HBCP 10-Q
Home Bancorp, Inc. (HBCP)
10-Q
2025-05-02
For: 2025-03-31
View Original
Added on
April 04, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
| Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |||||
For the quarterly period ended: March 31, 2025
or
| Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | |||||
For the transition period from to
Commission File Number: 001-34190
(Exact name of Registrant as specified in its charter)
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number) | ||||
| (Address of Principal Executive Offices) | (Zip Code) | ||||
Registrant’s telephone number, including area code: (337 ) 237-1960
Not Applicable
(Former Name, Former Address and Former Fiscal Year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Exchange Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | ☒ | ||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ||||||||||||
| Emerging growth company | ||||||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
At April 30, 2025, the registrant had 7,801,368 shares of common stock, $0.01 par value, outstanding.
HOME BANCORP, INC. and SUBSIDIARY
TABLE OF CONTENTS
| PART I - FINANCIAL INFORMATION | ||||||||
| Item 1. | Financial Statements (unaudited) | Page | ||||||
| Item 2. | ||||||||
| Item 3. | ||||||||
| Item 4. | ||||||||
| PART II - OTHER INFORMATION | ||||||||
| Item 1. | ||||||||
| Item 1A. | ||||||||
| Item 2. | ||||||||
| Item 3. | ||||||||
| Item 4. | ||||||||
| Item 5. | ||||||||
| Item 6. | ||||||||
i
HOME BANCORP, INC. and SUBSIDIARY
GLOSSARY OF DEFINED TERMS
Below is a listing of certain acronyms, abbreviations and defined terms, among others, used throughout this Quarterly Report on Form 10-Q, including in "Item 1. Financial Statements" and "Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations." The terms "we," "our" or "us" refer to Home Bancorp, Inc. and its consolidated subsidiaries, unless the context otherwise requires.
| ACL | – | Allowance for credit losses | ||||||
| ALL | – | Allowance for loan losses | ||||||
| AOCI | – | Accumulated other comprehensive income | ||||||
| ASC | – | Accounting Standards Codification | ||||||
| ASU | – | Accounting Standards Update | ||||||
| Bank | – | Home Bank, N. A., a wholly-owned subsidiary of the Company | ||||||
| BOLI | – | Bank-owned life insurance | ||||||
| bps | – | basis points, 100 basis points being equal to 1.0% | ||||||
BTFP | – | Bank Term Funding Program | ||||||
| C&D | – | Construction and land | ||||||
| C&I | – | Commercial and industrial | ||||||
| CARES Act | – | Coronavirus Aid, Relief, and Economic Security Act | ||||||
| CECL | – | Current expected credit losses | ||||||
| Company | – | Home Bancorp, Inc., a Louisiana corporation and the holding company for Home Bank, N. A. | ||||||
| COVID-19 | – | The novel coronavirus | ||||||
| CRE | – | Commercial real estate | ||||||
| EPS | – | Earnings per common share | ||||||
| FASB | – | Financial Accounting Standards Board | ||||||
| FHLB | – | Federal Home Loan Bank | ||||||
| GAAP | – | Generally Accepted Accounting Principles | ||||||
| LTV | – | Loan-to-value | ||||||
| NPA(s) | – | Nonperforming asset(s) | ||||||
| OCI | – | Other comprehensive income | ||||||
| ORE | – | Other real estate | ||||||
| PCD | – | Purchased credit deteriorated | ||||||
| PPP | – | Paycheck Protection Program | ||||||
| SBA | – | U.S. Small Business Association | ||||||
| SEC | – | U.S. Securities and Exchange Commission | ||||||
| TE | – | Taxable equivalent | ||||||
| U.S. | – | United States | ||||||
ii
HOME BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
| (Unaudited) | (Audited) | |||||||||||||
| (dollars in thousands) | March 31, 2025 | December 31, 2024 | ||||||||||||
| Assets | ||||||||||||||
| Cash and cash equivalents | $ | $ | ||||||||||||
Investment securities available for sale, at fair value (amortized cost $ | ||||||||||||||
Investment securities held to maturity (fair values of $ | ||||||||||||||
| Mortgage loans held for sale | ||||||||||||||
| Loans, net of unearned income | ||||||||||||||
| Allowance for loan losses | ( | ( | ||||||||||||
| Total loans, net of unearned income and allowance for loan losses | ||||||||||||||
| Office properties and equipment, net | ||||||||||||||
| Cash surrender value of bank-owned life insurance | ||||||||||||||
| Goodwill and core deposit intangibles | ||||||||||||||
| Accrued interest receivable and other assets | ||||||||||||||
| Total Assets | $ | $ | ||||||||||||
| Liabilities | ||||||||||||||
| Deposits: | ||||||||||||||
| Noninterest-bearing | $ | $ | ||||||||||||
| Interest-bearing | ||||||||||||||
| Total Deposits | ||||||||||||||
| Other borrowings | ||||||||||||||
| Subordinated debt, net of issuance cost | ||||||||||||||
| Short-term Federal Home Loan Bank advances | ||||||||||||||
| Long-term Federal Home Loan Bank advances | ||||||||||||||
| Accrued interest payable and other liabilities | ||||||||||||||
| Total Liabilities | ||||||||||||||
| Shareholders’ Equity | ||||||||||||||
Preferred stock, $ | ||||||||||||||
Common stock, $ | ||||||||||||||
Additional paid-in capital | ||||||||||||||
| Unallocated common stock held by: | ||||||||||||||
| Employee Stock Ownership Plan (ESOP) | ( | ( | ||||||||||||
| Retained earnings | ||||||||||||||
| Accumulated other comprehensive loss | ( | ( | ||||||||||||
| Total Shareholders’ Equity | ||||||||||||||
| Total Liabilities and Shareholders’ Equity | $ | $ | ||||||||||||
The accompanying Notes are an integral part of these Consolidated Financial Statements.
1
HOME BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| Three Months Ended March 31, | ||||||||||||||
| (dollars in thousands, except per share data) | 2025 | 2024 | ||||||||||||
| Interest Income | ||||||||||||||
| Loans, including fees | $ | $ | ||||||||||||
| Investment securities: | ||||||||||||||
| Taxable interest | ||||||||||||||
Tax-exempt interest | ||||||||||||||
| Other investments and deposits | ||||||||||||||
| Total interest income | ||||||||||||||
| Interest Expense | ||||||||||||||
| Deposits | ||||||||||||||
| Other borrowings | ||||||||||||||
| Subordinated debt expense | ||||||||||||||
| Short-term Federal Home Loan Bank advances | ||||||||||||||
| Long-term Federal Home Loan Bank advances | ||||||||||||||
| Total interest expense | ||||||||||||||
| Net interest income | ||||||||||||||
| Provision for loan losses | ||||||||||||||
| Net interest income after provision for loan losses | ||||||||||||||
| Noninterest Income | ||||||||||||||
| Service fees and charges | ||||||||||||||
| Bank card fees | ||||||||||||||
| Gain on sale of loans, net | ||||||||||||||
| Income from bank-owned life insurance | ||||||||||||||
| Gain on sale of assets, net | ||||||||||||||
| Other income | ||||||||||||||
| Total noninterest income | ||||||||||||||
| Noninterest Expense | ||||||||||||||
| Compensation and benefits | ||||||||||||||
| Occupancy | ||||||||||||||
| Marketing and advertising | ||||||||||||||
| Data processing and communication | ||||||||||||||
| Professional services | ||||||||||||||
| Forms, printing and supplies | ||||||||||||||
| Franchise and shares tax | ||||||||||||||
| Regulatory fees | ||||||||||||||
| Foreclosed assets and ORE, net | ||||||||||||||
| Amortization of acquisition intangible | ||||||||||||||
| Other expenses | ||||||||||||||
| Total noninterest expense | ||||||||||||||
| Income before income tax expense | ||||||||||||||
| Income tax expense | ||||||||||||||
| Net Income | $ | $ | ||||||||||||
| Earnings per share: | ||||||||||||||
| Basic | $ | $ | ||||||||||||
| Diluted | $ | $ | ||||||||||||
| Cash dividends declared per common share | $ | $ | ||||||||||||
The accompanying Notes are an integral part of these Consolidated Financial Statements.
2
HOME BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| Three Months Ended March 31, | ||||||||||||||
| (dollars in thousands) | 2025 | 2024 | ||||||||||||
| Net Income | $ | $ | ||||||||||||
| Other Comprehensive Income (Loss) | ||||||||||||||
| Unrealized gains (losses) on available for sale investment securities | ( | |||||||||||||
| Unrealized (losses) gains on cash flow hedges | ( | |||||||||||||
| Tax effect | ( | |||||||||||||
| Other comprehensive income (loss), net of taxes | ( | |||||||||||||
Comprehensive Income | $ | $ | ||||||||||||
The accompanying Notes are an integral part of these Consolidated Financial Statements.
3
HOME BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
| (dollars in thousands, except per share data) | Common stock | Additional Paid-in capital | Unallocated Common Stock Held by ESOP | Unallocated Common Stock Held by RRP | Retained Earnings | Accumulated Other Comprehensive Loss | Total | |||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | $ | $ | $ | ( | $ | ( | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Purchase of Company’s common stock at cost, | — | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
Cash dividends declared, $ | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Common Stock issued under incentive plans, net of shares surrendered in payment, including tax benefit, | — | ( | ( | |||||||||||||||||||||||||||||||||||||||||
| RRP shares released for allocation | ( | |||||||||||||||||||||||||||||||||||||||||||
| ESOP shares released for allocation | ||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation cost | ||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2024 | $ | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 | $ | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income | ||||||||||||||||||||||||||||||||||||||||||||
Purchase of Company’s common stock at cost, | ( | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||
Cash dividends declared, $ | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Common Stock issued under incentive plans, net of shares surrendered in payment, including tax benefit, | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Exercise of stock options | — | |||||||||||||||||||||||||||||||||||||||||||
| ESOP shares released for allocation | ||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation cost | ||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2025 | $ | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||
The accompanying Notes are an integral part of these Consolidated Financial Statements.
4
HOME BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| For the Three Months Ended March 31, | ||||||||||||||
| (dollars in thousands) | 2025 | 2024 | ||||||||||||
| Cash flows from operating activities: | ||||||||||||||
| Net income | $ | $ | ||||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||
| Provision for loan losses | ||||||||||||||
| Depreciation | ||||||||||||||
| Amortization and accretion of purchase accounting valuations and intangibles | ||||||||||||||
| Federal Home Loan Bank stock dividends | ( | ( | ||||||||||||
| Net amortization of discount on investments | ||||||||||||||
| Amortization of subordinated debt issuance cost | ||||||||||||||
| Gain on loans sold, net | ( | ( | ||||||||||||
| Proceeds, including principal payments, from loans held for sale | ||||||||||||||
| Originations of loans held for sale | ( | ( | ||||||||||||
| Gain on sale of assets, net | ( | ( | ||||||||||||
| Non-cash compensation | ||||||||||||||
| Deferred income tax benefit | ( | ( | ||||||||||||
| Increase in accrued interest receivable and other assets | ( | ( | ||||||||||||
| Increase in cash surrender value of bank-owned life insurance | ( | ( | ||||||||||||
| Increase in accrued interest payable and other liabilities | ||||||||||||||
| Net cash provided by operating activities | ||||||||||||||
| Cash flows from investing activities: | ||||||||||||||
| Purchases of securities available for sale | ( | |||||||||||||
| Proceeds from maturities, prepayments and calls on securities available for sale | ||||||||||||||
| Increase in loans, net | ( | ( | ||||||||||||
| Decrease in interest-bearing deposits in banks | ||||||||||||||
| Proceeds from sale of foreclosed assets | ||||||||||||||
| Purchases of office properties and equipment | ( | ( | ||||||||||||
| Proceeds from sale of office properties and equipment | ||||||||||||||
| Purchase of Federal Home Loan Bank stock | ( | |||||||||||||
Proceeds from redemption of Federal Home Loan Bank stock | ||||||||||||||
| Net cash used in investing activities | ( | ( | ||||||||||||
| Cash flows from financing activities: | ||||||||||||||
| Increase in deposits, net | ||||||||||||||
| Borrowings on Federal Home Loan Bank advances | ||||||||||||||
| Repayments of Federal Home Loan Bank advances | ( | ( | ||||||||||||
Proceeds from other borrowings | ||||||||||||||
| Proceeds from exercise of stock options | ||||||||||||||
| Issuance of stock under incentive plans, net | ( | |||||||||||||
| Dividends paid to shareholders | ( | ( | ||||||||||||
| Purchase of Company’s common stock | ( | ( | ||||||||||||
| Net cash provided by financing activities | ||||||||||||||
| Net change in cash and cash equivalents | ||||||||||||||
| Cash and cash equivalents, beginning | ||||||||||||||
| Cash and cash equivalents, ending | $ | $ | ||||||||||||
| Supplementary cash flow information: | ||||||||||||||
| Interest paid on deposits and borrowed funds | $ | $ | ||||||||||||
| Income taxes paid | ||||||||||||||
The accompanying Notes are an integral part of these Consolidated Financial Statements.
5
HOME BANCORP, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited consolidated financial statements of the Company were prepared in accordance with instructions for Form 10-Q and Regulation S-X and do not include information or footnotes necessary for a complete presentation of financial condition, results of operations, comprehensive income, changes in shareholders’ equity and cash flows in conformity with accounting principles generally accepted in the United States of America. However, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial statements have been included. Certain reclassifications have been made to prior period balances to conform to the current period presentation. The results of operations for the three months ended March 31, 2025 and 2024 are not necessarily indicative of the results which may be expected for the entire fiscal year. These statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2024.
