estate | — |  |  | 47 |  |  | — |  |  | — |  |  | 92 |  |  | 2,202 |  |  | 587 |  |  | 3,583 |  |  | 6,511 |
Consumer and other | — |  |  | 352 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 352 |
Total | $ | 28,675 |  |  | $ | 5,985 |  |  | $ | 7,286 |  |  | $ | 4,345 |  |  | $ | 1,731 |  |  | $ | 7,172 |  |  | $ | 4,475 |  |  | $ | 19,197 |  |  | $ | 78,866 |
| December 31, 2023
| 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior |  | Revolving Loans |  | Revolving Loans Converted to Term |  | Total
Commercial and industrial | $ | — |  |  | $ | 359 |  |  | $ | 1,635 |  |  | $ | 985 |  |  | $ | 1,257 |  |  | $ | 1,006 |  |  | $ | 9 |  |  | $ | 14,294 |  |  | $ | 19,545 |
Energy | 5,875 |  |  | — |  |  | — |  |  | 56 |  |  | 1,321 |  |  | — |  |  | 4,102 |  |  | 146 |  |  | 11,500 |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Buildings, land and other | 20,099 |  |  | — |  |  | 150 |  |  | — |  |  | 1,451 |  |  | 720 |  |  | — |  |  | — |  |  | 22,420 |
Construction | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Consumer real estate | — |  |  | — |  |  | — |  |  | 38 |  |  | 2,281 |  |  | 483 |  |  | 1,600 |  |  | 3,040 |  |  | 7,442 |
Consumer and other | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Total | $ | 25,974 |  |  | $ | 359 |  |  | $ | 1,785 |  |  | $ | 1,079 |  |  | $ | 6,310 |  |  | $ | 2,209 |  |  | $ | 5,711 |  |  | $ | 17,480 |  |  | $ | 60,907 |
In the tables above, loans reported as 2024 originations as of December 31, 2024 and loans reported as 2023 originations as of December 31, 2023 were, for the most part, first originated in various years prior to 2024 and 2023, respectively, but were renewed in the respective year. Had non-accrual loans performed in accordance with their original contract terms, we would have recognized additional interest income, net of tax, of approximately $5.7 million in 2024, $4.0 million in 2023 and $1.7 million in 2022. An age analysis of past due loans (including both accruing and non-accruing loans), segregated by class of loans, as of December 31, 2024 is presented in the following table.
| Loans 30-89 Days Past Due |  | Loans 90 or More Days Past Due |  | Total Past Due Loans |  | Current Loans |  | Total Loans |  | Accruing Loans 90 or More Days Past Due
Commercial and industrial | $ | 37,130 |  |  | $ | 28,120 |  |  | $ | 65,250 |  |  | $ | 6,044,282 |  |  | $ | 6,109,532 |  |  | $ | 7,685 |
Energy | 4,263 |  |  | 4,079 |  |  | 8,342 |  |  | 1,120,553 |  |  | 1,128,895 |  |  | — |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |
Buildings, land and other | 37,525 |  |  | 13,040 |  |  | 50,565 |  |  | 7,653,882 |  |  | 7,704,447 |  |  | 1,523 |
Construction | 870 |  |  | — |  |  | 870 |  |  | 2,263,206 |  |  | 2,264,076 |  |  | — |
Consumer real estate | 17,015 |  |  | 12,028 |  |  | 29,043 |  |  | 3,074,346 |  |  | 3,103,389 |  |  | 5,681 |
Consumer and other | 6,693 |  |  | 822 |  |  | 7,515 |  |  | 436,959 |  |  | 444,474 |  |  | 822 |
Total | $ | 103,496 |  |  | $ | 58,089 |  |  | $ | 161,585 |  |  | $ | 20,593,228 |  |  | $ | 20,754,813 |  |  | $ | 15,711 |
Modifications to Borrowers Experiencing Financial Difficulty. From time to time, we may modify certain loans to borrowers who are experiencing financial difficulty. In some cases, these modifications may result in new loans. Loan modifications to borrowers experiencing financial difficulty may be in the form of a principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, a term extension, or a combination thereof, among other things. The period-end balance of loan modifications, segregated by type of modification, to borrowers experiencing financial difficulty during 2024 and 2023 are set forth in the table below, regardless of whether such modifications resulted in a new loan. There were $44.1 million in commitments to lend additional funds to these borrowers at December 31, 2024.
|  |  |  |  | Payment Delay |  | Percent of Total Class of Loans |  | Combination: Payment Delay and Term Extension |  | Percent of Total Class of Loans |  | Interest Rate Reduction |  | Percent of Total Class of Loans |
December 31, 2024 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  |  |  |  | $ | 6,126 |  |  | 0.1 | % |  | $ | 45,835 |  |  | 0.8 | % |  | $ | — |  |  | — | % |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Buildings, land, and other |  |  |  |  | 2,012 |  |  | — |  |  | — |  |  | — |  |  | 31,302 |  |  | 0.4 |  |
|  |  |  |  | $ | 8,138 |  |  | — |  |  | $ | 45,835 |  |  | 0.2 |  |  | $ | 31,302 |  |  | 0.2 |  |
|  |  |  |  | Payment Delay |  | Percent of Total Class of Loans |  | Combination: Payment Delay and Term Extension |  | Percent of Total Class of Loans |  | Combination: Interest Rate Reduction and Term Extension |  | Percent of Total Class of Loans |
December 31, 2023 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial and industrial |  |  |  |  | $ | — |  |  | — |  |  | $ | 13,813 |  |  | 0.2 |  |  | $ | — |  |  | — |  |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Buildings, land, and other |  |  |  |  | — |  |  | — |  |  | 19,438 |  |  | 0.3 |  |  | 2,092 |  |  | — |  |
|  |  |  |  | $ | — |  |  | — |  |  | $ | 33,251 |  |  | 0.2 |  |  | $ | 2,092 |  |  | — |  |
During 2024, we modified the interest rate on one loan from a variable rate of prime plus a spread of 0.50% (8.50% as of the modification date) to a variable rate of prime minus a spread of 1.50% (6.50% after modification) with a floor of 6.00%. During 2023, we modified the interest rate on one loan from a variable rate of prime plus a spread of 1.75% (10.25% as of the modification date) to a fixed rate of 6.74% in addition to extending the term of the loan. The financial effects of the other loan modifications made to borrowers experiencing financial difficulty during 2024 and 2023 were not significant. The loan modifications reported in the table above did not significantly impact our determination of the allowance for credit losses on loans during 2024 or 2023. Information as of or for the years ended December 31, 2024, 2023, or 2022 related to loans modified (by type of modification) in the preceding twelve months, respectively, whereby the borrower was experiencing financial difficulty at the time of modification is set forth in the following table.
