HOME BANCORP INC
For the period ended Jun 30, 2024. Filed Aug 2, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Aug 2, 2024
HBCP$60.94+0.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-03.
0001436425-24-000016
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-08-02.
0001436425-24-000033
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 94 previous paragraphs and 102 current paragraphs.
52 unchanged; 34 reworded; 15 added; 8 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 18 previous and 18 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (15)
Current report
The Company reported net income for the second quarter of 2024 of $8.1 million, or $1.02 diluted EPS, down $1.7 million compared to the second quarter of 2023. Net income for the second quarter of 2023 totaled $9.8 million, or $1.21 diluted EPS. For the six months ended June 30, 2024, the Company reported net income $17.3 million, or $2.16 diluted EPS, down $3.8 million from $21.1 million, or $2.60 diluted EPS, reported for the six months ended June 30, 2023.
Current report
•During the three and six months ended June 30, 2024, the Company provisioned $1.3 million and $1.4 million, respectively, to the allowance for loan losses, primarily due to loan growth and net charge-offs. During the three and six months ended June 30, 2023, the Company provisioned $511,000 and $1.3 million, respectively, to the allowance for loan losses.
Current report
•Noninterest expense for the second quarter of 2024 was up $849,000, or 4.1%, compared to the second quarter of 2023, primarily due to increases in data processing and communication (up $423,000), compensation and benefits (up $187,000), other noninterest expense (up $187,000), occupancy (up $156,000), professional services (up $122,000) and regulatory fees (up $108,000), which were partially offset by the reversal of provision for credit losses on unfunded commitments (down $285,000). For the six months ended June 30, 2024, noninterest expense was up $1.8 million, or 4.3%, from the comparable period in 2023 primarily due to the absence of a recovery of a previous loss on a foreclosed asset that occurred in the first quarter of 2023 in the amount of $739,000, increases in data processing and communication expense (up $616,000), other noninterest expense (up $421,000), professional services (up $233,000) and marketing and advertising expense (up $202,000), which were partially offset by a decrease in amortization of acquisition intangibles (down $153,000) and the reversal of provision for credit losses on unfunded commitments (down $495,000).
Current report
The average balance of total FHLB advances was $46.5 million for the second quarter of 2024, down $226.3 million compared to the second quarter of 2023. For the six months ended June 30, 2024, the average balance of total FHLB advances was $59.1 million, down $185.2 million compared to the six months ended June 30, 2023.
Current report
Net income for the six months ended June 30, 2024 was $17.3 million, down $3.8 million, compared to the six months ended June 30, 2023. Diluted EPS for the six months ended June 30, 2024 was $2.16, down $0.44 compared to the six months ended June 30, 2023.
Current report
During the three and six months ended June 30, 2024, the Company provisioned $1.3 million and $1.4 million, respectively, to the allowance for loan losses primarily due to loan growth and net charge-offs. During the three and six months ended June 30, 2023, the Company provisioned $511,000 and $1.3 million, respectively, to the allowance for loan losses primarily due to loan growth.
Current report
Net interest income totaled $29.4 million for the second quarter of 2024, down $913,000, or 3.0%, compared to the second quarter of 2023. For the six months ended June 30, 2024, net interest income totaled $58.3 million, down $3.6 million, or 5.8%, compared to the six months ended June 30, 2023.
Current report
Noninterest income for the second quarter of 2024 totaled $3.8 million, up $307,000, or 8.9%, from $3.4 million earned for the same period in 2023.
Current report
Noninterest income for the six months ended June 30, 2024 totaled $7.3 million, up $545,000, or 8.1%, from $6.8 million earned for the same period in 2023.
Current report
Gains on the sale of loans for the second quarter of 2024 were up $100,000, or 384.6%, from the comparable period in 2023. For the six months ended June 30, 2024, gains on the sale of loans were up $130,000, or 156.6%, from the comparable period in 2023 due to an increase in mortgage loan sales.
Current report
There were no gains or losses related to the sale of investment securities for the three and six months ended June 30, 2024 or for the three months ended June 30, 2023. The Company recorded a net loss of $249,000 related to the sale of investment securities for the six months ended June 30, 2023.