Critical Accounting Policies and Estimates
Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties and could reflect materially different results under different assumptions and conditions. Methodologies the Company uses when applying critical accounting policies and developing critical accounting estimates are included in its Annual Report on Form 10-K for the year ended December 31, 2024.
There have been no material changes from the critical accounting policies previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024. In preparing its financial statements, the Company is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Reclassifications
Certain reclassifications have been made to prior period balances to conform to the current period presentation.
2. Recent Accounting Pronouncements
Accounting Standards Adopted in 2025
ASU No. 2023-07, "Improvements to Reportable Segment Disclosures" ("ASU 2023-07") primarily will require enhanced disclosures about significant segment expenses. The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted, and are to be applied on a retrospective basis. The adoption of ASU 2023-07 did not have a significant impact on our consolidated financial statements.
ASU No. 2023-09, "Improvements to Income Tax Disclosures" ("ASU 2023-09") is intended to enhance the transparency and decision usefulness of income tax disclosures primarily through changes to the rate reconciliation and income taxes paid information. This update is effective for annual periods beginning after December 15, 2024, though early adoption is permitted. The adoption of ASU 2023-09 did not have a significant impact on our consolidated financial statements.
Issued but Not Yet Adopted Accounting Standards
ASU 2023-06, "Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative" ("ASU 2023-06") related to disclosure or presentation requirements for various subtopics in the FASB’s Accounting Standards Codification (“Codification”). The amendments in the update are intended to align the requirements in the Codification with the U.S. Securities and Exchange Commission's (“SEC”) regulations and facilitate the application of GAAP for all entities. The effective date for each amendment is the date on which the SEC's removal of the related disclosure requirement from Regulation S-X or Regulation S-K becomes effective, or if the SEC has not removed the requirements by June 30, 2027, this amendment will be removed from the Codification and will not become effective for any entity. Early adoption is prohibited. We do not expect this update to have a material impact on our consolidated financial statements.
6
ASU 2024-03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures" (ASU 2024-03") requires the disaggregation of certain expenses in the notes to the financial statements, to provide enhanced transparency into the expense captions presented on the face of the income statement. The amendments in ASU 2024-03 are effective for annual reporting periods beginning after December 31, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this ASU may be applied either prospectively or retrospectively. The Company is currently evaluating the impact that this update will have on its disclosures in the consolidated financial statements.
3. Investment Securities
The following tables summarize the Company’s available for sale and held to maturity investment securities at March 31, 2025 and December 31, 2024.
| (dollars in thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||||
| March 31, 2025 | ||||||||||||||||||||||||||
| Available for sale: | ||||||||||||||||||||||||||
| U.S. agency mortgage-backed | $ | $ | $ | $ | ||||||||||||||||||||||
| Collateralized mortgage obligations | ||||||||||||||||||||||||||
| Municipal bonds | ||||||||||||||||||||||||||
| U.S. government agency | ||||||||||||||||||||||||||
| Corporate bonds | ||||||||||||||||||||||||||
| Total available for sale | $ | $ | $ | $ | ||||||||||||||||||||||
| Held to maturity: | ||||||||||||||||||||||||||
| Municipal bonds | $ | $ | $ | $ | ||||||||||||||||||||||
| Total held to maturity | $ | $ | $ | $ | ||||||||||||||||||||||
| (dollars in thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||
| Available for sale: | ||||||||||||||||||||||||||
| U.S. agency mortgage-backed | $ | $ | $ | $ | ||||||||||||||||||||||
| Collateralized mortgage obligations | ||||||||||||||||||||||||||
| Municipal bonds | ||||||||||||||||||||||||||
| U.S. government agency | ||||||||||||||||||||||||||
| Corporate bonds | ||||||||||||||||||||||||||
| Total available for sale | $ | $ | $ | $ | ||||||||||||||||||||||
| Held to maturity: | ||||||||||||||||||||||||||
| Municipal bonds | $ | $ | $ | $ | ||||||||||||||||||||||
| Total held to maturity | $ | $ | $ | $ | ||||||||||||||||||||||
The estimated fair value and amortized cost by contractual maturity of the Company’s investment securities as of March 31, 2025 are shown in the following tables. Securities are classified according to their contractual maturities without consideration of principal amortization, potential prepayments or call options. The expected maturity of a security may differ from its contractual maturity because of prepayments or the exercise of call options. Accordingly, actual maturities may differ from contractual maturities. The Company’s investment securities portfolio had an effective duration of 3.7 years and 3.9 years at March 31, 2025 and December 31, 2024, respectively.
7
| (dollars in thousands) | One Year or Less | After One Year through Five Years | After Five Years through Ten Years | After Ten Years | Total | |||||||||||||||||||||||||||
| Fair Value | ||||||||||||||||||||||||||||||||
| Available for sale: | ||||||||||||||||||||||||||||||||
| U.S. agency mortgage-backed | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Collateralized mortgage obligations | ||||||||||||||||||||||||||||||||
| Municipal bonds | ||||||||||||||||||||||||||||||||
| U.S. government agency | ||||||||||||||||||||||||||||||||
| Corporate bonds | ||||||||||||||||||||||||||||||||
| Total available for sale | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Held to maturity: | ||||||||||||||||||||||||||||||||
| Municipal bonds | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Total held to maturity | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| (dollars in thousands) | One Year or Less | After One Year through Five Years | After Five Years through Ten Years | After Ten Years | Total | |||||||||||||||||||||||||||
| Amortized Cost | ||||||||||||||||||||||||||||||||
| Available for sale: | ||||||||||||||||||||||||||||||||
| U.S. agency mortgage-backed | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Collateralized mortgage obligations | ||||||||||||||||||||||||||||||||
| Municipal bonds | ||||||||||||||||||||||||||||||||
| U.S. government agency | ||||||||||||||||||||||||||||||||
| Corporate bonds | ||||||||||||||||||||||||||||||||
| Total available for sale | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Held to maturity: | ||||||||||||||||||||||||||||||||
| Municipal bonds | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Total held to maturity | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
Management evaluates securities for impairment from credit losses at least quarterly, and more frequently when economic and market conditions warrant such evaluations. Consideration is given to numerous factors including, but not limited to, the extent to which the fair value is less than the amortized cost basis; adverse conditions causing changes in the financial condition of the issuer of the security or underlying loan guarantors; changes to the rating of the security by a rating agency; and the Company’s intent to sell a security or whether it is more likely than not the Company will be required to sell the security before the recovery of its amortized cost, which may extend to maturity.
The Company performs a process to determine whether the decline in the fair value of securities has resulted from credit losses or other factors. This process involves evaluating each security for impairment by monitoring credit performance, collateral type, collateral geography, bond credit support, loan-to-value ratios, credit scores, loss severity levels, pricing levels, downgrades by rating agencies, cash flow projections and other factors as indicators of potential credit issues. If this evaluation indicates the existence of credit losses, the Company compares the present value of cash flows expected to be collected from the security with the amortized cost basis. If the present value of expected cash flows is less than the amortized cost basis, an ACL is recorded, limited by the amount that the fair value of the security is less than its amortized cost.
The Company's investment securities with unrealized losses, aggregated by type and length of time that individual securities have been in a continuous loss position, are summarized in the following tables.
8
| (dollars in thousands) | Less Than 1 Year | Over 1 Year | Total | |||||||||||||||||||||||||||||||||||
| March 31, 2025 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||||||||||||||||
| Available for sale: | ||||||||||||||||||||||||||||||||||||||
| U.S. agency mortgage-backed | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Collateralized mortgage obligations | ||||||||||||||||||||||||||||||||||||||
| Municipal bonds | ||||||||||||||||||||||||||||||||||||||
| U.S. government agency | ||||||||||||||||||||||||||||||||||||||
| Corporate bonds | ||||||||||||||||||||||||||||||||||||||
| Total available for sale | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| (dollars in thousands) | Less Than 1 Year | Over 1 Year | Total | |||||||||||||||||||||||||||||||||||
| December 31, 2024 | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | ||||||||||||||||||||||||||||||||
| Available for sale: | ||||||||||||||||||||||||||||||||||||||
| U.S. agency mortgage-backed | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Collateralized mortgage obligations | ||||||||||||||||||||||||||||||||||||||
| Municipal bonds | ||||||||||||||||||||||||||||||||||||||
| U.S. government agency | ||||||||||||||||||||||||||||||||||||||
| Corporate bonds | ||||||||||||||||||||||||||||||||||||||
| Total available for sale | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
At March 31, 2025, 240 of the Company’s debt securities had unrealized losses totaling 8.1 % of the individual securities’ amortized cost basis and 7.8 % of the Company’s total amortized cost basis of the investment securities portfolio. At such date, 229 of the 240 securities had been in a continuous loss position for over 12 months. Management has determined that the declines in the fair value of these securities were not attributable to credit losses. As a result, no ACL was recorded for available for sale investment securities at March 31, 2025.
At March 31, 2025, it was determined that no ACL was required for the Company's held-to-maturity investment securities. The Company monitors credit quality of debt securities held-to-maturity through the use of credit ratings. The following tables present the amortized cost of the Company's held-to-maturity securities by credit quality rating at March 31, 2025 and December 31, 2024.
| Credit Ratings | ||||||||||||||||||||
| (dollars in thousands) | AAA/AA/A | BBB/BB/B | Total | |||||||||||||||||
| March 31, 2025 | ||||||||||||||||||||
| Held to maturity: | ||||||||||||||||||||
| Municipal bonds | $ | $ | $ | |||||||||||||||||
| Credit Ratings | ||||||||||||||||||||
| (dollars in thousands) | AAA/AA/A | BBB/BB/B | Total | |||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||
| Held to maturity: | ||||||||||||||||||||
| Municipal bonds | $ | $ | $ | |||||||||||||||||
Accrued interest receivable on the Company's investment securities was $1,222,000 and $1,471,000 at March 31, 2025 and December 31, 2024, respectively. These amounts are recorded in accrued interest receivable and other assets on the Consolidated Statements of Financial Condition.
At March 31, 2025 and December 31, 2024, the Company had $142,011,000 and $134,887,000 , respectively, of securities pledged to secure public deposits.
9
4. Earnings Per Share
Earnings per common share was computed based on the following:
| Three Months Ended March 31, | ||||||||||||||
| (in thousands, except per share data) | 2025 | 2024 | ||||||||||||
| Numerator: | ||||||||||||||
| Net income available to common shareholders | $ | $ | ||||||||||||
| Denominator: | ||||||||||||||
| Weighted average common shares outstanding | ||||||||||||||
| Effect of dilutive securities: | ||||||||||||||
| Restricted stock | ||||||||||||||
| Stock options | ||||||||||||||
| Weighted average common shares outstanding – assuming dilution | ||||||||||||||
| Basic earnings per common share | $ | $ | ||||||||||||
| Diluted earnings per common share | $ | $ | ||||||||||||
Options for 1,668 and 58,392 shares of common stock were not included in the computation of diluted EPS for the three months ended March 31, 2025 and 2024, respectively, because the effect of those shares was anti-dilutive.
10
5. Credit Quality and Allowance for Credit Losses
The Company’s loans, net of unearned income, consisted of the following as of the dates indicated.
| (dollars in thousands) | March 31, 2025 | December 31, 2024 | ||||||||||||
| Real estate loans: | ||||||||||||||
One- to four-family first mortgage | $ | $ | ||||||||||||
| Home equity loans and lines | ||||||||||||||
| Commercial real estate | ||||||||||||||
| Construction and land | ||||||||||||||
| Multi-family residential | ||||||||||||||
| Total real estate loans | ||||||||||||||
| Other loans: | ||||||||||||||
| Commercial and industrial | ||||||||||||||
| Consumer | ||||||||||||||
| Total other loans | ||||||||||||||
| Total loans | $ | $ | ||||||||||||
The net discount on the Company’s acquired loans was $2,116,000 and $2,469,000 at March 31, 2025 and December 31, 2024, respectively. In addition, loan balances as of March 31, 2025 and December 31, 2024 are reported net of unearned income of $5,225,000 and $5,122,000 , respectively.
Accrued interest receivable on the Company's loans was $13,049,000 and $13,314,000 at March 31, 2025 and December 31, 2024, respectively, and is excluded from the estimate of the ACL. Those amounts are recorded in accrued interest receivable and other assets on the Consolidated Statements of Financial Condition.
