Concentrations of Credit. Most of the Company’s lending activity occurs within the states of Texas and Oklahoma. Commercial real estate loans, 1-4 family residential loans and construction, land development and other land loans made up 81.8% and 81.3% of the Company’s total loan portfolio, excluding Warehouse Purchase Program loans, at June 30, 2025 and December 31, 2024, respectively. As of June 30, 2025 and December 31, 2024, excluding Warehouse Purchase Program loans, there were no concentrations of loans related to any single industry in excess of 10% of total loans.

Related Party Loans. As of June 30, 2025 and December 31, 2024, loans outstanding to directors, officers and their affiliates totaled $248 thousand and $266 thousand, respectively. All transactions between the Company and such related parties are conducted in the ordinary course of business and made on the same terms and conditions as similar transactions with unaffiliated persons.

Nonperforming Assets and Nonaccrual and Past Due Loans. The Company has several procedures in place to assist it in maintaining the overall quality of its loan portfolio. The Company has established underwriting guidelines to be followed by its officers, including requiring appraisals on loans collateralized by real estate. The Company also monitors its delinquency levels for any negative or adverse trends. Nevertheless, the Company’s loan portfolio could become subject to increasing pressures from deteriorating borrower credit due to general economic conditions.

The Company generally places a loan on nonaccrual status and ceases accruing interest when the payment of principal or interest is delinquent for 90 days, or earlier in some cases; unless the loan is in the process of collection and the underlying collateral fully supports the carrying value of the loan. 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.

With respect to potential problem loans, an evaluation of the borrower’s overall financial condition is made, together with an appraisal for loans collateralized by real estate, to determine the need, if any, for possible write-downs or appropriate additions to the allowance for credit losses.

An aging analysis of past due loans, segregated by category of loan, is presented below:


	June 30, 2025
	Loans Past Due and Still Accruing
	30-89 Days		90 or More Days		Total Past Due Loans		Nonaccrual Loans		Current Loans		Total Loans
	(Dollars in thousands)
Construction, land development and other land loans	$	12,465	$	162	$	12,627	$	734	$	2,859,877	$	2,873,238
Warehouse Purchase Program loans		—		—		—		—		1,287,440		1,287,440
Agriculture and agriculture real estate (includes farmland)		4,663		82		4,745		17,465		1,007,039		1,029,249
1-4 family (includes home equity) (1)		48,448		—		48,448		44,861		8,306,878		8,400,187
Commercial real estate (includes multi-family residential)		11,495		—		11,495		11,594		5,804,556		5,827,645
Commercial and industrial		20,631		332		20,963		27,348		2,362,571		2,410,882
Consumer and other		2,085		—		2,085		29		366,633		368,747
Total	$	99,787	$	576	$	100,363	$	102,031	$	21,994,994	$	22,197,388


	December 31, 2024
	Loans Past Due and Still Accruing
	30-89 Days		90 or More Days		Total Past Due Loans		Nonaccrual Loans		Current Loans		Total Loans
	(Dollars in thousands)
Construction, land development and other land loans	$	21,464	$	267	$	21,731	$	2,079	$	2,835,471	$	2,859,281
Warehouse Purchase Program loans		—		—		—		—		1,080,903		1,080,903
Agriculture and agriculture real estate (includes farmland)		4,554		575		5,129		2,634		1,025,783		1,033,546
1-4 family (includes home equity) (1)		49,391		—		49,391		42,048		8,396,150		8,487,589
Commercial real estate (includes multi-family residential)		15,692		—		15,692		18,455		5,766,838		5,800,985
Commercial and industrial		26,852		1,347		28,199		8,348		2,471,541		2,508,088
Consumer and other		478		—		478		83		378,256		378,817
Total	$	118,431	$	2,189	$	120,620	$	73,647	$	21,954,942	$	22,149,209

(1)

Includes $6.0 million and $10.7 million of residential mortgage loans held for sale at June 30, 2025 and December 31, 2024, respectively.

The Company had $110.5 million in nonperforming assets at June 30, 2025 compared with $81.5 million at December 31, 2024. Nonperforming assets were 0.50% of total loans and other real estate at June 30, 2025 and 0.37% of total loans and other real estate at December 31, 2024. The Company had $102.0 million in nonaccrual loans at June 30, 2025 compared with $73.6 million at December 31, 2024.