|  |  | Payment Delay |  | Combination: Payment Delay and Term Extension |  |
2024 |  |  |  |  |  |  |
Past due in excess of 90 days or on non-accrual status at period-end: |  |  |  |  |  |  |
Commercial and industrial |  |  | $ | 1,693 |  |  | $ | — |  |  |
Commercial real estate: |  |  |  |  |  |  |
Buildings, land, and other |  |  | 2,012 |  |  | — |  |  |
|  |  | $ | 3,705 |  |  | $ | — |  |  |
2023 |  |  |  |  |  |  |
Past due in excess of 90 days or on non-accrual status at period-end: |  |  |  |  |  |  |
Commercial and industrial |  |  | $ | — |  |  | $ | 13,813 |  |  |
Commercial real estate: |  |  |  |  |  |  |
Buildings, land, and other |  |  | — |  |  | 19,438 |  |  |
|  |  | $ | — |  |  | $ | 33,251 |  |  |
2022 |  |  |  |  |  |  |
Past due in excess of 90 days or on non-accrual status at period-end: |  |  |  |  |  |  |
Commercial real estate: |  |  |  |  |  |  |
Buildings, land, and other |  |  | $ | 1,051 |  |  | $ | — |  |  |
|  |  | $ | 1,051 |  |  | $ | — |  |  |
Charge-offs during the period: |  |  |  |  |  |  |
Commercial real estate: |  |  |  |  |  |  |
Buildings, land, and other |  |  | $ | 371 |  |  | $ | 352 |  |  |
|  |  | $ | 371 |  |  | $ | 352 |  |  |
Proceeds from sales: |  |  |  |  |  |  |
Commercial real estate: |  |  |  |  |  |  |
Buildings, land, and other |  |  | $ | — |  |  | $ | 1,070 |  |  |
|  |  | $ | — |  |  | $ | 1,070 |  |  |
Credit Quality Indicators. As part of the on-going monitoring of the credit quality of our loan portfolio, management tracks certain credit quality indicators including trends related to (i) the weighted-average risk grade of commercial loans, (ii) the level of classified commercial loans, (iii) the delinquency status of consumer loans (iv) non-performing loans (see details above) and (vi) the general economic conditions in the State of Texas. We utilize a risk grading matrix to assign a risk grade to each of our commercial loans. Loans are graded on a scale of 1 to 14. A description of the general characteristics of the 14 risk grades is as follows: •Grades 1, 2 and 3 - These grades include loans to very high credit quality borrowers of investment or near investment grade. These borrowers are generally publicly traded (grades 1 and 2), have significant capital strength, moderate leverage, stable earnings and growth, and readily available financing alternatives. Smaller entities, regardless of strength, would generally not fit in these grades. •Grades 4 and 5 - These grades include loans to borrowers of solid credit quality with moderate risk. Borrowers in these grades are differentiated from higher grades on the basis of size (capital and/or revenue), leverage, asset quality and the stability of the industry or market area. •Grades 6, 7 and 8 - These grades include “pass grade” loans to borrowers of acceptable credit quality and risk. Such borrowers are differentiated from Grades 4 and 5 in terms of size, secondary sources of repayment or they are of lesser stature in other key credit metrics in that they may be over-leveraged, undercapitalized, inconsistent in performance or in an industry or an economic area that is known to have a higher level of risk, volatility, or susceptibility to weaknesses in the economy. •Grade 9 - This grade includes loans on management’s “watch list” and is intended to be utilized on a temporary basis for pass grade borrowers where a significant risk-modifying action is anticipated in the near term. •Grade 10 - This grade is for “Other Assets Especially Mentioned” in accordance with regulatory guidelines. This grade is intended to be temporary and includes loans to borrowers whose credit quality has clearly deteriorated and are at risk of further decline unless active measures are taken to correct the situation. •Grade 11 - This grade includes “Substandard” loans, in accordance with regulatory guidelines, for which the accrual of interest has not been stopped. By definition under regulatory guidelines, a “Substandard” loan has defined weaknesses which make payment default or principal exposure likely, but not yet certain. Such loans are apt to be dependent upon collateral liquidation, a secondary source of repayment or an event outside of the normal course of business. •Grade 12 - This grade includes “Substandard” loans, in accordance with regulatory guidelines, for which the accrual of interest has been stopped. This grade includes loans where interest is more than 120 days past due and not fully secured and loans where a specific valuation allowance may be necessary, but generally does not exceed 30% of the principal balance. •Grade 13 - This grade includes “Doubtful” loans in accordance with regulatory guidelines. Such loans are placed on non-accrual status and may be dependent upon collateral having a value that is difficult to determine or upon some near-term event which lacks certainty. Additionally, these loans generally have a specific valuation allowance in excess of 30% of the principal balance. •Grade 14 - This grade includes “Loss” loans in accordance with regulatory guidelines. Such loans are to be charged-off or charged-down when payment is acknowledged to be uncertain or when the timing or value of payments cannot be determined. “Loss” is not intended to imply that the loan or some portion of it will never be paid, nor does it in any way imply that there has been a forgiveness of debt. In monitoring credit quality trends in the context of assessing the appropriate level of the allowance for credit losses on loans, we monitor portfolio credit quality by the weighted-average risk grade of each class of commercial loan. Individual relationship managers, under the oversight of credit administration, review updated financial information for all pass grade loans to reassess the risk grade on at least an annual basis. When a loan has a risk grade of 9, it is still considered a pass grade loan; however, it is considered to be on management’s “watch list,” where a significant risk-modifying action is anticipated in the near term. When a loan has a risk grade of 10 or higher, a special assets officer monitors the loan on an on-going basis. The following tables present weighted-average risk grades for all commercial loans, by class and year of origination/renewal as of December 31, 2024 and 2023.