Current report
Other income for the second quarter of 2024 was up $150,000, or 68.2%, from the comparable period in 2023. For the six months ended June 30, 2024, other income was up $281,000, or 62.4%, from the comparable period in 2023, primarily due to the increase in derivative fee income during 2024.
Current report
Income from bank card fees for the three and six months ended June 30, 2024 was up $36,000, or 2.1% and down $176,000, or 5.0%, respectively from the comparable period in 2023 primarily due to variations in transaction volumes by our cardholders.
Current report
Noninterest expense for the second quarter of 2024 totaled $21.8 million, up $849,000, or 4.1%, from the second quarter of 2023. Noninterest expense increased over the comparable quarters primarily due to increases in data processing and communication (up $423,000, primarily due to increases in cost of maintenance contracts), compensation and benefits (up $187,000, primarily due to increases in salaries and bonuses), other noninterest expense (up $187,000), occupancy expenses (up $156,000, primarily due to an additional lease for our new Pasadena office in Houston), professional services (up $122,000) and regulatory fees (up $108,000), which were partially offset by the reversal of provision for credit losses on unfunded commitments (down $285,000).
Current report
Noninterest expense for the six months ended June 30, 2024 totaled $42.7 million, up $1.8 million, or 4.3%, from the same period in 2023. The increase in noninterest expense for the six months ended June 30, 2024 related primarily to the absence of a recovery of a previous loss on a foreclosed asset in the first quarter of 2023 in the amount of $739,000, increases in data processing and communication expense (up $616,000, primarily due to increases in cost of maintenance contracts), other noninterest expense (up $421,000), professional services (up $233,000) and marketing and advertising expense (up $202,000), which were partially offset by a decrease in amortization of acquisition intangibles (down $153,000) and the reversal of provision for credit losses on unfunded commitments (down $495,000).
Removed paragraphs (8)
Previous report
The Company reported net income for the first quarter of 2024 of $9.2 million, or $1.14 diluted EPS, down $2.1 million compared to the first quarter of 2023. Net income for the first quarter of 2023 totaled $11.3 million, or $1.39 diluted EPS.
Previous report
•During the three months ended March 31, 2024, the Company provisioned $141,000 to the allowance for loan losses. During the three months ended March 31, 2023, the Company provisioned $814,000 to the allowance for loan losses.
Previous report
•Noninterest expense for the first quarter of 2024 was up $928,000, or 4.7%, compared to the first quarter of 2023, primarily due to increases in foreclosed assets (up $804,000 primarily due to the absence of a $739,000 recovery of a previous loss on a OREO sale that occurred during the first quarter of 2023), marketing and advertising (up $159,000), and professional services (up $111,000), which were partially offset by the absence of any provision for credit losses on unfunded commitments in the 2024 period.
Previous report
The average balance of total FHLB advances was $71.7 million for the first quarter of 2024, down $143.8 million compared to the first quarter of 2023.
Previous report
During the three months ended March 31, 2024, the Company provisioned $141,000 to the allowance for loan losses primarily due to loan growth. During the three months ended March 31, 2023, the Company provisioned $814,000 to the allowance for loan losses primarily due to loan growth.
Previous report
Net interest income totaled $28.9 million for the first quarter of 2024, down $2.7 million, or 8.5%, compared to the first quarter of 2023.
Previous report
Noninterest income for the first quarter of 2024 totaled $3.5 million, up $238,000, or 7.2%, from $3.3 million earned for the same period in 2023. Noninterest income increased over the prior comparable quarter primarily due to an increase in other income of $131,000 and the absence of a loss on sale of securities totaling $249,000 that occurred during the first quarter of 2023, which were partially offset with a decrease in bank card fees of $212,000.
Previous report
Noninterest expense for the first quarter of 2024 totaled $20.9 million, up $928,000, or 4.7%, from the first quarter of 2023. Noninterest expense increased over the prior comparable quarter primarily due to increases in foreclosed assets expense (up $804,000 primarily due to the absence of a $739,000 recovery of a previous loss on a OREO sale that occurred during the first quarter of 2023), marketing and advertising (up $159,000), and professional services (up $111,000), which were partially offset by the absence of any provision for credit losses on unfunded commitments in the 2024 period.
