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Loans Held for Investment and Allowance for Credit Losses on Loans | 9 Months Ended
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Sep. 30, 2022
Receivables [Abstract] |
Loans Held for Investment and Allowance for Credit Losses on Loans | (4) LOANS HELD FOR INVESTMENT AND ALLOWANCE FOR CREDIT LOSSES ON LOANS Loans held for investment are summarized by portfolio segment as follows:
| September 30, 2022 |  |  | December 31, 2021 |
| (Dollars in thousands) |
Real estate: |  |  |  |  |
Commercial real estate owner occupied | $ | 896,202 |  |  | $ | 775,554 |
Commercial real estate non-owner occupied |  | 1,230,074 |  |  |  | 1,095,324 |
Construction and development < 60 months |  | 473,631 |  |  |  | 415,466 |
Construction residential real estate < 60 months |  | 311,168 |  |  |  | 254,524 |
Residential real estate first lien |  | 1,097,710 |  |  |  | 937,006 |
Residential real estate all other |  | 188,508 |  |  |  | 161,018 |
Farmland |  | 256,821 |  |  |  | 272,179 |
Commercial and agricultural non-real estate (2) |  | 1,429,401 |  |  |  | 1,416,093 |
Consumer non-real estate |  | 431,913 |  |  |  | 413,370 |
Oil and gas |  | 512,344 |  |  |  | 428,908 |
Total (1) | $ | 6,827,772 |  |  | $ | 6,169,442 |
(1) Excludes accrued interest receivable of $25.4 million at September 30, 2022 and $21.0 million at December 31, 2021, that is recorded in accrued interest receivable and other assets. |
(2) Includes PPP loans held for investment of $1.1 million, net of unamortized processing fees of $0, at September 30, 2022 and $80.4 million, net of unamortized processing fees of $2.0 million, at December 31, 2021. |
Loans that were designated as Other and consisted mainly of Small Business Administration (“SBA”) loans were moved to their more descriptive portfolio segment. Therefore, we no longer have an Other loan portfolio segment. In April 2020, the Company began originating loans to qualified small businesses under the Paycheck Protection Program (“PPP”) administered by the SBA. Since PPP loans are fully guaranteed by the SBA, there is no expected credit loss related to these loans. T he Company had processing fees, which were recognized as interest income related to the PPP loans totaling approximately $0 and $10.0 million during the three months ended September 30, 2022 and 2021, respectively and $2.1 million and $31.7 million during the nine months ended September 30, 2022 and 2021, respectively. The Company's loans are currently 82% held by BancFirst and 18% held by Pegasus and Worthington. In addition, approximately 65% of the Company's loans are secured by real estate. Credit risk on loans is managed through limits on amounts loaned to individual and related borrowers, underwriting standards and loan monitoring procedures. The amounts and types of collateral obtained, if any, to secure loans are based upon the Company’s underwriting standards and management’s credit evaluation. Collateral varies, but may include real estate, equipment, accounts receivable, inventory, livestock and securities. The Company’s interest in collateral is secured through filing mortgages and liens, and in some cases, by possession of the collateral. The Company's portfolio segment descriptions and the weighted average remaining life of portfolio segments are disclosed in Note (5) to the Company's Annual Report on Form 10-K for the year ended December 31, 2021. Troubled Debt Restructurings, Other Real Estate Owned and Repossessed Assets and Held for Sale Assets The following is a summary of troubled debt restructurings and other real estate owned and repossessed assets:
|  | September 30, 2022 |  |  | December 31, 2021 |
|  | (Dollars in thousands) |
Troubled debt restructurings |  | $ | 2,249 |  |  | $ | 3,665 |
Other real estate owned and repossessed assets |  | $ | 39,419 |  |  | $ | 39,553 |
The Company charges interest on principal balances outstanding on troubled debt restructurings during deferral periods. The current and future financial effects of the recorded balance of loans considered to be troubled debt restructurings were not considered to be material. Other real estate owned included a commercial real estate property recorded at approximately $31.2 million at September 30, 2022 and $29.5 million at December 31, 2021. Rental income for this property is included in other noninterest income on the consolidated statements of comprehensive income. Operating expense for this property is included in net expense from other real estate owned in other noninterest expense on the consolidated statements of comprehensive income. This property had the following rental income and operating expenses for the periods presented.
