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What changed in HOME BANCORP, INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of HOME BANCORP, INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+191 added−182 removedSource: 10-K (2024-03-08) vs 10-K (2023-03-09)

Top changes in HOME BANCORP, INC.'s 2023 10-K

191 paragraphs added · 182 removed · 138 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

15 edited+6 added−3 removed103 unchanged
Biggest changeThe Community Reinvestment Act requires all institutions insured by the Federal Deposit Insurance Corporation to publicly disclose their rating. The Bank received an “Outstanding” Community Reinvestment Act rating in its most recent federal examination. Limitations on Dividends . OCC regulations impose various restrictions on the ability of the Bank to pay dividends.
Biggest changeThe Bank cannot predict the impact the changes to the CRA will have on its operations at this time. The Community Reinvestment Act requires all institutions insured by the Federal Deposit Insurance Corporation to publicly disclose their rating. The Bank received an “Outstanding” Community Reinvestment Act rating in its most recent federal examination. Limitations on Dividends .
Additionally, financial institutions generally may not disclose consumer account numbers to any nonaffiliated third party for use in telemarketing, direct mail marketing or other marketing through electronic mail to consumers. The Bank has established policies and procedures designed to safeguard its customers’ personal financial information and to ensure compliance with applicable privacy laws. 7
Additionally, financial institutions generally may not disclose consumer account numbers to any nonaffiliated third party for use in telemarketing, direct mail marketing or other marketing through electronic mail to consumers. The Bank has established policies and procedures designed to safeguard its customers’ personal financial information and to ensure compliance with applicable privacy laws.
In addition, undercapitalized institutions are subject to various regulatory restrictions, and the appropriate federal banking agency also may take any number of discretionary supervisory actions. As of December 31, 2022, the Bank was deemed a well-capitalized institution for purposes of the above regulations and as such is not subject to the above mentioned restrictions.
In addition, undercapitalized institutions are subject to various regulatory restrictions, and the appropriate federal banking agency also may take any number of discretionary supervisory actions. As of December 31, 2023, the Bank was deemed a well-capitalized institution for purposes of the above regulations and as such is not subject to the above mentioned restrictions.
The Bank, which is headquartered in Lafayette, Louisiana and is a wholly-owned subsidiary of the Company, currently conducts business through 43 banking offices in the Acadiana, Baton Rouge, Greater New Orleans and Northshore (of Lake Pontchartrain) regions of south Louisiana, the Natchez region of west Mississippi and Houston region of Texas.
The Bank, which is headquartered in Lafayette, Louisiana and is a wholly-owned subsidiary of the Company, currently conducts business through 42 banking offices in the Acadiana, Baton Rouge, Greater New Orleans and Northshore (of Lake Pontchartrain) regions of south Louisiana, the Natchez region of west Mississippi and Houston region of Texas.
The Bank currently is subject to Sections 22(g) and (h) of the Federal Reserve Act, and as of December 31, 2022 was in compliance with the above restrictions. Consumer Financial Services.
The Bank currently is subject to Sections 22(g) and (h) of the Federal Reserve Act, and as of December 31, 2023 was in compliance with the above restrictions. Consumer Financial Services.
The Bank currently operates 19 banking offices in Acadiana, four banking offices in Baton Rouge, six banking offices in the Greater New Orleans area, six banking offices in the Northshore region, three banking offices in Natchez, and five banking offices in the Houston area.
The Bank currently operates 18 banking offices in Acadiana, four banking offices in Baton Rouge, six banking offices in the Greater New Orleans area, six banking offices in the Northshore region, three banking offices in Natchez, and five banking offices in the Houston area.
Current OCC capital standards require these institutions to satisfy a common equity Tier 1 capital requirement, a leverage capital requirement and a risk-based capital requirement. The common equity Tier 1 capital component generally consists of retained earnings and common stock instruments and must equal at least 4.5% of risk-weighted assets.
Current OCC capital standards require institutions such as the Bank to satisfy a common equity Tier 1 capital requirement, a leverage capital requirement and a risk-based capital requirement. The common equity Tier 1 capital component generally consists of retained earnings and common stock instruments and must equal at least 4.5% of risk-weighted assets.
As of December 31, 2022, the Bank had $8.5 million in FHLB stock, which was in compliance with this requirement. Federal Reserve System . The FRB requires all depository institutions to maintain reserves against their transaction accounts and non-personal time deposits. Effective March 26, 2020, the Federal Reserve Board reduced reserve requirement ratios to zero percent. Privacy and Cyber Security.
As of December 31, 2023, the Bank had $11.1 million in FHLB stock, which was in compliance with this requirement. Federal Reserve System . The FRB requires all depository institutions to maintain reserves against their transaction accounts and non-personal time deposits. Effective March 26, 2020, the Federal Reserve Board reduced reserve requirement ratios to zero percent. Privacy and Cyber Security.
Information on our website should not be considered a part of this Annual Report on Form 10-K. Human Capital Resources At December 31, 2022, we had 475 full-time employees and nine part-time employees. None of our employees are represented by a collective bargaining group, and we believe that the Company's relationship with its employees is good.
Information on our website should not be considered a part of this Annual Report on Form 10-K. Human Capital Resources At December 31, 2023, we had 467 full-time employees and ten part-time employees. None of our employees are represented by a collective bargaining group, and we believe that the Company's relationship with its employees is good.
No institution may pay a dividend if it is in default on its federal deposit insurance assessment. As of December 31, 2022, assessment rates ranged from three basis points to 30 basis points for all institutions, subject to adjustments for unsecured debt issued by the institution, unsecured debt issued by other FDIC-insured institutions, and brokered deposits held by the institution.
No institution may pay a dividend if it is in default on its federal deposit insurance assessment. As of December 31, 2023, assessment rates ranged from five basis points to 32 basis points for all institutions, subject to adjustments for unsecured debt issued by the institution, unsecured debt issued by other FDIC-insured institutions, and brokered deposits held by the institution.
The Bank generally may pay dividends during any calendar year in an amount up to 100% of net income for the year-to-date plus retained net income for the two preceding years, so long as it is well-capitalized after the distribution.
OCC regulations impose various restrictions on the ability of the Bank to pay dividends. The Bank generally may pay dividends during any calendar year in an amount up to 100% of net income for the year-to-date plus retained net income for the two preceding years, so long as it is well-capitalized after the distribution.
Federal law provides the federal banking regulators with substantial enforcement powers. The OCC’s enforcement authority includes, among other things, the ability to assess civil money penalties, to issue cease and desist or removal orders and to initiate injunctive actions. In general, these enforcement actions may be initiated for violations of laws and regulations and unsafe or unsound practices.
The OCC’s enforcement authority includes, among other things, the ability to assess civil money penalties, to issue cease and desist or removal orders and to initiate injunctive actions. In general, these enforcement actions may be initiated for violations of laws and regulations and unsafe or unsound practices.
At December 31, 2022, the Bank exceeded all of its regulatory capital requirements, with Tier 1, Tier 1 common equity, Tier 1 common equity (to risk-weighted assets) and total risk-based capital ratios of 10.43%, 12.43%, 12.43% and 13.63%, respectively.
At December 31, 2023, the Bank exceeded all of its regulatory capital requirements, with Tier 1, Tier 1 common equity, Tier 1 common equity (to risk-weighted assets) and total risk-based capital ratios of 10.98%, 12.98%, 12.98% and 14.23%, respectively.
In the last several years, the Company has experienced heightened regulatory requirements and scrutiny following the global financial crisis and the enactment in 2010 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). Resulting reforms have caused the Company’s compliance and risk management processes, and the costs thereof, to increase.
The Company has experienced heightened regulatory requirements and scrutiny following the global financial crisis and the enactment in 2010 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). Resulting reforms have caused the Company’s compliance and risk management processes, and the costs thereof, to increase. Federal law provides the federal banking regulators with substantial enforcement powers.
As of December 31, 2022, the Bank had $176.2 million of FHLB advances and $937.4 million available on its line of credit with the FHLB.
As of December 31, 2023, the Bank had $192.7 million of FHLB advances and $1.0 billion available on its line of credit with the FHLB.
Removed
In January 2022, we sold the Bank's former branch office in Vicksburg, Mississippi, and transferred approximately $2.8 million in loans and $14.7 million in deposit liabilities from that office.
Added
On October 24, 2023, the federal banking agencies, including the OCC issued a final rule designed to strengthen and modernize regulations implementing the CRA.
Removed
On December 14, 2021, the OCC issued a final rule to rescind its June 2020 CRA rule and replace it with a rule based on the rules adopted jointly by the federal banking agencies in 1995, as amended.
Added
The changes are designed to encourage banks to expand access to credit, investment and banking services in low- and moderate-income communities, adapt to changes in the banking industry including mobile and internet banking, provide greater clarity and consistency in the application of the CRA regulations and tailor CRA evaluations and data collection to bank size and type.
Removed
The final rule aligns the OCC's CRA rule with the rules of the Federal Reserve and the FDIC and thereby, according to the OCC, facilitates the ongoing interagency work to modernize the CRA framework and create consistency for all insured depository institutions.
Added
The federal banking agencies recently adopted rules providing for new notification requirements for banking organizations and their service providers for significant cybersecurity incidents.
Added
Specifically, the new rules require a banking organization to notify its primary federal regulator as soon as possible, and no later than 36 hours after, the banking organization 7 determines that a “computer-security incident” rising to the level of a “notification incident” has occurred.