Reworded paragraphs (34)
Previous wording
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, 2023 through March 31, 2024 and on its results of operations for the three months ended March 31, 2024 and 2023. 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.
Current wording
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, 2023 through June 30, 2024 and on its results of operations for the three and six months ended June 30, 2024 and 2023. 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.
Previous wording
Key components of the Company’s performance during the three months ended March 31, 2024 include:
Current wording
Key components of the Company’s performance during the three and six months ended June 30, 2024 include:
Previous wording
•Assets increased $37.5 million, or 1.1%, from December 31, 2023 to $3.4 billion at March 31, 2024.
Current wording
•Assets increased $90.8 million, or 2.7%, from December 31, 2023 to $3.4 billion at June 30, 2024.
Previous wording
•Total loans were $2.6 billion at March 31, 2024, up $40.1 million, or 1.6%, from December 31, 2023.
Current wording
•Total loans were $2.7 billion at June 30, 2024, up $79.7 million, or 3.1%, from December 31, 2023.
Previous wording
•The ALL totaled $31.5 million, or 1.20% of total loans, at March 31, 2024 compared to $31.5 million, or 1.22% of total loans, at December 31, 2023. The ACL, which is comprised of the allowance for loan losses plus the allowance for unfunded lending commitments, totaled $34.1 million, or 1.30% of total loans, at March 31, 2024 compared to $34.1 million, or 1.32% of total loans, at December 31, 2023.
Current wording
•The ALL totaled $32.2 million, or 1.21% of total loans, at June 30, 2024 compared to $31.5 million, or 1.22% of total loans, at December 31, 2023. The ACL, which is comprised of the allowance for loan losses plus the allowance for unfunded lending commitments, totaled $34.7 million, or 1.30% of total loans, at June 30, 2024 compared to $34.1 million, or 1.32% of total loans, at December 31, 2023.
Previous wording
•Nonperforming assets increased $11.6 million, or 111.3%, from $10.4 million, or 0.31% of total assets, at December 31, 2023 to $22.0 million, or 0.65% of total assets, at March 31, 2024. The increase in nonperforming assets is primarily due to two loan relationships which were classified as nonperforming in the first quarter of 2024, for which management does not anticipate any loss.
Current wording
•Nonperforming assets increased $6.7 million, or 64.1%, from $10.4 million, or 0.31% of total assets, at December 31, 2023 to $17.0 million, or 0.50% of total assets, at June 30, 2024. The increase in nonperforming assets was primarily due to one loan relationship being downgraded to substandard during the 2024 period.
Previous wording
•Total deposits amounted to $2.7 billion at March 31, 2024, an increase of $52.0 million, or 1.9%, from December 31, 2023.
Current wording
•Total deposits amounted to $2.7 billion at June 30, 2024, an increase of $52.3 million, or 2.0%, from December 31, 2023.
Previous wording
•The net interest margin was 3.64% for the three months ended March 31, 2024, down 54 bps from the three months ended March 31, 2023.
Current wording
•The net interest margin was 3.66% and 3.65% for the three and six months ended June 30, 2024, respectively, down 28 bps and down 41 bps from the three and six months ended June 30, 2023, respectively.
Previous wording
•The average rate paid on total interest-bearing deposits was 2.52% for the first quarter of 2024, which was up 175 bps from the first quarter of 2023.
Current wording
•The average rate paid on total interest-bearing deposits was 2.69% for the second quarter of 2024, which was up 139 bps from the second quarter of 2023. For the six months ended June 30, 2024, the average rate paid on total interest-bearing deposits was 2.60%, up 156 bps from the six months ended June 30, 2023.
Previous wording
•Total interest expense for the first quarter of 2024 was up $8.7 million, or 133.5%, compared to the first quarter of 2023 primarily due to the rising interest rate environment and the higher costs on deposits.
Current wording
•Total interest expense for the second quarter of 2024 was up $6.3 million, or 64.5%, compared to the second quarter of 2023 primarily due to the rising interest rate environment and the higher cost of deposits. For the six months ended June 30, 2024, total interest expense was up $15.0 million, or 92.1%, from the comparable period in 2023.
