HOME BANCORP, INC.
For the period ended Mar 31, 2026. Filed May 6, 2026.
View on SEC.govAbout this filing
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.
Mar 31, 2026 · Filed May 6, 2026
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 2025-09-30; filed 2025-11-03.
0001628280-25-048166
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-03-31; filed 2026-05-06.
0001628280-26-031198
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 97 previous paragraphs and 91 current paragraphs.
47 unchanged; 31 reworded; 13 added; 18 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 17 previous and 16 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 (13)
Current report
The Company reported net income for the first quarter of 2026 of $11.4 million, or $1.45 diluted EPS, up $396,000, or 3.6%, compared to the first quarter of 2025. Net income for the first quarter of 2025 totaled $11.0 million, or $1.37 diluted EPS.
Current report
•Assets increased $62.0 million, or 1.8%, from December 31, 2025 to $3.6 billion at March 31, 2026.
Current report
•During the three months ended March 31, 2026, the Company provisioned $922,000 to the allowance for loan losses, primarily due an increase in individually impaired loan reserves, partially offset by loan reduction. During the three months ended March 31, 2025, the Company provisioned $394,000 to the allowance for loan losses.
Current report
•Nonperforming assets increased $3.8 million, or 10.5%, from $36.1 million, or 1.03% of total assets, at December 31, 2025 to $39.9 million, or 1.12% of total assets, at March 31, 2026. The increase in nonperforming assets during the first quarter of 2026 was primarily attributable to several loan relationships, including one relationship with an outstanding balance of $1.4 million, which were placed on nonaccrual status during the quarter, partially offset by loan paydowns and payoffs.
Current report
•The net interest margin was 4.16% for the three months ended March 31, 2026, up 25 bps from the three months ended March 31, 2025. The increase was primarily due to a decline in the average cost of interest-bearing liabilities.
Current report
•Total interest expense for the first quarter of 2026 was $13.3 million, down $2.2 million, or 14.2%, compared to the first quarter of 2025, primarily due to a decrease in FHLB borrowing interest.
Current report
•Noninterest income for the first quarter of 2026 was $3.7 million, down $271,000, or 6.8%, compared to the first quarter of 2025, primarily due to decreases in other income (down $266,000) and gain on sale of loans (down $147,000), which were partially offset by an increase in service fees and charges (up $128,000).
Current report
•Noninterest expense for the first quarter of 2026 was $22.9 million, up $1.4 million, or 6.3%, compared to the first quarter of 2025, primarily due to increases in compensation and benefits (up $1.1 million) and other expenses (up $786,000), which were partially offset by decreases in foreclosed assets (down $173,000), franchise and shares tax (down $136,000), and occupancy expense (down $132,000).
Current report
Total nonperforming loans increased by $1.6 million, or 4.8%, to $35.8 million at March 31, 2026, compared to $34.2 million at December 31, 2025. The increase was primarily attributable to several loan relationships, including one relationship with an outstanding balance of $1.4 million, which were placed on nonaccrual status during the quarter, partially offset by loan paydowns and payoffs. Based on the underlying collateral position and ongoing monitoring, management does not anticipate any material losses.
Current report
The average balance of total FHLB advances was $1.9 million for the first quarter of 2026, down $178.8 million compared to the first quarter of 2025.
Current report
Net income for the first quarter of 2026 was $11.4 million, up $396,000, or 3.6%, compared to the first quarter of 2025. Diluted EPS for the first quarter of 2026 was $1.45, up $0.08 compared to the first quarter of 2025.
Current report
Net interest income totaled $34.5 million for the first quarter of 2026, up $2.7 million, or 8.6%, compared to the first quarter of 2025.
Current report
Noninterest expense for the first quarter of 2026 totaled $22.9 million, up $1.4 million, or 6.3%, from the first quarter of 2025. Noninterest expense increased over the comparable quarter primarily due to increases in compensation and benefits (up $1.1 million) and other expenses (up $786,000), which were partially offset by decreases in foreclosed assets (down $173,000), franchise and shares tax (down $136,000), and occupancy expense (down $132,000).