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
|  | (Dollars in thousands) |
Rental income |  | $ | 2,347 |  |  | $ | 2,703 |  |  | $ | 7,750 |  |  | $ | 7,277 |
Operating expense |  | $ | 2,381 |  |  | $ | 2,036 |  |  | $ | 7,120 |  |  | $ | 6,599 |
At December 31, 2021, other real estate owned also included approximately $2.4 million related to the Company's previous headquarters. The previous headquarters was sold during the second quarter of 2022. During the nine months ended September 30, 2022, the Company sold property held in other real estate owned for a total gain of $4.0 million, compared to a total gain of $245,000 in the nine months ended September 30, 2021. Nonaccrual loans The Company did no t recognize any interest income on nonaccrual loans for either of the nine months ended September 30, 2022 or 2021. In addition, there were no nonaccrual loans for which there is no related allowance for credit losses at both September 30, 2022 and December 31, 2021. Had nonaccrual loans performed in accordance with their original contractual terms, the Company would have recognized additional interest income of approximately $992,000 for the nine months ended September 30, 2022 and approximately $1.7 million for the nine months ended September 30, 2021. Nonaccrual loans guaranteed by government agencies totaled approximately $2.0 million at September 30, 2022 and approximately $3.3 million at December 31, 2021. The following table is a summary of amounts included in nonaccrual loans, segregated by portfolio segment.
|  | September 30, 2022 |  |  | December 31, 2021 |
|  | (Dollars in thousands) |
Real estate: |  |  |  |  |  |
Commercial real estate owner occupied |  | $ | 1,845 |  |  | $ | 4,351 |
Commercial real estate non-owner occupied |  |  | — |  |  |  | 407 |
Construction and development < 60 months |  |  | 98 |  |  |  | 80 |
Construction residential real estate < 60 months |  |  | 103 |  |  |  | — |
Residential real estate first lien |  |  | 2,156 |  |  |  | 2,763 |
Residential real estate all other |  |  | 58 |  |  |  | 280 |
Farmland |  |  | 1,463 |  |  |  | 4,224 |
Commercial and agricultural non-real estate |  |  | 5,048 |  |  |  | 7,569 |
Consumer non-real estate |  |  | 191 |  |  |  | 148 |
Oil and gas |  |  | 1,000 |  |  |  | 1,070 |
Total |  | $ | 11,962 |  |  | $ | 20,892 |
Loans are considered past due if the required principal and interest payments have not been received as of the date such payments were due. The following table presents an age analysis of the Company's loans held for investment:
|  | Age Analysis of Past Due Loans |
|  | 30-59 Days Past Due |  |  | 60-89 Days Past Due |  |  | 90 Days and Greater |  |  | Total Past Due Loans |  |  | Current Loans |  |  | Total Loans |  |  | Accruing Loans 90 Days or More Past Due |
|  | (Dollars in thousands) |
As of September 30, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate owner occupied |  | $ | 4,518 |  |  | $ | 64 |  |  | $ | 339 |  |  | $ | 4,921 |  |  | $ | 891,281 |  |  | $ | 896,202 |  |  | $ | 339 |
Commercial real estate non-owner occupied |  |  | 525 |  |  |  | — |  |  |  | 36 |  |  |  | 561 |  |  |  | 1,229,513 |  |  |  | 1,230,074 |  |  |  | 36 |
Construction and development < 60 months |  |  | 224 |  |  |  | 274 |  |  |  | 33 |  |  |  | 531 |  |  |  | 473,100 |  |  |  | 473,631 |  |  |  | — |
Construction residential real estate < 60 months |  |  | 245 |  |  |  | — |  |  |  | 469 |  |  |  | 714 |  |  |  | 310,454 |  |  |  | 311,168 |  |  |  | 366 |
Residential real estate first lien |  |  | 2,918 |  |  |  | 770 |  |  |  | 1,158 |  |  |  | 4,846 |  |  |  | 1,092,864 |  |  |  | 1,097,710 |  |  |  | 365 |
Residential real estate all other |  |  | 136 |  |  |  | 155 |  |  |  | 102 |  |  |  | 393 |  |  |  | 188,115 |  |  |  | 188,508 |  |  |  | 83 |
Farmland |  |  | 391 |  |  |  | — |  |  |  | 302 |  |  |  | 693 |  |  |  | 256,128 |  |  |  | 256,821 |  |  |  | 92 |
Commercial and agricultural non-real estate |  |  | 2,027 |  |  |  | 307 |  |  |  | 4,677 |  |  |  | 7,011 |  |  |  | 1,422,390 |  |  |  | 1,429,401 |  |  |  | 667 |
Consumer non-real estate |  |  | 2,171 |  |  |  | 776 |  |  |  | 657 |  |  |  | 3,604 |  |  |  | 428,309 |  |  |  | 431,913 |  |  |  | 565 |
Oil and gas |  |  | 83 |  |  |  | 60 |  |  |  | 654 |  |  |  | 797 |  |  |  | 511,547 |  |  |  | 512,344 |  |  |  | 654 |
