v3.25.2
Loans
 6 Months Ended
Jun. 30, 2025
Receivables [Abstract]  
Loans Loans
Loans were as follows:
June 30,
2025		December 31,
2024
Commercial and industrial$6,069,215 $6,109,532 
Energy:
Production1,020,281 903,654 
Service239,901 203,629 
Other55,045 21,612 
Total energy1,315,227 1,128,895 
Commercial real estate:
Commercial mortgages7,472,048 7,165,220 
Construction2,075,700 2,264,076 
Land546,001 539,227 
Total commercial real estate10,093,749 9,968,523 
Consumer real estate:
Home equity lines of credit984,169 911,239 
Home equity loans972,366 914,738 
Home improvement loans872,176 852,536 
1-4 family mortgage loans354,762 259,456 
Other155,802 165,420 
Total consumer real estate3,339,275 3,103,389 
Total real estate13,433,024 13,071,912 
Consumer and other437,029 444,474 
Total loans$21,254,495 $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 June 30, 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 energy industry, which totaled 6.2% of total loans, and the automobile dealerships industry, which totaled 5.5% of total loans. Unfunded commitments to extend credit and standby letters of credit issued to customers in the energy industry totaled $1.1 billion and $67.3 million, respectively, as of June 30, 2025, while unfunded commitments to extend credit and standby letters of credit issued to customers in the automobile dealership industry totaled $519.7 million and $20.0 million, respectively, as of June 30, 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 June 30, 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 $280.8 million at June 30, 2025 and $295.8 million at December 31, 2024.
Accrued Interest Receivable. Accrued interest receivable on loans totaled $88.8 million at June 30, 2025 and $86.8 million at 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 $19.8 billion at June 30, 2025 and $19.2 billion at 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:
June 30, 2025December 31, 2024
Total Non-AccrualNon-Accrual with No Credit Loss AllowanceTotal Non-AccrualNon-Accrual with No Credit Loss Allowance
Commercial and industrial$38,015 $10,614 $46,004 $8,800 
Energy4,020 1,343 4,079 1,377 
Commercial real estate:
Buildings, land, and other14,058 9,267 21,920 18,660 
Construction— — — — 
Consumer real estate6,107 3,952 6,511 4,048 
Consumer and other193 193 352 — 
Total$62,393 $25,369 $78,866 $32,885 
The following table presents non-accrual loans as of June 30, 2025, by class and year of origination.
20252024202320222021PriorRevolving LoansRevolving Loans Converted to TermTotal
Commercial and industrial$8,896 $2,402 $6,228 $3,609 $1,493 $2,184 $2,652 $10,551 $38,015 
Energy— — — — — 1,343 2,677 — 4,020 
Commercial real estate:
Buildings, land, and other2,916 — 3,013 1,314 1,183 4,378 — 1,254 14,058 
Construction— — — — — — — — — 
Consumer real estate— — 47 — — 2,313 80 3,667 6,107 
Consumer and other— 185 8 — — — — — 193 
Total$11,812 $2,587 $9,296 $4,923 $2,676 $10,218 $5,409 $15,472 $62,393 
In the table above, loans reported as 2025 originations as of June 30, 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 $1.3 million and $2.7 million for the three and six months ended June 30, 2025, respectively, and approximately $1.3 million and $2.5 million for the three and six months ended June 30, 2024, respectively.
An age analysis of past due loans (including both accruing and non-accruing loans), segregated by class of loans, as of June 30, 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$26,553 $27,532 $54,085 $6,015,130 $6,069,215 $7,542 
Energy1,104 4,020 5,124 1,310,103 1,315,227 — 
Commercial real estate:
Buildings, land, and other10,791 44,129 54,920 7,963,129 8,018,049 36,439 
Construction— — — 2,075,700 2,075,700 — 
Consumer real estate19,316 10,336 29,652 3,309,623 3,339,275 4,387 
Consumer and other4,546 762 5,308 431,721 437,029 569 
Total$62,310 $86,779 $149,089 $21,105,406 $21,254,495 $48,937 
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 six months ended June 30, 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 June 30, 2025.
Payment
Delay		Percent of
Total Class
of Loans		Combination: Payment Delay and Term ExtensionPercent of
Total Class
of Loans
June 30, 2025
Commercial and industrial$3,101 0.1 %$— — %
Commercial real estate:
Buildings, land, and other1,876 — — — 
$4,977 $— 
June 30, 2024
Commercial and industrial$— — %$27,731 0.4 %
The financial effects of the loan modifications made to borrowers experiencing financial difficulty were not significant during the six months ended June 30, 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 June 30, 2025 and June 30, 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.
June 30, 2025June 30, 2024
Payment
Delay		Combination: Payment Delay and Term ExtensionPayment
Delay		Combination: Payment Delay and Term Extension
Past due in excess of 90 days or on non-accrual status at period-end:
Commercial and industrial$4,888 $9,911 $— $— 
Commercial real estate:
Buildings, land, and other1,876 — — — 
$6,764 $9,911 $— $— 
Charge-offs during the period:
Commercial and industrial$1,108 $— $— $— 
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 June 30, 2025.
