v3.25.1
Loans
 3 Months Ended
Mar. 31, 2025
Receivables [Abstract]  
Loans Loans
Loans were as follows:
March 31,
2025		December 31,
2024
Commercial and industrial$6,163,093 $6,109,532 
Energy:
Production912,747 903,654 
Service231,675 203,629 
Other8,715 21,612 
Total energy1,153,137 1,128,895 
Commercial real estate:
Commercial mortgages7,171,220 7,165,220 
Construction2,251,265 2,264,076 
Land536,482 539,227 
Total commercial real estate9,958,967 9,968,523 
Consumer real estate:
Home equity lines of credit939,356 911,239 
Home equity loans938,613 914,738 
Home improvement loans864,980 852,536 
1-4 family mortgage loans298,854 259,456 
Other161,741 165,420 
Total consumer real estate3,203,544 3,103,389 
Total real estate13,162,511 13,071,912 
Consumer and other425,179 444,474 
Total loans$20,903,920 $20,754,813 
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 March 31, 2025, there were no concentrations of loans related to any single industry in excess of 10% of total loans. At that date, the largest industry concentrations were related to the automobile dealerships industry, which totaled 5.7% of total loans, and the energy industry, which totaled 5.5% of total loans. Unfunded commitments to extend credit and standby letters of credit issued to customers in the automobile dealership industry totaled $524.3 million and $20.2 million, respectively, as of March 31, 2025, while unfunded commitments to extend credit and standby letters of credit issued to customers in the energy industry totaled $1.1 billion and $64.0 million, respectively, as of March 31, 2025.
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 March 31, 2025 or December 31, 2024.
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”). Such loans totaled $310.8 million at March 31, 2025 and $295.8 million at December 31, 2024.
Accrued Interest Receivable. Accrued interest receivable on loans totaled $86.8 million at both March 31, 2025 and December 31, 2024, and is included in accrued interest receivable and other assets in the accompanying consolidated balance sheets.
Federal Home Loan Bank Blanket Pledge. We have executed a blanket pledge and security agreement with the Federal Home Loan Bank (“FHLB”) under which certain qualifying loans are pledged as collateral for any outstanding borrowings under the agreement. Loans pledged under the blanket agreement totaled $19.2 billion at both March 31, 2025 and December 31, 2024, though no FHLB borrowings were outstanding as of these dates.
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.
Non-accrual loans, segregated by class of loans, were as follows:
March 31, 2025December 31, 2024
Total Non-AccrualNon-Accrual with No Credit Loss AllowanceTotal Non-AccrualNon-Accrual with No Credit Loss Allowance
Commercial and industrial$48,851 $10,632 $46,004 $8,800 
Energy4,035 1,358 4,079 1,377 
Commercial real estate:
Buildings, land, and other23,669 20,475 21,920 18,660 
Construction— — — — 
Consumer real estate6,438 3,997 6,511 4,048 
Consumer and other541 204 352 — 
Total$83,534 $36,666 $78,866 $32,885 
The following table presents non-accrual loans as of March 31, 2025, by class and year of origination.
20252024202320222021PriorRevolving LoansRevolving Loans Converted to TermTotal
Commercial and industrial$19,993 $1,362 $6,663 $3,985 $1,554 $2,249 $800 $12,245 $48,851 
Energy— — — — — 1,358 2,677 — 4,035 
Commercial real estate:
Buildings, land, and other— 3,032 3,107 1,312 10,613 4,351 — 1,254 23,669 
Construction— — — — — — — — — 
Consumer real estate— — 47 100 — 2,279 344 3,668 6,438 
Consumer and other— 204 337 — — — — — 541 
Total$19,993 $4,598 $10,154 $5,397 $12,167 $10,237 $3,821 $17,167 $83,534 
In the table above, loans reported as 2025 originations as of March 31, 2025 were, for the most part, first originated in years prior to 2025 but were renewed in the current 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 $1.4 million for the three months ended March 31, 2025 and approximately $1.2 million for the three months ended March 31, 2024.