| December 31, 2024
| 2024 |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | Prior |  | Revolving Loans |  | Revolving Loans Converted to Term |  | Total
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk grades 1-8 | $ | 1,553,200 |  |  | $ | 513,073 |  |  | $ | 385,824 |  |  | $ | 257,280 |  |  | $ | 298,912 |  |  | $ | 253,018 |  |  | $ | 2,242,193 |  |  | $ | 50,257 |  |  | $ | 5,553,757 |
Risk grade 9 | 15,552 |  |  | 24,059 |  |  | 58,521 |  |  | 25,818 |  |  | 3,796 |  |  | 9,959 |  |  | 109,594 |  |  | 15,147 |  |  | 262,446 |
Risk grade 10 | 4,992 |  |  | 9,269 |  |  | 42,146 |  |  | 2,112 |  |  | 918 |  |  | 12,290 |  |  | 15,332 |  |  | 1,876 |  |  | 88,935 |
Risk grade 11 | 35,583 |  |  | 18,057 |  |  | 17,673 |  |  | 2,987 |  |  | 4,675 |  |  | 2,092 |  |  | 44,926 |  |  | 32,397 |  |  | 158,390 |
Risk grade 12 | 13,107 |  |  | 2,443 |  |  | 2,574 |  |  | 1,564 |  |  | 324 |  |  | 2,144 |  |  | 1,179 |  |  | 9,404 |  |  | 32,739 |
Risk grade 13 | 7,712 |  |  | 472 |  |  | 1,479 |  |  | 28 |  |  | 11 |  |  | — |  |  | 7 |  |  | 3,556 |  |  | 13,265 |
| $ | 1,630,146 |  |  | $ | 567,373 |  |  | $ | 508,217 |  |  | $ | 289,789 |  |  | $ | 308,636 |  |  | $ | 279,503 |  |  | $ | 2,413,231 |  |  | $ | 112,637 |  |  | $ | 6,109,532 |
W/A risk grade | 6.73 |  |  | 7.12 |  |  | 7.52 |  |  | 7.13 |  |  | 5.58 |  |  | 6.11 |  |  | 6.30 |  |  | 9.12 |  |  | 6.64 |
Energy |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk grades 1-8 | $ | 387,904 |  |  | $ | 22,510 |  |  | $ | 35,357 |  |  | $ | 16,150 |  |  | $ | 1,516 |  |  | $ | 2,648 |  |  | $ | 639,362 |  |  | $ | 5,872 |  |  | $ | 1,111,319 |
Risk grade 9 | — |  |  | 1,677 |  |  | 662 |  |  | 2,011 |  |  | — |  |  | 398 |  |  | 5,035 |  |  | 1,400 |  |  | 11,183 |
Risk grade 10 | — |  |  | — |  |  | 52 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 52 |
Risk grade 11 | 188 |  |  | — |  |  | 2,038 |  |  | — |  |  | 36 |  |  | — |  |  | — |  |  | — |  |  | 2,262 |
Risk grade 12 | — |  |  | — |  |  | — |  |  | — |  |  | 56 |  |  | 1,321 |  |  | 2 |  |  | — |  |  | 1,379 |
Risk grade 13 | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,700 |  |  | — |  |  | 2,700 |
| $ | 388,092 |  |  | $ | 24,187 |  |  | $ | 38,109 |  |  | $ | 18,161 |  |  | $ | 1,608 |  |  | $ | 4,367 |  |  | $ | 647,099 |  |  | $ | 7,272 |  |  | $ | 1,128,895 |
W/A risk grade | 6.16 |  |  | 7.14 |  |  | 7.53 |  |  | 4.75 |  |  | 6.47 |  |  | 8.97 |  |  | 5.05 |  |  | 7.31 |  |  | 5.58 |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Buildings, land, other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk grades 1-8 | $ | 1,427,212 |  |  | $ | 1,288,934 |  |  | $ | 1,450,649 |  |  | $ | 1,006,922 |  |  | $ | 668,316 |  |  | $ | 965,448 |  |  | $ | 204,577 |  |  | $ | 91,444 |  |  | $ | 7,103,502 |
Risk grade 9 | 9,347 |  |  | 18,408 |  |  | 56,419 |  |  | 72,096 |  |  | 11,197 |  |  | 35,661 |  |  | 4,968 |  |  | 3,718 |  |  | 211,814 |
Risk grade 10 | 570 |  |  | 31,596 |  |  | 64,063 |  |  | 55,512 |  |  | 10,546 |  |  | 10,746 |  |  | — |  |  | — |  |  | 173,033 |
Risk grade 11 | 5,764 |  |  | 5,739 |  |  | 63,772 |  |  | 23,594 |  |  | 13,027 |  |  | 82,282 |  |  | — |  |  | — |  |  | 194,178 |
Risk grade 12 | 7,856 |  |  | 2,671 |  |  | 3,233 |  |  | 2,531 |  |  | 1,126 |  |  | 1,505 |  |  | — |  |  | 2,373 |  |  | 21,295 |
Risk grade 13 | — |  |  | — |  |  | — |  |  | 222 |  |  | 122 |  |  | — |  |  | — |  |  | 281 |  |  | 625 |
| $ | 1,450,749 |  |  | $ | 1,347,348 |  |  | $ | 1,638,136 |  |  | $ | 1,160,877 |  |  | $ | 704,334 |  |  | $ | 1,095,642 |  |  | $ | 209,545 |  |  | $ | 97,816 |  |  | $ | 7,704,447 |
W/A risk grade | 7.16 |  |  | 7.32 |  |  | 7.39 |  |  | 7.52 |  |  | 7.05 |  |  | 7.17 |  |  | 6.01 |  |  | 6.80 |  |  | 7.25 |
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk grades 1-8 | $ | 615,683 |  |  | $ | 601,151 |  |  | $ | 427,984 |  |  | $ | 59,895 |  |  | $ | 2,727 |  |  | $ | 559 |  |  | $ | 151,846 |  |  | $ | 159 |  |  | $ | 1,860,004 |
Risk grade 9 | 46,456 |  |  | 9,283 |  |  | 65,590 |  |  | 35,006 |  |  | — |  |  | — |  |  | 15,276 |  |  | — |  |  | 171,611 |
Risk grade 10 | 107,666 |  |  | — |  |  | 48,001 |  |  | 76,794 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 232,461 |
Risk grade 11 | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Risk grade 12 | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Risk grade 13 | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
| $ | 769,805 |  |  | $ | 610,434 |  |  | $ | 541,575 |  |  | $ | 171,695 |  |  | $ | 2,727 |  |  | $ | 559 |  |  | $ | 167,122 |  |  | $ | 159 |  |  | $ | 2,264,076 |
W/A risk grade | 7.82 |  |  | 7.35 |  |  | 7.99 |  |  | 8.85 |  |  | 7.39 |  |  | 7.65 |  |  | 6.46 |  |  | 6.98 |  |  | 7.71 |
Total commercial real estate | $ | 2,220,554 |  |  | $ | 1,957,782 |  |  | $ | 2,179,711 |  |  | $ | 1,332,572 |  |  | $ | 707,061 |  |  | $ | 1,096,201 |  |  | $ | 376,667 |  |  | $ | 97,975 |  |  | $ | 9,968,523 |
W/A risk grade | 7.39 |  |  | 7.33 |  |  | 7.54 |  |  | 7.69 |  |  | 7.06 |  |  | 7.17 |  |  | 6.21 |  |  | 6.80 |  |  | 7.35 |
| December 31, 2023
| 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior |  | Revolving Loans |  | Revolving Loans Converted to Term |  | Total
Commercial and industrial |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk grades 1-8 | $ | 1,489,026 |  |  | $ | 706,210 |  |  | $ | 458,855 |  |  | $ | 349,744 |  |  | $ | 172,656 |  |  | $ | 206,643 |  |  | $ | 2,083,490 |  |  | $ | 41,254 |  |  | $ | 5,507,878 |
Risk grade 9 | 57,625 |  |  | 42,618 |  |  | 12,258 |  |  | 4,952 |  |  | 1,641 |  |  | 10,383 |  |  | 70,142 |  |  | 5,625 |  |  | 205,244 |
Risk grade 10 | 63,205 |  |  | 2,222 |  |  | 1,307 |  |  | 911 |  |  | 4,005 |  |  | 581 |  |  | 35,977 |  |  | 1,046 |  |  | 109,254 |
Risk grade 11 | 9,450 |  |  | 16,837 |  |  | 25,932 |  |  | 7,854 |  |  | 2,530 |  |  | 1,153 |  |  | 58,134 |  |  | 3,371 |  |  | 125,261 |
Risk grade 12 | — |  |  | 359 |  |  | 1,635 |  |  | 950 |  |  | 1,257 |  |  | 1,006 |  |  | 1 |  |  | 11,894 |  |  | 17,102 |
Risk grade 13 | — |  |  | — |  |  | — |  |  | 35 |  |  | — |  |  | — |  |  | 8 |  |  | 2,400 |  |  | 2,443 |
| $ | 1,619,306 |  |  | $ | 768,246 |  |  | $ | 499,987 |  |  | $ | 364,446 |  |  | $ | 182,089 |  |  | $ | 219,766 |  |  | $ | 2,247,752 |  |  | $ | 65,590 |  |  | $ | 5,967,182 |
W/A risk grade | 6.53 |  |  | 7.05 |  |  | 7.26 |  |  | 5.87 |  |  | 6.01 |  |  | 6.04 |  |  | 6.50 |  |  | 8.48 |  |  | 6.60 |
