UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM10-Q

(Mark One)

☒
☒			Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended: September 30, ~~2018~~

2019

☐
☐			Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period fromto

Commission File Number:001-34190

HOME BANCORP, INC.

(Exact name of Registrant as specified in its charter)


~~Louisiana~~

	~~71-1051785~~
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 class

Trading
symbol(s)

Name of each exchange
on which registered

Common Stock

HBCP

Nasdaq 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~~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 RegulationS-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~~Yes ☒ NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-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 Rule12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☒

Non-accelerated filer

☒☐

Smaller reporting company

☐

~~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 Rule12b-2 of the Exchange Act). ~~YES~~Yes ☐ NO ☒

At ~~October 31, 2018,~~November 6, 2019, the registrant had ~~9,480,140~~9,275,629 shares of common stock, $0.01 par value, outstanding.

HOME BANCORP, INC. and SUBSIDIARY

TABLE OF CONTENTS


									Page
PART I
- FINANCIAL INFORMATION
Item 1.					Financial Statements (unaudited)

	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					5	6

	Notes to Unaudited Consolidated Financial Statements					6	7

Item 2.			Managements’ Discussion and Analysis of Financial Condition and Results of Operations					27

Item 3.			Quantitative and Qualitative Disclosures About Market Risk					40	38
Item 4.		Controls and Procedures			38
PART II - OTHER INFORMATION
~~Item 4.~~			~~Controls and Procedures~~			40

~~PART II~~

Item 1.			Legal Proceedings					40	39

Item 1A.			Risk Factors					41	39

Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds					41	39

Item 3.			Defaults Upon Senior Securities					41	39

Item 4.			Mine Safety Disclosures					41	39

Item 5.			Other Information					41	39
Item 6.		Exhibits			39
SIGNATURES
~~Item 6.~~	~~Exhibits~~41			41

~~SIGNATURES~~				42

HOME BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

   (Unaudited) (Audited)
   September 30, December 31,
(Dollars in thousands, except share data)    2018 2017
Assets

Cash and cash equivalents
   $ 61,724 $ 150,418
Interest-bearing deposits in banks
   1,184 2,421
Investment securities available for sale, at fair value
   258,948 234,993
Investment securities held to maturity (fair values of $10,868 and $13,055, respectively)
   10,942 13,034
Mortgage loans held for sale
   3,470 5,873
Loans, net of unearned income
   1,633,019 1,657,795
Allowance for loan losses
   (15,743 ) (14,807 )


Total loans, net of unearned income and allowance for loan losses
   1,617,276 1,642,988


Office properties and equipment, net
   45,758 45,605
Cash surrender value of bank-owned life insurance
   29,394 28,904
Goodwill and core deposit intangibles
   66,493 68,033
Accrued interest receivable and other assets
   45,341 35,852


Total Assets
   $ 2,140,530 $ 2,228,121


Liabilities

Deposits:

Noninterest-bearing
   $ 447,422 $ 461,999
Interest-bearing
   1,323,890 1,404,228


Total deposits
   1,771,312 1,866,227
Short-term Federal Home Loan Bank advances
   41 3,642
Long-term Federal Home Loan Bank advances
   59,536 68,183
Accrued interest payable and other liabilities
   13,953 12,198


Total Liabilities
   1,844,842 1,950,250


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; 9,479,611 and 9,395,488 shares issued and outstanding, respectively
   95 94
Additionalpaid-in capital
   167,942 165,341
Unallocated common stock held by:

Employee Stock Ownership Plan (ESOP)
   (3,571 ) (3,838 )
Recognition and Retention Plan (RRP)
   (77 ) (84 )
Retained earnings
   135,848 117,313
Accumulated other comprehensive loss
   (4,549 ) (955 )


Total Shareholders’ Equity
   295,688 277,871


Total Liabilities and Shareholders’ Equity
   $ 2,140,530 $ 2,228,121


	(Unaudited)		(Audited)
(dollars in thousands)	September 30, 2019		December 31, 2018
Assets
Cash and cash equivalents	$	61,289	$	59,618
Interest-bearing deposits in banks	449		939
Investment securities available for sale, at fair value	255,114		260,131
Investment securities held to maturity (fair values of $7,238 and $10,841, respectively)	7,193		10,872
Mortgage loans held for sale	6,909		2,086
Loans, net of unearned income	1,707,442		1,649,754
Allowance for loan losses	(17,598)		(16,348)
Total loans, net of unearned income and allowance for loan losses	1,689,844		1,633,406
Office properties and equipment, net	46,362		47,124
Cash surrender value of bank-owned life insurance	39,228		29,560
Goodwill and core deposit intangibles	64,854		66,055
Accrued interest receivable and other assets	46,798		43,867
Total Assets	2,218,040		2,153,658
Liabilities
Deposits:
Noninterest-bearing	446,742		438,146
Interest-bearing	1,384,664		1,335,071
Total Deposits	1,831,406		1,773,217
Other borrowings	5,539		5,539
Long-term Federal Home Loan Bank advances	47,853		58,698
Accrued interest payable and other liabilities	18,565		12,164
Total Liabilities	1,903,363		1,849,618
Shareholders’ Equity
Preferred stock, $0.01 par value - 10,000,000 shares authorized; NaN issued	—		—
Common stock, $0.01 par value - 40,000,000 shares authorized; 9,331,099 and 9,459,050 shares issued and outstanding, respectively	93		95
Additional paid-in capital	168,822		168,243
Unallocated common stock held by:
Employee Stock Ownership Plan (ESOP)	(3,213)		(3,481)
Recognition and Retention Plan (RRP)	(47)		(58)
Retained earnings	147,841		141,447
Accumulated other comprehensive income (loss)	1,181		(2,206)
Total Shareholders’ Equity	314,677		304,040
Total Liabilities and Shareholders’ Equity	$	2,218,040	$	2,153,658

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

HOME BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

   For the Three Months Ended For the Nine Months Ended
   September 30, September 30,
(Dollars in thousands, except per share data)    2018 2017 2018    2017
Interest Income

Loans, including fees
   $ 24,118 $ 16,336 $ 70,449    $ 48,747
Investment securities:

Taxable interest
   1,516 983 4,355    2,807
Tax-exempt interest
   178 152 543    471
Other investments and deposits
   297 194 1,063    403




Total interest income
   26,109 17,665 76,410    52,428




Interest Expense

Deposits
   2,312 1,396 6,141    3,538
Short-term Federal Home Loan Bank advances
   6 —   39    95
Long-term Federal Home Loan Bank advances
   281 313 877    972




Total interest expense
   2,599 1,709 7,057    4,605




Net interest income
   23,510 15,956 69,353    47,823
Provision for loan losses
   786 660 2,331    1,117




Net interest income after provision for loan losses
   22,724 15,296 67,022    46,706




Noninterest Income

Service fees and charges
   1,638 1,056 4,812    2,983
Bank card fees
   1,110 718 3,405    2,168
Gain on sale of loans, net
   206 303 614    919
Income from bank-owned life insurance
   166 121 490    361
(Loss) gain on sale of assets, net
   (68 ) (43 ) 77    (147 )
Other income
   289 138 768    999




Total noninterest income
   3,341 2,293 10,166    7,283




Noninterest Expense

Compensation and benefits
   9,328 7,062 27,492    20,730
Occupancy
   1,661 1,219 5,056    3,711
Marketing and advertising
   286 287 852    802
Data processing and communication
   1,804 928 5,827    3,076
Professional services
   265 407 856    819
Forms, printing and supplies
   180 119 811    410
Franchise and shares tax
   362 193 1,091    587
Regulatory fees
   455 317 1,177    952
Foreclosed assets, net
   58 (70 ) 247    (230 )
Other expenses
   1,297 879 4,199    2,565




Total noninterest expense
   15,696 11,341 47,608    33,422




Income before income tax expense
   10,369 6,248 29,580    20,567
Income tax expense
   2,107 2,158 6,079    6,985




Net Income
   $ 8,262 $ 4,090 $ 23,501    $ 13,582




Earnings per share:

Basic
   $ 0.91 $ 0.58 $ 2.60    $ 1.95




Diluted
   $ 0.89 $ 0.56 $ 2.53    $ 1.88




Cash dividends declared per common share
   $ 0.19 $ 0.14 $ 0.51    $ 0.41


	Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in thousands, except per share data)	2019		2018		2019		2018
Interest Income
Loans, including fees	$	23,562	$	24,118	$	70,572	$	70,448
Investment securities:
Taxable interest	1,401		1,516		4,655		4,355
Tax-exempt interest	114		178		397		543
Other investments and deposits	397		297		1,140		1,063
Total interest income	25,474		26,109		76,764		76,409
Interest Expense
Deposits	4,050		2,312		11,116		6,142
Other borrowings expense	53		—		159		—
Short-term Federal Home Loan Bank advances	—		6		—		39
Long-term Federal Home Loan Bank advances	230		281		751		877
Total interest expense	4,333		2,599		12,026		7,058
Net interest income	21,141		23,510		64,738		69,351
Provision for loan losses	1,146		786		2,301		2,331
Net interest income after provision for loan losses	19,995		22,724		62,437		67,020
Noninterest Income
Service fees and charges	1,516		1,638		4,396		4,812
Bank card fees	1,141		1,110		3,414		3,405
Gain on sale of loans, net	355		206		758		614
Income from bank-owned life insurance	1,464		166		1,831		490
(Loss) gain on sale of assets, net	(8)		(68)		(336)		77
Other income	306		289		853		770
Total noninterest income	4,774		3,341		10,916		10,168
Noninterest Expense
Compensation and benefits	10,266		9,328		28,977		27,492
Occupancy	1,791		1,661		5,405		5,055
Marketing and advertising	418		329		997		939
Data processing and communication	1,764		1,804		4,782		5,827
Professional services	227		265		684		856
Forms, printing and supplies	172		180		514		811
Franchise and shares tax	399		362		1,196		1,091
Regulatory fees	127		455		717		1,177
Foreclosed assets, net	47		58		328		247
Amortization of acquisition intangible	393		450		1,201		1,407
Other expenses	1,006		804		3,052		2,706
Total noninterest expense	16,610		15,696		47,853		47,608
Income before income tax expense	8,159		10,369		25,500		29,580
Income tax expense	1,303		2,107		4,174		6,079
Net Income	$	6,856	$	8,262	$	21,326	$	23,501
Earnings per share:
Basic	$	0.76	$	0.91	$	2.34	$	2.59
Diluted	$	0.75	$	0.89	$	2.32	$	2.53
Cash dividends declared per common share	$	0.21	$	0.19	$	0.62	$	0.51

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

HOME BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

   For the Three Months Ended For the Nine Months Ended
   September 30, September 30,
(Dollars in thousands)    2018 2017 2018 2017
Net Income
   $ 8,262 $ 4,090 $ 23,501 $ 13,582
Other Comprehensive (Loss) Income

Unrealized (losses) gains on investment securities
   (1,279 ) (60 ) (4,289 ) 103
Tax effect
   269 21 901 (36 )


Other comprehensive (loss) income, net of taxes
   (1,010 ) (39 ) (3,388 ) 67


Comprehensive Income
   $ 7,252 $ 4,051 $ 20,113 $ 13,649


	Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in thousands)	2019		2018		2019		2018
Net Income	$	6,856	$	8,262	$	21,326	$	23,501
Other Comprehensive Income (Loss)
Unrealized gains (losses) on investment securities	14		(1,279)		4,287		(4,289)
Tax effect	(3)		268		(900)		901
Other comprehensive income (loss), net of taxes	11		(1,011)		3,387		(3,388)
Comprehensive Income	$	6,867	$	7,251	$	24,713	$	20,113

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)

      Accumulated
      Additional Unallocated Unallocated Other
   Common    Paid-in Common Stock Common Stock Retained Comprehensive
(Dollars in thousands, except share and per share data)    Stock    Capital Held by ESOP Held by RRP Earnings Income (Loss) Total
Balance, December 31, 2016
   $ 74    $ 79,426 $ (4,196 ) $ (120 ) $ 104,647 $ 12 $ 179,843
Net income
      13,582 13,582
Other comprehensive income
      67 67
Purchase of Company’s common stock at cost, 1,233 shares
   —      (12 ) (36 ) (48 )
Cash dividends declared, $0.41 per share
   —      (3,028 ) (3,028 )
Common stock issued under incentive plans, net of shares surrendered in payment, including tax benefit 7,905 shares
   —      20 (35 ) (15 )
Exercise of stock options
   —      650 650
RRP shares released for allocation
      (6 ) 14 8
ESOP shares released for allocation
      915 268 1,183
Share-based compensation cost
      383 383




Balance, September 30, 2017
   $ 74    $ 81,376 $ (3,928 ) $ (106 ) $ 115,130 $ 79 $ 192,625




Balance, December 31, 2017
   $ 94    $ 165,341 $ (3,838 ) $ (84 ) $ 117,313 $ (955 ) $ 277,871
Net income
      23,501 23,501
Other comprehensive loss
      (3,388 ) (3,388 )
Reclassification of stranded tax effects in accumulated other comprehensive income⁽¹⁾
      206 (206 ) —
Purchase of Company’s common stock at cost,8,283 shares
   —      (83 ) (297 ) (380 )
Cash dividends declared, $0.51 per share
      (4,810 ) (4,810 )
Common Stock issued under incentive plans, net of shares surrendered in payment, including tax benefit, 16,898 shares
   —      139 (65 ) 74
Exercise of stock options
   1    897 898
RRP shares released for allocation
      (7 ) 7 —
ESOP shares released for allocation
      1,109 267 1,376
Share-based compensation cost
      546 546




Balance, September 30, 2018
   $ 95    $ 167,942 $ (3,571 ) $ (77 ) $ 135,848 $ (4,549 ) $ 295,688

⁽¹⁾	~~See Note 2 - Recent Accounting Pronouncements~~


(dollars in thousands, except per share data)	Common stock		Additional Paid-in capital		Unallocated Common Stock Held by ESOP		Unallocated Common Stock Held by RRP		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total
Balance, December 31, 2017	$	94	$	165,341	$	(3,838)	$	(84)	$	117,313	$	(955)	$	277,871
Net income									23,501				23,501
Other comprehensive loss											(3,388)		(3,388)
Reclassification of stranded tax effects in accumulated other comprehensive income									206		(206)		—
Purchase of Company’s common stock at cost, 8,283 shares	—		(83)						(297)				(380)
Cash dividends declared, $0.51 per share									(4,810)				(4,810)
Common Stock issued under incentive plans, net of shares surrendered in payment, including tax benefit, 16,898 shares	—		139						(65)				74
Exercise of stock options	1		897										898
RRP shares released for allocation			(7)				7						—
ESOP shares released for allocation			1,109		267								1,376
Share-based compensation cost			546										546
Balance, September 30, 2018	$	95	$	167,942	$	(3,571)	$	(77)	$	135,848	$	(4,549)	$	295,688
Balance, December 31, 2018	$	95	$	168,243	$	(3,481)	$	(58)	$	141,447	$	(2,206)	$	304,040
Net income									21,326				21,326
Other comprehensive income											3,387		3,387
Purchase of Company’s common stock at cost, 341,095 shares	(3)		(3,408)						(9,008)				(12,419)
Cash dividends declared, $0.62 per share									(5,858)				(5,858)
Common Stock issued under incentive plans, net of shares surrendered in payment, including tax benefit, 24,392 shares	—		233						(66)				167
Exercise of stock options	1		2,228										2,229
RRP shares released for allocation			(11)				11						—
ESOP shares released for allocation			922		268								1,190
Share-based compensation cost			615										615
Balance, September 30, 2019	$	93	$	168,822	$	(3,213)	$	(47)	$	147,841	$	1,181	$	314,677

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

HOME BANCORP, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~ CHANGES IN SHAREHOLDERS’ EQUITY - CONTINUED

(Unaudited)

   For the Nine Months Ended
   September 30,
(Dollars in thousands)    2018 2017
Cash flows from operating activities:

Net income
   $ 23,501 $ 13,582
Adjustments to reconcile net income to net cash provided by operating activities:

Provision for loan losses
   2,331 1,117
Depreciation
   1,832 1,439
Amortization and accretion of purchase accounting valuations and intangibles
   6,259 3,496
Net amortization of mortgage servicing asset
   113 150
Federal Home Loan Bank stock dividends
   (90 ) (83 )
Net amortization of discount on investments
   1,516 1,269
Gain on loans sold, net
   (614 ) (919 )
Proceeds, including principal payments, from loans held for sale
   73,539 94,171
Originations of loans held for sale
   (70,521 ) (94,714 )
Non-cash compensation
   1,922 1,566
Deferred income tax expense (benefit)
   225 (315 )
(Increase) decrease in accrued interest receivable and other assets
   (9,003 ) 1,460
Increase in cash surrender value of bank-owned life insurance
   (490 ) (361 )
Decrease (increase) in accrued interest payable and other liabilities
   1,685 (63 )


Net cash provided by operating activities
   32,205 21,795


Cash flows from investing activities:

Purchases of securities available for sale
   (67,539 ) (48,408 )
Proceeds from maturities, prepayments and calls on securities available for sale
   38,016 29,022
Proceeds from maturities, prepayments and calls on securities held to maturity
   1,855 —
Decrease (increase) in loans, net
   18,222 (2,516 )
Reimbursement from FDIC for covered assets
   —   142
Decrease in interest-bearing deposits in banks
   1,237 693
Proceeds from sale of repossessed assets
   616 2,632
Purchases of office properties and equipment
   (2,824 ) (1,360 )
Proceeds from sale of office properties and equipment
   1,051 640
Proceeds from redemption of Federal Home Loan Bank stock
   —   4,180


Net cash (used in) provided by investing activities
   (9,366 ) (14,975 )


Cash flows from financing activities:

(Decrease) increase in deposits, net
   (94,992 ) 71,645
Borrowings on Federal Home Loan Bank advances
   —   130,750
Repayments of Federal Home Loan Bank advances
   (12,323 ) (184,463 )
Proceeds from exercise of stock options
   898 650
Issuance of stock under incentive plans
   74 (15 )
Dividends paid to shareholders
   (4,810 ) (3,028 )
Purchase of Company’s common stock
   (380 ) (48 )


Net cash (used in) provided by financing activities
   (111,533 ) 15,491


Net change in cash and cash equivalents
   (88,694 ) 22,311
Cash and cash equivalents at beginning of year
   150,418 29,315


Cash and cash equivalents at end of year
   $ 61,724 $ 51,626


   —   —


(dollars in thousands, except per share data)	Common stock		Additional Paid-in capital		Unallocated Common Stock Held by ESOP		Unallocated Common Stock Held by RRP		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total
Balance, June 30, 2018	$	94	$	166,897	$	(3,660)	$	(77)	$	129,645	$	(3,538)	$	289,361
Net income									8,262				8,262
Other comprehensive loss											(1,011)		(1,011)
Purchase of Company’s common stock at cost,7,206 shares	—		(72)						(259)				(331)
Cash dividends declared, $0.19 per share									(1,799)				(1,799)
Common Stock issued under incentive plans, net of shares surrendered in payment, including tax benefit, 370 shares	—		(31)						(1)				(32)
Exercise of stock options	1		558										559
RRP shares released for allocation			(3)				—						(3)
ESOP shares released for allocation			390		89								479
Share-based compensation cost			203										203
Balance, September 30, 2018	$	95	$	167,942	$	(3,571)	$	(77)	$	135,848	$	(4,549)	$	295,688
Balance, June 30, 2019	$	94	$	169,233	$	(3,303)	$	(48)	$	146,348	$	1,170	$	313,494
Net income									6,856				6,856
Other comprehensive income											11		11
Purchase of Company’s common stock at cost, 123,902 shares	(1)		(1,238)						(3,385)				(4,624)
Cash dividends declared, $0.21 per share									(1,976)				(1,976)
Common Stock issued under incentive plans, net of shares surrendered in payment, including tax benefit, 5,071 shares	—		130						(2)				128
Exercise of stock options	—		143										143
RRP shares released for allocation			(1)				1						—
ESOP shares released for allocation			318		90								408
Share-based compensation cost			237										237
Balance, September 30, 2019	$	93	$	168,822	$	(3,213)	$	(47)	$	147,841	$	1,181	$	314,677

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 Nine Months Ended September 30,
(dollars in thousands)	2019		2018
Cash flows from operating activities:
Net income	$	21,326	$	23,501
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	2,301		2,331
Depreciation	2,107		1,832
Amortization and accretion of purchase accounting valuations and intangibles	4,768		6,259
Net amortization of mortgage servicing asset	83		113
Federal Home Loan Bank stock dividends	(119)		(90)
Net amortization of discount on investments	1,605		1,516
Gain on loans sold, net	(758)		(614)
Proceeds, including principal payments, from loans held for sale	81,021		73,539
Originations of loans held for sale	(85,086)		(70,521)
Non-cash compensation	1,805		1,922
Deferred income tax expense	176		225
Increase in accrued interest receivable and other assets	(3,961)		(9,003)
Increase in cash surrender value of bank-owned life insurance	(636)		(490)
Change in accrued interest payable and other liabilities	6,404		1,685
Net cash provided by operating activities	31,036		32,205
Cash flows from investing activities:
Purchases of securities available for sale	(46,914)		(67,539)
Proceeds from maturities, prepayments and calls on securities available for sale	54,775		38,016
Proceeds from maturities, prepayments and calls on securities held to maturity	3,517		1,855
(Increase) decrease in loans, net	(63,679)		18,222
Reimbursement from FDIC for covered assets	142		—
Decrease in interest-bearing deposits in banks	490		1,237
Proceeds from sale of repossessed assets	1,720		616
Purchases of office properties and equipment	(3,009)		(2,824)
Purchase of bank-owned life insurance	(10,000)		—
Proceeds from bank-owned life insurance	2,163		—
Proceeds from sale of office properties and equipment	53		1,051
Net cash used in investing activities	(60,742)		(9,366)
Cash flows from financing activities:
Increase (decrease) in deposits, net	58,152		(94,992)
Borrowings on Federal Home Loan Bank advances	6,010		—
Repayments of Federal Home Loan Bank advances	(16,904)		(12,323)
Proceeds from exercise of stock options	2,229		898
Issuance of stock under incentive plans	167		74
Dividends paid to shareholders	(5,858)		(4,810)
Purchase of Company’s common stock	(12,419)		(380)
Net cash provided by (used in) financing activities	31,377		(111,533)
Net change in cash and cash equivalents	1,671		(88,694)
Cash and cash equivalents at beginning of year	59,618		150,418
Cash and cash equivalents at end of period	$	61,289	$	61,724

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 Home Bancorp, Inc. (the “Company”) were prepared in accordance with instructions for Form10-Q and RegulationS-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 ~~nine-month period~~three and nine months ended September 30, 2019 and 2018 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 Form10-K filed with the Securities and Exchange Commission (“SEC”) for the year ended December 31, ~~2017.~~

2018.