Removed paragraphs (18)
Previous report
The Company reported net income for the third quarter of 2025 of $12.4 million, or $1.59 diluted EPS, up $2.9 million, or 30.9%, compared to the third quarter of 2024. Net income for the third quarter of 2024 totaled $9.4 million, or $1.18 diluted EPS. For the nine months ended September 30, 2025, the Company reported net income $34.7 million, or $4.41 diluted EPS, up $7.9 million, or 29.5%, from $26.8 million, or $3.34 diluted EPS, reported for the nine months ended September 30, 2024.
Previous report
•Assets increased $50.4 million, or 1.5%, from December 31, 2024 to $3.5 billion at September 30, 2025.
Previous report
•During the three months ended September 30, 2025, the Company reversed $229,000 of the allowance for loan losses, primarily due to loan reduction, which was partially offset by an increase in nonaccrual loans during the quarter. During the nine months ended September 30, 2025, the Company provisioned $654,000 to the allowance for loan losses, primarily due to the mix in loans and an increase in nonperforming assets during the year. During the three and nine months ended September 30, 2024, the Company provisioned $140,000 and $1.5 million, respectively, to the allowance for loan losses.
Previous report
•Nonperforming assets increased $15.3 million, or 98.0%, from $15.6 million, or 0.45% of total assets, at December 31, 2024 to $30.9 million, or 0.88% of total assets, at September 30, 2025. The increase in nonperforming assets was primarily due to three loan relationships classified as substandard in 2024 and moved to nonaccrual status during the 2025 period, and seven loan relationships that were downgraded to substandard and moved to nonaccrual status during the 2025 period.
Previous report
•The net interest margin was 4.10% and 4.02% for the three and nine months ended September 30, 2025, respectively, up 39 bps and 35 bps from the three and nine months ended September 30, 2024, respectively. The increases were primarily due to higher yields on interest-earning assets and lower funding costs.
Previous report
•Total interest expense for the third quarter of 2025 was $15.1 million, down $1.9 million, or 11.1%, compared to the third quarter of 2024, primarily due to lower cost of borrowings. For the nine months ended September 30, 2025, total interest expense was $45.8 million, down $2.4 million, or 5.1%, from the comparable period in 2024.
Previous report
•Noninterest income for the third quarter of 2025 was $3.7 million, up $46,000, or 1.2%, compared to the third quarter of 2024, primarily due to an increase in service fees and charges (up $117,000), which was partially offset by a decrease in other income (down $70,000). For the nine months ended September 30, 2025, noninterest income was $11.5 million, up $467,000, or 4.2%, from the comparable period in 2024 primarily due to an increase in service fees and charges (up $278,000) and gain on sale of loans (up $227,000), which were partially offset by a decrease in other income (down $116,000).
Previous report
•Noninterest expense for the third quarter of 2025 was $22.5 million, up $273,000, or 1.2%, compared to the third quarter of 2024, primarily due to an increase in compensation and benefits (up $473,000) and foreclosed assets (up $315,000), which were partially offset by a decrease in other expenses (down $206,000) and occupancy (down $188,000). For the nine months ended September 30, 2025, noninterest expense was up $66.5 million, $1.6 million, or 2.4%, from the comparable period in 2024 primarily due to an increase in compensation and benefits (up $1.5 million) and foreclosed assets, net (up $807,000), which were partially offset by the reversal of provision for credit losses on unfunded commitments (down $836,000).
Previous report
Total nonperforming loans increased by $15.9 million, or 117.1%, to $29.5 million at September 30, 2025, compared to $13.6 million at December 31, 2024. The primary reason for the increase was ten loan relationships with an aggregate outstanding balance of $19.0 million at September 30, 2025 that became nonperforming during 2025, for which management does not anticipate any losses.
Previous report
Other Borrowings
Previous report
Other borrowings at September 30, 2025 and December 31, 2024 included a $5,539,000 note payable with a rate of 3.83% on the Company’s investment in a new market tax credit entity. The note payable is a 20-year leverage loan with interest-only payments for the first seven years. The note was originated in October 2018.
Previous report
The average balance of total FHLB advances was $39.4 million for the third quarter of 2025, down $17.3 million compared to the third quarter of 2024. We reduced our FHLB advances in 2024 primarily due to our increased utilization of BTFP loans as an alternative source of funds. BTFP borrowings were paid off in the fourth quarter of 2024 and replaced with short-term FHLB advances.