20252024202320222021PriorRevolving LoansRevolving Loans Converted to TermTotalW/A Risk Grade
Commercial and industrial
Risk grades 1-8$1,100,232 $763,569 $421,366 $328,274 $215,171 $459,353 $2,230,178 $44,149 $5,562,292 6.12 
Risk grade 946,794 26,690 7,814 7,935 21,947 29,688 50,570 19,167 210,605 9.00 
Risk grade 103,294 1,687 17,427 39,411 3,680 15,433 37,216 6,446 124,594 10.00 
Risk grade 1135,019 15,743 20,166 17,117 2,113 5,288 20,220 18,043 133,709 11.00 
Risk grade 123,100 1,600 5,487 2,153 1,481 2,154 591 6,107 22,673 12.00 
Risk grade 135,796 802 741 1,456 12 30 2,061 4,444 15,342 13.00 
$1,194,235 $810,091 $473,001 $396,346 $244,404 $511,946 $2,340,836 $98,356 $6,069,215 6.45 
W/A risk grade5.88 6.98 7.13 7.35 7.19 5.74 6.24 8.95 6.45 
Energy
Risk grades 1-8$265,684 $162,906 $12,350 $32,534 $13,660 $1,588 $796,450 $3,031 $1,288,203 5.52 
Risk grade 9467 — 2,148 — 5 520 3,834 186 7,160 9.00 
Risk grade 10— — — 1,561 1,947 — 3,161 737 7,406 10.00 
Risk grade 11— 110 — 1,999 — 14 2,867 3,448 8,438 11.00 
Risk grade 12— — — — — 1,343 — — 1,343 12.00 
Risk grade 13— — — — — — 2,677 — 2,677 13.00 
$266,151 $163,016 $14,498 $36,094 $15,612 $3,465 $808,989 $7,402 $1,315,227 5.62 
W/A risk grade6.01 6.68 7.34 7.66 4.68 9.70 5.12 9.25 5.62 
Commercial real estate:
Buildings, land, other
Risk grades 1-8$698,567 $1,335,669 $1,250,645 $1,347,688 $908,921 $1,455,579 $180,755 $198,344 $7,376,168 6.97 
Risk grade 910,949 8,426 12,399 65,910 81,454 31,445 575 5,432 216,590 9.00 
Risk grade 10— 7,760 42,684 53,115 106,361 23,135 3,498 192 236,745 10.00 
Risk grade 11— 9,388 12,644 47,292 8,638 92,716 — 3,810 174,488 11.00 
Risk grade 122,916 — 3,013 1,314 961 3,656 — 963 12,823 12.00 
Risk grade 13— — — — 222 722 — 291 1,235 13.00 
$712,432 $1,361,243 $1,321,385 $1,515,319 $1,106,557 $1,607,253 $184,828 $209,032 $8,018,049 7.21 
W/A risk grade7.08 7.19 7.25 7.33 7.61 7.13 6.90 5.43 7.21 
20252024202320222021PriorRevolving LoansRevolving Loans Converted to TermTotalW/A Risk Grade
Construction
Risk grades 1-8$227,096 $620,535 $416,397 $300,600 $62,672 $89 $130,496 $— $1,757,885 7.59 
Risk grade 926,472 5,418 26,840 23,242 — — 13,649 — 95,621 9.00 
Risk grade 1016,396 — — 155,092 44,846 — — — 216,334 10.00 
Risk grade 11— — 5,860 — — — — — 5,860 11.00 
Risk grade 12— — — — — — — — — 12.00 
Risk grade 13— — — — — — — — — 13.00 
$269,964 $625,953 $449,097 $478,934 $107,518 $89 $144,145 $— $2,075,700 7.91 
W/A risk grade7.42 7.65 7.85 8.57 8.34 6.02 7.66 — 7.91 
Total commercial real estate$982,396 $1,987,196 $1,770,482 $1,994,253 $1,214,075 $1,607,342 $328,973 $209,032 $10,093,749 7.35 
W/A risk grade7.18 7.33 7.40 7.63 7.67 7.13 7.23 5.43 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 June 30, 2025, was as follows:
20252024202320222021PriorRevolving LoansRevolving Loans Converted to TermTotal
Consumer real estate:
Past due 30-89 days$503 $1,506 $1,748 $2,868 $1,235 $3,120 $8,243 $93 $19,316 
Past due 90 or more days— 44 153 1,124 568 2,550 1,949 3,948 10,336 
Total past due503 1,550 1,901 3,992 1,803 5,670 10,192 4,041 29,652 
Current loans295,248 674,978 500,685 360,309 232,865 275,529 962,005 8,004 3,309,623 
Total$295,751 $676,528 $502,586 $364,301 $234,668 $281,199 $972,197 $12,045 $3,339,275 
Consumer and other:
Past due 30-89 days$2,697 $329 $230 $183 $20 $47 $952 $88 $4,546 
Past due 90 or more days171 29 8 38 — — 331 185 762 
Total past due2,868 358 238 221 20 47 1,283 273 5,308 
Current loans37,048 25,992 17,799 6,598 2,247 2,329 314,958 24,750 431,721 
Total$39,916 $26,350 $18,037 $6,819 $2,267 $2,376 $316,241 $25,023 $437,029 
Period-end balances for revolving loans that converted to term during the three and six months ended June 30, 2025 and 2024 were as follows:
Three Months Ended
June 30,		Six Months Ended
June 30,
2025202420252024
Commercial and industrial$12,234 $10,557 $34,255 $24,813 
Energy2,199 604 2,242 646 
Commercial real estate:
Buildings, land and other60,649 65,642 115,162 66,238 
Construction— 165 — 165 
Consumer real estate667 971 1,254 1,703 
Consumer and other2,630 3,541 6,296 6,094 
Total$78,379 $81,480 $159,209 $99,659 
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 126.1 at June 30, 2025 and 125.3 at December 31, 2024. A higher TLI value implies more 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 June 30, 2025 and December 31, 2024.