Acquired Loans. Acquired loans were preliminarily recorded at fair value based on a discounted cash flow valuation methodology that considers, among other things, interest rates, projected default rates, loss given default, and recovery rates. Projected default rates, loss given default, and recovery rates for purchased credit deteriorated (“PCD”) loans primarily impact the related allowance, as opposed to the fair value mark. During the valuation process, the Company identified PCD and Non-PCD loans in the acquired loan portfolios. Loans acquired with evidence of credit quality deterioration since origination as of the acquisition date were accounted for as PCD. PCD loan identification considers the following factors: payment history and past due status, debt service coverage, loan grading, collateral values and other factors that may indicate deterioration of credit quality as of the acquisition date when compared to the origination date. Non-PCD loan identification considers the following factors: account types, remaining terms, annual interest rates or coupons, current market rates, interest types, past delinquencies, timing of principal and interest payments, loan to value ratios, loss exposures and remaining balances. Accretion of purchased discounts on PCD and Non-PCD loans will be recognized based on payment structure and the contractual maturity of individual loans.

PCD Loans. The recorded investment in PCD loans included in the consolidated balance sheet and the related outstanding balance as of the dates indicated are presented in the table below. The outstanding balance represents the total amount owed as of June 30, 2025 and December 31, 2024.

Income recognition on PCD loans is subject to the timing and amount of future cash flows. PCD loans for which the Company is accruing interest income are not considered nonperforming or impaired. The PCD discount reflected above as of June 30, 2025, represents the amount of discount available to be recognized as income.

Non-PCD Loans. The recorded investment in Non-PCD loans included in the consolidated balance sheet and the related outstanding balance as of the dates indicated are presented in the table below. The outstanding balance represents the total amount owed as of June 30, 2025 and December 31, 2024.

Credit Quality Indicators. As part of the ongoing monitoring of the credit quality of the Company’s loan portfolio and methodology for calculating the allowance for credit losses, management assigns and tracks loan grades to be used as credit quality indicators. The following is a general description of the loan grades used:

Grade 1—Credits in this category have risk potential that is virtually nonexistent. These loans may be secured by insured certificates of deposit, insured savings accounts, U.S. Government securities and highly rated municipal bonds.

Grade 2—Credits in this category are of the highest quality. These borrowers represent top rated companies and individuals with unquestionable financial standing with excellent global cash flow coverage, net worth, liquidity and collateral coverage.

Grade 3—Credits in this category are not immune from risk but are well protected by the collateral and paying capacity of the borrower. These loans may exhibit a minor unfavorable credit factor, but the overall credit is sufficiently strong to minimize the possibility of loss.

Grade 4—Credits in this category are considered to be of acceptable credit quality with moderately greater risk than Grade 3 and receiving closer monitoring. Loans in this category have sources of repayment that remain sufficient to preclude a larger than normal probability of default and secondary sources are likewise currently of sufficient quantity, quality, and liquidity to protect the Company against loss of principal and interest. These borrowers have specific risk factors, but the overall strength of the credit is acceptable based on other mitigating credit and/or collateral factors and can repay the debt in the normal course of business.

Grade 5—Credits in this category constitute an undue and unwarranted credit risk; however, the factors do not rise to a level of substandard. These credits have potential weaknesses and/or declining trends that, if not corrected, could expose the Company to risk at a future date. These loans are monitored on the Company’s internally-generated watch list and evaluated on a quarterly basis.

Grade 6—Credits in this category are considered “substandard” but “non-impaired” loans in accordance with regulatory guidelines. Loans in this category have well-defined weakness that, if not corrected, could make default of principal and interest possible. Loans in this category are still accruing interest and may be dependent upon secondary sources of repayment and/or collateral liquidation.

Grade 7—Credits in this category are deemed “substandard” and “impaired” pursuant to regulatory guidelines. As such, the Company has determined that it is probable that less than 100% of the contractual principal and interest will be collected. These loans are individually evaluated for a specific reserve and will typically have the accrual of interest stopped.

Grade 8—Credits in this category include “doubtful” loans in accordance with regulatory guidance. Such loans are no longer accruing interest and factors indicate a loss is imminent. These loans are also deemed “impaired.” While a specific reserve may be in place while the loan and collateral are being evaluated, these loans are typically charged down to an amount the Company estimates is collectible.

Grade 9—Credits in this category are deemed a “loss” in accordance with regulatory guidelines and have been charged off or charged down. The Company may continue collection efforts and may have partial recovery in the future.