Previous report
Net income for the third quarter of 2025 was $12.4 million, up $2.9 million, or 30.9%, compared to the third quarter of 2024. Diluted EPS for the third quarter of 2025 was $1.59, up $0.41 compared to the third quarter of 2024.
Previous report
Net income for the nine months ended September 30, 2025 was $34.7 million, up $7.9 million, or 28.7%, compared to the nine months ended September 30, 2024. Diluted EPS for the nine months ended September 30, 2025 was $4.41, up $1.07 compared to the nine months ended September 30, 2024.
Previous report
Net interest income totaled $34.1 million for the third quarter of 2025, up $3.7 million, or 12.3%, compared to the third quarter of 2024. For the nine months ended September 30, 2025, net interest income totaled $99.2 million, up $10.5 million, or 11.9%, compared to the nine months ended September 30, 2024.
Previous report
Noninterest income for the nine months ended September 30, 2025 totaled $11.5 million, up $467,000, or 4.2%, from $11.0 million earned for the same period in 2024. Noninterest income increased over the comparable period primarily due to an increase in service fees and charges (up $278,000) and gain on sale of loans (up $227,000, primarily due to gain on sale of SBA loans), which were partially offset by a decrease in other income (down $116,000, primarily due to the absence of derivative fee income).
Previous report
Noninterest expense for the third quarter of 2025 totaled $22.5 million, up $273,000, or 1.2%, from the third quarter of 2024. Noninterest expense increased over the comparable quarter primarily due to an increase in compensation and benefits (up $473,000, primarily due to increases in salaries) and foreclosed assets (up $315,000), which were partially offset by a decrease in other expenses (down $206,000) and occupancy expenses (down $188,000, primarily due to a lease that ended September 2024).
Previous report
Noninterest expense for the nine months ended September 30, 2025 totaled $66.5 million, up $1.6 million, or 2.4%, from the same period in 2024. Noninterest expense increased over the comparable quarter primarily due to an increase in compensation and benefits (up $1.5 million, primarily due to increases in salaries) and foreclosed assets, net (up $807,000), which were partially offset by the reversal of provision for credit losses on unfunded commitments (down $836,000, primarily due to lower unfunded commitment levels).
Reworded paragraphs (31)
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, 2024 through September 30, 2025 and on its results of operations for the three and nine months ended September 30, 2025 and 2024. This discussion and analysis is intended to highlight and supplement information presented elsewhere in this quarterly report on Form 10-Q, particularly the consolidated financial statements and related notes appearing in Item 1.
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, 2025 through March 31, 2026 and on its results of operations for the three months ended March 31, 2026 and 2025. 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 and nine months ended September 30, 2025 include:
Current wording
Key components of the Company’s performance during the three months ended March 31, 2026 include:
Previous wording
•Total loans were $2.7 billion at September 30, 2025, down $12.3 million, or 0.5%, from December 31, 2024.
Current wording
•Total loans were $2.7 billion at March 31, 2026, down $15.9 million, or 0.6%, from December 31, 2025.
Previous wording
•The ALL totaled $32.8 million, or 1.21% of total loans, at September 30, 2025 compared to $32.9 million, or 1.21% of total loans, at December 31, 2024. The ACL, which is comprised of the allowance for loan losses plus the allowance for unfunded lending commitments, totaled $34.6 million, or 1.28% of total loans, at September 30, 2025 compared to $35.6 million, or 1.31% of total loans, at December 31, 2024.
Current wording
•The ALL totaled $33.7 million, or 1.23% of total loans, at March 31, 2026 compared to $33.1 million, or 1.21% of total loans, at December 31, 2025. The ACL, which is comprised of the allowance for loan losses plus the allowance for unfunded lending commitments, totaled $35.3 million, or 1.29% of total loans, at March 31, 2026 compared to $34.8 million, or 1.27% of total loans, at December 31, 2025.
Previous wording
•Total deposits amounted to $3.0 billion at September 30, 2025, an increase of $194.8 million, or 7.0%, from December 31, 2024.
Current wording
•Total deposits amounted to $3.0 billion at March 31, 2026, an increase of $54.0 million, or 1.8%, from December 31, 2025.
