Equibles

10-Q

HOME BANCORP, INC. (HBCP)

10-Q 2021-08-05 For: 2021-06-30
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: June 30, 2021

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

HOME BANCORP, INC.

(Exact name of Registrant as specified in its charter)

Louisiana 71-1051785
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification Number)
503 Kaliste Saloom Road, Lafayette, Louisiana 70508
(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 classTrading symbol(s)Name of each exchange on which registeredCommon StockHBCPNASDAQ Stock Market

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 ☐ 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 July 30, 2021, the registrant had 8,645,924 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
Consolidated Statements of Financial Condition 1
Consolidated Statements of Income 2
Consolidated Statements of Comprehensive Income 3
Consolidated Statements of Changes in Shareholders’ Equity 4
Consolidated Statements of Cash Flows 6
Notes to Unaudited Consolidated Financial Statements 7
Item 2. Managements’ Discussion and Analysis of Financial Condition and Results of Operations 36
Item 3. Quantitative and Qualitative Disclosures About Market Risk 54
Item 4. Controls and Procedures 54
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 55
Item 1A. Risk Factors 55
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 55
Item 3. Defaults Upon Senior Securities 56
Item 4. Mine Safety Disclosures 56
Item 5. Other Information 56
Item 6. Exhibits 56
SIGNATURES 57

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%
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
PCI – Purchased credit impaired
PPP – Paycheck Protection Program
SBA – Small Business Association
SEC – Securities and Exchange Commission
TDR – Troubled debt restructuring
TE – Taxable equivalent
U.S. – United States

ii

HOME BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Unaudited) (Audited)
(dollars in thousands) June 30, 2021 December 31, 2020
Assets
Cash and cash equivalents $ 393,203 $ 187,952
Interest-bearing deposits in banks 349 349
Investment securities available for sale, at fair value 285,185 254,752
Investment securities held to maturity (fair values of $2,164 and $2,996, respectively) 2,118 2,934
Mortgage loans held for sale 3,752 9,559
Loans, net of unearned income 1,918,488 1,979,954
Allowance for loan losses (26,687) (32,963)
Total loans, net of unearned income and allowance for loan losses 1,891,801 1,946,991
Office properties and equipment, net 44,232 45,497
Cash surrender value of bank-owned life insurance 40,781 40,334
Goodwill and core deposit intangibles 62,520 63,112
Accrued interest receivable and other assets 40,815 40,370
Total Assets $ 2,764,756 $ 2,591,850
Liabilities
Deposits:
Noninterest-bearing $ 715,167 $ 615,700
Interest-bearing 1,655,597 1,598,121
Total Deposits 2,370,764 2,213,821
Other borrowings 5,539 5,539
Long-term Federal Home Loan Bank advances 27,502 28,824
Accrued interest payable and other liabilities 23,139 21,824
Total Liabilities 2,426,944 2,270,008
Shareholders’ Equity
Preferred stock, $0.01 par value - 10,000,000 shares authorized; none issued — —
Common stock, $0.01 par value - 40,000,000 shares authorized; 8,678,686 and 8,740,104 shares issued and outstanding, respectively 87 87
Additional paid-in capital 165,296 164,988
Unallocated common stock held by:
Employee Stock Ownership Plan (ESOP) (2,589) (2,767)
Recognition and Retention Plan (RRP) (15) (22)
Retained earnings 171,644 154,282
Accumulated other comprehensive income 3,389 5,274
Total Shareholders’ Equity 337,812 321,842
Total Liabilities and Shareholders’ Equity $ 2,764,756 $ 2,591,850

The accompanying Notes are an integral part of these Consolidated Financial Statements.

HOME BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

Three Months Ended<br>June 30, Six Months Ended<br>June 30,
(dollars in thousands, except per share data) 2021 2020 2021 2020
Interest Income
Loans, including fees $ 24,500 $ 24,371 $ 50,317 $ 48,070
Investment securities:
Taxable interest 1,043 1,103 1,961 2,411
Tax-exempt interest 87 79 181 183
Other investments and deposits 133 117 232 255
Total interest income 25,763 25,670 52,691 50,919
Interest Expense
Deposits 1,480 3,012 3,136 6,679
Other borrowings 53 53 106 106
Short-term Federal Home Loan Bank advances — 20 — 23
Long-term Federal Home Loan Bank advances 120 168 244 371
Total interest expense 1,653 3,253 3,486 7,179
Net interest income 24,110 22,417 49,205 43,740
(Reversal) provision for loan losses (3,425) 6,471 (5,128) 12,728
Net interest income after (reversal) provision for loan losses 27,535 15,946 54,333 31,012
Noninterest Income
Service fees and charges 1,146 942 2,218 2,406
Bank card fees 1,591 1,127 2,897 2,264
Gain on sale of loans, net 559 642 1,727 939
Income from bank-owned life insurance 221 228 446 487
Loss on sale of assets, net (457) (13) (457) (11)
Other income 234 177 523 376
Total noninterest income 3,294 3,103 7,354 6,461
Noninterest Expense
Compensation and benefits 9,687 9,362 19,351 18,778
Occupancy 1,733 1,653 3,429 3,389
Marketing and advertising 268 160 439 458
Data processing and communication 2,159 1,760 4,145 3,579
Professional services 217 255 451 468
Forms, printing and supplies 163 160 322 331
Franchise and shares tax 359 389 719 778
Regulatory fees 306 362 685 478
Foreclosed assets and ORE, net 101 145 224 162
Amortization of acquisition intangible 293 342 593 695
Provision for credit losses on unfunded commitments 375 — 375 —
Other expenses 907 865 1,801 1,753
Total noninterest expense 16,568 15,453 32,534 30,869
Income before income tax expense 14,261 3,596 29,153 6,604
Income tax expense 2,865 675 5,829 1,201
Net Income $ 11,396 $ 2,921 $ 23,324 $ 5,403
Earnings per share:
Basic $ 1.35 $ 0.33 $ 2.76 $ 0.60
Diluted $ 1.34 $ 0.33 $ 2.75 $ 0.60
Cash dividends declared per common share $ 0.23 $ 0.22 $ 0.45 $ 0.44

The accompanying Notes are an integral part of these Consolidated Financial Statements.

HOME BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

Three Months Ended<br>June 30, Six Months Ended<br>June 30,
(dollars in thousands) 2021 2020 2021 2020
Net Income $ 11,396 $ 2,921 $ 23,324 $ 5,403
Other Comprehensive Income (Loss)
Unrealized gains (losses) on available for sale investment securities 1,453 (211) (3,304) 5,776
Unrealized (losses) gains on cash flow hedges (398) (158) 919 (158)
Tax effect (222) 77 500 (1,180)
Other comprehensive income (loss), net of taxes 833 (292) (1,885) 4,438
Comprehensive Income $ 12,229 $ 2,629 $ 21,439 $ 9,841

The accompanying Notes are an integral part of these Consolidated Financial Statements.

HOME BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(Unaudited)

(dollars in thousands, except per share data) Additional Paid-in capital Unallocated Common Stock Held by ESOP Unallocated Common Stock Held by RRP Retained Earnings Accumulated Other Comprehensive Income Total
Balance, March 31, 2020 91 $ 167,249 $ (3,035) $ (28) $ 143,114 $ 5,422 $ 312,813
Net income 2,921 2,921
Other comprehensive loss (292) (292)
Purchase of Company’s common stock at cost, 115,327 shares (1,152) (1,693) (2,846)
Cash dividends declared, 0.22 per share (1,981) (1,981)
Common Stock issued under incentive plans, net of shares surrendered in payment, including tax benefit, 13,508 shares (3) (34) (37)
Exercise of stock options —
RRP shares released for allocation (4) 4 —
ESOP shares released for allocation 198 89 287
Share-based compensation cost 206 206
Balance, June 30, 2020 90 $ 166,494 $ (2,946) $ (24) $ 142,327 $ 5,130 $ 311,071
Balance, March 31, 2021 87 $ 165,155 $ (2,678) $ (17) $ 163,507 $ 2,556 $ 328,610
Net income 11,396 11,396
Other comprehensive income 833 833
Purchase of Company’s common stock at cost, 42,258 shares (422) (1,207) (1,629)
Cash dividends declared, 0.23 per share (2,003) (2,003)
Common Stock issued under incentive plans, net of shares surrendered in payment, including tax benefit, 10,720 shares 52 (49) 3
Exercise of stock options 10 10
RRP shares released for allocation (2) 2 —
ESOP shares released for allocation 315 89 404
Share-based compensation cost 188 188
Balance, June 30, 2021 87 $ 165,296 $ (2,589) $ (15) $ 171,644 $ 3,389 $ 337,812

All values are in US Dollars.

The accompanying Notes are an integral part of these Consolidated Financial Statements.

HOME BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY - CONTINUED

(Unaudited)

(dollars in thousands, except per share data) Additional<br>Paid-in<br>capital Unallocated<br>Common Stock<br>Held by ESOP Unallocated<br>Common Stock<br>Held by RRP Retained<br>Earnings Accumulated Other Comprehensive Income Total
Balance, December 31, 2019 93 $ 168,545 $ (3,124) $ (35) $ 150,158 $ 692 $ 316,329
Cumulative effect of change in accounting principle due the adoption of ASC Topic 326, net of tax (3,985) (3,985)
Net income 5,403 5,403
Other comprehensive income 4,438 4,438
Purchase of Company’s common stock at cost, 303,668 shares (3,033) (5,199) (8,235)
Cash dividends declared, 0.44 per share (4,008) (4,008)
Common Stock issued under incentive plans, net of shares surrendered in payment, including tax benefit, 15,646 shares 34 (42) (8)
Exercise of stock options 30 30
RRP shares released for allocation (11) 11 —
ESOP shares released for allocation 479 178 657
Share-based compensation cost 450 450
Balance, June 30, 2020 90 $ 166,494 $ (2,946) $ (24) $ 142,327 $ 5,130 $ 311,071
Balance, December 31, 2020 87 $ 164,988 $ (2,767) $ (22) $ 154,282 $ 5,274 $ 321,842
Net income 23,324 23,324
Other comprehensive loss (1,885) (1,885)
Purchase of Company’s common stock at cost, 83,735 shares (837) (1,977) (2,814)
Cash dividends declared, 0.45 per share (3,918) (3,918)
Common Stock issued under incentive plans, net of shares surrendered in payment, including tax benefit, 18,724 shares 158 (67) 91
Exercise of stock options 54 54
RRP shares released for allocation (7) 7 —
ESOP shares released for allocation 580 178 758
Share-based compensation cost 360 360
Balance, June 30, 2021 87 $ 165,296 $ (2,589) $ (15) $ 171,644 $ 3,389 $ 337,812

All values are in US Dollars.

The accompanying Notes are an integral part of these Consolidated Financial Statements.

HOME BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

For the Six Months Ended<br>June 30,
(dollars in thousands) 2021 2020
Cash flows from operating activities:
Net income $ 23,324 $ 5,403
Adjustments to reconcile net income to net cash provided by operating activities:
(Reversal) provision for loan losses (5,128) 12,728
Depreciation 1,532 1,525
Amortization and accretion of purchase accounting valuations and intangibles 1,914 2,272
Net amortization of mortgage servicing asset — 38
Federal Home Loan Bank stock dividends (8) (45)
Net amortization of discount on investments 1,099 1,358
Gain on loans sold, net (1,727) (939)
Proceeds, including principal payments, from loans held for sale 130,051 105,307
Originations of loans held for sale (122,517) (110,737)
Loss on sale of assets, net 457 11
Non-cash compensation 1,118 1,107
Deferred income tax expense (benefit) 1,307 (2,527)
Increase in accrued interest receivable and other assets (1,468) (1,683)
Increase in cash surrender value of bank-owned life insurance (446) (487)
Increase (decrease) in accrued interest payable and other liabilities 2,243 (481)
Net cash provided by operating activities 31,751 12,850
Cash flows from investing activities:
Purchases of securities available for sale (80,483) (36,435)
Proceeds from maturities, prepayments and calls on securities available for sale 45,663 41,317
Proceeds from maturities, prepayments and calls on securities held to maturity 800 2,750
Decrease (increase) in loans, net 57,085 (253,820)
Proceeds from sale of foreclosed assets 2,138 2,516
Purchases of office properties and equipment (1,127) (1,080)
Proceeds from sale of office properties and equipment 400 4
Purchase of Federal Home Loan Bank stock — (1,592)
Net cash provided by (used in) investing activities 24,476 (246,340)
Cash flows from financing activities:
Increase in deposits, net 156,942 445,720
Borrowings on Federal Home Loan Bank advances — 119,700
Repayments of Federal Home Loan Bank advances (1,331) (125,301)
Proceeds from exercise of stock options 54 30
Issuance of stock under incentive plans 91 (8)
Dividends paid to shareholders (3,918) (4,008)
Purchase of Company’s common stock (2,814) (8,235)
Net cash provided by financing activities 149,024 427,898
Net change in cash and cash equivalents 205,251 194,408
Cash and cash equivalents, beginning 187,952 39,847
Cash and cash equivalents, ending $ 393,203 $ 234,255

The accompanying Notes are an integral part of these Consolidated Financial Statements.

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 and six months ended June 30, 2021 and 2020 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, 2020.

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, 2020.

There have been no material changes from the critical accounting policies disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020. In preparing the 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.

  1. Recent Accounting Pronouncements

Accounting Standards Adopted in 2021

In December 2019, the FASB issued ASU No. 2019-12, "Simplifying the Accounting for Income Taxes (Topic 740)." The amendments in this ASU simplified the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improved the consistent application of and simplified GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The amendments in the ASU are effective for fiscal years and interim periods beginning after December 15, 2020. The adoption of this ASU did not impact our Consolidated Financial Statements.

  1. Investment Securities

The following tables summarize the Company’s available for sale and held to maturity investment securities at June 30, 2021 and December 31, 2020.

(dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
June 30, 2021
Available for sale:
U.S. agency mortgage-backed $ 179,704 $ 3,026 $ 1,062 $ 181,668
Collateralized mortgage obligations 46,417 1,074 3 47,488
Municipal bonds 44,420 452 472 44,400
U.S. government agency 5,993 70 8 6,055
Corporate bonds 5,500 74 — 5,574
Total available for sale $ 282,034 $ 4,696 $ 1,545 $ 285,185
Held to maturity:
Municipal bonds $ 2,118 $ 46 $ — $ 2,164
Total held to maturity $ 2,118 $ 46 $ — $ 2,164 (dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
--- --- --- --- --- --- --- --- ---
December 31, 2020
Available for sale:
U.S. agency mortgage-backed $ 138,669 $ 4,162 $ 19 $ 142,812
Collateralized mortgage obligations 74,112 1,565 57 75,620
Municipal bonds 27,306 717 12 28,011
U.S. government agency 6,210 55 10 6,255
Corporate bonds 2,000 54 — 2,054
Total available for sale $ 248,297 $ 6,553 $ 98 $ 254,752
Held to maturity:
Municipal bonds $ 2,934 $ 62 $ — $ 2,996
Total held to maturity $ 2,934 $ 62 $ — $ 2,996

The estimated fair value and amortized cost by contractual maturity of the Company’s investment securities as of June 30, 2021 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.