Critical Accounting Policies and Estimates

There were no material changes or developments during the reporting period with respect to methodologies the Company uses when applying critical accounting policies and developing critical accounting estimates as disclosed in its Annual Report on Form10-K for the year ended December 31, ~~2017.~~

2018.

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. The financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair statement of the Company’s financial condition, results of operations, comprehensive income, changes in shareholders’ equity and cash flows for the interim periods presented. These adjustments are of a normal recurring nature and include appropriate estimated provisions.

2. Recent Accounting Pronouncements

In February 2016, the FASB issued ASU No. 2016-02, “Conforming Amendments Related to Leases”. This ASU amends the codification regarding leases in order to increase transparency and comparability. ~~The~~Under former GAAP, the recognition of lease assets and lease liabilities by lessees was not required if the terms of the lease qualified it as an operating lease. ASU No. 2016-02 requires companies to recognize lease assets and liabilities on the statement of condition and disclose key information about leasing ~~arrangements. Upon implementation, a~~arrangements, for both operating and capital or finance leases. A lessee ~~will~~must recognize a liability to make lease payments and aright-of-use asset representing its right to use the leased asset for the lease term. The ASU is effective for annual and interim periods beginning after December 15, 2018. The Company ~~is currently assessing the amendment but does not anticipate it will have a material impact on our Consolidated Financial Statements. Based on the Company’s preliminary assessment~~implemented an accounting policy election to keep leases with an initial term of ~~its current leases, the impact to~~12 months or less off the Company’s consolidated balance ~~sheet is estimated to be less than a 1% increase in~~sheet. As of September 30, 2019, the Company’s right-of-use assets and ~~liabilities.~~

liabilities, net of amortization, were $4.6 million. The Company reports its right-of-use assets and liabilities within accrued interest receivable and other assets and accrued interest payable and other liabilities on the Consolidated Statements of Financial Condition. The ASU did not have material impact on the consolidated income statement for the three-months or nine-months ended September 30, 2019, and is not expected to in future periods.

In June 2016, the FASB issued ASU No. 2016-13, “Measurement of Credit Losses on Financial ~~Instruments”~~Instruments,” which introduced a new impairment model known as CECL (Current Expected Credit Losses). The ASU requires a financial asset (or a group of financial assets) measured aton an amortized cost basis to be presented at ~~the~~an amount net ~~amount expected to be collected. The~~of an allowance for credit losses, ~~is a valuation account that is deducted from~~which reflects expected losses for the ~~amortized cost basis~~full life of the financial ~~assets to present the net carrying value at the amount expected to be collected on the financial assets. The income statement reflects the measurement of~~asset. Under current GAAP, credit losses ~~for newly~~are not recognized ~~financial assets, as well as~~until the occurrence of the loss is probable and entities, in general, only consider past events and current conditions when measuring incurred losses. ASU No. 2016-13 will require entities to recognize a current estimate of all expected ~~increases or decreases~~credit losses, thus eliminating the “probable” recognition threshold. To produce a current estimate of expected credit losses, ~~that have taken place during~~ the ~~period. The measurement of expected credit losses is based on~~standard will require entities to incorporate forecasted information along with relevant information about past events, including historical experience, and current conditions ~~and reasonable and supportable forecasts~~ that affect the collectability of the reported amount of financial assets. ~~An entity must use judgment in determining~~The ASU also amends the ~~relevant information and estimation methods that are appropriate in its circumstances. The allowance for credit losses~~accounting model for purchased financial assets ~~with a more-than-insignificant amount of~~and replaces the current accounting for purchased credit ~~deterioration since origination that are measured at amortized cost basis is determined in a similar manner to other~~impaired ("PCI") financial assets

~~measured at amortized cost basis; however,~~ with the concept of purchased credit deteriorated ("PCD") financial assets. For non-PCD assets, an initial ~~allowance for credit losses is added to the purchase price rather than being reported as a credit loss expense. Only subsequent changes in~~CECL estimate will be recognized through the allowance for credit losses ~~are recorded~~and the provision for loan losses. For PCD assets, an initial CECL estimate will be recognized through the allowance for credit losses with an offset to the cost basis of the PCD asset. Financial assets currently classified as ~~a credit loss expense for these assets.Off-balance-sheet~~PCI will be classified as PCD assets upon implementation of the ASU. Held-to-maturity debt securities and off-balance-sheet arrangements, such as commitments to extend credit, guarantees and standby letters of credit that ~~and~~ are not unconditionally cancellable, are also within the scope of this amendment. ~~Credit~~In addition, ASU 2016-13 will require expected credit related losses ~~relating to~~for available-for-sale debt securities ~~should~~to be recorded through an allowance for credit ~~losses.~~losses,

while non-credit related losses will continue to be recognized through Other Comprehensive Income (“OCI”). This ASU is effective for fiscal years beginning after December 31, 2019. An entity will apply the amendments in this update on a modified retrospective basis, through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company is ~~currently assessing this accounting standard and~~conducting parallel testing of the ~~implementation of a new software application during 2018~~CECL estimation process to ~~assist in determining~~determine the potential impact to our Consolidated Financial ~~Statements. The~~Statements upon the implementation of ASU No. 2016-13. Currently, the Company expects the adoption of ~~this~~the ASU ~~could result in material changes in our accounting~~to increase the allowance for ~~credit~~loan losses and the provision for loan losses. The extent of the impact upon adoption is not known and will depend on the characteristics of the Company’s loan portfolio and economic conditions on that date as well as forecasted conditions thereafter.

In January 2017, FASB issued ASUNo. 2017-04, “Intangibles – Goodwill and Other, Simplifying the Test for Goodwill Impairment”. The amendment in this ASU eliminates the requirement to calculate the implied fair value of goodwill in order to measure a goodwill impairment charge. An entity will record an impairment charge based on the excess of the carrying amount over its fair value. This ASU is effective for fiscal and interim testing periods beginning after December 15, 2019. The Company ~~is currently assessing~~has early adopted the amendment and ~~does~~it has not ~~anticipate it will have a material impact on~~impacted our Consolidated Financial Statements.

~~In April 2017, FASB issued ASUNo. 2017-08,~~ ~~“Receivables - Nonrefundable Fees and Other Costs (Subtopic310-20):~~ Premium Amortization on Purchased Callable Debt Securities”. This ASU shortens the amortization period for the premium on certain purchased callable debt securities to the earliest call date. The accounting for purchased callable debt securities held at a discount does not change under the new guidance. This ASU is effective for fiscal and interim periods beginning after December 15, 2018. The Company is currently assessing the amendment and does not anticipate it will have an impact on our Consolidated Financial Statements.

~~ASU2018-02,~~ ~~“Income Statement — Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.” ASU2018-02~~ was issued to address the income tax accounting treatment of the stranded tax effects within accumulated other comprehensive income as a result of tax reform. This issue came about from the enactment of the Tax Cuts and Jobs Act of 2017 on December 22, 2017 that changed the Company’s statutory income tax rate from 35% to 21%. The ASU changed current accounting whereby an entity may elect to reclassify the stranded tax effect from accumulated other comprehensive income to retained earnings. The ASU is effective for periods beginning after December 15, 2018 although early adoption is permitted. The Company adopted ASU~~2018-02~~ ~~in the first quarter of 2018 and reclassified its stranded tax credit of $206,000 from accumulated other comprehensive income to retained earnings.~~

~~In July 2018, the FASB issued ASUNo. 2018-11,~~ ~~“Leases – Targeted Improvements” to provide alternative transition methods to reduce the costs and complexities of implementing the new leases standard, ASUNo. 2016-02.~~ ~~The amendments in the update allow entities to recognize a cumulative-effect adjustment in the opening balance of retained earnings in the period of adoption of ASUNo. 2016-02,~~ ~~which eliminates the need tore-state~~ ~~amounts presented for prior-periods. In addition, under certain conditions, lessors are allowed to account for lease andnon-lease~~ ~~components as a single component. The amendments have the same effective date as ASUNo. 2016-02~~ ~~(periods beginning after December 15, 2018). The Company is currently assessing ASUNo. 2018-11,~~ ~~but does not anticipate it will have a material impact on our Consolidated Financial Statements.~~

In August 2018, the FASB issued ASUNo. 2018-13, “Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement.” The ASU removes, modifies and adds certain disclosure requirements for fair value measurements. For example, public entities will no longer be required to disclose the valuation processes for Level 3 fair value measurements, but will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ASUNo. 2018-13 is effective for interim and annual reporting periods beginning after December 15, 2019. In addition, entities may early adopt the modified or eliminated disclosure requirements and delay adoption of the additional disclosure requirements until their effective date. The Company ~~does~~is currently assessing the impact of adoption of this guidance upon its disclosures. ASU No. 2018-13 will not ~~believe ASUNo. 2018-13~~ ~~will have a material~~ impact on our Consolidated Financial Statements, as the update only revises disclosure requirements.

3. Investment Securities

Summary information regarding the Company’s investment securities classified as available for sale and held to maturity as of September 30, ~~2018~~2019 and December 31, ~~2017~~2018 is as follows.

(dollars in thousands)
   Amortized
Cost    Gross
Unrealized
Gains    Gross Unrealized Losses    Fair Value
         Less Than 1
Year    Over 1
Year
September 30, 2018

Available for sale:

U.S. agency mortgage-backed
   $ 80,917    $ 447    $ 1,083    $ 789    $ 79,492
Collateralized mortgage obligations
   151,719    42    1,321    2,999    147,441
Municipal bonds
   21,690    57    73    —      21,674
U.S. government agency
   10,380    27    33    33    10,341










Total available for sale
   $ 264,706    $ 573    $ 2,510    $ 3,821    $ 258,948










Held to maturity:

Municipal bonds
   $ 10,942    $ 6    $ 40    $ 40    $ 10,868










Total held to maturity
   $ 10,942    $ 6    $ 40    $ 40    $ 10,868










(dollars in thousands)
   Amortized
Cost    Gross
Unrealized
Gains    Gross Unrealized Losses    Fair Value
         Less Than 1
Year    Over 1
Year
December 31, 2017

Available for sale:

U.S. agency mortgage-backed
   $ 84,639    $ 619    $ 270    $ 298    $ 84,690
Collateralized mortgage obligations
   115,435    46    671    1,075    113,735
Municipal bonds
   25,362    177    17    1    25,521
U.S. government agency
   11,026    42    21    —      11,047










Total available for sale
   $ 236,462    $ 884    $ 979    $ 1,374    $ 234,993










Held to maturity:

Municipal bonds
   $ 13,034    $ 54    $ 18    $ 15    $ 13,055










Total held to maturity
   $ 13,034    $ 54    $ 18    $ 15    $ 13,055


(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses						Fair Value
					Less Than 1 Year		Over 1 Year
September 30, 2019
Available for sale:
U.S. agency mortgage-backed	$	82,597	$	1,226	$	54	$	74	$	83,695
Collateralized mortgage obligations	152,143		958		351		366		152,384
Municipal bonds	15,059		181		26		—		15,214
U.S. government agency	3,820		13		2		10		3,821
Total available for sale	$	253,619	$	2,378	$	433	$	450	$	255,114
Held to maturity:
Municipal bonds	$	7,193	$	46	$	1	$	—	$	7,238
Total held to maturity	$	7,193	$	46	$	1	$	—	$	7,238


(dollars in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses						Fair Value
					Less Than 1 Year		Over 1 Year
December 31, 2018
Available for sale:
U.S. agency mortgage-backed	$	86,487	$	485	$	171	$	892	$	85,909
Collateralized mortgage obligations	145,814		129		161		2,191		143,591
Municipal bonds	21,453		52		16		12		21,477
U.S. government agency	9,169		29		19		25		9,154
Total available for sale	$	262,923	$	695	$	367	$	3,120	$	260,131
Held to maturity:
Municipal bonds	$	10,872	$	11	$	5	$	37	$	10,841
Total held to maturity	$	10,872	$	11	$	5	$	37	$	10,841

The estimated fair value and amortized cost by contractual maturity of the Company’s investment securities as of September 30, ~~2018~~2019 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		(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											Fair Value
Securities available for sale:											Securities available for sale:
U.S. agency mortgage-backed	$	1,718	$	12,321	$	37,171	$	28,282	$	79,492	U.S. agency mortgage-backed	$	43	$	10,308	$	22,898	$	50,446	$	83,695
Collateralized mortgage obligations		—		5,662		18,171		123,608		147,441	Collateralized mortgage obligations	—		—		—		152,384		152,384
Municipal bonds		3,585		9,919		5,355		2,815		21,674	Municipal bonds	778		5,549		2,185		6,702		15,214
U.S. government agency		4,965		—		3,940		1,436		10,341	U.S. government agency	—		—		—		3,821		3,821

Total securities available for sale	$	10,268	$	27,902	$	64,637	$	156,141	$	258,948	Total securities available for sale	$	821	$	15,857	$	25,083	$	213,353	$	255,114

Securities held to maturity:											Securities held to maturity:
Municipal bonds	$	—	$	5,767	$	4,055	$	1,046	$	10,868	Municipal bonds	$	—	$	2,603	$	2,188	$	2,447	$	7,238

Total securities held to maturity	$	—	$	5,767	$	4,055	$	1,046	$	10,868	Total securities held to maturity	$	—	$	2,603	$	2,188	$	2,447	$	7,238


*(dollars in thousands)*	One Year or Less		After One Year through Five Years		After Five Years through Ten Years		After Ten Years		Total		(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											Amortized Cost
Securities available for sale:											Securities available for sale:
U.S. agency mortgage-backed	$	1,720	$	12,693	$	38,212	$	28,292	$	80,917	U.S. agency mortgage-backed	$	41	$	10,277	$	22,581	$	49,698	$	82,597
Collateralized mortgage obligations		—		5,719		18,694		127,306		151,719	Collateralized mortgage obligations	—		—		—		152,143		152,143
Municipal bonds		3,580		9,920		5,345		2,845		21,690	Municipal bonds	776		5,524		2,119		6,640		15,059
U.S. government agency		4,998		—		3,913		1,469		10,380	U.S. government agency	—		—		—		3,820		3,820

Total securities available for sale	$	10,298	$	28,332	$	66,164	$	159,912	$	264,706	Total securities available for sale	$	817	$	15,801	$	24,700	$	212,301	$	253,619

Securities held to maturity:											Securities held to maturity:
Municipal bonds	$	—	$	5,777	$	4,108	$	1,057	$	10,942	Municipal bonds	$	—	$	2,593	$	2,157	$	2,443	$	7,193

Total securities held to maturity	$	—	$	5,777	$	4,108	$	1,057	$	10,942	Total securities held to maturity	$	—	$	2,593	$	2,157	$	2,443	$	7,193

Management evaluates securities for other-than-temporary impairment at least quarterly, and more frequently when economic and market conditions warrant such evaluations. Consideration is given to (1) the extent and length of time the fair value has been below cost; (2) the reasons for the decline in value; and (3) 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 identify securities that could potentially have a credit impairment that is other-than-temporary. 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. When the Company determines that a security is deemed other-than-temporarily impaired, an impairment loss is recognized.

As of September 30, ~~2018, 184~~2019, 64 of the Company’s investment securities had unrealized losses totaling ~~2.8%~~0.8% of the individual securities’ amortized cost basis and ~~2.3%~~0.3% of the Company’s total amortized cost basis of the investment securities portfolio. At such date, 5935 of the ~~184~~64 securities had been in a continuous loss position for over 12 months. The 5935 securities had an aggregate amortized cost basis of ~~$94.1 million~~$47,162,000 and an unrealized loss of ~~$3.8 million~~$450,000 at September 30, ~~2018.~~2019. Management has the intent and ability to hold these securities until maturity, or until anticipated recovery; hence, no declines in these securities were deemed other-than-temporary at September 30, ~~2018.~~

2019.

As of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, the Company had ~~$152,374,000~~$172,339,000 and ~~$121,984,000,~~$157,198,000, respectively, of securities pledged to secure public deposits.

4. Earnings Per Share

Earnings per common share were computed based on the following:

   Three Months Ended    Nine Months Ended
   September 30,    September 30,
(in thousands, except per share data)
   2018    2017    2018    2017
Numerator:

Net income available to common shareholders
   $ 8,262    $ 4,090    $ 23,501    $ 13,582
Denominator:

Weighted average common shares outstanding
   9,098    7,007    9,053    6,972
Effect of dilutive securities:

Restricted stock
   19    3    21    3
Stock options
   204    271    223    266








Weighted average common shares outstanding – assuming dilution
   9,321    7,281    9,297    7,241








Basic earnings per common share
   $ 0.91    $ 0.58    $ 2.60    $ 1.95








Diluted earnings per common share
   $ 0.89    $ 0.56    $ 2.53    $ 1.88


	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share data)	2019		2018		2019		2018
Numerator:
Net income available to common shareholders	$	6,856	$	8,262	$	21,326	$	23,501
Denominator:
Weighted average common shares outstanding	9,059		9,098		9,114		9,053
Effect of dilutive securities:
Restricted stock	9		19		12		21
Stock options	39		204		63		223
Weighted average common shares outstanding – assuming dilution	9,107		9,321		9,189		9,297
Basic earnings per common share	$	0.76	$	0.91	$	2.34	$	2.59
Diluted earnings per common share	$	0.75	$	0.89	$	2.32	$	2.53

Options on ~~27,934~~100,288 and ~~77,024~~27,934 shares of common stock were not included in the computation of diluted earnings per share for the three months ended September 30, ~~2018~~2019 and ~~September 30, 2017,~~2018, respectively, because the effect of these shares was anti-dilutive. Options on ~~15,850~~90,511 and ~~60,849~~15,850 shares of common stock were not included in the computation of diluted earnings per share for the nine months ended September 30, ~~2018~~2019 and ~~September 30, 2017,~~2018, respectively, because the effect of these shares was anti-dilutive.

5. Credit Quality and Allowance for Loan Losses

The following briefly describes the distinction between originated and ~~Acquired Loans~~acquired loans and certain significant accounting policies relevant to each category.

Originated Loans

Loans originated for investment are reported at the principal balance outstanding net of unearned income. Interest on loans and 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 on an originated loan is discontinued when it is probable the borrower will not be able to meet payment obligations as they become due. The Company maintains an allowance for loan losses on originated loans that represents management’s estimate of probable losses incurred in this portfolio category.

Acquired Loans

Loans that were acquired as a result of business combinations are referred to as ~~“Acquired Loans.~~“acquired loans.” Acquired ~~Loans~~loans were recorded at estimated fair value at the acquisition date with no carryover of the related allowance for loan losses. The ~~Acquired Loans~~acquired loans were segregated between those considered to be performing (“acquired performing”) and those with evidence of credit deterioration (“acquired impaired”), and then further segregated into loan pools designed to facilitate the estimation of expected cash flows. The fair value estimate for each pool of acquired performing and acquired impaired 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 performing 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. Management estimates an allowance for loan losses for acquired performing loans using a methodology similar to that used for originated loans. The allowance determined for each loan pool is compared to the remaining fair value discount for that pool. If the allowance amount calculated under the Company’s methodology is greater than the Company’s remaining discount, the additional amount called for is added to the reported allowance through a provision for loan losses. If the allowance amount calculated under the Company’s methodology is less than the Company’s recorded discount, no additional allowance or provision is recognized. Actual losses first reduce any remaining nonaccretable discount for the loan pool. Once the nonaccretable discount is fully depleted, losses are applied against the allowance established for that pool. Acquired performing loans are placed on nonaccrual status and considered and reported as nonperforming or past due using the same criteria applied to the originated portfolio.

The excess of cash flows expected to be collected from an acquired impaired loan pool over the pool’s estimated fair value at acquisition is referred to as the accretable yield and is recognized in interest income using an effective yield method over the remaining life of the pool. Each pool of acquired impaired loans is accounted for as a single asset with a single composite interest rate and an aggregate expectation of cash flows.

Management recasts the estimate of cash flows expected to be collected on each acquired impaired loan pool periodically. If the present value of expected cash flows for a pool is less than its carrying value, an impairment is recognized by an increase in the allowance for loan losses and a charge to the provision for loan losses. If the present value of expected cash flows for a pool is greater than its carrying value, any previously established allowance for loan losses is reversed and any remaining difference increases the accretable yield, which will be taken into interest income over the remaining life of the loan pool. Acquired impaired loans are generally not subject to individual evaluation for impairment and are not reported with impaired loans, even if they would otherwise qualify for such treatment.

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

(dollars in thousands) September 30,
2019 December 31,
2018
Real estate loans:
One- to four-family first mortgage $ 432,964 $ 450,363
Home equity loans and lines 81,835 83,976
Commercial real estate 719,392 640,575
Construction and land 188,879 193,597
Multi-family residential 56,733 54,455
Total real estate loans 1,479,803 1,422,966
Other loans:
Commercial and industrial 180,264 172,934
Consumer 47,375 53,854
Total other loans 227,639 226,788
Total loans $ 1,707,442 $ 1,649,754

The net discount on the Company’s loans was $14,016,000 and $18,811,000 at September 30, 2019 and December 31, 2018, respectively, of which $6,228,000 and $7,865,000 for the same time periods, respectively, were related to impaired loans. In addition, loan balances as of September 30, 2019 and December 31, 2018 are reported net of unearned income of $2,922,000 and $2,716,000, respectively.

Allowance for Loan Losses

The allowance for loan losses and recorded investment in loans as of the dates indicated are as follows.