Previous wording
•Noninterest income for the first quarter of 2024 was up $238,000, or 7.2%, compared to the first quarter of 2023, primarily due to an increase in other income of $131,000 and the absence of a loss on sale of securities totaling $249,000 that occurred during the first quarter of 2023, which were partially offset with a decrease in bank card fees of $212,000.
Current wording
•Noninterest income for the second quarter of 2024 was up $307,000, or 8.9%, compared to the second quarter of 2023, primarily due to an increase in other income (up $150,000), gain on sale of loans (up $100,000) and bank card fees (up $36,000). For the six months ended June 30, 2024, noninterest income was up $545,000, or 8.1%, from the comparable period in 2023 primarily due to an increase in other income (up $281,000), the absence of net loss on sale of securities totaling $249,000 during the first quarter of 2023, and an increase in gain on sale of loans (up $130,000), which were partially offset with a decrease in bank card fees (down $176,000).
Previous wording
Total loans at March 31, 2024 were $2.6 billion, up $40.1 million, or 1.6%, from December 31, 2023. The loan growth resulted primarily from the additions of loans across all loan types, with the exception of construction and land loans and consumer loans.
Current wording
Total loans at June 30, 2024 were $2.7 billion, up $79.7 million, or 3.1%, from December 31, 2023. The loan growth resulted primarily from the additions of loans across all loan types, with the exception of construction and land loans and consumer loans.
Previous wording
At March 31, 2024, the ALL totaled $31.5 million, or 1.20% of total loans, down $76,000 from $31.5 million, or 1.22% of total loans, at December 31, 2023. During the three months ended March 31, 2024, the Company provisioned $141,000 of the allowance loan losses primarily due to loan growth. Net loan charge-offs totaled $217,000 for the three months ended March 31, 2024.
Current wording
At June 30, 2024, the ALL totaled $32.2 million, or 1.21% of total loans, up $675,000 from $31.5 million, or 1.22% of total loans, at December 31, 2023. During the six months ended June 30, 2024, the Company provisioned $1.4 million of the allowance loan losses primarily due to loan growth and net charge-offs. Net loan charge-offs totaled $727,000 for the six months ended June 30, 2024.
Previous wording
At March 31, 2024 and December 31, 2023, loans identified as credit deteriorated loans and individually evaluated for expected losses were $3.9 million and $4.2 million, respectively. The following tables provide a summary of loans individually evaluated for credit losses as of the dates indicated.
Current wording
At June 30, 2024 and December 31, 2023, loans identified as credit deteriorated loans and individually evaluated for expected losses were $4.5 million and $4.2 million, respectively. The following tables provide a summary of loans individually evaluated for credit losses as of the dates indicated.
Previous wording
At March 31, 2024 and December 31, 2023, loans classified as substandard totaled $35.1 million and $28.2 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 $7.0 million, or 24.7%, increase in substandard loans at March 31, 2024 compared to December 31, 2023 was primarily due to two credit relationships being downgraded, partially offset by loan payoffs and improvements in other classified loans.
Current wording
At June 30, 2024 and December 31, 2023, loans classified as substandard totaled $32.7 million and $28.2 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 $4.5 million, or 15.9%, increase in substandard loans at June 30, 2024 compared to December 31, 2023 was primarily due to one credit relationship being downgraded, partially offset by loan payoffs and improvements in other classified loans.
Previous wording
Total nonperforming loans increased by $11.5 million, or 130.9%, to $20.3 million at March 31, 2024, compared to $8.8 million at December 31, 2023. The primary reason for the increase was two loan relationships with an aggregate outstanding balance of $9.7 million at March 31, 2024 that became nonperforming during the first quarter of 2024. The first relationship is a $5.0 million construction and land loan for the construction of two multi-family, 15 condominium units to be sold and three commercial spaces for lease in Bay St. Louis, Mississippi that were more than 90-days past due and still accruing at March 31. 2024. There have been delays in the developer’s receipt of necessary certificates of occupancy which impeded its ability to sell the units and bring the loan current. Recently, the developer has begun receiving the certificates of occupancy and entered into purchase agreements on two of the units. Upon such sales, the loans were brought current, and the outstanding balance of this relationship has been reduced by $170,000 since March 31, 2024. We do not anticipate any loss on this relationship. The second relationship that was the primary reason for our increase in nonperforming loans is a $4.7 million relationship which was placed on non-accrual status during the first quarter and is secured by 17 residential units in eight investment properties in New Orleans and have a loan-to-value ratio of approximately 65%. We have commenced foreclosure proceedings on this relationship and do not expect any loss.