An age analysis of past due loans (including both accruing and non-accruing loans), segregated by class of loans, as of March 31, 2025, was as follows:
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$40,463 $28,432 $68,895 $6,094,198 $6,163,093 $7,218 
Energy6,980 4,074 11,054 1,142,083 1,153,137 39 
Commercial real estate:
Buildings, land, and other49,867 8,805 58,672 7,649,030 7,707,702 4,098 
Construction3,844 — 3,844 2,247,421 2,251,265 — 
Consumer real estate18,731 9,373 28,104 3,175,440 3,203,544 3,322 
Consumer and other6,867 958 7,825 417,354 425,179 958 
Total$126,752 $51,642 $178,394 $20,725,526 $20,903,920 $15,635 
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, or 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 the three months ended March 31, 2025 and 2024 are set forth in the table below, regardless of whether such modifications resulted in a new loan. There were no commitments to lend additional funds to these borrowers at March 31, 2025.
Payment
Delay		Percent of
Total Class
of Loans		Combination: Payment Delay and Term ExtensionPercent of
Total Class
of Loans
March 31, 2025
Commercial and industrial$4,385 0.1 %$— — %
Commercial real estate:
Buildings, land, and other1,946 — — — 
$6,331 — $— — 
March 31, 2024
Commercial and industrial$— — %$28,931 0.5 %
Commercial real estate:
Buildings, land, and other— — — — 
$— — $28,931 0.1 
The financial effects of the loan modifications made to borrowers experiencing financial difficulty were not significant during the three months ended March 31, 2025 and 2024. The loan modifications reported in the table above did not significantly impact our determination of the allowance for credit losses on loans during their respective reporting periods.
Information as of March 31, 2025 and March 31, 2024, 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.
March 31, 2025March 31, 2024
Payment
Delay		Combination: Payment Delay and Term ExtensionCombination: Payment Delay and Term Extension
Past due in excess of 90 days or on non-accrual status at period-end:
Commercial and industrial$4,941 $19,347 $13,644 
Commercial real estate:
Buildings, land, and other1,946 — 19,137 
$6,887 $19,347 $32,781 
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 (v) 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 set forth in our 2024 Form 10-K. 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 table presents weighted-average risk grades for all commercial loans, by class and year of origination/renewal, as of March 31, 2025.
20252024202320222021PriorRevolving LoansRevolving Loans Converted to TermTotalW/A Risk Grade
Commercial and industrial
Risk grades 1-8$877,222 $927,368 $463,360 $351,170 $233,860 $504,251 $2,193,394 $41,349 $5,591,974 6.31 
Risk grade 910,813 10,899 18,527 46,810 21,620 11,921 109,940 19,906 250,436 9.00 
Risk grade 102,184 1,570 10,950 49,032 3,885 25,057 39,141 2,986 134,805 10.00 
Risk grade 1129,544 17,990 20,911 8,652 2,927 6,312 26,854 23,837 137,027 11.00 
Risk grade 1212,457 652 5,753 2,515 1,525 2,219 617 8,689 34,427 12.00 
Risk grade 137,536 710 910 1,470 29 30 183 3,556 14,424 13.00 
$939,756 $959,189 $520,411 $459,649 $263,846 $549,790 $2,370,129 $100,323 $6,163,093 6.66 
W/A risk grade6.61 6.86 7.13 7.45 7.15 5.88 6.37 9.08 6.66 
Energy
Risk grades 1-8$197,422 $197,147 $19,272 $34,420 $14,400 $1,956 $659,248 $1,907 $1,125,772 5.53 
Risk grade 9487 — 2,258 — 13 538 7,474 571 11,341 9.00 
Risk grade 10— — — 636 1,969 — 4,192 3,000 9,797 10.00 
Risk grade 11— 149 — 2,018 — 25 — — 2,192 11.00 
Risk grade 12— — — — — 1,358 — — 1,358 12.00 
Risk grade 13— — — — — — 2,677 — 2,677 13.00 
$197,909 $197,296 $21,530 $37,074 $16,382 $3,877 $673,591 $5,478 $1,153,137 5.64 
W/A risk grade6.00 6.57 7.22 7.56 4.67 9.29 5.08 8.96 5.64 
Commercial real estate:
Buildings, land, other
Risk grades 1-8$294,901 $1,392,807 $1,275,664 $1,362,405 $933,837 $1,513,562 $170,204 $144,616 $7,087,996 7.00 
Risk grade 9699 10,616 14,815 75,960 60,126 64,873 4,170 433 231,692 9.00 
Risk grade 103 4,309 31,293 77,174 62,385 26,619 — 194 201,977 10.00 