   As of September 30, 2018
   Originated Loans
(dollars in thousands)
   Collectively
Evaluated
for
Impairment    Individually
Evaluated
for
Impairment    Acquired
Loans    Total
Allowance for loan losses:

One- to four-family first mortgage
   $ 1,861    $ —      $ 53    $ 1,914
Home equity loans and lines
   692    348    52    1,092
Commercial real estate
   5,144    187    237    5,568
Construction and land
   2,021    —      6    2,027
Multi-family residential
   540    —      60    600
Commercial and industrial
   2,253    862    575    3,690
Consumer
   484    —      368    852








Total allowance for loan losses
   $ 12,995    $ 1,397    $ 1,351    $ 15,743








   As of September 30, 2018
   Originated Loans
(dollars in thousands)
   Collectively
Evaluated
for
Impairment    Individually
Evaluated
for
Impairment    Acquired
Loans⁽¹⁾    Total
Loans:

One- to four-family first mortgage
   $ 221,283    $ —      $ 235,514    $ 456,797
Home equity loans and lines
   52,734    885    32,786    86,405
Commercial real estate
   417,338    5,944    206,015    629,297
Construction and land
   139,869    —      34,704    174,573
Multi-family residential
   43,219    —      12,934    56,153
Commercial and industrial
   119,987    3,010    50,941    173,938
Consumer
   37,929    —      17,927    55,856








Total loans
   $ 1,032,359    $ 9,839    $ 590,821    $ 1,633,019

   As of December 31, 2017
   Originated Loans
(dollars in thousands)
   Collectively
Evaluated
for
Impairment    Individually
Evaluated
for
Impairment    Acquired
Loans    Total
Allowance for loan losses:

One- to four-family first mortgage
   $ 1,574    $ —      $ 89    $ 1,663
Home equity loans and lines
   676    348    78    1,102
Commercial real estate
   4,766    —      140    4,906
Construction and land
   1,742    —      7    1,749
Multi-family residential
   355    —      —      355
Commercial and industrial
   2,721    1,625    184    4,530
Consumer
   496    —      6    502








Total allowance for loan losses
   $ 12,330    $ 1,973    $ 504    $ 14,807








   As of December 31, 2017
   Originated Loans
(dollars in thousands)
   Collectively
Evaluated
for
Impairment    Individually
Evaluated
for
Impairment    Acquired
Loans⁽¹⁾    Total
Loans:

One- to four-family first mortgage
   $ 199,199    $ —      $ 278,012    $ 477,211
Home equity loans and lines
   53,349    925    40,171    94,445
Commercial real estate
   369,740    22    241,596    611,358
Construction and land
   124,963    —      52,300    177,263
Multi-family residential
   30,540    —      20,438    50,978
Commercial and industrial
   120,818    2,512    61,954    185,284
Consumer
   39,854    —      21,402    61,256








Total loans
   $ 938,463    $ 3,459    $ 715,873    $ 1,657,795

⁽¹⁾	~~$11.0 million and $14.2 million in Acquired Loans were deemed to be acquired impaired loans and were accounted for under ASC310-30~~ ~~at September 30, 2018 and December 31, 2017, respectively.~~


	September 30, 2019
	Originated Loans
(dollars in thousands)	Collectively Evaluated for Impairment		Individually Evaluated for Impairment		Acquired Loans		Total
Allowance for loan losses:
One- to four-family first mortgage	$	1,939	$	—	$	464	$	2,403
Home equity loans and lines	711		348		29		1,088
Commercial real estate	5,631		361		823		6,815
Construction and land	2,168		—		4		2,172
Multi-family residential	572		—		—		572
Commercial and industrial	2,813		701		336		3,850
Consumer	450		—		248		698
Total allowance for loan losses	$	14,284	$	1,410	$	1,904	$	17,598


	September 30, 2019
	Originated Loans
(dollars in thousands)	Collectively Evaluated for Impairment		Individually Evaluated for Impairment		Acquired Loans⁽¹⁾		Total
Loans:
One- to four-family first mortgage	$	242,256	$	187	$	190,521	$	432,964
Home equity loans and lines	56,542		800		24,493		81,835
Commercial real estate	510,913		6,830		201,649		719,392
Construction and land	164,444		—		24,435		188,879
Multi-family residential	48,731		—		8,002		56,733
Commercial and industrial	147,555		1,233		31,476		180,264
Consumer	36,048		—		11,327		47,375
Total loans	$	1,206,489	$	9,050	$	491,903	$	1,707,442


	December 31, 2018
	Originated Loans
(dollars in thousands)	Collectively Evaluated for Impairment		Individually Evaluated for Impairment		Acquired Loans		Total
Allowance for loan losses:
One- to four-family first mortgage	$	1,937	$	—	$	199	$	2,136
Home equity loans and lines	682		349		48		1,079
Commercial real estate	5,272		484		369		6,125
Construction and land	2,280		—		5		2,285
Multi-family residential	522		—		28		550
Commercial and industrial	2,541		321		366		3,228
Consumer	472		—		473		945
Total allowance for loan losses	$	13,706	$	1,154	$	1,488	$	16,348



	December 31, 2018
	Originated Loans
(dollars in thousands)	Collectively Evaluated for Impairment		Individually Evaluated for Impairment		Acquired Loans⁽¹⁾		Total
Loans:
One- to four-family first mortgage	$	227,602	$	—	$	222,761	$	450,363
Home equity loans and lines	53,049		866		30,061		83,976
Commercial real estate	432,217		7,059		201,299		640,575
Construction and land	161,232		—		32,365		193,597
Multi-family residential	42,222		—		12,233		54,455
Commercial and industrial	131,250		1,952		39,732		172,934
Consumer	37,711		—		16,143		53,854
Total loans	$	1,085,283	$	9,877	$	554,594	$	1,649,754

⁽¹⁾$8.9 million and $10.0 million in Acquired Loans were deemed to be acquired impaired loans and were accounted for under ASC 310-30 at September 30, 2019 and December 31, 2018, respectively.

A summary of activity in the allowance for loan losses for the nine months ended September 30, ~~2018~~2019 and September 30, ~~2017~~2018 follows.

   For the Nine Months Ended September 30, 2018
(dollars in thousands)
   Beginning
Balance    Charge-offs Recoveries    Provision    Ending
Balance
Originated loans:

Allowance for loan losses:

One- to four-family first mortgage
   $ 1,574    $ (1 ) $ —      $ 288    $ 1,861
Home equity loans and lines
   1,024    —   3    13    1,040
Commercial real estate
   4,766    —   —      565    5,331
Construction and land
   1,742    —   —      279    2,021
Multi-family residential
   355    —   —      185    540
Commercial and industrial
   4,346    (1,503 ) 153    119    3,115
Consumer
   496    (60 ) 13    35    484








Total allowance for loan losses
   $ 14,303    $ (1,564 ) 169    $ 1,484    $ 14,392

Acquired loans:

Allowance for loan losses:

One- to four-family first mortgage
   $ 89    $ —   $ —      $ (36 ) $ 53
Home equity loans and lines
   78    —   —      (26 ) 52
Commercial real estate
   140    —   —      97 237
Construction and land
   7    —   —      (1 ) 6
Multi-family residential
   —      —   —      60 60
Commercial and industrial
   184    —   —      391 575
Consumer
   6    —   —      362 368






Total allowance for loan losses
   $ 504    $ —   $ —      $ 847 $ 1,351






Total loans:

Allowance for loan losses:

One- to four-family first mortgage
   $ 1,663    $ (1 ) $ —      $ 252 $ 1,914
Home equity loans and lines
   1,102    —   3    (13 ) 1,092
Commercial real estate
   4,906    —   —      662 5,568
Construction and land
   1,749    —   —      278 2,027
Multi-family residential
   355    —   —      245 600
Commercial and industrial
   4,530    (1,503 ) 153    510 3,690
Consumer
   502    (60 ) 13    397 852






Total allowance for loan losses
   $ 14,807    $ (1,564 ) $ 169    $ 2,331 $ 15,743






   For the Nine Months Ended September 30, 2017
(dollars in thousands)
   Beginning
Balance    Charge-offs Recoveries    Provision Ending
Balance
Originated loans:

Allowance for loan losses:

One- to four-family first mortgage
   $ 1,436    $ —   $ —      $ 117 $ 1,553
Home equity loans and lines
   654    (10 ) 18    399 1,061
Commercial real estate
   4,177    (4 ) —      431 4,604
Construction and land
   1,763    —   —      (86 ) 1,677
Multi-family residential
   361    —   —      (10 ) 351
Commercial and industrial
   3,316    (358 ) 203    164 3,325
Consumer
   513    (58 ) 5    9 469






Total allowance for loan losses
   $ 12,220    $ (430 ) $ 226    $ 1,024 $ 13,040






Acquired loans:

Allowance for loan losses:

One- to four-family first mortgage
   $ 75    $ —   $ —      $ (16 ) $ 59
Home equity loans and lines
   74    —   —      (12 ) 62
Commercial real estate
   —      —   —      77 77
Construction and land
   19    —   —      (12 ) 7
Multi-family residential
   —      —   —      —   —
Commercial and industrial
   123    —   —      53 176
Consumer
   —      —   —      3 3






Total allowance for loan losses
   $ 291    $ —   $ —      $ 93 $ 384






Total loans:

Allowance for loan losses:

One- to four-family first mortgage
   $ 1,511    $ —   $ —      $ 101 $ 1,612
Home equity loans and lines
   728    (10 ) 18    387 1,123
Commercial real estate
   4,177    (4 ) —      508 4,681
Construction and land
   1,782    —   —      (98 ) 1,684
Multi-family residential
   361    —   —      (10 ) 351
Commercial and industrial
   3,439    (358 ) 203    217 3,501
Consumer
   513    (58 ) 5    12 472






Total allowance for loan losses
   $ 12,511    $ (430 ) $ 226    $ 1,117 $ 13,424

Nine Months Ended September 30, 2019
(dollars in thousands) Beginning
Balance Charge-offs Recoveries Provision Ending
Balance
Originated loans:
Allowance for loan losses:
One- to four-family first mortgage $ 1,937 $ (4) $ — $ 6 $ 1,939
Home equity loans and lines 1,031 (42) 10 60 1,059
Commercial real estate 5,756 (139) — 375 5,992
Construction and land 2,280 — — (112) 2,168
Multi-family residential 522 — — 50 572
Commercial and industrial 2,862 (744) 23 1,373 3,514
Consumer 472 (104) 34 48 450
Total allowance for loan losses $ 14,860 $ (1,033) 67 $ 1,800 $ 15,694
Acquired loans:
Allowance for loan losses:
One- to four-family first mortgage $ 199 $ — $ — $ 265 $ 464
Home equity loans and lines 48 — — (19) 29
Commercial real estate 369 — — 454 823
Construction and land 5 — — (1) 4
Multi-family residential 28 — — (28) —
Commercial and industrial 366 — — (30) 336
Consumer 473 (85) — (140) 248
Total allowance for loan losses $ 1,488 $ (85) $ — $ 501 $ 1,904

Total loans:
Allowance for loan losses:
One- to four-family first mortgage $ 2,136 $ (4) $ — $ 271 $ 2,403
Home equity loans and lines 1,079 (42) 10 41 1,088
Commercial real estate 6,125 (139) — 829 6,815
Construction and land 2,285 — — (113) 2,172
Multi-family residential 550 — — 22 572
Commercial and industrial 3,228 (744) 23 1,343 3,850
Consumer 945 (189) 34 (92) 698
Total allowance for loan losses $ 16,348 $ (1,118) $ 67 $ 2,301 $ 17,598

Nine Months Ended September 30, 2018
(dollars in thousands) Beginning
Balance Charge-offs Recoveries Provision Ending
Balance
Originated loans:
Allowance for loan losses:
One- to four-family first mortgage $ 1,574 $ (1) $ — $ 288 $ 1,861
Home equity loans and lines 1,024 — 3 13 1,040
Commercial real estate 4,766 — — 565 5,331
Construction and land 1,742 — — 279 2,021
Multi-family residential 355 — — 185 540
Commercial and industrial 4,346 (1,503) 153 119 3,115
Consumer 496 (60) 13 35 484
Total allowance for loan losses $ 14,303 $ (1,564) $ 169 $ 1,484 $ 14,392
Acquired loans:
Allowance for loan losses:
One- to four-family first mortgage $ 89 $ — $ — $ (36) $ 53
Home equity loans and lines 78 — — (26) 52
Commercial real estate 140 — — 97 237
Construction and land 7 — — (1) 6
Multi-family residential — — — 60 60
Commercial and industrial 184 — — 391 575
Consumer 6 — — 362 368
Total allowance for loan losses $ 504 $ — $ — $ 847 $ 1,351
Total loans:
Allowance for loan losses:
One- to four-family first mortgage $ 1,663 $ (1) $ — $ 252 $ 1,914
Home equity loans and lines 1,102 — 3 (13) 1,092
Commercial real estate 4,906 — — 662 5,568
Construction and land 1,749 — — 278 2,027
Multi-family residential 355 — — 245 600
Commercial and industrial 4,530 (1,503) 153 510 3,690
Consumer 502 (60) 13 397 852
Total allowance for loan losses $ 14,807 $ (1,564) $ 169 $ 2,331 $ 15,743
14

Credit Quality

The following tables present the Company’s loan portfolio by credit quality classification as of the dates indicated.

   September 30, 2018
(dollars in thousands)
   Pass    Special
Mention    Substandard    Doubtful    Total
Originated loans:

One- to four-family first mortgage
   $ 216,787    $ 1,745    $ 2,751    $ —      $ 221,283
Home equity loans and lines
   52,011    —      1,608    —      53,619
Commercial real estate
   410,684    4,610    7,988    —      423,282
Construction and land
   137,578    1,168    1,123    —      139,869
Multi-family residential
   43,219    —      —      —      43,219
Commercial and industrial
   112,336    4,537    6,124    —      122,997
Consumer
   37,634    124    171    —      37,929










Total originated loans
   $ 1,010,249    $ 12,184    $ 19,765    $ —      $ 1,042,198










Acquired loans:

One- to four-family first mortgage
   $ 226,735    $ 1,806    $ 6,973    $ —      $ 235,514
Home equity loans and lines
   32,321    188    277    —      32,786
Commercial real estate
   187,358    8,343    10,314    —      206,015
Construction and land
   32,839    1,302    563    —      34,704
Multi-family residential
   12,091    588    255    —      12,934
Commercial and industrial
   46,948    1,661    2,332    —      50,941
Consumer
   17,510    170    247    —      17,927










Total acquired loans
   $ 555,802    $ 14,058    $ 20,961    $ —      $ 590,821










Total loans:

One- to four-family first mortgage
   $ 443,522    $ 3,551    $ 9,724    $ —      $ 456,797
Home equity loans and lines
   84,332    188    1,885    —      86,405
Commercial real estate
   598,042    12,953    18,302    —      629,297
Construction and land
   170,417    2,470    1,686    —      174,573
Multi-family residential
   55,310    588    255    —      56,153
Commercial and industrial
   159,284    6,198    8,456    —      173,938
Consumer
   55,144    294    418    —      55,856










Total loans
   $ 1,566,051    $ 26,242    $ 40,726    $ —      $ 1,633,019

   December 31, 2017
(dollars in thousands)
   Pass    Special
Mention    Substandard    Doubtful    Total
Originated loans:

One- to four-family first mortgage
   $ 196,203    $ 990    $ 2,006    $ —      $ 199,199
Home equity loans and lines
   52,492    283    1,499    —      54,274
Commercial real estate
   356,020    5,080    8,662    —      369,762
Construction and land
   122,076    2,043    844    —      124,963
Multi-family residential
   30,540    —      —      —      30,540
Commercial and industrial
   105,097    4,640    13,593    —      123,330
Consumer
   39,335    120    399    —      39,854










Total originated loans
   $ 901,763    $ 13,156    $ 27,003    $ —      $ 941,922










Acquired loans:

One- to four-family first mortgage
   $ 269,144    $ 2,825    $ 6,043    $ —      $ 278,012
Home equity loans and lines
   39,603    307    261    —      40,171
Commercial real estate
   218,234    12,522    10,840    —      241,596
Construction and land
   48,748    3,056    496    —      52,300
Multi-family residential
   19,644    636    158    —      20,438
Commercial and industrial
   56,635    2,998    2,321    —      61,954
Consumer
   21,172    69    161    —      21,402










Total acquired loans
   $ 673,180    $ 22,413    $ 20,280    $ —      $ 715,873










Total loans:

One- to four-family first mortgage
   $ 465,347    $ 3,815    $ 8,049    $ —      $ 477,211
Home equity loans and lines
   92,095    590    1,760    —      94,445
Commercial real estate
   574,254    17,602    19,502    —      611,358
Construction and land
   170,824    5,099    1,340    —      177,263
Multi-family residential
   50,184    636    158    —      50,978
Commercial and industrial
   161,732    7,638    15,914    —      185,284
Consumer
   60,507    189    560    —      61,256










Total loans
   $ 1,574,943    $ 35,569    $ 47,283    $ —      $ 1,657,795


	September 30, 2019
(dollars in thousands)	Pass		Special Mention		Substandard		Doubtful		Total
Originated loans:
One- to four-family first mortgage	$	238,197	$	1,985	$	2,261	$	—	$	242,443
Home equity loans and lines	56,176		43		1,123		—		57,342
Commercial real estate	504,930		3,786		9,027		—		517,743
Construction and land	162,368		859		1,217		—		164,444
Multi-family residential	48,731		—		—		—		48,731
Commercial and industrial	144,554		407		3,827		—		148,788
Consumer	35,734		267		47		—		36,048
Total originated loans	$	1,190,690	$	7,347	$	17,502	$	—	$	1,215,539
Acquired loans:
One- to four-family first mortgage	$	183,205	$	1,696	$	5,620	$	—	$	190,521
Home equity loans and lines	24,036		278		179		—		24,493
Commercial real estate	186,766		1,514		13,369		—		201,649
Construction and land	22,259		661		1,515		—		24,435
Multi-family residential	7,260		515		227		—		8,002
Commercial and industrial	27,035		46		4,395		—		31,476
Consumer	10,953		193		181		—		11,327
Total acquired loans	$	461,514	$	4,903	$	25,486	$	—	$	491,903
Total loans:
One- to four-family first mortgage	$	421,402	$	3,681	$	7,881	$	—	$	432,964
Home equity loans and lines	80,212		321		1,302		—		81,835
Commercial real estate	691,696		5,300		22,396		—		719,392
Construction and land	184,627		1,520		2,732		—		188,879
Multi-family residential	55,991		515		227		—		56,733
Commercial and industrial	171,589		453		8,222		—		180,264
Consumer	46,687		460		228		—		47,375
Total loans	$	1,652,204	$	12,250	$	42,988	$	—	$	1,707,442


	December 31, 2018
(dollars in thousands)	Pass		Special Mention		Substandard		Doubtful		Total
Originated loans:
One- to four-family first mortgage	$	221,930	$	1,852	$	3,820	$	—	$	227,602
Home equity loans and lines	52,344		69		1,502		—		53,915
Commercial real estate	425,851		4,463		8,962		—		439,276
Construction and land	159,428		—		1,804		—		161,232
Multi-family residential	42,222		—		—		—		42,222
Commercial and industrial	126,126		1,717		5,359		—		133,202
Consumer	37,312		126		273		—		37,711
Total originated loans	$	1,065,213	$	8,227	$	21,720	$	—	$	1,095,160
Acquired loans:
One- to four-family first mortgage	$	213,199	$	2,474	$	7,088	$	—	$	222,761
Home equity loans and lines	29,451		270		340		—		30,061
Commercial real estate	183,514		5,189		12,596		—		201,299
Construction and land	30,005		917		1,443		—		32,365
Multi-family residential	11,401		582		250		—		12,233
Commercial and industrial	35,918		1,376		2,438		—		39,732
Consumer	15,521		262		360		—		16,143
Total acquired loans	$	519,009	$	11,070	$	24,515	$	—	$	554,594
Total loans:
One- to four-family first mortgage	$	435,129	$	4,326	$	10,908	$	—	$	450,363
Home equity loans and lines	81,795		339		1,842		—		83,976
Commercial real estate	609,365		9,652		21,558		—		640,575
Construction and land	189,433		917		3,247		—		193,597
Multi-family residential	53,623		582		250		—		54,455
Commercial and industrial	162,044		3,093		7,797		—		172,934
Consumer	52,833		388		633		—		53,854
Total loans	$	1,584,222	$	19,297	$	46,235	$	—	$	1,649,754

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 andloan-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.