The following tables present loans by risk grade, by category of loan and year of origination/renewal at June 30, 2025.


	Term Loans
	Amortized Cost Basis by Origination Year
	2025		2024		2023		2022		2021		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
	(Dollars in thousands)

Construction, Land Development and Other Land Loans
Grade 1	$	274	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	274
Grade 2		—		—		659		139		—		13		—		—		811
Grade 3		441,971		552,385		324,163		335,752		157,548		57,530		110,247		849		1,980,445
Grade 4		30,416		122,532		199,392		291,566		79,910		18,311		45,440		—		787,567
Grade 5		2,723		250		13		—		352		5,346		912		—		9,596
Grade 6		7,262		525		—		—		146		460		—		—		8,393
Grade 7		—		—		—		82		—		186		—		—		268
Grade 8		—		—		—		—		—		—		—		—		—
Grade 9		—		—		—		—		—		—		—		—		—
PCD Loans		11,930		11,700		8,159		29,856		5,733		3,258		15,248		—		85,884
Total	$	494,576	$	687,392	$	532,386	$	657,395	$	243,689	$	85,104	$	171,847	$	849	$	2,873,238

Current-period gross write-offs	$	—	$	82	$	—	$	—	$	—	$	—	$	—	$	—	$	82

Agriculture and Agriculture Real Estate (includes Farmland)
Grade 1	$	3,003	$	1,520	$	346	$	8	$	7	$	2	$	9,226	$	—	$	14,112
Grade 2		—		—		8		45		—		552		—		—		605
Grade 3		98,098		105,904		70,970		166,396		80,789		119,280		154,960		226		796,623
Grade 4		34,478		31,885		13,690		17,798		26,794		12,667		28,211		—		165,523
Grade 5		1,369		1,525		45		241		623		1,358		—		—		5,161
Grade 6		—		—		—		—		—		656		—		—		656
Grade 7		—		1,796		—		1,514		—		385		250		—		3,945
Grade 8		—		—		—		—		—		—		—		—		—
Grade 9		—		—		—		—		—		—		—		—		—
PCD Loans		14,382		14,277		19		2,346		1,422		5,120		5,058		—		42,624
Total	$	151,330	$	156,907	$	85,078	$	188,348	$	109,635	$	140,020	$	197,705	$	226	$	1,029,249

Current-period gross write-offs	$	—	$	29	$	—	$	—	$	8	$	—	$	—	$	—	$	37

1-4 Family (includes Home Equity) (1)
Grade 1	$	—	$	—	$	70	$	138	$	—	$	106	$	—	$	—	$	314
Grade 2		—		—		506		1,010		140		2,042		—		—		3,698
Grade 3		222,803		526,947		1,530,991		2,127,012		1,799,587		1,872,142		96,821		2,848		8,179,151
Grade 4		6,715		11,689		18,532		18,607		27,701		66,708		2,804		—		152,756
Grade 5		132		488		679		2,356		2,442		2,665		76		—		8,838
Grade 6		—		132		370		400		201		2,734		—		—		3,837
Grade 7		—		212		5,292		14,237		7,307		17,521		95		—		44,664
Grade 8		—		—		—		—		—		—		—		—		—
Grade 9		—		—		—		—		—		—		—		—		—
PCD Loans		47		32		1,616		3,093		279		1,862		—		—		6,929
Total	$	229,697	$	539,500	$	1,558,056	$	2,166,853	$	1,837,657	$	1,965,780	$	99,796	$	2,848	$	8,400,187

Current-period gross write-offs	$	—	$	—	$	483	$	467	$	51	$	25	$	442	$	—	$	1,468


	Term Loans
	Amortized Cost Basis by Origination Year
	2025		2024		2023		2022		2021		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
	(Dollars in thousands)

Commercial Real Estate (includes Multi-Family Residential)
Grade 1	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Grade 2		387		—		—		763		—		751		6,523		—		8,424
Grade 3		217,566		312,016		385,826		882,609		746,270		1,067,147		51,582		—		3,663,016
Grade 4		98,326		51,622		97,967		417,711		216,346		672,776		9,210		300		1,564,258
Grade 5		3,511		27,256		1,023		19,537		12,271		180,937		—		—		244,535
Grade 6		4,732		28,076		4,942		4,858		1,969		79,856		—		—		124,433
Grade 7		—		1,069		—		1,576		3,855		1,021		—		—		7,521
Grade 8		—		—		—		—		—		—		—		—		—
Grade 9		—		—		—		—		—		—		—		—		—
PCD Loans		21,034		36,645		15,932		55,576		42,290		43,981		—		—		215,458
Total	$	345,556	$	456,684	$	505,690	$	1,382,630	$	1,023,001	$	2,046,469	$	67,315	$	300	$	5,827,645