(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 $ 4,164 $ 12,407 $ 55,844 $ 109,253 $ 181,668
Collateralized mortgage obligations — 20,886 9,749 16,853 47,488
Municipal bonds 1,142 1,558 9,122 32,578 44,400
U.S. government agency — — 5,647 408 6,055
Corporate bonds — — 5,574 — 5,574
Total available for sale $ 5,306 $ 34,851 $ 85,936 $ 159,092 $ 285,185
Held to maturity:
Municipal bonds $ — $ 555 $ 1,609 $ — $ 2,164
Total held to maturity $ — $ 555 $ 1,609 $ — $ 2,164
(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 $ 4,145 $ 11,995 $ 54,139 $ 109,425 $ 179,704
Collateralized mortgage obligations — 20,197 9,592 16,628 46,417
Municipal bonds 1,140 1,552 8,877 32,851 44,420
U.S. government agency — — 5,581 412 5,993
Corporate bonds — — 5,500 — 5,500
Total available for sale $ 5,285 $ 33,744 $ 83,689 $ 159,316 $ 282,034
Held to maturity:
Municipal bonds $ — $ 540 $ 1,578 $ — $ 2,118
Total held to maturity $ — $ 540 $ 1,578 $ — $ 2,118

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.

(dollars in thousands) Less Than 1 Year Over 1 Year Total
June 30, 2021 Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses
Available for sale:
U.S. agency mortgage-backed $ 86,422 $ 1,062 $ — $ — $ 86,422 $ 1,062
Collateralized mortgage obligations 544 1 2,758 2 3,302 3
Municipal bonds 25,448 472 — — 25,448 472
U.S. government agency — — 1,114 8 1,114 8
Corporate bonds — — — — — —
Total available for sale $ 112,414 $ 1,535 $ 3,872 $ 10 $ 116,286 $ 1,545
Held to maturity:
Municipal bonds $ — $ — $ — $ — $ — $ —
Total held to maturity $ — $ — $ — $ — $ — $ —
(dollars in thousands) Less Than 1 Year Over 1 Year Total
--- --- --- --- --- --- --- --- --- --- --- --- ---
December 31, 2020 Fair Value Unrealized Losses Fair Value Unrealized Losses Fair Value Unrealized Losses
Available for sale:
U.S. agency mortgage-backed $ 13,666 $ 19 $ — $ — $ 13,666 $ 19
Collateralized mortgage obligations 13,615 55 2,309 2 15,924 57
Municipal bonds 1,278 12 — — 1,278 12
U.S. government agency — — 1,196 10 1,196 10
Corporate bonds — — — — — —
Total available for sale $ 28,559 $ 86 $ 3,505 $ 12 $ 32,064 $ 98
Held to maturity:
Municipal bonds $ — $ — $ — $ — $ — $ —
Total held to maturity $ — $ — $ — $ — $ — $ —

At June 30, 2021, 50 of the Company’s debt securities had unrealized losses totaling 1.3% of the individual securities’ amortized cost basis and 0.5% of the Company’s total amortized cost basis of the investment securities portfolio. At such date, 7 of the 50 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 June 30, 2021.

At June 30, 2021, 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 June 30, 2021 and December 31, 2020.

Credit Ratings
(dollars in thousands) AAA/AA/A BBB/BB/B Total
June 30, 2021
Held to maturity:
Municipal bonds $ 2,118 $ — $ 2,118 Credit Ratings
--- --- --- --- --- --- ---
(dollars in thousands) AAA/AA/A BBB/BB/B Total
December 31, 2020
Held to maturity:
Municipal bonds $ 2,934 $ — $ 2,934

Accrued interest receivable on the Company's investment securities was $891,000 and $744,000 at June 30, 2021 and December 31, 2020, respectively. These amounts are recorded in accrued interest receivable and other assets on the Consolidated Statements of Financial Condition.

At June 30, 2021 and December 31, 2020, the Company had $153,841,000 and $125,889,000, respectively, of securities pledged to secure public deposits.

  1. Earnings Per Share

Earnings per common share was computed based on the following:

Three Months Ended<br>June 30, Six Months Ended<br>June 30,
(in thousands, except per share data) 2021 2020 2021 2020
Numerator:
Net income available to common shareholders $ 11,396 $ 2,921 $ 23,324 $ 5,403
Denominator:
Weighted average common shares outstanding 8,449 8,702 8,443 8,792
Effect of dilutive securities:
Restricted stock 13 8 12 11
Stock options 37 20 33 26
Weighted average common shares outstanding – assuming dilution 8,499 8,730 8,488 8,829
Basic earnings per common share $ 1.35 $ 0.33 $ 2.76 $ 0.60
Diluted earnings per common share $ 1.34 $ 0.33 $ 2.75 $ 0.60

Options for 92,068 and 131,382 shares of common stock were not included in the computation of diluted EPS for the three months ended June 30, 2021 and 2020, respectively, because the effect of these shares was anti-dilutive. For the six months ended June 30, 2021 and 2020, options on 94,233 and 114,028, respectively, shares of common stock were not included in the computation of diluted EPS because the effect of these shares was anti-dilutive.

  1. Credit Quality and Allowance for Credit Losses

The following briefly describes the distinction between originated and acquired loans and certain significant accounting policies.

Loans

Loans are reported at the principal balance outstanding net of unearned income and fair value discounts, if applicable. Interest on loans and the accretion of unearned income are computed in a manner that approximates a level yield on recorded principal. Interest on loans is recorded as income is earned. The accrual of interest is discontinued when it is probable the borrower will not be able to meet payment obligations as they become due. 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. Interest income is not accrued on these loans until the borrower’s financial condition and payment record demonstrate an ability to service the debt. If it is determined that all or part of a loan is uncollectible, the potion of the loan deemed uncollectible is charged to the allowance for credit losses.

Originated vs. Acquired Loans

"Originated loans" are loans that were originated for investment by the Company. Loans that were acquired as a result of business combinations are referred to as “acquired loans” and are recorded at the principal balance net of unearned income and fair value discounts. The Company's acquired loans were purchased prior to the adoption of ASC Topic 326 on January 1, 2020 and were recorded at estimated fair value at the acquisition date with no carryover of the related allowance for loan losses ("ALL"). Since the adoption of ASC 326, loans that were acquired with evidence of credit deterioration are referred to as "purchased credit deteriorated ("PCD") loans." At acquisition, acquired loans were segregated into loan pools designed to facilitate the estimation of expected cash flows. The fair value estimate for each pool of acquired loans was based on the estimate of expected cash flows, both principal and interest, from that pool, discounted at prevailing market interest rates. The difference between the fair value of an acquired loan pool and the contractual amounts due at the acquisition date (the “fair value discount”) is accreted into income over the estimated life of the pool.

Allowance for Credit Losses

Due to the adoption of ASC Topic 326 on January 1, 2020, management maintains, based on current and forecasted information, an allowance for credit losses ("ACL") that reflects a current estimate of expected credit losses ("CECL") for the estimated life of the loan portfolio at reporting periods subsequent to the adoption date.

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 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.

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 conditions used by management to determine the current level of the ACL.

The Company’s loans, net of unearned income, consisted of the following as of the dates indicated.

(dollars in thousands) June 30, 2021 December 31, 2020
Real estate loans:
One- to four-family first mortgage $ 365,640 $ 395,638
Home equity loans and lines 64,614 67,700
Commercial real estate 755,707 750,623
Construction and land 233,714 221,823
Multi-family residential 82,966 87,332
Total real estate loans 1,502,641 1,523,116
Other loans:
Commercial and industrial 380,751 417,926
Consumer 35,096 38,912
Total other loans 415,847 456,838
Total loans $ 1,918,488 $ 1,979,954

The net investment in PPP loans, which is included in commercial and industrial loans, was $197,614,000 and $221,220,000 at June 30, 2021 and December 31, 2020, respectively.

The net discount on the Company’s loans was $5,329,000 and $6,650,000 at June 30, 2021 and December 31, 2020, respectively. In addition, loan balances as of June 30, 2021 and December 31, 2020 are reported net of unearned income of $11,096,000 and $8,727,000, respectively. Unearned income at June 30, 2021 and December 31, 2020 included PPP deferred lender fees of $7,693,000 and $5,449,000, respectively.

Accrued interest receivable on the Company's loans was $7,224,000 and $8,635,000 at June 30, 2021 and December 31, 2020, respectively, and is excluded from the estimate of the ACL. These 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.

June 30, 2021
(dollars in thousands) Collectively Evaluated Individually Evaluated Total
Allowance for credit losses:
One- to four-family first mortgage $ 2,397 $ — $ 2,397
Home equity loans and lines 582 — 582
Commercial real estate 15,219 218 15,437
Construction and land 3,585 — 3,585
Multi-family residential 745 — 745
Commercial and industrial 2,790 478 3,268
Consumer 673 — 673
Total allowance for loan losses $ 25,991 $ 696 $ 26,687
Unfunded lending commitments(1) $ 1,800 $ — $ 1,800
Total allowance for credit losses $ 27,791 $ 696 $ 28,487
June 30, 2021
--- --- --- --- --- --- ---
(dollars in thousands) Collectively Evaluated Individually Evaluated(2) Total
Loans:
One- to four-family first mortgage $ 365,640 $ — $ 365,640
Home equity loans and lines 64,614 — 64,614
Commercial real estate 751,488 4,219 755,707
Construction and land 233,714 — 233,714
Multi-family residential 82,966 — 82,966
Commercial and industrial 379,951 800 380,751
Consumer 35,096 — 35,096
Total loans $ 1,913,469 $ 5,019 $ 1,918,488
December 31, 2020
--- --- --- --- --- --- ---
(dollars in thousands) Collectively Evaluated Individually Evaluated Total
Allowance for loan losses:
One- to four-family first mortgage $ 2,965 $ 100 $ 3,065
Home equity loans and lines 676 — 676
Commercial real estate 17,843 1,008 18,851
Construction and land 4,155 — 4,155
Multi-family residential 1,077 — 1,077
Commercial and industrial 3,845 431 4,276
Consumer 863 — 863
Total allowance for loan losses $ 31,424 $ 1,539 $ 32,963
Unfunded lending commitments(1) $ 1,425 $ — $ 1,425
Total allowance for credit losses $ 32,849 $ 1,539 $ 34,388
December 31, 2020
(dollars in thousands) Collectively Evaluated Individually Evaluated(2) Total
Loans:
One- to four-family first mortgage $ 394,632 $ 1,006 $ 395,638
Home equity loans and lines 67,700 — 67,700
Commercial real estate 743,223 7,400 750,623
Construction and land 221,823 — 221,823
Multi-family residential 87,332 — 87,332
Commercial and industrial 417,320 606 417,926
Consumer 38,912 — 38,912
Total loans $ 1,970,942 $ 9,012 $ 1,979,954

(1)The ACL on unfunded lending commitments is recorded within accrued interest payable and other liabilities on the Consolidated Statements of Financial Condition.

(2)Loans individually evaluated included PCD loans of $277,000 at June 30, 2021 and December 31, 2020.

A summary of activity in the ACL for the six months ended June 30, 2021 and June 30, 2020 follows.

Six Months Ended June 30, 2021
(dollars in thousands) Beginning<br>Balance Charge-offs Recoveries Provision (Reversal) Ending<br>Balance
Allowance for credit losses:
One- to four-family first mortgage $ 3,065 $ (172) $ 10 $ (506) $ 2,397
Home equity loans and lines 676 — 4 (98) 582
Commercial real estate 18,851 (1,003) — (2,411) 15,437
Construction and land 4,155 — 63 (633) 3,585
Multi-family residential 1,077 — — (332) 745
Commercial and industrial 4,276 (324) 282 (966) 3,268
Consumer 863 (60) 52 (182) 673
Total allowance for loan losses $ 32,963 $ (1,559) $ 411 $ (5,128) $ 26,687
Unfunded lending commitments $ 1,425 $ — $ — $ 375 $ 1,800
Total allowance for credit losses $ 34,388 $ (1,559) $ 411 $ (4,753) $ 28,487
Six Months Ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- --- ---
(dollars in thousands) Beginning Balance ASC Topic 326 Adoption Impact(1) Charge-offs Recoveries Provision Ending Balance
Allowance for credit losses:
One- to four-family first mortgage $ 2,715 $ 986 $ (55) $ 2 $ 792 $ 4,440
Home equity loans and lines 1,084 (1) (161) 12 613 1,547
Commercial real estate 6,541 1,974 — — 9,297 17,812
Construction and land 2,670 519 (657) 55 1,204 3,791
Multi-family residential 572 (245) — — 613 940
Commercial and industrial 3,694 1,243 (565) 59 (194) 4,237
Consumer 592 157 (189) 93 403 1,056
Total allowance for loan losses $ 17,868 $ 4,633 $ (1,627) $ 221 $ 12,728 $ 33,823
Unfunded lending commitments $ — $ 1,425 $ — $ — $ — $ 1,425
Total allowance for credit losses $ 17,868 $ 6,058 $ (1,627) $ 221 $ 12,728 $ 35,248

(1)On January 1, 2020 the Company adopted ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced a new model known as CECL.

Credit Quality

The following tables present the Company’s loan portfolio by credit quality classification and origination year as of June 30, 2021 and December 31, 2020.