Total |  | $ | 13,238 |  |  | $ | 2,406 |  |  | $ | 8,427 |  |  | $ | 24,071 |  |  | $ | 6,803,701 |  |  | $ | 6,827,772 |  |  | $ | 3,167 |
As of December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate owner occupied |  | $ | 2,046 |  |  | $ | 223 |  |  | $ | 1,465 |  |  | $ | 3,734 |  |  | $ | 771,820 |  |  | $ | 775,554 |  |  | $ | 18 |
Commercial real estate non-owner occupied |  |  | 7,244 |  |  |  | — |  |  |  | — |  |  |  | 7,244 |  |  |  | 1,088,080 |  |  |  | 1,095,324 |  |  |  | — |
Construction and development < 60 months |  |  | 136 |  |  |  | — |  |  |  | — |  |  |  | 136 |  |  |  | 415,330 |  |  |  | 415,466 |  |  |  | — |
Construction residential real estate < 60 months |  |  | 2,264 |  |  |  | — |  |  |  | — |  |  |  | 2,264 |  |  |  | 252,260 |  |  |  | 254,524 |  |  |  | — |
Residential real estate first lien |  |  | 3,351 |  |  |  | 567 |  |  |  | 2,817 |  |  |  | 6,735 |  |  |  | 930,271 |  |  |  | 937,006 |  |  |  | 1,704 |
Residential real estate all other |  |  | 293 |  |  |  | 30 |  |  |  | 451 |  |  |  | 774 |  |  |  | 160,244 |  |  |  | 161,018 |  |  |  | 431 |
Farmland |  |  | 253 |  |  |  | 37 |  |  |  | 2,077 |  |  |  | 2,367 |  |  |  | 269,812 |  |  |  | 272,179 |  |  |  | 139 |
Commercial and agricultural non-real estate |  |  | 2,506 |  |  |  | 546 |  |  |  | 7,118 |  |  |  | 10,170 |  |  |  | 1,405,923 |  |  |  | 1,416,093 |  |  |  | 2,418 |
Consumer non-real estate |  |  | 1,873 |  |  |  | 321 |  |  |  | 272 |  |  |  | 2,466 |  |  |  | 410,904 |  |  |  | 413,370 |  |  |  | 254 |
Oil and gas |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 428,908 |  |  |  | 428,908 |  |  |  | — |
Total |  | $ | 19,966 |  |  | $ | 1,724 |  |  | $ | 14,200 |  |  | $ | 35,890 |  |  | $ | 6,133,552 |  |  | $ | 6,169,442 |  |  | $ | 4,964 |
Credit Quality Indicators The Company considers credit quality indicators to monitor the credit risk in the loan portfolio including volume and severity of loan delinquencies, nonaccrual loans, internal grading of loans, historical credit loss experience and economic conditions. These indicators are reviewed and updated regularly throughout the year. An internal risk grading system is used to indicate the credit risk of loans. The loan grades used by the Company are for internal risk identification purposes and do not directly correlate to regulatory classification categories or any financial reporting definitions. The general characteristics of the risk grades and the table summarizing the Company’s gross loans held for investment by year of origination and internally assigned credit grades as of December 31, 2021, are disclosed in Note (5) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. The Company’s revolving loans that are converted to term loans are not material and therefore have not been presented. The following table summarizes the Company’s gross loans held for investment by year of origination and internally assigned credit grades :
|  | Term Loans Amortized Cost Basis by Origination Year |  |  |  |  |  |  |
|  | 2022 |  |  | 2021 |  |  | 2020 |  |  | 2019 |  |  | 2018 |  |  | Prior |  |  | Revolving Loans Amortized Cost Basis |  |  | Total |
|  | (Dollars in thousands) |
As of September 30, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate owner occupied |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grade 1 |  | $ | 141,987 |  |  | $ | 145,596 |  |  | $ | 114,356 |  |  | $ | 93,878 |  |  | $ | 47,340 |  |  | $ | 129,610 |  |  | $ | 48,189 |  |  | $ | 720,956 |
Grade 2 |  |  | 30,513 |  |  |  | 36,392 |  |  |  | 29,012 |  |  |  | 18,542 |  |  |  | 9,327 |  |  |  | 30,565 |  |  |  | 15,436 |  |  |  | 169,787 |
Grade 3 |  |  | — |  |  |  | 126 |  |  |  | 76 |  |  |  | 1,302 |  |  |  | 337 |  |  |  | 1,421 |  |  |  | 62 |  |  |  | 3,324 |
Grade 4 |  |  | 45 |  |  |  | 269 |  |  |  | — |  |  |  | 1,128 |  |  |  | 186 |  |  |  | 507 |  |  |  | — |  |  |  | 2,135 |
Total commercial real estate owner occupied |  |  | 172,545 |  |  |  | 182,383 |  |  |  | 143,444 |  |  |  | 114,850 |  |  |  | 57,190 |  |  |  | 162,103 |  |  |  | 63,687 |  |  |  | 896,202 |
Commercial real estate non-owner occupied |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grade 1 |  |  | 198,064 |  |  |  | 238,174 |  |  |  | 177,410 |  |  |  | 109,128 |  |  |  | 26,907 |  |  |  | 77,085 |  |  |  | 39,667 |  |  |  | 866,435 |