	September 30, 2018													September 30, 2019
*(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		(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:													Originated loans:
Real estate loans:													Real estate loans:
One- to four-family first mortgage	$	1,271	$	374	$	371	$	2,016	$	219,267	$	221,283	One- to four-family first mortgage	$	1,641	$	701	$	702	$	3,044	$	239,399	$	242,443
Home equity loans and lines		177		44		26		247		53,372		53,619	Home equity loans and lines	354		43		40		437		56,905		57,342
Commercial real estate		242		1,016		167		1,425		421,857		423,282	Commercial real estate	554		3,602		6,811		10,967		506,776		517,743
Construction and land		6		—		—		6		139,863		139,869	Construction and land	872		—		494		1,366		163,078		164,444
Multi-family residential		—		—		—		—		43,219		43,219	Multi-family residential	—		—		—		—		48,731		48,731

Total real estate loans		1,696		1,434		564		3,694		877,578		881,272	Total real estate loans	3,421		4,346		8,047		15,814		1,014,889		1,030,703

Other loans:													Other loans:
Commercial and industrial		291		266		257		814		122,183		122,997	Commercial and industrial	63		303		1,160		1,526		147,262		148,788
Consumer		314		85		84		483		37,446		37,929	Consumer	138		81		29		248		35,800		36,048

Total other loans		605		351		341		1,297		159,629		160,926	Total other loans	201		384		1,189		1,774		183,062		184,836

Total originated loans	$	2,301	$	1,785	$	905	$	4,991	$	1,037,207	$	1,042,198	Total originated loans	$	3,622	$	4,730	$	9,236	$	17,588	$	1,197,951	$	1,215,539

Acquired loans:													Acquired loans:
Real estate loans:													Real estate loans:
One- to four-family first mortgage	$	3,375	$	654	$	4,018	$	8,047	$	227,467	$	235,514	One- to four-family first mortgage	$	4,567	$	454	$	1,482	$	6,503	$	184,018	$	190,521
Home equity loans and lines		281		267		93		641		32,145		32,786	Home equity loans and lines	160		68		120		348		24,145		24,493
Commercial real estate		2,646		129		1,213		3,988		202,027		206,015	Commercial real estate	372		549		2,592		3,513		198,136		201,649
Construction and land		506		145		327		978		33,726		34,704	Construction and land	386		370		1,224		1,980		22,455		24,435
Multi-family residential		—		—		—		—		12,934		12,934	Multi-family residential	—		—		—		—		8,002		8,002

Total real estate loans		6,808		1,195		5,651		13,654		508,299		521,953	Total real estate loans	5,485		1,441		5,418		12,344		436,756		449,100

Other loans:													Other loans:
Commercial and industrial		960		91		160		1,211		49,730		50,941	Commercial and industrial	630		213		459		1,302		30,174		31,476
Consumer		544		105		155		804		17,123		17,927	Consumer	274		48		110		432		10,895		11,327

Total other loans		1,504		196		315		2,015		66,853		68,868	Total other loans	904		261		569		1,734		41,069		42,803

Total acquired loans	$	8,312	$	1,391	$	5,966	$	15,669	$	575,152	$	590,821	Total acquired loans	$	6,389	$	1,702	$	5,987	$	14,078	$	477,825	$	491,903

Total loans:													Total loans:
Real estate loans:													Real estate loans:
One- to four-family first mortgage	$	4,646	$	1,028	$	4,389	$	10,063	$	446,734	$	456,797	One- to four-family first mortgage	$	6,208	$	1,155	$	2,184	$	9,547	$	423,417	$	432,964
Home equity loans and lines		458		311		119		888		85,517		86,405	Home equity loans and lines	514		111		160		785		81,050		81,835
Commercial real estate		2,888		1,145		1,380		5,413		623,884		629,297	Commercial real estate	926		4,151		9,403		14,480		704,912		719,392
Construction and land		512		145		327		984		173,589		174,573	Construction and land	1,258		370		1,718		3,346		185,533		188,879
Multi-family residential		—		—		—		—		56,153		56,153	Multi-family residential	—		—		—		—		56,733		56,733

Total real estate loans		8,504		2,629		6,215		17,348		1,385,877		1,403,225	Total real estate loans	8,906		5,787		13,465		28,158		1,451,645		1,479,803

Other loans:													Other loans:
Commercial and industrial		1,251		357		417		2,025		171,913		173,938	Commercial and industrial	693		516		1,619		2,828		177,436		180,264
Consumer		858		190		239		1,287		54,569		55,856	Consumer	412		129		139		680		46,695		47,375

Total other loans		2,109		547		656		3,312		226,482		229,794	Total other loans	1,105		645		1,758		3,508		224,131		227,639

Total loans	$	10,613	$	3,176	$	6,871	$	20,660	$	1,612,359	$	1,633,019	Total loans	$	10,011	$	6,432	$	15,223	$	31,666	$	1,675,776	$	1,707,442


	December 31, 2017
*(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	$	837	$	131	$	44	$	1,012	$	198,187	$	199,199
Home equity loans and lines		1,018		—		26		1,044		53,230		54,274
Commercial real estate		670		—		—		670		369,092		369,762
Construction and land		744		—		200		944		124,019		124,963
Multi-family residential		—		—		—		—		30,540		30,540

Total real estate loans		3,269		131		270		3,670		775,068		778,738

Other loans:

Commercial and industrial
   882    825    1,641    3,348    119,982    123,330
Consumer
   380    9    278    667    39,187    39,854












Total other loans
   1,262    834    1,919    4,015    159,169    163,184












Total originated loans
   $ 4,531    $ 965    $ 2,189    $ 7,685    $ 934,237    $ 941,922












Acquired loans:

Real estate loans:

One- to four-family first mortgage
   $ 3,867    $ 2,087    $ 2,816    $ 8,770    $ 269,242    $ 278,012
Home equity loans and lines
   137    61    46    244    39,927    40,171
Commercial real estate
   5,071    436    1,864    7,371    234,225    241,596
Construction and land
   2,089    159    239    2,487    49,813    52,300
Multi-family residential
   —      —      —      —      20,438    20,438












Total real estate loans
   11,164    2,743    4,965    18,872    613,645    632,517












Other loans:

Commercial and industrial
   809    678    185    1,672    60,282    61,954
Consumer
   329    152    95    576    20,826    21,402












Total other loans
   1,138    830    280    2,248    81,108    83,356












Total acquired loans
   $ 12,302    $ 3,573    $ 5,245    $ 21,120    $ 694,753    $ 715,873












Total loans:

Real estate loans:

One- to four-family first mortgage
   $ 4,704    $ 2,218    $ 2,860    $ 9,782    $ 467,429    $ 477,211
Home equity loans and lines
   1,155    61    72    1,288    93,157    94,445
Commercial real estate
   5,741    436    1,864    8,041    603,317    611,358
Construction and land
   2,833    159    439    3,431    173,832    177,263
Multi-family residential
   —      —      —      —      50,978    50,978












Total real estate loans
   14,433    2,874    5,235    22,542    1,388,713    1,411,255












Other loans:

Commercial and industrial
   1,691    1,503    1,826    5,020    180,264    185,284
Consumer
   709    161    373    1,243    60,013    61,256












Total other loans
   2,400    1,664    2,199    6,263    240,277    246,540












Total loans
   $ 16,833    $ 4,538    $ 7,434    $ 28,805    $ 1,628,990    $ 1,657,795


	December 31, 2018
(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	$	3,913	$	270	$	64	$	4,247	$	223,355	$	227,602
Home equity loans and lines	326		61		41		428		53,487		53,915
Commercial real estate	714		34		168		916		438,360		439,276
Construction and land	576		—		740		1,316		159,916		161,232
Multi-family residential	—		—		—		—		42,222		42,222
Total real estate loans	5,529		365		1,013		6,907		917,340		924,247
Other loans:
Commercial and industrial	362		1,369		265		1,996		131,206		133,202
Consumer	319		131		196		646		37,065		37,711
Total other loans	681		1,500		461		2,642		168,271		170,913
Total originated loans	$	6,210	$	1,865	$	1,474	$	9,549	$	1,085,611	$	1,095,160
Acquired loans:
Real estate loans:
One- to four-family first mortgage	$	4,196	$	1,258	$	3,702	$	9,156	$	213,605	$	222,761
Home equity loans and lines	462		116		163		741		29,320		30,061
Commercial real estate	3,104		265		1,143		4,512		196,787		201,299
Construction and land	1,050		488		813		2,351		30,014		32,365
Multi-family residential	84		—		—		84		12,149		12,233
Total real estate loans	8,896		2,127		5,821		16,844		481,875		498,719
Other loans:
Commercial and industrial	4,315		109		329		4,753		34,979		39,732
Consumer	357		277		262		896		15,247		16,143
Total other loans	4,672		386		591		5,649		50,226		55,875
Total acquired loans	$	13,568	$	2,513	$	6,412	$	22,493	$	532,101	$	554,594
Total loans:
Real estate loans:
One- to four-family first mortgage	$	8,109	$	1,528	$	3,766	$	13,403	$	436,960	$	450,363
Home equity loans and lines	788		177		204		1,169		82,807		83,976
Commercial real estate	3,818		299		1,311		5,428		635,147		640,575
Construction and land	1,626		488		1,553		3,667		189,930		193,597
Multi-family residential	84		—		—		84		54,371		54,455
Total real estate loans	14,425		2,492		6,834		23,751		1,399,215		1,422,966
Other loans:
Commercial and industrial	4,677		1,478		594		6,749		166,185		172,934
Consumer	676		408		458		1,542		52,312		53,854
Total other loans	5,353		1,886		1,052		8,291		218,497		226,788
Total loans	$	19,778	$	4,378	$	7,886	$	32,042	$	1,617,712	$	1,649,754

The increase in loans greater than 90 days past due for the nine months ending September 30, 2019 was primarily due to a $6.4 million non-performing commercial relationship which filed for bankruptcy during the third quarter of 2019. Excluding Acquired Loans with deteriorated credit quality, the Company did ~~not~~0t have any loans greater than 90 days past due and accruing as of September 30, ~~2018~~2019 or December 31, ~~2017.~~

2018.

The following table summarizes the accretable ~~yield~~discount on loans accounted for under ASC310-30 as of the dates indicated.

   For the Nine Months Ended
(dollars in thousands)
   September 30,
2018    September 30,
2017
Balance at beginning of period
   $ (9,303 )    $ (11,091 )
Accretion
   1,849    2,495
Transfers from nonaccretable difference to accretable yield
   (2,559 )    (1,208 )




Balance at end of period
   $ (10,013 )    $ (9,804 )


	Nine Months Ended
(dollars in thousands)	September 30, 2019		September 30, 2018
Balance at beginning of period	$	(9,147)	$	(9,303)
Accretion	1,571		1,849
Transfers from nonaccretable difference to accretable discount	(462)		(2,559)
Balance at end of period	$	(8,038)	$	(10,013)

The following table summarizes information pertaining to ~~Originated Loans,~~originated loans, which were deemed impaired loans as of the dates indicated.


	For the Period Ended September 30, 2018											For the Period Ended September 30, 2019
*(dollars in thousands)*	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized		(dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:											With no related allowance recorded:
One- to four-family first mortgage	$	—	$	—	$	—	$	—	$	—	One- to four-family first mortgage	$	187	$	187	$	—	$	84	$	—
Home equity loans and lines		450		476		—		458		—	Home equity loans and lines	410		453		—		423		—
Commercial real estate		21		33		—		22		—	Commercial real estate	19		22		—		48		—
Construction and land		—		—		—		—		—	Construction and land	—		—		—		—		—
Multi-family residential		—		—		—		—		—	Multi-family residential	—		—		—		—		—
Commercial and industrial		324		440		—		347		—	Commercial and industrial	295		332		—		1,320		—
Consumer		—		—		—		—		—	Consumer	—		—		—		—		—

Total	$	795	$	949	$	—	$	827	$	—	Total	$	911	$	994	$	—	$	1,875	$	—

With an allowance recorded:											With an allowance recorded:
One- to four-family first mortgage	$	—	$	—	$	—	$	—	$	—	One- to four-family first mortgage	$	—	$	—	$	—	$	—	$	—
Home equity loans and lines		435		461		348		443		—	Home equity loans and lines	390		432		348		406		—
Commercial real estate		5,923		5,923		187		658		—	Commercial real estate	6,811		6,885		361		6,836		—
Construction and land		—		—		—		—		—	Construction and land	—		—		—		—		—
Multi-family residential		—		—		—		—		—	Multi-family residential	—		—		—		—		—
Commercial and industrial		2,686		2,905		862		1,186		—	Commercial and industrial	938		1,217		701		443		—
Consumer		—		—		—		—		—	Consumer	—		—		—		—		—

Total	$	9,044	$	9,289	$	1,397	$	2,287	$	—	Total	$	8,139	$	8,534	$	1,410	$	7,685	$	—

Total impaired loans:											Total impaired loans:
One- to four-family first mortgage	$	—	$	—	$	—	$	—	$	—	One- to four-family first mortgage	$	187	$	187	$	—	$	84	$	—
Home equity loans and lines		885		937		348		901		—	Home equity loans and lines	800		885		348		829		—
Commercial real estate		5,944		5,956		187		680		—	Commercial real estate	6,830		6,907		361		6,884		—
Construction and land		—		—		—		—		—	Construction and land	—		—		—		—		—
Multi-family residential		—		—		—		—		—	Multi-family residential	—		—		—		—		—
Commercial and industrial		3,010		3,345		862		1,533		—	Commercial and industrial	1,233		1,549		701		1,763		—
Consumer		—		—		—		—		—	Consumer	—		—		—		—		—

Total	$	9,839	$	10,238	$	1,397	$	3,114	$	—	Total	$	9,050	$	9,528	$	1,410	$	9,560	$	—


	For the Period Ended December 31, 2017
*(dollars in thousands)*	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
One- to four-family first mortgage	$	—	$	—	$	—	$	—	$	—
Home equity loans and lines		470		476		—		395		1
Commercial real estate		22		32		—		19		—
Construction and land		—		—		—		—		—
Multi-family residential		—		—		—		—		—
Commercial and industrial		428		434		—		2,849		2
Consumer		—		—		—		—		—

Total	$	920	$	942	$	—	$	3,263	$	3

With an allowance recorded:
One- to four-family first mortgage	$	—	$	—	$	—	$	42	$	—
Home equity loans and lines		455		461		348		383		1
Commercial real estate		—		—		—		296		—
Construction and land		—		—		—		—		—
Multi-family residential		—		—		—		—		—
Commercial and industrial		2,084		2,157		1,625		1,985		52
Consumer		—		—		—		—		—

Total	$	2,539	$	2,618	$	1,973	$	2,706	$	53

Total impaired loans:

One- to four-family first mortgage
   $ —      $ —      $ —      $ 42    $ —
Home equity loans and lines
   925    937    348    778    2
Commercial real estate
   22    32    —      315    —
Construction and land
   —      —      —      —      —
Multi-family residential
   —      —      —      —      —
Commercial and industrial
   2,512    2,591    1,625    4,834    54
Consumer
   —      —      —      —      —










Total
   $ 3,459    $ 3,560    $ 1,973    $ 5,969    $ 56










   For the Period Ended September 30, 2017
(dollars in thousands)
   Recorded
Investment    Unpaid
Principal
Balance    Related
Allowance    Average
Recorded
Investment    Interest
Income
Recognized
With no related allowance recorded:

One- to four-family first mortgage
   $ —      $ —      $ —      $ —      $ —
Home equity loans and lines
   473    476    —      370    18
Commercial real estate
   23    33    —      18    1
Construction and land
   —      —      —      —      —
Multi-family residential
   —      —      —      —      —
Commercial and industrial
   2,952    3,131    —      3,209    133
Consumer
   —      —      —      —      —










Total
   $ 3,448    $ 3,640    $ —      $ 3,597    $ 152










With an allowance recorded:

One- to four-family first mortgage
   $ —      $ —      $ —      $ 55    $ — ��
Home equity loans and lines
   459    460    348    358    17
Commercial real estate
   —      —      —      395    —
Construction and land
   —      —      —      —      —
Multi-family residential
   —      —      —      —      —
Commercial and industrial
   1,988    2,102    865    1,985    80
Consumer
   —      —      —      —      —










Total
   $ 2,447    $ 2,562    $ 1,213    $ 2,793    $ 97










Total impaired loans:

One- to four-family first mortgage
   $ —      $ —      $ —      $ 55    $ —
Home equity loans and lines
   932    936    348    728    35
Commercial real estate
   23    33    —      413    1
Construction and land
   —      —      —      —      —
Multi-family residential
   —      —      —      —      —
Commercial and industrial
   4,940    5,233    865    5,194    213
Consumer
   —      —      —      —      —










Total
   $ 5,895    $ 6,202    $ 1,213    $ 6,390    $ 249


	For the Period Ended December 31, 2018
(dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
One- to four-family first mortgage	$	—	$	—	$	—	$	—	$	—
Home equity loans and lines	441		476		—		454		—
Commercial real estate	149		161		—		32		7
Construction and land	—		—		—		—		—
Multi-family residential	—		—		—		—		—
Commercial and industrial	1,540		1,904		—		438		—
Consumer	—		—		—		—		—
Total	$	2,130	$	2,541	$	—	$	924	$	7
With an allowance recorded:
One- to four-family first mortgage	$	—	$	—	$	—	$	—	$	—
Home equity loans and lines	425		457		349		440		—
Commercial real estate	6,910		6,910		484		2,057		38
Construction and land	—		—		—		—		—
Multi-family residential	—		—		—		—		—
Commercial and industrial	412		442		321		1,367		1
Consumer	—		—		—		—		—
Total	$	7,747	$	7,809	$	1,154	$	3,864	$	39
Total impaired loans:
One- to four-family first mortgage	$	—	$	—	$	—	$	—	$	—
Home equity loans and lines	866		933		349		894		—
Commercial real estate	7,059		7,071		484		2,089		45
Construction and land	—		—		—		—		—
Multi-family residential	—		—		—		—		—
Commercial and industrial	1,952		2,346		321		1,805		1
Consumer	—		—		—		—		—
Total	$	9,877	$	10,350	$	1,154	$	4,788	$	46


	For the Period Ended September 30, 2018
(dollars in thousands)	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
One- to four-family first mortgage	$	—	$	—	$	—	$	—	$	—
Home equity loans and lines	450		476		—		458		—
Commercial real estate	21		33		—		22		—
Construction and land	—		—		—		—		—
Multi-family residential	—		—		—		—		—
Commercial and industrial	324		440		—		347		—
Consumer	—		—		—		—		—
Total	$	795	$	949	$	—	$	827	$	—


With an allowance recorded:
One- to four-family first mortgage	$	—	$	—	$	—	$	—	$	—
Home equity loans and lines	435		461		348		443		—
Commercial real estate	5,923		5,923		187		658		—
Construction and land	—		—		—		—		—
Multi-family residential	—		—		—		—		—
Commercial and industrial	2,686		2,905		862		1,186		—
Consumer	—		—		—		—		—
Total	$	9,044	$	9,289	$	1,397	$	2,287	$	—
Total impaired loans:
One- to four-family first mortgage	$	—	$	—	$	—	$	—	$	—
Home equity loans and lines	885		937		348		901		—
Commercial real estate	5,944		5,956		187		680		—
Construction and land	—		—		—		—		—
Multi-family residential	—		—		—		—		—
Commercial and industrial	3,010		3,345		862		1,533		—
Consumer	—		—		—		—		—
Total	$	9,839	$	10,238	$	1,397	$	3,114	$	—

The following table summarizes information pertaining to nonaccrual loans as of dates indicated.

   September 30, 2018    December 31, 2017
(dollars in thousands)
   Originated    Acquired⁽¹⁾    Total    Originated    Acquired⁽¹⁾    Total
Nonaccrual loans:

One- to four-family first mortgage
   $ 2,637    $ 2,753    $ 5,390    $ 2,006    $ 1,167    $ 3,173
Home equity loans and lines
   1,339    144    1,483    1,434    108    1,542
Commercial real estate
   7,374    729    8,103    8,662    95    8,757
Construction and land
   3    345    348    200    249    449
Multi-family residential
   —      —      —      —      —      —
Commercial and industrial
   4,281    873    5,154    9,678    932    10,610
Consumer
   171    226    397    399    103    502












Total
   $ 15,805    $ 5,070    $ 20,875    $ 22,379    $ 2,654    $ 25,033

⁽¹⁾

~~Table excludes Acquired Loans which were being accounted for under ASC310-30~~ because they continue to earn interest from accretable yield regardless of their status as past due or otherwise not in compliance with their contractual terms. Acquired Loans with deteriorated credit quality which were being accounting for under ASC~~310-30~~ ~~and which were 90 days or more past due totaled $2.5 million and $4.3 million as of September 30, 2018 and December 31, 2017, respectively.~~


	September 30, 2019										December 31, 2018
(dollars in thousands)	Originated		Acquired⁽¹⁾		Total		Originated		Acquired⁽¹⁾		Total
Nonaccrual loans:
One- to four-family first mortgage	$	2,022	$	2,392	$	4,414	$	1,984	$	3,188	$	5,172
Home equity loans and lines	840		185		1,025		1,457		242		1,699
Commercial real estate	7,710		5,876		13,586		7,940		3,403		11,343
Construction and land	494		1,373		1,867		740		854		1,594
Multi-family residential	—		—		—		—		—		—
Commercial and industrial	2,108		1,778		3,886		2,986		1,002		3,988
Consumer	47		181		228		273		343		616
Total	$	13,221	$	11,785	$	25,006	$	15,380	$	9,032	$	24,412

⁽¹⁾Table excludes Acquired Loans which were being accounted for under ASC 310-30 because they continue to earn interest from accretable yield regardless of their status as past due or otherwise not in compliance with their contractual terms. Acquired Loans with deteriorated credit quality which were being accounted for under ASC 310-30 and which were 90 days or more past due totaled $2.4 million and $1.7 million as of September 30, 2019 and December 31, 2018, respectively.

As of September 30, ~~2018,~~2019, the Company had no0 outstanding commitments to lend additional funds to any customer whose loan was classified as impaired.

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 considered troubled debt restructurings (“TDR”) 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 anon-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. For purposes of the determination of an allowance for loan losses on TDRs, such loans are reviewed for specific impairment in accordance with the Company’s allowance for loan loss methodology. If it is determined that losses are probable on such TDRs, either because of delinquency or other credit quality indicators, the Company specifically allocates a portion of the allowance for loan losses to these loans.

~~Information about the Company’s TDRs is presented in the following tables.~~

   As of September 30, 2018
(dollars in thousands)
   Current    Past Due
Greater Than
30 Days    Nonaccrual
TDRs    Total
TDRs
Originated loans:

Real estate loans:

One- to four-family first mortgage
   $ 219    $ —      $ 1,824    $ 2,043
Home equity loans and lines
   210    59    312    581
Commercial real estate
   705    —      6,307    7,012
Construction and land
   145    —      —      145
Multi-family residential
   —      —      —      —








Total real estate loans
   1,279    59    8,443    9,781








Other loans:

Commercial and industrial
   —      —      466    466
Consumer
   —      —      87    87








Total other loans
   —      —      553    553








Total loans
   $ 1,279    $ 59    $ 8,996    $ 10,334








Acquired loans:

Real estate loans:

One- to four-family first mortgage
   $ 210    $ —      $ —      $ 210
Home equity loans and lines
   —      —      68    68
Commercial real estate
   —      —      —      —
Construction and land
   —      —      —      —
Multi-family residential
   —      —      —      —








Total real estate loans
   210    —      68    278








Other loans:

Commercial and industrial
   71    —      787    858
Consumer
   8    —      12    20








Total other loans
   79    —      799    878








Total loans
   $ 289    $ —      $ 867    $ 1,156








Total loans:

Real estate loans:

One- to four-family first mortgage
   $ 429    $ —      $ 1,824    $ 2,253
Home equity loans and lines
   210    59    380    649
Commercial real estate
   705    —      6,307    7,012
Construction and land
   145    —      —      145
Multi-family residential
   —      —      —      —








Total real estate loans
   1,489    59    8,511    10,059








Other loans:

Commercial and industrial
   71    —      1,253    1,324
Consumer
   8    —      99    107








Total other loans
   79    —      1,352    1,431








Total loans
   $ 1,568    $ 59    $ 9,863    $ 11,490

   As of December 31, 2017
(dollars in thousands)
   Current    Past Due
Greater Than
30 Days    Nonaccrual
TDRs    Total
TDRs
Originated loans:

Real estate loans:

One- to four-family first mortgage
   $ 306    $ 274    $ 473    $ 1,053
Home equity loans and lines
   275    64    316    655
Commercial real estate
   96    332    1,942    2,370
Construction and land
   169    —      —      169
Multi-family residential
   —      —      —      —








Total real estate loans
   846    670    2,731    4,247








Other loans:

Commercial and industrial
   —      —      4,581    4,581
Consumer
   —      —      178    178








Total other loans
   —      —      4,759    4,759








Total loans
   $ 846    $ 670    $ 7,490    $ 9,006








Acquired loans:

Real estate loans:

One- to four-family first mortgage
   $ 214    $ 3    $ 59    $ 276
Home equity loans and lines
   —      —      91    91
Commercial real estate
   —      803    —      803
Construction and land
   —      —      —      —
Multi-family residential
   —      —      —      —








Total real estate loans
   214    806    150    1,170








Other loans:

Commercial and industrial
   —      —      203    203
Consumer
   —      —      —      —








Total other loans
   —      —      203    203








Total loans
   $ 214    $ 806    $ 353    $ 1,373








Total loans:

Real estate loans:

One- to four-family first mortgage
   $ 520    $ 277    $ 532    $ 1,329
Home equity loans and lines
   275    64    407    746
Commercial real estate
   96    1,135    1,942    3,173
Construction and land
   169    —      —      169
Multi-family residential
   —      —      —      —








Total real estate loans
   1,060    1,476    2,881    5,417








Other loans:

Commercial and industrial
   —      —      4,784    4,784
Consumer
   —      —      178    178








Total other loans
   —      —      4,962    4,962








Total loans
   $ 1,060    $ 1,476    $ 7,843    $ 10,379

The following table summarizes information pertaining to ~~loans~~TDRs modified ~~as of~~during the periods indicated.