Previous wording
•The average rate paid on total interest-bearing deposits was 2.57% for the third quarter of 2025, which was down 21 bps from the third quarter of 2024. For the nine months ended September 30, 2025, the average rate paid on total interest-bearing deposits was 2.54%, down 12 bps from the nine months ended September 30, 2024.
Current wording
•The average rate paid on total interest-bearing deposits was 2.29% for the first quarter of 2026, which was down 22 bps from the first quarter of 2025.
Previous wording
Total loans at September 30, 2025 were $2.7 billion, down $12.3 million, or 0.5%, from December 31, 2024.
Current wording
Total loans at March 31, 2026 were $2.7 billion, down $15.9 million, or 0.6%, from December 31, 2025.
Previous wording
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.
Current wording
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.
Previous wording
At September 30, 2025, the ALL totaled $32.8 million, or 1.21% of total loans, down $89,000 from $32.9 million, or 1.21% of total loans, at December 31, 2024. During the nine months ended September 30, 2025, the Company provisioned $654,000 of the allowance loan losses primarily due to the mix in loans and an increase in nonperforming assets during the year. Net loan charge-offs totaled $743,000 for the nine months ended September 30, 2025.
Current wording
At March 31, 2026, the ALL totaled $33.7 million, or 1.23% of total loans, up $538,000 from $33.1 million, or 1.21% of total loans, at December 31, 2025. During the three months ended March 31, 2026, the Company provisioned $922,000 to the allowance loan losses primarily due to an increase in individually impaired loan reserves, partially offset by loan reduction. Net loan charge-offs totaled $384,000 for the three months ended March 31, 2026.
Previous wording
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.
Current wording
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., credit relationships with aggregate 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.
Previous wording
At September 30, 2025 and December 31, 2024, loans identified as credit deteriorated loans and individually evaluated for expected losses were $6.1 million and $5.0 million, respectively. The following tables provide a summary of loans individually evaluated for credit losses as of the dates indicated.
Current wording
At March 31, 2026 and December 31, 2025, loans identified as credit deteriorated loans and individually evaluated for expected losses were $10.0 million and $6.2 million, respectively. The following tables provide a summary of loans individually evaluated for credit losses as of the dates indicated.
Previous wording
At September 30, 2025 and December 31, 2024, loans classified as substandard totaled $57.6 million and $35.8 million, respectively. There were no assets classified as doubtful at either date. For additional information, refer to Note 5 to the Consolidated Financial Statements.
Current wording
At March 31, 2026 and December 31, 2025, loans classified as substandard totaled $61.5 million and $61.1 million, respectively. There were no assets classified as doubtful at either date. For additional information, refer to Note 5 to the Consolidated Financial Statements.
Previous wording
(1)Nonaccrual acquired loans include PCD loans of $1.2 million and $1.3 million at September 30, 2025 and December 31, 2024, respectively.
Current wording
(1)Nonaccrual acquired loans include PCD loans of $1.1 million and $1.2 million at March 31, 2026 and December 31, 2025, respectively.
Previous wording
The Company’s investment securities portfolio totaled $384.4 million as of September 30, 2025, a decrease of $19.5 million, or 4.8%, from December 31, 2024. During the third quarters of 2025 and 2024, the Company had no gains or losses related to the sale of available-for-sale investment securities. At September 30, 2025, the Company had a net unrealized loss on its available for sale investment securities portfolio of $26.5 million, compared to a net unrealized loss of $41.0 million at December 31, 2024. The Company’s investment securities portfolio had an effective duration of 3.5 years and 3.9 years at September 30, 2025 and December 31, 2024, respectively.
Current wording
The Company’s investment securities portfolio totaled $386.3 million as of March 31, 2026, a decrease of $6.3 million, or 1.6%, from December 31, 2025. During the first quarters of 2026 and 2025, the Company had no gains or losses related to the sale of available for sale investment securities. At March 31, 2026, the Company had a net unrealized loss on its available for sale investment securities portfolio of $24.0 million, compared to a net unrealized loss of $23.4 million at December 31, 2025. The Company’s investment securities portfolio had an effective duration of 3.4 years and 3.3 years at March 31, 2026 and December 31, 2025, respectively.
Previous wording
The following table summarizes activity in the Company’s investment securities portfolio during the nine months ended September 30, 2025.