Grade 2 |  |  | 88,113 |  |  |  | 56,473 |  |  |  | 30,068 |  |  |  | 47,428 |  |  |  | 25,178 |  |  |  | 72,943 |  |  |  | 30,663 |  |  |  | 350,866 |
Grade 3 |  |  | 7,126 |  |  |  | — |  |  |  | — |  |  |  | 2,748 |  |  |  | 79 |  |  |  | 2,784 |  |  |  | — |  |  |  | 12,737 |
Grade 4 |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 36 |  |  |  | — |  |  |  | — |  |  |  | 36 |
Total commercial real estate non-owner occupied |  |  | 293,303 |  |  |  | 294,647 |  |  |  | 207,478 |  |  |  | 159,304 |  |  |  | 52,200 |  |  |  | 152,812 |  |  |  | 70,330 |  |  |  | 1,230,074 |
Construction and development < 60 months |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grade 1 |  |  | 138,067 |  |  |  | 122,780 |  |  |  | 41,667 |  |  |  | 10,473 |  |  |  | 3,510 |  |  |  | 5,479 |  |  |  | 33,306 |  |  |  | 355,282 |
Grade 2 |  |  | 29,324 |  |  |  | 20,056 |  |  |  | 1,589 |  |  |  | 14,711 |  |  |  | 1,709 |  |  |  | 1,249 |  |  |  | 48,254 |  |  |  | 116,892 |
Grade 3 |  |  | 1,098 |  |  |  | — |  |  |  | 102 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 159 |  |  |  | 1,359 |
Grade 4 |  |  | — |  |  |  | — |  |  |  | 33 |  |  |  | 50 |  |  |  | — |  |  |  | 15 |  |  |  | — |  |  |  | 98 |
Total construction and development < 60 months |  |  | 168,489 |  |  |  | 142,836 |  |  |  | 43,391 |  |  |  | 25,234 |  |  |  | 5,219 |  |  |  | 6,743 |  |  |  | 81,719 |  |  |  | 473,631 |
Construction residential real estate < 60 months |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grade 1 |  |  | 178,568 |  |  |  | 47,012 |  |  |  | 261 |  |  |  | 22 |  |  |  | — |  |  |  | 43 |  |  |  | 46,695 |  |  |  | 272,601 |
Grade 2 |  |  | 26,903 |  |  |  | 8,606 |  |  |  | 179 |  |  |  | — |  |  |  | — |  |  |  | 407 |  |  |  | 2,136 |  |  |  | 38,231 |
Grade 3 |  |  | 233 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 233 |
Grade 4 |  |  | — |  |  |  | 103 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 103 |
Total construction residential real estate < 60 months |  |  | 205,704 |  |  |  | 55,721 |  |  |  | 440 |  |  |  | 22 |  |  |  | — |  |  |  | 450 |  |  |  | 48,831 |  |  |  | 311,168 |
Residential real estate first lien |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grade 1 |  |  | 251,829 |  |  |  | 218,962 |  |  |  | 150,043 |  |  |  | 90,854 |  |  |  | 58,348 |  |  |  | 146,667 |  |  |  | 4,922 |  |  |  | 921,625 |
Grade 2 |  |  | 34,687 |  |  |  | 37,637 |  |  |  | 25,916 |  |  |  | 13,497 |  |  |  | 11,075 |  |  |  | 39,349 |  |  |  | — |  |  |  | 162,161 |
Grade 3 |  |  | 1,543 |  |  |  | 1,171 |  |  |  | 651 |  |  |  | 1,516 |  |  |  | 1,870 |  |  |  | 4,143 |  |  |  | — |  |  |  | 10,894 |
Grade 4 |  |  | 30 |  |  |  | 322 |  |  |  | 138 |  |  |  | 568 |  |  |  | 180 |  |  |  | 1,792 |  |  |  | — |  |  |  | 3,030 |
Total residential real estate first lien |  |  | 288,089 |  |  |  | 258,092 |  |  |  | 176,748 |  |  |  | 106,435 |  |  |  | 71,473 |  |  |  | 191,951 |  |  |  | 4,922 |  |  |  | 1,097,710 |
Residential real estate all other |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grade 1 |  |  | 24,287 |  |  |  | 11,519 |  |  |  | 11,471 |  |  |  | 5,940 |  |  |  | 3,909 |  |  |  | 11,865 |  |  |  | 41,165 |  |  |  | 110,156 |
Grade 2 |  |  | 4,387 |  |  |  | 1,896 |  |  |  | 1,860 |  |  |  | 1,676 |  |  |  | 1,261 |  |  |  | 2,646 |  |  |  | 62,195 |  |  |  | 75,921 |
Grade 3 |  |  | 200 |  |  |  | 204 |  |  |  | 88 |  |  |  | 84 |  |  |  | 222 |  |  |  | 890 |  |  |  | 602 |  |  |  | 2,290 |
Grade 4 |  |  | — |  |  |  | 18 |  |  |  | 30 |  |  |  | — |  |  |  | 39 |  |  |  | 54 |  |  |  | — |  |  |  | 141 |
Total residential real estate all other |  |  | 28,874 |  |  |  | 13,637 |  |  |  | 13,449 |  |  |  | 7,700 |  |  |  | 5,431 |  |  |  | 15,455 |  |  |  | 103,962 |  |  |  | 188,508 |
Farmland |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grade 1 |  |  | 39,963 |  |  |  | 36,229 |  |  |  | 30,416 |  |  |  | 19,528 |  |  |  | 10,297 |  |  |  | 30,735 |  |  |  | 5,256 |  |  |  | 172,424 |
Grade 2 |  |  | 12,439 |  |  |  | 15,174 |  |  |  | 6,903 |  |  |  | 7,816 |  |  |  | 5,835 |  |  |  | 16,093 |  |  |  | 9,619 |  |  |  | 73,879 |
Grade 3 |  |  | 2,201 |  |  |  | 113 |  |  |  | 1,799 |  |  |  | 1,365 |  |  |  | 70 |  |  |  | 2,057 |  |  |  | 1,891 |  |  |  | 9,496 |
Grade 4 |  |  | — |  |  |  | 318 |  |  |  | 434 |  |  |  | — |  |  |  | 58 |  |  |  | 212 |  |  |  | — |  |  |  | 1,022 |
