Quarterly report pursuant to Section 13 or 15(d)

Loans

v3.21.1
Loans
3 Months Ended
Mar. 31, 2021
Receivables [Abstract]  
Loans

NOTE 4. LOANS

Total loans held in portfolio consisted of the following at March 31, 2021 and December 31, 2020:

 

 

 

 

March 31, 2021

 

 

 

Acquired

Loans (1)

 

 

Organic Loans

 

 

Total Loans

 

 

 

(Dollars in thousands)

 

Commercial and industrial loans (2)

 

$

51,240

 

 

$

648,656

 

 

$

699,896

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

1-4 single family residential loans

 

 

87,876

 

 

 

261,032

 

 

 

348,908

 

Construction, land and development

 

 

59,458

 

 

 

285,099

 

 

 

344,557

 

Commercial real estate loans (including multifamily)

 

 

343,979

 

 

 

620,363

 

 

 

964,342

 

Consumer loans and leases

 

 

2,370

 

 

 

7,249

 

 

 

9,619

 

Municipal and other loans

 

 

5,170

 

 

 

58,102

 

 

 

63,272

 

Total loans held in portfolio (3)

 

$

550,093

 

 

$

1,880,501

 

 

$

2,430,594

 

 

 

 

 

December 31, 2020

 

 

 

Acquired

Loans (1)

 

 

Organic Loans

 

 

Total Loans

 

 

 

(Dollars in thousands)

 

Commercial and industrial loans (2)

 

$

53,857

 

 

$

521,129

 

 

$

574,986

 

Real estate:

 

 

 

 

 

 

 

 

 

 

 

 

1-4 single family residential loans

 

 

93,840

 

 

 

270,299

 

 

 

364,139

 

Construction, land and development

 

 

131,734

 

 

 

283,754

 

 

 

415,488

 

Commercial real estate loans (including multifamily)

 

 

333,489

 

 

 

623,254

 

 

 

956,743

 

Consumer loans and leases

 

 

3,088

 

 

 

8,650

 

 

 

11,738

 

Municipal and other loans

 

 

6,103

 

 

 

59,335

 

 

 

65,438

 

Total loans held in portfolio (3)

 

$

622,111

 

 

$

1,766,421

 

 

$

2,388,532

 

 

(1)

Acquired loans include loans acquired in the acquisitions of Comanche, National Corporation, First Beeville Financial Corporation, and Chandler Bancorp, Inc. and its subsidiary, Citizens State Bank (together, “Citizens”), and the Simmons Bank branch acquisition.  All loans originated after acquisition close date are included in organic loans.

(2)

Organic loans balance includes $67.4 million and $70.8 million of the unguaranteed portion of SBA loans as of March 31, 2021 and December 31, 2020, respectively.

(3)

Organic loans balance includes $(11.9) million and $(8.2) million of deferred fees, cost, premium and discount as of March 31, 2021 and December 31, 2020, respectively.

At March 31, 2021 and December 31, 2020, the Company had pledged loans as collateral for Federal Home Loan Bank (“FHLB”) advances of $971.5 million and $927.3 million, respectively. Additionally, at March 31, 2021 and December 31, 2020, the Company had pledged loans as collateral associated with the Paycheck Protection Program Liquidity Facility (“PPPLF”) of $100.1 million and $149.8 million, respectively.   There were no recorded investments of consumer mortgage loans secured by residential real estate properties for which formal foreclosure proceedings were in process as of March 31, 2021 and December 31, 2020.

The Company originates and sells loans secured by the SBA. The Company retains the unguaranteed portion of the loan and servicing on the loans sold and receives a fee based upon the principal balance outstanding. During the three months ended March 31, 2021 and 2020, the Company sold approximately $2.0 million and $5.6 million, respectively, in SBA loans to third parties. The loan sales resulted in realized gains of $155 thousand and $464 thousand for the three months ended March 31, 2021 and 2020, respectively.

During the fourth quarter of 2020 and continuing into the first quarter of 2021, we originated loans to qualified mid-sized businesses under the Main Street Lending Program administered by the Federal Reserve Bank of Boston special purpose vehicle.  Under the terms of the program 95 percent of the loan balance is purchased by the Federal Reserve Bank of Boston special purpose vehicle one day following origination.  During the three months ended March 31, 2021, the Company sold approximately $10.5 million of loans to the Federal Reserve Bank of Boston special purpose vehicle.  The loan sales resulted in realized gains of $99 thousand for the three months ended March 31, 2021.  At March 31, 2021 and December 31, 2020, the unpaid principal balance of loans serviced for others related to the Main Street Lending Program was $410.8 million and $400.3 million, respectively.

    

In April 2020, we began originating loans to qualified small businesses under the Paycheck Protection Program (the “PPP”) administered by the SBA under the provisions of the CARES Act. Total PPP loans originated by the Bank as of March 31, 2021 were $366.5 million and are included in the commercial and industrial segment of our loan portfolio. These loans are fully guaranteed by the SBA, carry a contractual term of two to five years and an interest rate of 1.00%. In conjunction with originating PPP loans, the Company has $6.7 million of deferred origination fees, net of costs at March 31, 2021 which will be recognized over the 2.3 year weighted average life of the loans or at the date of forgiveness if earlier.  In conjunction with the PPP, we are also currently participating in the PPPLF which extends loans to banks who are loaning money to small businesses under the PPP. The amount of borrowings under the PPPLF as of March 31, 2021 was $100.1 million and is non-recourse and secured by the amount of the PPP loans we originate. The maturity date of a borrowing under the PPPLF is equal to the maturity date of the PPP loan pledged to secure the borrowing and would be accelerated (i) if the underlying PPP loan goes into default and is sold to the SBA to realize on the SBA guarantee or (ii) to the extent that any loan forgiveness reimbursement is received from the SBA. Borrowings under the PPPLF are included in long-term liabilities on the consolidated balance sheet and bear interest at a rate of 0.35%. Additionally, a bank may exclude all PPP loans pledged as collateral to the PPPLF from its average total consolidated assets for the purposes of calculating its leverage ratio, while PPP loans that are not pledged as collateral to the PPPLF will be included.

Due to the rights retained on certain loan participations sold, the Company is deemed to have retained effective control over these loans under ASC 860, “Transfers and Servicing.” These loans can no longer be reported as sold, and must be reported on the balance sheet as loans held for investment regardless of whether the Company intends to exercise its rights. These loans are reported as loans held for investment with the offsetting liability recorded as long-term borrowings. The amount of secured borrowings included in loans held for investment and long-term borrowings at March 31, 2021 and December 31, 2020 was $4.0 million.

Loans serviced for others are not included in the accompanying balance sheets.  The unpaid principal balances of loans serviced for others, including SBA loans, were $186.4 million and $193.3 million at March 31, 2021 and December 31, 2020, respectively.

 

 

In the ordinary course of business, the Company makes loans to executive officers and directors. Loans to these related parties, including companies in which they are principal owners, are as follows for the periods presented:

 

 

 

Three Months Ended March 31,

 

 

 

2021

 

 

2020

 

 

 

(Dollars in thousands)

 

Principal outstanding, beginning of year

 

$

7,581

 

 

$

6,005

 

Additions (reductions) of affiliations

 

 

 

 

 

 

New loans made in current year

 

 

972

 

 

 

1,719

 

Repayments

 

 

(1,775

)

 

 

(277

)

Principal outstanding, end of year

 

$

6,778

 

 

$

7,447

 

 

There were $2.0 million in unfunded commitments to related parties at March 31, 2021. There were $1.8 million in unfunded commitments to related parties at December 31, 2020.