Current wording
Total nonperforming loans increased by $8.0 million, or 90.8%, to $16.8 million at June 30, 2024, compared to $8.8 million at December 31, 2023. The primary reason for the increase was one loan relationship with an aggregate outstanding balance of $4.7 million at June 30, 2024 that became nonperforming during the first quarter of 2024. This relationship is secured by 17 residential units in eight investment properties in New Orleans with an aggregate loan-to-value ratio of approximately 65%. We have commenced foreclosure proceedings on this relationship and do not expect any loss. There were also additional smaller loan balances downgraded to nonperforming during the period, but we do not anticipate any losses associated with these loans.
Previous wording
(1)Nonaccrual acquired loans include PCD loans of $1.4 million and $1.4 million at March 31, 2024 and December 31, 2023, respectively.
Current wording
(1)Nonaccrual acquired loans include PCD loans of $1.3 million and $1.4 million at June 30, 2024 and December 31, 2023, respectively.
Previous wording
The Company’s investment securities portfolio totaled $422.9 million as of March 31, 2024, a decrease of $12.1 million, or 2.8%, from December 31, 2023. During the first quarter of 2024, the Company had no gain or losses related to the sale of available-for-sale investment securities compared to a net loss of $249,000 during the first quarter of 2023. At March 31, 2024, the Company had a net unrealized loss on its available for sale investment securities portfolio of $46.6 million, compared to a net unrealized loss of $43.4 million at December 31, 2023. The Company’s investment securities portfolio had an effective duration of 4.2 years at March 31, 2024 and December 31, 2023.
Current wording
The Company’s investment securities portfolio totaled $413.5 million as of June 30, 2024, a decrease of $21.5 million, or 4.9%, from December 31, 2023. During the second quarters of 2024 and 2023, the Company had no gains or losses related to the sale of available-for-sale investment securities. At June 30, 2024, the Company had a net unrealized loss on its available for sale investment securities portfolio of $46.6 million, compared to a net unrealized loss of $43.4 million at December 31, 2023. The Company’s investment securities portfolio had an effective duration of 4.0 years and 4.2 years at June 30, 2024 and December 31, 2023, respectively.
Previous wording
The following table summarizes activity in the Company’s investment securities portfolio during the three months ended March 31, 2024.
Current wording
The following table summarizes activity in the Company’s investment securities portfolio during the six months ended June 30, 2024.
Previous wording
Deposits totaled $2.7 billion at March 31, 2024, an increase of $52.0 million, or 1.9%, compared to December 31, 2023. The following table summarizes the changes in the Company’s deposits from December 31, 2023 to March 31, 2024.
Current wording
Deposits totaled $2.7 billion at June 30, 2024, an increase of $52.3 million, or 2.0%, compared to December 31, 2023. The following table summarizes the changes in the Company’s deposits from December 31, 2023 to June 30, 2024.
Previous wording
The average rate paid on interest-bearing deposits was 2.52% for the first quarter of 2024, up 175 bps compared to the first quarter of 2023. At March 31, 2024, certificates of deposit maturing within the next 12 months totaled $640.2 million.
Current wording
The average rate paid on interest-bearing deposits was 2.69% for the second quarter of 2024, up 139 bps compared to the second quarter of 2023. At June 30, 2024, certificates of deposit maturing within the next 12 months totaled $686.2 million.
Previous wording
The total amounts of our uninsured deposits (deposits in excess of $250,000, as calculated in accordance with FDIC regulations) were $781.9 million at March 31, 2024 and $748.6 million at December 31, 2023. Public funds in excess of the FDIC insurance limits are fully collateralized.