June 30, 2021
Term Loans by Origination Year
(dollars in thousands) 2021 2020 2019 2018 2017 Prior Revolving Loans Revolving Loans Converted to Term Loans Total
One- to four-family first mortgage:
Pass $ 41,653 $ 50,880 $ 51,469 $ 39,590 $ 39,692 $ 124,502 $ 14,004 $ 388 $ 362,178
Special Mention — — — — 15 435 — — 450
Substandard — 133 115 332 260 2,172 — — 3,012
Doubtful — — — — — — — — —
Total one- to four-family first mortgages $ 41,653 $ 51,013 $ 51,584 $ 39,922 $ 39,967 $ 127,109 $ 14,004 $ 388 $ 365,640
Home equity loans and lines:
Pass $ 948 $ 1,005 $ 1,353 $ 1,608 $ 1,039 $ 5,550 $ 52,869 $ 35 $ 64,407
Special Mention — — — — — — — — —
Substandard — — — 5 202 — — — 207
Doubtful — — — — — — — — —
Total home equity loans and lines $ 948 $ 1,005 $ 1,353 $ 1,613 $ 1,241 $ 5,550 $ 52,869 $ 35 $ 64,614
Commercial real estate:
Pass $ 85,793 $ 210,270 $ 154,433 $ 86,160 $ 93,877 $ 90,930 $ 21,636 $ 599 $ 743,698
Special Mention — — — — — 881 — — 881
Substandard — 832 1,948 1,679 314 6,355 — — 11,128
Doubtful — — — — — — — — —
Total commercial real estate loans $ 85,793 $ 211,102 $ 156,381 $ 87,839 $ 94,191 $ 98,166 $ 21,636 $ 599 $ 755,707
Construction and land:
Pass $ 74,769 $ 71,635 $ 52,454 $ 10,185 $ 3,265 $ 2,604 $ 3,512 $ — $ 218,424
Special Mention — 601 — — — — — — 601
Substandard — 14,451 — — — 238 — — 14,689
Doubtful — — — — — — — — —
Total construction and land loans $ 74,769 $ 86,687 $ 52,454 $ 10,185 $ 3,265 $ 2,842 $ 3,512 $ — $ 233,714
June 30, 2021
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Term Loans by Origination Year
(dollars in thousands) 2021 2020 2019 2018 2017 Prior Revolving Loans Revolving Loans Converted to Term Loans Total
Multi-family residential:
Pass $ 10,589 $ 40,262 $ 14,764 $ 9,150 $ 3,126 $ 4,123 $ 952 $ — $ 82,966
Special Mention — — — — — — — — —
Substandard — — — — — — — — —
Doubtful — — — — — — — — —
Total multi-family residential loans $ 10,589 $ 40,262 $ 14,764 $ 9,150 $ 3,126 $ 4,123 $ 952 $ — $ 82,966
Commercial and industrial:
Pass $ 143,207 $ 108,508 $ 23,661 $ 17,025 $ 4,259 $ 3,936 $ 73,231 $ 496 $ 374,323
Special Mention — — 150 — — — 1,761 — 1,911
Substandard — 2,856 — 421 7 33 1,200 — 4,517
Doubtful — — — — — — — — —
Total commercial and industrial loans $ 143,207 $ 111,364 $ 23,811 $ 17,446 $ 4,266 $ 3,969 $ 76,192 $ 496 $ 380,751
Consumer:
Pass $ 2,898 $ 4,718 $ 1,801 $ 694 $ 1,455 $ 17,154 $ 6,145 $ — $ 34,865
Special Mention — — — — — 8 — — 8
Substandard — 35 4 — 17 167 — — 223
Doubtful — — — — — — — — —
Total consumer loans $ 2,898 $ 4,753 $ 1,805 $ 694 $ 1,472 $ 17,329 $ 6,145 $ — $ 35,096
Total loans:
Pass $ 359,857 $ 487,278 $ 299,935 $ 164,412 $ 146,713 $ 248,799 $ 172,349 $ 1,518 $ 1,880,861
Special Mention — 601 150 — 15 1,324 1,761 — 3,851
Substandard — 18,307 2,067 2,437 800 8,965 1,200 — 33,776
Doubtful — — — — — — — — —
Total loans $ 359,857 $ 506,186 $ 302,152 $ 166,849 $ 147,528 $ 259,088 $ 175,310 $ 1,518 $ 1,918,488
December 31, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Term Loans by Origination Year
(dollars in thousands) 2020 2019 2018 2017 2016 Prior Revolving Loans Revolving Loans Converted to Term Loans Total
One- to four-family first mortgage:
Pass $ 58,958 $ 65,070 $ 46,412 $ 48,851 $ 37,039 $ 114,588 $ 17,762 $ 1,457 $ 390,137
Special Mention — — 167 16 — 1,057 — — 1,240
Substandard 129 34 — 335 1,069 2,694 — — 4,261
Doubtful — — — — — — — — —
Total one- to four-family first mortgages $ 59,087 $ 65,104 $ 46,579 $ 49,202 $ 38,108 $ 118,339 $ 17,762 $ 1,457 $ 395,638
Home equity loans and lines:
Pass $ 1,172 $ 1,307 $ 2,028 $ 964 $ 1,889 $ 5,537 $ 53,309 $ 1,389 $ 67,595
Special Mention — — — 43 — — — — 43
Substandard — — — — — 58 4 — 62
Doubtful — — — — — — — — —
Total home equity loans and lines $ 1,172 $ 1,307 $ 2,028 $ 1,007 $ 1,889 $ 5,595 $ 53,313 $ 1,389 $ 67,700
Commercial real estate:
Pass $ 235,900 $ 156,646 $ 96,153 $ 102,166 $ 59,859 $ 60,720 $ 22,962 $ 56 $ 734,462
Special Mention — — — 15 951 — — — 966
Substandard 1,606 1,994 1,742 323 1,344 8,164 — 22 15,195
Doubtful — — — — — — — — —
Total commercial real estate loans $ 237,506 $ 158,640 $ 97,895 $ 102,504 $ 62,154 $ 68,884 $ 22,962 $ 78 $ 750,623
Construction and land:
Pass $ 87,540 $ 91,337 $ 16,703 $ 5,486 $ 2,585 $ 1,505 $ 1,892 $ 429 $ 207,477
Special Mention 877 — — — — 618 — 627 2,122
Substandard 451 50 — — 252 249 — 11,222 12,224
Doubtful — — — — — — — — —
Total construction and land loans $ 88,868 $ 91,387 $ 16,703 $ 5,486 $ 2,837 $ 2,372 $ 1,892 $ 12,278 $ 221,823
December 31, 2020
--- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- ---
Term Loans by Origination Year
(dollars in thousands) 2020 2019 2018 2017 2016 Prior Revolving Loans Revolving Loans Converted to Term Loans Total
Multi-family residential:
Pass $ 40,462 $ 24,329 $ 9,711 $ 3,844 $ 2,889 $ 4,539 $ 1,452 $ — $ 87,226
Special Mention — — — — — — — — —
Substandard — — — — — 106 — — 106
Doubtful — — — — — — — — —
Total multi-family residential loans $ 40,462 $ 24,329 $ 9,711 $ 3,844 $ 2,889 $ 4,645 $ 1,452 $ — $ 87,332
Commercial and industrial:
Pass $ 264,079 $ 29,115 $ 21,053 $ 6,001 $ 3,952 $ 2,408 $ 82,039 $ 1,311 $ 409,958
Special Mention 2,089 792 131 — — 1 1,801 — 4,814
Substandard 592 — 427 23 141 16 1,955 — 3,154
Doubtful — — — — — — — — —
Total commercial and industrial loans $ 266,760 $ 29,907 $ 21,611 $ 6,024 $ 4,093 $ 2,425 $ 85,795 $ 1,311 $ 417,926
Consumer:
Pass $ 6,844 $ 2,667 $ 1,149 $ 2,073 $ 1,118 $ 18,258 $ 6,340 $ 27 $ 38,476
Special Mention 4 — 4 — 13 120 — 5 146
Substandard — 34 3 12 17 223 — 1 290
Doubtful — — — — — — — — —
Total consumer loans $ 6,848 $ 2,701 $ 1,156 $ 2,085 $ 1,148 $ 18,601 $ 6,340 $ 33 $ 38,912
Total loans:
Pass $ 694,955 $ 370,471 $ 193,209 $ 169,385 $ 109,331 $ 207,555 $ 185,756 $ 4,669 $ 1,935,331
Special Mention 2,970 792 302 74 964 1,796 1,801 632 9,331
Substandard 2,778 2,112 2,172 693 2,823 11,510 1,959 11,245 35,292
Doubtful — — — — — — — — —
Total loans $ 700,703 $ 373,375 $ 195,683 $ 170,152 $ 113,118 $ 220,861 $ 189,516 $ 16,546 $ 1,979,954

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.

June 30, 2021
(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
Originated loans:
Real estate loans:
One- to four-family first mortgage $ 1,632 $ 21 $ 327 $ 1,980 $ 252,876 $ 254,856
Home equity loans and lines — — 168 168 51,851 52,019
Commercial real estate — 191 6,414 6,605 612,555 619,160
Construction and land 147 — — 147 222,547 222,694
Multi-family residential — — — — 78,167 78,167
Total real estate loans 1,779 212 6,909 8,900 1,217,996 1,226,896
Other loans:
Commercial and industrial 461 179 412 1,052 366,544 367,596
Consumer 131 4 91 226 30,475 30,701
Total other loans 592 183 503 1,278 397,019 398,297
Total originated loans $ 2,371 $ 395 $ 7,412 $ 10,178 $ 1,615,015 $ 1,625,193
Acquired loans:
Real estate loans:
One- to four-family first mortgage $ 1,285 $ 531 $ 769 $ 2,585 $ 108,199 $ 110,784
Home equity loans and lines 40 — — 40 12,555 12,595
Commercial real estate 2,017 — 647 2,664 133,883 136,547
Construction and land — 9 80 89 10,931 11,020
Multi-family residential — — — — 4,799 4,799
Total real estate loans 3,342 540 1,496 5,378 270,367 275,745
Other loans:
Commercial and industrial 30 2 421 453 12,702 13,155
Consumer 16 18 16 50 4,345 4,395
Total other loans 46 20 437 503 17,047 17,550
Total acquired loans $ 3,388 $ 560 $ 1,933 $ 5,881 $ 287,414 $ 293,295
Total loans:
Real estate loans:
One- to four-family first mortgage $ 2,917 $ 552 $ 1,096 $ 4,565 $ 361,075 $ 365,640
Home equity loans and lines 40 — 168 208 64,406 64,614
Commercial real estate 2,017 191 7,061 9,269 746,438 755,707
Construction and land 147 9 80 236 233,478 233,714
Multi-family residential — — — — 82,966 82,966
Total real estate loans 5,121 752 8,405 14,278 1,488,363 1,502,641
Other loans:
Commercial and industrial 491 181 833 1,505 379,246 380,751
Consumer 147 22 107 276 34,820 35,096
Total other loans 638 203 940 1,781 414,066 415,847
Total loans $ 5,759 $ 955 $ 9,345 $ 16,059 $ 1,902,429 $ 1,918,488
December 31, 2020
--- --- --- --- --- --- --- --- --- --- --- --- ---
(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
Originated loans:
Real estate loans:
One- to four-family first mortgage $ 1,651 $ 66 $ 365 $ 2,082 $ 258,386 $ 260,468
Home equity loans and lines 117 148 — 265 52,101 52,366
Commercial real estate 518 532 6,770 7,820 581,524 589,344
Construction and land — — — — 207,928 207,928
Multi-family residential 94 — — 94 82,051 82,145
Total real estate loans 2,380 746 7,135 10,261 1,181,990 1,192,251
Other loans:
Commercial and industrial 797 3 603 1,403 398,377 399,780
Consumer 219 42 145 406 32,702 33,108
Total other loans 1,016 45 748 1,809 431,079 432,888
Total originated loans $ 3,396 $ 791 $ 7,883 $ 12,070 $ 1,613,069 $ 1,625,139
Acquired loans:
Real estate loans:
One- to four-family first mortgage $ 1,823 $ 502 $ 1,154 $ 3,479 $ 131,691 $ 135,170
Home equity loans and lines 34 43 25 102 15,232 15,334
Commercial real estate 603 303 2,462 3,368 157,911 161,279
Construction and land — — 142 142 13,753 13,895
Multi-family residential 92 — — 92 5,095 5,187
Total real estate loans 2,552 848 3,783 7,183 323,682 330,865
Other loans:
Commercial and industrial 3 — 907 910 17,236 18,146
Consumer 126 50 66 242 5,562 5,804
Total other loans 129 50 973 1,152 22,798 23,950
Total acquired loans $ 2,681 $ 898 $ 4,756 $ 8,335 $ 346,480 $ 354,815
Total loans:
Real estate loans:
One- to four-family first mortgage $ 3,474 $ 568 $ 1,519 $ 5,561 $ 390,077 $ 395,638
Home equity loans and lines 151 191 25 367 67,333 67,700
Commercial real estate 1,121 835 9,232 11,188 739,435 750,623
Construction and land — — 142 142 221,681 221,823
Multi-family residential 186 — — 186 87,146 87,332
Total real estate loans 4,932 1,594 10,918 17,444 1,505,672 1,523,116
Other loans:
Commercial and industrial 800 3 1,510 2,313 415,613 417,926
Consumer 345 92 211 648 38,264 38,912
Total other loans 1,145 95 1,721 2,961 453,877 456,838
Total loans $ 6,077 $ 1,689 $ 12,639 $ 20,405 $ 1,959,549 $ 1,979,954

At June 30, 2021 and December 31, 2020, loans greater than 90 days past due and accruing totaled $4,000 and $2,000, respectively.

The following tables summarize information pertaining to nonaccrual loans as of dates indicated.

June 30, 2021
(dollars in thousands) With Related Allowance Without Related Allowance Total(1)
Nonaccrual loans:
One- to four-family first mortgage $ 2,530 $ — $ 2,530
Home equity loans and lines 209 — 209
Commercial real estate 6,290 3,367 9,657
Construction and land 250 — 250
Multi-family residential — — —
Commercial and industrial 916 185 1,101
Consumer 225 — 225
Total $ 10,420 $ 3,552 $ 13,972
December 31, 2020
(dollars in thousands) With Related Allowance Without Related Allowance Total(1)
Nonaccrual loans:
One- to four-family first mortgage $ 3,838 $ — $ 3,838
Home equity loans and lines 63 — 63
Commercial real estate 12,298 — 12,298
Construction and land 469 — 469
Multi-family residential — — —
Commercial and industrial 1,717 — 1,717
Consumer 292 — 292
Total $ 18,677 $ — $ 18,677

(1)PCD loans of $413,000 and $390,000 are included in nonaccrual loans at June 30, 2021 and December 31, 2020, respectively.

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 June 30, 2021 and December 31, 2020 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:

•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 June 30, 2021 and December 31, 2020.