Current-period gross write-offs	$	—	$	74	$	342	$	33	$	—	$	—	$	50	$	—	$	499

Commercial and Industrial
Grade 1	$	22,560	$	25,250	$	3,590	$	1,056	$	2,054	$	673	$	47,178	$	—	$	102,361
Grade 2		—		1,578		506		6,831		—		1,558		9,678		—		20,151
Grade 3		173,577		264,443		167,051		135,397		96,679		211,646		880,871		3,519		1,933,183
Grade 4		8,642		34,903		26,999		25,956		5,665		23,723		81,067		1,494		208,449
Grade 5		145		4,244		149		18,114		550		2,327		8,752		—		34,281
Grade 6		75		1,335		8,495		3,053		451		213		39,131		3,624		56,377
Grade 7		—		737		4,117		227		83		167		20,596		—		25,927
Grade 8		—		—		—		—		—		—		—		—		—
Grade 9		—		—		—		—		—		—		—		—		—
PCD Loans		76		1,254		749		8,503		808		1,842		16,921		—		30,153
Total	$	205,075	$	333,744	$	211,656	$	199,137	$	106,290	$	242,149	$	1,104,194	$	8,637	$	2,410,882

Current-period gross write-offs	$	—	$	515	$	160	$	273	$	104	$	85	$	1,440	$	—	$	2,577

Consumer and Other
Grade 1	$	16,520	$	12,960	$	3,624	$	1,209	$	888	$	278	$	1,772	$	—	$	37,251
Grade 2		9,986		99,954		10,503		13,789		—		1,740		2		—		135,974
Grade 3		32,418		20,183		19,593		27,975		16,556		11,206		39,251		2		167,184
Grade 4		11		537		1,232		42		875		16,326		9,083		100		28,206
Grade 5		—		—		—		—		—		—		88		—		88
Grade 6		—		—		—		—		—		—		—		—		—
Grade 7		—		—		21		3		—		—		—		—		24
Grade 8		—		—		—		—		—		—		—		—		—
Grade 9		—		—		—		—		—		—		—		—		—
PCD Loans		—		—		—		—		13		5		2		—		20
Total	$	58,935	$	133,634	$	34,973	$	43,018	$	18,332	$	29,555	$	50,198	$	102	$	368,747

Current-period gross write-offs	$	3,022	$	46	$	81	$	38	$	—	$	244	$	66	$	5	$	3,502


	Term Loans
	Amortized Cost Basis by Origination Year
	2025		2024		2023		2022		2021		Prior		Revolving Loans		Revolving Loans Converted to Term Loans		Total
	(Dollars in thousands)

Warehouse Purchase Program
Grade 1	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Grade 2		—		—		—		—		—		—		—		—		—
Grade 3		1,287,440		—		—		—		—		—		—		—		1,287,440
Grade 4		—		—		—		—		—		—		—		—		—
Grade 5		—		—		—		—		—		—		—		—		—
Grade 6		—		—		—		—		—		—		—		—		—
Grade 7		—		—		—		—		—		—		—		—		—
Grade 8		—		—		—		—		—		—		—		—		—
Grade 9		—		—		—		—		—		—		—		—		—
PCD Loans		—		—		—		—		—		—		—		—		—
Total	$	1,287,440	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	1,287,440

Current-period gross write-offs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Total
Grade 1	$	42,357	$	39,730	$	7,630	$	2,411	$	2,949	$	1,059	$	58,176	$	—	$	154,312
Grade 2		10,373		101,532		12,182		22,577		140		6,656		16,203		—		169,663
Grade 3		2,473,873		1,781,878		2,498,594		3,675,141		2,897,429		3,338,951		1,333,732		7,444		18,007,042
Grade 4		178,588		253,168		357,812		771,680		357,291		810,511		175,815		1,894		2,906,759
Grade 5		7,880		33,763		1,909		40,248		16,238		192,633		9,828		—		302,499
Grade 6		12,069		30,068		13,807		8,311		2,767		83,919		39,131		3,624		193,696
Grade 7		—		3,814		9,430		17,639		11,245		19,280		20,941		—		82,349
Grade 8		—		—		—		—		—		—		—		—		—
Grade 9		—		—		—		—		—		—		—		—		—
PCD Loans		47,469		63,908		26,475		99,374		50,545		56,068		37,229		—		381,068
Total	$	2,772,609	$	2,307,861	$	2,927,839	$	4,637,381	$	3,338,604	$	4,509,077	$	1,691,055	$	12,962	$	22,197,388