Allowance for Credit Losses
The ACL, which includes the ALL and the ACL on unfunded lending commitments, and recorded investment in loans as of the dates indicated are as follows.
| March 31, 2025 | ||||||||||||||||||||
| (dollars in thousands) | Collectively Evaluated | Individually Evaluated | Total | |||||||||||||||||
| Allowance for credit losses: | ||||||||||||||||||||
One- to four-family first mortgage | $ | $ | $ | |||||||||||||||||
| Home equity loans and lines | ||||||||||||||||||||
| Commercial real estate | ||||||||||||||||||||
| Construction and land | ||||||||||||||||||||
| Multi-family residential | ||||||||||||||||||||
| Commercial and industrial | ||||||||||||||||||||
| Consumer | ||||||||||||||||||||
| Total allowance for loan losses | $ | $ | $ | |||||||||||||||||
Unfunded lending commitments(1) | $ | $ | $ | |||||||||||||||||
| Total allowance for credit losses | $ | $ | $ | |||||||||||||||||
11
| March 31, 2025 | ||||||||||||||||||||
| (dollars in thousands) | Collectively Evaluated | Individually Evaluated(2) | Total | |||||||||||||||||
| Loans: | ||||||||||||||||||||
One- to four-family first mortgage | $ | $ | $ | |||||||||||||||||
| Home equity loans and lines | ||||||||||||||||||||
| Commercial real estate | ||||||||||||||||||||
| Construction and land | ||||||||||||||||||||
| Multi-family residential | ||||||||||||||||||||
| Commercial and industrial | ||||||||||||||||||||
| Consumer | ||||||||||||||||||||
| Total loans | $ | $ | $ | |||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||
| (dollars in thousands) | Collectively Evaluated | Individually Evaluated | Total | |||||||||||||||||
| Allowance for credit losses: | ||||||||||||||||||||
One- to four-family first mortgage | $ | $ | $ | |||||||||||||||||
| Home equity loans and lines | ||||||||||||||||||||
| Commercial real estate | ||||||||||||||||||||
| Construction and land | ||||||||||||||||||||
| Multi-family residential | ||||||||||||||||||||
| Commercial and industrial | ||||||||||||||||||||
| Consumer | ||||||||||||||||||||
| Total allowance for loan losses | $ | $ | $ | |||||||||||||||||
Unfunded lending commitments(1) | $ | $ | $ | |||||||||||||||||
| Total allowance for credit losses | $ | $ | $ | |||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||
| (dollars in thousands) | Collectively Evaluated | Individually Evaluated(2) | Total | |||||||||||||||||
| Loans: | ||||||||||||||||||||
One- to four-family first mortgage | $ | $ | $ | |||||||||||||||||
| Home equity loans and lines | ||||||||||||||||||||
| Commercial real estate | ||||||||||||||||||||
| Construction and land | ||||||||||||||||||||
| Multi-family residential | ||||||||||||||||||||
| Commercial and industrial | ||||||||||||||||||||
| Consumer | ||||||||||||||||||||
| Total loans | $ | $ | $ | |||||||||||||||||
(1)The ACL on unfunded lending commitments is recorded within accrued interest payable and other liabilities on the Consolidated Statements of Financial Condition.
(2)One
12
A summary of activity in the ACL for the three months ended March 31, 2025 and March 31, 2024 follows.
| Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||||||||
| (dollars in thousands) | Beginning Balance | Charge-offs | Recoveries | Provision (Reversal) | Ending Balance | |||||||||||||||||||||||||||
| Allowance for credit losses: | ||||||||||||||||||||||||||||||||
One- to four-family first mortgage | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Home equity loans and lines | ( | |||||||||||||||||||||||||||||||
| Commercial real estate | ||||||||||||||||||||||||||||||||
| Construction and land | ( | |||||||||||||||||||||||||||||||
| Multi-family residential | ( | |||||||||||||||||||||||||||||||
| Commercial and industrial | ( | ( | ||||||||||||||||||||||||||||||
| Consumer | ( | |||||||||||||||||||||||||||||||
| Total allowance for loan losses | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||
| Unfunded lending commitments | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Total allowance for credit losses | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||
| Three Months Ended March 31, 2024 | ||||||||||||||||||||||||||||||||
| (dollars in thousands) | Beginning Balance | Charge-offs | Recoveries | Provision (Reversal) | Ending Balance | |||||||||||||||||||||||||||
| Allowance for credit losses: | ||||||||||||||||||||||||||||||||
One- to four-family first mortgage | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Home equity loans and lines | ||||||||||||||||||||||||||||||||
| Commercial real estate | ||||||||||||||||||||||||||||||||
| Construction and land | ( | ( | ||||||||||||||||||||||||||||||
| Multi-family residential | ||||||||||||||||||||||||||||||||
| Commercial and industrial | ( | ( | ||||||||||||||||||||||||||||||
| Consumer | ( | |||||||||||||||||||||||||||||||
| Total allowance for loan losses | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||
| Unfunded lending commitments | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Total allowance for credit losses | $ | $ | ( | $ | $ | $ | ||||||||||||||||||||||||||
13
Credit Quality
The following tables present the Company’s loan portfolio by credit quality classification and origination year as of March 31, 2025 and December 31, 2024.
| March 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Term Loans by Origination Year | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Revolving Loans | Revolving Loans Converted to Term Loans | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| One- to four-family first mortgage: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total one- to four-family first mortgages | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Home equity loans and lines: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total home equity loans and lines | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial real estate: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial real estate loans | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Construction and land: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total construction and land loans | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
14
| March 31, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Term Loans by Origination Year | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Revolving Loans | Revolving Loans Converted to Term Loans | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| Multi-family residential: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total multi-family residential loans | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial and industrial loans | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Consumer: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer loans | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Total loans: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total loans | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
15
| December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Term Loans by Origination Year | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | 2024 | 2023 | 2022 | 2021 | 2020 | Prior | Revolving Loans | Revolving Loans Converted to Term Loans | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| One- to four-family first mortgage: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total one- to four-family first mortgages | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Home equity loans and lines: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total home equity loans and lines | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial real estate: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial real estate loans | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Construction and land: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total construction and land loans | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Multi-family residential: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
16
| December 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Term Loans by Origination Year | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | 2024 | 2023 | 2022 | 2021 | 2020 | Prior | Revolving Loans | Revolving Loans Converted to Term Loans | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total multi-family residential loans | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Commercial and industrial: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total commercial and industrial loans | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Consumer: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total consumer loans | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Total loans: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Special Mention | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total loans | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||||||
17
The above classifications follow regulatory guidelines and can generally be described as follows:
•Pass loans are of satisfactory quality.
•Special mention loans have an existing weakness that could cause future impairment, including the deterioration of financial ratios, past due status, questionable management capabilities and possible reduction in the collateral values.
•Substandard loans have an existing specific and well-defined weakness that may include poor liquidity and deterioration of financial performance. Such loans may be past due and related deposit accounts experiencing overdrafts. Immediate corrective action is necessary.
•Doubtful loans have specific weaknesses that are severe enough to make collection or liquidation in full highly questionable and improbable.
In addition, residential loans are classified using an inter-agency regulatory methodology that incorporates, among other factors, the extent of delinquencies and loan-to-value ratios. These classifications were the most current available as of the dates indicated and were generally updated within the quarter.
Age analysis of past due loans as of the dates indicated are as follows.
| March 31, 2025 | ||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | 30-59 Days Past Due | 60-89 Days Past Due | Greater Than 90 Days Past Due | Total Past Due | Current Loans | Total Loans | ||||||||||||||||||||||||||||||||
| Real estate loans: | ||||||||||||||||||||||||||||||||||||||
One- to four-family first mortgage | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Home equity loans and lines | ||||||||||||||||||||||||||||||||||||||
| Commercial real estate | ||||||||||||||||||||||||||||||||||||||
| Construction and land | ||||||||||||||||||||||||||||||||||||||
| Multi-family residential | ||||||||||||||||||||||||||||||||||||||
| Total real estate loans | ||||||||||||||||||||||||||||||||||||||
| Other loans: | ||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | ||||||||||||||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||||||||||||||
| Total other loans | ||||||||||||||||||||||||||||||||||||||
| Total loans | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | 30-59 Days Past Due | 60-89 Days Past Due | Greater Than 90 Days Past Due | Total Past Due | Current Loans | Total Loans | ||||||||||||||||||||||||||||||||
| Real estate loans: | ||||||||||||||||||||||||||||||||||||||
One- to four-family first mortgage | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Home equity loans and lines | ||||||||||||||||||||||||||||||||||||||
| Commercial real estate | ||||||||||||||||||||||||||||||||||||||
| Construction and land | ||||||||||||||||||||||||||||||||||||||
| Multi-family residential | ||||||||||||||||||||||||||||||||||||||
| Total real estate loans | ||||||||||||||||||||||||||||||||||||||
| Other loans: | ||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | ||||||||||||||||||||||||||||||||||||||
| Consumer | ||||||||||||||||||||||||||||||||||||||
| Total other loans | ||||||||||||||||||||||||||||||||||||||
| Total loans | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
18
There were $77,000 and $16,000 of loans greater than 90 days past due and accruing at March 31, 2025 and December 31, 2024, respectively.
The following tables summarize information pertaining to nonaccrual loans as of dates indicated.
| March 31, 2025 | ||||||||||||||||||||
| (dollars in thousands) | With Related Allowance | Without Related Allowance | Total | |||||||||||||||||
Nonaccrual loans(1): | ||||||||||||||||||||
One- to four-family first mortgage | $ | $ | $ | |||||||||||||||||
| Home equity loans and lines | ||||||||||||||||||||
| Commercial real estate | ||||||||||||||||||||
| Construction and land | ||||||||||||||||||||
| Multi-family residential | ||||||||||||||||||||
| Commercial and industrial | ||||||||||||||||||||
| Consumer | ||||||||||||||||||||
| Total | $ | $ | $ | |||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||
| (dollars in thousands) | With Related Allowance | Without Related Allowance | Total | |||||||||||||||||
Nonaccrual loans(1): | ||||||||||||||||||||
One- to four-family first mortgage | $ | $ | $ | |||||||||||||||||
| Home equity loans and lines | ||||||||||||||||||||
| Commercial real estate | ||||||||||||||||||||
| Construction and land | ||||||||||||||||||||
| Multi-family residential | ||||||||||||||||||||
| Commercial and industrial | ||||||||||||||||||||
| Consumer | ||||||||||||||||||||
| Total | $ | $ | $ | |||||||||||||||||
All interest accrued but not received for loans placed on nonaccrual status is reversed against interest income. All payments received while on nonaccrual status are applied against the principal balance of nonaccrual loans. The Company does not recognize interest income while loans are on nonaccrual status.
Collateral Dependent Loans
The Company held loans that were individually evaluated for credit losses at March 31, 2025 and December 31, 2024 for which the repayment, on the basis of our assessment at the reporting date, is expected to be provided substantially through the operation or sale of the collateral and the borrower is experiencing financial difficulty. The ACL for these collateral-dependent loans is primarily based on the fair value of the underlying collateral at the reporting date. The following describes the types of collateral that secure collateral dependent loans:
19
•One- to four-family first mortgages are primarily secured by first liens on residential real estate.
•Home equity loans and lines are primarily secured by first and junior liens on residential real estate.
•Commercial real estate loans are primarily secured by office and industrial buildings, warehouses, retail shopping facilities and various special purpose properties, including hotels and restaurants.
•Construction and land loans are primarily secured by residential and commercial properties, which are under construction and/or redevelopment, and by raw land.
•Commercial and industrial loans considered collateral dependent are primarily secured by accounts receivable, inventory and equipment.
The tables below summarize collateral dependent loans and the related ACL at March 31, 2025 and December 31, 2024.
| March 31, 2025 | ||||||||||||||
| (dollars in thousands) | Loans | ACL | ||||||||||||
One- to four-family first mortgage | $ | $ | ||||||||||||
| Home equity loans and lines | ||||||||||||||
| Commercial real estate | ||||||||||||||
| Construction and land | ||||||||||||||
| Multi-family residential | ||||||||||||||
| Commercial and industrial | ||||||||||||||
| Consumer | ||||||||||||||
| Total | $ | $ | ||||||||||||
| December 31, 2024 | ||||||||||||||
| (dollars in thousands) | Loans | ACL | ||||||||||||
One- to four-family first mortgage | $ | $ | ||||||||||||
| Home equity loans and lines | ||||||||||||||
| Commercial real estate | ||||||||||||||
| Construction and land | ||||||||||||||
| Multi-family residential | ||||||||||||||
| Commercial and industrial | ||||||||||||||
| Consumer | ||||||||||||||
| Total | $ | $ | ||||||||||||
Loan Modifications Made to Borrowers Experiencing Financial Difficulty
Occasionally, the Company modifies loans to borrowers in financial distress by providing certain concessions, such as principal forgiveness, term extension, an other-than-insignificant payment delay, interest only for a specified period of time, an interest rate reduction, or a combination of such concessions. When principal forgiveness is provided, the amount of forgiveness is charged-off against the allowance for credit losses. Upon the Company's determination that a modified loan (or portion of a loan) has subsequently been deemed uncollectible, the loan (or portion of the loan) is charged-off. The balance of loan modifications, segregated by type of modification, to borrowers experiencing financial difficulty are set forth in the tables below for the periods indicated.
20
| Three Months Ended March 31, 2025 | |||||||||||||||||||||||
| (dollars in thousands) | Payment Deferral | Principal Forgiveness | Term Extension | Interest Rate Reduction | Combination Term Extension and Principal Forgiveness | Combination Term Extension and Interest Rate Reduction | Percent of Total Class of Loans | ||||||||||||||||
| One-to four-family first mortgage | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||
| Home equity loans and lines | |||||||||||||||||||||||
| Commercial real estate | |||||||||||||||||||||||
| Construction and land | |||||||||||||||||||||||
| Multi-family residential | |||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||
| Consumer | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||
| Three Months Ended March 31, 2024 | |||||||||||||||||||||||
| (dollars in thousands) | Payment Deferral | Principal Forgiveness | Term Extension | Interest Rate Reduction | Combination Term Extension and Principal Forgiveness | Combination Term Extension and Interest Rate Reduction | Percent of Total Class of Loans | ||||||||||||||||
| One-to four-family first mortgage | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||
| Home equity loans and lines | |||||||||||||||||||||||
| Commercial real estate | |||||||||||||||||||||||
| Construction and land | |||||||||||||||||||||||
| Multi-family residential | |||||||||||||||||||||||
| Commercial and industrial | |||||||||||||||||||||||
| Consumer | |||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | % | ||||||||||||||||
During the three months ended March 31, 2025 and 2024, no
The following table details the financial impacts of loan modifications made to borrowers experiencing financial difficulty for the periods presented.
| Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | ||||||||||||||||
Minimum Term Extensions (in months) | Maximum Term Extensions (in months) | Minimum Term Extensions (in months) | Maximum Term Extensions (in months) | ||||||||||||||
| One-to four-family first mortgage | |||||||||||||||||
| Home equity loans and lines | |||||||||||||||||
| Commercial real estate | |||||||||||||||||
| Construction and land | |||||||||||||||||
| Multi-family residential | |||||||||||||||||
| Commercial and industrial | |||||||||||||||||
| Consumer | |||||||||||||||||
The table below reflects the performance of loans that have been modified in the last 12 months.