Added
Notification is required for incidents that have materially affected or are reasonably likely to materially affect the viability of a banking organization’s operations, its ability to deliver banking products and services, or the stability of the financial sector.
Added
Service providers are required under the rule to notify affected banking organization customers as soon as possible when the provider determines that it has experienced a computer-security incident that has materially affected or is reasonably likely to materially affect the banking organization’s customers for four or more hours.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

25 edited+31 added−13 removed72 unchanged
Biggest changeOver the past several years, we have grown our branch system primarily through acquisitions of other financial institutions. Our ability to successfully acquire other institutions depends on our ability to identify, acquire and integrate such institutions into our franchise.
Biggest changeOur financial performance and future growth may be negatively affected if we are unable to successfully execute our growth plans, which may include additional acquisitions. Over the past several years, we have grown our branch system primarily through acquisitions of other financial institutions.
CECL also requires expected credit related losses for available for sale debt securities to be recorded through an allowance for credit losses, while non-credit related losses will continue to be recognized through other comprehensive income. The Company’s held to maturity debt securities are also required to utilize the CECL approach to estimate expected credit losses.
CECL requires expected credit related losses for available for sale debt securities to be recorded through an allowance for credit losses, while non-credit related losses will continue to be recognized through other comprehensive income. The Company’s held to maturity debt securities are also required to utilize the CECL approach to estimate expected credit losses.
Construction and land loans generally have a higher risk of loss than single-family residential mortgage loans due primarily to the critical nature of the initial estimates of a property’s value upon completion of construction compared to the estimated costs, including interest, of construction as well as other 8 assumptions.
Construction and land loans generally have a higher risk of loss than single-family residential mortgage loans due primarily to the critical nature of the initial estimates of a property’s value upon completion of construction compared to the estimated costs, including interest, of construction as well as other assumptions.
We have established an allowance for credit losses, which includes the allowance for loans losses and losses on unfunded lending commitments, based upon various assumptions and judgments about the collectability of our loan portfolio which we believe is adequate to offset expected losses on our existing financial assets.
We have established an allowance for credit losses, which includes the allowance for loans losses and losses on unfunded lending commitments, based upon various assumptions and judgments about the collectability of our loan portfolio which we 10 believe is adequate to offset expected losses on our existing financial assets.
Some of our larger competitors have substantially greater resources, technological capabilities, lending limits, branch systems and a wider array of commercial banking services. Vigorous competition from both bank and non-bank organizations is expected to continue. 13 We operate in a highly regulated environment, and we may be adversely affected by changes in laws and regulations.
Some of our larger competitors have substantially greater resources, technological capabilities, lending limits, branch systems and a wider array of commercial banking services. Vigorous competition from both bank and non-bank organizations is expected to continue. 14 We operate in a highly regulated environment, and we may be adversely affected by changes in laws and regulations.
We had an additional $37.8 million in unfunded loan commitments to companies in the energy sector at such date. At December 31, 2022, $1.4 million of our loans in the energy sector were on nonaccrual status, and $1.0 9 million of our total allowance for loan losses was attributable to energy sector loans.
We had an additional $37.8 million in unfunded loan commitments to companies in the energy sector at such date. At December 31, 2023, $1.4 million of our loans in the energy sector were on nonaccrual status, and $1.0 million of our total allowance for loan losses was attributable to energy sector loans.
Although the Company attempts to mitigate risk by diversifying its borrower base, approximately $75.2 million, or 3.1% of the Company’s loan portfolio, at December 31, 2022 was comprised of loans to borrowers in the oil and gas industry (which is also referred to as the “energy sector”).
Although the Company attempts to mitigate risk by diversifying its borrower base, approximately $75.2 million, or 2.9% of the Company’s loan portfolio, at December 31, 2023 was comprised of loans to borrowers in the oil and gas industry (which is also referred to as the “energy sector”).
As of December 31, 2022, the largest outstanding balances of our commercial and industrial, multi-family residential and commercial real estate loans were $18.6 million, $11.0 million and $21.8 million respectively. If a large loan were to become non-performing, as we have experienced in the past, it can have a significant impact on our results of operations.
As of December 31, 2023, the largest outstanding balances of our commercial and industrial, multi-family residential and commercial real estate loans were $18.6 million, $10.6 million and $20.9 million respectively. If a large loan were to become non-performing, as we have experienced in the past, it can have a significant impact on our results of operations.
Furthermore, mergers and acquisitions involve a number of risks and challenges, including: (1) our ability to achieve planned synergies and to integrate the branches and operations we acquire and the internal controls and regulatory functions into our current operations and (2) the diversion of management’s attention from existing operations, which may adversely affect our ability to successfully conduct our business and negatively impact our financial results. 11 Our financial performance and future growth may be negatively affected if we are unable to successfully execute our growth plans, which may include additional acquisitions.
Furthermore, mergers and acquisitions involve a number of risks and challenges, including: (1) our ability to achieve planned synergies and to integrate the branches and operations we acquire and the internal controls and regulatory functions into our current operations and (2) the diversion of 12 management’s attention from existing operations, which may adversely affect our ability to successfully conduct our business and negatively impact our financial results.
As of December 31, 2022, our allowance for loan losses amounted to $29.3 million, or 1.21% of total loans and our total allowance for credit losses amounted to $31.4 million, or 1.29% of total loans. See Note 2 to the Consolidated Financial Statements for a detailed discussion of the Company's methodologies for estimating expected credit losses.
As of December 31, 2023, our allowance for loan losses amounted to $31.5 million, or 1.22% of total loans and our total allowance for credit losses amounted to $34.1 million, or 1.32% of total loans. See Note 2 to the Consolidated Financial Statements for a detailed discussion of the Company's methodologies for estimating expected credit losses.
Risks Related to Our Operational and Information Technology Systems A failure in our operational systems or infrastructure, or those of third parties, could impair our liquidity, disrupt our businesses, result in the unauthorized disclosure of confidential information, damage our reputation and cause financial losses.
Currently, we have no agreements or understandings with anyone regarding a future acquisition. Risks Related to Our Operational and Information Technology Systems A failure in our operational systems or infrastructure, or those of third parties, could impair our liquidity, disrupt our businesses, result in the unauthorized disclosure of confidential information, damage our reputation and cause financial losses.
If significant, sustained or repeated, a system failure or service denial could compromise our ability to operate effectively, damage our reputation, result in a loss of customer business and/or subject us to additional regulatory scrutiny and possible financial liability, any of which could have a material adverse effect on us. 12 Our third-party service providers may be vulnerable to unauthorized access, computer viruses, phishing schemes and other security breaches.
If significant, sustained or repeated, a system failure or service denial could compromise our ability to operate 13 effectively, damage our reputation, result in a loss of customer business and/or subject us to additional regulatory scrutiny and possible financial liability, any of which could have a material adverse effect on us.
We likely will expend additional resources to protect against the threat of such security breaches and computer viruses, or to alleviate problems caused by such security breaches or viruses.
Our third-party service providers may be vulnerable to unauthorized access, computer viruses, phishing schemes and other security breaches. We likely will expend additional resources to protect against the threat of such security breaches and computer viruses, or to alleviate problems caused by such security breaches or viruses.
See Notes 2 and 8 to the Consolidated Financial Statements for additional information concerning our goodwill and the required impairment test. Changes in accounting policies or in accounting standards could materially affect how we report our financial condition and results of operations. Our accounting policies are fundamental to the understanding of our financial condition and results of operations.
Changes in accounting policies or in accounting standards could materially affect how we report our financial condition and results of operations. Our accounting policies are fundamental to the understanding of our financial condition and results of operations.
Our decisions regarding the fair value of assets acquired could be inaccurate, which could materially and adversely affect our business, financial condition, results of operations and future prospects. 10 Management makes various assumptions and judgments about the collectability of acquired loan portfolios, including the creditworthiness of borrowers and the value of the real estate and other assets serving as collateral for the repayment of secured loans.
Management makes various assumptions and judgments about the collectability of acquired loan portfolios, including the creditworthiness of borrowers and the value of the real estate and other assets serving as collateral for the repayment of secured loans.
Generally, multi-family residential, commercial and industrial and commercial real estate lending involve a higher degree of risk than single-family residential lending due to a variety of factors.
Excluding PPP loans, our commercial and industrial loans increased by an aggregate of 116.6% over the same time period. Generally, multi-family residential, commercial and industrial and commercial real estate lending involve a higher degree of risk than single-family residential lending due to a variety of factors.
Risks Related to Our Market Areas Our business is geographically concentrated in south Louisiana, southeast Texas and west Mississippi, which are areas where the oil and gas industry has a significant presence.
The Company continues to monitor efforts and evaluate the impact of reference rate reform on its consolidated financial statements; however, the impact is not expected to be significant. 9 Risks Related to Our Market Areas Our business is geographically concentrated in south Louisiana, southeast Texas and west Mississippi, which are areas where the oil and gas industry has a significant presence.
While crude oil prices have rebounded since the Spring of 2020, g lobal markets for oil and gas were disrupted by the COVID-19 pandemic. Continued fluctuations in crude oil prices could adversely affect our operations and economic conditions in some of our markets during 2023 and future periods, which could adversely affect our future results of operations.
Continued fluctuations in crude oil prices could adversely affect our operations and economic conditions in some of our markets during 2024 and future periods, which could adversely affect our future results of operations.
If the Bank is forced to liquidate the collateral associated with such loans at values less than the remaining loan balance, it could have a significant impact on our results of operations. Risks Related to Market Interest Rates Changes in interest rates could have a material adverse effect on our operations.