   For the Nine Months Ended September 30,
   2018    2017
(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
   2    $ 1,132    $ 1,131    5    $ 268    $ 263
Home equity loans and lines
   —      —      —      2    38    37
Commercial real estate
   1    6,423    5,923    1    431    431
Construction and land
   —      —      —      —      —      —
Multi-family residential
   —      —      —      —      —      —
Commercial and industrial
   2    738    676    1    1,439    1,146
Other consumer
   3    20    20    2    60    57












Total
   8    $ 8,313    $ 7,750    11    $ 2,236    $ 1,934

~~None~~


	Nine Months Ended September 30,
	2019								2018
(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	6	$	924	$	911	2	$	1,132	$	1,131
Home equity loans and lines	—	—		—		—	—		—
Commercial real estate	1	89		88		1	6,423		5,923
Construction and land	—	—		—		—	—
Multi-family residential	—	—		—		—	—		—
Commercial and industrial	—	—		—		2	738		676
Other consumer	2	11		10		3	20		20
Total	9	$	1,024	$	1,009	8	$	8,313	$	7,750

NaN of the performing troubled debt restructurings as of September 30, ~~2018~~2019 had defaulted subsequent to the restructuring through the date the financial statements were available to be issued.

6. 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 ofnon-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 thebid-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 September 30, ~~2018,~~2019, management did not make adjustments to prices provided by the third-party pricing service as a result of illiquid or inactive markets.

The following tables present the balances of assets measured for fair value on a recurring basis as of September 30, ~~2018~~2019 and December 31, ~~2017.~~

(dollars in thousands)
   September 30,
2018    Level 1    Level 2    Level 3
Available for sale securities:

U.S. agency mortgage-backed
   $ 79,492    $ —      $ 79,492    $ —
Collateralized mortgage obligations
   147,441    —      147,441    —
Municipal bonds
   21,674    —      21,674    —
U.S. government agency
   10,341    —      10,341    —








Total
   $ 258,948    $ —      $ 258,948    $ —








(dollars in thousands)
   December 31, 2017    Level 1    Level 2    Level 3
Available for sale securities:

U.S. agency mortgage-backed
   $ 84,690    $ —      $ 84,690    $ —
Collateralized mortgage obligations
   113,735    —      113,735    —
Municipal bonds
   25,521    —      25,521    —
U.S. government agency
   11,047    —      11,047    —








Total
   $ 234,993    $ —      $ 234,993    $ —

2018.


(dollars in thousands)	September 30, 2019		Level 1		Level 2		Level 3
Available for sale securities:
U.S. agency mortgage-backed	$	83,695	$	—	$	83,695	$	—
Collateralized mortgage obligations	152,384		—		152,384		—
Municipal bonds	15,214		—		15,214		—
U.S. government agency	3,821		—		3,821		—
Total	$	255,114	$	—	$	255,114	$	—


(dollars in thousands)	December 31, 2018		Level 1		Level 2		Level 3
Available for sale securities:
U.S. agency mortgage-backed	$	85,909	$	—	$	85,909	$	—
Collateralized mortgage obligations	143,591		—		143,591		—
Municipal bonds	21,477		—		21,477		—
U.S. government agency	9,154		—		9,154		—
Total	$	260,131	$	—	$	260,131	$	—

The Company did not record any liabilities at fair value for which measurement of the fair value was made on a recurring basis.

Nonrecurring Basis

In accordance with the provisions of ASC 310,Receivables, the Company records loans considered impaired at fair value. A loan is considered impaired if it is probable the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. Fair value is measured at the fair value of the collateral for collateral-dependent loans. Fornon-collateral-dependent loans, fair value is measured by present valuing expected future cash flows. Impaired loans 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. ~~Repossessed~~Foreclosed assets are initially recorded at fair value less estimated costs to sell. Surplus real estate ("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 ~~repossessed~~foreclosed assets and ORE is based on property appraisals and an analysis of similar properties available. As such, the Company classifies ~~repossessed~~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)
   September 30, 2018    Level 1    Level 2    Level 3
Assets

Impaired loans
   $ 8,442    $ —      $ —      $ 8,442
Repossessed assets
   571    —      —      571








Total
   $ 9,013    $ —      $ —      $ 9,013








      Fair Value Measurements Using
(dollars in thousands)
   December 31, 2017    Level 1    Level 2    Level 3
Assets

Impaired loans
   $ 1,486    $ —      $ —      $ 1,486
Repossessed assets
   728    —      —      728








Total
   $ 2,214    $ —      $ —      $ 2,214


			Fair Value Measurements Using
(dollars in thousands)	September 30, 2019		Level 1		Level 2		Level 3
Assets
Impaired loans	$	7,640	$	—	$	—	$	7,640
Foreclosed assets and ORE	2,592		—		—		2,592
Total	$	10,232	$	—	$	—	$	10,232
			Fair Value Measurements Using
(dollars in thousands)	December 31, 2018		Level 1		Level 2		Level 3
Assets
Impaired loans	$	8,723	$	—	$	—	$	8,723
Foreclosed assets and ORE	1,558		—		—		1,558
Total	$	10,281	$	—	$	—	$	10,281

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
As of September 30, 2018:

Impaired loans
   $ 8,442    Third party appraisals and discounted cash flows    Collateral discounts and discount rates    0% - 80% 14 %
Repossessed assets
   $ 571    Third party appraisals, sales contracts, broker price opinions    Collateral discounts and estimated costs to sell    6% - 100% 42 %

(dollars in thousands)
   Fair
Value
Valuation Technique

Unobservable
Inputs
   Range of
Discounts Weighted
Average
Discount
As of December 31, 2017:

Impaired loans
   $ 1,486    Third party appraisals and discounted cash flows    Collateral discounts and discount rates    0% - 100% 57 %
Repossessed assets
   $ 728    Third party appraisals, sales contracts, broker price opinions    Collateral discounts and estimated costs to sell    6% - 100% 28 %

(dollars in thousands)

Fair
Value

Valuation Technique

Unobservable
Inputs

Range of
Discounts

Weighted
Average
Discount

As of September 30, 2019:

Impaired loans

7,640

Third party appraisals and discounted cash flows

Collateral values, market discounts and estimated costs to sell

0% - 89%

17%

Foreclosed assets and ORE

2,592

Third party appraisals, sales contracts, broker price opinions

Collateral values, market discounts and estimated costs to sell

6% - 100%

37%

(dollars in thousands)

Fair
Value

Valuation Technique

Unobservable
Inputs

Range of
Discounts

Weighted
Average
Discount

As of December 31, 2018:

Impaired loans

8,723

Third party appraisals and discounted cash flows

Collateral values, market discounts and estimated costs to sell

0% - 100%

12%

Foreclosed assets and ORE

1,558

Third party appraisals, sales contracts, broker price opinions

Collateral values, market discounts and estimated costs to sell

6% - 68%

20%

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 allnon-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 existingon- andoff-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.

The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that ~~value:~~

value.

The carrying value of cash and cash equivalents and interest-bearing deposits in banks approximate their fair value.

The fair value for investment securities is determined from quoted market prices when available. If a quoted market price is not available, fair value is estimated using ~~first~~third party pricing services or quoted market prices of securities with similar characteristics.

The carrying value of mortgage loans held for sale approximates their fair value.

The fair value of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturity.

The cash surrender value of bank-owned life insurance (“BOLI”) approximates its fair value.

The fair value of customer deposits, excluding certificates of deposit, is the amount payable on demand. The fair value of fixed-maturity certificates of deposit is estimated by discounting the future cash flows using the rates currently offered for deposits of similar remaining maturities.

~~The fair value of short-term FHLB advances is the amount payable at maturity.~~ The fair value of long-term FHLB advances is estimated by discounting the future cash flows using the rates currently offered for advances of similar maturities.

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

      Fair Value Measurements at September 30, 2018
   Carrying
(dollars in thousands)
   Amount    Total    Level 1    Level 2    Level 3
Financial Assets

Cash and cash equivalents
   $ 61,724    $ 61,724    $ 61,724    $ —      $ —
Interest-bearing deposits in banks
   1,184    1,184    1,184    —      —
Investment securities available for sale
   258,948    258,948    —      258,948    —
Investment securities held to maturity
   10,942    10,868    —      10,868    —
Mortgage loans held for sale
   3,470    3,470    —      3,470    —
Loans, net
   1,617,276    1,590,380    —      1,581,938    8,442
Cash surrender value of BOLI
   29,394    29,394    29,394    —      —
Financial Liabilities

Deposits
   $ 1,771,312    $ 1,766,441    $ —      $ 1,766,441    $ —
Short-term FHLB advances
   41    41    41    —      —
Long-term FHLB advances
   59,536    57,879    —      57,879    —
      Fair Value Measurements at December 31, 2017
   Carrying
(dollars in thousands)
   Amount    Total    Level 1    Level 2    Level 3
Financial Assets

Cash and cash equivalents
   $ 150,418    $ 150,418    $ 150,418    $ —      $ —
Interest-bearing deposits in banks
   2,421    2,421    2,421    —      —
Investment securities available for sale
   234,993    234,993    —      234,993    —
Investment securities held to maturity
   13,034    13,055    —      13,055    —
Mortgage loans held for sale
   5,873    5,873    —      5,873    —
Loans, net
   1,642,988    1,642,634    —      1,641,148    1,486
Cash surrender value of BOLI
   28,904    28,904    28,904    —      —
Financial Liabilities

Deposits
   $ 1,866,227    $ 1,864,735    $ —      $ 1,864,735    $ —
Short-term FHLB advances
   3,642    3,642    3,642    —      —
Long-term FHLB advances
   68,183    67,143    —      67,143    —


			Fair Value Measurements at September 30, 2019
(dollars in thousands)	Carrying Amount		Total		Level 1		Level 2		Level 3
Financial Assets
Cash and cash equivalents	$	61,289	$	61,289	$	61,289	$	—	$	—
Interest-bearing deposits in banks	449		449		449		—		—
Investment securities available for sale	255,114		255,114		—		255,114		—
Investment securities held to maturity	7,193		7,238		—		7,238		—
Mortgage loans held for sale	6,909		6,909		—		6,909		—
Loans, net	1,689,844		1,684,650		—		1,677,010		7,640
Cash surrender value of BOLI	39,228		39,228		39,228		—		—
Financial Liabilities
Deposits	$	1,831,406	$	1,832,247	$	—	$	1,832,247	$	—
Other borrowings	5,539		5,951		—		5,951		—
Long-term FHLB advances	47,853		47,749		—		47,749		—


			Fair Value Measurements at December 31, 2018
(dollars in thousands)	Carrying Amount		Total		Level 1		Level 2		Level 3
Financial Assets
Cash and cash equivalents	$	59,618	$	59,618	$	59,618	$	—	$	—
Interest-bearing deposits in banks	939		939		939		—		—
Investment securities available for sale	260,131		260,131		—		260,131		—
Investment securities held to maturity	10,872		10,841		—		10,841		—
Mortgage loans held for sale	2,086		2,086		—		2,086		—
Loans, net	1,633,406		1,623,920		—		1,615,197		8,723
Cash surrender value of BOLI	29,560		29,560		29,560		—		—
Financial Liabilities
Deposits	$	1,773,217	$	1,769,087	$	—	$	1,769,087	$	—
Other borrowings	5,539		5,542		—		5,542		—
Long-term FHLB advances	58,698		57,527		—		57,527		—

~~Item~~2.
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 Home Bancorp, Inc. (the “Company”) and its wholly owned subsidiary, Home Bank, N. A. (the “Bank”), from

December 31, ~~2017~~2018 through September 30, ~~2018~~2019 and on its results of operations for the three and nine months ended September 30, ~~2018~~2019 and ~~September 30, 2017.~~2018. This discussion and analysis is intended to highlight and supplement information presented elsewhere in this quarterly report on Form10-Q, particularly the consolidated financial statements and related notes appearing in Item 1.

Forward-Looking Statements

To the extent that statements in this Form10-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 Form10-K filed with the Securities Exchange Commission (“SEC”) for the year ended December 31, ~~2017.~~2018. The Company undertakes no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.

EXECUTIVE OVERVIEW

During the third quarter of ~~2018,~~2019, the Company earned ~~$8.3~~$6.9 million, ~~an increase~~a decrease of ~~$4.2~~$1.4 million, or ~~102.0%~~17.0%, compared to the third quarter of ~~2017.~~2018. Diluted earnings per share for the third quarter of ~~2018~~2019 were ~~$0.89, an increase~~$0.75, a decrease of ~~$0.33,~~$0.14, or ~~58.9%~~15.7%, compared to the third quarter of 2017. The increase in earnings is primarily due to the acquisition of St. Martin Bancshares, Inc. (“SMB”). In addition, net income for the third quarter of 2017 included merger expenses related to the acquisition of SMB totaling $225,000, net of taxes. No merger-related expenses were recorded during the third quarter of 2018.

During the nine months ended September 30, ~~2018,~~2019, the Company earned ~~$23.5~~$21.3 million, ~~an increase~~a decrease of ~~$9.9~~$2.2 million, or ~~73.0%~~9.3%, compared to the nine months ended September 30, ~~2017.~~2018. Diluted earnings per share for the nine months ended September 30, ~~2018~~2019 were ~~$2.53, an increase~~$2.32, a decrease of ~~$0.65,~~$0.21, or ~~34.6%~~8.3%, compared to the nine months ended September 30, ~~2017. The~~2018. Net income for the nine months ended September 30, 2018 ~~and September 30, 2017~~ included ~~merger~~merger-related expenses ~~related to the acquisition~~ of ~~SMB totaling~~ $1.6 million, ~~and $225,000,~~ net of ~~taxes, respectively.~~

tax.

Key components of the Company’s performance during the three and nine months ended September 30, ~~2018~~2019 include:

~~Assets totaled $2.1 billion as of September 30, 2018, a decrease of $87.6~~

•Total assets increased $64.4 million, or ~~3.9%~~3.0%, from December 31, ~~2017.~~

~~Loans as of~~2018 to $2.2 billion at September 30, ~~2018 were $1.6 billion, a decrease~~2019.

•Loans increased of ~~$24.8~~$57.7 million, or ~~1.5%~~3.5%, from December 31, ~~2017.~~

~~Investment securities totaled $269.9 million as of~~2018 to $1.7 billion at September 30, ~~2018, an increase of $21.9~~2019.

•Total deposits increased $58.2 million, or ~~8.8%~~3.3%, from December 31, ~~2017.~~

~~Deposits totaled~~2018 to $1.8 billion ~~as of~~at September 30, ~~2018, a decrease of $94.9 million, or 5.1%, from December 31, 2017.~~

2019.

•Interest income ~~increased $8.4 million,~~decreased $635,000, or ~~47.8%~~2.4%, infor the third quarter of ~~2018~~2019 compared to the third quarter of ~~2017.~~2018. For the nine months ended September 30, ~~2018,~~2019, interest income increased ~~$24.0 million,~~$355,000, or ~~45.7%~~0.5%, compared to the nine months ended September 30, ~~2017. The increases in 2018 were driven primarily by~~2018. Interest income for the ~~addition~~three and nine months ended September 30, 2019 included a $680,000 (pre-tax) charge due to the write-off of the ~~interest-earning assets acquired from SMB.~~

FDIC loss sharing indemnification receivable.

•Interest expense increased ~~$890,000,~~$1.7 million, or ~~52.0%~~66.7%, in the third quarter of ~~2018~~2019 compared to the third quarter of ~~2017.~~2018. For the nine months ended September 30, ~~2018,~~2019, interest expense increased ~~$2.5~~$5.0 million, or ~~53.2%~~70.4%, compared to the nine months ended September 30, ~~2017. The~~2018. Interest expense increased over the comparable periods primarily due to increases in ~~2018 were driven primarily by~~ the ~~addition of the interest-bearing liabilities acquired from SMB.~~

average rate paid on deposits.

•The provision for loan losses ~~totaled $786,000~~ for the third quarter of ~~2018, an increase of $126,000,~~2019 increased $360,000, or ~~19.1%~~45.8%, to $1.1 million, compared to the third quarter of ~~2017.~~2018. The provision increased primarily due to a nonperforming commercial loan relationship which filed for bankruptcy during the third quarter of 2019. For the nine months ended September 30, ~~2018,~~2019, the Company recorded a provision for loan losses of $2.3 million, a ~~$1.2 million,~~decrease of $30,000, or ~~108.7%~~1.3%, ~~increase from the provision recorded for~~compared to the same period in ~~2017.~~2018. The ~~Company recorded net~~ratio of allowance for loan ~~charge-offs for the third quarter of 2018 of $15,000 and net loan charge-offs for the nine months ended~~losses to total loans was 1.03% at September 30, ~~2018 of $1.4 million. The Company recorded net loan charge-offs for the third quarter of 2017 of $246,000 and net loan charge-offs for the nine months ended September 30, 2017 of $204,000.~~

2019, compared to 0.99% at December 31, 2018.

•Noninterest income for the third quarter of ~~2018~~2019 increased ~~$1.0~~$1.4 million, or ~~45.7%~~42.9%, compared to the third quarter of ~~2017.~~2018 primarily due to a non-taxable bank-owned life insurance ("BOLI") benefit of $1.2 million. For the nine months ended September 30, ~~2018,~~2019, noninterest income increased ~~$2.9 million,~~$748,000, or ~~39.6%~~7.4%, compared to the nine months ended September 30, ~~2017. The increase for the comparative quarters resulted~~2018 primarily ~~from additional service fees and charges, bank card fees, and other income~~ due to the ~~SMB acquisition. The increase in the nine-month comparative periods resulted primarily from additional service fees and charges and bank card fees due to the SMB acquisition, which were~~third quarter 2019 life insurance benefit, partially offset by ~~decreases~~asset write-downs of $347,000 (pre-tax) recorded in ~~gains on~~ the ~~sale~~second quarter of ~~mortgage loans.~~

2019.

•Noninterest expense for the third quarter of ~~2018~~2019 increased ~~$4.4 million,~~$914,000, or ~~38.4%~~5.8%, compared to the third quarter of ~~2017.~~2018 primarily due to an increase in compensation and benefits expense. Noninterest expense for the nine months ended September 30, 2019 increased $245,000, or 0.5%, compared to the same period in 2018 primarily due to increases in compensation and benefits and occupancy expenses, partially offset by decreases in certain other expenses. The Company incurred $291,000 (pre-tax) in occupancy expense to terminate an office lease during the second quarter of 2019 and $287,000 (pre-tax) in compensation and benefits expense related to the departure of a former executive during the third quarter of 2019. Noninterest expense for the nine months ended September 30, 2018 ~~increased $14.2 million, or 42.4%, compared to the nine months ended September 30, 2017. Noninterest expense includes~~included merger-related expenses ~~which totaled~~of $2.0 million(pre-tax) ~~for the nine months ended September 30, 2018 and $247,000(pre-tax)~~ for the three and nine months ended September 30, 2017. The increases in noninterest expense related primarily to the growth of the Company’s employee base, higher occupancy and data processing costs due to the SMB acquisition.

FINANCIAL CONDITION

Loans, Asset Quality and Allowance for Loan Losses

Loans –Loans outstanding as of September 30, ~~2018~~2019 were ~~$1.6~~$1.7 billion, ~~a decrease~~an increase of ~~$24.8~~$57.7 million, or 3.5%, from December 31, ~~2017. Growth in originated loans~~2018. The increase was primarily the result of ~~10.6% (14.2% annualized) during the first nine months of 2018 was offset by reductions in Acquired Loan balances. Organic loan growth resulted primarily from increases in the Company’s~~ commercial real estate ("CRE") loan ~~portfolio.~~

growth of $78.8 million, or 12.3%, offset partially by declines in residential mortgage loans (down $17.4 million, or 3.9%). CRE loan growth was strongest in the Acadiana and New Orleans markets.

The Company also experienced growth in commercial and industrial ("C&I") loans (up $7.3 million, or 4.2%) and multi-family residential loans (up $2.3 million, or 4.2%), offset by declines in consumer loans (down $6.5 million, or 12.0%) and construction and land loans (down $4.7 million, or 2.4%). C&I loan growth was due primarily to increases in agriculture production and farm-related loans in the southwest Acadiana market. Multi-family residential loan growth was primarily within the New Orleans market. The decline in construction and land loans was primarily due to the completion of the construction phase of certain larger construction loans and their conversion to permanent CRE loans.

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

   September 30,    December 31,    Increase/(Decrease)
(dollars in thousands)
   2018    2017    Amount Percent
Real estate loans:

One- to four-family first mortgage
   $ 456,797    $ 477,211    $ (20,414 ) (4.3 )%
Home equity loans and lines
   86,405    94,445    (8,040 ) (8.5 )
Commercial real estate
   629,297    611,358    17,939 2.9
Construction and land
   174,573    177,263    (2,690 ) (1.5 )
Multi-family residential
   56,153    50,978    5,175 10.2






Total real estate loans
   1,403,225    1,411,255    (8,030 ) (0.6 )






Other loans:

Commercial and industrial
   173,938    185,284    (11,346 ) (6.1 )
Consumer
   55,856    61,256    (5,400 ) (8.8 )






Total other loans
   229,794    246,540    (16,746 ) (6.8 )






Total loans
   $ 1,633,019    $ 1,657,795    $ (24,776 ) (1.5 )%

September 30, December 31, Increase/(Decrease)
(dollars in thousands) 2019 2018 Amount Percent
Real estate loans:
One-to four-family first mortgage $ 432,964 $ 450,363 $ (17,399) (3.9) %
Home equity loans and lines 81,835 83,976 (2,141) (2.5)
Commercial real estate 719,392 640,575 78,817 12.3
Construction and land 188,879 193,597 (4,718) (2.4)
Multi-family residential 56,733 54,455 2,278 4.2
Total real estate loans 1,479,803 1,422,966 56,837 4.0 %
Other loans:
Commercial and industrial 180,264 172,934 7,330 4.2
Consumer 47,375 53,854 (6,479) (12.0)
Total other loans 227,639 226,788 851 0.4
Total loans $ 1,707,442 $ 1,649,754 $ 57,688 3.5 %

The outstanding balance of direct loans to borrowers in the energy sector totaled $40.1 million, or 2.4% of total outstanding loans, at September 30, 2019, compared to $45.6 million, or 2.8% of total outstanding loans, at December 31, 2018. Unfunded loan commitments to customers in the energy sector totaled $6.0 million at September 30, 2019, compared to $10.1 million at December 31, 2018. At September 30, 2019 and December 31, 2018, loans constituting 94.9% and 96.7%, respectively, of the balance of our direct energy related portfolio were performing in accordance with their original loan agreements.