Total farmland |  |  | 54,603 |  |  |  | 51,834 |  |  |  | 39,552 |  |  |  | 28,709 |  |  |  | 16,260 |  |  |  | 49,097 |  |  |  | 16,766 |  |  |  | 256,821 |
Commercial and agricultural non-real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grade 1 |  |  | 239,757 |  |  |  | 257,163 |  |  |  | 83,658 |  |  |  | 58,217 |  |  |  | 17,413 |  |  |  | 46,390 |  |  |  | 361,517 |  |  |  | 1,064,115 |
Grade 2 |  |  | 79,522 |  |  |  | 65,913 |  |  |  | 23,868 |  |  |  | 15,699 |  |  |  | 17,090 |  |  |  | 4,710 |  |  |  | 136,388 |  |  |  | 343,190 |
Grade 3 |  |  | 3,575 |  |  |  | 2,290 |  |  |  | 1,843 |  |  |  | 936 |  |  |  | 1,896 |  |  |  | 932 |  |  |  | 6,094 |  |  |  | 17,566 |
Grade 4 |  |  | 439 |  |  |  | 553 |  |  |  | 591 |  |  |  | 1,121 |  |  |  | 497 |  |  |  | 1,159 |  |  |  | 170 |  |  |  | 4,530 |
Total commercial and agricultural non-real estate |  |  | 323,293 |  |  |  | 325,919 |  |  |  | 109,960 |  |  |  | 75,973 |  |  |  | 36,896 |  |  |  | 53,191 |  |  |  | 504,169 |  |  |  | 1,429,401 |
Consumer non-real estate |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grade 1 |  |  | 163,610 |  |  |  | 121,331 |  |  |  | 46,856 |  |  |  | 24,674 |  |  |  | 8,419 |  |  |  | 2,989 |  |  |  | 20,821 |  |  |  | 388,700 |
Grade 2 |  |  | 15,625 |  |  |  | 12,007 |  |  |  | 4,564 |  |  |  | 4,113 |  |  |  | 1,079 |  |  |  | 1,511 |  |  |  | 968 |  |  |  | 39,867 |
Grade 3 |  |  | 663 |  |  |  | 817 |  |  |  | 370 |  |  |  | 381 |  |  |  | 159 |  |  |  | 67 |  |  |  | 3 |  |  |  | 2,460 |
Grade 4 |  |  | 231 |  |  |  | 307 |  |  |  | 108 |  |  |  | 175 |  |  |  | 52 |  |  |  | 12 |  |  |  | 1 |  |  |  | 886 |
Total consumer non-real estate |  |  | 180,129 |  |  |  | 134,462 |  |  |  | 51,898 |  |  |  | 29,343 |  |  |  | 9,709 |  |  |  | 4,579 |  |  |  | 21,793 |  |  |  | 431,913 |
Oil and gas |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Grade 1 |  |  | 137,122 |  |  |  | 76,145 |  |  |  | 24,844 |  |  |  | 864 |  |  |  | 1,732 |  |  |  | 313 |  |  |  | 175,742 |  |  |  | 416,762 |
Grade 2 |  |  | 4,432 |  |  |  | 4,603 |  |  |  | 2,890 |  |  |  | 19,655 |  |  |  | 19,248 |  |  |  | 200 |  |  |  | 36,964 |  |  |  | 87,992 |
Grade 3 |  |  | 209 |  |  |  | 4,557 |  |  |  | 7 |  |  |  | — |  |  |  | — |  |  |  | 171 |  |  |  | 1,646 |  |  |  | 6,590 |
Grade 4 |  |  | — |  |  |  | 1,000 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,000 |
Total oil and gas |  |  | 141,763 |  |  |  | 86,305 |  |  |  | 27,741 |  |  |  | 20,519 |  |  |  | 20,980 |  |  |  | 684 |  |  |  | 214,352 |  |  |  | 512,344 |
Total loans held for investment |  | $ | 1,856,792 |  |  | $ | 1,545,836 |  |  | $ | 814,101 |  |  | $ | 568,089 |  |  | $ | 275,358 |  |  | $ | 637,065 |  |  | $ | 1,130,531 |  |  | $ | 6,827,772 |
Allowance for Credit Losses Methodology The Company determines its provision for credit losses and allowance for credit losses using the expected loss methodology that is referred to as the CECL model. The allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. The increase in allowance for credit losses during 2022 was related to the purchase of loans without credit deterioration during the year along with loan growth. The decrease in the allowance for credit losses during 2021 was driven by a reversal of a pandemic-related provision during 2021 based on sustained improvements in the economy, both nationally and in the Company's markets, which reduced the amount of expected credit losses within the loan portfolio. This reduction during 2021 was partially offset by additional allowance for credit losses required for newly acquired loans. The allowance for credit losses for the oil and gas category was reduced during 2021 due to the increases in oil and gas commodity prices contributing to a more stable and profitable energy industry; however this decrease was offset by an increase in allowance for credit losses for the commercial real estate non-owner occupied category due to ongoing uncertainty regarding the pandemic's long-term impact on the office and retail sectors. The following table details activity in the allowance for credit losses on loans for the period presented. Allocation of a portion of the allowance to one category of loans does not preclude its availability to absorb losses in other categories.