Energy |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk grades 1-8 | $ | 270,710 |  |  | $ | 54,185 |  |  | $ | 75,004 |  |  | $ | 3,673 |  |  | $ | 1,819 |  |  | $ | 4,047 |  |  | $ | 451,897 |  |  | $ | 9,886 |  |  | $ | 871,221 |
Risk grade 9 | 1,137 |  |  | 7,315 |  |  | 1,041 |  |  | — |  |  | 456 |  |  | — |  |  | 17,680 |  |  | 14 |  |  | 27,643 |
Risk grade 10 | — |  |  | — |  |  | 33 |  |  | — |  |  | 291 |  |  | 494 |  |  | — |  |  | — |  |  | 818 |
Risk grade 11 | — |  |  | — |  |  | 25 |  |  | 106 |  |  | 2,989 |  |  | — |  |  | 21,650 |  |  | 785 |  |  | 25,555 |
Risk grade 12 | 5,875 |  |  | — |  |  | — |  |  | 56 |  |  | 1,321 |  |  | — |  |  | 1,402 |  |  | 146 |  |  | 8,800 |
Risk grade 13 | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,700 |  |  | — |  |  | 2,700 |
| $ | 277,722 |  |  | $ | 61,500 |  |  | $ | 76,103 |  |  | $ | 3,835 |  |  | $ | 6,876 |  |  | $ | 4,541 |  |  | $ | 495,329 |  |  | $ | 10,831 |  |  | $ | 936,737 |
W/A risk grade | 6.19 |  |  | 7.07 |  |  | 6.00 |  |  | 6.99 |  |  | 10.02 |  |  | 7.07 |  |  | 5.75 |  |  | 7.33 |  |  | 6.05 |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Buildings, land, other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk grades 1-8 | $ | 1,601,175 |  |  | $ | 1,667,750 |  |  | $ | 1,186,559 |  |  | $ | 747,289 |  |  | $ | 503,303 |  |  | $ | 874,942 |  |  | $ | 214,874 |  |  | $ | 99,466 |  |  | $ | 6,895,358 |
Risk grade 9 | 12,173 |  |  | 68,007 |  |  | 28,870 |  |  | 13,250 |  |  | 16,272 |  |  | 23,214 |  |  | 11,143 |  |  | 541 |  |  | 173,470 |
Risk grade 10 | 7,671 |  |  | 29,278 |  |  | 17,364 |  |  | 34,672 |  |  | 747 |  |  | 3,153 |  |  | 3,716 |  |  | — |  |  | 96,601 |
Risk grade 11 | 4,105 |  |  | 20,589 |  |  | 20,119 |  |  | 16,363 |  |  | 793 |  |  | 51,739 |  |  | — |  |  | 363 |  |  | 114,071 |
Risk grade 12 | 17,449 |  |  | — |  |  | 150 |  |  | — |  |  | 1,451 |  |  | 720 |  |  | — |  |  | — |  |  | 19,770 |
Risk grade 13 | 2,650 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 2,650 |
| $ | 1,645,223 |  |  | $ | 1,785,624 |  |  | $ | 1,253,062 |  |  | $ | 811,574 |  |  | $ | 522,566 |  |  | $ | 953,768 |  |  | $ | 229,733 |  |  | $ | 100,370 |  |  | $ | 7,301,920 |
W/A risk grade | 7.23 |  |  | 7.18 |  |  | 7.29 |  |  | 7.22 |  |  | 6.90 |  |  | 7.16 |  |  | 7.49 |  |  | 6.77 |  |  | 7.20 |
Construction |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Risk grades 1-8 | $ | 538,072 |  |  | $ | 537,705 |  |  | $ | 264,770 |  |  | $ | 28,063 |  |  | $ | 296 |  |  | $ | 1,613 |  |  | $ | 155,567 |  |  | $ | — |  |  | $ | 1,526,086 |
Risk grade 9 | 3,414 |  |  | 35,565 |  |  | 79,871 |  |  | — |  |  | — |  |  | — |  |  | 8,252 |  |  | — |  |  | 127,102 |
Risk grade 10 | 13,322 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 3,713 |  |  | — |  |  | 17,035 |
Risk grade 11 | 5,912 |  |  | 3,104 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 1,485 |  |  | — |  |  | 10,501 |
Risk grade 12 | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Risk grade 13 | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
| $ | 560,720 |  |  | $ | 576,374 |  |  | $ | 344,641 |  |  | $ | 28,063 |  |  | $ | 296 |  |  | $ | 1,613 |  |  | $ | 169,017 |  |  | $ | — |  |  | $ | 1,680,724 |
W/A risk grade | 7.44 |  |  | 7.44 |  |  | 7.93 |  |  | 2.55 |  |  | 7.22 |  |  | 6.78 |  |  | 7.34 |  |  | — |  |  | 7.45 |
Total commercial real estate | $ | 2,205,943 |  |  | $ | 2,361,998 |  |  | $ | 1,597,703 |  |  | $ | 839,637 |  |  | $ | 522,862 |  |  | $ | 955,381 |  |  | $ | 398,750 |  |  | $ | 100,370 |  |  | $ | 8,982,644 |
W/A risk grade | 7.28 |  |  | 7.24 |  |  | 7.43 |  |  | 7.07 |  |  | 6.90 |  |  | 7.15 |  |  | 7.43 |  |  | 6.77 |  |  | 7.24 |
At December 31, 2024 and 2023, the weighted-average risk grades for “pass grade” (risk grades 1-8) loans were 6.30 and 6.32, respectively, for commercial and industrial; 5.51 and 5.73, respectively, for energy; 7.01 and 7.03, respectively, for commercial real estate - buildings, land and other; and 7.31 and 7.27, respectively, for commercial real estate - construction. Furthermore, in the tables above, there are loans reported as 2024 originations as of December 31, 2024 and 2023 originations as of December 31, 2023 that have risk grades of 11 or higher. These loans were, for the most part, first originated in various years prior to 2024 and 2023, respectively, but were renewed in the respective year. Information about the payment status of consumer loans, segregated by portfolio segment and year of origination, as of December 31, 2024 and December 31, 2023 was as follows:
| December 31, 2024
| 2024 |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | Prior |  | Revolving Loans |  | Revolving Loans Converted to Term |  | Total
Consumer real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Past due 30-89 days | $ | 632 |  |  | $ | 1,030 |  |  | $ | 1,897 |  |  | $ | 965 |  |  | $ | 645 |  |  | $ | 1,944 |  |  | $ | 9,790 |  |  | $ | 112 |  |  | $ | 17,015 |
Past due 90 or more days | — |  |  | 292 |  |  | 972 |  |  | 1,165 |  |  | 213 |  |  | 3,255 |  |  | 2,452 |  |  | 3,679 |  |  | 12,028 |
Total past due | 632 |  |  | 1,322 |  |  | 2,869 |  |  | 2,130 |  |  | 858 |  |  | 5,199 |  |  | 12,242 |  |  | 3,791 |  |  | 29,043 |
Current loans | 699,196 |  |  | 544,811 |  |  | 387,344 |  |  | 248,225 |  |  | 146,972 |  |  | 152,517 |  |  | 886,848 |  |  | 8,433 |  |  | 3,074,346 |
Total | $ | 699,828 |  |  | $ | 546,133 |  |  | $ | 390,213 |  |  | $ | 250,355 |  |  | $ | 147,830 |  |  | $ | 157,716 |  |  | $ | 899,090 |  |  | $ | 12,224 |  |  | $ | 3,103,389 |
Consumer and other: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Past due 30-89 days | $ | 3,378 |  |  | $ | 772 |  |  | $ | 249 |  |  | $ | 22 |  |  | $ | 66 |  |  | $ | 23 |  |  | $ | 1,734 |  |  | $ | 449 |  |  | $ | 6,693 |
Past due 90 or more days | 243 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 3 |  |  | 395 |  |  | 181 |  |  | 822 |
Total past due | 3,621 |  |  | 772 |  |  | 249 |  |  | 22 |  |  | 66 |  |  | 26 |  |  | 2,129 |  |  | 630 |  |  | 7,515 |
Current loans | 54,440 |  |  | 27,705 |  |  | 9,276 |  |  | 3,006 |  |  | 1,906 |  |  | 1,124 |  |  | 315,038 |  |  | 24,464 |  |  | 436,959 |
Total | $ | 58,061 |  |  | $ | 28,477 |  |  | $ | 9,525 |  |  | $ | 3,028 |  |  | $ | 1,972 |  |  | $ | 1,150 |  |  | $ | 317,167 |  |  | $ | 25,094 |  |  | $ | 444,474 |