21
| (dollars in thousands) | 30-89 Days Past Due | 90+ Days Past Due | Nonaccrual | Current | Total | ||||||||||||
| March 31, 2025 | |||||||||||||||||
| One-to four-family first mortgage | $ | $ | $ | $ | $ | ||||||||||||
| Home equity loans and lines | |||||||||||||||||
| Commercial real estate | |||||||||||||||||
| Construction and land | |||||||||||||||||
| Multi-family residential | |||||||||||||||||
| Commercial and industrial | |||||||||||||||||
| Consumer | |||||||||||||||||
| Total | $ | $ | $ | $ | $ | ||||||||||||
The loan modifications reported in the table above did not significantly impact the Company's allowance for loan losses during 2025.
Foreclosed Assets and ORE
Foreclosed assets and ORE include real property and other assets that have been acquired as a result of foreclosure, and real property no longer used in the Bank's business. Foreclosed assets and ORE totaled $2,424,000 and $2,010,000 at March 31, 2025 and December 31, 2024, respectively. These amounts are recorded in accrued interest receivable and other assets on the Consolidated Statements of Financial Condition.
The carrying amount of foreclosed residential real estate properties held at March 31, 2025 and December 31, 2024 totaled $2,410,000 and $2,010,000 , respectively. Loans secured by single family residential real estate that were in the process of foreclosure at March 31, 2025 and December 31, 2024 totaled $1,843,000 and $4,472,000 , respectively.
6. Derivatives and Hedging Activities
Risk Management Objective of Using Derivatives
The Company is exposed to certain risk arising from both its business operations and economic conditions. The Company principally manages its exposures to a wide variety of business and operational risks through management of its core business activities. The Company manages economic risks, including interest rate, liquidity, and credit risk primarily by managing the amount, sources, and duration of its assets and liabilities and the use of derivative financial instruments. Specifically, the Company enters into derivative financial instruments to manage exposures that arise from business activities that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates.
The Company’s existing credit derivatives result from loan participation arrangements, therefore, are not used to manage interest rate risk in the Company’s assets or liabilities. The Company occasionally enters into credit risk participation agreements with counterparty banks to accept a portion of the credit risk related to interest rate swaps. The agreements, which are typically executed in conjunction with a participation in a loan with the same customer, allow customers to execute an interest rate swap with one bank while allowing for the distribution of the credit risk among participating members. Collateral used to support the credit risk for the underlying lending relationship is also available to offset the risk of credit risk participations and customer derivative positions.
Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. As part of its efforts to accomplish this objective, the Company entered into certain interest rate swap agreements as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. Such derivatives were used to hedge the variable cash flows associated with existing variable rate liabilities.
For derivatives designated and that qualify as cash flow hedges of interest rate risk, the gain or loss on the derivative is recorded in Accumulated Other Comprehensive Income and subsequently reclassified into interest expense in the same period(s) during which the hedged transaction affects earnings. Amounts reported in accumulated other comprehensive income related to
22
derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable rate liabilities. During the next twelve months, the Company estimates that an additional $1,607,000 will be reclassified as additional interest expense.
Non-designated Hedges
Derivatives not designated as hedges are not speculative and result from a service the Company provides to certain customers. The Company executes interest rate swaps with commercial banking customers to facilitate their respective risk management strategies. Those interest rate swaps are simultaneously hedged by offsetting derivatives that the Company executes with a third party, such that the Company minimizes its net risk exposure resulting from such transactions. As the interest rate derivatives associated with this program do not meet hedge accounting requirements, changes in the fair value of both the customer derivatives and the offsetting derivatives are recognized directly in earnings through other income.
Fair Values of Derivative Instruments
The tables below present the fair value of the Company’s derivative financial instruments as well as their classification on the Consolidated Statement of Financial Condition as of March 31, 2025 and December 31, 2024.
| March 31, 2025 | ||||||||||||||||||||||||||
Derivative Assets(1) | Derivative Liabilities(1) | |||||||||||||||||||||||||
| (dollars in thousands) | Notional Amount | Fair Value | Notional Amount | Fair Value | ||||||||||||||||||||||
| Derivatives designated as hedging instruments: | ||||||||||||||||||||||||||
| Interest rate swaps - variable rate liabilities | $ | $ | $ | $ | ||||||||||||||||||||||
| Derivatives not designated as hedging instruments: | ||||||||||||||||||||||||||
Interest rate contracts | $ | $ | $ | $ | ||||||||||||||||||||||
| Risk participation agreements | ||||||||||||||||||||||||||
| Netting adjustments | ||||||||||||||||||||||||||
| Net derivative amounts | $ | $ | ||||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||
Derivative Assets(1) | Derivative Liabilities(1) | |||||||||||||||||||||||||
| (dollars in thousands) | Notional Amount | Fair Value | Notional Amount | Fair Value | ||||||||||||||||||||||
| Derivatives designated as hedging instruments: | ||||||||||||||||||||||||||
| Interest rate swaps - variable rate liabilities | $ | $ | $ | $ | ||||||||||||||||||||||
| Derivatives not designated as hedging instruments: | ||||||||||||||||||||||||||
Interest rate contracts | ||||||||||||||||||||||||||
| Risk participation agreements | ||||||||||||||||||||||||||
| Netting adjustments | ||||||||||||||||||||||||||
| Net derivative amounts | $ | $ | ||||||||||||||||||||||||
At March 31, 2025 and December 31, 2024, accumulated unrealized gains, net of taxes, on derivative instruments totaled $1,775,000 and $2,418,000 , respectively.
23
Effect of Cash Flow Hedge Accounting on Accumulated Other Comprehensive Income and the Consolidated Statements of Income
The tables below present the effect of cash flow hedge accounting on Accumulated Other Comprehensive Income and the Consolidated Statements of Income as of March 31, 2025 and March 31, 2024.
| Three Months Ended March 31, 2025 | ||||||||||||||||||||||||||||||||
| Amount of Loss Recognized in OCI | Location of Gain Reclassified from AOCI into Income | Amount of Gain Reclassified from AOCI into Income | ||||||||||||||||||||||||||||||
| (dollars in thousands) | Total | Included Component | Total | Included Component | ||||||||||||||||||||||||||||
| Derivatives in cash flows hedging relationships: | ||||||||||||||||||||||||||||||||
| Interest rate swaps - variable rate liabilities | $ | ( | $ | ( | Interest income | $ | $ | |||||||||||||||||||||||||
| Three Months Ended March 31, 2024 | ||||||||||||||||||||||||||||||||
| Amount of Gain Recognized in OCI | Location of Gain Reclassified from AOCI into Income | Amount of Gain Reclassified from AOCI into Income | ||||||||||||||||||||||||||||||
| (dollars in thousands) | Total | Included Component | Total | Included Component | ||||||||||||||||||||||||||||
| Derivatives in cash flows hedging relationships: | ||||||||||||||||||||||||||||||||
| Interest rate swaps - variable rate liabilities | $ | $ | Interest income | $ | $ | |||||||||||||||||||||||||||
Effect of Derivatives Not Designated as Hedging Instruments on the Consolidated Statements of Income
The table below presents the effect of the Company’s derivative financial instruments that are not designated as hedging instruments on the Consolidated Statements of Income as of March 31, 2025 and March 31, 2024.
| (dollars in thousands) | Location of Loss Recognized on Non-designated Hedges | Three Months Ended March 31, 2025 | ||||||||||||
| Effects of non-designated hedges | ||||||||||||||
Interest rate contracts | Other noninterest expense | $ | ( | |||||||||||
| Risk participation agreements | Other noninterest expense | $ | ||||||||||||
| (dollars in thousands) | Location of Income Recognized on Non-designated Hedges | Three Months Ended March 31, 2024 | ||||||||||||
| Effects of non-designated hedges | ||||||||||||||
| Risk participation agreements | Other noninterest income | $ | ||||||||||||
Credit-risk-related Contingent Features
The Company has agreements with each of its derivative counterparties that contain a provision to the effect that, if the Company (either) defaults (or is capable of being declared in default) on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.
The Company has agreements with certain of its derivative counterparties that contain a provision to the effect that, if the Company fails to maintain its status as a well or adequately capitalized institution, then the Company could be required to post additional collateral.
24
As of March 31, 2025, there were no derivatives with credit-risk-related contingent features in a net liability position. Such derivatives are measured at fair value, which includes accrued interest but excludes any adjustment for nonperformance risk. If the Company had breached any provisions at March 31, 2025, it would not have been required to settle any obligations under the agreements since the termination value was $0 .
7. Long-term Debt and Borrowings
Subordinated Debt
On June 30, 2022, the Company issued $55,000,000 in aggregate principal amount of its 5.75 % Fixed-to-Floating Rate Subordinated Notes (the "Notes") due 2032. The Notes were issued at a price equal to 100 % of the aggregate principal amount. The Notes have a stated maturity date of June 30, 2032 and bear interest at a fixed rate of 5.75 % per year from and including the issue date to but excluding June 30, 2027. From June 30, 2027, the Notes will bear interest at a floating rate equal to the then current three-month term secured overnight financing rate (“SOFR”), plus 282 basis points. The Notes may be redeemed by the Company, in whole or in part, on or after June 30, 2027. The Notes are intended to qualify as Tier 2 capital for regulatory purposes.
The carrying value of the Notes was $54,513,000 and $54,459,000 at March 31, 2025 and December 31, 2024, respectively. The Note was recorded net of issuance costs which is being amortized using the straight-line method over five years .
Other Borrowings
Other borrowings at March 31, 2025 and December 31, 2024 included a $5,539,000 3.83 20-year seven years
Federal Home Loan Bank Advances
The average balance of total FHLB advances was $180,658,000 for the first quarter of 2025, an increase of $108,954,000 compared to the first quarter of 2024.
The Company had short-term FHLB advances in the amount of $150,000,000 as of March 31, 2025 compared to $137,220,000 as of December 31, 2024. At March 31, 2025 and December 31, 2024, the Company had $13,259,000 and $38,326,000 in long-term FHLB advances, respectively, and $1,140,061,000 and $1,088,068,000 in additional FHLB advances available, respectively.
The following table summarizes long-term FHLB advances as of March 31, 2025 and December 31, 2024.
| March 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||
| (dollars in thousands) | Amount | Weighted Average Rate | Amount | Weighted Average Rate | ||||||||||||||||||||||
| Fixed rate advances maturing in: | ||||||||||||||||||||||||||
| 2025 | $ | % | $ | % | ||||||||||||||||||||||
| 2026 | ||||||||||||||||||||||||||
Total FHLB advances | $ | % | $ | % | ||||||||||||||||||||||
8. Fair Value Measurements and Disclosures
The Company utilizes fair value measurements to record fair value adjustments to certain assets and liabilities and to determine fair value disclosures. The Company groups assets and liabilities measured or disclosed at fair value in three levels as required by ASC 820, Fair Value Measurements and Disclosures. Under this guidance, fair value should be based on the assumptions market participants would use when pricing the asset or liability and establishes a fair value hierarchy that prioritizes the inputs used to develop those assumptions and measure fair value. The hierarchy requires companies to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels used to measure fair value are as follows:
25
•Level 1 – Quoted prices in active markets for identical assets or liabilities.
•Level 2 – Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
•Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
An asset’s or liability’s categorization within the fair value hierarchy is based upon the lowest level that is significant to the fair value measurement. Management reviews and updates the fair value hierarchy classifications of the Company’s assets and liabilities quarterly.
Recurring Basis
Investment Securities Available for Sale
Fair values of investment securities available for sale are primarily measured using information from a third-party pricing service. This pricing service provides pricing information by utilizing pricing models supported with market data information. Standard inputs include benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities bids, offers and other reference data from market research publications. If quoted prices are available in an active market, investment securities are classified as Level 1 measurements. If quoted prices are not available in an active market, fair values are estimated primarily by the use of pricing models. Level 2 investment securities are primarily comprised of mortgage-backed securities issued by government agencies and U.S. government-sponsored enterprises. In certain cases, where there is limited or less transparent information provided by the Company’s third-party pricing service, fair value is estimated by the use of secondary pricing services or through the use of non-binding third-party broker quotes. Investment securities are classified within Level 3 when little or no market activity supports the fair value.
Management primarily identifies investment securities which may have traded in illiquid or inactive markets, by identifying instances of a significant decrease in the volume and frequency of trades, relative to historical levels, as well as instances of a significant widening of the bid-ask spread in the brokered markets. Investment securities that are deemed to have been trading in illiquid or inactive markets may require the use of significant unobservable inputs. For example, management may use quoted prices for similar investment securities in the absence of a liquid and active market for the investment securities being valued. As of March 31, 2025, management did not make adjustments to prices provided by the third-party pricing service as a result of illiquid or inactive markets.