Current-period gross write-offs	$	3,022	$	746	$	1,066	$	811	$	163	$	354	$	1,998	$	5	$	8,165

(1)

Includes $6.0 million of residential mortgage loans held for sale at June 30, 2025.

Allowance for Credit Losses on Loans. The allowance for credit losses is adjusted through charges to earnings in the form of a provision for credit losses. Management has established an allowance for credit losses which it believes is adequate to cover expected losses in the Company’s loan portfolio as of June 30, 2025. The amount of the allowance for credit losses on loans is affected by the following: (1) charge-offs of loans that occur when loans are deemed uncollectible and decrease the allowance, (2) recoveries on loans previously charged off that increase the allowance, (3) provisions for credit losses charged to earnings that increase the allowance, and (4) provision releases returned to earnings that decrease the allowance. Based on an evaluation of the loan portfolio and consideration of the factors listed below, management presents a quarterly review of the allowance for credit losses to the Bank’s Board of Directors, indicating any change in the allowance since the last review and any recommendations as to adjustments in the allowance. Although management believes it uses the best information available to make determinations with respect to the allowance for credit losses, future adjustments may be necessary if economic conditions or borrower performance differ from the assumptions used in making the initial determinations.

The Company’s allowance for credit losses on loans consists of two components: (1) a specific valuation allowance based on expected losses on specifically identified loans and (2) a general valuation allowance based on historical lifetime loan loss experience, current economic conditions, reasonable and supportable forecasted economic conditions and other qualitative risk factors both internal and external to the Company.

In setting the specific valuation allowance, the Company follows a loan review program to evaluate the credit risk in the total loan portfolio and assigns risk grades to each loan. Through this loan review process, the Company maintains an internal list of impaired loans, which along with the delinquency list of loans, helps management assess the overall quality of the loan portfolio and the adequacy of the allowance for credit losses. All loans that have been identified as impaired are reviewed on a quarterly basis in order to determine whether a specific reserve is required. For certain impaired loans, the Company allocates a specific loan loss reserve primarily based on the value of the collateral securing the impaired loan in accordance with CECL. The specific reserves are determined on an individual loan basis. Loans for which specific reserves are provided are excluded from the general valuation allowance described below.

In connection with this review of the loan portfolio, the Company considers risk elements attributable to particular loan types or categories in assessing the quality of individual loans. Some of the risk elements include:

In addition, for each category, the Company considers secondary sources of income and the financial strength and credit history of the borrower and any guarantors.

In determining the amount of the general valuation allowance, management considers factors such as historical lifetime loan loss experience, concentration risk of specific loan types, the volume, growth and composition of the Company’s loan portfolio, current economic conditions and reasonable and supportable forecasted economic conditions that may affect borrower ability to pay and the value of collateral, the evaluation of the Company’s loan portfolio through its internal loan review process, other qualitative risk factors both internal and external to the Company and other relevant factors in accordance with CECL. Historical lifetime loan loss experience is determined by utilizing an open-pool (“cumulative loss rate”) methodology. Adjustments to the historical lifetime loan loss experience are made for differences in current loan pool risk characteristics such as portfolio concentrations, delinquency, non-accrual, and watch list levels, as well as changes in current and forecasted economic conditions such as unemployment rates, property and collateral values, and other indices relating to economic activity. The utilization of reasonable and supportable forecasts includes an immediate reversion to lifetime historical loss rates. Based on a review of these factors for each loan type, the Company applies an estimated percentage to the outstanding balance of each loan type, excluding any loan that has a specific reserve. Allocation of a portion of the allowance to one category of loans does not preclude its availability to cover expected losses in other categories.

The following table details activity in the allowance for credit losses on loans by category of loan for the three and six months ended June 30, 2025 and 2024.