If the Bank is forced to liquidate the collateral associated with such loans at values less than the remaining loan balance, it could have a significant impact on our results of operations. 8 Risks Related to Our Deposit Activities Municipal deposits are an important source of cost-effective funds for us, and a reduced level of such deposits may hurt our profits.
We have ceased originating LIBOR-based products effective December 2021 and transitioning all remaining LIBOR based products to an alternative benchmark over the next 18 months. The Company continues to monitor efforts and evaluate the impact of reference rate reform on its consolidated financial statements; however, the impact is not expected to be significant.
We have ceased originating LIBOR-based products effective December 2021 and transitioning all remaining LIBOR based products to an alternative benchmark over the next 18 months.
Our results of operations could be adversely affected if our analysis of pending or future acquisitions was not complete and correct or our integration efforts were not successful. Currently, we have no agreements or understandings with anyone regarding a future acquisition.
Our ability to successfully acquire other institutions depends on our ability to identify, acquire and integrate such institutions into our franchise. Our results of operations could be adversely affected if our analysis of pending or future acquisitions was not complete and correct or our integration efforts were not successful.
Risks Related to Our Lending Activities There are increased risks involved with commercial real estate, including multi-family residential, commercial and industrial and construction and land lending activities. Our lending activities include loans secured by commercial real estate and commercial and industrial loans.
Item 1A. Risk Factors. In analyzing whether to make or to continue an investment in our securities, investors should consider, among other factors, the following risk factors. Risks Related to Our Lending Activities There are increased risks involved with commercial real estate, including multi-family residential, commercial and industrial and construction and land lending activities.
Our commercial and industrial loans, multi-family residential loans, and commercial real estate loans increased by an aggregate of 118.5%, 84.7% and 79.9% respectively, from December 31, 2018 through December 31, 2022. Excluding PPP loans, our commercial and industrial loans increased by an aggregate of 114.6% over the same time period.
Our lending activities include loans secured by commercial real estate and commercial and industrial loans. Our commercial and industrial loans, multi-family residential loans, and commercial real estate loans increased by an aggregate of 119.6%, 95.5% and 65.0% respectively, from December 31, 2019 through December 31, 2023.
Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation or supervisory action, may have a material impact on our operations. Item 1B. Unresolved Staff Comments . Not applicable.
Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation or supervisory action, may have a material impact on our operations. Financial challenges at other banking institutions could lead to disruptive and destabilizing deposit outflows, as well as an increase in FDIC deposit premiums, which could negatively impact our profitability and results of operations.
In addition to commercial and industrial, multi-family residential loans, and commercial real estate, the Bank holds a significant portfolio of construction and land loans. As of December 31, 2022, the Bank’s construction and land loans amounted to $313.2 million, or 12.9% of our loan portfolio.
As of December 31, 2023, the Bank’s construction and land loans amounted to $340.7 million, or 13.2% of our loan portfolio.
Removed
Item 1A. Risk Factors. In analyzing whether to make or to continue an investment in our securities, investors should consider, among other factors, the following risk factors. Risks Related to the COVID-19 Pandemic The long-term macroeconomic effects of the COVID-19 pandemic and any future pandemic or epidemic could have an adverse impact on our financial performance and results of operations.
Added
As of December 31, 2023, commercial real estate mortgage loans comprised approximately 46.2% of our loan portfolio. Commercial real estate mortgage loans generally involve a greater degree of credit risk than residential real estate mortgage loans because they typically have larger balances and are more affected by adverse conditions in the economy.
Removed
Outbreaks of contagious disease, including COVID-19, or other adverse public health developments in the U.S. or worldwide could have a material adverse effect on our business, financial condition and results of operations.
Added
Because payments on loans secured by commercial real estate often depend upon the successful operation and management of the properties and the businesses which operate from within them, repayment of such loans may be affected by factors outside the borrower’s control, such as adverse conditions in the real estate market or the economy or changes in government regulations.
Removed
While many of the direct impacts of the COVID-19 pandemic have eased, the longer-term macroeconomic effects on global supply chains, inflation, labor shortages and wage increases continue to impact many industries, including the collateral underlying certain of our loans.
Added
In recent years, commercial real estate markets have been particularly impacted by the economic disruption resulting from the COVID-19 pandemic. The COVID-19 pandemic has also been a catalyst for the evolution of various remote work options which could impact the long-term performance of some types of office properties within our commercial real estate portfolio.
Removed
Moreover, with the potential for new strains of existing viruses to emerge, or other pandemics or epidemics, governments and businesses may re-impose aggressive measures to help slow its spread in the future.
Added
Accordingly, the federal banking regulatory agencies have expressed concerns about weaknesses in the current commercial real estate market.
Removed
Long-term macroeconomic effects from a pandemic or epidemic, including from supply and labor shortages, workforce reductions in response to challenging economic conditions, or shifts in demand for real estate may have an adverse impact on our portfolio which includes loans collateralized by office, hotel, and other asset classes that are particularly negatively impacted by such supply and labor issues.
Added
Failures in our risk management policies, procedures and controls could adversely affect our ability to manage this portfolio going forward and could result in an increased rate of delinquencies in, and increased losses from, this portfolio, which, accordingly, could have a material adverse effect on our business, financial condition and results of operations In addition to commercial and industrial, multi-family residential loans, and commercial real estate, the Bank holds a significant portfolio of construction and land loans.
Removed
The impact of such long-term effects may disproportionally affect certain asset classes and geographic areas.
Added
Municipal deposits are an important source of our cost-effective funds, and we intend to continue to solicit municipal deposits following the completion of the conversion and stock offering. As of December 31, 2023, the Bank held $175.7 million in municipal deposits, consisting of public funds on deposit from local government entities domiciled in the States of Louisiana, Mississippi and Texas.
Removed
For example, many businesses increasingly permit employees to work from home and make use of flexible work schedules, open workplaces, videoconferences and teleconferences, which could have a longer-term impact on the demand for both office space and hotel rooms for business travel, which could adversely affect our investments in assets secured by office or hotel properties.
Added
Given our use of these high-average balance municipal deposits as a source of spread income, our inability to retain such funds could have an adverse effect on our liquidity. In addition, our municipal deposits are primarily demand deposit accounts or short-term deposits and therefore are more volatile and sensitive to changes in interest rates.
Removed
While we believe the principal amount of our loans are generally adequately protected by underlying property value, there can be no assurance that we will realize the entire principal amount of certain investments.
Added
If we are forced to pay higher rates on our municipal deposits to retain those funds, or if we are unable to retain those funds, it could have an adverse effect our net income. Risks Related to Market Interest Rates Changes in interest rates could have a material adverse effect on our operations.
Removed
The full extent of the impact and effects of COVID-19, and any future pandemics or epidemics, will depend on future developments, including, among other factors, how rapidly variants develop, availability, acceptance and effectiveness of vaccines along with related travel advisories, quarantines and restrictions, the recovery time of the disrupted supply chains and industries, the impact of labor market interruptions, the impact of government interventions, and uncertainty with respect to the duration of the global economic slowdown.
Added
Actions by members of the Organization of Petroleum Exporting Countries (“OPEC”) can impact global crude oil production levels and lead to significant volatility in global oil supplies and market oil prices.
Removed
COVID-19, or any future pandemics or epidemics, and resulting impacts on the financial, economic and capital markets environment, and future developments in these and other areas present uncertainty and risk with respect to our performance, results of operations and ability to pay distributions.
Added
In recent years, decreased market oil prices compressed margins for many U.S. based oil producers, particularly those that utilize higher-cost production technologies such as hydraulic fracking and horizontal drilling, as well as oilfield service providers, energy equipment manufacturers and transportation suppliers, among others.
Removed
On January 1, 2020, the Company adopted ASC 326, Financial Instruments - Credit Losses, which introduced a new model known as CECL. The new standard significantly changed the impairment model for most financial assets that are measured at amortized cost, including off-balance sheet credit exposures, from an incurred loss model to an expected loss model.
Added
While crude oil prices have rebounded since the Spring of 2020, global markets for oil and gas were disrupted by the COVID-19 pandemic. The current wars in Ukraine and Israel also have impacted global oil supplies and caused further volatility in oil prices.
Removed
Our goodwill may be determined to be impaired at a future date depending on the results of periodic impairment tests. We test goodwill for impairment annually, or more frequently if necessary.
Added
Our decisions regarding the fair value of assets acquired could be inaccurate, which could materially and adversely affect our business, financial condition, results of operations and future prospects.
Removed
If the quoted market price of our common stock were to decline significantly and the total book value of the Company, including goodwill, exceeded its fair value, we could be required to write down the amount recorded for goodwill. This, in turn, would result in a charge to earnings and, thus, a reduction in shareholders’ equity.
Added
The fair value of our investment securities can fluctuate due to factors outside of our control. Factors beyond our control can significantly influence the fair value of securities in our portfolio and can cause potential adverse changes to the fair value of these securities.
Added
These factors include, but are not limited to, rating agency actions with respect to individual securities, defaults by the issuer or with respect to the underlying securities, and changes in market interest rates and continued instability in the capital markets.
Added
Any of these factors, among others, could cause credit losses and realized and/or unrealized losses in future periods and declines in other comprehensive income, which could materially and adversely affect our business, results of operations, financial condition and prospects.
Added
The process for determining whether impairment of a security is related to credit usually requires complex, subjective judgments about the future financial performance and liquidity of the issuer and any collateral underlying the security in order to assess the probability of receiving all contractual principal and interest payments on the security.