Current wording
The total amounts of our uninsured deposits (deposits in excess of $250,000, as calculated in accordance with FDIC regulations) were $780.1 million at June 30, 2024 and $748.6 million at December 31, 2023. Public funds in excess of the FDIC insurance limits are fully collateralized.
Previous wording
On March 12, 2023, the Federal Reserve Board created the BTFP, which offers loans to banks with a term up to one year with no prepayment penalty. The loans are secured by pledging qualifying securities and are valued at par for collateral. In 2024, the Bank participated in the BTFP and had an outstanding debt of $135.0 million at March 31, 2024. The average balance of other borrowings, which included the BTFP loan was $126.0 million for the first quarter of 2024, up $120.4 million compared to the first quarter of 2023.
Current wording
On March 12, 2023, the Federal Reserve Board created the BTFP, which offers loans to banks with a term up to one year with no prepayment penalty. The loans are secured by pledging qualifying securities and are valued at par for collateral. In 2024, the Bank participated in the BTFP and had an outstanding debt of $135.0 million at June 30, 2024. The average balance of other borrowings, which included the BTFP loan was $140.6 million for the second quarter of 2024, up $135.0 million compared to the second quarter of 2023.
Previous wording
The Company had no short-term FHLB advances as of March 31, 2024 compared to $150.0 million as of December 31, 2023. At March 31, 2024 and December 31, 2023, the Company had $38.6 million and $42.7 million in long-term FHLB advances, respectively, and $1.1 billion and $1.0 billion in additional FHLB advances available, respectively.
Current wording
The Company had $45.0 million short-term FHLB advances as of June 30, 2024 compared to $150.0 million as of December 31, 2023. At June 30, 2024 and December 31, 2023, the Company had $38.5 million and $42.7 million in long-term FHLB advances, respectively, and $1.1 billion and $1.0 billion in additional FHLB advances available, respectively.
Previous wording
Total shareholders’ equity increased $4.8 million, or 1.3%, from $367.4 million at December 31, 2023 to $372.3 million at March 31, 2024. Shareholders' equity increased primarily due to net income of $9.2 million, which was partially offset by an increase in accumulated other comprehensive loss on available for sale investment securities, cash dividends and share repurchases during the three months ended March 31, 2024.
Current wording
Total shareholders’ equity increased $8.4 million, or 2.3%, from $367.4 million at December 31, 2023 to $375.8 million at June 30, 2024. Shareholders' equity increased primarily due to net income of $17.3 million, which was partially offset by an increase in accumulated other comprehensive loss on available for sale investment securities, cash dividends and share repurchases during the six months ended June 30, 2024.
Previous wording
The Company uses its liquidity to fund existing and future loan commitments, to fund maturing certificates of deposit and demand deposit withdrawals, to invest in other interest-earning assets and to meet operating expenses. At March 31, 2024, certificates of deposit maturing within the next 12 months totaled $640.2 million. Based upon historical experience, the Company anticipates that a significant portion of the maturing certificates of deposit will be redeposited with us.
Current wording
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, 2024, certificates of deposit maturing within the next 12 months totaled $686.2 million. Based upon historical experience, the Company anticipates that a significant portion of the maturing certificates of deposit will be redeposited with us.
Previous wording
In addition to cash flow from loan and securities payments and prepayments as well as from sales of securities available for sale, the Company has significant borrowing capacity available to fund liquidity needs. In recent years, the Company has utilized borrowings as a cost efficient addition to deposits as a source of funds. Borrowings consist of advances from the FHLB of Dallas, of which the Company is a member. Under terms of the collateral agreement with the FHLB, the Company pledges residential mortgage loans and investment securities as well as the Company’s stock in the FHLB as collateral for such advances. For the three months ended March 31, 2024, the average balance of outstanding FHLB advances was $71.7 million. At March 31, 2024, the Company had $38.6 million in total outstanding FHLB advances.
Current wording
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 six months ended June 30, 2024, the average balance of outstanding FHLB advances was $59.1 million. At June 30, 2024, the Company had $83.5 million in total outstanding FHLB advances.
