Southwest Bancorp in Stillwater, Okla., and LegacyTexas Financial Group in Plano have disclosed exposure to a commercial borrower that faces criminal and civil investigations.

The $2.4 billion-asset Southwest said in its annual report that it has about $10 million of outstanding commercial-and-industrial loans to the unnamed borrower. Southwest said it downgraded the credit to “substandard” during the first quarter, although the company said it is “probable” that the borrower will repay its balances.

The borrower has said that it's the subject of an “ongoing investigation” by the Securities and Exchange Commission, and the Federal Bureau of Investigation has reportedly served a search warrant on the borrower, the filing said.

Southwest, which has not classified the loan as impaired, added that it has not set aside specific reserves to cover the loan. 

The $7.7 billion-asset LegacyTexas disclosed in its annual report that it has about $18.6 million in outstanding loan balances with the unnamed borrower. The loan is secured by “various assets, including multiple individual notes made by numerous residential developers in favor of each fund and secured by deeds of trust,” LegacyTexas said.

LegacyTexas has not impaired the borrower's loan and no specific reserves have been set aside for it.

LegacyTexas also did not identify the borrower, but described its investigations using the same language as Southwest.

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