June 30, 2025Commercial
and
Industrial		EnergyCommercial
Real Estate		Consumer
Real Estate		Consumer
and Other		Total
Modeled expected credit losses$56,406 $4,388 $17,656 $20,312 $6,207 $104,969 
Q-Factor and other qualitative adjustments23,735 3,324 122,032 711 3,093 152,895 
Specific allocations15,343 2,677 1,235 684 — 19,939 
Total$95,484 $10,389 $140,923 $21,707 $9,300 $277,803 
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 and six months ended June 30, 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:
June 30, 2025
Beginning balance$94,307 $10,256 $143,177 $18,924 $8,824 $275,488 
Credit loss expense (benefit)4,315 (47)383 3,821 4,994 13,466 
Charge-offs(4,163)— (2,639)(1,292)(7,290)(15,384)
Recoveries1,025 180 2 254 2,772 4,233 
Net (charge-offs) recoveries(3,138)180 (2,637)(1,038)(4,518)(11,151)
Ending balance$95,484 $10,389 $140,923 $21,707 $9,300 $277,803 
June 30, 2024
Beginning balance$75,596 $14,218 $138,224 $13,857 $8,402 $250,297 
Credit loss expense (benefit)6,936 (3,038)1,903 2,175 7,760 15,736 
Charge-offs(4,282)(79)(122)(408)(8,360)(13,251)
Recoveries304 384 15 83 2,739 3,525 
Net (charge-offs) recoveries(3,978)305 (107)(325)(5,621)(9,726)
Ending balance$78,554 $11,485 $140,020 $15,707 $10,541 $256,307 
Six months ended:
June 30, 2025
Beginning balance$87,569 $9,992 $143,205 $19,106 $10,279 $270,151 
Credit loss expense (benefit)14,496 (85)2,353 4,250 7,480 28,494 
Charge-offs(8,499)(52)(4,639)(2,250)(14,134)(29,574)
Recoveries1,918 534 4 601 5,675 8,732 
Net (charge-offs) recoveries(6,581)482 (4,635)(1,649)(8,459)(20,842)
Ending balance$95,484 $10,389 $140,923 $21,707 $9,300 $277,803 
June 30, 2024
Beginning balance$74,006 $17,814 $130,598 $13,538 $10,040 $245,996 
Credit loss expense (benefit)8,928 (6,814)9,513 3,981 11,778 27,386 
Charge-offs(6,426)(79)(122)(2,077)(16,617)(25,321)
Recoveries2,046 564 31 265 5,340 8,246 
Net (charge-offs) recoveries(4,380)485 (91)(1,812)(11,277)(17,075)
Ending balance$78,554 $11,485 $140,020 $15,707 $10,541 $256,307 
The following table presents year-to-date gross charge-offs by year of origination as of June 30, 2025.
20252024202320222021PriorRevolving LoansRevolving Loans Converted to TermTotal
Commercial and industrial$165 $682 $1,774 $101 $452 $61 $2,752 $2,512 $8,499 
Energy— — — 52 — — — — 52 
Commercial real estate:
Buildings, land and other— — — — 4,636 3 — — 4,639 
Construction— — — — — — — — — 
Consumer real estate— 57 261 110 259 428 1,135 — 2,250 
Consumer and other7,624 3,957 461 221 1 13 1,328 529 14,134 
Total$7,789 $4,696 $2,496 $484 $5,348 $505 $5,215 $3,041 $29,574 
In the table above, $7.6 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 June 30, 2025 and December 31, 2024.
June 30, 2025December 31, 2024
Loan
Balance		Specific AllocationsLoan
Balance		Specific Allocations
Commercial and industrial$36,745 $15,343 $45,009 $13,265 
Energy4,020 2,677 4,078 2,700 
Commercial real estate:
Buildings, land and other13,322 1,235 18,797 122 
Construction— — 2,012 503 
Consumer real estate5,819 684 6,039 766 
Consumer and other— — 352 165 
Total$59,906 $19,939 $76,287 $17,521