| December 31, 2023
| 2023 |  | 2022 |  | 2021 |  | 2020 |  | 2019 |  | Prior |  | Revolving Loans |  | Revolving Loans Converted to Term |  | Total
Consumer real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Past due 30-89 days | $ | 874 |  |  | $ | 2,066 |  |  | $ | 1,318 |  |  | $ | 959 |  |  | $ | 537 |  |  | $ | 2,641 |  |  | $ | 3,570 |  |  | $ | 539 |  |  | $ | 12,504 |
Past due 90 or more days | — |  |  | 512 |  |  | 626 |  |  | 38 |  |  | — |  |  | 887 |  |  | 2,566 |  |  | 3,087 |  |  | 7,716 |
Total past due | 874 |  |  | 2,578 |  |  | 1,944 |  |  | 997 |  |  | 537 |  |  | 3,528 |  |  | 6,136 |  |  | 3,626 |  |  | 20,220 |
Current loans | 579,505 |  |  | 432,719 |  |  | 281,820 |  |  | 170,225 |  |  | 58,744 |  |  | 134,319 |  |  | 775,465 |  |  | 7,709 |  |  | 2,440,506 |
Total | $ | 580,379 |  |  | $ | 435,297 |  |  | $ | 283,764 |  |  | $ | 171,222 |  |  | $ | 59,281 |  |  | $ | 137,847 |  |  | $ | 781,601 |  |  | $ | 11,335 |  |  | $ | 2,460,726 |
Consumer and other: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Past due 30-89 days | $ | 3,014 |  |  | $ | 488 |  |  | $ | 148 |  |  | $ | 66 |  |  | $ | 28 |  |  | $ | 40 |  |  | $ | 2,553 |  |  | $ | 158 |  |  | $ | 6,495 |
Past due 90 or more days | 153 |  |  | — |  |  | 27 |  |  | — |  |  | 20 |  |  | — |  |  | 51 |  |  | — |  |  | 251 |
Total past due | 3,167 |  |  | 488 |  |  | 175 |  |  | 66 |  |  | 48 |  |  | 40 |  |  | 2,604 |  |  | 158 |  |  | 6,746 |
Current loans | 67,272 |  |  | 28,885 |  |  | 6,290 |  |  | 3,581 |  |  | 1,199 |  |  | 1,230 |  |  | 339,789 |  |  | 21,970 |  |  | 470,216 |
Total | $ | 70,439 |  |  | $ | 29,373 |  |  | $ | 6,465 |  |  | $ | 3,647 |  |  | $ | 1,247 |  |  | $ | 1,270 |  |  | $ | 342,393 |  |  | $ | 22,128 |  |  | $ | 476,962 |
Revolving loans that converted to term during 2024 and 2023 were as follows:
| 2024 |  | 2023 |  |
Commercial and industrial | $ | 71,275 |  |  | $ | 28,713 |  |  |
Energy | 2,393 |  |  | 6,409 |  |  |
Commercial real estate: |  |  |  |  |
Buildings, land and other | 9,776 |  |  | 4,780 |  |  |
Construction | 159 |  |  | — |  |  |
Consumer real estate | 3,425 |  |  | 2,467 |  |  |
Consumer and other | 11,158 |  |  | 7,482 |  |  |
Total | $ | 98,186 |  |  | $ | 49,851 |  |  |
In assessing the general economic conditions in the State of Texas, management monitors and tracks the Texas Leading Index (“TLI”), which is produced by the Federal Reserve Bank of Dallas. The TLI is a single summary statistic that is designed to signal the likelihood of the Texas economy’s transition from expansion to recession and vice versa. Management believes this index provides a reliable indication of the direction of overall credit quality. The TLI is a composite of the following eight leading indicators: (i) Texas Value of the Dollar, (ii) U.S. Leading Index, (iii) real oil prices (iv) well permits, (v) initial claims for unemployment insurance, (vi) Texas Stock Index, (vii) Help-Wanted Index and (viii) average weekly hours worked in manufacturing. The TLI totaled 125.9 at December 31, 2024 and 127.2 at December 31, 2023. A lower TLI value implies less favorable economic conditions. Allowance For Credit Losses - Loans. The allowance for credit losses on loans is a contra-asset valuation account, calculated in accordance with ASC 326, that is deducted from the amortized cost basis of loans to present the net amount expected to be collected. The amount of the allowance represents management's best estimate of current expected credit losses on loans considering available information, from internal and external sources, relevant to assessing collectibility over the loans' contractual terms, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions, renewals and modifications unless (i) management has a reasonable expectation that a loan to an individual borrower that is experiencing financial difficulty will be modified or (ii) such extension or renewal options are not unconditionally cancellable by us and, in such cases, the borrower is likely to meet applicable conditions and likely to request extension or renewal. Relevant available information includes historical credit loss experience; current conditions; and reasonable and supportable forecasts. While historical credit loss experience provides the basis for the estimation of expected credit losses, adjustments to historical loss information may be made for differences in current portfolio-specific risk characteristics, environmental conditions, or other relevant factors. The allowance for credit losses is measured on a collective basis for portfolios of loans when similar risk characteristics exist. Loans that do not share risk characteristics are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Expected credit losses for collateral dependent loans, including loans where the borrower is experiencing financial difficulty but foreclosure is not probable, are based on the fair value of the collateral at the reporting date, adjusted for selling costs as appropriate. Credit loss expense related to loans reflects the totality of actions taken on all loans for a particular period including any necessary increases or decreases in the allowance related to changes in credit loss expectations associated with specific loans or pools of loans. Portions of the allowance may be allocated for specific credits; however, the entire allowance is available for any credit that, in management’s judgment, should be charged off. While management utilizes its best judgment and information available, the ultimate appropriateness of the allowance is dependent upon a variety of factors beyond our control, including the performance of our loan portfolio, the economy, changes in interest rates and the view of the regulatory authorities toward loan classifications. In calculating the allowance for credit losses, most loans are segmented into pools based upon similar characteristics and risk profiles. Common characteristics and risk profiles include the type/purpose of loan, underlying collateral, geographical similarity, and historical/expected credit loss patterns. In developing these loan pools for the purposes of modeling expected credit losses, we also analyzed the degree of correlation in how loans within each portfolio respond when subjected to varying economic conditions and scenarios as well as other portfolio stress