June 30, 2021
(dollars in thousands) Loans ACL
One- to four-family first mortgage $ — $ —
Home equity loans and lines — —
Commercial real estate 4,219 218
Construction and land — —
Multi-family residential — —
Commercial and industrial 800 478
Consumer — —
Total $ 5,019 $ 696
December 31, 2020
(dollars in thousands) Loans ACL
One- to four-family first mortgage $ 1,006 $ 100
Home equity loans and lines — —
Commercial real estate 7,400 1,008
Construction and land — —
Multi-family residential — —
Commercial and industrial 606 431
Consumer — —
Total $ 9,012 $ 1,539

At June 30, 2021 and December 31, 2020, collateral dependent commercial real estate loans included one loan acquired with deteriorated credit quality totaling $277,000.

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 $1,113,000 and 1,302,000 at June 30, 2021 and December 31, 2020, 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 June 30, 2021 and December 31, 2020 totaled $178,000 and $877,000, respectively. Loans secured by single family residential real estate that were in the process of foreclosure at June 30, 2021 and December 31, 2020 totaled $385,000 and $446,000, respectively.

Foreclosed assets and ORE included certain bank buildings that meet the criteria to be classified as assets held for sale. The carrying value of these assets totaled $212,000 at June 30, 2021 and December 31, 2020. The expected timing of the sale of the properties is uncertain.

Troubled Debt Restructurings

During the course of its lending operations, the Company periodically grants concessions to its customers in an attempt to protect as much of its investment as possible and to minimize risk of loss. These concessions may include restructuring the terms of a customer loan to alleviate the burden of the customer’s near-term cash requirements. Loans are TDRs when the Company agrees to restructure a loan to a borrower who is experiencing financial difficulties in a manner that is deemed to be a “concession”. The Company defines a concession as a modification of existing terms granted to a borrower for economic or legal reasons related to the borrower’s financial difficulties that the Company would otherwise not consider. The concession either is granted through an agreement with the customer or is imposed by a court or by law. Concessions include modifying original loan terms to reduce or defer cash payments required as part of the loan agreement, including but not limited to:

•a reduction of the stated interest rate for the remaining original life of the debt,

•an extension of the maturity date or dates at an interest rate lower than the current market rate for new debt with similar risk characteristics,

•a reduction of the face amount or maturity amount of the debt or

•a reduction of accrued interest receivable on the debt.

In its determination of whether the customer is experiencing financial difficulties, the Company considers numerous indicators, including, but not limited to:

•whether the customer is currently in default on its existing loan, or is in an economic position where it is probable the customer will be in default on its loan in the foreseeable future without a modification,

•whether the customer has declared or is in the process of declaring bankruptcy,

•whether there is substantial doubt about the customer’s ability to continue as a going concern,

•whether, based on its projections of the customer’s current capabilities, the Company believes the customer’s future cash flows will be insufficient to service the debt, including interest, in accordance with the contractual terms of the existing agreement for the foreseeable future and

•whether, without modification, the customer cannot obtain sufficient funds from other sources at an effective interest rate equal to the current market rate for similar debt for a non-troubled debtor.

If the Company concludes that both a concession has been granted and the concession was granted to a customer experiencing financial difficulties, the Company identifies the loan as a TDR. At least quarterly, the Company evaluates larger commercial TDRs (i.e., TDRs with balances of $500,000 or greater) to determine if the assets should be individually evaluated for credit losses. The ACL for loans that are individually evaluated is based on a comparison of the recorded investment in the loan with either the expected cash flows discounted using the loan’s original effective interest rate, observable market price for the loan or the fair value of the collateral underlying certain collateral-dependent loans. Residential, consumer and smaller balance commercial TDRs are included in the Company's pooled-loan analysis to calculate the ACL and, generally, do not have a material impact on the overall ACL.

As of June 30, 2021, the Company had modified loans with an aggregate outstanding loan balance of $7.0 million, or less than 1% of total outstanding loans, via payment relief in the nature of principal and/or interest deferrals for 90 days. These modifications were done in accordance with Section 4013 of the Coronavirus Aid, Relief, and Economic Security ("CARES") Act and the Interagency Statement on Loan Modifications on Reporting for Financial Institutions Working With Customers Affected by the Coronavirus. Accordingly, these loans were not categorized as TDRs.

The following table summarizes information pertaining to TDRs modified during the periods indicated.

Six Months Ended June 30,
2021 2020
(dollars in thousands) Number of Contracts Pre-modification Outstanding Recorded Investment Post-modification Outstanding Recorded Investment Number of Contracts Pre-modification Outstanding Recorded Investment Post-modification Outstanding Recorded Investment
Troubled debt restructurings:
One- to four-family first mortgage — $ — $ — 7 $ 967 $ 472
Home equity loans and lines — — — — — —
Commercial real estate 2 479 450 4 1,044 1,025
Construction and land — — — — — —
Multi-family residential — — — — — —
Commercial and industrial 2 2,397 2,370 1 33 32
Other consumer 1 5 3 1 4 4
Total 5 $ 2,881 $ 2,823 13 $ 2,048 $ 1,533

None of the the loans modified during the six months ended June 30, 2021 defaulted during the same period.

Five residential mortgage loans totaling $674,000, two commercial real estate loans totaling $282,000 and one consumer loan totaling $4,000 were modified during the six months ended June 30, 2020 and defaulted within twelve months of modification. The defaults did not have a significant impact on our allowance for credit losses at June 30, 2020.

  1. 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 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 $63,000 will be reclassified as additional interest expense.

Non-designated Hedges

The Company’s existing credit derivatives result from participations in interest rate swaps provided by external lenders as part of loan participation arrangements, therefore, are not used to manage interest rate risk in the Company’s assets or liabilities. Derivatives not designated as hedges are not speculative and result from a service the Company provides to certain lenders which participate in loans. For derivative instruments that are not designated as hedging instruments, changes in the fair value of the derivatives are recognized in earnings immediately.

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 June 30, 2021 and December 31, 2020.

June 30, 2021
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 $ 40,000 $ 1,133 $ — $ —
Derivatives not designated as hedging instruments:
Risk participation agreements — — 10,000 38
Netting adjustments — —
Net derivative amounts $ 1,133 $ 38
December 31, 2020
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 $ 40,000 $ 214 $ — $ —
Derivatives not designated as hedging instruments:
Risk participation agreements — — 10,000 58
Netting adjustments — —
Net derivative amounts $ 214 $ 58

(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.

At June 30, 2021 and December 31, 2020, accumulated unrealized gains, net of taxes, on derivative instruments totaled $900,000 and $174,000, respectively.

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 June 30, 2021 and June 30, 2020.

Three Months Ended June 30, 2021
Amount of Loss Recognized in OCI Location of Loss Reclassified from AOCI into Income Amount of Loss 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 $ (414) $ (414) Interest expense $ (16) $ (16)
Six Months Ended June 30, 2021
Amount of Gain Recognized in OCI Location of Loss Reclassified from AOCI into Income Amount of Loss 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 $ 887 $ 887 Interest expense $ (32) $ (32)
Three Months Ended June 30, 2020
--- --- --- --- --- --- --- --- --- --- --- ---
Amount of Loss Recognized in OCI Location of Loss Reclassified from AOCI into Income Amount of Loss 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 $ (170) $ (170) Interest expense $ (12) $ (12)
Six Months Ended June 30, 2020
Amount of Loss Recognized in OCI Location of Loss Reclassified from AOCI into Income Amount of Loss 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 $ (170) $ (170) Interest expense $ (12) $ (12)

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 June 30, 2021.

(dollars in thousands) Location of (Loss) Income Recognized on Non-designated Hedges Three Months Ended June 30, 2021 Six Months Ended June 30, 2021
Effects of non-designated hedges
Risk participation agreements Other noninterest income $ (18) $ 20

At and during the three and six months ended June 30, 2020, the Company was not a party to derivative contracts not designated as hedging instruments.

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.

As of June 30, 2021, 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 June 30, 2021, it would not have been required to settle any obligations under the agreements since the termination value was $0.

  1. 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:

•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 June 30, 2021, 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

Derivative assets 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. The fair value of these derivative financial instruments is obtained from a third-party pricing service that uses widely accepted valuation techniques including discounted cash flow analysis on the expected cash flows of each derivative. The analysis reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The fair values of interest rate swaps are determined using the market standard methodology of netting the discounted future fixed cash receipts (or payments) and the discounted expected variable cash payments (or receipts). The variable cash payments (or receipts) are based on an expectation of future interest rates (forward curves) derived from observable market interest rate curves. The Company has determined that its derivative valuations are classified in Level 2 of the fair vale hierarchy.

The following tables present the balances of assets measured for fair value on a recurring basis as of June 30, 2021 and December 31, 2020.

(dollars in thousands) June 30, 2021 Level 1 Level 2 Level 3
Assets
Available for sale securities:
U.S. agency mortgage-backed $ 181,668 $ — $ 181,668 $ —
Collateralized mortgage obligations 47,488 — 47,488 —
Municipal bonds 44,400 — 44,400 —
U.S. government agency 6,055 — 6,055 —
Corporate bonds 5,574 — 5,574 —
Total $ 285,185 $ — $ 285,185 $ —
Derivative assets $ 1,133 $ — $ 1,133 $ —
Total $ 286,318 $ — $ 286,318 $ —
Liabilities
Derivative liabilities $ 38 $ — $ 38 $ — (dollars in thousands) December 31, 2020 Level 1 Level 2 Level 3
--- --- --- --- --- --- --- --- ---
Assets
Available for sale securities:
U.S. agency mortgage-backed $ 142,812 $ — $ 142,812 $ —
Collateralized mortgage obligations 75,620 — 75,620 —
Municipal bonds 28,011 — 28,011 —
U.S. government agency 6,255 — 6,255 —
Corporate bonds 2,054 — 2,054 —
Total $ 254,752 $ — $ 254,752 $ —
Derivative assets $ 214 $ — $ 214 $ —
Total $ 254,966 $ — $ 254,966 $ —
Liabilities
Derivative liabilities $ 58 $ — $ 58 $ —

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.

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) June 30, 2021 Level 1 Level 2 Level 3
Assets
Loans individually evaluated $ 4,323 $ — $ — $ 4,323
Foreclosed assets and ORE 1,113 — — 1,113
Total $ 5,436 $ — $ — $ 5,436
Fair Value Measurements Using
(dollars in thousands) December 31, 2020 Level 1 Level 2 Level 3
Assets
Loans individually evaluated $ 7,473 $ — $ — $ 7,473
Foreclosed assets and ORE 1,302 — — 1,302
Total $ 8,775 $ — $ — $ 8,775

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
June 30, 2021
Loans individually evaluated $ 4,323 Third party appraisals and discounted cash flows Collateral values, market discounts and estimated costs to sell 0% - 95% 14%
Foreclosed assets and ORE $ 1,113 Third party appraisals, sales contracts, broker price opinions Collateral values, market discounts and estimated costs to sell 6% - 41% 7%
(dollars in thousands) Fair Value Valuation Technique Unobservable Inputs Range of<br>Discounts Weighted Average Discount
December 31, 2020
Loans individually evaluated $ 7,473 Third party appraisals and discounted cash flows Collateral values, market discounts and estimated costs to sell 3% - 87% 17%
Foreclosed assets and ORE $ 1,302 Third party appraisals, sales contracts, broker price opinions Collateral values, market discounts and estimated costs to sell 6% - 42% 11%

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.

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, 2020. There have been no material changes from the fair value estimate methods and assumptions disclosed in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020.

The following table presents estimated fair values of the Company’s financial instruments as of the dates indicated.

Fair Value Measurements at June 30, 2021
(dollars in thousands) Carrying<br>Amount Total Level 1 Level 2 Level 3
Financial Assets
Cash and cash equivalents $ 393,203 $ 393,203 $ 393,203 $ — $ —
Interest-bearing deposits in banks 349 349 349 — —
Investment securities available for sale 285,185 285,185 — 285,185 —
Investment securities held to maturity 2,118 2,164 — 2,164 —
Mortgage loans held for sale 3,752 3,752 — 3,752 —
Loans, net 1,891,801 1,893,253 — 1,888,930 4,323
Cash surrender value of BOLI 40,781 40,781 40,781 — —
Derivative assets(1) 1,133 1,133 — 1,133 —
Financial Liabilities
Deposits $ 2,370,764 $ 2,371,879 $ — $ 2,371,879 $ —
Other borrowings 5,539 6,050 — 6,050 —
Long-term FHLB advances 27,502 28,028 — 28,028 —
Derivative liabilities(1) 38 38 — 38 —
Fair Value Measurements at December 31, 2020
(dollars in thousands) Carrying<br>Amount Total Level 1 Level 2 Level 3
Financial Assets
Cash and cash equivalents $ 187,952 $ 187,952 $ 187,952 $ — $ —
Interest-bearing deposits in banks 349 349 349 — —
Investment securities available for sale 254,752 254,752 — 254,752 —
Investment securities held to maturity 2,934 2,996 — 2,996 —
Mortgage loans held for sale 9,559 9,559 — 9,559 —
Loans, net 1,946,991 1,957,705 — 1,950,232 7,473
Cash surrender value of BOLI 40,334 40,334 40,334 — —
Derivative assets(1) 214 214 — 214 —
Financial Liabilities
Deposits $ 2,213,821 $ 2,216,002 $ — $ 2,216,002 $ —
Other borrowings 5,539 6,224 — 6,224 —
Long-term FHLB advances 28,824 29,662 — 29,662 —
Derivative liabilities(1) 58 58 — 58 —

(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, 2020 through June 30, 2021 and on its results of operations for the three and six months ended June 30, 2021 and 2020. 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. Factors that may cause actual results to differ materially from these forward-looking statements include, but are not limited to, the risk factors described 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, 2020.

The COVID-19 pandemic has caused significant economic dislocation in the United States as many state and local governments have ordered non-essential businesses to close and residents to shelter in place at home. Given its ongoing and dynamic nature, it is difficult to predict the full impact of COVID-19 on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and when and how the national and local economies may be reopened. As a result of the COVID-19 pandemic and the related adverse local and national economic consequences, our forward-looking statements are subject to the following additional risks, uncertainties and assumptions, among others:

•Demand for our products and services may decline;

•If high levels of unemployment continue, our loan delinquencies, non-performing assets and loan foreclosures may increase;

•Collateral for loans, especially real estate, may decline in value;

•Our allowance for loan losses may have to be increased if our borrowers continue to experience financial difficulties;

•As a result of the reduction in the Federal Reserve Board's target federal funds rate to near 0%, the yield on our interest-earning assets may decline more than the decline in the cost of our interest-bearing liabilities;

•A material decrease in our net income or a net loss over several quarters could result in a suspension of our stock repurchase program and/or a reduction of our quarterly stock dividend;

•Our cyber security risks may be increased as a result of more of our employees working remotely; and

•FDIC deposit insurance premiums may increase if the agency experiences additional resolution costs.

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.