Risk grade 11— 8,007 9,258 36,940 17,053 87,234 246 3,630 162,368 11.00 
Risk grade 12— 3,032 3,107 1,312 10,391 4,229 — 973 23,044 12.00 
Risk grade 13— — — — 222 122 — 281 625 13.00 
$295,603 $1,418,771 $1,334,137 $1,553,791 $1,084,014 $1,696,639 $174,620 $150,127 $7,707,702 7.24 
W/A risk grade6.98 7.20 7.30 7.34 7.54 7.14 6.79 5.84 7.24 
20252024202320222021PriorRevolving LoansRevolving Loans Converted to TermTotalW/A Risk Grade
Construction
Risk grades 1-8$133,282 $580,216 $566,929 $336,820 $65,554 $3,598 $178,803 $155 $1,865,357 7.38 
Risk grade 921,955 2,310 13,029 152,784 35,836 — 18,103 — 244,017 9.00 
Risk grade 1016,055 — — 47,088 78,748 — — — 141,891 10.00 
Risk grade 11— — — — — — — — — 11.00 
Risk grade 12— — — — — — — — — 12.00 
Risk grade 13— — — — — — — — — 13.00 
$171,292 $582,526 $579,958 $536,692 $180,138 $3,598 $196,906 $155 $2,251,265 7.72 
W/A risk grade7.41 7.57 7.56 8.28 8.77 7.28 6.44 7.02 7.72 
Total commercial real estate$466,895 $2,001,297 $1,914,095 $2,090,483 $1,264,152 $1,700,237 $371,526 $150,282 $9,958,967 7.35 
W/A risk grade7.14 7.31 7.38 7.58 7.72 7.14 6.60 5.84 7.35 
In the table above, certain loans are reported as 2025 originations and have risk grades of 11 or higher. These loans were, for the most part, first originated in various years prior to 2025 but were renewed in the current year.
The following tables present weighted average risk grades for all commercial loans by class as of December 31, 2024. Refer to our 2024 Form 10-K for details of these loans by year of origination/renewal.
Commercial and IndustrialEnergyCommercial Real Estate - Buildings, Land and OtherCommercial Real Estate - ConstructionTotal Commercial Real Estate
W/A Risk GradeLoansW/A Risk GradeLoansW/A Risk GradeLoansW/A Risk GradeLoansW/A Risk GradeLoans
Risk grades 1-86.30 $5,553,757 5.51 $1,111,319 7.01 $7,103,502 7.31 $1,860,004 7.07 $8,963,506 
Risk grade 99.00 262,446 9.00 11,183 9.00 211,814 9.00 171,611 9.00 383,425 
Risk grade 1010.00 88,935 10.00 52 10.00 173,033 10.00 232,461 10.00 405,494 
Risk grade 1111.00 158,390 11.00 2,262 11.00 194,178 11.00 — 11.00 194,178 
Risk grade 1212.00 32,739 12.00 1,379 12.00 21,295 12.00 — 12.00 21,295 
Risk grade 1313.00 13,265 13.00 2,700 13.00 625 13.00 — 13.00 625 
Total6.64 $6,109,532 5.58 $1,128,895 7.25 $7,704,447 7.71 $2,264,076 7.35 $9,968,523 
Information about the payment status of consumer loans, segregated by portfolio segment and year of origination, as of March 31, 2025, was as follows:
20252024202320222021PriorRevolving LoansRevolving Loans Converted to TermTotal
Consumer real estate:
Past due 30-89 days$— $426 $1,821 $2,225 $1,225 $3,350 $9,322 $362 $18,731 
Past due 90 or more days— 155 434 469 466 3,110 906 3,833 9,373 
Total past due— 581 2,255 2,694 1,691 6,460 10,228 4,195 28,104 
Current loans124,072 692,889 527,716 377,051 240,897 287,806 917,172 7,837 3,175,440 
Total$124,072 $693,470 $529,971 $379,745 $242,588 $294,266 $927,400 $12,032 $3,203,544 
Consumer and other:
Past due 30-89 days$2,776 $291 $1,053 $177 $— $79 $1,486 $1,005 $6,867 
Past due 90 or more days259 53 6 143 20 — 296 181 958 
Total past due3,035 344 1,059 320 20 79 1,782 1,186 7,825 
Current loans23,685 30,980 22,265 7,674 2,600 2,581 303,008 24,561 417,354 
Total$26,720 $31,324 $23,324 $7,994 $2,620 $2,660 $304,790 $25,747 $425,179 
Period-end balances for revolving loans that converted to term during the three months ended March 31, 2025 and 2024 were as follows:
Three Months Ended
March 31,
20252024
Commercial and industrial$28,429 $20,972 
Energy46 44 
Commercial real estate:
Buildings, land and other55,054 3,081 
Construction— — 
Consumer real estate599 792 
Consumer and other3,793 3,020 
Total$87,921 $27,909 
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, the components of which are more fully described in our 2024 Form 10-K, totaled 123.9 at March 31, 2025 and 125.2 at December 31, 2024. 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. 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. Our allowance methodology is more fully described in our 2024 Form 10-K.