factors. For modeling purposes, our loan pools include (i) commercial and industrial non-revolving, (ii) commercial and industrial revolving, (iii) energy, (iv) commercial real estate - owner occupied, (v) commercial real estate - non-owner occupied, (vi) commercial real estate - construction/land development, (vii) consumer real estate and (viii) consumer and other. Prior to 2023, energy loans were included within the commercial and industrial loan pools. See discussion of the 2023 model updates below. We periodically reassess each pool to ensure the loans within the pool continue to share similar characteristics and risk profiles and to determine whether further segmentation is necessary. For each loan pool, we measure expected credit losses over the life of each loan utilizing a combination of models which measure (i) probability of default (“PD”), which is the likelihood that loan will stop performing/default, (ii) probability of attrition (“PA”), which is the likelihood that a loan will pay-off prior to maturity, (iii) loss given default (“LGD”), which is the expected loss rate for loans in default and (iv) exposure at default (“EAD”), which is the estimated outstanding principal balance of the loans upon default, including the expected funding of unfunded commitments outstanding as of the measurement date. For commercial loan portfolios, the PD is calculated using a transition matrix to determine the likelihood of a customer’s risk grade migrating from one specified range of risk grades to a different specified range. Expected credit losses are calculated as the product of PD (adjusted for attrition), LGD and EAD. This methodology builds on default probabilities already incorporated into our risk grading process by utilizing pool-specific historical loss rates to calculate expected credit losses. These pool-specific historical loss rates may be adjusted for current macroeconomic assumptions, as further discussed below, and other factors such as differences in underwriting standards, portfolio mix, or when historical asset terms do not reflect the contractual terms of the financial assets being evaluated as of the measurement date. Each time we measure expected credit losses, we assess the relevancy of historical loss information and consider any necessary adjustments to address any differences in asset-specific characteristics. Due to their short-term nature, expected credit losses for overdrafts included in consumer and other loans are based solely upon a weighting of recent historical charge-offs over a period of three years. The measurement of expected credit losses is impacted by loan/borrower attributes and certain macroeconomic variables. Significant loan/borrower attributes utilized in our modeling processes include, among other things, (i) origination date, (ii) maturity date, (iii) payment type, (iv) collateral type and amount, (v) current risk grade, (vi) current unpaid balance and commitment utilization rate, (vii) payment status/delinquency history and (viii) expected recoveries of previously charged-off amounts. Significant macroeconomic variables utilized in our modeling processes include, among other things, (i) Gross State Product for Texas and U.S. Gross Domestic Product, (ii) selected market interest rates including U.S. Treasury rates, bank prime rate, 30-year fixed mortgage rate, BBB corporate bond rate, among others, (iii) unemployment rates, (iv) commercial and residential property prices in Texas and the U.S. as a whole, (v) West Texas Intermediate crude oil price and (vi) total stock market index. PD and PA were estimated by analyzing internally-sourced data related to historical performance of each loan pool over a complete economic cycle. PD and PA are adjusted to reflect the current impact of certain macroeconomic variables as well as their expected changes over a reasonable and supportable forecast period. We have determined that we are reasonably able to forecast the macroeconomic variables used in our modeling processes with an acceptable degree of confidence for a total of two years with the last twelve months of the forecast period encompassing a reversion process whereby the forecasted macroeconomic variables are reverted to their historical mean utilizing a rational, systematic basis. The macroeconomic variables utilized as inputs in our modeling processes were subjected to a variety of analysis procedures and were selected primarily based on statistical relevancy and correlation to our historical credit losses. By reverting these modeling inputs to their historical mean and considering loan/borrower specific attributes, our models are intended to yield a measurement of expected credit losses that reflects our average historical loss rates for periods subsequent to the twelve-month reversion period. The LGD is based on historical recovery averages for each loan pool, adjusted to reflect the current impact of certain macroeconomic variables as well as their expected changes over a two-year forecast period, with the final twelve months of the forecast period encompassing a reversion process, which management considers to be both reasonable and supportable. This same forecast/reversion period is used for all macroeconomic variables used in all of our models. EAD is estimated using a linear regression model that estimates the average percentage of the loan balance that remains at the time of a default event. Management qualitatively adjusts model results for risk factors that are not considered within our modeling processes but are nonetheless relevant in assessing the expected credit losses within our loan pools. These qualitative factor (“Q-Factor”) and other qualitative adjustments may increase or decrease management's estimate of expected credit losses by a calculated percentage or amount based upon the estimated level of risk. The various risks that may be considered in making Q-Factor and other qualitative adjustments include, among other things, the impact of (i) changes in lending policies and procedures, including changes in underwriting standards and practices for collections, write-offs, and recoveries, (ii) actual and expected changes in international, national, regional, and local economic and business conditions and developments that affect the collectibility of the loan pools, (iii) changes in the nature and volume of the loan pools and in the terms of the