Added
Significant negative changes to valuations could result in credit losses on our securities portfolio, which could have an adverse effect on our financial condition or results of operations.
Added
As of December 31, 2023, we had $31.4 million of accumulated other comprehensive losses. 11 Impairment of investment securities, goodwill, other intangible assets, or deferred tax assets could require charges to earnings, which could result in a negative impact on our results of operations.
Added
In assessing whether the impairment of investment securities is related to a deterioration in credit factors, management considers the length of time and extent to which the fair value has been less than cost, the financial condition and near-term prospects of the issuer, and the intent and ability to retain our investment in the security for a period of time sufficient to allow for any anticipated recovery in fair value in the near term.
Added
Under current accounting standards, goodwill is not amortized but, instead, is subject to impairment tests on at least an annual basis or more frequently if an event occurs or circumstances change that reduce the fair value of a reporting unit below its carrying amount.
Added
Significant negative industry or economic trends, reduced estimates of future cash flows or disruptions to our business, could indicate that goodwill might be impaired. Our valuation methodology for assessing impairment requires management to make judgements and assumptions based on historical experience and to rely on projections of future operating performance.
Added
In the event that we conclude in a future assessment that all or a portion of our goodwill may be impaired, a non-cash charge for the amount of such impairment would be recorded to earnings. Such a charge would have no impact on tangible capital.
Added
At December 31, 2023, we had goodwill of $81.5 million, which represents approximately 22.2% of shareholders’ equity. See Notes 2 and 8 to the Consolidated Financial Statements for additional information concerning our goodwill and the required impairment test.
Added
In assessing the realizability of DTAs, management considers whether it is more likely than not that some portion or all of the DTAs will not be realized. Assessing the need for, or the sufficiency of, a valuation allowance requires management to evaluate all available evidence, both negative and positive, including the recent trend of quarterly earnings.
Added
Positive evidence necessary to overcome the negative evidence includes whether future taxable income in sufficient amounts and character within the carryback and carryforward periods is available under the tax law, including the use of tax planning strategies.
Added
When negative evidence (e.g., cumulative losses in recent years, history of operating loss or tax credit carryforwards expiring unused) exists, more positive evidence than negative evidence will be necessary. The impact of each of these impairment matters could have a material adverse effect on our business, results of operations, and financial condition.
Added
In March 2023, Silicon Valley Bank and Signature Bank experienced large deposit outflows, coupled with insufficient liquidity to meet withdrawal demands, resulting in the institutions being placed into FDIC receivership. Additionally in May 2023, First Republic Bank experienced similar circumstances which resulted in the institution being placed into FDIC receivership.
Added
The placement of these institutions into receivership has resulted in market disruption and increased concerns that diminished depositor confidence across the banking industry in general could lead to deposit outflows that could destabilize other institutions. At December 31, 2023, we had $75.8 million in cash and cash equivalents.
Added
Notwithstanding our significant liquidity, large deposit outflows could materially and adversely affect our financial condition and results of operations.
Added
Following the placement of Silicon Valley Bank and Signature Bank into FDIC receivership, the federal banking regulators also issued a joint statement providing that the losses to support the uninsured deposits of those banks would be recovered via a special assessment on banks.
Added
The announced special assessment, as well as any future additional special assessments, increases in assessment rates or required prepayments in FDIC insurance premiums, to the extent that they result in increased deposit insurance costs, would reduce our profitability. Item 1B. Unresolved Staff Comments . Not applicable.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeThe Bank owns 34 of its 43 banking offices. The Bank leases the land for one banking office in our Northshore market, and leases one banking office in Acadiana, Baton Rouge, Mississippi and Greater New Orleans, respectively and five banking centers in the Houston market.
Biggest changeThe Bank owns 33 of its 42 banking offices. The Bank leases the land for one banking office in our Northshore market, and leases one banking office in Acadiana, Baton Rouge, Mississippi and Greater New Orleans, respectively and five banking centers in the Houston market.
Item 2. Properties . We currently conduct business from 19 banking offices in Acadiana, four banking offices in Baton Rouge, six banking offices in Greater New Orleans, six banking offices in the Northshore (of Lake Pontchartrain) region of Louisiana, three banking offices in Natchez, Mississippi, and five banking offices in the Houston area.
Item 2. Properties . We currently conduct business from 18 banking offices in Acadiana, four banking offices in Baton Rouge, six banking offices in Greater New Orleans, six banking offices in the Northshore (of Lake Pontchartrain) region of Louisiana, three banking offices in Natchez, Mississippi, and five banking offices in the Houston area.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe Company’s purchases of its common stock made during the fourth quarter of 2022 (which were made pursuant to the 2021 Repurchase Plan) are set forth in the following table. 15 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 Plans or Programs October 1 - October 31, 2022 — $ — — 197,033 November 1 - November 30, 2022 — — — 197,033 December 1 - December 31, 2022 1,315 42.84 1,315 195,718 Total 1,315 $ 42.84 1,315 195,718 Item 6.
Biggest changeAs of December 31, 2023, 31,446 shares remain to be purchased under the Company's 2021 Repurchase Plan. 18 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 Plans or Programs October 1 - October 31, 2023 15,918 $ 32.53 15,918 437,062 November 1 - November 30, 2023 601 36.56 601 436,461 December 1 - December 31, 2023 15 38.51 15 436,446 Total 16,534 $ 32.68 16,534 436,446 Item 6.
Information used was obtained from S&P Global Market Intelligence, Charlottesville, Virginia. The Company assumes no responsibility for any errors or omissions in such information. The Company did not sell any of its equity securities during 2022 that were not registered under the Securities Act of 1933. For information regarding the Company’s equity compensation plans, see Item 12 .
Information used was obtained from S&P Global Market Intelligence, Charlottesville, Virginia. The Company assumes no responsibility for any errors or omissions in such information. The Company did not sell any of its equity securities during 2023 that were not registered under the Securities Act of 1933. For information regarding the Company’s equity compensation plans, see Item 12 .
The graph below represents $100 invested in our common stock at its closing price on December 31, 2017.
The graph below represents $100 invested in our common stock at its closing price on December 31, 2018.
(b) Not applicable. (c) On October 26, 2021, the Company announced the approval of a new repurchase program (the "2021 Repurchase Plan"). Under the 2021 Repurchase Plan, the Company may purchase up to 430,000 shares, or approximately 5% of its common stock outstanding, through open market or privately negotiated transactions.
(b) Not applicable. (c) On October 18, 2023, the Company announced the approval of a new repurchase program (the "2023 Repurchase Plan"). Under the 2023 Repurchase Plan, the Company may purchase up to 405,000 shares, or approximately 5% of its common stock outstanding, through open market or privately negotiated transactions.
As of the close of business on December 31, 2022, there were 8,286,084 shares of common stock outstanding, held by approximately 634 shareholders of record, not including the number of persons or entities whose stock is held in nominee or “street” name through various brokerage firms and banks. 14 The following graph shows a comparison of the cumulative total returns for the common stock of Home Bancorp, Inc., the Nasdaq Composite Index, and the S&P US Small Cap Banks Index for the period beginning December 31, 2017 and ending December 31, 2022.
As of the close of business on December 31, 2023, there were 8,158,281 shares of common stock outstanding, held by approximately 613 shareholders of record, not including the number of persons or entities whose stock is held in nominee or “street” name through various brokerage firms and banks. 17 The following graph shows a comparison of the cumulative total returns for the common stock of Home Bancorp, Inc., the Nasdaq Composite Index, and the S&P US Small Cap Banks Index for the period beginning December 31, 2018 and ending December 31, 2023.
Period Ending Index 12/31/17 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 Home Bancorp, Inc. 100.00 83.29 94.34 69.61 105.79 104.46 NASDAQ Composite 100.00 95.47 129.10 185.44 225.10 150.59 S&P US Small Cap Banks 100.00 83.44 104.69 95.08 132.36 116.69 The stock price information shown above is not necessarily indicative of future price performance.
Period Ending Index 12/31/18 12/31/19 12/31/20 12/31/21 12/31/22 12/31/23 Home Bancorp, Inc. 100.00 113.27 83.57 127.01 125.41 135.43 NASDAQ Composite 100.00 136.27 195.74 237.60 158.96 227.98 S&P US Small Cap Banks 100.00 125.46 113.94 158.62 139.85 140.55 The stock price information shown above is not necessarily indicative of future price performance.
Shares repurchases under the 2021 Repurchase Plan commenced upon the completion of the Company's 2020 Repurchase Plan in the first quarter of 2022.
Shares repurchases under the 2023 Repurchase Plan will commence upon the completion of the Company's 2021 Repurchase Plan. The Company’s purchases of its common stock made during the fourth quarter of 2023 (which were made pursuant to the 2021 Repurchase Plan) are set forth in the following table.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe subordinated debt was recorded net of issuance costs of $1.1 million at December 31, 2022, which is being amortized using the straight-line method over five years. 16 • The Company repurchased 288,350 shares of common stock at an average price of $39.30 per share. • The net interest margin was 3.92% for the year ended December 31, 2022, up 4 bps compared to 2021, primarily due to an increase in the average yield earned on interest-earning assets, partially offset with an increase in the average cost of interest-bearing liabilities during 2022. • Loan income from the recognition of deferred PPP lender fees decreased $10.2 million, or 89.4%, from the year ended December 31, 2021 to $1.2 million for the year ended December 31, 2022. • The average rate paid on total interest-bearing deposits during 2022 was 0.28%, down 4 bps compared to 2021. • Noninterest income decreased $2.4 million, or 14.7%, in 2022 compared to 2021 primarily due to a decrease in gains on the sale of loans and a decrease in income from bank-owned life insurance primarily due to the receipt of non-taxable life insurance proceeds of $1.7 million from a BOLI policy following the death of an employee in 2021. • Noninterest expense increased $14.9 million, or 22.3%, in 2022 compared to 2021 primarily due to the acquisition of Friendswood.