Current wording
The following table summarizes activity in the Company’s investment securities portfolio during the three months ended March 31, 2026.
Previous wording
Deposits totaled $3.0 billion at September 30, 2025, an increase of $194.8 million, or 7.0%, compared to December 31, 2024. The following table summarizes the changes in the Company’s deposits from December 31, 2024 to September 30, 2025.
Current wording
Deposits totaled $3.0 billion at March 31, 2026, an increase of $54.0 million, or 1.8%, compared to December 31, 2025. The following table summarizes the changes in the Company’s deposits from December 31, 2025 to March 31, 2026.
Previous wording
The average rate paid on interest-bearing deposits was 2.57% for the third quarter of 2025, down 21 bps compared to the third quarter of 2024. At September 30, 2025, certificates of deposit maturing within the next 12 months totaled $810.5 million.
Current wording
The average rate paid on interest-bearing deposits was 2.29% for the first quarter of 2026, down 22 bps compared to the first quarter of 2025. At March 31, 2026, certificates of deposit maturing within the next 12 months totaled $715.3 million.
Previous wording
The total amounts of our uninsured deposits (deposits in excess of $250,000, as calculated in accordance with FDIC regulations) were $894.8 million at September 30, 2025 and $813.6 million at December 31, 2024. 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 $919.7 million at March 31, 2026 and $885.4 million at December 31, 2025. Public funds in excess of the FDIC insurance limits are fully collateralized.
Previous wording
The carrying value of the Notes was $54.6 million and $54.5 million at September 30, 2025 and December 31, 2024, respectively. The subordinated debt was recorded net of issuance costs and amortized using the straight-line method over five years.
Current wording
The carrying value of the Notes was $54.7 million and $54.7 million at March 31, 2026 and December 31, 2025, respectively. The subordinated debt was recorded net of issuance costs and amortized using the straight-line method over five years.
Previous wording
The Company had no short-term FHLB advances as of September 30, 2025, down $137.2 million compared to $137.2 million as of December 31, 2024. At September 30, 2025 and December 31, 2024, the Company had $3.1 million and $38.3 million in long-term FHLB advances, respectively, and $1.3 billion and $1.1 billion in additional FHLB advances available, respectively.
Current wording
The Company had no short-term FHLB advances as of March 31, 2026 and December 31, 2025. At March 31, 2026 and December 31, 2025, the Company had $0.0 million and $3.0 million in long-term FHLB advances, respectively, and $1.3 billion and $1.3 billion in additional FHLB advances available, respectively.
Previous wording
Total shareholders’ equity increased $27.0 million, or 6.8%, from $396.1 million at December 31, 2024 to $423.0 million at September 30, 2025. Shareholders' equity increased primarily due to net income of $34.7 million and a decrease in accumulated other comprehensive loss on available for sale investment securities, which were partially offset by cash dividends paid on the common stock and share repurchases during the nine months ended September 30, 2025.
Current wording
Total shareholders’ equity increased $9.3 million, or 2.1%, from $435.1 million at December 31, 2025 to $444.4 million at March 31, 2026. Shareholders' equity increased primarily due to net income of $11.4 million, which was partially offset by an increase in the accumulated other comprehensive loss on available for sale investment securities and cash dividends paid on the common stock during the three months ended March 31, 2026.
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 September 30, 2025, certificates of deposit maturing within the next 12 months totaled $810.5 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 March 31, 2026, certificates of deposit maturing within the next 12 months totaled $715.3 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 nine months ended September 30, 2025, the average balance of outstanding FHLB advances was $110.9 million. At September 30, 2025, the Company had $3.1 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 three months ended March 31, 2026, the average balance of outstanding FHLB advances was $1.9 million. At March 31, 2026, the Company had $0.0 million in total outstanding FHLB advances.
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 September 30, 2025 and December 31, 2024, the Company's allowance for credit losses on unfunded commitments totaled $1.7 million and $2.7 million, respectively.
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 March 31, 2026 and December 31, 2025, the Company's allowance for credit losses on unfunded commitments totaled $1.6 million and $1.6 million, respectively.