Non-GAAP Financial Measures

Management's Discussion and Analysis of Financial Condition and Results of Operations contains financial information determined by methods other than in accordance with generally accepted accounting principles (“GAAP”). The Company's management uses this non-GAAP financial information in its analysis of the Company's performance. In this item, information is included which excludes PPP loans. Management believes the presentation of this non-GAAP financial information provides useful information that is helpful to a full understanding of the Company’s financial position and operating results. This non-GAAP financial information should not be viewed as a substitute for financial information determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP financial information presented by other companies. A reconciliation on non-GAAP information included herein to GAAP is presented at the end of this item.

EXECUTIVE OVERVIEW

The Company reported net income for the second quarter of 2021 of $11.4 million, or $1.34 diluted EPS, up $8.5 million compared to the the second quarter of 2020. Net income for the second quarter of 2020 totaled $2.9 million, or $0.33 diluted EPS. For the six months ended June 30, 2021, the Company reported net income of $23.3 million, or $2.75 diluted EPS, up $17.9 million from $5.4 million, or $0.60 diluted EPS, reported for the six months ended June 30, 2020.

Key components of the Company’s performance during the three and six months ended June 30, 2021 include:

•Assets increased $172.9 million, or 6.7%, from December 31, 2020 to $2.8 billion at June 30, 2021.

•Total loans were $1.9 billion, down $61.5 million, or 3.1%, from December 31, 2020.

•PPP loans totaled $197.6 million, down $23.6 million, or 10.7%, from December 31, 2020.

•During three and six months ended June 30, 2021, the Company reversed $3.4 million and $5.1 million, respectively, of the allowance for loan losses primarily due to improvements in our assessment of the economic impact of the COVID-19 pandemic and an increase in prepayments on loans.

•The ALL totaled $26.7 million, or 1.39% of total loans, at June 30, 2021 compared to $33.0 million, or 1.66% of total loans, at December 31, 2020. Excluding PPP loans, the ratios of the ALL to total loans were 1.55% and 1.87% at June 30, 2021 and December 31, 2020, respectively.

•Nonperforming assets decreased $4.9 million, or 24.5%, from $20.0 million, or 0.77% of total assets, at December 31, 2020 to $15.1 million, or 0.55% of total assets, at June 30, 2021.

•Total deposits increased $156.9 million, or 7.1%, from $2.2 billion at December 31, 2020 to $2.4 billion at June 30, 2021.

•The net interest margin was 3.75% and 3.94% for the three and six months ended June 30, 2021, respectively, down one basis point from the comparable periods in 2020. Excluding the impact of PPP loans, the net interest margin was 3.71% and 3.79% for the three and six months ended June 30, 2021, respectively, compared to 3.82% and 3.99% for the three and six months ended June 30, 2020, respectively.

•The average rate paid on total interest-bearing deposits was 0.36%, down 42 bps from the second quarter of 2020. For the six months ended June 30, 2021, the average yield paid on total interest-bearing deposits was 0.39%, down 53 bps from the six months ended June 30, 2020.

•Total interest expense for the second quarter of 2021 was down $1.6 million, or 49.2%, compared to the second quarter of 2020. For the six months ended June 30, 2021, total interest expense was down $3.7 million, or 51.4%, from the comparable period in 2020.

•Noninterest income for the second quarter of 2021 was up $191,000, or 6.2%, compared to the second quarter of 2020 primarily due to income from bank card fees (up $464,000) and service fees and charges (up $204,000), partially offset by an increase in net losses on the sale of assets (up $444,000). For the six months ended June 30, 2021, noninterest income was up $893,000, or 13.8%, from the comparable period in 2020 primarily due gains on the sale of loans (up $788,000) and income from bank card fees (up $633,000), partially offset by an increase in net losses on the sale of assets (up $446,000).

•Noninterest expense for the second quarter of 2021 was up $1.1 million, or 7.2%, compared to the second quarter of 2020 primarily due to increases in expenses for data processing and communication (up $399,000), the provision for credit losses on unfunded commitments (up $375,000) compensation and benefits (up $325,000) and marketing and advertising (up $108,000). For the six months ended June 30, 2021, noninterest expense was up $1.7 million, or 5.4%, from the comparable period in 2020 primarily due increases in expenses for compensation and benefits (up $573,000), data processing and communication (up $566,000), the provision for credit losses on unfunded commitments (up $375,000) and regulatory fees (up $207,000).

COVID-19 IMPACTS

Nearly all COVID-19 related restrictions were removed in Mississippi during the first quarter of 2021, while Louisiana lifted its mask mandate in April 2021 and ended capacity limits in May 2021.

Under the Small Business Administration's ("SBA") Paycheck Protection Program ("PPP"), the Company funded 3,072 PPP loans totaling $262.2 million during 2020. During 2021, the Company funded an additional 1,803 PPP loans totaling $126.5 million. At June 30, 2021, the total recorded net investment in PPP loans was $197.6 million, of which 2,209 loans with an aggregate outstanding balance of $64.1 million were for amounts of $150,000 or less.

To give immediate financial support to our customers, the Company began providing principal and/or interest payment deferral options in March 2020. At June 30, 2021, $7.0 million, or less than 1% of total loans, were under deferral agreements. The level of COVID-19 related deferrals formerly totaled $558.8 million, or 28% of total loans, at June 30, 2020. Of the loans that have exited deferral agreements, $443.7 million, or 99%, were current and performing as of June 30, 2021.

FINANCIAL CONDITION

Loans, Allowance for Credit Losses and Asset Quality

Loans

Total loans at June 30, 2021 were $1.9 billion, down $61.5 million, or 3.1%, from December 31, 2020. PPP loans, included in commercial and industrial loans, totaled $197.6 million at June 30, 2021, down $23.6 million, or 10.7%, from December 31, 2020. Excluding PPP loans, loans decreased $37.9 million, or 2.2%, from December 31, 2020.

The following table summarizes the composition of the Company’s loan portfolio as of the dates indicated.

(dollars in thousands) June 30, 2021 December 31, 2020 Increase/(Decrease)
Real estate loans:
One-to four-family first mortgage $ 365,640 $ 395,638 $ (29,998) (7.6) %
Home equity loans and lines 64,614 67,700 (3,086) (4.6)
Commercial real estate 755,707 750,623 5,084 0.7
Construction and land 233,714 221,823 11,891 5.4
Multi-family residential 82,966 87,332 (4,366) (5.0)
Total real estate loans 1,502,641 1,523,116 (20,475) (1.3) %
Other loans:
Commercial and industrial 380,751 417,926 (37,175) (8.9)
Consumer 35,096 38,912 (3,816) (9.8)
Total other loans 415,847 456,838 (40,991) (9.0)
Total loans $ 1,918,488 $ 1,979,954 $ (61,466) (3.1) %

During the first half of 2021, the Company experienced significant pay-downs across nearly all segments of the loan portfolio. The increase in commercial real estate loans was primarily due to the conversion of existing construction loans to permanent financing during the second quarter of 2021. Construction and land loan growth was strongest in our New Orleans and Northshore markets.

Allowance for Credit Losses

Due to the adoption of ASC Topic 326 on January 1, 2020, management maintains, based on current and forecasted information, an ACL that reflects a current estimate of expected credit losses ("CECL") for the estimated life of the loan portfolio at reporting periods subsequent to the adoption date.

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 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.

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 conditions used by management to determine the current level of the ACL.

Additional Information on Loan Portfolio Composition and Allowance for Credit Losses

At June 30, 2021, the ALL totaled $26.7 million, or 1.39% of total loans, down $6.3 million from $33.0 million, or 1.66% of total loans, at December 31, 2020. During the six months ended June 30, 2021, the Company reversed $5.1 million of the allowance loan losses primarily due to improvements in our assessment of the economic impact of the COVID-19 pandemic and an increase in prepayments on loans. Net loan charge-offs totaled $1.1 million for the six months ended June 30, 2021 and were primarily attributable to an acquired hotel loan and one originated commercial relationship, both of which were nonperforming prior to the COVID-19 crisis.

As the fallout of the COVID-19 pandemic continues to impact the national, regional and local economies, management continues to proactively monitor the loan portfolio to identify potential weaknesses that may develop. Specifically, management has identified and is monitoring exposures to borrowers and industries that may be impacted more immediately and acutely than others. In many instances, management has directly reached out to specific borrowers to provide guidance and assistance as appropriate. On a portfolio level, management continues to monitor aggregate exposures to highly sensitive segments for changes in asset quality, payment performance and liquidity levels. Additionally, management is monitoring unfunded commitments, such as lines of credit and overdraft protection, to monitor liquidity and funding issues that may arise with our customers.

The following table provides a summary of the loan portfolio and related reserves at June 30, 2021. We have separately identified certain information regarding PPP loans which, due to the existence of full repayment guarantees from the SBA as well as the likelihood that the vast majority of such loans will be forgiven, we believe entail minimal credit risk to the Company.

Loans Allowance for Credit Losses
(dollars in thousands) Total Loans PPP Loans Total ACL ACL to <br>Total Loans ACL to <br>Total Non-PPP Loans
June 30, 2021
Retail CRE $ 180,608 $ — $ 5,267 2.92 % 2.92 %
Hotels and short-term rentals 102,542 6,661 4,718 4.60 4.92
Restaurants and bars 92,928 31,927 2,255 2.43 3.70
Energy 41,944 8,818 1,024 2.44 3.09
Credit cards 3,826 — 306 8.00 8.00
Other loans 1,496,640 150,208 13,117 0.88 0.97
Total $ 1,918,488 $ 197,614 $ 26,687 1.39 % 1.55 %
Unfunded lending commitments(1) $ — $ — $ 1,800 — —
Total $ 1,918,488 $ 197,614 $ 28,487 1.48 % 1.66 %

(1)The ACL on unfunded lending commitments is recorded within accrued interest payable and other liabilities on the Consolidated Statements of Financial Condition.

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 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 June 30, 2021 and December 31, 2020, loans individually evaluated for credit losses were $5.0 million and $9.0 million, respectively. Total loans individually evaluated for credit losses at June 30, 2021 included $1.0 million of acquired loans, of which $277,000 was acquired with deteriorated credit quality. At December 31, 2020, loans individually evaluated for credit losses included $2.4 million of acquired loans, of which $277,000 was acquired with deteriorated credit quality.

The following tables provide a summary of loans individually evaluated for credit losses as of the dates indicated.

June 30, 2021
(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 4,219 218 5.17
Construction and land — — —
Multi-family residential — — —
Commercial and industrial 800 478 59.75
Consumer — — —
Total $ 5,019 $ 696 13.87 %
December 31, 2020
(dollars in thousands) Recorded investment Allowance for Loan Losses Allowance to Total Loans
Loans Individually Evaluated
One- to four-family first mortgage $ 1,006 $ 100 9.94 %
Home equity loans and lines — — —
Commercial real estate 7,400 1,008 13.62
Construction and land — — —
Multi-family residential — — —
Commercial and industrial 606 431 71.12
Consumer — — —
Total $ 9,012 $ 1,539 17.08 %

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 June 30, 2021 and December 31, 2020, loans classified as substandard totaled $33.8 million and $35.3 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) June 30, 2021 December 31, 2020 Increase/(Decrease)
Special Mention Loans
One- to four-family first mortgage $ 450 $ 1,240 $ (790) (63.7) %
Home equity loans and lines — 43 (43) (100.0)
Commercial real estate 881 966 (85) (8.8)
Construction and land 601 2,122 (1,521) (71.7)
Multi-family residential — — — —
Commercial and industrial 1,911 4,814 (2,903) (60.3)
Consumer 8 146 (138) (94.5)
Total special mention loans $ 3,851 $ 9,331 $ (5,480) (58.7) %
(dollars in thousands) June 30, 2021 December 31, 2020 Increase/(Decrease)
Substandard Loans
One- to four-family first mortgage $ 3,012 $ 4,261 $ (1,249) (29.3) %
Home equity loans and lines 207 62 145 233.9
Commercial real estate 11,128 15,195 (4,067) (26.8)
Construction and land 14,689 12,224 2,465 20.2
Multi-family residential — 106 (106) (100.0)
Commercial and industrial 4,517 3,154 1,363 43.2
Consumer 223 290 (67) (23.1)
Total substandard loans $ 33,776 $ 35,292 $ (1,516) (4.3) %

Special mention loans decreased $5.5 million from December 31, 2020 to June 30, 2021 primarily due to upgrades of special mention loans to a pass rating.

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. 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. Due to the adoption of ASC Topic 326 on January 1, 2020, 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 and performing troubled debt restructurings as of the dates indicated.

June 30, 2021 December 31, 2020
(dollars in thousands) Originated Acquired(1) Total Originated Acquired(1) Total
Nonaccrual loans(2):
Real estate loans:
One- to four-family first mortgage $ 686 $ 1,844 $ 2,530 $ 1,464 $ 2,374 $ 3,838
Home equity loans and lines 168 41 209 24 39 63
Commercial real estate 6,627 3,030 9,657 7,650 4,648 12,298
Construction and land — 250 250 — 469 469
Multi-family residential — — — — — —
Other loans:
Commercial and industrial 621 480 1,101 603 1,114 1,717
Consumer 177 48 225 188 104 292
Total nonaccrual loans 8,279 5,693 13,972 9,929 8,748 18,677
Accruing loans 90 days or more past due 4 — 4 2 — 2
Total nonperforming loans 8,283 5,693 13,976 9,931 8,748 18,679
Foreclosed assets and ORE 724 389 1,113 422 880 1,302
Total nonperforming assets 9,007 6,082 15,089 10,353 9,628 19,981
Performing troubled debt restructurings 4,117 1,103 5,220 1,512 573 2,085
Total nonperforming assets and troubled debt restructurings $ 13,124 $ 7,185 $ 20,309 $ 11,865 $ 10,201 $ 22,066
Nonperforming loans to total loans 0.73 % 0.94 %
Nonperforming loans to total assets 0.51 % 0.72 %
Nonperforming assets to total assets 0.55 % 0.77 %

(1)Nonaccrual acquired loans include PCD loans of $413,000 and $390,000 at June 30, 2021 and December 31, 2020, respectively.

(2)Nonaccrual loans include originated restructured loans placed on nonaccrual totaling $4.1 million and $6.5 million at June 30, 2021 and December 31, 2020, respectively. Acquired restructured loans placed on nonaccrual totaled $3.5 million and $3.5 million at June 30, 2021 and December 31, 2020, respectively.