Derivative Assets and Liabilities
The following tables present the balances of assets measured for fair value on a recurring basis as of March 31, 2025 and December 31, 2024.
26
| (dollars in thousands) | March 31, 2025 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Available for sale securities: | ||||||||||||||||||||||||||
| U.S. agency mortgage-backed | $ | $ | $ | $ | ||||||||||||||||||||||
| Collateralized mortgage obligations | ||||||||||||||||||||||||||
| Municipal bonds | ||||||||||||||||||||||||||
| U.S. government agency | ||||||||||||||||||||||||||
| Corporate bonds | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Derivative assets | $ | $ | $ | $ | ||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Derivative liabilities | $ | $ | $ | $ | ||||||||||||||||||||||
| (dollars in thousands) | December 31, 2024 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Available for sale securities: | ||||||||||||||||||||||||||
| U.S. agency mortgage-backed | $ | $ | $ | $ | ||||||||||||||||||||||
| Collateralized mortgage obligations | ||||||||||||||||||||||||||
| Municipal bonds | ||||||||||||||||||||||||||
| U.S. government agency | ||||||||||||||||||||||||||
| Corporate bonds | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Derivative assets | $ | $ | $ | $ | ||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||
| Derivative liabilities | $ | $ | $ | $ | ||||||||||||||||||||||
Nonrecurring Basis
The Company records loans individually evaluated for credit losses at fair value on a nonrecurring basis. Fair value is measured at the fair value of the collateral for collateral-dependent loans. For non-collateral-dependent loans, fair value is measured by present valuing expected future cash flows. Loans individually evaluated are classified as Level 3 assets when measured using appraisals from third parties of the collateral less any prior liens and when there is no observable market price.
Foreclosed assets and ORE are also recorded at fair value on a nonrecurring basis. Foreclosed assets are initially recorded at fair value less estimated costs to sell. ORE is recorded at the lower of its net book value or fair value at the date of transfer to ORE. The fair value of foreclosed assets and ORE is based on property appraisals and an analysis of similar properties available. As such, the Company classifies foreclosed and ORE assets as Level 3 assets.
27
The Company has segregated all financial assets that are measured at fair value on a nonrecurring basis into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the measurement date as reflected in the table below.
| Fair Value Measurements Using | ||||||||||||||||||||||||||
| (dollars in thousands) | March 31, 2025 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Loans individually evaluated | $ | $ | $ | $ | ||||||||||||||||||||||
| Foreclosed assets and ORE | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
| Fair Value Measurements Using | ||||||||||||||||||||||||||
| (dollars in thousands) | December 31, 2024 | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Loans individually evaluated | $ | $ | $ | $ | ||||||||||||||||||||||
| Foreclosed assets and ORE | ||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||||||||||||
The following table shows significant unobservable inputs used in the fair value measurement of Level 3 assets.
| (dollars in thousands) | Fair Value | Valuation Technique | Unobservable Inputs | Range of Discounts | Weighted Average Discount | |||||||||||||||||||||||||||
| March 31, 2025 | ||||||||||||||||||||||||||||||||
| Loans individually evaluated | $ | Third party appraisals and discounted cash flows | Collateral values, market discounts and estimated costs to sell | |||||||||||||||||||||||||||||
| Foreclosed assets and ORE | $ | Third party appraisals, sales contracts, broker price opinions | Collateral values, market discounts and estimated costs to sell | |||||||||||||||||||||||||||||
| (dollars in thousands) | Fair Value | Valuation Technique | Unobservable Inputs | Range of Discounts | Weighted Average Discount | |||||||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||
| Loans individually evaluated | $ | Third party appraisals and discounted cash flows | Collateral values, market discounts and estimated costs to sell | |||||||||||||||||||||||||||||
| Foreclosed assets and ORE | $ | Third party appraisals, sales contracts, broker price opinions | Collateral values, market discounts and estimated costs to sell | |||||||||||||||||||||||||||||
ASC 820, Fair Value Measurements and Disclosures, requires the disclosure of each class of financial instruments for which it is practicable to estimate. The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. ASC 820 excludes certain financial instruments and all non-financial instruments from its disclosure requirements. Accordingly, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.
28
Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial statements. These estimates are subjective in nature, involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Fair value estimates included herein are based on existing on- and off-balance-sheet financial instruments without attempting to estimate the value of anticipated future business and the fair value of assets and liabilities that are not required to be recorded or disclosed at fair value like premises and equipment. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.
Methods and assumptions used to estimate fair value of each class of financial instruments for which it is practicable to estimate fair value are described in the Company's Annual Report on Form 10-K for the year ended December 31, 2024. The fair value of subordinated debt is estimated based on current market rates on similar debt in the market. The Company classifies this debt in Level 2 of the fair value table. There have been no other material changes from the fair value estimate methods and assumptions previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024.
The following table presents estimated fair values of the Company’s financial instruments as of the dates indicated.
| Fair Value Measurements at March 31, 2025 | ||||||||||||||||||||||||||||||||
| (dollars in thousands) | Carrying Amount | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||
| Financial Assets | ||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Investment securities available for sale | ||||||||||||||||||||||||||||||||
| Investment securities held to maturity | ||||||||||||||||||||||||||||||||
| Mortgage loans held for sale | ||||||||||||||||||||||||||||||||
| Loans, net | ||||||||||||||||||||||||||||||||
| Cash surrender value of BOLI | ||||||||||||||||||||||||||||||||
Derivative assets(1) | ||||||||||||||||||||||||||||||||
| Financial Liabilities | ||||||||||||||||||||||||||||||||
| Deposits | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Other borrowings | ||||||||||||||||||||||||||||||||
| Subordinated debt, net of issuance cost | ||||||||||||||||||||||||||||||||
| Short-term FHLB advances | ||||||||||||||||||||||||||||||||
| Long-term FHLB advances | ||||||||||||||||||||||||||||||||
Derivative liabilities(1) | ||||||||||||||||||||||||||||||||
29
| Fair Value Measurements at December 31, 2024 | ||||||||||||||||||||||||||||||||
| (dollars in thousands) | Carrying Amount | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||||||||||
| Financial Assets | ||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Interest-bearing deposits in banks | ||||||||||||||||||||||||||||||||
| Investment securities available for sale | ||||||||||||||||||||||||||||||||
| Investment securities held to maturity | ||||||||||||||||||||||||||||||||
| Mortgage loans held for sale | ||||||||||||||||||||||||||||||||
| Loans, net | ||||||||||||||||||||||||||||||||
| Cash surrender value of BOLI | ||||||||||||||||||||||||||||||||
Derivative assets(1) | ||||||||||||||||||||||||||||||||
| Financial Liabilities | ||||||||||||||||||||||||||||||||
| Deposits | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||
| Other borrowings | ||||||||||||||||||||||||||||||||
| Subordinated debt, net of issuance cost | ||||||||||||||||||||||||||||||||
| Short-term FHLB advances | ||||||||||||||||||||||||||||||||
| Long-term FHLB advances | ||||||||||||||||||||||||||||||||
Derivative liabilities(1) | ||||||||||||||||||||||||||||||||
(1)Derivative assets and liabilities are reported at fair value in accrued interest receivable and other assets and accrued interest payable and other liabilities, respectively, in the Consolidated Statements of Financial Condition.
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | ||||
The purpose of this discussion and analysis is to focus on significant changes in the financial condition of the Company and the Bank from December 31, 2024 through March 31, 2025 and on its results of operations for the three months ended March 31, 2025 and 2024. This discussion and analysis is intended to highlight and supplement information presented elsewhere in this quarterly report on Form 10-Q, particularly the consolidated financial statements and related notes appearing in Item 1.
Forward-Looking Statements
To the extent that statements in this Form 10-Q relate to future plans, objectives, financial results or performance of the Company or Bank, these statements are deemed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements, which are based on management’s current information, estimates and assumptions and the current economic environment, are generally identified by the use of words such as “plan”, “believe”, “expect”, “intend”, “anticipate”, “estimate”, “project” or similar expressions, or by future or conditional terms such as “will”, “would”, “should”, “could”, “may”, “likely”, “probably”, or “possibly”. The Company’s or the Bank’s actual strategies and results in future periods may differ materially from those currently expected due to various risks and uncertainties. Certain risks, uncertainties and other factors, including those set forth under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2024 and any subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K, may cause actual results to differ materially from the results discussed in the forward-looking statements appearing in this discussion and analysis and may include factors such as, but not limited to, our lending activities, our use of municipal deposits as a source of funds, credit quality and risk, industry and technological changes, cyber incidents or other failures, disruptions or security breaches, interest rates, commercial and residential real estate values, economic and market conditions in the markets we operate in or generally in the United States, funds availability, accounting estimates and risk management processes, legislative and regulatory changes, the fair values of our acquired assets and our investment securities portfolio, business strategy execution, key personnel, competition, mortgage markets, fraud, environmental liability and severe weather, natural disasters, acts of war or terrorism or other external events. The Company undertakes no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.
EXECUTIVE OVERVIEW
The Company reported net income for the first quarter of 2025 of $11.0 million, or $1.37 diluted EPS, up $1.8 million compared to the first quarter of 2024. Net income for the first quarter of 2024 totaled $9.2 million, or $1.14 diluted EPS.
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Key components of the Company’s performance during the three months ended March 31, 2025 include:
•Assets increased $41.8 million, or 1.2%, from December 31, 2024 to $3.5 billion at March 31, 2025.
•Total loans were $2.7 billion at March 31, 2025, up $29.1 million, or 1.1%, from December 31, 2024.
•During the three months ended March 31, 2025, the Company provisioned $394,000 to the allowance for loan losses, primarily due to loan growth. During the three months ended March 31, 2024, the Company provisioned $141,000 to the allowance for loan losses.
•The ALL totaled $33.3 million, or 1.21% of total loans, at March 31, 2025 compared to $32.9 million, or 1.21% of total loans, at December 31, 2024. The ACL, which is comprised of the allowance for loan losses plus the allowance for unfunded lending commitments, totaled $36.0 million, or 1.31% of total loans, at March 31, 2025 compared to $35.6 million, or 1.31% of total loans, at December 31, 2024.
•Nonperforming assets increased $5.9 million, or 37.6%, from $15.6 million, or 0.45% of total assets, at December 31, 2024 to $21.5 million, or 0.62% of total assets, at March 31, 2025. The increase in nonperforming assets was primarily due to two loan relationships, which were classified as substandard in 2024 and moved to nonaccrual status in the first quarter of 2025.
•Total deposits amounted to $2.8 billion at March 31, 2025, an increase of $46.5 million, or 1.7%, from December 31, 2024.
•The net interest margin was 3.91% for the three months ended March 31, 2025, up 27 bps from the three months ended March 31, 2024. The increase was primarily due to increase in interest-earning assets.
•The average rate paid on total interest-bearing deposits was 2.51% for the first quarter of 2025, which was down 1 bps from the first quarter of 2024.
•Total interest expense for the first quarter of 2025 was up $227,000, or 1.5%, compared to the first quarter of 2024, primarily due to higher cost of deposits.
•Noninterest income for the first quarter of 2025 was up $460,000, or 13.0%, compared to the first quarter of 2024, primarily due to increases in gain on sale of loans (up $290,000), other income (up $97,000), and service fees and charges (up $55,000).
•Noninterest expense for the first quarter of 2025 was up $711,000, or 3.4%, compared to the first quarter of 2024, primarily due to increases in compensation and benefits (up $482,000), foreclosed assets, net (up $162,000), data processing and communication (up $128,000), and occupancy (up $107,000), which were partially offset by decreases in professional services (down $70,000) and marketing and advertising (down $37,000).
31
FINANCIAL CONDITION
Loans, Allowance for Credit Losses and Asset Quality
Loans
Total loans at March 31, 2025 were $2.7 billion, up $29.1 million, or 1.1%, from December 31, 2024.
The following table summarizes the composition of the Company’s loan portfolio as of the dates indicated.
| (dollars in thousands) | March 31, 2025 | December 31, 2024 | Increase/(Decrease) | |||||||||||||||||||||||
| Real estate loans: | ||||||||||||||||||||||||||
One-to four-family first mortgage | $ | 504,356 | $ | 501,225 | $ | 3,131 | 0.6 | % | ||||||||||||||||||
| Home equity loans and lines | 77,417 | 79,097 | (1,680) | (2.1) | ||||||||||||||||||||||
| Commercial real estate | 1,193,364 | 1,158,781 | 34,583 | 3.0 | ||||||||||||||||||||||
| Construction and land | 346,987 | 352,263 | (5,276) | (1.5) | ||||||||||||||||||||||
| Multi-family residential | 183,792 | 178,568 | 5,224 | 2.9 | ||||||||||||||||||||||
| Total real estate loans | 2,305,916 | 2,269,934 | 35,982 | 1.6 | % | |||||||||||||||||||||
| Other loans: | ||||||||||||||||||||||||||
| Commercial and industrial | 411,363 | 418,627 | (7,264) | (1.7) | ||||||||||||||||||||||
| Consumer | 29,998 | 29,624 | 374 | 1.3 | ||||||||||||||||||||||
| Total other loans | 441,361 | 448,251 | (6,890) | (1.5) | ||||||||||||||||||||||
| Total loans | $ | 2,747,277 | $ | 2,718,185 | $ | 29,092 | 1.1 | % | ||||||||||||||||||
Allowance for Credit Losses
The ACL which equals the sum of the ALL and the ACL on unfunded lending commitments, is established through provisions for credit losses. Management recalculates the ACL at least quarterly to reassess the estimate of credit losses for the total portfolio at the relevant reporting date. Under ASC Topic 326, the ACL is measured on a pool basis when similar risk characteristics exist. For each pool of loans, management also evaluates and applies qualitative adjustments to the calculated ACL based on several factors, including, but not limited to, changes in current and expected future economic conditions, changes in industry experience and industry loan concentrations, changes in the volume and severity of NPAs, changes in lending policies and personnel and changes in the competitive and regulatory environment of the banking industry. Loans that do not share similar risk characteristics are individually evaluated and are excluded from the pooled loan analysis.