|  | Allowance for Credit Losses |
|  | Balance at beginning of period |  |  | Initial allowance on loans purchased with credit deterioration |  |  | Charge- offs |  |  | Recoveries |  |  | Net charge-offs |  |  | Provision for /(benefit from) credit losses on loans |  |  | Balance at end of period |
|  | (Dollars in thousands) |
Three Months Ended September 30, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate owner occupied |  | $ | 6,945 |  |  | $ | — |  |  | $ | — |  |  | $ | 426 |  |  | $ | 426 |  |  | $ | (291 | ) |  | $ | 7,080 |
Commercial real estate non-owner occupied |  |  | 22,937 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 988 |  |  |  | 23,925 |
Construction and development < 60 months |  |  | 3,728 |  |  |  | — |  |  |  | — |  |  |  | 3 |  |  |  | 3 |  |  |  | 449 |  |  |  | 4,180 |
Construction residential real estate < 60 months |  |  | 2,292 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 115 |  |  |  | 2,407 |
Residential real estate first lien |  |  | 3,383 |  |  |  | — |  |  |  | (11 | ) |  |  | 15 |  |  |  | 4 |  |  |  | (8 | ) |  |  | 3,379 |
Residential real estate all other |  |  | 2,051 |  |  |  | — |  |  |  | (2 | ) |  |  | 1 |  |  |  | (1 | ) |  |  | 59 |  |  |  | 2,109 |
Farmland |  |  | 4,365 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (101 | ) |  |  | 4,264 |
Commercial and agricultural non-real estate |  |  | 27,833 |  |  |  | (4 | ) |  |  | (267 | ) |  |  | 27 |  |  |  | (240 | ) |  |  | 545 |  |  |  | 28,134 |
Consumer non-real estate |  |  | 4,094 |  |  |  | (3 | ) |  |  | (171 | ) |  |  | 59 |  |  |  | (112 | ) |  |  | 268 |  |  |  | 4,247 |
Oil and gas |  |  | 9,307 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 839 |  |  |  | 10,146 |
Total |  | $ | 86,935 |  |  | $ | (7 | ) |  | $ | (451 | ) |  | $ | 531 |  |  | $ | 80 |  |  | $ | 2,863 |  |  | $ | 89,871 |
Nine Months Ended September 30, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate owner occupied |  | $ | 7,568 |  |  | $ | — |  |  | $ | (20 | ) |  | $ | 504 |  |  | $ | 484 |  |  | $ | (972 | ) |  | $ | 7,080 |
Commercial real estate non-owner occupied |  |  | 16,987 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 6,938 |  |  |  | 23,925 |
Construction and development < 60 months |  |  | 3,490 |  |  |  | — |  |  |  | — |  |  |  | 8 |  |  |  | 8 |  |  |  | 682 |  |  |  | 4,180 |
Construction residential real estate < 60 months |  |  | 1,092 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,315 |  |  |  | 2,407 |
Residential real estate first lien |  |  | 3,076 |  |  |  | 2 |  |  |  | (60 | ) |  |  | 28 |  |  |  | (32 | ) |  |  | 333 |  |  |  | 3,379 |
Residential real estate all other |  |  | 2,104 |  |  |  | — |  |  |  | (38 | ) |  |  | 403 |  |  |  | 365 |  |  |  | (360 | ) |  |  | 2,109 |
Farmland |  |  | 4,822 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (558 | ) |  |  | 4,264 |
Commercial and agricultural non-real estate |  |  | 28,085 |  |  |  | 44 |  |  |  | (1,166 | ) |  |  | 170 |  |  |  | (996 | ) |  |  | 1,001 |  |  |  | 28,134 |
Consumer non-real estate |  |  | 3,734 |  |  |  | 25 |  |  |  | (404 | ) |  |  | 139 |  |  |  | (265 | ) |  |  | 753 |  |  |  | 4,247 |
Oil and gas |  |  | 12,978 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (2,832 | ) |  |  | 10,146 |
Total |  | $ | 83,936 |  |  | $ | 71 |  |  | $ | (1,688 | ) |  | $ | 1,252 |  |  | $ | (436 | ) |  | $ | 6,300 |  |  | $ | 89,871 |
|  | Allowance for Credit Losses |
|  | Balance at beginning of period |  |  | Initial allowance on loans purchased with credit deterioration |  |  | Charge- offs |  |  | Recoveries |  |  | Net charge-offs |  |  | Provision for /(benefit from) credit losses on loans |  |  | Balance at end of period |
|  | (Dollars in thousands) |
Three Months Ended September 30, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate owner occupied |  | $ | 8,298 |  |  | $ | 93 |  |  | $ | (3 | ) |  | $ | 72 |  |  | $ | 69 |  |  | $ | 91 |  |  | $ | 8,551 |
Commercial real estate non-owner occupied |  |  | 15,038 |  |  |  | 191 |  |  |  | (7 | ) |  |  | 67 |  |  |  | 60 |  |  |  | 46 |  |  |  | 15,335 |
Construction and development < 60 months |  |  | 3,095 |  |  |  | — |  |  |  | — |  |  |  | 4 |  |  |  | 4 |  |  |  | 417 |  |  |  | 3,516 |