Biggest changeThe ACL, which is comprised of the allowance for loan losses plus the allowance for unfunded lending commitments, totaled $34.1 million, or 1.32% of total loans, at December 31, 2023. • Total deposits increased $37.4 million, or 1.4%, from December 31, 2022 to $2.7 billion at December 31, 2023, primarily due to increase in certificate of deposits, which was partially offset with decreases in core deposits. • The Company repurchased 164,272 shares of common stock at an average price of $32.01 per share during 2023. • The net interest margin was 3.89% for the year ended December 31, 2023, down 3 bps compared to 2022, primarily due to an increase in the average cost of interest-bearing liabilities, partially offset with an increase in the average yield earned on interest-earning assets during 2023. • The average rate paid on total interest-bearing deposits during 2023 was 1.56%, up 128 bps compared to 2022. • Noninterest income increased $751,000, or 5.4%, in 2023 compared to 2022, primarily due to an increase in bank card fees and gain on sale of loans. • Noninterest expense increased $932,000, or 1.1%, in 2023 compared to 2022 primarily due to increase in compensation and benefits, occupancy and provision for credit losses on unfunded commitments, which were partially offset with a recovery of foreclosed assets expense and lower franchise and shares tax expense.
We seek to manage our exposure to risks from changes in interest rates while at the same time trying to 37 improve our net interest spread. We monitor interest rate risk as such risk relates to our operating strategies. ALCO is responsible for reviewing our asset/liability and investment policies and interest rate risk position. ALCO meets at least quarterly.
We seek to manage our exposure to risks from changes in interest rates while at the same time trying to improve our net interest spread. We monitor interest rate risk as such risk relates to our operating strategies. ALCO is responsible for reviewing our asset/liability and investment policies and interest rate risk position. ALCO meets at least quarterly.
Gains on the sale of assets for 2022 totaled $26,000 compared to losses on the sale of assets of $504,000 during 2021. During the second quarter of 2021, the Company sold and leased back one of its Mississippi branch locations. The sale transferred control to the buyer-lessor and all losses totaling $457,000 were recognized at the time of the sale.
Gains on the sale of assets for 2022 totaled $26,000 compared to losses on sale of assets of $504,000 from 2021. During the second quarter of 2021, the Company sold and leased back one of its Mississippi branch locations. The sale transferred control to the buyer-lessor and all losses totaling $457,000 were recognized at the time of the sale.
Our deposits consist of checking, both interest-bearing and noninterest-bearing, money market, savings and certificate of deposit accounts. 30 The flow of deposits is influenced significantly by general economic conditions, changes in market interest rates and competition. Our deposits are obtained predominantly from the areas where our branch offices are located.
Our deposits consist of checking, both interest-bearing and noninterest-bearing, money market, savings and certificate of deposit accounts. The flow of deposits is influenced significantly by general economic conditions, changes in market interest rates and competition. Our deposits are obtained predominantly from the areas where our branch offices are located.
The determination of fair value as of the acquisition date requires management to consider various factors that involve judgment and estimation, including the application of discount rates, prepayment rates, attrition rates, future estimates of interest rates, as well as many other assumptions.
The determination of fair value as of the acquisition date requires management to consider various factors that involve judgment and estimation, including the application of discount rates, prepayment rates, 22 attrition rates, future estimates of interest rates, as well as many other assumptions.
The total allowance for credit losses includes activity related to allowances calculated in accordance with Accounting Standards Codification 326, Financial Instruments — Credit Losses. The allowance for credit losses is established through a provision for credit losses charged to current earnings.
The total allowance for credit losses includes activity related to allowances calculated in accordance with Accounting Standards Codification ("ASC") 326, Financial Instruments — Credit Losses. The allowance for credit losses is established through a provision for credit losses charged to current earnings.
Subsequently, adjustments recorded during the measurement period are recognized in the current reporting period. 20 ACQUISITION ACTIVITY The Company has completed six acquisitions since 2010. The following table is a summary of the Company’s acquisition activity as recorded.
Subsequently, adjustments recorded during the measurement period are recognized in the current reporting period. ACQUISITION ACTIVITY The Company has completed six acquisitions since 2010. The following table is a summary of the Company’s acquisition activity as recorded.
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 27 processes that meet the objectives set forth in the policy statement.
Generally, the policy statement recommends that institutions have effective systems and controls to 28 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.
Noninterest expense for 2022 and 2021 included merger-related expenses from the Friendswood acquisition totaling $2.0 million and $299,000 (pre-tax), respectively. The increase in noninterest expense in 2022 primarily reflects the overall growth of the Company's employee base and higher occupancy, data processing and regulatory costs due to the Friendswood acquisition.
Noninterest expense for 2022 and 2021 included merger-related expenses from the Friendswood acquisition totaling $2.0 million and $299,000 (pre-tax), respectively. The increase in noninterest expense in 2022 primarily reflected the overall growth of the Company's employee base and higher occupancy, data processing and regulatory costs due to the Friendswood acquisition.
From June 30, 2027, the Notes will bear interest at a floating rate equal to the then current three-month term secured overnight financing rate (“SOFR”), plus 282 basis points. The Notes may be redeemed by the Company, in whole or in part, on or after June 30, 2027.
From June 30, 2027, the Notes bear interest at a floating rate equal to the then current three-month term secured overnight financing rate (“SOFR”), plus 282 basis points. The Notes may be 32 redeemed by the Company, in whole or in part, on or after June 30, 2027.
The Notes were issued at a price equal to 100% of the aggregate principal amount. The Notes have a stated maturity date of June 30, 2032 and will bear interest at a fixed rate of 5.75% per year from 31 and including the issue date to but excluding June 30, 2027.
The Notes were issued at a price equal to 100% of the aggregate principal amount. The Notes have a stated maturity date of June 30, 2032 and bear interest at a fixed rate of 5.75% per year from and including the issue date to but excluding June 30, 2027.
Acquired loans were recorded at fair value upon acquisition and accrete interest income over the remaining life of the respective loans. 33 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.
Acquired loans were recorded at fair value upon acquisition and accrete interest income over the remaining life of the respective loans. 34 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.
During 2022 and 2021, such derivatives were used to hedge the variable cost associated with existing variable rate liabilities. Refer to Note 14. Derivatives and Hedging Activities of the Consolidated Financial Statements for more information on the effects of the derivative financial instruments on the consolidated financial statements.
During 2023 and 2022, such derivatives were used to hedge the variable cost associated with existing variable rate liabilities. Refer to Note 14. Derivatives and Hedging Activities of the Consolidated Financial Statements for more information on the effects of the derivative financial instruments on the consolidated financial statements.
For more information on the adoption of ASC 326, refer to Note 2 of the Consolidated Financial Statements. 26 The following tables provide a summary of loans individually evaluated for expected losses as of the dates indicated.
For more information on the adoption of ASC 326, refer to Note 2 of the Consolidated Financial Statements. 27 The following tables provide a summary of loans individually evaluated for expected losses as of the dates indicated.
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 position or results of operations of the Company. 38 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 the undisbursed portion of construction loans as of December 31, 2022.
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 position or results of operations of the Company. 39 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 the undisbursed portion of construction loans as of December 31, 2023.
Prior 22 to January 1, 2020 and the adoption of ASC 326, the ALL was maintained at an amount which management determined covered reasonably estimable and probable losses. The day one impact of the change in accounting principle is reflected in the table below as an increase to the beginning balance in 2020.
Prior to January 1, 2020 and the adoption of ASC 326, the ALL was maintained at an amount which management determined covered reasonably estimable and probable losses. The adoption impact of the change in accounting principle is reflected in the table below as an increase to the beginning balance in 2020.
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 December 31, 2022.
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 December 31, 2023.
The Notes are intended to qualify as Tier 2 capital for regulatory purposes. The carrying value of subordinated debt was $54.0 million at December 31, 2022. The subordinated debt was recorded net of issuance costs of $1.1 million at December 31, 2022, which is being amortized using the straight-line method over five years.
The Notes are intended to qualify as Tier 2 capital for regulatory purposes. The carrying value of subordinated debt was $54.2 million and $54.0 million at December 31, 2023 and December 31, 2022, respectively. The subordinated debt was recorded net of issuance costs, which is being amortized using the straight-line method over five years.
The required payments under such commitments and other contractual cash commitments as of December 31, 2022 are shown in the following table.
The required payments under such commitments and other contractual cash commitments as of December 31, 2023 are shown in the following table.
At December 31, 2022 and 2021, loans identified as impaired and individually evaluated for expected losses were $5.0 million and $4.6 million, respectively. Due to the adoption of ASC 326, total loans identified as impaired and individually evaluated at December 31, 2022 included $1.5 million of acquired loans, of which none were acquired with deteriorated credit quality.
At December 31, 2023 and 2022, loans identified as individually evaluated for expected losses were $4.2 million and $5.0 million, respectively. Due to the adoption of ASC 326, total loans identified as impaired and individually evaluated at December 31, 2023 included $1.4 million of acquired loans, of which none were acquired with deteriorated credit quality.