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.

Repossessed assets, which are acquired as a result of foreclosure, are classified as repossessed assets until sold. Third party property valuations are obtained at the time the asset is repossessed and periodically until the property is liquidated. Repossessed assets are initially recorded at fair value less estimated costs to sell. Costs associated with acquiring and improving a foreclosed property are usually capitalized to the extent that the carrying value does not exceed fair value less estimated selling costs. Holding costs are charged to expense. Gains and losses on the sale of repossessed assets are charged to operations, as incurred.

An impaired loan generally is one for which it is probable, based on current information, that the lender will not collect all the amounts due under the contractual terms of the loan. Large groups of smaller balance, homogeneous loans are collectively evaluated for impairment. Loans collectively evaluated for impairment include smaller balance commercial loans, residential real estate loans and consumer loans. These loans are evaluated as a group because they have similar characteristics and performance experience. Larger (i.e., loans with balances of $250,000 or greater) commercial real estate loans, multi-family residential loans, construction and land loans and commercial and industrial loans are individually evaluated for impairment. 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 help determine if there is impairment, 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.~~Bank. The Company typically orders an “as is” valuation for collateral property if a loan is in a criticized loan classification. The Board of Directors is provided with monthly reports on impaired loans. As of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, loans identified as impaired and individually evaluated ~~with~~for impairment, excluding Acquired Loans, amounted to ~~$9.8~~$9.1 million and ~~$3.5~~$9.9 million, respectively. As of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, acquired impaired loans (loans considered to have deteriorated credit quality at the time of acquisition) amounted to ~~$11.0~~$8.9 million and ~~$14.2~~$10.0 million, respectively. As of September 30, ~~2018~~2019 and December 31, ~~2017,~~2018, substandard loans, excluding Acquired Loans, amounted to ~~$19.8~~$17.5 million and ~~$27.0~~$21.7 million, respectively. As of September 30, 2019 and December 31, 2018, Acquired Loans considered substandard amounted to $25.5 million and $24.5 million, respectively. The amount of the allowance for loan losses allocated to ~~substandard~~originated impaired loans ~~originated by Home Bank~~ totaled $1.4 million as of September 30, ~~2018~~2019 and ~~$2.0~~$1.2 million as of December 31, ~~2017.~~2018. The amount of the allowance for loan losses allocated to Acquired Loans totaled ~~$1.4~~$1.9 million and ~~$504,000,~~$1.5 millions, respectively, at such dates. There were no assets classified as doubtful or loss as of September 30, ~~2018~~2019 or December 31, ~~2017.~~

2018.

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”~~ “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.

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. Our management believes that, based on information currently available, our allowance for loan losses is maintained at a level which covers all known and inherent losses that are both probable and reasonably estimable as of each reporting date. However, actual losses are dependent upon future events and, as such, further additions to the level of allowance for loan losses may become necessary.

~~Real~~

Foreclosed assets and surplus real estate or("ORE") includes real property and other ~~collateral, which is~~assets that have been acquired as a result of foreclosure, isand real property no longer used in the Bank's business. Foreclosed assets and ORE are classified as ~~a foreclosed asset~~such until ~~sold.~~sold or disposed. Foreclosed assets are recorded at ~~the lesser of the balance of the loan or~~ 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 ~~acquired or upon receiving new property valuations. Holding~~of transfer to ORE. Foreclosed assets and ORE holding costs are charged to expense. Gains and losses on the sale of ~~real estate owned~~foreclosed assets and ORE are charged to operations, as incurred.

Costs associated with acquiring and improving a foreclosed property or ORE are usually capitalized to the extent that the carrying value does not exceed fair value less estimated selling costs.

The following table sets forth the composition of the Company’s nonperforming assets (“NPAs”) and performing troubled debt restructurings as of the dates indicated.

   September 30, 2018 December 31, 2017
(dollars in thousands)
   Originated    Acquired⁽¹⁾    Total Originated    Acquired⁽¹⁾    Total
Nonaccrual loans⁽²⁾:

Real estate loans:

One- to four-family first mortgage
   $ 2,637    $ 2,753    $ 5,390 $ 2,006    $ 1,167    $ 3,173
Home equity loans and lines
   1,339    144    1,483 1,434    108    1,542
Commercial real estate
   7,374    729    8,103 8,662    95    8,757
Construction and land
   3    345    348 200    249    449
Multi-family residential
   —      —      —   —      —      —
Other loans:

Commercial and industrial
   4,281    873    5,154 9,678    932    10,610
Consumer
   171    226    397 399    103    502










Total nonaccrual loans
   15,805    5,070    20,875 22,379    2,654    25,033
Accruing loans 90 days or more past due
   —      —      —   —      —      —










Total nonperforming loans
   15,805    5,070    20,875 22,379    2,654    25,033
Foreclosed assets
   86    485    571 144    584    728










Total nonperforming assets
   15,891    5,555    21,446 22,523    3,238    25,761
Performing troubled debt restructurings
   1,338    288    1,626 1,516    1,020    2,536










Total nonperforming assets and troubled debt restructurings
   $ 17,229    $ 5,843    $ 23,072 $ 24,039    $ 4,258    $ 28,297










Nonperforming loans to total loans
         1.28 %       1.51 %
Nonperforming loans to total assets
         0.98 %       1.12 %
Nonperforming assets to total assets
         1.00 %       1.16 %

⁽¹⁾

~~Table excludes Acquired Loans, which were being accounted for under ASC310-30~~ because they continue to earn interest from accretable yield regardless of their status as past due or otherwise not in compliance with their contractual terms. Acquired Loans with deteriorated credit quality, which were being accounted for under ASC~~310-30~~ ~~and which were 90 days or more past due, totaled $2.5 million and $4.3 million as of September 30, 2018 and December 31, 2017, respectively.~~

⁽²⁾

Nonaccrual loans include originated restructured loans placed on nonaccrual totaling $9.0 million and $7.5 million at September 30, 2018 and December 31, 2017, respectively. Acquired restructured loans placed on nonaccrual totaled $868,000 and $353,000 at September 30, 2018 and December 31, 2017, respectively.

September 30, 2019 December 31, 2018
(dollars in thousands) Originated
Acquired⁽¹⁾
Total Originated
Acquired⁽¹⁾
Total
Nonaccrual loans⁽²⁾:
Real estate loans:
One- to four-family first mortgage $ 2,022 $ 2,392 $ 4,414 $ 1,984 $ 3,188 $ 5,172
Home equity loans and lines 840 185 1,025 1,457 242 1,699
Commercial real estate 7,710 5,876 13,586 7,940 3,403 11,343
Construction and land 494 1,373 1,867 740 854 1,594
Multi-family residential — — — — — —
Other loans:
Commercial and industrial 2,108 1,778 3,886 2,986 1,002 3,988
Consumer 47 181 228 273 343 616
Total nonaccrual loans 13,221 11,785 25,006 15,380 9,032 24,412
Accruing loans 90 days or more past due — — — — — —
Total nonperforming loans 13,221 11,785 25,006 15,380 9,032 24,412
Foreclosed assets and ORE 712 1,880 2,592 146 1,412 1,558
Total nonperforming assets 13,933 13,665 27,598 15,526 10,444 25,970
Performing troubled debt restructurings 1,712 213 1,925 1,117 289 1,406
Total nonperforming assets and troubled debt restructurings $ 15,645 $ 13,878 $ 29,523 $ 16,643 $ 10,733 $ 27,376
Nonperforming loans to total loans 1.46 % 1.48 %
Nonperforming loans to total assets 1.13 % 1.13 %
Nonperforming assets to total assets 1.24 % 1.21 %

⁽¹⁾Table excludes Acquired Loans which were being accounted for under ASC 310-30 because they continue to earn interest from accretable yield regardless of their status as past due or otherwise not in compliance with their contractual terms. Acquired Loans with deteriorated credit quality which were being accounted for under ASC 310-30, and which were 90 days or more past due, totaled $2.4 million and $1.7 million as of September 30, 2019 and December 31, 2018, respectively.

⁽²⁾Nonaccrual loans include originated restructured loans placed on nonaccrual totaling $8.8 million and $10.3 million at September 30, 2019 and December 31, 2018, respectively. Acquired restructured loans placed on nonaccrual totaled $2.0 million and $4.2 million at September 30, 2019 and December 31, 2018, respectively.

The Company recorded net loan charge-offs for the third quarter of 2019 of $787,000 and net loan charge-offs for the nine months ended September 30, 2019 of $1.1 million. The Company recorded net loan charge-offs for the third quarter of 2018 of $15,000, and net loan charge-offs for the nine months ended September 30, 2018 of $1.4 million. ~~The Company recorded net loan charge-offs for the third quarter of 2017 of $246,000 and net loan charge-offs for the nine months ended September 30, 2017 of $204,000.~~

Allowance for Loan Losses – The allowance for loan losses is established through provisions for loan losses. The Company maintains the allowance at a level believed, to the best of management’s knowledge, to cover all known and inherent losses in the portfolio that are both probable and reasonable to estimate at each reporting date. Management reviews the allowance for loan losses at least quarterly in order to identify those inherent losses and to assess the overall collection probability for the loan portfolio. The evaluation process includes, among other things, an analysis of delinquency trends, nonperforming loan trends, the level of charge-offs and recoveries, prior loss experience, total loans outstanding, the volume of loan originations, the type, size and geographic concentration of loans, the value of collateral securing loans, the borrower’s ability to repay and repayment performance, the number of loans requiring heightened management oversight, economic conditions and industry experience.

Based on this evaluation, management assigns risk ratings to segments of the loan portfolio. Such risk ratings are periodically reviewed by management and revised as deemed appropriate. These efforts are supplemented by 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 allowance for loan losses 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 allowance for loan losses. Such agencies may require management to make additional provisions for estimated loan losses based upon judgments different from those of management.

With respect to Acquired Loans, the Company follows the reserve standard set forth in ASC 310,Receivables. At acquisition, the Company reviews each loan to determine whether there is evidence of deterioration in credit quality since origination and if it is probable that the Company will be unable to collect all amounts due according to the loan’s contractual terms. The Company considers expected prepayments and estimates the amount and timing of undiscounted expected principal, interest and other cash flows for each loan pool meeting the criteria above, and determines the excess of the loan pool’s scheduled contractual principal and interest payments in excess of cash flows expected at acquisition as an amount that should not be accreted (nonaccretable difference). The remaining amount, representing the excess of the pool’s cash flows expected to be collected over the fair value, is accreted into interest income over the remaining life of the pool (accretable yield). The Company records a discount on these loans at acquisition to record them at their estimated fair values. As a result, Acquired Loans subject to ASC 310 are excluded from the calculation of the allowance for loan losses as of the acquisition date. See Note 5 to the Unaudited Consolidated Financial Statements for additional information concerning our allowance for Acquired Loans.

Acquired Loans were recorded at their acquisition date fair value, which was based on expected cash flows and included an estimation of expected future loan losses. If the present value of expected cash flows for a pool is less than its carrying value, an impairment is recognized by an increase in the allowance for loan losses and a charge to the provision for loan losses. As of September 30, ~~2018~~2019 and December 31, ~~2017, $1.4~~2018, $1.9 million and ~~$504,000,~~$1.5 million, respectively, of our allowance for loan losses was allocated to Acquired Loans.

We will continue to monitor and modify our allowance for loan losses as conditions warrant. No assurance can be given that our level of allowance for loan losses will cover all of the inherent losses on our loans or that future adjustments to the allowance for loan losses will not be necessary if economic and other conditions differ substantially from the conditions used by management to determine the current level of the allowance for loan ~~losses.~~

losses or as a result of the implementation of the CECL model in 2020.

The following table presents the activity in the allowance for loan losses during the first nine months of ~~2018.~~

(dollars in thousands)
   Originated    Acquired    Total
Balance, December 31, 2017
   $ 14,303    $ 504    $ 14,807
Provision charged to operations
   1,484    847    2,331
Loans charged off
   (1,564 )    —      (1,564 )
Recoveries on charged off loans
   169    —      169






Balance, September 30, 2018
   $ 14,392    $ 1,351    $ 15,743

2019.


(dollars in thousands)	Originated		Acquired		Total
Balance, December 31, 2018	$	14,860	$	1,488	$	16,348
Provision charged to operations	1,800		501		2,301
Loans charged off	(1,033)		(85)		(1,118)
Recoveries on charged off loans	67		—		67
Balance, September 30, 2019	$	15,694	$	1,904	$	17,598

At September 30, ~~2018,~~2019, the Company’s ratio of the allowance for loan losses to total loans was ~~0.96%~~1.03%, compared to ~~0.89%~~0.99% and ~~1.09%~~0.96% at December 31, ~~2017~~2018 and September 30, ~~2017,~~2018, respectively. Excluding Acquired Loans, the ratio of the allowance for loan losses to total loans was ~~1.38%~~1.29% at September 30, ~~2018,~~2019, compared to ~~1.52%~~1.36% and ~~1.40%~~1.38% at December 31, ~~2017~~2018 and September 30, ~~2017,~~2018, respectively.

The allowance for loan losses attributable to originated ~~direct energy-related~~energy-sector loans totaled ~~2.50%~~2.40% of the outstanding balance of originated ~~energy-related~~energy-sector loans at September 30, ~~2018,~~2019, compared to ~~2.49%~~2.39% and ~~3.13%~~2.50% at December 31, ~~2017~~2018 and September 30, ~~2017,~~2018, respectively.

Investment Securities

The Company’s investment securities portfolio totaled ~~$269.9~~$262.3 million as of September 30, ~~2018, an increase~~2019, a decrease of ~~$21.9~~$8.7 million, or ~~8.8%~~3.2%, from December 31, ~~2017.~~2018. As of September 30, ~~2018,~~2019, the Company had a net unrealized ~~loss~~gain on its available for sale investment securities portfolio of ~~$5.8~~$1.5 million, compared to a net unrealized loss of ~~$1.5~~$2.8 million as of December 31, ~~2017.~~

2018.

The following table summarizes activity in the Company’s investment securities portfolio during the first nine months of ~~2018.~~

(dollars in thousands)
   Available for Sale    Held to Maturity
Balance, December 31, 2017
   $ 234,993    $ 13,034
Purchases
   67,539    —
Sales
   —      —
Principal maturities, prepayments and calls
   (38,016 )    (1,855 )
Amortization of premiums and accretion of discounts
   (1,279 )    (237 )
Decrease in market value
   (4,289 )    —




Balance, September 30, 2018
   $ 258,948    $ 10,942

2019.

(dollars in thousands) Available for Sale Held to Maturity
Balance, December 31, 2018 $ 260,131 $ 10,872
Purchases 46,914 —
Sales — —
Principal maturities, prepayments and calls (54,775) (3,517)
Amortization of premiums and accretion of discounts (1,443) (162)
Increase in market value 4,287 —
Balance, September 30, 2019 $ 255,114 $ 7,193

Funding Sources

Deposits –Deposits totaled $1.8 billion as of September 30, ~~2018, a decrease~~2019, an increase of ~~$94.9~~$58.2 million, or ~~5.1%~~3.3%, compared to December 31, ~~2017.~~2018. Core deposits (i.e. checking, savings and money market accounts) totaled $1.4 billion as of September 30, ~~2018, a decrease~~2019, an increase of ~~$54.7~~$15.3 million, or ~~3.7%~~1.1%, compared to December 31, ~~2017.~~2018. Certificates of deposit totaled ~~$348.9~~$393.9 million as of September 30, ~~2018, a decrease~~2019, an increase of ~~$40.2~~$42.9 million, or ~~10.3%~~12.2%, compared to December 31, ~~2017. To reverse the trend in deposit outflows, management has begun to raise interest rates on deposit accounts and is currently offering several special rates to attract new deposits.~~

2018.

The following table sets forth the composition of the Company’s deposits at the dates indicated.

   September 30,    December 31,    Increase/(Decrease)
(dollars in thousands)
   2018    2017    Amount Percent
Demand deposit
   $ 447,422    $ 461,999    $ (14,577 ) (3.2 )%
Savings
   207,379    217,639    (10,260 ) (4.7 )
Money market
   293,313    306,509    (13,196 ) (4.3 )
NOW
   474,250    490,924    (16,674 ) (3.4 )
Certificates of deposit
   348,948    389,156    (40,208 ) (10.3 )






Total deposits
   $ 1,771,312    $ 1,866,227    $ (94,915 ) (5.1 )%

September 30, December 31, Increase/(Decrease)
(dollars in thousands) 2019 2018 Amount Percent
Demand deposit $ 446,742 $ 438,146 $ 8,596 2.0 %
Savings 204,807 201,393 3,414 1.7
Money market 272,489 295,705 (23,216) (7.9)
NOW 513,440 486,979 26,461 5.4
Certificates of deposit 393,928 350,994 42,934 12.2
Total deposits $ 1,831,406 $ 1,773,217 $ 58,189 3.3 %

Federal Home Loan Bank Advances – ~~Short-term~~ Long-term FHLB advances totaled ~~$41,000~~$47.9 million as of September 30, ~~2018,~~2019 a decrease of ~~$3.6~~$10.8 million, or ~~98.9%~~18.5%, compared to ~~$3.6~~$58.7 million as of December 31, ~~2017. Long-term~~2018. The decrease in FHLB advances ~~totaled $59.5~~is primarily due to pay-downs on maturing obligations.

Shareholders’ Equity – Shareholders’ equity increased $10.6 million, or 3.5%, from $304.0 million as of December 31, 2018 to $314.7 million as of September 30, ~~2018, a decrease of $8.6 million, or 12.7%, compared to $68.2 million as of December 31, 2017. The decreases in FHLB advances are primarily due topay-downs~~ ~~on maturing obligations.~~

~~Shareholders’ Equity~~~~– Shareholders’ equity increased $17.8 million, or 6.4%, from $277.9 million as of December 31, 2017 to $295.7 million as of September 30, 2018,~~2019, primarily due to earnings during the ~~period.~~

period and an increase in accumulated other comprehensive income due to unrealized gains on available-for-sale investment securities.

As of September 30, ~~2018,~~2019, 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 September 30, ~~2018~~2019 based on ~~thephase-in~~ ~~provisions of the Basel III Capital Rules and~~ the minimum required capital levels as of January 1, 2019 when the Basel III Capital Rules ~~have been~~were fullyphased-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
IIIPhase-In
Schedule Minimum Capital
Required – Basel
III FullyPhased-In To Be Well
Capitalized Under
Prompt Corrective
Action Provisions
(dollars in thousands)
   Amount    Ratio Amount    Ratio Amount    Ratio Amount    Ratio
Bank:

Common equity Tier 1 capital (to risk-weighted assets)
   $ 221,952    13.91 % $ 101,713    6.375 % $ 111,685    7.00 % $ 103,707    6.50 %
Tier 1 risk-based capital
   221,952    13.91 125,645    7.875 135,617    8.50 127,640    8.00
Total risk-based capital
   237,695    14.90 157,555    9.875 167,527    10.50 159,550    10.00
Tier 1 leverage capital
   221,952    10.73 82,725    4.00 82,725    4.00 103,406    5.00


	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)	$	238,964	14.21	%	$	117,740	7.00	%	$	109,330	6.50	%
Tier 1 risk-based capital	238,964		14.21		142,970		8.50		134,560		8.00
Total risk-based capital	256,562		15.25		176,610		10.50		168,200		10.00
Tier 1 leverage capital	238,964		11.12		85,930		4.00		107,413		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.

As of September 30, ~~2018,~~2019, cash and cash equivalents totaled ~~$61.7~~$61.3 million. At such date, investment securities available for sale totaled ~~$258.9~~$255.1 million.

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. As of September 30, ~~2018,~~2019, certificates of deposit maturing within the next 12 months totaled ~~$207.5~~$293.9 million. Based upon historical experience, the Company anticipates that a significant portion of the maturing certificates of deposit will be redeposited with us. For the three months ended September 30, ~~2018,~~2019, the average balance of outstanding FHLB advances was ~~$64.2~~$51.2 million. As of September 30, ~~2018,~~2019, the Company had ~~$59.6~~$47.9 million in total outstanding FHLB advances and had ~~$730.9~~$727.3 million in additional FHLB advances available.

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.

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 September 30, ~~2018.~~


~~Shift in Interest Rates~~ ~~(in bps)~~		~~% Change in Projected~~ ~~Net Interest Income~~
~~+300~~		~~0.0%~~
~~+200~~		~~0.1~~
~~+100~~		~~0.2~~

2019.



Shift in Interest Rates (in bps)						% Change in Projected Net Interest Income
200						1.1
100						0.8
(100)						(2.5)

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.

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 foron-balance sheet

instruments. The Company’s exposure to credit losses from these financial instruments is represented by their contractual amounts.

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 September 30, ~~2018~~2019 and December 31, ~~2017.~~

2018.


	Contract Amount					Contract Amount
	September 30,		December 31,			September 30,		December 31,
*(dollars in thousands)*	2018		2017		(dollars in thousands)	2019		2018
Standby letters of credit	$	3,582	$	6,620	Standby letters of credit	$	5,036	$	4,288
Available portion of lines of credit		168,223		203,367	Available portion of lines of credit	238,067		186,446
Undisbursed portion of loans in process		109,338		78,578	Undisbursed portion of loans in process	108,062		108,307
Commitments to originate loans		137,510		96,183	Commitments to originate loans	96,488		92,656

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

During the third quarter of ~~2018,~~2019, the Company earned ~~$8.3~~$6.9 million, ~~an increase~~a decrease of ~~$4.2~~$1.4 million, or ~~102.0%~~17.0%, compared to the third quarter of ~~2017.~~2018. Diluted earnings per share for the third quarter of ~~2018~~2019 were ~~$0.89, an increase~~$0.75, a decrease of ~~$0.33,~~$0.14, or ~~58.9%~~15.7%, compared to the third quarter of 2017. The increase in earnings is primarily due to the acquisition of SMB. In addition, net income for the third quarter of 2017 included merger expenses related to the acquisition of SMB totaling $225,000, net of taxes. No merger-related expenses were recorded during the third quarter of 2018.