The ACL policy described above is supplemented by periodic reviews and validations performed by independent loan reviewers. The results of the reviews are reported to the Audit Committee of the Board of Directors. The establishment of the ACL is significantly affected by management judgment. There is likelihood that different amounts would be reported under different conditions or assumptions. Federal regulatory agencies, as an integral part of their examination process, periodically review our ACL. Such agencies may require management to make additional provisions for estimated losses based upon judgments different from those of management.
We continue to monitor and modify our ACL as conditions warrant. No assurance can be given that our level of ACL will cover all of the losses on our loans or that future adjustments to the ACL will not be necessary if economic and other conditions differ substantially from the assumptions used by management to determine the current level of the ACL.
At March 31, 2025, the ALL totaled $33.3 million, or 1.21% of total loans, up $362,000 from $32.9 million, or 1.21% of total loans, at December 31, 2024. During the three months ended March 31, 2025, the Company provisioned $394,000 of the allowance loan losses primarily due to loan growth. Net loan charge-offs totaled $32,000 for the three months ended March 31, 2025.
Asset Quality
One of management’s key objectives has been, and continues to be, maintaining a high level of asset quality. In addition to maintaining credit standards for new loan originations, we proactively monitor loans and collection and workout processes of
32
delinquent or problem loans. When a borrower fails to make a scheduled payment, we attempt to cure the deficiency by making personal contact with the borrower. Initial contacts are generally made within 10 days after the date payment is due. In most cases, deficiencies are promptly resolved. If the delinquency continues, late charges are assessed and additional efforts are made to collect the deficiency. All loans which are designated as “special mention,” classified or which are delinquent 90 days or more are reported to the Board of Directors of the Bank monthly. For loans where the collection of principal or interest payments is doubtful, the accrual of interest income ceases. It is our policy, with certain limited exceptions, to discontinue accruing interest and reverse any interest accrued on any loan which is 90 days or more past due. On occasion, this action may be taken earlier if the financial condition of the borrower raises significant concern with regard to their ability to service the debt in accordance with the terms of the loan agreement. Interest income is not accrued on these loans until the borrower’s financial condition and payment record demonstrate an ability to service the debt.
Under our allowance policy, credit losses are measured on a pool basis when similar risk characteristics exist. Loans that do not share similar risk characteristics are individually evaluated for credit losses and are excluded from the pooled loan analysis. At least quarterly, management evaluates the loan portfolio to determine which loans should be individually evaluated for credit losses. Management's evaluation involves an analysis of larger (i.e., loans with balances of $500,000 or greater) commercial real estate loans, multi-family residential loans, construction and land loans and commercial and industrial loans. Third party property valuations are obtained at the time of origination for real estate secured loans. When a determination is made that a loan has deteriorated to the point of becoming a problem loan, updated valuations may be ordered to determine if a short-fall exists, which may lead to a recommendation for partial charge off or appropriate allowance allocation. Property valuations are ordered through, and are reviewed by, an appraisal officer at the Bank. The Company typically orders an “as is” valuation for collateral property if a loan is in a criticized loan classification. Loans individually evaluated for credit losses are reported to the Board of Directors monthly.
At March 31, 2025 and December 31, 2024, loans identified as credit deteriorated loans and individually evaluated for expected losses were $3.1 million and $5.0 million, respectively. The following tables provide a summary of loans individually evaluated for credit losses as of the dates indicated.
| March 31, 2025 | ||||||||||||||||||||
| (dollars in thousands) | Recorded investment | Allowance for Loan Losses | Allowance to Total Loans | |||||||||||||||||
| Loans Individually Evaluated | ||||||||||||||||||||
One- to four-family first mortgage | $ | — | $ | — | — | % | ||||||||||||||
| Home equity loans and lines | — | — | — | |||||||||||||||||
| Commercial real estate | 2,313 | 439 | 18.98 | |||||||||||||||||
| Construction and land | — | — | — | |||||||||||||||||
| Multi-family residential | — | — | — | |||||||||||||||||
| Commercial and industrial | 646 | 326 | 50.46 | |||||||||||||||||
| Consumer | 141 | 141 | 100.00 | |||||||||||||||||
| Total | $ | 3,100 | $ | 906 | 29.23 | % | ||||||||||||||
| December 31, 2024 | ||||||||||||||||||||
| (dollars in thousands) | Recorded investment | Allowance for Loan Losses | Allowance to Total Loans | |||||||||||||||||
| Loans Individually Evaluated | ||||||||||||||||||||
One- to four-family first mortgage | $ | — | $ | — | — | % | ||||||||||||||
| Home equity loans and lines | — | — | — | |||||||||||||||||
| Commercial real estate | 4,718 | 200 | 4.24 | |||||||||||||||||
| Construction and land | — | — | — | |||||||||||||||||
| Multi-family residential | — | — | — | |||||||||||||||||
| Commercial and industrial | 254 | 248 | 97.64 | |||||||||||||||||
| Consumer | — | — | — | |||||||||||||||||
| Total | $ | 4,972 | $ | 448 | 9.01 | % | ||||||||||||||
33
Federal regulations and our policies require that we utilize an internal asset classification system as a means of reporting problem and potential problem assets. We have incorporated an internal asset classification system, substantially consistent with Federal banking regulations, as a part of our credit monitoring system. Federal banking regulations set forth a classification scheme for problem and potential problem assets as “substandard,” “doubtful” or “loss” assets. An asset is considered “substandard” if it is inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. “Substandard” assets include those characterized by the “distinct possibility” that the insured institution will sustain “some loss” if the deficiencies are not corrected. Assets classified as “doubtful” have all of the weaknesses inherent in those classified “substandard” with the added characteristic that the weaknesses present make “collection or liquidation in full,” on the basis of currently existing facts, conditions and values, “highly questionable and improbable.” Assets classified as “loss” are those considered “uncollectible” and of such little value that their continuance as assets without the establishment of a specific loss reserve is not warranted.
At March 31, 2025 and December 31, 2024, loans classified as substandard totaled $36.4 million and $35.8 million, respectively. There were no assets classified as doubtful at either date. For additional information, refer to Note 5 to the Consolidated Financial Statements.
The following tables provide a summary of loans classified as special mention and substandard as of the dates indicated.
| (dollars in thousands) | March 31, 2025 | December 31, 2024 | Increase/(Decrease) | |||||||||||||||||||||||
| Special Mention Loans | ||||||||||||||||||||||||||
One- to four-family first mortgage | $ | 820 | $ | 823 | $ | (3) | (0.4) | % | ||||||||||||||||||
| Home equity loans and lines | — | — | — | — | ||||||||||||||||||||||
| Commercial real estate | — | — | — | — | ||||||||||||||||||||||
| Construction and land | — | — | — | — | ||||||||||||||||||||||
| Multi-family residential | — | — | — | — | ||||||||||||||||||||||
| Commercial and industrial | — | — | — | — | ||||||||||||||||||||||
| Consumer | — | — | — | — | ||||||||||||||||||||||
| Total special mention loans | $ | 820 | $ | 823 | $ | (3) | (0.4) | % | ||||||||||||||||||
| (dollars in thousands) | March 31, 2025 | December 31, 2024 | Increase/(Decrease) | |||||||||||||||||||||||
| Substandard Loans | ||||||||||||||||||||||||||
One- to four-family first mortgage | $ | 6,842 | $ | 7,034 | $ | (192) | (2.7) | % | ||||||||||||||||||
| Home equity loans and lines | 372 | 279 | 93 | 33.3 | ||||||||||||||||||||||
| Commercial real estate | 18,444 | 18,541 | (97) | (0.5) | ||||||||||||||||||||||
| Construction and land | 5,714 | 5,224 | 490 | 9.4 | ||||||||||||||||||||||
| Multi-family residential | 1,256 | 930 | 326 | 35.1 | ||||||||||||||||||||||
| Commercial and industrial | 3,621 | 3,755 | (134) | (3.6) | ||||||||||||||||||||||
| Consumer | 160 | 27 | 133 | 492.6 | ||||||||||||||||||||||
| Total substandard loans | $ | 36,409 | $ | 35,790 | $ | 619 | 1.7 | % | ||||||||||||||||||
A bank’s determination as to the classification of its assets and the amount of its valuation allowances is subject to review by Federal bank regulators which can order the establishment of additional general or specific loss allowances. The Federal banking agencies have adopted an interagency policy statement on the allowance for loan and lease losses. The policy statement provides guidance for financial institutions on both the responsibilities of management for the assessment and establishment of allowances and guidance for banking agency examiners to use in determining the adequacy of general valuation guidelines.
34
Generally, the policy statement recommends that institutions have effective systems and controls to identify, monitor and address asset quality problems; that management analyze all significant factors that affect the collectability of the portfolio in a reasonable manner; and that management establish acceptable allowance evaluation processes that meet the objectives set forth in the policy statement. Management maintains, based on current and forecasted information, an ACL that reflects a current estimate of expected credit losses for the estimated life of the loan portfolio at reporting periods subsequent to the adoption date. For all reporting periods, actual losses are uncertain and dependent upon future events and, as such, further additions to the level of ACL may become necessary.
The following table sets forth the composition of the Company’s nonperforming assets as of the dates indicated.
| March 31, 2025 | December 31, 2024 | |||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | Originated | Acquired(1) | Total | Originated | Acquired(1) | Total | ||||||||||||||||||||||||||||||||
Nonaccrual loans: | ||||||||||||||||||||||||||||||||||||||
| Real estate loans: | ||||||||||||||||||||||||||||||||||||||
One- to four-family first mortgage | $ | 4,420 | $ | 1,948 | $ | 6,368 | $ | 5,348 | $ | 1,691 | $ | 7,039 | ||||||||||||||||||||||||||
| Home equity loans and lines | 339 | 33 | 372 | 245 | 34 | 279 | ||||||||||||||||||||||||||||||||
| Commercial real estate | 1,055 | 3,294 | 4,349 | 1,058 | 2,246 | 3,304 | ||||||||||||||||||||||||||||||||
| Construction and land | 5,584 | — | 5,584 | 1,619 | 3 | 1,622 | ||||||||||||||||||||||||||||||||
| Multi-family residential | 930 | — | 930 | — | — | — | ||||||||||||||||||||||||||||||||
| Other loans: | ||||||||||||||||||||||||||||||||||||||
| Commercial and industrial | 611 | 595 | 1,206 | 705 | 606 | 1,311 | ||||||||||||||||||||||||||||||||
| Consumer | 151 | 10 | 161 | 16 | 11 | 27 | ||||||||||||||||||||||||||||||||
| Total nonaccrual loans | 13,090 | 5,880 | 18,970 | 8,991 | 4,591 | 13,582 | ||||||||||||||||||||||||||||||||
| Accruing loans 90 days or more past due | 77 | — | 77 | 16 | — | 16 | ||||||||||||||||||||||||||||||||
Total nonperforming loans | 13,167 | 5,880 | 19,047 | 9,007 | 4,591 | 13,598 | ||||||||||||||||||||||||||||||||
| Foreclosed assets and ORE | 2,424 | — | 2,424 | 1,963 | 47 | 2,010 | ||||||||||||||||||||||||||||||||
| Total nonperforming assets | 15,591 | 5,880 | 21,471 | 10,970 | 4,638 | 15,608 | ||||||||||||||||||||||||||||||||
| Nonperforming loans to total loans | 0.69 | % | 0.50 | % | ||||||||||||||||||||||||||||||||||
| Nonperforming loans to total assets | 0.55 | % | 0.39 | % | ||||||||||||||||||||||||||||||||||
| Nonperforming assets to total assets | 0.62 | % | 0.45 | % | ||||||||||||||||||||||||||||||||||
(1)Nonaccrual acquired loans include PCD loans of $1.2 million and $1.3 million at March 31, 2025 and December 31, 2024, respectively.
Foreclosed assets and ORE includes real property and other assets that have been acquired as a result of foreclosure, and real property no longer used in the Bank's business. Foreclosed assets and ORE are classified as such until sold or disposed. Foreclosed assets are recorded at fair value less estimated selling costs based on third party property valuations which are obtained at the time the asset is repossessed and periodically until the property is liquidated. ORE is recorded at the lower of its net book value or fair value at the date of transfer to ORE. Foreclosed assets and ORE holding costs are charged to expense. Gains and losses on the sale of foreclosed assets and ORE are charged to operations, as incurred. Costs associated with acquiring and improving a foreclosed property or ORE are capitalized to the extent that the carrying value does not exceed fair value less estimated selling costs.
Investment Securities
The Company’s investment securities portfolio totaled $401.6 million as of March 31, 2025, a decrease of $2.2 million, or 0.6%, from December 31, 2024. During the first quarters of 2025 and 2024, the Company had no gains or losses related to the sale of available-for-sale investment securities. At March 31, 2025, the Company had a net unrealized loss on its available for sale investment securities portfolio of $34.0 million, compared to a net unrealized loss of $41.0 million at December 31, 2024. The Company’s investment securities portfolio had an effective duration of 3.7 years and 3.9 years at March 31, 2025 and December 31, 2024, respectively.