As previously indicated, as a result of Section 4013 of the CARES Act and recent interagency guidance issued by Federal banking regulators, modifications, such as deferrals of principal and/or interest payments, to borrowers affected by the COVID-19 pandemic are not deemed to be TDRs if such modifications are made on loans that were current as of December 31, 2019. Such deferrals and loan modifications totaled $7.0 million, or less than 1% of total loans, at June 30, 2021 and $36.0 million, or 2% of total loans, at December 31, 2020. We will continue to follow the guidance of Federal banking regulators in making any TDR determinations.

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 $287.3 million as of June 30, 2021, an increase of $29.6 million, or 11.5%, from December 31, 2020. At June 30, 2021, the Company had a net unrealized gain on its available for sale investment securities portfolio of $3.2 million, compared to a net unrealized gain of $6.5 million at December 31, 2020.

The following table summarizes activity in the Company’s investment securities portfolio during the six months ended June 30, 2021.

(dollars in thousands) Available for Sale Held to Maturity
Balance, December 31, 2020 $ 254,752 $ 2,934
Purchases 80,483 —
Sales — —
Principal maturities, prepayments and calls (45,663) (800)
Amortization of premiums and accretion of discounts (1,083) (16)
Decrease in market value (3,304) —
Balance, June 30, 2021 $ 285,185 $ 2,118

Funding Sources

Deposits

Deposits totaled $2.4 billion at June 30, 2021, an increase of $156.9 million, or 7.1%, compared to December 31, 2020. The following table summarizes the changes in the Company’s deposits from December 31, 2020 to June 30, 2021.

(dollars in thousands) June 30, 2021 December 31, 2020 Increase/(Decrease)
Demand deposit $ 715,167 $ 615,700 $ 99,467 16.2 %
Savings 277,899 250,165 27,734 11.1
Money market 362,938 333,078 29,860 9.0
NOW 680,297 646,085 34,212 5.3
Certificates of deposit 334,463 368,793 (34,330) (9.3)
Total deposits $ 2,370,764 $ 2,213,821 $ 156,943 7.1 %

The average rate paid on interest-bearing deposits was 0.36% for the second quarter of 2021, down 42 bps compared to the second quarter of 2020. For the six months ended June 30, 2021, the average rate paid on interest-bearing deposits was 0.39%, down 53 bps from the comparable period in 2020.

At June 30, 2021, certificates of deposit maturing within the next 12 months totaled $282.1 million.

Federal Home Loan Bank Advances

The average balance of total FHLB advances was $27.7 million for the second quarter of 2021, down $42.8 million compared to the second quarter of 2020. For the six months ended June 30, 2021, the average balance of total FHLB advances was $28.1 million, down $30.0 million compared to the six months ended June 30, 2020. Average total FHLB advances decreased over the comparable periods primarily due to the absence of short-term FHLB borrowings and paydowns during the six months ended June 30, 2021.

At June 30, 2021, the Company had $27.5 million in total outstanding FHLB advances and had $832.4 million in additional FHLB advances available.

Shareholders’ Equity

Total shareholders’ equity increased $16.0 million, or 5.0%, from $321.8 million at December 31, 2020 to $337.8 million at June 30, 2021. Shareholders' equity increased primarily due to net income of $23.3 million, partially offset by an other comprehensive loss of $1.9 million, share repurchases of $2.8 million and cash dividends of $3.9 million during six months ended June 30, 2021.

At June 30, 2021, 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 Bank under the Basel III Capital Rules. The minimum required capital amounts presented include the minimum required capital levels as of June 30, 2021 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
Bank:
Common equity Tier 1 capital (to risk-weighted assets) $ 264,447 14.82 % $ 124,944 7.00 % $ 116,020 6.50 %
Tier 1 risk-based capital 264,447 14.82 151,718 8.50 142,793 8.00
Total risk-based capital 286,834 16.07 187,416 10.50 178,492 10.00
Tier 1 leverage capital 264,447 9.89 106,953 4.00 133,691 5.00

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 June 30, 2021, certificates of deposit maturing within the next 12 months totaled $282.1 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 and six months ended June 30, 2021, the average balances of outstanding FHLB advances were $27.7 million and $28.1 million, respectively. At June 30, 2021, the Company had $27.5 million in total outstanding FHLB advances and had $832.4 million in additional FHLB advances available.

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 June 30, 2021.

Shift in Interest Rates (in bps) % Change in Projected Net Interest Income
+300 17.1%
+200 11.4%
+100 5.7%
-100 (4.8)%

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 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.

During the second quarter of 2020, the Company entered into certain 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 2021 and 2020, 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.

Off-Balance Sheet Activities

To meet the financing needs of its customers, the Bank 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 June 30, 2021 and December 31, 2020, the Company's allowance for credit losses on unfunded commitments totaled $1.8 million and $1.4 million, respectively.

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) June 30, 2021 December 31, 2020
Standby letters of credit $ 4,925 $ 5,781
Available portion of lines of credit 282,130 266,349
Undisbursed portion of loans in process 141,578 99,527
Commitments to originate loans 162,638 139,471

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 second quarter of 2021 was $11.4 million, up $8.5 million, compared to the second quarter of 2020. Diluted EPS for the second quarter of 2021 was $1.34, up $1.01 compared to the second quarter of 2020.

Net income for the six months ended June 30, 2021 was $23.3 million, up $17.9 million, compared to the six months ended June 30, 2020. Diluted EPS for the six months ended June 30, 2021 was $2.75, up $2.15 compared to the six months ended June 30, 2020.

The net income for the three and six months ended June 30, 2021 and 2020 were significantly impacted by the change in our estimate of the allowance for loan losses over the comparable periods. During the the three and six months ended June 30, 2021, the Company reversed $3.4 million and $5.1 million, respectively, of the allowance loan losses. During the three and six months ended June 30, 2020, the Company provisioned $6.5 million and $12.7 million, respectively, for expected credit losses on loans primarily due to the uncertainty and economic disruption brought on by the COVID-19 pandemic.

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 3.62% and 3.51% for the quarters ended June 30, 2021 and 2020, respectively, and 3.80% and 3.67% for the six months ended June 30, 2021 and 2020, respectively.

Net interest income totaled $24.1 million for the second quarter of 2021, up $1.7 million, or 7.6%, compared to the second quarter of 2020. For the six months ended June 30, 2021, net interest income totaled $49.2 million, up $5.5 million, or 12.5%, compared to the six months ended June 30, 2020.

Loan income from deferred PPP lender fees totaled $1.8 million for the second quarter of 2021, up $892,000, or 101.1%, compared to the second quarter of 2020. For the six months ended June 30, 2021, loan income from PPP lender fees totaled $5.0 million, up $4.2 million from the comparable period in 2020. Unrecognized PPP lender fees totaled $7.7 million at June 30, 2021 and will be amortized into interest income over the life of the loans.

The Company’s tax-equivalent net interest margin, which is net interest income as a percentage of average interest-earning assets, was 3.75% and 3.76% for the quarters ended June 30, 2021 and 2020, respectively. For the same periods, the average loan yield was 4.95% and 5.02%, respectively. PPP loans increased the the net interest margin by 4 bps and decreased the average loan yield by 11 bps during the second quarter of 2021. During the second quarter of 2020, PPP loans decreased the net interest margin by 6 bps and the average loan yield by 21 bps. Excluding the impact of PPP loans, the net interest margin and the average loan yield decreased by 11 and 17 bps, respectively, over the comparable quarters.

The net interest margin for the six months ended June 30, 2021 and 2020 was 3.94% and 3.95%, respectively. For the same periods, the average loan yield was 5.08% and 5.21%, respectively. PPP loans increased the the net interest margin by 15 bps and the average loan yield by 3 bps during the six months ended June 30, 2021. During the six months ended June 30, 2020, PPP loans decreased the net interest margin by 4 bps and the average loan yield by 12 bps. Excluding the impact of PPP loans, the net interest margin and the average loan yield decreased by 20 and 28 bps, respectively, over the comparable year-to-date periods.

Average PPP loans were $228.1 million and $180.7 million for the second quarters of 2021 and 2020, respectively. For the six months ended June 30, 2021 and 2020, average PPP loans were $233.4 million and $90.4 million, respectively.

The net interest margin was also impacted by the increase in average cash and cash equivalents when comparing the three and six months ended June 30, 2021 and 2020. During the second quarter of 2020, the increase in average cash and cash equivalents decreased the net interest margin and the average yield on total interest-earning assets by 19 and 21 bps, respectively. During the six months ended June 30, 2021, the increase in average cash and cash equivalents decreased the net interest margin and the average yield on total interest-earning assets by 23 and 25 bps, respectively.

Average cash and cash equivalents are reflected in the increases in the average balances of other interest-earning assets. Average other interest-earning assets for the three and six months ended June 30, 2021 were up $127.8 million, or 68.7%, and $142.2 million, or 132.8%, respectively, from the comparable periods in 2020.

Acquired loan discount accretion included in interest income totaled $585,000 and $746,000 for the quarters ended June 30, 2021 and 2020, respectively. For the six months ended June 30, 2021 and 2020, acquired loan discount accretion included in interest income totaled $1.3 million and $1.6 million, respectively.

The following tables set 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 June 30,
2021 2020
(dollars in thousands) Average Balance Interest Average Yield/Rate Average Balance Interest Average Yield/Rate
Interest-earning assets:
Loans receivable(1) $ 1,963,935 $ 24,500 4.95 % $ 1,928,185 $ 24,371 5.02 %
Investment securities
Taxable 256,700 1,043 1.63 243,011 1,103 1.82
Tax-exempt (TE) 20,196 87 2.19 13,058 79 3.07
Total investment securities 276,896 1,130 1.67 256,069 1,182 1.88
Other interest-earning assets 313,954 133 0.17 186,127 117 0.25
Total interest-earning assets (TE) 2,554,785 $ 25,763 4.01 2,370,381 $ 25,670 4.31
Noninterest-earning assets 187,016 193,829
Total assets $ 2,741,801 $ 2,564,210
Interest-bearing liabilities:
Deposits:
Savings, checking and money market $ 1,315,432 $ 842 0.26 % $ 1,157,239 $ 1,347 0.47 %
Certificates of deposit 341,300 638 0.75 391,380 1,665 1.71
Total interest-bearing deposits 1,656,732 1,480 0.36 1,548,619 3,012 0.78
Other borrowings 5,539 53 3.84 5,539 53 3.86
Short-term FHLB advances — — — 31,868 20 0.25
Long term FHLB advances 27,699 120 1.73 38,592 168 1.74
Total interest-bearing liabilities 1,689,970 $ 1,653 0.39 1,624,618 $ 3,253 0.80
Noninterest-bearing liabilities 717,739 624,418
Total liabilities 2,407,709 2,249,036
Shareholders’ equity 334,092 315,174
Total liabilities and shareholders' equity $ 2,741,801 $ 2,564,210
Net interest-earning assets $ 864,815 $ 745,763
Net interest spread (TE) $ 24,110 3.62 % $ 22,417 3.51 %
Net interest margin (TE) 3.75 % 3.76 %

(1)Nonperforming loans are included in the respective average loan balances, net of deferred fees, discounts and loans in process.

Six Months Ended June 30,
2021 2020
(dollars in thousands) Average Balance Interest Average Yield/Rate Average Balance Interest Average Yield/Rate
Interest-earning assets:
Loans receivable(1) $ 1,975,535 $ 50,317 5.08 % $ 1,831,704 $ 48,070 5.21 %
Investment securities
Taxable 248,765 1,961 1.58 243,965 2,411 1.98
Tax-exempt (TE) 20,373 181 2.25 15,589 183 2.98
Total investment securities 269,138 2,142 1.63 259,554 2,594 2.04
Other interest-earning assets 249,222 232 0.19 107,065 255 0.48
Total interest-earning assets (TE) 2,493,895 $ 52,691 4.22 2,198,323 $ 50,919 4.61
Noninterest-earning assets 187,672 193,239
Total assets $ 2,681,567 $ 2,391,562
Interest-bearing liabilities:
Deposits:
Savings, checking and money market $ 1,278,388 $ 1,723 0.27 % $ 1,073,133 $ 3,169 0.59 %
Certificates of deposit 346,870 1,413 0.82 392,025 3,510 1.80
Total interest-bearing deposits 1,625,258 3,136 0.39 1,465,158 6,679 0.92
Other borrowings 5,622 106 3.81 5,539 106 3.86
Short-term FHLB advances — — — 16,251 23 0.28
Long term FHLB advances 28,059 244 1.73 41,844 371 1.77
Total interest-bearing liabilities 1,658,939 $ 3,486 0.42 1,528,792 $ 7,179 0.94
Noninterest-bearing liabilities 692,147 547,007
Total liabilities 2,351,086 2,075,799
Shareholders’ equity 330,481 315,763
Total liabilities and shareholders’ equity $ 2,681,567 $ 2,391,562
Net interest-earning assets $ 834,956 $ 669,531
Net interest spread (TE) $ 49,205 3.80 % $ 43,740 3.67 %
Net interest margin (TE) 3.94 % 3.95 %

(1)Nonperforming loans are included in the respective average loan balances, net of deferred fees, discounts and loans in process.

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 June 30, Six Months Ended June 30,
2021 Compared to 2020 2021 Compared to 2020
Change Attributable To Change Attributable To
(dollars in thousands) Rate Volume Increase/ (Decrease) Rate Volume Increase/ (Decrease)
Interest income:
Loans receivable $ (311) $ 440 $ 129 $ (138) $ 2,385 $ 2,247
Investment securities (157) 105 (52) (392) (60) (452)
Other interest-earning assets (51) 67 16 (135) 112 (23)
Total interest income (519) 612 93 (665) 2,437 1,772
Interest expense:
Savings, checking and money market accounts (630) 125 (505) (1,295) (151) (1,446)
Certificates of deposit (875) (152) (1,027) (1,426) (671) (2,097)
Other borrowings — — — — — —
FHLB advances (11) (57) (68) (46) (104) (150)
Total interest expense (1,516) (84) (1,600) (2,767) (926) (3,693)
Increase (decrease) in net interest income $ 997 $ 696 $ 1,693 $ 2,102 $ 3,363 $ 5,465

Noninterest Income

Noninterest income for the second quarter of 2021 totaled $3.3 million, up $191,000, or 6.2%, from $3.1 million earned for the same period in 2020. Noninterest income for the six months ended June 30, 2021 totaled $7.4 million, up $893,000, or 13.8%, from $6.5 million earned for the same period in 2020.

Income from service fees and charges for the second quarter of 2021 was up $204,000, or 21.7%, from the second quarter of 2020. For the six months ended June 30, 2021, income from service fees and charges was down $188,000, or 7.8%. The change in income from service fees and charges over the three- and six-month periods was primarily due to the change in income from overdraft fees on deposit accounts.