During the nine months ended September 30, ~~2018,~~2019, the Company earned ~~$23.5~~$21.3 million, ~~an increase~~a decrease of ~~$9.9~~$2.2 million, or ~~73.0%~~9.3%, compared to the nine months ended September 30, ~~2017.~~2018. Diluted earnings per share for the nine months ended September 30, ~~2018~~2019 were ~~$2.53, an increase~~$2.32, a decrease of ~~$0.65,~~$0.21, or ~~34.6%~~8.3%, compared to the nine months ended September 30, ~~2017. The~~2018. Net income for the nine months ended September 30, 2018 ~~and September 30, 2017 include merger~~included merger-related expenses ~~related to the acquisition~~ of ~~SMB totaling~~ $1.6 million, net of taxes, and $225,000, net of taxes, respectively. The nine months ended September 30, 2017 also includes a net loss totaling $45,000, net of taxes, resulting from a write down on a banking center in the second quarter of 2017 and a gain on the sale of a banking center in the first quarter of 2017.

tax.

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’stax-equivalent net interest spread was ~~4.53%~~3.79% and ~~4.13%~~4.53% for the three months ended September 30, ~~2018~~2019 and September 30, ~~2017,~~2018, respectively, and ~~4.46%~~3.97% and ~~4.20%~~4.46% for the nine months ended September 30, ~~2018~~2019 and September 30, ~~2017,~~2018, respectively. The Company’stax-equivalent net interest margin, which is net interest income as a percentage of average interest-earning assets, was ~~4.74%~~4.12% and ~~4.29%~~4.74% for the three months ended September 30, ~~2018~~2019 and September 30, ~~2017,~~2018, respectively, and ~~was~~4.30% and 4.64% ~~and 4.35%~~ for the nine months ended September 30, ~~2018~~2019 and September 30, ~~2017,~~2018, respectively.

Net interest income totaled ~~$23.5~~$21.1 million for the three months ended September 30, ~~2018, an increase~~2019, a decrease of ~~$7.6~~$2.4 million, or ~~47.3%~~10.1%, compared to the three months ended September 30, ~~2017.~~2018. For the nine months ended September 30, ~~2018,~~2019 net interest income totaled ~~$69.4~~$64.7 million, ~~an increase~~a decrease of ~~$21.5~~$4.6 million, or ~~45.0%~~6.7%, compared to the nine months ended September 30, ~~2017. The addition of SMB’s interest-earning assets accounted~~2018. Interest income due to acquired loan discount accretion totaled $420,000 and $1.4 million for the ~~vast majority of the increase in both the three and nine-month periods~~quarters ended September 30, 2019 and September 30, 2018, ~~over~~respectively, and $2.5 million and $4.4 million for the ~~prior comparable periods.~~

nine months ended September 30, 2019 and September 30, 2018, respectively.

Acquired loan discount accretion for the third quarter of 2019 was reduced by $680,000 (pre-tax) due to the write-off of the Company's FDIC loss sharing indemnification receivable. The receivable represented the present value of expected

reimbursable losses on acquired loans covered by a FDIC loss sharing agreement. Loans covered by the agreement, which expires in March 2020, have performed better than originally projected, and the Company does not expect to incur any reimbursable losses during the remaining term of the loss sharing agreement. The loss sharing agreement was entered in connection with the Company's acquisition of certain assets and liabilities of Statewide Bank in a FDIC assisted transaction in 2010. The write-off the of FDIC loss sharing indemnification receivable impacted the Company's tax-equivalent net interest margin by 14 basis points for the quarter ended September 30, 2019 and by four basis points for the nine months ended September 30, 2019. During the first six months of 2019, amortization of the FDIC loss sharing indemnification receivable reduced net interest income by $293,000 (pre-tax).

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 (“TE”) yields are calculated using a marginal tax rate of 21% ~~for 2018~~.


	Three Months Ended September 30,
	2019										2018
	Average				Average Yield/		Average				Average Yield/
(dollars in thousands)	Balance		Interest		Rate ⁽¹⁾		Balance		Interest		Rate⁽¹⁾
Interest-earning assets:
Loans receivable⁽¹⁾
Originated loans	$	1,193,759	$	16,534	5.45	%	$	961,917	$	14,365	5.87	%
Acquired loans	504,287		7,028		5.49		669,922		9,753		5.74
Total loans receivable⁽¹⁾	1,698,046		23,562		5.46		1,631,839		24,118		5.82
Investment securities
Taxable	241,475		1,401		2.32		245,156		1,516		2.47
Tax-exempt (TE)	20,303		114		2.83		33,197		178		2.71
Total investment securities	261,778		1,515		2.36		278,353		1,694		2.50
Other interest-earning assets	58,878		397		2.68		47,759		297		2.47
Total interest-earning assets (TE)	2,018,702		$	25,474	4.98		1,957,951		$	26,109	5.27
Noninterest-earning assets	198,476						179,471
Total assets	$	2,217,178					$	2,137,422
Interest-bearing liabilities:
Deposits:
Savings, checking and money market	$	991,248	$	2,215	0.89	%	$	979,919	$	1,379	0.56	%
Certificates of deposit	392,214		1,835		1.86		350,308		933		1.06
Total interest-bearing deposits	1,383,462		4,050		1.16		1,330,227		2,312		0.69
Other borrowings	5,550		53		3.80		—		—		—
Short-term FHLB advances	22		—		2.45		1,423		6		1.78
Long term FHLB advances	51,144		230		1.80		62,786		281		1.79
Total interest-bearing liabilities	1,440,178		$	4,333	1.19		1,394,436		$	2,599	0.74
Noninterest-bearing liabilities	462,227						449,619
Total liabilities	1,902,405						1,844,055
Shareholders’ equity	314,773						293,367
Total liabilities and shareholders’ equity	$	2,217,178					$	2,137,422


Net interest-earning assets	$	578,524					$	563,515
Net interest spread (TE)			$	21,141	3.79	%			$	23,510	4.53	%
Net interest margin (TE)					4.12	%					4.74	%

⁽¹⁾Nonperforming loans are included in the respective average loan balances, net of deferred fees, discounts and ~~35% for 2017.~~

   Three Months Ended September 30,
   2018 2017
         Average       Average
   Average       Yield/ Average       Yield/
(dollars in thousands)
   Balance    Interest    Rate⁽¹⁾ Balance    Interest    Rate⁽¹⁾
Interest-earning assets:

Loans receivable⁽¹⁾

Originated loans
   $ 961,917    $ 14,365    5.87 % $ 917,056    $ 11,756    5.04 %
Acquired loans
   669,922    9,753    5.74 298,929    4,580    6.05









Total loans receivable⁽¹⁾
   1,631,839    24,118    5.82 1,215,985    16,336    5.29
Investment securities

Taxable
   245,156    1,516    2.47 182,411    983    2.16
Tax-exempt (TE)
   33,197    178    2.71 30,406    152    3.07









Total investment securities
   278,353    1,694    2.50 212,817    1,135    2.29
Other interest-earning assets
   47,759    297    2.47 44,941    194    1.72









Total interest-earning assets (TE)
   1,957,951    26,109    5.27 1,473,743    17,665    4.75



Noninterest-earning assets
   179,471       99,925





Total assets
   $ 2,137,422       $ 1,573,668    $





Interest-bearing liabilities:

Deposits:

Savings, checking and money market
   $ 979,919    $ 1,379    0.56 % $ 726,995    $ 682    0.37 %
Certificates of deposit
   350,308    933    1.06 297,168    714    0.95









Total interest-bearing deposits
   1,330,227    2,312    0.69 1,024,163    1,396    0.54
Short-term FHLB advances
   1,423    6    1.78 —      —      —
Long term FHLB advances
   62,786    281    1.79 66,630    313    1.88









Total interest-bearing liabilities
   1,394,436    2,599    0.74 1,090,793    1,709    0.62



Noninterest-bearing liabilities
   449,619       291,267





Total liabilities
   1,844,055       1,382,060
Shareholders’ equity
   293,367       191,608





Total liabilities and shareholders’ equity
   $ 2,137,422       $ 1,573,668





Net interest-earning assets
   $ 563,515       $ 382,950





Net interest spread (TE)
      $ 23,510    4.53 %    $ 15,956    4.13 %





Net interest margin (TE)
         4.74 %       4.29 %
loans in process. Acquired Loans were recorded at fair value upon acquisition and accrete interest income over the remaining lives of the respective loans.

   Nine Months Ended September 30,
   2018 2017
         Average       Average
   Average       Yield/ Average       Yield/
(dollars in thousands)
   Balance    Interest    Rate⁽¹⁾ Balance    Interest    Rate⁽¹⁾
Interest-earning assets:

Loans receivable⁽¹⁾

Originated loans
   $ 937,268    $ 39,707    5.61 % $ 909,068    $ 34,580    5.04 %
Acquired loans
   700,559    30,742    5.82 313,838    14,167    5.99









Total loans receivable⁽¹⁾
   1,637,827    70,449    5.70 1,222,906    48,747    5.28
Investment securities

Taxable
   238,694    4,355    2.43 174,936    2,807    2.14
Tax-exempt (TE)
   34,766    543    2.64 31,347    471    3.08









Total investment securities
   273,460    4,898    2.46 206,283    3,278    2.28
Other interest-earning assets
   71,963    1,063    1.97 34,206    403    1.57









Total interest-earning assets (TE)
   1,983,250    76,410    5.12 1,463,395    52,428    4.77



Noninterest-earning assets
   185,501       102,392





Total assets
   $ 2,168,751       $ 1,565,787    $





Interest-bearing liabilities:

Deposits:

Savings, checking and money market
   $ 994,336    $ 3,421    0.46 % $ 702,565    $ 1,582    0.30 %
Certificates of deposit
   360,194    2,720    1.01 288,037    1,956    0.91









Total interest-bearing deposits
   1,354,530    6,141    0.61 990,602    3,538    0.48
Short-term FHLB advances
   2,868    39    1.81 18,166    95    0.69
Long term FHLB advances
   65,666    877    1.78 71,754    972    1.81









Total interest-bearing liabilities
   1,423,064    7,057    0.66 1,080,522    4,605    0.57



Noninterest-bearing liabilities
   458,411       297,896





Total liabilities
   1,881,475       1,378,418
Shareholders’ equity
   287,276       187,369





Total liabilities and shareholders’ equity
   $ 2,168,751       $ 1,565,787





Net interest-earning assets
   $ 560,186       $ 382,873





Net interest spread (TE)
      $ 69,353    4.46 %    $ 47,823    4.20 %





Net interest margin (TE)
         4.64 %       4.35 %

⁽¹⁾	Nonperforming loans are included in the respective average loan balances, net of deferred fees, discounts and loans in process. Acquired Loans were recorded at fair value upon acquisition and accrete interest income over the remaining lives of the respective loans.

Nine Months Ended September 30,
2019 2018
Average Average
Yield/ Average Average
Yield/
(dollars in thousands) Balance Interest
Rate ⁽¹⁾
Balance Interest
Rate⁽¹⁾
Interest-earning assets:
Loans receivable⁽¹⁾
Originated loans $ 1,145,839 $ 47,318 5.47 % $ 937,268 $ 39,707 5.61 %
Acquired loans 525,509 23,254 5.87 700,559 30,741 5.82
Total loans receivable⁽¹⁾
1,671,348 70,572 5.59 1,637,827 70,448 5.70
Investment securities
Taxable 244,555 4,655 2.54 238,694 4,355 2.43
Tax-exempt (TE) 24,001 397 2.79 34,766 543 2.64
Total investment securities 268,556 5,052 2.56 273,460 4,898 2.46
Other interest-earning assets 56,808 1,140 2.68 71,963 1,063 1.97
Total interest-earning assets (TE) 1,996,712 $ 76,764 5.10 1,983,250 $ 76,409 5.12
Noninterest-earning assets 194,840 185,501
Total assets $ 2,191,552 $ 2,168,751
Interest-bearing liabilities:
Deposits:
Savings, checking and money market $ 986,623 $ 6,318 0.86 % $ 994,336 $ 3,421 0.46 %
Certificates of deposit 381,148 4,798 1.68 360,194 2,721 1.01
Total interest-bearing deposits 1,367,771 11,116 1.09 1,354,530 6,142 0.61
Other Borrowings 5,543 159 3.84 — — —
Short-term FHLB advances 22 — 2.58 2,868 39 1.81
Long term FHLB advances 55,466 751 1.80 65,666 877 1.78
Total interest-bearing liabilities 1,428,802 $ 12,026 1.13 1,423,064 $ 7,058 0.66
Noninterest-bearing liabilities 451,945 458,411
Total liabilities 1,880,747 1,881,475
Shareholders’ equity 310,805 287,276
Total liabilities and shareholders’ equity $ 2,191,552 $ 2,168,751
Net interest-earning assets $ 567,910 $ 560,186
Net interest spread (TE) $ 64,738 3.97 % $ 69,351 4.46 %
Net interest margin (TE) 4.30 % 4.64 %

⁽¹⁾Nonperforming loans are included in the respective average loan balances, net of deferred fees, discounts and loans in process. Acquired Loans were recorded at fair value upon acquisition and accrete interest income over the remaining lives of the respective loans.

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).

   For the Three Months Ended For the Nine Months Ended
   September 30, September 30,
   2018 Compared to 2017 2018 Compared to 2017
   Change Attributable To Change Attributable To
   Total    Total
   Increase    Increase
(dollars in thousands)
   Rate Volume (Decrease) Rate    Volume (Decrease)
Interest income:

Loans receivable
   $ 1,877 $ 5,905 $ 7,782 $ 4,509    $ 17,193 $ 21,702
Investment securities
   158 401 559 399    1,221 1,620
Other interest-earning assets
   88 15 103 159    501 660




Total interest income
   2,123 6,321 8,444 5,067    18,915 23,982




Interest expense:

Savings, checking and money market accounts
   440 257 697 1,073    766 1,839
Certificates of deposit
   84 135 219 247    517 764
FHLB advances
   (11 ) (15 ) (26 ) 76    (227 ) (151 )




Total interest expense
   513 377 890 1,396    1,056 2,452




Increase (decrease) in net interest income
   $ 1,610 $ 5,944 $ 7,554 $ 3,671    $ 17,859 $ 21,530

Three Months Ended September 30, Nine Months Ended September 30,
2019 Compared to 2018 2019 Compared to 2018
Change Attributable To Change Attributable To
Total
Increase Total
Increase
(dollars in thousands) Rate Volume (Decrease) Rate Volume (Decrease)
Interest income:
Loans receivable $ (1,444) $ 888 $ (556) $ (1,215) $ 1,339 $ 124
Investment securities (76) (103) (179) 133 21 154
Other interest-earning assets 34 66 100 346 (269) 77
Total interest income (1,486) 851 (635) (736) 1,091 355
Interest expense:
Savings, checking and money market accounts 806 30 836 2,915 (18) 2,897
Certificates of deposit 748 154 902 1,866 211 2,077
Other borrowings 27 26 53 80 79 159
FHLB advances 2 (59) (57) (49) (116) (165)
Total interest expense 1,583 151 1,734 4,812 156 4,968
Increase (decrease) in net interest income $ (3,069) $ 700 $ (2,369) $ (5,548) $ 935 $ (4,613)

Provision for Loan Losses –For the quarter ended September 30, ~~2018,~~2019, the Company recorded a provision for loan losses of ~~$786,000, which was 19.1% higher than~~$1.1 million, an increase of $360,000, or 45.8%, compared to the ~~$660,000~~$786,000 recorded for the ~~same~~comparable period in ~~2017.~~2018. For the nine months ended September 30, ~~2018,~~2019, the provision for loan losses totaled $2.3 million, ~~which was 108.7% higher than the $1.1~~a decrease of $30,000, or 1.3%, compared to $2.3 million recorded for the same period in 2017. The increase in provision for the nine-month period ended September 30, 2018 over the comparable period in the prior year resulted primarily due to growth in the organic loan portfolio and a $1.2 million increase in net loan charge-offs during the 2018 period, which was primarily driven by two commercial and industrial loan relationships.

2018.

The Company recorded net loan charge-offs of ~~$15,000~~$787,000 during the third quarter of ~~2018,~~2019, compared to ~~$246,000~~$15,000 of net loan charge-offs in the third quarter of ~~2017. The~~2018. For the nine months ended September 30, 2019 and September 30, 2018, the Company recorded net loan charge-offs of $1.1 million and $1.4 million, ~~during the nine months ended September 30, 2018 and net loan charge-offs of $204,000 for the nine months ended September 30, 2017.~~ respectively.

The increase in provision and net loan charge-offs for the ~~nine months~~quarter ended September 30, 2019 over the comparable period in 2018 ~~resulted~~was primarily ~~from two~~due to a previously recognized $6.4 million non-performing commercial loan ~~relationships identified as problem credits in prior periods.~~

Asrelationship which filed for bankruptcy during the third quarter of 2019.

2018, respectively.

Noninterest Income –~~The Company’s noninterest~~ Noninterest income was ~~$3.3~~$4.8 million for the quarter ended September 30, ~~2018, $1.0~~2019, an increase of $1.4 million, or ~~45.7%~~42.9%, ~~higher than~~compared to the ~~$2.3~~$3.3 million earned for the same period in ~~2017. The increase for the comparative quarters resulted~~2018. Noninterest income increased primarily ~~from additional service fees and charges and bank card fees~~ due to the ~~SMB acquisition (up $582,000 and $392,000, respectively) and an~~ increase in income from bank-owned life insurance. The Company received a non-taxable BOLI benefit of ~~$151,000 in other income, driven primarily by recoveries on~~$1.2 million following the ~~Company’s acquired loan portfolio.~~

death of a former employee during the third quarter of 2019.

Noninterest income ~~was $10.2~~increased $748,000, or 7.4%, to $10.9 million for the nine months ended September 30, ~~2018, $2.9~~2019, compared to $10.2 million ~~or 39.6%, higher than the $7.3 million earned~~ for the ~~same~~comparable period in 2018. Noninterest income increased over the comparable nine-month period primarily due to the third quarter 2019 life insurance benefit mentioned above, which was partially offset by asset write-downs of ~~2017. The nine months~~$347,000 (pre-tax) recorded in the second quarter of 2019.

Noninterest Expense – Noninterest expense increased $914,000, or 5.8%, to $16.6 million for the quarter ended September 30, ~~2017~~

~~included a net loss of $69,000 resulting from a $449,000(pre-tax)~~ ~~write down on a closed banking center in Vicksburg, Mississippi and a $380,000(pre-tax)~~ ~~gain on the sale of a banking center. The increase for the comparative nine-month periods resulted primarily from additional service fees and charges and bank card fees due primarily~~2019, compared to ~~the SMB acquisition (up $1.8 million and $1.2 million, respectively), which were partially offset by decreases in gains on the sale of mortgage loans (down $305,000).~~

~~Noninterest Expense –~~~~The Company’s noninterest expense was~~ $15.7 ~~million for the three months ended September 30, 2018, $4.4 million, or 38.4%, higher than the $11.3~~ million recorded for the same period in ~~2017.~~2018. Noninterest expense increased over the comparable quarter primarily due to the increase in compensation and benefits (up $938,000, or 10.1%). The increase in ~~noninterest expense is~~compensation and benefits was primarily driven by elevated employee health care costs, routine annual salary adjustments and $287,000 (pre-tax) of costs related ~~primarily~~ to the ~~growth~~departure of ~~the Company’s employee base, higher occupancy and data processing costs due to the SMB acquisition.~~

a former executive.

Noninterest expense ~~was $47.6~~increased $245,000, or 0.5%, to $47.9 million for the nine months ended September 30, ~~2018, $14.2 million, or 42.4%, higher than the $33.4~~2019, compared to $47.6 million for the same period ~~of 2017. As described above,~~in 2018. Noninterest expense increased over the ~~increase is related~~comparable periods primarily due to ~~the growth of the Company’s employee base, higher~~increases in compensation and benefits (up $1.5 million, or 5.4%) and occupancy ~~and data processing costs~~expenses (up $350,000, or 6.9%), partially offset by declines in certain other noninterest expense categories due to the ~~SMB acquisition. Noninterest expense includes~~absence of merger-related expenses ~~totaling $2.0 million(pre-tax)~~ ~~for~~in 2019. In addition to the ~~nine months ended September 30, 2018. In comparison,~~$287,000 (pre-tax) in compensation and benefits related to the departure of a former executive during the third quarter of 2019, noninterest expense for the nine months ended September 30, ~~2017 includes $247,000~~2019 included $291,000 (pre-tax) ~~in merger related expenses.~~

of occupancy costs to terminate an office lease during the second quarter of 2019. Noninterest expense for the nine months ended September 30, 2018 included merger-related expenses of $2.0 million (pre-tax).

Income Taxes– For the quarters ended September 30, ~~2018~~2019 and ~~September 30, 2017,~~2018, the Company incurred income tax expense of $1.3 million and $2.1 million, ~~and $2.2 million,~~ respectively. ~~The~~For the same periods, the Company’s effective tax rate was ~~20.3%~~16.0% and ~~34.5%~~20.3%, respectively. Income tax expense decreased over the comparable quarters primarily due to the increase in non-taxable earnings from bank-owned life insurance during the third ~~quarters~~quarter of ~~2018 and 2017, respectively.~~ 2019.

For the nine months ended September 30, ~~2018~~2019 and September 30, ~~2017,~~2018, the Company incurred income tax expense of $4.2 million and $6.1 million, ~~and $7.0 million,~~ respectively. ~~The lower~~For the same periods, the Company's effective tax rate ~~recorded in 2018~~ was ~~the result of the Tax Cuts~~16.4% and ~~Jobs Act of 2017 (the “Tax Act”).~~20.6%, respectively. The ~~Tax Act reduced the federal corporate statutory tax rate from 35% to 21%. Differences between the~~ effective tax rate decreased over the comparable nine-month periods primarily due to elevated levels of stock option exercises and ~~the statutory tax rate primarily relate to variances~~an increase in ~~items that are~~non-taxable or~~non-deductible~~ ~~(e.g., state tax,tax-exempt~~ ~~income, merger-related expenses, etc.).~~

earnings from bank-owned life insurance during 2019.


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 Form10-K filed with the SEC for the year ended December 31, ~~2017,~~2018, under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Asset/Liability Management and Market Risk”. Additional information at September 30, ~~2018~~2019 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 Rules13a-15(e) and15d-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 Rules13a-15(f) and15(d)-15(f) under the Securities Exchange Act of 1934) occurred during the third quarter of ~~2018~~2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

~~Item~~1.

~~Legal Proceedings~~.

~~Not applicable.~~

~~Item1A.~~
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 Form10-K for the year ended December 31, ~~2017~~2018 filed with the Securities and Exchange Commission.