underlying loans, (iv) changes in the experience, ability, and depth of our lending management and staff, (v) changes in volume and severity of past due financial assets, the volume of non-accrual assets, and the volume and severity of adversely classified or graded assets, (vi) changes in the quality of our credit review function, (vii) changes in the value of the underlying collateral for loans that are non-collateral dependent, (viii) the existence, growth, and effect of any concentrations of credit and (ix) other factors such as the regulatory, legal and technological environments; competition; and events such as natural disasters or health pandemics. In some cases, management may determine that an individual loan exhibits unique risk characteristics which differentiate the loan from other loans within our loan pools. In such cases, the loans are evaluated for expected credit losses on an individual basis and excluded from the collective evaluation. Specific allocations of the allowance for credit losses are determined by analyzing the borrower’s ability to repay amounts owed, collateral deficiencies, the relative risk grade of the loan and economic conditions affecting the borrower’s industry, among other things. A loan is considered to be collateral dependent when, based upon management's assessment, the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. In such cases, expected credit losses are based on the fair value of the collateral at the measurement date, adjusted for estimated selling costs if satisfaction of the loan depends on the sale of the collateral. We reevaluate the fair value of collateral supporting collateral dependent loans on a quarterly basis. The fair value of real estate collateral supporting collateral dependent loans is evaluated by our internal appraisal services using a methodology that is consistent with the Uniform Standards of Professional Appraisal Practice. The fair value of collateral supporting collateral dependent construction loans is based on an “as is” valuation. During the first quarter of 2024, we updated our non-owner-occupied commercial real estate loan models as well as our consumer and other loan models. Our prior non-owner-occupied commercial real estate loan models were legacy models developed for stress-testing purposes by a third-party using external market data. The updated non-owner-occupied commercial real estate loan models are now based on internal historical loan data and risk grade information and the modeling processes are now consistent with those used with our other commercial loan models. Our prior consumer and other loan models relied upon certain components that did not use loan level attributes and were less sensitive to macroeconomic variables. The updated consumer and other loan models are now based on internal historical loan data and utilize more loan-level attributes and the modeling processes are now consistent with those used with our consumer real estate loan models. The overall approximate impact of the model updates during the first quarter was a $7.2 million increase ($6.2 million related to non-owner-occupied commercial real estate loans and $923 thousand related to consumer and other loans) in modeled expected credit losses on loans; however, the impact of this increase was largely offset by reductions in qualitative adjustments as some of the risks to which those qualitative adjustments related are now considered and incorporated in the updated models. During the first quarter of 2023, we recalibrated and updated all of our commercial loan models, with the exception of the models related to commercial real estate - non-owner-occupied loans, as well as our consumer real estate loan models. While the fundamental modeling methodologies remain unchanged, the updates included (i) separating the energy loan pool from the commercial and industrial pool as a result of differences in loss characteristics observed in recent history and (ii) changing the modeling approach related to loan renewals whereby each renewal is treated as a separate loan which impacted loan life assumptions. The overall approximate impact of the model updates during the first quarter was a $45.0 million decrease in modeled expected credit losses on loans though the impact of this decrease was largely offset with discretionary qualitative adjustments. The decrease in modeled expected credit losses on loans was largely driven by lower measurements for PD and LGD based on the historical data series (2008 through 2018) used for the recalibration. This period was one of relatively low losses and included higher levels of government stimulus. The lower PD and LGD measurements were also impacted by shorter loan life assumptions due to the aforementioned change in the modeling approach related to loan renewals. The following table presents details of the allowance for credit losses on loans segregated by loan portfolio segment as of December 31, 2024 and 2023, calculated in accordance with the CECL methodology described above.
| Commercial and Industrial |  | Energy |  | Commercial Real Estate |  | Consumer Real Estate |  | Consumer and Other |  | Total
December 31, 2024 |  |  |  |  |  |  |  |  |  |  |
Modeled expected credit losses | $ | 51,669 |  |  | $ | 3,969 |  |  | $ | 17,549 |  |  | $ | 17,720 |  |  | $ | 7,019 |  |  | $ | 97,926 |
Q-Factor and other qualitative adjustments | 22,635 |  |  | 3,323 |  |  | 125,031 |  |  | 620 |  |  | 3,095 |  |  | 154,704 |
Specific allocations | 13,265 |  |  | 2,700 |  |  | 625 |  |  | 766 |  |  | 165 |  |  | 17,521 |
Total | $ | 87,569 |  |  | $ | 9,992 |  |  | $ | 143,205 |  |  | $ | 19,106 |  |  | $ | 10,279 |  |  | $ | 270,151 |
December 31, 2023 |  |  |  |  |  |  |  |  |  |  |
Modeled expected credit losses | $ | 50,959 |  |  | $ | 7,838 |  |  | $ | 15,443 |  |  | $ | 12,364 |  |  | $ | 5,969 |  |  | $ | 92,573 |
Q-Factor and other qualitative adjustments | 20,612 |  |  | 7,276 |  |  | 112,505 |  |  | 433 |  |  | 4,071 |  |  | 144,897 |
Specific allocations | 2,435 |  |  | 2,700 |  |  | 2,650 |  |  | 741 |  |  | — |  |  | 8,526 |
Total | $ | 74,006 |  |  | $ | 17,814 |  |  | $ | 130,598 |  |  | $ | 13,538 |  |  | $ | 10,040 |  |  | $ | 245,996 |
The following table details activity in the allowance for credit losses on loans by portfolio segment for 2024, 2023 and 2022. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.