Previous wording
During the three months ended September 30, 2025, the Company reversed $229,000 of the allowance for loan losses primarily due to loan reduction. During the nine months ended September 30, 2025, the Company provisioned $654,000 to the allowance for loan losses, primarily due to an increase in nonaccrual loans during the year. During the three and nine months ended September 30, 2024, the Company provisioned $140,000 and $1.5 million, respectively, to the allowance for loan losses primarily due to loan growth and net charge-offs.
Current wording
During the three months ended March 31, 2026, the Company provisioned $922,000 to the allowance for loan losses, primarily due to an increase in individually impaired loan reserves, partially offset by loan reduction. During the three months ended March 31, 2025, the Company provisioned $394,000 to the allowance for loan losses, primarily due to loan growth.
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 3.26% and 2.80% for the quarters ended September 30, 2025 and 2024, respectively, and 3.19% and 2.80% for the nine months ended September 30, 2025 and 2024, 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 3.40% and 3.10% for the quarters ended March 31, 2026 and 2025, 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 4.10% and 3.71% for the quarters ended September 30, 2025 and 2024, respectively. For the same periods, the average loan yield was 6.53% and 6.43%, respectively. The net interest margin for the nine months ended September 30, 2025 and 2024 was 4.02% and 3.67%, respectively. For the same periods, the average loan yield was 6.49% and 6.30%, 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 4.16% and 3.91% for the quarters ended March 31, 2026 and 2025, respectively. For the same periods, the average loan yield was 6.41% and 6.43%, respectively.
Previous wording
Acquired loan discount accretion included in interest income totaled $347,000 and $452,000 for the quarters ended September 30, 2025 and 2024, respectively. For the nine months ended September 30, 2025 and 2024, acquired loan discount accretion included in interest income totaled $1.1 million and $1.5 million, respectively.
Current wording
Acquired loan discount accretion included in interest income totaled $189,000 and $356,000 for the quarters ended March 31, 2026 and 2025, respectively.
Previous wording
Noninterest income for the third quarter of 2025 totaled $3.7 million, up $46,000, or 1.2%, from $3.7 million earned for the same period in 2024. Noninterest income increased over the comparable period primarily due to an increase in service fees and charges (up $117,000), which was partially offset by a decrease in other income (down $70,000).
Current wording
Noninterest income for the first quarter of 2026 totaled $3.7 million, down $271,000, or 6.8%, from $4.0 million earned for the same period in 2025. Noninterest income decreased over the comparable period primarily due to decreases in other income (down $266,000) and gain on sale of loans (down $147,000), which were partially offset by an increase in service fees and charges (up $128,000).
Previous wording
Income tax expense for the three and nine months ended September 30, 2025 totaled $3.2 million and $8.8 million, respectively, compared to $2.2 million and $6.4 million for the three and nine months ended September 30, 2024, respectively. Income tax expense increased over the prior comparable quarter primarily due to increased taxable earnings. The Company's effective tax rates for the third quarters of 2025 and 2024 were 20.5% and 19.2%, respectively. For the nine months ended September 30, 2025 and 2024, the Company's effective tax rates were 20.3% and 19.4%, respectively.
Current wording
Income tax expense for the three months ended March 31, 2026 totaled $3.0 million, compared to $2.8 million for the three months ended March 31, 2025. Income tax expense increased over the prior comparable quarter primarily due to increased taxable earnings. The Company's effective tax rates for the first quarters of 2026 and 2025 were 20.9% and 20.5%, respectively.
Previous wording
We follow financial accounting and reporting policies that are in accordance with accounting principles generally accepted in the United States. Our accounting policies are discussed in detail in Note 1 - Basis of Presentation in the accompanying notes to the consolidated financial statements included elsewhere in this report and in our 2024 Annual Report on Form 10-K. Not all significant accounting policies require management to make difficult, subjective or complex judgments. However, management believes the policy noted below meets the SEC’s definition of a critical accounting policy.
Current wording
We follow financial accounting and reporting policies that are in accordance with accounting principles generally accepted in the United States. Our accounting policies are discussed in detail in Note 1 - Basis of Presentation in the accompanying notes to the consolidated financial statements included elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2025. Not all significant accounting policies require management to make difficult, subjective or complex judgments. However, management believes the policy noted below meets the SEC’s definition of a critical accounting policy.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
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