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The following table summarizes activity in the Company’s investment securities portfolio during the three months ended March 31, 2025.
| (dollars in thousands) | Available for Sale | Held to Maturity | ||||||||||||
| Balance, December 31, 2024 | $ | 402,792 | $ | 1,065 | ||||||||||
| Purchases | 2,908 | — | ||||||||||||
| Sales | — | — | ||||||||||||
| Principal maturities, prepayments and calls | (12,105) | — | ||||||||||||
| Amortization of premiums and accretion of discounts | (54) | — | ||||||||||||
| Increase in market value | 7,012 | — | ||||||||||||
| Balance, March 31, 2025 | $ | 400,553 | $ | 1,065 | ||||||||||
Funding Sources
Deposits
Deposits totaled $2.8 billion at March 31, 2025, an increase of $46.5 million, or 1.7%, compared to December 31, 2024. The following table summarizes the changes in the Company’s deposits from December 31, 2024 to March 31, 2025.
| (dollars in thousands) | March 31, 2025 | December 31, 2024 | Increase/(Decrease) | |||||||||||||||||||||||
| Demand deposit | $ | 754,955 | $ | 733,073 | $ | 21,882 | 3.0 | % | ||||||||||||||||||
| Savings | 212,053 | 210,977 | 1,076 | 0.5 | ||||||||||||||||||||||
| Money market | 464,659 | 457,483 | 7,176 | 1.6 | ||||||||||||||||||||||
| NOW | 641,287 | 645,246 | (3,959) | (0.6) | ||||||||||||||||||||||
| Certificates of deposit | 754,253 | 733,917 | 20,336 | 2.8 | ||||||||||||||||||||||
| Total deposits | $ | 2,827,207 | $ | 2,780,696 | $ | 46,511 | 1.7 | % | ||||||||||||||||||
The average rate paid on interest-bearing deposits was 2.51% for the first quarter of 2025, down 1 bps compared to the first quarter of 2024. At March 31, 2025, certificates of deposit maturing within the next 12 months totaled $708.2 million.
We obtain most of our deposits from individuals, small businesses and public funds in our market areas. The following table presents our deposits per customer type for the periods indicated.
| March 31, 2025 | December 31, 2024 | |||||||||||||
| Individuals | 53% | 53% | ||||||||||||
| Small businesses | 36 | 37 | ||||||||||||
| Public funds | 8 | 7 | ||||||||||||
| Broker | 3 | 3 | ||||||||||||
| Total | 100% | 100% | ||||||||||||
The total amounts of our uninsured deposits (deposits in excess of $250,000, as calculated in accordance with FDIC regulations) were $844.2 million at March 31, 2025 and $813.6 million at December 31, 2024. Public funds in excess of the FDIC insurance limits are fully collateralized.
Subordinated Debt
On June 30, 2022, the Company issued $55.0 million in aggregate principal amount of its 5.75% Fixed-to-Floating Rate Subordinated Notes due 2032. The Notes were issued at a price equal to 100% of the aggregate principal amount. The Notes have a stated maturity date of June 30, 2032 and bear interest at a fixed rate of 5.75% per year from and including the issue date to but excluding June 30, 2027. From June 30, 2027, the Notes will bear interest at a floating rate equal to the then current three-month term secured overnight financing rate (“SOFR”), plus 282 basis points. The Notes may be redeemed by the
36
Company, in whole or in part, on or after June 30, 2027. The Notes are intended to qualify as Tier 2 capital for regulatory purposes.
The carrying value of the Notes was $54.5 million and $54.5 million at March 31, 2025 and December 31, 2024, respectively. The subordinated debt was recorded net of issuance costs and amortized using the straight-line method over five years.
Other Borrowings
Other borrowings at March 31, 2025 and December 31, 2024 included a $5,539,000 note payable with a rate of 3.83% on the Company’s investment in a new market tax credit entity. The note payable is a 20-year leverage loan with interest-only payments for the first seven years. The note was originated in October 2018.
Federal Home Loan Bank Advances
The average balance of total FHLB advances was $180.7 million for the first quarter of 2025, up $109.0 million compared to the first quarter of 2024. We reduced our FHLB advances in 2024 primarily due to our increased utilization of BTFP loans as an alternative source of funds.
The Company had $150.0 million short-term FHLB advances as of March 31, 2025, up $12.8 million, or 9.3%, compared to $137.2 million as of December 31, 2024. At March 31, 2025 and December 31, 2024, the Company had $13.3 million and $38.3 million in long-term FHLB advances, respectively, and $1.1 billion and $1.1 billion in additional FHLB advances available, respectively.
Shareholders’ Equity
Total shareholders’ equity increased $6.7 million, or 1.7%, from $396.1 million at December 31, 2024 to $402.8 million at March 31, 2025. Shareholders' equity increased primarily due to net income of $11.0 million and a decrease in accumulated other comprehensive loss on available for sale investment securities, which were partially offset by cash dividends and share repurchases during the three months ended March 31, 2025.
At March 31, 2025, the Company and the Bank had regulatory capital amounts that were well in excess of regulatory requirements. The following table presents actual and required capital ratios for the Company and the Bank under the Basel III Capital Rules. The minimum required capital amounts presented include the minimum required capital levels as of March 31, 2025 based on the required capital levels as of January 1, 2019 when the Basel III Capital Rules were fully phased-in. Capital levels required to be considered well capitalized are based upon prompt corrective action regulations, as amended to reflect the changes under the Basel III Capital Rules.
| Actual | Minimum Capital Required – Basel III Fully Phased-In | To Be Well Capitalized Under Prompt Corrective Action Provisions | ||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||||||||||||||||
| Company: | ||||||||||||||||||||||||||||||||||||||
| Tier 1 risk-based capital | $ | 343,165 | 11.85 | % | $ | 246,103 | 8.50 | % | N/A | N/A | ||||||||||||||||||||||||||||
| Total risk-based capital | 433,456 | 14.97 | 304,009 | 10.50 | N/A | N/A | ||||||||||||||||||||||||||||||||
| Tier 1 leverage capital | 343,165 | 10.20 | 134,589 | 4.00 | N/A | N/A | ||||||||||||||||||||||||||||||||
| Bank: | ||||||||||||||||||||||||||||||||||||||
| Common equity Tier 1 capital (to risk-weighted assets) | $ | 385,061 | 13.34 | % | $ | 202,004 | 7.00 | % | $ | 187,575 | 6.50 | % | ||||||||||||||||||||||||||
| Tier 1 risk-based capital | 385,061 | 13.34 | 245,290 | 8.50 | 230,861 | 8.00 | ||||||||||||||||||||||||||||||||
| Total risk-based capital | 420,839 | 14.58 | 303,005 | 10.50 | 288,577 | 10.00 | ||||||||||||||||||||||||||||||||
| Tier 1 leverage capital | 385,061 | 11.48 | 134,219 | 4.00 | 167,773 | 5.00 | ||||||||||||||||||||||||||||||||
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LIQUIDITY AND ASSET/LIABILITY MANAGEMENT
Liquidity Management
Liquidity management encompasses our ability to ensure that funds are available to meet the cash flow requirements of depositors and borrowers, while also ensuring adequate cash flow exists to meet the Company’s needs, including operating, strategic and capital. The Company develops its liquidity management strategies as part of its overall asset/liability management process. Our primary sources of funds are from deposits, amortization of loans, loan prepayments and the maturity of loans, investment securities and other investments, and other funds provided from operations. While scheduled payments from the amortization of loans and investment securities and maturing investment securities are relatively predictable sources of funds, deposit flows and loan prepayments can be greatly influenced by general interest rates, economic conditions and competition. The Company also maintains excess funds in short-term, interest-bearing assets that provide additional liquidity.
The Company uses its liquidity to fund existing and future loan commitments, to fund maturing certificates of deposit and demand deposit withdrawals, to invest in other interest-earning assets and to meet operating expenses. At March 31, 2025, certificates of deposit maturing within the next 12 months totaled $708.2 million. Based upon historical experience, the Company anticipates that a significant portion of the maturing certificates of deposit will be redeposited with us.
In addition to cash flow from loan and securities payments and prepayments as well as from sales of securities available for sale, the Company has significant borrowing capacity available to fund liquidity needs. In recent years, the Company has utilized borrowings as a cost efficient addition to deposits as a source of funds. Borrowings consist of advances from the FHLB of Dallas, of which the Company is a member. Under terms of the collateral agreement with the FHLB, the Company pledges residential mortgage loans and investment securities as well as the Company’s stock in the FHLB as collateral for such advances. For the three months ended March 31, 2025, the average balance of outstanding FHLB advances was $180.7 million. At March 31, 2025, the Company had $163.3 million in total outstanding FHLB advances.
The following table summarizes the Company's primary and secondary sources of liquidity which were available at March 31, 2025.
| (dollars in thousands) | March 31, 2025 | |||||||
| Cash and cash equivalents | $ | 110,662 | ||||||
| Unencumbered investment securities, amortized cost | 68,179 | |||||||
| FHLB advance availability | 1,140,061 | |||||||
| Amounts available from unsecured lines of credit | 55,000 | |||||||
| Federal Reserve discount window availability | 500 | |||||||
| Total primary and secondary sources of available liquidity | $ | 1,374,402 | ||||||
Asset/Liability Management
The objective of asset/liability management is to implement strategies for the funding and deployment of the Company’s financial resources that are expected to maximize soundness and profitability over time at acceptable levels of risk. Interest rate sensitivity is the potential impact of changing rate environments on both net interest income and cash flows. The Company measures its interest rate sensitivity over the near term primarily by running net interest income simulations. Our interest rate sensitivity also is monitored by management through the use of a model which generates estimates of the change in its net interest income over a range of interest rate scenarios. Based on the Company’s interest rate risk model, the table below sets forth the results of immediate and sustained changes in interest rates as of March 31, 2025.
| Shift in Interest Rates (in bps) | % Change in Projected Net Interest Income | |||||||
| +200 | 1.9% | |||||||
| +100 | 1.1% | |||||||
| -100 | (1.7)% | |||||||
| -200 | (3.8)% | |||||||
The actual impact of changes in interest rates will depend on many factors. These factors include the Company’s ability to achieve expected growth in earning assets and maintain a desired mix of earning assets and interest-bearing liabilities, the actual
38
timing of asset and liability repricing, the magnitude of interest rate changes and corresponding movement in interest rate spreads and the level of success of asset/liability management strategies.
The Company periodically has entered into interest rate swap agreements as part of its interest rate risk management strategy. The Company’s objectives in using interest rate derivatives are to manage its exposure to interest rate movements. During 2025 and 2024, such derivatives were used to hedge the variable cost associated with existing variable rate liabilities. Refer to Note 6 of the Consolidated Financial Statements for more information on the effects of the derivative financial instruments on the consolidated financial statements.
To meet the financing needs of its customers, the Company issues financial instruments which represent conditional obligations that are not recognized, wholly or in part, in the statements of financial condition. These financial instruments include commitments to extend credit and standby letters of credit. Such instruments expose the Company to varying degrees of credit and interest rate risk in much the same way as funded loans. The same credit policies are used in these commitments as for on-balance sheet instruments. At both March 31, 2025 and December 31, 2024, the Company's allowance for credit losses on unfunded commitments totaled $2.7 million.
The following table summarizes our outstanding commitments to originate loans and to advance additional amounts pursuant to outstanding letters of credit, lines of credit and undisbursed construction loans as of the periods indicated.
| Contract Amount | ||||||||||||||
| (dollars in thousands) | March 31, 2025 | December 31, 2024 | ||||||||||||
| Standby letters of credit | $ | 5,957 | $ | 6,502 | ||||||||||
| Available portion of lines of credit | 471,304 | 488,930 | ||||||||||||
| Undisbursed portion of loans in process | 84,207 | 76,424 | ||||||||||||
| Commitments to originate loans | 152,370 | 161,482 | ||||||||||||
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to be drawn upon, the total commitment amounts generally represent future cash requirements.
Unfunded commitments under commercial lines of credit, revolving credit lines and overdraft protection agreements are commitments for possible future extensions of credit to existing customers. These lines of credit usually do not contain a specified maturity date and may not be drawn upon to the total extent to which the Company is committed.
The Company is subject to certain claims and litigation arising in the ordinary course of business. In the opinion of management, after consultation with legal counsel, the ultimate disposition of these matters is not expected to have a material effect on the financial condition or results of operations of the Company.
RESULTS OF OPERATIONS
Net income for the first quarter of 2025 was $11.0 million, up $1.8 million compared to the first quarter of 2024. Diluted EPS for the first quarter of 2025 was $1.37, up $0.23 compared to the first quarter of 2024.
During the three months ended March 31, 2025, the Company provisioned $394,000 to the allowance for loan losses primarily due to loan growth. During the three months ended March 31, 2024, the Company provisioned $141,000 to the allowance for loan losses primarily due to loan growth.
Net Interest Income
Net interest income is the difference between the interest income earned on interest-earning assets, such as loans and investment securities, and the interest expense paid on interest-bearing liabilities, such as deposits and borrowings. The Company’s net interest income is largely determined by our net interest spread, which is the difference between the average yield earned on interest-earning assets and the average rate paid on interest-bearing liabilities, and the relative amounts of interest-earning assets and interest-bearing liabilities. The Company’s tax-equivalent net interest spread was 3.10% and 2.81% for the quarters ended March 31, 2025 and 2024, respectively.