~~Item~~2.
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⁾
July 1 – July 31, 2018
   —      $ —      —      365,892
August 1 – August 31, 2018
   7,206    45.97    7,206    358,686
September 1 – September 30, 2018
   —      —      —      358,686








Total
   7,206    $ 45.97    7,206    358,686


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⁾
July 1 – July 31, 2019	32,925	$	36.89	32,925	555,964
August 1 – August 31, 2019	49,553	36.50		49,553	506,411
September 1 – September 30, 2019	41,424	38.64		41,424	464,987
Total	123,902	$	37.32	123,902	464,987

⁽¹⁾On April 26, 2016, the Company announced a stock repurchase program (the “2016 Repurchase Program”). During the quarter ended September 30, 2019, the Company completed the remaining share repurchases under the 2016 Repurchase Program. On August 28, 2019, the Company announced a new stock repurchase program (the "2019 Repurchase Plan"). Under the 2019 Repurchase Plan, the Company may purchase up to $470,000 shares, or approximately 5% of the its common stock outstanding, through open market or privately negotiated transactions.

⁽¹⁾

On June 7, 2013, the Company announced the commencement of a stock repurchase program. Under the 2013 plan, the Company was able to repurchase 370,000 shares, or approximately 5% of its common stock outstanding, through open market or privately negotiated transactions. On April 26, 2016, the Company announced a new stock repurchase program. Under the 2016 plan, the Company can repurchase up to 365,000 shares, or approximately 5% of its common stock outstanding at the time of adoption, through open market or privately negotiated transactions.

Item3.

Defaults Upon Senior Securities.

None.

~~Item~~4.
Item 4.			Mine Safety Disclosures.

None.

~~Item~~5.
Item 5.			Other Information.

None.


Item 6.			Exhibits and Financial Statement Schedules.


No.			Description

~~No.~~ 31.1		~~Description~~

~~31.1~~	Rule13(a)-14(a) Certification of the Chief Executive Officer

31.2			Rule13(a)-14(a) Certification of the Chief Financial Officer

32.0			Section 1350 Certification

101.INS			XBRL Instance Document

101.SCH			XBRL Taxonomy Extension Schema Document

101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB			XBRL Taxonomy Extension Label Linkbase Document

101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF			XBRL Taxonomy Extension Definitions 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.

November ~~7, 2018~~8, 2019

By:

/s/ John W. Bordelon

John W. Bordelon

President, Chief Executive Officer and Director

November ~~7, 2018~~8, 2019

By:

/s/ Joseph B. Zanco

Joseph B. Zanco

Executive Vice President and Chief Financial Officer

November ~~7, 2018~~8, 2019

By:

/s/ Mary H. Hopkins

Mary H. Hopkins

Home Bank, N.A. ~~First~~Senior Vice President and Director of Financial Management


	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
*(Dollars in thousands, except per share data)*	2018			2017			2018		2017
Interest Income
Loans, including fees	$	24,118		$	16,336		$	70,449	$	48,747
Investment securities:
Taxable interest		1,516			983			4,355		2,807
Tax-exempt interest		178			152			543		471
Other investments and deposits		297			194			1,063		403

Total interest income		26,109			17,665			76,410		52,428

Interest Expense
Deposits		2,312			1,396			6,141		3,538
Short-term Federal Home Loan Bank advances		6			—			39		95
Long-term Federal Home Loan Bank advances		281			313			877		972

Total interest expense		2,599			1,709			7,057		4,605

Net interest income		23,510			15,956			69,353		47,823
Provision for loan losses		786			660			2,331		1,117

Net interest income after provision for loan losses		22,724			15,296			67,022		46,706

Noninterest Income
Service fees and charges		1,638			1,056			4,812		2,983
Bank card fees		1,110			718			3,405		2,168
Gain on sale of loans, net		206			303			614		919
Income from bank-owned life insurance		166			121			490		361
(Loss) gain on sale of assets, net		(68	)		(43	)		77		(147	)
Other income		289			138			768		999

Total noninterest income		3,341			2,293			10,166		7,283

Noninterest Expense
Compensation and benefits		9,328			7,062			27,492		20,730
Occupancy		1,661			1,219			5,056		3,711
Marketing and advertising		286			287			852		802
Data processing and communication		1,804			928			5,827		3,076
Professional services		265			407			856		819
Forms, printing and supplies		180			119			811		410
Franchise and shares tax		362			193			1,091		587
Regulatory fees		455			317			1,177		952
Foreclosed assets, net		58			(70	)		247		(230	)
Other expenses		1,297			879			4,199		2,565

Total noninterest expense		15,696			11,341			47,608		33,422

Income before income tax expense		10,369			6,248			29,580		20,567
Income tax expense		2,107			2,158			6,079		6,985

Net Income	$	8,262		$	4,090		$	23,501	$	13,582

Earnings per share:
Basic	$	0.91		$	0.58		$	2.60	$	1.95

Diluted	$	0.89		$	0.56		$	2.53	$	1.88

Cash dividends declared per common share	$	0.19		$	0.14		$	0.51	$	0.41


															Accumulated
			Additional			Unallocated			Unallocated						Other
	Common		Paid-in			Common Stock			Common Stock			Retained			Comprehensive
*(Dollars in thousands, except share and per share data)*	Stock		Capital			Held by ESOP			Held by RRP			Earnings			Income (Loss)			Total
Balance, December 31, 2016	$	74	$	79,426		$	(4,196	)	$	(120	)	$	104,647		$	12		$	179,843

Net income													13,582						13,582
Other comprehensive income																67			67
Purchase of Company’s common stock at cost, 1,233 shares		—		(12	)								(36	)					(48	)
Cash dividends declared, $0.41 per share		—											(3,028	)					(3,028	)
Common stock issued under incentive plans, net of shares surrendered in payment, including tax benefit 7,905 shares		—		20									(35	)					(15	)
Exercise of stock options		—		650															650
RRP shares released for allocation				(6	)					14									8
ESOP shares released for allocation				915			268												1,183
Share-based compensation cost				383															383

Balance, September 30, 2017	$	74	$	81,376		$	(3,928	)	$	(106	)	$	115,130		$	79		$	192,625

Balance, December 31, 2017	$	94	$	165,341		$	(3,838	)	$	(84	)	$	117,313		$	(955	)	$	277,871

Net income													23,501						23,501
Other comprehensive loss																(3,388	)		(3,388	)
Reclassification of stranded tax effects in accumulated other comprehensive income⁽¹⁾													206			(206	)		—
Purchase of Company’s common stock at cost,8,283 shares		—		(83	)								(297	)					(380	)
Cash dividends declared, $0.51 per share													(4,810	)					(4,810	)
Common Stock issued under incentive plans, net of shares surrendered in payment, including tax benefit, 16,898 shares		—		139									(65	)					74
Exercise of stock options		1		897															898
RRP shares released for allocation				(7	)					7									—
ESOP shares released for allocation				1,109			267												1,376
Share-based compensation cost				546															546

Balance, September 30, 2018	$	95	$	167,942		$	(3,571	)	$	(77	)	$	135,848		$	(4,549	)	$	295,688


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
*(in thousands, except per share data)*	2018		2017		2018		2017
Numerator:
Net income available to common shareholders	$	8,262	$	4,090	$	23,501	$	13,582

Denominator:
Weighted average common shares outstanding		9,098		7,007		9,053		6,972
Effect of dilutive securities:
Restricted stock		19		3		21		3

Stock options		204		271		223		266

Weighted average common shares outstanding – assuming dilution		9,321		7,281		9,297		7,241

Basic earnings per common share	$	0.91	$	0.58	$	2.60	$	1.95

Diluted earnings per common share	$	0.89	$	0.56	$	2.53	$	1.88


(dollars in thousands)	September 30, 2019		December 31, 2018
Real estate loans:
One- to four-family first mortgage	$	432,964	$	450,363
Home equity loans and lines	81,835		83,976
Commercial real estate	719,392		640,575
Construction and land	188,879		193,597
Multi-family residential	56,733		54,455
Total real estate loans	1,479,803		1,422,966
Other loans:
Commercial and industrial	180,264		172,934
Consumer	47,375		53,854
Total other loans	227,639		226,788
Total loans	$	1,707,442	$	1,649,754


	As of September 30, 2018
	Originated Loans
*(dollars in thousands)*	Collectively Evaluated for Impairment		Individually Evaluated for Impairment		Acquired Loans		Total
Allowance for loan losses:
One- to four-family first mortgage	$	1,861	$	—	$	53	$	1,914
Home equity loans and lines		692		348		52		1,092
Commercial real estate		5,144		187		237		5,568
Construction and land		2,021		—		6		2,027
Multi-family residential		540		—		60		600
Commercial and industrial		2,253		862		575		3,690
Consumer		484		—		368		852

Total allowance for loan losses	$	12,995	$	1,397	$	1,351	$	15,743


	As of September 30, 2018
	Originated Loans
*(dollars in thousands)*	Collectively Evaluated for Impairment		Individually Evaluated for Impairment		Acquired Loans⁽¹⁾		Total
Loans:
One- to four-family first mortgage	$	221,283	$	—	$	235,514	$	456,797
Home equity loans and lines		52,734		885		32,786		86,405
Commercial real estate		417,338		5,944		206,015		629,297
Construction and land		139,869		—		34,704		174,573
Multi-family residential		43,219		—		12,934		56,153
Commercial and industrial		119,987		3,010		50,941		173,938
Consumer		37,929		—		17,927		55,856

Total loans	$	1,032,359	$	9,839	$	590,821	$	1,633,019


	As of December 31, 2017
	Originated Loans
*(dollars in thousands)*	Collectively Evaluated for Impairment		Individually Evaluated for Impairment		Acquired Loans		Total
Allowance for loan losses:
One- to four-family first mortgage	$	1,574	$	—	$	89	$	1,663
Home equity loans and lines		676		348		78		1,102
Commercial real estate		4,766		—		140		4,906
Construction and land		1,742		—		7		1,749
Multi-family residential		355		—		—		355
Commercial and industrial		2,721		1,625		184		4,530
Consumer		496		—		6		502

Total allowance for loan losses	$	12,330	$	1,973	$	504	$	14,807


	As of December 31, 2017
	Originated Loans
*(dollars in thousands)*	Collectively Evaluated for Impairment		Individually Evaluated for Impairment		Acquired Loans⁽¹⁾		Total
Loans:
One- to four-family first mortgage	$	199,199	$	—	$	278,012	$	477,211
Home equity loans and lines		53,349		925		40,171		94,445
Commercial real estate		369,740		22		241,596		611,358
Construction and land		124,963		—		52,300		177,263
Multi-family residential		30,540		—		20,438		50,978
Commercial and industrial		120,818		2,512		61,954		185,284
Consumer		39,854		—		21,402		61,256

Total loans	$	938,463	$	3,459	$	715,873	$	1,657,795


	For the Nine Months Ended September 30, 2018
*(dollars in thousands)*	Beginning Balance		Charge-offs			Recoveries		Provision		Ending Balance
Originated loans:
Allowance for loan losses:
One- to four-family first mortgage	$	1,574	$	(1	)	$	—	$	288	$	1,861
Home equity loans and lines		1,024		—			3		13		1,040
Commercial real estate		4,766		—			—		565		5,331
Construction and land		1,742		—			—		279		2,021
Multi-family residential		355		—			—		185		540
Commercial and industrial		4,346		(1,503	)		153		119		3,115
Consumer		496		(60	)		13		35		484

Total allowance for loan losses	$	14,303	$	(1,564	)		169	$	1,484	$	14,392


	Nine Months Ended September 30, 2019
(dollars in thousands)	Beginning Balance		Charge-offs		Recoveries		Provision		Ending Balance
Originated loans:
Allowance for loan losses:
One- to four-family first mortgage	$	1,937	$	(4)	$	—	$	6	$	1,939
Home equity loans and lines	1,031		(42)		10		60		1,059
Commercial real estate	5,756		(139)		—		375		5,992
Construction and land	2,280		—		—		(112)		2,168
Multi-family residential	522		—		—		50		572
Commercial and industrial	2,862		(744)		23		1,373		3,514
Consumer	472		(104)		34		48		450
Total allowance for loan losses	$	14,860	$	(1,033)	67		$	1,800	$	15,694
Acquired loans:
Allowance for loan losses:
One- to four-family first mortgage	$	199	$	—	$	—	$	265	$	464
Home equity loans and lines	48		—		—		(19)		29
Commercial real estate	369		—		—		454		823
Construction and land	5		—		—		(1)		4
Multi-family residential	28		—		—		(28)		—
Commercial and industrial	366		—		—		(30)		336
Consumer	473		(85)		—		(140)		248
Total allowance for loan losses	$	1,488	$	(85)	$	—	$	501	$	1,904


	Nine Months Ended September 30, 2018
(dollars in thousands)	Beginning Balance		Charge-offs		Recoveries		Provision		Ending Balance
Originated loans:
Allowance for loan losses:
One- to four-family first mortgage	$	1,574	$	(1)	$	—	$	288	$	1,861
Home equity loans and lines	1,024		—		3		13		1,040
Commercial real estate	4,766		—		—		565		5,331
Construction and land	1,742		—		—		279		2,021
Multi-family residential	355		—		—		185		540
Commercial and industrial	4,346		(1,503)		153		119		3,115
Consumer	496		(60)		13		35		484
Total allowance for loan losses	$	14,303	$	(1,564)	$	169	$	1,484	$	14,392
Acquired loans:
Allowance for loan losses:
One- to four-family first mortgage	$	89	$	—	$	—	$	(36)	$	53
Home equity loans and lines	78		—		—		(26)		52
Commercial real estate	140		—		—		97		237
Construction and land	7		—		—		(1)		6
Multi-family residential	—		—		—		60		60
Commercial and industrial	184		—		—		391		575
Consumer	6		—		—		362		368
Total allowance for loan losses	$	504	$	—	$	—	$	847	$	1,351
Total loans:
Allowance for loan losses:
One- to four-family first mortgage	$	1,663	$	(1)	$	—	$	252	$	1,914
Home equity loans and lines	1,102		—		3		(13)		1,092
Commercial real estate	4,906		—		—		662		5,568
Construction and land	1,749		—		—		278		2,027
Multi-family residential	355		—		—		245		600
Commercial and industrial	4,530		(1,503)		153		510		3,690
Consumer	502		(60)		13		397		852
Total allowance for loan losses	$	14,807	$	(1,564)	$	169	$	2,331	$	15,743


	For the Nine Months Ended
*(dollars in thousands)*	September 30, 2018			September 30, 2017
Balance at beginning of period	$	(9,303	)	$	(11,091	)
Accretion		1,849			2,495

Transfers from nonaccretable difference to accretable yield		(2,559	)		(1,208	)

Balance at end of period	$	(10,013	)	$	(9,804	)


	As of September 30, 2018
*(dollars in thousands)*	Current		Past Due Greater Than 30 Days		Nonaccrual TDRs		Total TDRs
Originated loans:
Real estate loans:
One- to four-family first mortgage	$	219	$	—	$	1,824	$	2,043
Home equity loans and lines		210		59		312		581
Commercial real estate		705		—		6,307		7,012
Construction and land		145		—		—		145
Multi-family residential		—		—		—		—

Total real estate loans		1,279		59		8,443		9,781

Other loans:
Commercial and industrial		—		—		466		466
Consumer		—		—		87		87

Total other loans		—		—		553		553

Total loans	$	1,279	$	59	$	8,996	$	10,334

Acquired loans:
Real estate loans:
One- to four-family first mortgage	$	210	$	—	$	—	$	210
Home equity loans and lines		—		—		68		68
Commercial real estate		—		—		—		—
Construction and land		—		—		—		—
Multi-family residential		—		—		—		—

Total real estate loans		210		—		68		278

Other loans:
Commercial and industrial		71		—		787		858
Consumer		8		—		12		20

Total other loans		79		—		799		878

Total loans	$	289	$	—	$	867	$	1,156

Total loans:
Real estate loans:
One- to four-family first mortgage	$	429	$	—	$	1,824	$	2,253
Home equity loans and lines		210		59		380		649
Commercial real estate		705		—		6,307		7,012
Construction and land		145		—		—		145
Multi-family residential		—		—		—		—

Total real estate loans		1,489		59		8,511		10,059

Other loans:
Commercial and industrial		71		—		1,253		1,324
Consumer		8		—		99		107

Total other loans		79		—		1,352		1,431

Total loans	$	1,568	$	59	$	9,863	$	11,490


	For the Nine Months Ended September 30,
	2018						2017
*(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		2	$	1,132	$	1,131		5	$	268	$	263
Home equity loans and lines		—		—		—		2		38		37
Commercial real estate		1		6,423		5,923		1		431		431
Construction and land		—		—		—		—		—		—
Multi-family residential		—		—		—		—		—		—
Commercial and industrial		2		738		676		1		1,439		1,146
Other consumer		3		20		20		2		60		57

Total		8	$	8,313	$	7,750		11	$	2,236	$	1,934


*(dollars in thousands)*	Fair Value		Valuation Technique	Unobservable Inputs	Range of Discounts		Weighted Average Discount
As of September 30, 2018:
Impaired loans	$	8,442	Third party appraisals and discounted cash flows	Collateral discounts and discount rates		0% - 80%		14	%

Repossessed assets	$	571	Third party appraisals, sales contracts, broker price opinions	Collateral discounts and estimated costs to sell		6% - 100%		42	%


			Fair Value Measurements at September 30, 2018
	Carrying
*(dollars in thousands)*	Amount		Total		Level 1		Level 2		Level 3
Financial Assets
Cash and cash equivalents	$	61,724	$	61,724	$	61,724	$	—	$	—
Interest-bearing deposits in banks		1,184		1,184		1,184		—		—
Investment securities available for sale		258,948		258,948		—		258,948		—
Investment securities held to maturity		10,942		10,868		—		10,868		—
Mortgage loans held for sale		3,470		3,470		—		3,470		—
Loans, net		1,617,276		1,590,380		—		1,581,938		8,442
Cash surrender value of BOLI		29,394		29,394		29,394		—		—

Financial Liabilities
Deposits	$	1,771,312	$	1,766,441	$	—	$	1,766,441	$	—
Short-term FHLB advances		41		41		41		—		—
Long-term FHLB advances		59,536		57,879		—		57,879		—

			Fair Value Measurements at December 31, 2017
	Carrying
*(dollars in thousands)*	Amount		Total		Level 1		Level 2		Level 3
Financial Assets
Cash and cash equivalents	$	150,418	$	150,418	$	150,418	$	—	$	—
Interest-bearing deposits in banks		2,421		2,421		2,421		—		—
Investment securities available for sale		234,993		234,993		—		234,993		—
Investment securities held to maturity		13,034		13,055		—		13,055		—
Mortgage loans held for sale		5,873		5,873		—		5,873		—
Loans, net		1,642,988		1,642,634		—		1,641,148		1,486
Cash surrender value of BOLI		28,904		28,904		28,904		—		—

Financial Liabilities
Deposits	$	1,866,227	$	1,864,735	$	—	$	1,864,735	$	—
Short-term FHLB advances		3,642		3,642		3,642		—		—
Long-term FHLB advances		68,183		67,143		—		67,143		—


	September 30,		December 31,		Increase/(Decrease)
*(dollars in thousands)*	2018		2017		Amount			Percent
Real estate loans:
One- to four-family first mortgage	$	456,797	$	477,211	$	(20,414	)		(4.3	)%
Home equity loans and lines		86,405		94,445		(8,040	)		(8.5	)
Commercial real estate		629,297		611,358		17,939			2.9
Construction and land		174,573		177,263		(2,690	)		(1.5	)
Multi-family residential		56,153		50,978		5,175			10.2

Total real estate loans		1,403,225		1,411,255		(8,030	)		(0.6	)

Other loans:
Commercial and industrial		173,938		185,284		(11,346	)		(6.1	)
Consumer		55,856		61,256		(5,400	)		(8.8	)

Total other loans		229,794		246,540		(16,746	)		(6.8	)

Total loans	$	1,633,019	$	1,657,795	$	(24,776	)		(1.5	)%


*(dollars in thousands)*	Available for Sale			Held to Maturity
Balance, December 31, 2017	$	234,993		$	13,034
Purchases		67,539			—
Sales		—			—
Principal maturities, prepayments and calls		(38,016	)		(1,855	)
Amortization of premiums and accretion of discounts		(1,279	)		(237	)
Decrease in market value		(4,289	)		—

Balance, September 30, 2018	$	258,948		$	10,942


	Actual					Minimum Capital Required – Basel IIIPhase-In Schedule					Minimum Capital Required – Basel III FullyPhased-In					To Be Well Capitalized Under Prompt Corrective Action Provisions
(dollars in thousands)	Amount		Ratio			Amount		Ratio			Amount		Ratio			Amount		Ratio
Bank:
Common equity Tier 1 capital (to risk-weighted assets)	$	221,952		13.91	%	$	101,713		6.375	%	$	111,685		7.00	%	$	103,707		6.50	%
Tier 1 risk-based capital		221,952		13.91			125,645		7.875			135,617		8.50			127,640		8.00
Total risk-based capital		237,695		14.90			157,555		9.875			167,527		10.50			159,550		10.00
Tier 1 leverage capital		221,952		10.73			82,725		4.00			82,725		4.00			103,406		5.00


	Three Months Ended September 30,										Nine Months Ended September 30,
	2019 Compared to 2018										2019 Compared to 2018
	Change Attributable To										Change Attributable To
					Total Increase						Total Increase
(dollars in thousands)	Rate		Volume		(Decrease)		Rate		Volume		(Decrease)
Interest income:
Loans receivable	$	(1,444)	$	888	$	(556)	$	(1,215)	$	1,339	$	124
Investment securities	(76)		(103)		(179)		133		21		154
Other interest-earning assets	34		66		100		346		(269)		77
Total interest income	(1,486)		851		(635)		(736)		1,091		355
Interest expense:
Savings, checking and money market accounts	806		30		836		2,915		(18)		2,897
Certificates of deposit	748		154		902		1,866		211		2,077
Other borrowings	27		26		53		80		79		159
FHLB advances	2		(59)		(57)		(49)		(116)		(165)
Total interest expense	1,583		151		1,734		4,812		156		4,968
Increase (decrease) in net interest income	$	(3,069)	$	700	$	(2,369)	$	(5,548)	$	935	$	(4,613)


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⁾
July 1 – July 31, 2018		—	$	—		—		365,892
August 1 – August 31, 2018		7,206		45.97		7,206		358,686
September 1 – September 30, 2018		—		—		—		358,686

Total		7,206	$	45.97		7,206		358,686