Income from bank card fees for the three and six months ended June 30, 2021 was up $464,000, or 41.2%, and $633,000, or 28.0%, respectively, from the comparable periods in 2020 primarily due to increased transaction activity by our cardholders.

Gains on the sale of loans for the second quarter of 2021 were down $83,000, or 12.9%, from the comparable period in 2020. For the six months ended June 30, 2021, gains on the sale of loans were up $788,000, or 83.9%, from the comparable period in 2020. The origination of mortgage loans held for sale slowed in the second quarter of 2021, however earnings from the sale of loans during the first quarter of 2021 were strong and resulted in a net increase in gains on the sale of loans for the six months ended June 30, 2021 compared to the same six-month period in 2020.

Losses on the sale of assets for the three and six months ended June 30, 2021 totaled $457,000. This was an increase of $444,000 and $446,000, from the three and six months ended June 30, 2020, respectively. During the second quarter of 2021, the Company sold and leased back one of its Mississippi branch locations. The sale transferred control to the buyer-lessor and all losses were recognized at the time of the sale. The Company believes that the sale/leaseback will reduce the operating expenses related to this branch office in future periods.

Noninterest Expense

Noninterest expense for the second quarter of 2021 totaled $16.6 million, up $1.1 million, or 7.2%, from the second quarter of 2020. Noninterest expense for the six months ended June 30, 2021 totaled $32.5 million, up $1.7 million, or 5.4%, from the same period in 2020.

Compensation and benefits expense for the three and six months ended June 30, 2021 was up $325,000, or 3.5%, and $573,000, or 3.1%, respectively, from the comparable periods in 2020 primarily due to increases in wages and incentive pay, health insurance costs and compensation expense related to the Company's ESOP driven primarily by the increase in market value of shares of the Company's common stock held by the ESOP.

Marketing and advertising expense for the second quarter of 2021 was up $108,000, or 67.5%, from the comparable period in 2020 primarily due to an increase in sponsorships and donations. For the six months ended June 30, 2021, marketing and advertising expense was down $19,000, or 4.1%, from the comparable period in 2020.

Data processing and communication expense for the three and six months ended June 30, 2021 was up $399,000, or 22.7%, and $566,000, or 15.8%, respectively, from the comparable periods in 2020 primarily due to a general increase in the cost of software and data processing, increased costs related to higher PPP loan origination volume as well as costs related to the implementation of enhancements to our lending software.

Regulatory fees for the the second quarter of 2021 were down $56,000, or 15.5%, from the comparable period in 2020. For the six months ended June 30, 2021, regulatory fees were up $207,000, or 43.3%, primarily due to the absence of FDIC assessment credits during the first quarter of 2021. FDIC assessment credits were exhausted during the first quarter of 2020.

The Company provisioned $375,000 for credit losses on unfunded loan commitments for the second quarter of 2021 primarily due to the growth in unfunded construction loan commitments during the quarter. The Company did not record a provision for credit losses on unfunded commitments during the first quarter of 2021 or the six months ended June 30, 2020.

Income Taxes

Income tax expense for the three and six months ended June 30, 2021 totaled $2.9 million and $5.8 million, respectively, compared to $675,000 and $1.2 million for the three and six months ended June 30, 2020, respectively. The increases in income tax expense over the comparable periods were primarily due to increases in taxable earnings.

The Company's effective tax rates for the second quarters of 2021 and 2020 were 20.1% and 18.8%, respectively. For the six months ended June 30, 2021 and 2020, the Company's effective tax rates were 20.0% and 18.2%, respectively.

Reconciliation of Non-GAAP Measures

Financial Condition

(dollars in thousands) June 30, 2021 December 31, 2020
Total loans $ 1,918,488 $ 1,979,954
Less: PPP loans 197,614 221,220
Total loans excluding PPP loans $ 1,720,874 $ 1,758,734
Allowance for loan losses to total loans 1.39 % 1.66 %
Less: PPP loans 0.16 0.21
Non-GAAP allowance for loan losses to total loans 1.55 % 1.87 %

Results of Operations

Three Months Ended<br>June 30, Six Months Ended<br>June 30,
(dollars in thousands) 2021 2020 2021 2020
Reported loan income $ 24,500 $ 24,371 $ 50,317 $ 48,070
Less: PPP loan income 2,372 1,373 6,265 1,373
Loan income excluding PPP loan income $ 22,128 $ 22,998 $ 44,052 $ 46,697
Average total loans $ 1,963,935 $ 1,928,185 $ 1,975,535 $ 1,831,704
Less: average PPP loans 228,114 180,712 233,434 90,356
Average total loans excluding PPP loans $ 1,735,821 $ 1,747,473 $ 1,742,101 $ 1,741,348
Loan yield 4.95 % 5.02 % 5.08 % 5.21 %
Negative (positive) impact of PPP loans 0.11 0.21 (0.03) 0.12
Loan yield excluding PPP loans 5.06 % 5.23 % 5.05 % 5.33 %
Net interest margin 3.75 % 3.76 % 3.94 % 3.95 %
(Positive) negative impact of PPP loans (0.04) 0.06 (0.15) 0.04
Net interest margin excluding PPP loans 3.71 % 3.82 % 3.79 % 3.99 %
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, 2020, under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Asset/Liability Management and Market Risk”. Additional information at June 30, 2021 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 second quarter of 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 1. Legal Proceedings.

Not applicable.

Item 1A. Risk Factors.

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, 2020 filed with the Securities and Exchange Commission.

.

Item 2. Unregistered Sales of Equity Securities and the Use of Proceeds.

The Company’s purchases of its common stock made during the quarter 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)
April 1 – April 30, 2021 29 $ 37.76 29 258,574
May 1 – May 31, 2021 — — — 258,574
June 1 – June 30, 2021 42,229 38.55 42,229 216,345
Total 42,258 $ 38.55 42,258 216,345

(1)On August 31, 2020, the Company announced the approval of a repurchase program (the "2020 Repurchase Plan"). Under the 2020 Repurchase Plan, the Company may purchase up to 444,000 shares, or approximately 5% of its common stock outstanding, through open market or privately negotiated transactions.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

None.

| Item 6. | Exhibits and Financial Statement Schedules. | | --- | --- || No. | Description | Location | | --- | --- | --- | | 3.2 | Amended and Restated Bylaws of Home Bancorp | Filed herewith | | 31.1 | Rule 13(a)-14(a) Certification of the Chief Executive Officer | Filed herewith | | 31.2 | Rule 13(a)-14(a) Certification of the Chief Financial Officer | Filed herewith | | 32.0 | Section 1350 Certification | 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 | |

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.
August 5, 2021 By: /s/ John W. Bordelon
John W. Bordelon
Chairman of the Board, President and Chief Executive Officer
August 5, 2021 By: /s/ David T. Kirkley
David T. Kirkley
Executive Vice President and Chief Financial Officer
August 5, 2021 By: /s/ Mary H. Hopkins
Mary H. Hopkins
Home Bank, N.A. Senior Vice President and Director of Financial Management

57

Document

AMENDED AND RESTATED

BYLAWS

OF

HOME BANCORP, INC.

(As Amended Through June 28, 2021)

ARTICLE I. OFFICES

1.1    Registered Office and Registered Agent. The registered office of Home Bancorp, Inc. (the “Corporation”) shall be located in the State of Louisiana at such place as may be fixed from time to time by the Board of Directors upon filing of such notices as may be required by law, and the registered agent shall have a business office identical with such registered office.

1.2    Other Offices. The Corporation may have other offices within or outside the State of Louisiana at such place or places as the Board of Directors may from time to time determine.

ARTICLE II. SHAREHOLDERS’ MEETINGS

2.1    Meeting Place. All meetings of the shareholders shall be held at the principal place of business of the Corporation, or at such other place within or without the State of Louisiana as shall be determined from time to time by the Board of Directors, and the place at which any such meeting shall be held shall be stated in the notice of the meeting.

2.2    Annual Meeting Time. The annual meeting of the shareholders for the election of directors and for the transaction of such other business as may properly come before the meeting shall be held each year on the fourth Tuesday of April at the hour of 1:00 p.m., if not a legal holiday, and if a legal holiday, then on the day following, at the same hour, or at such other date and time as may be determined by the Board of Directors and stated in the notice of such meeting.

2.3    Organization and Conduct. Each meeting of the shareholders shall be presided over by the President, or if the President is not present, by any Executive or Senior Vice President or such other person as the directors may determine. The Secretary, or in his absence a temporary Secretary, shall act as secretary of each meeting of the shareholders. In the absence of the Secretary and any temporary Secretary, the chairman of the meeting may appoint any person present to act as secretary of the meeting. The chairman of any meeting of the shareholders, unless prescribed by law or regulation or unless the Board of Directors has otherwise determined, shall determine the order of the business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussions as shall be deemed appropriate by him in his sole discretion.

2.4    Notice.

(a) Notice of the time and place of the annual meeting of shareholders shall be given by delivering personally or by mailing a written or printed notice of the same, at least 10 days and not more than 60 days prior to the meeting, to each shareholder of record entitled to vote at such meeting. When any shareholders’ meeting, either annual or special, is adjourned for 30 days or more, or if a new record date is fixed for an adjourned meeting of shareholders, notice of the adjourned meeting shall be given as in the case of an original meeting. It shall not be necessary to give any notice of the time and place of any meeting adjourned for less than 30 days or of the business to be transacted thereat (unless a new record date is fixed therefor), other than an announcement at the meeting at which such adjournment is taken.

(b) At least 15 days and not more than 60 days prior to the meeting, a written or printed notice of each special meeting of shareholders, stating the place, day and hour of such meeting, and the purpose or purposes for which the meeting is called, shall be either delivered personally or mailed to each shareholder of record entitled to vote at such meeting.

2.5    Voting Record. At least five days before each meeting of shareholders, a complete record of the shareholders entitled to vote at such meeting, or any adjournment thereof, shall be made, arranged in alphabetical order, with the number and class of shares held by each shareholder, which record shall be kept on file at the registered office of the Corporation and shall be subject to inspection by any shareholder at any time during usual business hours. The record shall be kept open at the time and place of such meeting for the inspection by any shareholder.

2.6    Quorum. Except as otherwise required by law or the Corporation’s Articles of Incorporation or these Bylaws:

(a) A quorum at any annual or special meeting of shareholders shall consist of shareholders representing, either in person or by proxy, a majority of the outstanding capital stock of the Corporation entitled to vote at such meeting.

(b) The votes of a majority in interest of those present at any properly called meeting or adjourned meeting of shareholders, at which a quorum as defined above is present, shall be sufficient to transact business.

2.7    Voting of Shares.

(a) Except as otherwise provided in these Bylaws or to the extent that voting rights of the shares of any class or classes are limited or denied by the Articles of Incorporation, each shareholder, on each matter submitted to a vote at a meeting of shareholders, shall have one vote for each share of stock registered in his name on the books of the Corporation.

(b) Directors are to be elected by a plurality of votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present. Shareholders shall not be permitted to cumulate their votes for the election of directors. If, at any meeting of the

shareholders, due to a vacancy or vacancies or otherwise, directors of more than one class of the Board of Directors are to be elected, each class of directors to be elected at the meeting shall be elected in a separate election by a plurality vote.

2.8    Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders, or any adjournment thereof, or entitled to receive payment of any dividend, the Board of Directors shall fix in advance a record date for such determination of shareholders, such date to be not more than 60 days and, in case of a meeting of shareholders, not less than 10 days prior to the date on which the particular action requiring such determination of shareholders is to be taken.

2.9    Proxies. A shareholder may vote either in person or by proxy executed in writing by the shareholder, or his duly authorized attorney-in-fact. No proxy shall be valid after 11 months from the date of its execution, unless otherwise provided in the proxy.

2.10    Voting of Shares in the Name of Two or More Persons. Where shares are held jointly or as tenants in common by two or more persons as fiduciaries or otherwise, if only one or more of such persons is present in person or by proxy, all of the shares standing in the names of such persons shall be deemed to be represented for the purpose of determining a quorum and the Corporation shall accept as the vote of all such shares the votes cast by him or a majority of them and if in any case such persons are equally divided upon the manner of voting the shares held by them, the vote of such shares shall be divided equally among such persons, without prejudice to the rights of such joint owners or the beneficial owners thereof among themselves, unless either (a) the Corporation receives written notice to the contrary from a nonsigning registered holder before the proxy is voted, or (b) there shall have been filed with the Secretary of the Corporation a copy, certified by an attorney-at-law to be correct, of the relevant portions of the agreements under which such shares are held or the instrument by which the trust or estate was created or the decree of court appointing them, or of a decree of court directing the voting of such shares, and the persons specified as having such voting power in the latest such document so filed, and only such persons, shall be entitled to vote such shares but only in accordance therewith.

2.11    Voting of Shares by Certain Holders. Shares standing in the name of another corporation may be voted by an officer, agent or proxy as the bylaws of such corporation may prescribe, or, in the absence of such provision, in accordance with the Louisiana Business Corporation Law, as amended (“BCL”). Shares held by an administrator, executor, guardian or conservator may be voted by him, either in person or by proxy, without a transfer of such shares into his name. Shares standing in the name of a trustee may be voted by him, either in person or by proxy. Shares standing in the name of a receiver may be voted by such receiver, and shares held by or under the control of a receiver may be voted by such receiver without the transfer thereof into his name if authority to do so is contained in an appropriate order of the court or other public authority by which such receiver was appointed. A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee or nominee, and thereafter the pledgee or nominee shall be entitled to vote the shares so transferred.

2.12    Inspectors. For each meeting of shareholders, the Board of Directors may appoint one or more inspectors of election. If for any meeting the inspector(s) appointed by the Board

of Directors shall be unable to act or the Board of Directors shall fail to appoint any inspector, one or more inspectors may be appointed at the meeting by the chairman thereof. Such inspectors shall conduct the voting in each election of directors and, as directed by the Board of Directors or the chairman of the meeting, the voting on each matter voted on at such meeting, and after the voting shall make a certificate of the vote taken. Inspectors need not be shareholders.