In addition to classified assets, assets which do not currently expose the Bank to sufficient risk to be classified may be categorized as "special mention." Special mention assets have an existing weakness that could cause future impairment. At December 31, 2022 and 2021, we had a total of $21.5 million and $17.5 million, respectively, in loans classified as substandard.
In addition to classified assets, assets which do not currently expose the Bank to sufficient risk to be classified may be categorized as "special mention." Special mention assets have an existing weakness that could cause future impairment. At December 31, 2023 and 2022, we had a total of $28.2 million and $21.5 million, respectively, in loans classified as substandard.
For the Years Ended December 31, (dollars in thousands) 2022 2021 2020 2019 2018 Allowance for loan losses: Beginning balance $ 21,089 $ 32,963 $ 17,868 $ 16,348 $ 14,807 ASC 326 adoption impact — — 4,633 — — Provision for acquired PCD loans 1,415 — — — — Provision for loan losses 7,489 (10,161) 12,728 3,014 3,943 Loans charged off: One- to four-family first mortgage (80) (176) (99) (4) (1) Home equity loans and lines — (6) (575) (42) — Commercial real estate (270) (1,337) (5) (360) — Construction and land — — (688) (6) — Multi-family residential — — — — — Commercial and industrial (792) (599) (984) (893) (2,506) Consumer (256) (187) (250) (272) (74) Recoveries on charged off loans 704 592 335 83 179 Ending balance - allowance for loan losses $ 29,299 $ 21,089 $ 32,963 $ 17,868 $ 16,348 Allowance for unfunded lending commitments: Beginning balance $ 1,815 $ 1,425 $ — $ — $ — ASC 326 adoption impact — — 1,425 — — Provision for losses on unfunded commitments 278 390 — — — Ending balance - allowance for unfunded commitments 2,093 1,815 1,425 — — Total allowance for credit losses $ 31,392 $ 22,904 $ 34,388 $ 17,868 $ 16,348 At December 31, 2022, the ALL totaled $29.3 million, or 1.21% of total loans, and the ACL, which includes the reserve for unfunded lending commitments, totaled $31.4 million, or 1.29% of total loans.
For the Years Ended December 31, (dollars in thousands) 2023 2022 2021 2020 2019 Allowance for loan losses: Beginning balance $ 29,299 $ 21,089 $ 32,963 $ 17,868 $ 16,348 ASC 326 adoption impact — — — 4,633 — Provision for acquired PCD loans — 1,415 — — — Provision for loan losses 2,341 7,489 (10,161) 12,728 3,014 Loans charged off: One- to four-family first mortgage (12) (80) (176) (99) (4) Home equity loans and lines — — (6) (575) (42) Commercial real estate (29) (270) (1,337) (5) (360) Construction and land — — — (688) (6) Multi-family residential — — — — — Commercial and industrial (255) (792) (599) (984) (893) Consumer (175) (256) (187) (250) (272) Recoveries on charged off loans 368 704 592 335 83 Ending balance - allowance for loan losses $ 31,537 $ 29,299 $ 21,089 $ 32,963 $ 17,868 Allowance for unfunded lending commitments: Beginning balance $ 2,093 $ 1,815 $ 1,425 $ — $ — ASC 326 adoption impact — — — 1,425 — Provision for losses on unfunded commitments 501 278 390 — — Ending balance - allowance for unfunded commitments 2,594 2,093 1,815 1,425 — Total allowance for credit losses $ 34,131 $ 31,392 $ 22,904 $ 34,388 $ 17,868 At December 31, 2023, the ALL totaled $31.5 million, or 1.22% of total loans, and the ACL, which includes the reserve for unfunded lending commitments, totaled $34.1 million, or 1.32% of total loans.
"Management's Discussion and Analysis of Financial Condition and Results of Operations - Financial Condition - Allowance for Credit Losses" provides more information on the changes in the ALL and ACL. 34 Noninterest Income The following table illustrates the primary components of noninterest income for the years indicated.
"Management's Discussion and Analysis of Financial Condition and Results of Operations - Financial Condition - Allowance for Credit Losses" provides additional information on the changes in the ALL and ACL. 35 Noninterest Income The following table illustrates the primary components of noninterest income for the years indicated.
Provision for Loan Losses For the year ended December 31, 2022, the Company provisioned $7.5 million of the allowance for loan losses compared to a reversal of $10.2 million and a provision of $12.7 million for 2021 and 2020, respectively.
Provision for Loan Losses For the year ended December 31, 2023, the Company provisioned $2.3 million to the allowance for loan losses compared to a provision of $7.5 million and a reversal of $10.2 million for 2022 and 2021, respectively.
We use our liquidity to fund existing and future loan commitments, to fund maturing certificates of deposit and demand deposit withdrawals, to invest in other interest-earning assets and to meet operating expenses. At December 31, 2022, certificates of deposit maturing within the next 12 months totaled $259.1 million.
We use our liquidity to fund existing and future loan commitments, to fund maturing certificates of deposit and demand deposit withdrawals, to invest in other interest-earning assets and to meet operating expenses. At December 31, 2023, certificates of deposit maturing within the next 12 months totaled $544.5 million.
A reconciliation of GAAP to non-GAAP disclosures is included in the table below. 19 Non-GAAP Reconciliation As of or For the Years Ended December 31, (dollars in thousands, except per share data) 2022 2021 2020 2019 2018 Book value per common share $ 39.82 $ 41.27 $ 36.82 $ 34.19 $ 32.14 Less: Intangibles 10.62 7.27 7.22 6.97 6.98 Tangible book value per common share 29.20 34.00 29.60 27.22 25.16 Net Income 34,072 48,621 24,765 27,932 31,590 Add: CDI amortization, net of tax 1,266 919 1,074 1,250 1,458 Non-GAAP tangible income 35,338 49,540 25,839 29,182 33,048 Return on common equity 10.16 % 14.38 % 7.83 % 8.95 % 10.88 % Add: Intangibles 3.77 3.60 2.41 2.88 3.92 Return on average tangible common equity 13.93 % 17.98 % 10.24 % 11.83 % 14.80 % CRITICAL ACCOUNTING ESTIMATES SEC guidance requires disclosure of “critical accounting estimates.” The SEC defines “critical accounting estimates” as those estimates made in accordance with generally accepted accounting principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of the registrant.
A reconciliation of GAAP to non-GAAP disclosures is included in the table below. 21 Non-GAAP Reconciliation As of or For the Years Ended December 31, (dollars in thousands, except per share data) 2023 2022 2021 2020 2019 Book value per common share $ 45.04 $ 39.82 $ 41.27 $ 36.82 $ 34.19 Less: Intangibles 10.59 10.62 7.27 7.22 6.97 Tangible book value per common share 34.45 29.20 34.00 29.60 27.22 Net Income 40,240 34,072 48,621 24,765 27,932 Add: CDI amortization, net of tax 1,264 1,266 919 1,074 1,251 Non-GAAP tangible income 41,504 35,338 49,540 25,839 29,183 Return on common equity 11.59 % 10.16 % 14.38 % 7.83 % 8.95 % Add: Intangibles 4.36 3.77 3.60 2.41 2.88 Return on average tangible common equity 15.95 % 13.93 % 17.98 % 10.24 % 11.83 % CRITICAL ACCOUNTING ESTIMATES SEC guidance requires disclosure of “critical accounting estimates.” The SEC defines “critical accounting estimates” as those estimates made in accordance with generally accepted accounting principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on the financial condition or results of operations of the registrant.
Under terms of the collateral agreement with the FHLB, we may pledge residential mortgage loans and mortgage-backed securities as well as our stock in the FHLB as collateral for such advances. For the year ended December 31, 2022, the average balance of our outstanding FHLB advances was $32.8 million.
Under terms of the collateral agreement with the FHLB, we may pledge residential mortgage loans and mortgage-backed securities as well as our stock in the FHLB as collateral for such advances. For the year ended December 31, 2023, the average balance of our outstanding FHLB advances was $243.5 million.
December 31, (dollars in thousands) 2022 2021 2020 2019 2018 Nonaccrual loans (1) : Real estate loans: One- to four-family first mortgage $ 2,300 $ 3,575 $ 3,838 $ 3,948 $ 5,172 Home equity loans and lines 34 38 63 1,244 1,699 Commercial real estate 6,945 8,431 12,298 13,325 11,343 Construction and land 315 258 469 2,469 1,594 Multi-family residential — — — — — Other loans: Commercial and industrial 378 763 1,717 3,224 3,988 Consumer 541 204 292 176 616 Total nonaccrual loans 10,513 13,269 18,677 24,386 24,412 Accruing loans 90 days or more past due 2 6 2 — — Total nonperforming loans 10,515 13,275 18,679 24,386 24,412 Foreclosed assets and ORE 461 1,189 1,302 4,156 1,558 Total nonperforming assets 10,976 14,464 19,981 28,542 25,970 Performing troubled debt restructurings 6,205 4,963 2,085 2,378 1,406 Total nonperforming assets and troubled debt restructurings $ 17,181 $ 19,427 $ 22,066 $ 30,920 $ 27,376 Nonperforming loans to total loans 0.43 % 0.72 % 0.94 % 1.42 % 1.48 % Nonperforming loans to total assets 0.33 % 0.45 % 0.72 % 1.11 % 1.13 % Nonaccrual loans to total loans 0.43 % 0.72 % 0.94 % 1.42 % 1.48 % Nonperforming assets to total assets 0.34 % 0.49 % 0.77 % 1.30 % 1.21 % Total loans outstanding $ 2,430,750 $ 1,840,093 $ 1,979,954 $ 1,714,361 $ 1,649,754 Total assets outstanding $ 3,228,280 $ 2,938,244 $ 2,591,850 $ 2,200,465 $ 2,153,658 (1) Prior to January 1, 2020, PCD loans were classified as PCI under ASC 310-30 and excluded from nonperforming loans because they continued to earn interest income from the accretable yield at the pool level regardless of their status as past due or otherwise not in compliance with their contractual terms.