Construction residential real estate < 60 months |  |  | 998 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (25 | ) |  |  | 973 |
Residential real estate first lien |  |  | 2,921 |  |  |  | 9 |  |  |  | (4 | ) |  |  | 9 |  |  |  | 5 |  |  |  | 199 |  |  |  | 3,134 |
Residential real estate all other |  |  | 1,963 |  |  |  | — |  |  |  | — |  |  |  | 46 |  |  |  | 46 |  |  |  | 206 |  |  |  | 2,215 |
Farmland |  |  | 3,727 |  |  |  | (248 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 969 |  |  |  | 4,448 |
Commercial and agricultural non-real estate |  |  | 34,310 |  |  |  | 952 |  |  |  | (219 | ) |  |  | 43 |  |  |  | (176 | ) |  |  | (489 | ) |  |  | 34,597 |
Consumer non-real estate |  |  | 3,481 |  |  |  | 30 |  |  |  | (67 | ) |  |  | 49 |  |  |  | (18 | ) |  |  | 66 |  |  |  | 3,559 |
Oil and gas |  |  | 10,132 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 3 |  |  |  | 10,135 |
Total |  | $ | 83,963 |  |  | $ | 1,027 |  |  | $ | (300 | ) |  | $ | 290 |  |  | $ | (10 | ) |  | $ | 1,483 |  |  | $ | 86,463 |
Nine Months Ended September 30, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate owner occupied |  | $ | 8,470 |  |  | $ | 1,080 |  |  | $ | (3 | ) |  | $ | 73 |  |  | $ | 70 |  |  | $ | (1,069 | ) |  | $ | 8,551 |
Commercial real estate non-owner occupied |  |  | 12,318 |  |  |  | 824 |  |  |  | (803 | ) |  |  | 67 |  |  |  | (736 | ) |  |  | 2,929 |  |  |  | 15,335 |
Construction and development < 60 months |  |  | 2,723 |  |  |  | 173 |  |  |  | — |  |  |  | 9 |  |  |  | 9 |  |  |  | 611 |  |  |  | 3,516 |
Construction residential real estate < 60 months |  |  | 726 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 247 |  |  |  | 973 |
Residential real estate first lien |  |  | 2,822 |  |  |  | 126 |  |  |  | (56 | ) |  |  | 36 |  |  |  | (20 | ) |  |  | 206 |  |  |  | 3,134 |
Residential real estate all other |  |  | 2,236 |  |  |  | — |  |  |  | (46 | ) |  |  | 50 |  |  |  | 4 |  |  |  | (25 | ) |  |  | 2,215 |
Farmland |  |  | 3,153 |  |  |  | 395 |  |  |  | — |  |  |  | 1 |  |  |  | 1 |  |  |  | 899 |  |  |  | 4,448 |
Commercial and agricultural non-real estate |  |  | 34,643 |  |  |  | 5,663 |  |  |  | (3,817 | ) |  |  | 195 |  |  |  | (3,622 | ) |  |  | (2,087 | ) |  |  | 34,597 |
Consumer non-real estate |  |  | 3,542 |  |  |  | 38 |  |  |  | (689 | ) |  |  | 247 |  |  |  | (442 | ) |  |  | 421 |  |  |  | 3,559 |
Oil and gas |  |  | 20,733 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (10,598 | ) |  |  | 10,135 |
Total |  | $ | 91,366 |  |  | $ | 8,299 |  |  | $ | (5,414 | ) |  | $ | 678 |  |  | $ | (4,736 | ) |  | $ | (8,466 | ) |  | $ | 86,463 |
Purchased Credit Deteriorated Loans The Company has purchased loans, for which there was, at acquisition, evidence of more than insignificant deterioration of credit quality since origination. The credit-deteriorated loans purchased during the nine-month periods ended September 30, 2022 and September 30, 2021 were as follows:
|  | Loans acquired with deteriorated credit quality |
|  | (Dollars in thousands) |
For the period ended September 30, 2022 |  |  |
Purchase price of loans at acquisition |  | $ | 661 |
Allowance for credit losses at acquisition |  |  | 71 |
Par value of acquired loans at acquisition |  | $ | 732 |
For the period ended September 30, 2021 |  |  |
Purchase price of loans at acquisition |  | $ | 39,284 |
Allowance for credit losses at acquisition |  |  | 8,299 |
Par value of acquired loans at acquisition |  | $ | 47,583 |
Collateral Dependent Loans A loan is considered collateral-dependent when the borrower is experiencing financial difficulty and repayment is expected to be provided substantially through the operation or sale of the collateral. During the nine months ended September 30, 2022 and 2021, no material amount of interest income was recognized on collateral-dependent loans subsequent to their classification as collateral-dependent. The following table summarizes collateral-dependent gross loans held for investment by collateral type and the related specific allocation as follows:
|  | Collateral Type |  |  |  |  |  |  |
|  | Real Estate |  |  | Business Assets |  |  | Energy Reserves |  |  | Other Assets |  |  | Total |  |  | Specific Allocation |