ARTICLE III. CAPITAL STOCK

3.1    Certificates. Shares of the Corporation’s capital stock may be represented by certificates or, to the extent permitted by the BCL, may be uncertificated. To the extent they are issued, certificates of stock shall be issued in numerical order, and each shareholder shall be entitled to a certificate signed by the President or a Vice President, and the Secretary or the Treasurer, and may be sealed with the seal of the Corporation or a facsimile thereof. The signatures of such officers may be facsimiles if the certificate is manually signed on behalf of a transfer agent, or registered by a registrar, other than the Corporation itself or an employee of the Corporation. If an officer who has signed or whose facsimile signature has been placed upon such certificate ceases to be an officer before the certificate is issued, it may be issued by the Corporation with the same effect as if the person were an officer on the date of issue. Each certificate of stock shall state:

(a) that the Corporation is incorporated under the laws of the State of Louisiana;

(b) the name of the person to whom issued;

(c) the number and class of shares and the designation of the series, if any, which such certificate represents;

(d) the par value of each share represented by such certificate, or a statement that such shares are without par value; and

(e) such other information as may be required by the BCL.

3.2    Transfers. Transfers of stock shall be made only upon the stock transfer books of the Corporation, kept at the registered office of the Corporation or at its principal place of business, or at the office of its transfer agent or registrar. The Board of Directors may, by resolution, open a share register in any state of the United States, and may employ an agent or agents to keep such register, and to record transfers of shares therein.

3.3    Registered Owner. Registered shareholders shall be treated by the Corporation as the holders in fact of the stock standing in their respective names and the Corporation shall not be bound to recognize any equitable or other claim to or interest in any share on the part of any other person, whether or not it shall have express or other notice thereof, except as expressly provided below or by the laws of the State of Louisiana. The Board of Directors may adopt by resolution a procedure whereby a shareholder of the Corporation may certify in writing to the Corporation that all or a portion of the shares registered in the name of such

shareholder are held for the account of a specified person or persons. The resolution shall set forth:

(a) The classification of shareholder who may certify;

(b) The purpose or purposes for which the certification may be made;

(c) The form of certification and information to be contained therein;

(d) If the certification is with respect to a record date or closing of the stock transfer books, the date within which the certification must be received by the Corporation; and

(e) Such other provisions with respect to the procedure as are deemed necessary or desirable.

Upon receipt by the Corporation of a certification complying with the above requirements, the persons specified in the certification shall be deemed, for the purpose or purposes set forth in the certification, to be the holders of record of the number of shares specified in place of the shareholder making the certification.

3.4    Mutilated, Lost or Destroyed Certificates. In case of any mutilation, loss or destruction of any certificate of stock, another may be issued in its place upon receipt of proof of such mutilation, loss or destruction. The Board of Directors may impose conditions on such issuance and may require the giving of a satisfactory bond or indemnity to the Corporation in such sum as they might determine, or establish such other procedures as they deem necessary.

3.5    Fractional Shares or Scrip. The Corporation may (a) issue fractions of a share which shall entitle the holder to exercise voting rights, to receive dividends thereon, and to participate in any of the assets of the Corporation in the event of liquidation; (b) arrange for the disposition of fractional interests by those entitled thereto; (c) pay in cash the fair value of fractions of a share as of the time when those entitled to receive such shares are determined; or (d) issue scrip in registered or bearer form which shall entitle the holder to receive a certificate for a full share upon the surrender of such scrip aggregating a full share.

3.6    Shares of Another Corporation. Shares owned by the Corporation in another corporation, domestic or foreign, may be voted by such officer, agent or proxy as the Board of Directors may determine or, in the absence of such determination, by the President of the Corporation.

ARTICLE IV. BOARD OF DIRECTORS

4.1    Number and Powers; Age Limitation. The management of all the affairs, property and interest of the Corporation shall be vested in a Board of Directors. The Board of Directors shall be divided into three classes as nearly equal in number as possible. The initial Board of Directors shall consist of eight persons. The classification and term of the directors shall be as set forth in the Corporation’s Articles of Incorporation, which provisions are incorporated herein with the same effect as if they were set forth herein. Directors need not be residents of the State of Louisiana. Directors will be expected to acquire and maintain an investment in the Company’s common stock in accordance with the policies of the Board of Directors as established from time-to-time. No person seventy-five years of age shall be eligible for election, reelection, appointment, or reappointment to the Board of Directors of the Corporation. No director shall serve as such beyond the annual meeting of Corporation immediately following the director becoming seventy-five. This age limitation does not apply to an advisory or emeritus director. In addition to the powers and authorities expressly conferred upon it by these Bylaws and the Articles of Incorporation, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Articles of Incorporation or by these Bylaws directed or required to be exercised or done by the shareholders.

4.2    Change of Number. The number of directors may at any time be increased or decreased by a vote of a majority of the Board of Directors, provided that no decrease shall have the effect of shortening the term of any incumbent director except as provided in Sections 4.3 and 4.4 hereunder. Notwithstanding anything to the contrary contained within these Bylaws, the number of directors may not be less than 5 nor more than 15.

4.3    Vacancies. All vacancies in the Board of Directors shall be filled in the manner provided in the Corporation’s Articles of Incorporation, which provisions are incorporated herein with the same effect as if they were set forth herein.

4.4    Removal of Directors. Directors may be removed in the manner provided in the Corporation’s Articles of Incorporation, which provisions are incorporated herein with the same effect as if they were set forth herein.

4.5    Regular Meeting. Regular meetings of the Board of Directors or any committee may be held without notice at the principal place of business of the Corporation or at such other place or places, either within or without the State of Louisiana, as the Board of Directors or such committee, as the case may be, may from time to time designate. The annual meeting of the Board of Directors shall be held without notice immediately after the adjournment of the annual meeting of shareholders.

4.6     Special Meetings.

(a) Special meetings of the Board of Directors may be called at any time by the President or by a majority of the authorized number of directors, to be held at the principal place of business of the Corporation or at such other place or places as the Board of Directors

or the person or persons calling such meeting may from time to time designate. Notice of all special meetings of the Board of Directors shall be given to each director by five days’ service of the same by telegram, by letter, or personally. Such notice need not specify the business to be transacted at, nor the purpose of, the meeting.

(b) Special meetings of any committee may be called at any time by such person or persons and with such notice as shall be specified for such committee by the Board of Directors, or in the absence of such specification, in the manner and with the notice required for special meetings of the Board of Directors.

4.7    Quorum. A majority of the Board of Directors shall be necessary at all meetings to constitute a quorum for the transaction of business.

4.8    Waiver of Notice. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. A waiver of notice signed by the director or directors, whether before or after the time stated for the meeting, shall be equivalent to the giving of notice.

4.9    Registering Dissent. A director who is present at a meeting of the Board of Directors at which action on a corporate matter is taken shall be presumed to have assented to such action unless his dissent is entered in the minutes of the meeting, or unless he files his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof, or unless he delivers his dissent in writing to the Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action.

4.10    Executive, Audit and Other Committees. Standing or special committees may be appointed from its own number by the Board of Directors from time to time, and the Board of Directors may from time to time invest such committees with such powers as it may see fit, subject to such conditions as may be prescribed by the Board. An Executive Committee may be appointed by resolution passed by a majority of the full Board of Directors. It shall have and exercise all of the authority of the Board of Directors, except in reference to amending the Articles of Incorporation, adopting a plan of merger or consolidation, recommending the sale, lease or exchange or other dispositions of all or substantially all the property and assets of the Corporation otherwise than in the usual and regular course of business, recommending a voluntary dissolution or a revocation thereof, or amending these Bylaws. An Audit Committee shall be appointed by resolution passed by a majority of the full Board of Directors. Members of the Audit Committee shall be directors who meet all applicable standards under the regulations of the Securities and Exchange Commission and the standards of the Nasdaq Stock Market. The Audit Committee shall appoint or recommend independent auditors to the Board of Directors annually and shall review the Corporation’s budget, the scope and results of the audit performed by the Corporation’s independent auditors and the Corporation’s system of internal control and audit with management and such independent auditors, and such other duties as may be assigned to it by the Board of Directors. All committees appointed by the Board of Directors shall keep regular minutes of the transactions of their meetings and shall cause them to be recorded in books kept for that purpose in the

office of the Corporation. The designation of any such committee, and the delegation of authority thereto, shall not relieve the Board of Directors, or any member thereof, of any responsibility imposed by law.

4.11    Remuneration. No stated fee shall be paid to directors, as such, for their service, but by resolution of the Board of Directors, a fixed sum and expenses of attendance, if any, may be allowed for attendance at each regular or special meeting of such Board; provided, that nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of standing or special committees may be allowed like compensation for attending committee meetings.

4.12    Action by Directors Without a Meeting. Any action which may be taken at a meeting of the directors, or of a committee thereof, may be taken without a meeting if a consent in writing, setting forth the action so taken or to be taken, shall be signed by all of the directors, or all of the members of the committee, as the case may be. Such consent shall have the same effect as a unanimous vote.

4.13    Action of Directors by Communications Equipment. Any action which may be taken at a meeting of directors, or of a committee thereof, may be taken by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time.

4.14    Chairman of the Board of Directors. The Board of Directors may elect from among its members a Chairman of the Board and a Vice Chairman of the Board of Directors. The Chairman of the Board of Directors (or, in his absence, the Vice Chairman of the Board, if one has been elected) shall preside at all meetings of the Board of Directors. The Chairman of the Board (and the Vice Chairman of the Board, if one has been elected) shall perform such other duties as may be assigned from time to time by the Board of Directors.

ARTICLE V. OFFICERS

5.1    Designations. The officers of the Corporation shall be the Chairman of the Board, a President, a Secretary and a Treasurer, as well as such Vice Presidents (including Executive and Senior Vice Presidents), Assistant Secretaries and Assistant Treasurers as the Board may designate, who shall be elected for one year by the directors at their first meeting after the annual meeting of shareholders, and who shall hold office until their successors are elected and qualify. Any two or more offices may be held by the same person, except that the offices of President and Secretary may not be held by the same person.

5.2    Powers and Duties. The officers of the Corporation shall have such authority and perform such duties as the Board of Directors may from time to time authorize or determine. In the absence of action by the Board of Directors, the officers shall have such powers and duties as generally pertain to their respective offices.

5.3    Delegation. In the case of absence or inability to act of any officer of the Corporation and of any person herein authorized to act in his place, the Board of Directors

may from time to time delegate the powers or duties of such officer to any other officer or any director or other person whom it may select.

5.4    Vacancies. Vacancies in any office arising from any cause may be filled by the Board of Directors at any regular or special meeting of the Board.

5.5    Other Officers. Directors may appoint such other officers and agents as it shall deem necessary or expedient, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors.

5.6    Term - Removal. The officers of the Corporation shall hold office until their successors are chosen and qualify. Any officer or agent elected or appointed by the Board of Directors may be removed at any time, with or without cause, by the affirmative vote of a majority of the whole Board of Directors, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.

5.7    Bonds. The Board of Directors may, by resolution, require any and all of the officers to give bonds to the Corporation, with sufficient surety or sureties, conditioned for the faithful performance of the duties of their respective offices, and to comply with such other conditions as may from time to time be required by the Board of Directors.

ARTICLE VI. FISCAL YEAR; ANNUAL AUDIT

The fiscal year of the Corporation shall end on the 31st day of December of each year. The Corporation shall be subject to an annual audit as of the end of its fiscal year by independent public accountants appointed by and responsible to the Board of Directors.

ARTICLE VII. DIVIDENDS AND FINANCE

7.1    Dividends. Dividends may be declared by the Board of Directors and paid by the Corporation out of the unreserved and unrestricted earned surplus of the Corporation, or out of the unrestricted capital surplus of the Corporation, subject to the conditions and limitations imposed by the laws of the State of Louisiana. The Board of Directors may declare dividends payable to the holders of record at the close of business on any business day not more than 60 days prior to the date on which the dividend is paid.

7.2    Reserves. Before making any distribution of earned surplus, there may be set aside out of the earned surplus of the Corporation such sum or sums as the directors from time to time in their absolute discretion deem expedient as a reserve fund to meet contingencies, or for equalizing dividends, or for maintaining any property of the Corporation, or for any other purpose. Any earned surplus of any year not distributed as dividends shall be deemed to have thus been set apart until otherwise disposed of by the Board of Directors.

7.3    Depositories. The monies of the Corporation shall be deposited in the name of the Corporation in such bank or banks or trust company or trust companies as the Board of Directors shall designate, and shall be drawn out only by check or other order for payment of money signed by such persons and in such manner as may be determined by resolution of the Board of Directors.

ARTICLE VIII. PERSONAL LIABILITY OF DIRECTORS AND OFFICERS

Directors and officers of the Corporation shall not be personally liable for monetary damages for any action taken, or any failure to take any action, as a director or officer to the extent set forth in the Corporation’s Articles of Incorporation, which provisions are incorporated herein with the same effect as if they were set forth herein.

ARTICLE IX. NOTICES

Except as may otherwise be required by law, any notice to any shareholder or director may be delivered personally or by mail. If mailed, the notice shall be deemed to have been delivered when deposited in the United States mail, addressed to the addressee at his last known address in the records of the Corporation, with postage thereon prepaid.

ARTICLE X. SEAL

The corporate seal of the Corporation shall be in such form and bear such inscription as may be adopted by resolution of the Board of Directors, or by usage of the officers on behalf of the Corporation.

ARTICLE XI. BOOKS AND RECORDS

The Corporation shall keep correct and complete books and records of account and shall keep minutes and proceedings of meetings of its shareholders and Board of Directors; and it shall keep at its registered office or principal place of business, or at the office of its transfer agent or registrar, a record of its shareholders, giving the names and addresses of all shareholders and the number and class of the shares held by each. Any books, records and minutes may be in written form or any other form capable of being converted into written form within a reasonable time.

ARTICLE XII. AMENDMENTS

These Bylaws may be altered, amended or repealed only as set forth in the Corporation’s Articles of Incorporation, which provisions are incorporated herein with the same effect as if they were set forth herein.

Document

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I, John W. Bordelon, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Home Bancorp, Inc. (the “registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2021 /s/ John W. Bordelon
John W. Bordelon
Chairman of the Board, President and Chief Executive Officer

Document

EXHIBIT 31.2

CERTIFICATION

I, David T. Kirkley, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Home Bancorp, Inc. (the “registrant”);

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 5, 2021 /s/ David T. Kirkley
David T. Kirkley
Executive Vice President and Chief Financial Officer

Document

EXHIBIT 32.0

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 AND SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Home Bancorp, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2021, each of the undersigned, John W. Bordelon, Chairman of the Board, President and Chief Executive Officer of the Company, and David T. Kirkley, Executive Vice President and Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the periods covered in the Report.

Date: August 5, 2021 By: /s/ John W. Bordelon
John W. Bordelon
Chairman of the Board, President and Chief Executive Officer
Date: August 5, 2021 By: /s/ David T. Kirkley
David T. Kirkley
Executive Vice President and Chief Financial Officer Note: A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act has been provided to Home Bancorp, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
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