Previous wording
During the second quarter of 2020 and 2023, 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 2024 and 2023, 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.
Current wording
During the second quarters of 2020, 2023 and 2024, 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 2024 and 2023, 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.
Previous wording
To meet the financing needs of its customers, the Company issues financial instruments which represent conditional obligations that are not recognized, wholly or in part, in the statements of financial condition. These financial instruments include commitments to extend credit and standby letters of credit. Such instruments expose the Company to varying degrees of credit and interest rate risk in much the same way as funded loans. The same credit policies are used in these commitments as for on-balance sheet instruments. At both March 31, 2024 and December 31, 2023, the Company's allowance for credit losses on unfunded commitments totaled $2.6 million.
Current wording
To meet the financing needs of its customers, the Company issues financial instruments which represent conditional obligations that are not recognized, wholly or in part, in the statements of financial condition. These financial instruments include commitments to extend credit and standby letters of credit. Such instruments expose the Company to varying degrees of credit and interest rate risk in much the same way as funded loans. The same credit policies are used in these commitments as for on-balance sheet instruments. At both June 30, 2024 and December 31, 2023, the Company's allowance for credit losses on unfunded commitments totaled $2.5 million.
Previous wording
Net income for the first quarter of 2024 was $9.2 million, down $2.1 million compared to the first quarter of 2023. Diluted EPS for the first quarter of 2024 was $1.14, down $0.25 compared to the first quarter of 2023.
Current wording
Net income for the second quarter of 2024 was $8.1 million, down $1.7 million compared to the second quarter of 2023. Diluted EPS for the second quarter of 2024 was $1.02, down $0.19 compared to the second quarter of 2023.
Previous wording
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 2.81% and 3.72% for the quarters ended March 31, 2024 and 2023, respectively.
Current wording
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 2.77% and 3.31% for the quarters ended June 30, 2024 and 2023, respectively, and 2.79% and 3.51% for the six months ended June 30, 2024 and 2023, respectively.
Previous wording
The Company’s tax-equivalent net interest margin, which is net interest income as a percentage of average interest-earning assets, was 3.64% and 4.18% for the quarters ended March 31, 2024 and 2023, respectively. For the same periods, the average loan yield was 6.18% and 5.67%, respectively.
Current wording
The Company’s tax-equivalent net interest margin, which is net interest income as a percentage of average interest-earning assets, was 3.66% and 3.94% for the quarters ended June 30, 2024 and 2023, respectively. For the same periods, the average loan yield was 6.28% and 5.82%, respectively. The net interest margin for the six months ended June 30, 2024 and 2023 was 3.65% and 4.06%, respectively. For the same periods, the average loan yield was 6.23% and 5.74%, respectively.
Previous wording
Acquired loan discount accretion included in interest income totaled $525,000 and $668,000 for the quarters ended March 31, 2024 and 2023, respectively.
Current wording
Acquired loan discount accretion included in interest income totaled $490,000 and $647,000 for the quarters ended June 30, 2024 and 2023, respectively. For the six months ended June 30, 2024 and 2023, acquired loan discount accretion included in interest income totaled $1.0 million and $1.3 million, respectively.
Previous wording
Income tax expense for the three months ended March 31, 2024 totaled $2.2 million compared to $2.8 million for the three months ended March 31, 2023. Income tax expense decreased over the prior comparable quarter primarily due to decreased taxable earnings in the first quarter of 2024. The Company's effective tax rates for the first quarters of 2024 and 2023 were 19.6% and 20.0%, respectively.
Current wording
Income tax expense for the three and six months ended June 30, 2024 totaled $2.0 million and $4.2 million, respectively, compared to $2.5 million and $5.3 million for the three and six months ended June 30, 2023, respectively. Income tax expense decreased over the prior comparable quarter primarily due to decreased taxable earnings. The Company's effective tax rates for the second quarters of 2024 and 2023 were 19.5% and 20.4%, respectively. For the six months ended June 30, 2024 and 2023, the Company's effective tax rates were 19.5% and 20.2%, respectively.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
(1)Nonperforming loans are included in the respective average loan balances, net of deferred fees, discounts and loans in process.