|  | (Dollars in thousands) |  |  |  |  |  |  |
As of September 30, 2022 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate owner occupied |  | $ | 1,307 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1,307 |  |  | $ | 488 |
Commercial real estate non-owner occupied |  |  | 595 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 595 |  |  |  | 64 |
Construction and development < 60 months |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Construction residential real estate < 60 months |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Residential real estate first lien |  |  | 372 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 372 |  |  |  | 96 |
Residential real estate all other |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Farmland |  |  | 4,746 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 4,746 |  |  |  | 971 |
Commercial and agricultural non-real estate |  |  | — |  |  |  | 6,088 |  |  |  | — |  |  |  | 3,816 |  |  |  | 9,904 |  |  |  | 3,998 |
Consumer non-real estate |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 107 |  |  |  | 107 |  |  |  | 59 |
Oil and gas |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total collateral-dependent loans held for investment |  | $ | 7,020 |  |  | $ | 6,088 |  |  | $ | — |  |  | $ | 3,923 |  |  | $ | 17,031 |  |  | $ | 5,676 |
|  | Collateral Type |  |  |  |  |  |  |
|  | Real Estate |  |  | Business Assets |  |  | Energy Reserves |  |  | Other Assets |  |  | Total |  |  | Specific Allocation |
|  | (Dollars in thousands) |  |  |  |  |  |  |
As of December 31, 2021 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Real estate: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commercial real estate owner occupied |  | $ | 1,952 |  |  | $ | — |  |  | $ | — |  |  | $ | — |  |  | $ | 1,952 |  |  | $ | 576 |
Commercial real estate non-owner occupied |  |  | 1,404 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 1,404 |  |  |  | 263 |
Construction and development < 60 months |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Construction residential real estate < 60 months |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Residential real estate first lien |  |  | 871 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 871 |  |  |  | 143 |
Residential real estate all other |  |  | 199 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 199 |  |  |  | 178 |
Farmland |  |  | 8,703 |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 8,703 |  |  |  | 1,805 |
Commercial and agricultural non-real estate |  |  | — |  |  |  | 6,472 |  |  |  | — |  |  |  | 5,202 |  |  |  | 11,674 |  |  |  | 4,938 |
Consumer non-real estate |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 54 |  |  |  | 54 |  |  |  | 20 |
Oil and gas |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Total collateral-dependent loans held for investment |  | $ | 13,129 |  |  | $ | 6,472 |  |  | $ | — |  |  | $ | 5,256 |  |  | $ | 24,857 |  |  | $ | 7,923 |
Non-Cash Transfers from Loans and Premises and Equipment Transfers from loans and premises and equipment to other real estate owned and repossessed assets are non-cash transactions, and are not included in the statements of cash flow. Transfers from loans and premises and equipment to other real estate owned and repossessed assets during the periods presented are summarized as follows:
|  | Nine Months Ended September 30, |
|  | 2022 |  |  | 2021 |
|  | (Dollars in thousands) |
Other real estate owned |  | $ | 4,393 |  |  | $ | 10,564 |
Repossessed assets |  |  | 696 |  |  |  | 594 |
Total |  | $ | 5,089 |  |  | $ | 11,158 |

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- Definition The entire disclosure for claims held for amounts due a entity, excluding financing receivables. Examples include, but are not limited to, trade accounts receivables, notes receivables, loans receivables. Includes disclosure for allowance for credit losses. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 310 -SubTopic 10 -URI https://asc.fasb.org/subtopic&trid=2196772 + Details
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- References No definition available. + Details
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