December 31, (dollars in thousands) 2023 2022 2021 2020 2019 Nonaccrual loans (1) : Real estate loans: One- to four-family first mortgage $ 1,600 $ 2,300 $ 3,575 $ 3,838 $ 3,948 Home equity loans and lines 208 34 38 63 1,244 Commercial real estate 5,203 6,945 8,431 12,298 13,325 Construction and land 1,181 315 258 469 2,469 Multi-family residential — — — — — Other loans: Commercial and industrial 331 378 763 1,717 3,224 Consumer 291 541 204 292 176 Total nonaccrual loans 8,814 10,513 13,269 18,677 24,386 Accruing loans 90 days or more past due — 2 6 2 — Total nonperforming loans 8,814 10,515 13,275 18,679 24,386 Foreclosed assets and ORE 1,575 461 1,189 1,302 4,156 Total nonperforming assets 10,389 10,976 14,464 19,981 28,542 Performing troubled debt restructurings (2) — 6,205 4,963 2,085 2,378 Total nonperforming assets and troubled debt restructurings $ 10,389 $ 17,181 $ 19,427 $ 22,066 $ 30,920 Nonperforming loans to total loans 0.34 % 0.43 % 0.72 % 0.94 % 1.42 % Nonperforming loans to total assets 0.27 % 0.33 % 0.45 % 0.72 % 1.11 % Nonaccrual loans to total loans 0.34 % 0.43 % 0.72 % 0.94 % 1.42 % Nonperforming assets to total assets 0.31 % 0.34 % 0.49 % 0.77 % 1.30 % Total loans outstanding $ 2,581,638 $ 2,430,750 $ 1,840,093 $ 1,979,954 $ 1,714,361 Total assets outstanding $ 3,320,122 $ 3,228,280 $ 2,938,244 $ 2,591,850 $ 2,200,465 (1) Prior to January 1, 2020, PCD loans were classified as PCI under ASC 310-30 and excluded from nonperforming loans because they continued to earn interest income from the accretable yield at the pool level regardless of their status as past due or otherwise not in compliance with their contractual terms.
The average cost of total interest-bearing deposits in 2021 totaled 0.32%, down 40 basis points from 2020. The Company’s net interest margin, which is net interest income as a percentage of average interest-earning assets, was 3.92%, 3.88%, and 3.96% during the years ended December 31, 2022, 2021, and 2020, respectively.
The average cost of total interest-bearing deposits in 2022 totaled 0.28%, down 4 basis points from 2021. The Company’s net interest margin, which is net interest income as a percentage of average interest-earning assets, was 3.89%, 3.92%, and 3.88% during the years ended December 31, 2023, 2022, and 2021, respectively.
At December 31, 2022, the total recorded net investment in PPP loans was $6.7 million, which is included in commercial and industrial loans. The recorded investment in PPP loans is net of $94,000 in deferred lender fees, which will be amortized into interest income over the life of the loans.
At December 31, 2023, the total recorded net investment in PPP loans was $5.5 million, which is included in commercial and industrial loans. The recorded investment in PPP loans is net of $60,000 in deferred lender fees, which will be amortized into interest income over the life of the loans.
The principal objective of our interest rate risk management function is to evaluate the interest rate risk embedded in certain balance sheet accounts, determine the level of risk appropriate given our business strategy, operating environment, capital and liquidity requirements, performance objectives and interest rate environment and manage the risk consistent with approved guidelines.
We attempt to manage credit risk through our loan underwriting and oversight policies. 38 The principal objective of our interest rate risk management function is to evaluate the interest rate risk embedded in certain balance sheet accounts, determine the level of risk appropriate given our business strategy, operating environment, capital and liquidity requirements, performance objectives and interest rate environment and manage the risk consistent with approved guidelines.
Shift in Interest Rates (in bps) % Change in Projected Net Interest Income +300 5.3% +200 3.7 +100 1.9 -100 (2.4) The actual impact of changes in interest rates will depend on many factors.
Shift in Interest Rates (in bps) % Change in Projected Net Interest Income +200 1.9 +100 1.1 -100 (1.8) -200 (3.9) The actual impact of changes in interest rates will depend on many factors.
As of December 31, (dollars in thousands) 2022 2021 2020 2019 2018 Selected Financial Condition Data: Total assets $ 3,228,280 $ 2,938,244 $ 2,591,850 $ 2,200,465 $ 2,153,658 Cash and cash equivalents 87,401 601,443 187,952 39,847 59,618 Interest-bearing deposits in banks 349 349 349 449 939 Investment securities: Available for sale 486,518 327,632 254,752 257,321 260,131 Held to maturity 1,075 2,102 2,934 7,149 10,872 Loans receivable, net 2,401,451 1,819,004 1,946,991 1,696,493 1,633,406 Intangible assets 87,973 61,949 63,112 64,472 66,055 Deposits 2,633,181 2,535,849 2,213,821 1,820,975 1,773,217 Other borrowings 5,539 5,539 5,539 5,539 5,539 Subordinated debt, net of issuance cost 54,013 — — — — Federal Home Loan Bank advances 176,213 26,046 28,824 40,620 58,698 Shareholders’ equity 329,954 351,903 321,842 316,329 304,040 17 For the Years Ended December 31, (dollars in thousands, except per share data) 2022 2021 2020 2019 2018 Selected Operating Data: Interest income $ 125,930 $ 106,902 $ 104,129 $ 102,208 $ 102,312 Interest expense 7,915 5,913 11,918 16,212 10,306 Net interest income 118,015 100,989 92,211 85,996 92,006 Provision (reversal) for loan losses 7,489 (10,161) 12,728 3,014 3,943 Net interest income after provision for loan losses 110,526 111,150 79,483 82,982 88,063 Noninterest income 13,885 16,271 14,305 14,415 13,447 Noninterest expense 81,909 66,982 62,981 63,605 63,225 Income before income taxes 42,502 60,439 30,807 33,792 38,285 Income taxes 8,430 11,818 6,042 5,860 6,695 Net income $ 34,072 $ 48,621 $ 24,765 $ 27,932 $ 31,590 Earnings per share - basic $ 4.19 $ 5.80 $ 2.86 $ 3.08 $ 3.48 Earnings per share - diluted $ 4.16 $ 5.77 $ 2.85 $ 3.05 $ 3.40 Cash dividends per share $ 0.93 $ 0.91 $ 0.88 $ 0.84 $ 0.71 As of or For the Years Ended December 31, 2022 2021 2020 2019 2018 Selected Operating Ratios: (1) Average yield on interest-earning assets (TE) 4.19 % 4.11 % 4.48 % 5.07 % 5.15 % Average rate on interest-bearing liabilities 0.41 0.35 0.76 1.13 0.73 Average interest rate spread (TE)(2) 3.78 3.76 3.72 3.94 4.42 Net interest margin (TE)(3) 3.92 3.88 3.96 4.26 4.62 Average interest-earning assets to average interest-bearing liabilities 154.87 152.48 146.05 140.07 139.72 Noninterest expense to average assets 2.58 2.42 2.53 2.89 2.93 Efficiency ratio (4) 62.10 57.12 59.13 63.34 59.96 Return on average assets 1.07 1.76 0.99 1.27 1.46 Return on average common equity 10.16 14.38 7.83 8.95 10.88 Return on average tangible common equity (Non-GAAP) (8) 13.93 17.98 10.24 11.83 14.80 Common stock dividend payout ratio 22.36 15.77 30.88 27.54 20.88 Average equity to average assets 10.55 12.22 12.69 14.19 13.43 Book value per common share $ 39.82 $ 41.27 $ 36.82 $ 34.19 $ 32.14 Tangible book value per common share (Non-GAAP) (9) 29.20 34.00 29.60 27.22 25.16 18 As of or For the Years Ended December 31, 2022 2021 2020 2019 2018 Asset Quality Ratios: (5) (6) Non-performing loans as a percent of total loans receivable 0.43 % 0.72 % 0.61 % 1.17 % 1.40 % Non-performing assets as a percent of total assets 0.34 0.49 0.95 0.95 0.97 Allowance for loan losses as a percent of non-performing loans as of end of period 278.6 158.86 110.0 110.0 96.6 Allowance for loan losses as a percent of net loans as of end of period 1.21 1.15 1.29 1.29 1.36 Capital Ratios: (5) (7) Tier 1 risk-based capital ratio 12.43 % 14.66 % 13.92 % 14.22 % 14.55 % Leverage capital ratio 10.43 9.77 9.68 11.17 11.15 Total risk-based capital ratio 13.63 15.85 15.18 15.28 15.59 (1) With the exception of end-of-period ratios, all ratios are based on average monthly balances during the respective periods.