The following table presents details of the allowance for credit losses on loans segregated by loan portfolio segment as of March 31, 2025 and December 31, 2024.
March 31, 2025Commercial
and
Industrial		EnergyCommercial
Real Estate		Consumer
Real Estate		Consumer
and Other		Total
Modeled expected credit losses$55,502 $4,107 $17,482 $17,562 $5,590 $100,243 
Q-Factor and other qualitative adjustments24,381 3,472 125,070 615 3,084 156,622 
Specific allocations14,424 2,677 625 747 150 18,623 
Total$94,307 $10,256 $143,177 $18,924 $8,824 $275,488 
December 31, 2024
Modeled expected credit losses$51,669 $3,969 $17,549 $17,720 $7,019 $97,926 
Q-Factor and other qualitative adjustments22,635 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 
The following table details activity in the allowance for credit losses on loans by portfolio segment for the three months ended March 31, 2025 and 2024. 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		EnergyCommercial
Real Estate		Consumer
Real Estate		Consumer
and Other		Total
Three months ended:
March 31, 2025
Beginning balance$87,569 $9,992 $143,205 $19,106 $10,279 $270,151 
Credit loss expense (benefit)10,181 (38)1,970 429 2,486 15,028 
Charge-offs(4,336)(52)(2,000)(958)(6,844)(14,190)
Recoveries893 354 2 347 2,903 4,499 
Net (charge-offs) recoveries(3,443)302 (1,998)(611)(3,941)(9,691)
Ending balance$94,307 $10,256 $143,177 $18,924 $8,824 $275,488 
March 31, 2024
Beginning balance$74,006 $17,814 $130,598 $13,538 $10,040 $245,996 
Credit loss expense (benefit)1,992 (3,776)7,610 1,806 4,018 11,650 
Charge-offs(2,144)— — (1,669)(8,257)(12,070)
Recoveries1,742 180 16 182 2,601 4,721 
Net (charge-offs) recoveries(402)180 16 (1,487)(5,656)(7,349)
Ending balance$75,596 $14,218 $138,224 $13,857 $8,402 $250,297 
The following table presents year-to-date gross charge-offs by year of origination as of March 31, 2025.
20252024202320222021PriorRevolving LoansRevolving Loans Converted to TermTotal
Commercial and industrial$— $— $1,166 $— $95 $61 $1,971 $1,043 $4,336 
Energy— — — 52 — — — — 52 
Commercial real estate:
Buildings, land and other— — — — 2,000 — — — 2,000 
Construction— — — — — — — — — 
Consumer real estate— 57 39 110 134 111 507 — 958 
Consumer and other1,804 3,874 33 75 — 2 701 355 6,844 
Total$1,804 $3,931 $1,238 $237 $2,229 $174 $3,179 $1,398 $14,190 
In the table above, $1.8 million of the consumer and other loan charge-offs reported as 2025 originations and $3.8 million of the total reported as 2024 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 March 31, 2025 and December 31, 2024.
March 31, 2025December 31, 2024
Loan
Balance		Specific AllocationsLoan
Balance		Specific Allocations
Commercial and industrial$47,860 $14,424 $45,009 $13,265 
Energy4,035 2,677 4,078 2,700 
Commercial real estate:
Buildings, land and other20,656 122 18,797 122 
Construction1,946 503 2,012 503 
Consumer real estate6,104 747 6,039 766 
Consumer and other337 150 352 165 
Total$80,938 $18,623 $76,287 $17,521