| Commercial and Industrial |  | Energy |  | Commercial Real Estate |  | Consumer Real Estate |  | Consumer and Other |  | Total
2024 |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | 74,006 |  |  | $ | 17,814 |  |  | $ | 130,598 |  |  | $ | 13,538 |  |  | $ | 10,040 |  |  | $ | 245,996 |
Credit loss expense (benefit) | 24,494 |  |  | (8,977) |  |  | 16,479 |  |  | 9,753 |  |  | 23,083 |  |  | 64,832 |
Charge-offs | (14,828) |  |  | (79) |  |  | (3,919) |  |  | (4,940) |  |  | (33,344) |  |  | (57,110) |
Recoveries | 3,897 |  |  | 1,234 |  |  | 47 |  |  | 755 |  |  | 10,500 |  |  | 16,433 |
Net (charge-offs) recoveries | (10,931) |  |  | 1,155 |  |  | (3,872) |  |  | (4,185) |  |  | (22,844) |  |  | (40,677) |
Ending balance | $ | 87,569 |  |  | $ | 9,992 |  |  | $ | 143,205 |  |  | $ | 19,106 |  |  | $ | 10,279 |  |  | $ | 270,151 |
2023 |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | 104,237 |  |  | $ | 18,062 |  |  | $ | 90,301 |  |  | $ | 8,004 |  |  | $ | 7,017 |  |  | $ | 227,621 |
Credit loss expense (benefit) | (16,709) |  |  | (1,067) |  |  | 40,889 |  |  | 6,736 |  |  | 23,012 |  |  | 52,861 |
Charge-offs | (18,315) |  |  | (518) |  |  | (955) |  |  | (2,883) |  |  | (31,260) |  |  | (53,931) |
Recoveries | 4,793 |  |  | 1,337 |  |  | 363 |  |  | 1,681 |  |  | 11,271 |  |  | 19,445 |
Net (charge-offs) recoveries | (13,522) |  |  | 819 |  |  | (592) |  |  | (1,202) |  |  | (19,989) |  |  | (34,486) |
Ending balance | $ | 74,006 |  |  | $ | 17,814 |  |  | $ | 130,598 |  |  | $ | 13,538 |  |  | $ | 10,040 |  |  | $ | 245,996 |
2022 |  |  |  |  |  |  |  |  |  |  |
Beginning balance | $ | 72,091 |  |  | $ | 17,217 |  |  | $ | 144,936 |  |  | $ | 6,585 |  |  | $ | 7,837 |  |  | $ | 248,666 |
Credit loss expense (benefit) | 34,479 |  |  | (313) |  |  | (54,775) |  |  | 1,813 |  |  | 13,517 |  |  | (5,279) |
Charge-offs | (6,575) |  |  | (371) |  |  | (702) |  |  | (912) |  |  | (24,388) |  |  | (32,948) |
Recoveries | 4,242 |  |  | 1,529 |  |  | 842 |  |  | 518 |  |  | 10,051 |  |  | 17,182 |
Net (charge-offs) recoveries | (2,333) |  |  | 1,158 |  |  | 140 |  |  | (394) |  |  | (14,337) |  |  | (15,766) |
Ending balance | $ | 104,237 |  |  | $ | 18,062 |  |  | $ | 90,301 |  |  | $ | 8,004 |  |  | $ | 7,017 |  |  | $ | 227,621 |
Generally, a commercial loan, or a portion thereof, is charged-off immediately when it is determined, through the analysis of any available current financial information with regards to the borrower, that the borrower is incapable of servicing unsecured debt, there is little or no prospect for near term improvement and no realistic strengthening action of significance is pending or, in the case of secured debt, when it is determined, through analysis of current information with regards to our collateral position, that amounts due from the borrower are in excess of the calculated current fair value of the collateral. Notwithstanding the foregoing, generally, commercial loans that become past due 180 cumulative days are charged-off. Generally, a consumer loan, or a portion thereof, is charged-off in accordance with regulatory guidelines which provide that such loans be charged-off when we become aware of the loss, such as from a triggering event that may include new information about a borrower’s intent/ability to repay the loan, bankruptcy, fraud or death, among other things, but in any event the charge-off must be taken within specified delinquency time frames. Such delinquency time frames state that closed-end retail loans (loans with pre-defined maturity dates, such as real estate mortgages, home equity loans and consumer installment loans) that become past due 120 cumulative days and open-end retail loans (loans that roll-over at the end of each term, such as home equity lines of credit) that become past due 180 cumulative days should be classified as a loss and charged-off. The following table presents year-to-date gross charge-offs by year of origination as of December 31, 2024.
| 2024 |  | 2023 |  | 2022 |  | 2021 |  | 2020 |  | Prior |  | Revolving Loans |  | Revolving Loans Converted to Term |  | Total
Commercial and industrial | $ | 1,423 |  |  | $ | 1,820 |  |  | $ | 804 |  |  | $ | 487 |  |  | $ | 403 |  |  | $ | 625 |  |  | $ | 6,273 |  |  | $ | 2,993 |  |  | $ | 14,828 |
Energy | — |  |  | 79 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 79 |
Commercial real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Buildings, land and other | — |  |  | 3,797 |  |  | 122 |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | 3,919 |
Construction | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |  |  | — |
Consumer real estate | — |  |  | 537 |  |  | 315 |  |  | 253 |  |  | — |  |  | 704 |  |  | 3,064 |  |  | 67 |  |  | 4,940 |
Consumer and other | 24,485 |  |  | 5,793 |  |  | 218 |  |  | 56 |  |  | 30 |  |  | 71 |  |  | 2,459 |  |  | 232 |  |  | 33,344 |
Total | $ | 25,908 |  |  | $ | 12,026 |  |  | $ | 1,459 |  |  | $ | 796 |  |  | $ | 433 |  |  | $ | 1,400 |  |  | $ | 11,796 |  |  | $ | 3,292 |  |  | $ | 57,110 |
In the table above, $24.2 million of the consumer and other loan charge-offs reported as 2024 originations and $5.5 million of the total reported as 2023 originations were related to deposit overdrafts. The following table presents loans that were evaluated for expected credit losses on an individual basis and the related specific allocations, by loan portfolio segment as of December 31, 2024 and December 31, 2023.
| December 31, 2024 |  | December 31, 2023
Loan Balance |  | Specific Allocations |  | Loan Balance |  | Specific Allocations
Commercial and industrial | $ | 45,009 |  |  | $ | 13,265 |  |  | $ | 18,670 |  |  | $ | 2,435 |
Energy | 4,078 |  |  | 2,700 |  |  | 11,353 |  |  | 2,700 |
Commercial real estate: |  |  |  |  |  |  |
Buildings, land and other | 18,797 |  |  | 122 |  |  | 21,373 |  |  | 2,650 |
Construction | 2,012 |  |  | 503 |  |  | — |  |  | — |
Consumer real estate | 6,039 |  |  | 766 |  |  | 7,235 |  |  | 741 |
Consumer and other | 352 |  |  | 165 |  |  | — |  |  | — |
Total | $ | 76,287 |  |  | $ | 17,521 |  |  | $ | 58,631 |  |  | $ | 8,526 |

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