	Construction, Land Development and Other Land Loans			Agriculture and Agriculture Real Estate (includes Farmland)			1-4 Family (includes Home Equity)			Commercial Real Estate (includes Multi-Family Residential)			Commercial and Industrial			Consumer and Other			Total
	(Dollars in thousands)
Allowance for credit losses on loans:
Three Months Ended
Balance March 31, 2025	$	80,580		$	26,097		$	83,895		$	90,307		$	60,174		$	8,048		$	349,101
Provision for credit losses on loans		(2,765	)		737			(1,448	)		(1,131	)		3,126			1,481			—
Charge-offs		(82	)		(37	)		(410	)		(112	)		(1,636	)		(1,945	)		(4,222	)
Recoveries		85			51			68			57			592			352			1,205
Net (charge-offs) recoveries		3			14			(342	)		(55	)		(1,044	)		(1,593	)		(3,017	)
Balance June 30, 2025	$	77,818		$	26,848		$	82,105		$	89,121		$	62,256		$	7,936		$	346,084

Six Months Ended
Balance December 31, 2024	$	77,984		$	27,693		$	80,735		$	92,147		$	65,500		$	7,746		$	351,805
Provision for credit losses on loans		(325	)		(859	)		2,763			(2,793	)		(1,870	)		3,084			—
Charge-offs		(82	)		(37	)		(1,468	)		(499	)		(2,577	)		(3,502	)		(8,165	)
Recoveries		241			51			75			266			1,203			608			2,444
Net (charge-offs) recoveries		159			14			(1,393	)		(233	)		(1,374	)		(2,894	)		(5,721	)
Balance June 30, 2025	$	77,818		$	26,848		$	82,105		$	89,121		$	62,256		$	7,936		$	346,084

Allowance for credit losses on loans:
Three Months Ended
Balance March 31, 2024	$	82,158		$	12,627		$	79,664		$	87,213		$	61,616		$	6,941		$	330,219
Initial allowance on loans purchased with credit deterioration		942			14,309			344			4,306			6,176			1			26,078
Provision for credit losses on loans		(6,215	)		2,757			1,106			3,828			5,097			1,350			7,923
Charge-offs		(109	)		(400	)		(433	)		(511	)		(3,176	)		(1,488	)		(6,117	)
Recoveries		—			186			8			892			399			264			1,749
Net (charge-offs) recoveries		(109	)		(214	)		(425	)		381			(2,777	)		(1,224	)		(4,368	)
Balance June 30, 2024	$	76,776		$	29,479		$	80,689		$	95,728		$	70,112		$	7,068		$	359,852

Six Months Ended
Balance December 31, 2023	$	87,775		$	11,380		$	77,652		$	88,664		$	59,832		$	7,059		$	332,362
Initial allowance on loans purchased with credit deterioration		942			14,309			344			4,306			6,176			1			26,078
Provision for credit losses on loans		(11,834	)		4,027			3,575			2,360			7,164			2,631			7,923
Charge-offs		(109	)		(522	)		(894	)		(511	)		(4,536	)		(3,146	)		(9,718	)
Recoveries		2			285			12			909			1,476			523			3,207
Net (charge-offs) recoveries		(107	)		(237	)		(882	)		398			(3,060	)		(2,623	)		(6,511	)
Balance June 30, 2024	$	76,776		$	29,479		$	80,689		$	95,728		$	70,112		$	7,068		$	359,852

The allowance for credit losses on loans as of June 30, 2025 totaled $346.1 million or 1.56% of total loans, including acquired loans with discounts, a decrease $5.7 million or 1.6% compared to the allowance for credit losses on loans totaling $351.8 million or 1.59% of total loans, including acquired loans with discounts, as of December 31, 2024.

There was no provision for credit losses for the three and six months ended June 30, 2025 compared to $9.1 million provision for credit losses for the three and six months ended June 30, 2024, related to the merger of Lone Star State Bancshares, Inc. (“Lone Star”) with Bancshares and the merger of Lone Star State Bank of West Texas (“Lone Star Bank”) with the Bank, both effective on April 1, 2024 (collectively, the “Lone Star Merger”). As a result of the loans acquired in the Lone Star Merger, the second quarter of 2024 included a $7.9 million provision for credit losses on loans and a $1.2 million provision for credit losses on off-balance sheet credit exposures.

Net charge-offs were $3.0 million for the three months ended June 30, 2025 compared to net charge-offs of $4.4 million for the three months ended June 30, 2024. For the three months ended June 30, 2025, $2.1 million of reserves on resolved PCD loans without any related charge-offs were released to the general reserve.