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Net interest income totaled $31.7 million for the first quarter of 2025, up $2.8 million, or 9.9%, compared to the first quarter of 2024.
The Company’s tax-equivalent net interest margin, which is net interest income as a percentage of average interest-earning assets, was 3.91% and 3.64% for the quarters ended March 31, 2025 and 2024, respectively. For the same periods, the average loan yield was 6.43% and 6.18%, respectively.
Acquired loan discount accretion included in interest income totaled $356,000 and $525,000 for the quarters ended March 31, 2025 and 2024, respectively.
The following table sets forth, for the periods indicated, information regarding (i) the total dollar amount of interest income of the Company from interest-earning assets and the resultant average yields; (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant average rate; (iii) net interest income; (iv) net interest spread; and (v) net interest margin. Information is based on average monthly balances during the indicated periods. Taxable equivalent yields are calculated using a marginal tax rate of 21%.
| Three Months Ended March 31, | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||||||||||||||
| (dollars in thousands) | Average Balance | Interest | Average Yield/Rate | Average Balance | Interest | Average Yield/Rate | ||||||||||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||||||||||||||||
Loans receivable(1) | $ | 2,745,212 | $ | 44,032 | 6.43 | % | $ | 2,602,941 | $ | 40,567 | 6.18 | % | ||||||||||||||||||||||||||
| Investment securities | ||||||||||||||||||||||||||||||||||||||
| Taxable | 423,412 | 2,592 | 2.45 | 456,246 | 2,715 | 2.38 | ||||||||||||||||||||||||||||||||
Tax-exempt (TE) | 16,144 | 72 | 2.26 | 16,332 | 73 | 2.26 | ||||||||||||||||||||||||||||||||
| Total investment securities | 439,556 | 2,664 | 2.44 | 472,578 | 2,788 | 2.38 | ||||||||||||||||||||||||||||||||
| Other interest-earning assets | 55,851 | 505 | 3.67 | 57,103 | 771 | 5.43 | ||||||||||||||||||||||||||||||||
Total interest-earning assets (TE) | 3,240,619 | $ | 47,201 | 5.84 | 3,132,622 | $ | 44,126 | 5.60 | ||||||||||||||||||||||||||||||
| Noninterest-earning assets | 208,853 | 201,261 | ||||||||||||||||||||||||||||||||||||
| Total assets | $ | 3,449,472 | $ | 3,333,883 | ||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||||||||||||||||
| Savings, checking and money market | $ | 1,306,602 | $ | 5,401 | 1.68 | % | $ | 1,269,293 | $ | 4,800 | 1.52 | % | ||||||||||||||||||||||||||
| Certificates of deposit | 732,079 | 7,221 | 4.00 | 668,353 | 7,332 | 4.41 | ||||||||||||||||||||||||||||||||
| Total interest-bearing deposits | 2,038,681 | 12,622 | 2.51 | 1,937,646 | 12,132 | 2.52 | ||||||||||||||||||||||||||||||||
| Other borrowings | 5,539 | 53 | 3.89 | 125,979 | 1,486 | 4.74 | ||||||||||||||||||||||||||||||||
| Subordinated debt | 54,485 | 845 | 6.20 | 54,268 | 845 | 6.22 | ||||||||||||||||||||||||||||||||
| Short-term FHLB advances | 149,043 | 1,655 | 4.44 | 31,831 | 436 | 5.42 | ||||||||||||||||||||||||||||||||
| Long term FHLB advances | 31,615 | 277 | 3.51 | 39,873 | 326 | 3.27 | ||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 2,279,363 | $ | 15,452 | 2.74 | 2,189,597 | $ | 15,225 | 2.79 | ||||||||||||||||||||||||||||||
| Noninterest-bearing liabilities | 766,605 | 773,525 | ||||||||||||||||||||||||||||||||||||
| Total liabilities | 3,045,968 | 2,963,122 | ||||||||||||||||||||||||||||||||||||
| Shareholders’ equity | 403,504 | 370,761 | ||||||||||||||||||||||||||||||||||||
| Total liabilities and shareholders' equity | $ | 3,449,472 | $ | 3,333,883 | ||||||||||||||||||||||||||||||||||
| Net interest-earning assets | $ | 961,256 | $ | 943,025 | ||||||||||||||||||||||||||||||||||
Net interest spread (TE) | $ | 31,749 | 3.10 | % | $ | 28,901 | 2.81 | % | ||||||||||||||||||||||||||||||
Net interest margin (TE) | 3.91 | % | 3.64 | % | ||||||||||||||||||||||||||||||||||
(1)Nonperforming loans are included in the respective average loan balances, net of deferred fees, discounts and loans in process.
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The following table displays the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities. The table distinguishes between (i) changes attributable to volume (changes in average volume between periods times prior year rate), (ii) changes attributable to rate (changes in average rate between periods times prior year volume) and (iii) total increase (decrease).
| Three Months Ended March 31, | ||||||||||||||||||||
2025 Compared to 2024 | ||||||||||||||||||||
| Change Attributable To | ||||||||||||||||||||
| (dollars in thousands) | Rate | Volume | Increase/ (Decrease) | |||||||||||||||||
| Interest income: | ||||||||||||||||||||
| Loans receivable | $ | 1,398 | $ | 2,067 | $ | 3,465 | ||||||||||||||
| Investment securities | 75 | (199) | (124) | |||||||||||||||||
| Other interest-earning assets | (249) | (17) | (266) | |||||||||||||||||
| Total interest income | 1,224 | 1,851 | 3,075 | |||||||||||||||||
| Interest expense: | ||||||||||||||||||||
| Savings, checking and money market accounts | 319 | 282 | 601 | |||||||||||||||||
| Certificates of deposit | (741) | 630 | (111) | |||||||||||||||||
| Other borrowings | (145) | (1,288) | (1,433) | |||||||||||||||||
| Subordinated debt | (3) | 3 | — | |||||||||||||||||
| FHLB advances | (203) | 1,373 | 1,170 | |||||||||||||||||
| Total interest expense | (773) | 1,000 | 227 | |||||||||||||||||
| Increase in net interest income | $ | 1,997 | $ | 851 | $ | 2,848 | ||||||||||||||
Noninterest Income
Noninterest income for the first quarter of 2025 totaled $4.0 million, up $460,000, or 13.0%, from $3.5 million earned for the same period in 2024. Noninterest income increased over the comparable periods primarily due to increases in gain on the sale of loans (up $290,000 primarily due to gain on sale of SBA loans), other income (up $97,000), and service fees and charges (up $55,000).
Noninterest Expense
Noninterest expense for the first quarter of 2025 totaled $21.6 million, up $711,000, or 3.4%, from the first quarter of 2024. Noninterest expense increased over the comparable quarters primarily due to increases in compensation and benefits (up $482,000, primarily due to increases in salaries), foreclosed assets, net (up $162,000), data processing and communication (up $128,000), and occupancy (up $107,000), which were partially offset by decreases in professional services (down $70,000) and marketing and advertising (down $37,000).
Income Taxes
Income tax expense for the three months ended March 31, 2025 totaled $2.8 million compared to $2.2 million for the three months ended March 31, 2024. Income tax expense increased over the prior comparable quarter primarily due to increased taxable earnings. The Company's effective tax rates for the first quarters of 2025 and 2024 were 20.5% and 19.6%, respectively.
CRITICAL ACCOUNTING ESTIMATES
SEC guidance requires disclosure of “critical accounting estimates.” The SEC defines “critical accounting estimates” as those estimates made in accordance with generally accepted accounting principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of the registrant.
We follow financial accounting and reporting policies that are in accordance with accounting principles generally accepted in the United States. Our accounting policies are discussed in detail in Note 1 - Basis of Presentation in the accompanying notes to the consolidated financial statements included elsewhere in this report and in our 2024 Annual Report on Form 10-K. Not all
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significant accounting policies require management to make difficult, subjective or complex judgments. However, management believes the policy noted below meets the SEC’s definition of a critical accounting policy.
Allowance for Credit Losses
Management considers the policies related to the allowance for credit losses as the most critical to the financial statement presentation. The total allowance for credit losses includes activity related to allowances calculated in accordance with Accounting Standards Codification 326, Credit Losses. The allowance for credit losses is established through a provision for credit losses charged to current earnings. The amount maintained in the allowance reflects management’s continuing evaluation of the credit losses expected to be recognized over the life of the loans in our portfolio. The allowance for credit losses on loans is a valuation account that is deducted from the loans' amortized cost basis to present the net amount expected to be collected on the loans. For purposes of determining the allowance for credit losses, the loan portfolio is segregated by product types in order to recognize differing risk profiles among categories. Loans that do not share risk characteristics are evaluated on an individual basis and are not included in the collective evaluation. Management estimates the allowance balance using relevant available information from internal and external sources relating to past events, current conditions and reasonable and supportable forecasts. Adjustments to historical loss information are made to incorporate our reasonable and supportable forecast of future losses at the portfolio segment level, as well as any necessary qualitative adjustments, including, but not limited to, changes in current and expected future economic conditions, changes in industry experience and industry loan concentrations, changes in the volume and severity of nonperforming assets, changes in lending policies and personnel and changes in the competitive and regulatory environment of the banking industry. Loans that do not share similar risk characteristics are individually evaluated and are excluded from the pooled loan analysis.
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk. | ||||
Quantitative and qualitative disclosures about market risk are presented in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2024, under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Asset/Liability Management and Market Risk”. Additional information at March 31, 2025 is included herein under Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Asset/Liability Management”.
| Item 4. | Controls and Procedures. | ||||
Our management evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and regulations and are operating in an effective manner.
No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15(d)-15(f) under the Securities Exchange Act of 1934) occurred during the first quarter of 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
| Item 1. | Legal Proceedings. | ||||
Not applicable.
| Item 1A. | Risk Factors. | ||||
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There have been no material changes from the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securities and Exchange Commission.
| Item 2. | Unregistered Sales of Equity Securities and the Use of Proceeds. | ||||
(a) Not applicable.
(b) Not applicable.
(c) The Company’s purchases of its common stock made during the quarter ended March 31, 2025 consisted of stock repurchases under the Company’s approved plans and are set forth in the following table.
| Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet be Purchased Under the Plan or Programs(1) | ||||||||||||||||||||||
January 1 – January 31, 2025 | — | $ | — | — | 311,812 | |||||||||||||||||||||
February 1 – February 28, 2025 | — | — | — | 311,812 | ||||||||||||||||||||||
March 1 – March 31, 2025 | 173,497 | 44.72 | 173,497 | 138,315 | ||||||||||||||||||||||
| Total | 173,497 | $ | 44.72 | 173,497 | 138,315 | |||||||||||||||||||||
(1)On October 18, 2023, the Company announced the approval of a new repurchase program (the “2023 Repurchase Plan”). Under the 2023 Repurchase Plan, the Company may purchase up to 405,000 shares, or approximately 5% of the Company’s outstanding common stock. On April 21, 2025, the Company announced the approval of a new share repurchase plan (the “2025 Repurchase Plan”). Under the 2025 Repurchase Plan, the Company may purchase up to an additional 400,000 shares, or approximately 5% of the Company’s outstanding common stock. Share repurchases under the 2025 Repurchase Plan may commence upon the completion of the Company’s 2023 Repurchase Plan.
| Item 3. | Defaults Upon Senior Securities. | ||||
(a) Not applicable.
(b) Not applicable.
| Item 4. | Mine Safety Disclosures. | ||||
Not applicable.
| Item 5. | Other Information. | ||||
(a) Not applicable.
(b) Not applicable.
(c) During the fiscal quarter ended March 31, 2025, none of our directors or executive officers adopted terminated
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| Item 6. | Exhibits and Financial Statement Schedules. | ||||
| No. | Description | Location | ||||||||||||
| 4.1 | Indenture, dated June 30, 2022, by and between Home Bancorp, Inc. and UMB Bank, National Association, as trustee for the 5.75% Fixed-to-Floating Rate Subordinated Notes Due 2032. | (incorporated by reference from the like-numbered exhibit included in Home Bancorp’s Current Report on Form 8-K, dated as of June 30, 2022 and filed July 1, 2022 (SEC File No. 001-34190)) | ||||||||||||
| Filed herewith | ||||||||||||||
| Filed herewith | ||||||||||||||
| Filed herewith | ||||||||||||||
| 101.INS | XBRL Instance Document | |||||||||||||
| 101.SCH | XBRL Taxonomy Extension Schema Document | |||||||||||||
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | |||||||||||||
| 101.DEF | XBRL Taxonomy Extension Definitions Linkbase Document | |||||||||||||
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | |||||||||||||
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | |||||||||||||
| 104 | Cover page Interactive Data File (embedded within the Inline XBRL document) | |||||||||||||
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| HOME BANCORP, INC. | ||||||||||||||
| May 2, 2025 | By: | /s/ John W. Bordelon | ||||||||||||
| John W. Bordelon | ||||||||||||||
| Chairman of the Board, President and Chief Executive Officer | ||||||||||||||
| May 2, 2025 | By: | /s/ David T. Kirkley | ||||||||||||
| David T. Kirkley | ||||||||||||||
| Senior Executive Vice President and Chief Financial Officer | ||||||||||||||
| May 2, 2025 | By: | /s/ Mary H. Hopkins | ||||||||||||
| Mary H. Hopkins | ||||||||||||||
| Home Bank, N. A. Senior Vice President and Director of Financial Management | ||||||||||||||
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