Net charge-offs were $5.7 million for the six months ended June 30, 2025 compared with $6.5 million for the six months ended June 30, 2024. For the six months ended June 30, 2025, $10.4 million of reserves on resolved PCD loans without any related charge-offs were released to the general reserve.

Allowance for Credit Losses on Off-Balance Sheet Credit Exposures. The allowance for credit losses on off-balance sheet credit exposures estimates expected credit losses over the contractual period in which there is exposure to credit risk via a contractual obligation to extend credit, except when an obligation is unconditionally cancellable by the Company. The allowance is adjusted by provisions for credit losses charged to earnings that increase the allowance, or by provision releases returned to earnings that decrease the allowance. The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on the commitments expected to fund. The estimate of commitments expected to fund is affected by historical analysis of utilization rates. The expected credit loss rates applied to the commitments expected to fund are affected by the general valuation allowance utilized for outstanding balances with the same underlying assumptions and drivers. As of June 30, 2025 and December 31, 2024, the Company had $37.6 million in allowance for credit losses on off-balance sheet credit exposures. The allowance for credit losses on off-balance sheet credit exposures is a separate line item on the Company’s consolidated balance sheet. As of June 30, 2025, the Company had $1.56 billion in commitments expected to fund.

Loan Modifications Made to Borrowers Experiencing Financial Difficulty. The Company evaluates all restructurings, including restructurings for borrowers experiencing financial difficulty, to determine whether they result in a new loan or a continuation of an existing loan. In accordance with CECL, the Company only establishes a specific reserve for modifications to borrowers experiencing financial difficulty when the loan is identified as impaired. The effect of most modifications of loans made to borrowers experiencing financial difficulty is already included in the allowance for credit losses because of the measurement methodologies used to estimate the allowance. The Company adjusts the terms of loans for certain borrowers when it believes such changes will help its customers manage their loan obligations and increase the collectability of the loans.

Modifications of loans made to borrowers experiencing financial difficulty may include but are not limited to changes in committed loan amount, interest rate, amortization, note maturity, borrower, guarantor, collateral, forbearance, forgiveness of principal or interest, and other actions intended to minimize economic loss and to avoid foreclosure or repossession of collateral. The approval of modifications of loans for borrowers experiencing financial difficulty is handled on a case-by-case basis.

The following table displays the amortized cost of loans that were both experiencing financial difficulty and modified during the three and six months ended June 30, 2025 and 2024, presented by category of loan and type of modification.


	Term Extension		Interest Rate Reduction		Total		Percent of Total Class of Loans
	(Dollars in thousands)
Three Months Ended June 30, 2025
Commercial real estate (includes multi-family residential)	$	—	$	—	$	—		0.0	%
Agriculture and agriculture real estate (includes farmland)		—		—		—		0.0	%
Total	$	—	$	—	$	—		0.0	%

Six Months Ended June 30, 2025
Commercial real estate (includes multi-family residential)	$	680	$	23,205	$	23,885		0.4	%
Agriculture and agriculture real estate (includes farmland)		158		—		158		0.0	%
Total	$	838	$	23,205	$	24,043		0.4	%


	Term Extension		Interest Rate Reduction		Total		Percent of Total Class of Loans
	(Dollars in thousands)
Three Months Ended June 30, 2024
Commercial and industrial	$	2,489	$	—	$	2,489		0.1	%
Agriculture and agriculture real estate (includes farmland)		650		—		650		0.1	%
Total	$	3,139	$	—	$	3,139		0.1	%

Six Months Ended June 30, 2024
Commercial and industrial	$	2,902	$	—	$	2,902		0.1	%
Agriculture and agriculture real estate (includes farmland)		11,650		—		11,650		1.1	%
Total	$	14,552	$	—	$	14,552		0.4	%

The financial effects of the modifications of loans made to borrowers experiencing financial difficulty were not significant during the three and six months ended June 30, 2025 and 2024. Furthermore, such modifications did not significantly impact the Company’s determination of the allowance for credit losses during those periods.

The Company did not have any loans made to borrowers experiencing financial difficulty that were modified during the three and six months ended June 30, 2025 that subsequently defaulted and were modified in the twelve months prior to default. Payment default is defined as movement to nonperforming status, foreclosure or charge-off, whichever occurs first.