Taxable equivalent (“TE”) ratios have been calculated using a marginal tax rate of 21%. 19 As of December 31, (dollars in thousands) 2023 2022 2021 2020 2019 Selected Financial Condition Data: Total assets $ 3,320,122 $ 3,228,280 $ 2,938,244 $ 2,591,850 $ 2,200,465 Cash and cash equivalents 75,831 87,401 601,443 187,952 39,847 Interest-bearing deposits in banks 99 349 349 349 449 Investment securities: Available for sale 433,926 486,518 327,632 254,752 257,321 Held to maturity 1,065 1,075 2,102 2,934 7,149 Loans receivable, net 2,550,101 2,401,451 1,819,004 1,946,991 1,696,493 Intangible assets 86,372 87,973 61,949 63,112 64,472 Deposits 2,670,624 2,633,181 2,535,849 2,213,821 1,820,975 Other borrowings 5,539 5,539 5,539 5,539 5,539 Subordinated debt, net of issuance cost 54,241 54,013 — — — Federal Home Loan Bank advances 192,713 176,213 26,046 28,824 40,620 Shareholders’ equity 367,444 329,954 351,903 321,842 316,329 For the Years Ended December 31, (dollars in thousands, except per share data) 2023 2022 2021 2020 2019 Selected Operating Data: Interest income $ 163,663 $ 125,930 $ 106,902 $ 104,129 $ 102,208 Interest expense 42,971 7,915 5,913 11,918 16,212 Net interest income 120,692 118,015 100,989 92,211 85,996 Provision (reversal) for loan losses 2,341 7,489 (10,161) 12,728 3,014 Net interest income after provision for loan losses 118,351 110,526 111,150 79,483 82,982 Noninterest income 14,636 13,885 16,271 14,305 14,415 Noninterest expense 82,841 81,909 66,982 62,981 63,605 Income before income taxes 50,146 42,502 60,439 30,807 33,792 Income taxes 9,906 8,430 11,818 6,042 5,860 Net income $ 40,240 $ 34,072 $ 48,621 $ 24,765 $ 27,932 Earnings per share - basic $ 5.02 $ 4.19 $ 5.80 $ 2.86 $ 3.08 Earnings per share - diluted $ 4.99 $ 4.16 $ 5.77 $ 2.85 $ 3.05 Cash dividends per share $ 1.00 $ 0.93 $ 0.91 $ 0.88 $ 0.84 As of or For the Years Ended December 31, 2023 2022 2021 2020 2019 Selected Operating Ratios: (1) Average yield on interest-earning assets (TE) 5.28 % 4.19 % 4.11 % 4.48 % 5.07 % Average rate on interest-bearing liabilities 2.08 0.41 0.35 0.76 1.13 Average interest rate spread (TE)(2) 3.20 3.78 3.76 3.72 3.94 Net interest margin (TE)(3) 3.89 3.92 3.88 3.96 4.26 Average interest-earning assets to average interest-bearing liabilities 148.73 154.87 152.48 146.05 140.07 Noninterest expense to average assets 2.54 2.58 2.42 2.53 2.89 Efficiency ratio (4) 61.21 62.10 57.12 59.13 63.34 Return on average assets 1.23 1.07 1.76 0.99 1.27 Return on average common equity 11.59 10.16 14.38 7.83 8.95 20 As of or For the Years Ended December 31, 2023 2022 2021 2020 2019 Return on average tangible common equity (Non-GAAP) (8) 15.95 13.93 17.98 10.24 11.83 Common stock dividend payout ratio 20.04 22.36 15.77 30.88 27.54 Average equity to average assets 10.64 10.55 12.22 12.69 14.19 Book value per common share $ 45.04 $ 39.82 $ 41.27 $ 36.82 $ 34.19 Tangible book value per common share (Non-GAAP) (9) 34.45 29.20 34.00 29.60 27.22 Asset Quality Ratios: (5) (6) Non-performing loans as a percent of total loans receivable 0.34 % 0.43 % 0.72 % 0.61 % 1.17 % Non-performing assets as a percent of total assets 0.31 0.34 0.49 0.95 0.95 Allowance for loan losses as a percent of non-performing loans as of end of period 357.8 278.64 158.9 110.0 110.0 Allowance for loan losses as a percent of net loans as of end of period 1.22 1.15 1.15 1.29 1.29 Capital Ratios: (5) (7) Tier 1 risk-based capital ratio 12.98 % 12.43 % 14.66 % 13.92 % 14.22 % Leverage capital ratio 10.98 10.43 9.77 9.68 11.17 Total risk-based capital ratio 14.23 13.63 15.85 15.18 15.28 (1) With the exception of end-of-period ratios, all ratios are based on average daily balances during the respective periods.
All loan applications are processed and underwritten centrally at the Bank’s main office. Total loans in portfolio (which does not include mortgage loans held for sale) increased $590.7 million, or 32.1%, from December 31, 2021 to $2.4 billion at December 31, 2022.
All loan applications are processed and underwritten centrally at the Bank’s main office. Total loans in portfolio (which does not include mortgage loans held for sale) increased $150.9 million, or 6.2%, from December 31, 2022 to $2.6 billion at December 31, 2023.
Average FHLB advances were $32.8 million during 2022, up $5.4 million, or 19.9%, from 2021. Shareholders’ Equity Shareholders’ equity provides a source of permanent funding, allows for future growth and provides the Company with a cushion to withstand unforeseen adverse developments.
Average FHLB advances were $243.5 million during 2023, up $210.8 million, or 643.3%, from 2022. Shareholders’ Equity Shareholders’ equity provides a source of permanent funding, allows for future growth and provides the Company with a cushion to withstand unforeseen adverse developments.
The investment securities portfolio increased by an aggregate of $157.9 million, or 47.9%, during 2022. Securities available for sale made up 99.8% of the investment securities portfolio as of December 31, 2022. The following table sets forth the amortized cost and market value of our investment securities portfolio as of the dates indicated.
The investment securities portfolio decreased by an aggregate of $52.6 million, or 10.8%, during 2023. Securities available for sale made up 99.8% of the investment securities portfolio as of December 31, 2023. The following table sets forth the amortized cost and market value of our investment securities portfolio as of the dates indicated.
December 31, (dollars in thousands) 2022 2021 2020 2019 2018 Real estate loans: One- to four-family first mortgage $ 389,616 $ 350,843 $ 395,638 $ 430,820 $ 450,363 Home equity loans and lines 61,863 60,312 67,700 79,812 83,976 Commercial real estate 1,152,537 801,624 750,623 722,807 640,575 Construction and land 313,175 259,652 221,823 195,748 193,597 Multi-family residential 100,588 90,518 87,332 54,869 54,455 Total real estate loans 2,017,779 1,562,949 1,523,116 1,484,056 1,422,966 21 December 31, (dollars in thousands) 2022 2021 2020 2019 2018 Other loans: Commercial and industrial 377,894 244,123 417,926 184,701 172,934 Consumer 35,077 33,021 38,912 45,604 53,854 Total other loans 412,971 277,144 456,838 230,305 226,788 Total loans $ 2,430,750 $ 1,840,093 $ 1,979,954 $ 1,714,361 $ 1,649,754 The following table reflects contractual loan maturities as of December 31, 2022, unadjusted for scheduled principal reductions, prepayments, or repricing opportunities.
December 31, (dollars in thousands) 2023 2022 2021 2020 2019 Real estate loans: One- to four-family first mortgage $ 433,401 $ 389,616 $ 350,843 $ 395,638 $ 430,820 Home equity loans and lines 68,977 61,863 60,312 67,700 79,812 Commercial real estate 1,192,691 1,152,537 801,624 750,623 722,807 Construction and land 340,724 313,175 259,652 221,823 195,748 Multi-family residential 107,263 100,588 90,518 87,332 54,869 Total real estate loans 2,143,056 2,017,779 1,562,949 1,523,116 1,484,056 Other loans: Commercial and industrial 405,659 377,894 244,123 417,926 184,701 Consumer 32,923 35,077 33,021 38,912 45,604 Total other loans 438,582 412,971 277,144 456,838 230,305 Total loans $ 2,581,638 $ 2,430,750 $ 1,840,093 $ 1,979,954 $ 1,714,361 The following table reflects contractual loan maturities as of December 31, 2023, unadjusted for scheduled principal reductions, prepayments, or repricing opportunities.
SELECTED FINANCIAL DATA Set forth below is selected summary historical financial and other data of the Company. When you read this summary historical financial data, it is important that you also read the historical financial statements and related notes contained in Item 8 of this Form 10-K.
The Company incurred $2.0 million in pre-tax merger-related expenses during 2022. SELECTED FINANCIAL DATA Set forth below is selected summary historical financial and other data of the Company. When you read this summary historical financial data, it is important that you also read the historical financial statements and related notes contained in Item 8 of this Form 10-K.
At December 31, 2022, we had $176.2 million in outstanding FHLB advances and $937.4 million in additional FHLB advances available to us. Liquidity management is both a daily and long-term function of business management. Excess liquidity is generally invested in short-term investments such as overnight deposits.
At December 31, 2023, we had $192.7 million in outstanding FHLB advances and $1.0 billion in additional FHLB advances available to us. Liquidity management is both a daily and long-term function of business management. Excess liquidity is generally invested in short-term investments such as overnight deposits.
December 31, (dollars in thousands) 2022 2021 2020 3 months or less $ 19,826 $ 19,481 $ 24,321 3 - 6 months 13,646 13,586 15,298 6 - 12 months 26,620 21,631 19,665 12 - 36 months 8,040 7,355 9,004 More than 36 months 1,310 1,168 772 Total certificates of deposit greater than $250,000 $ 69,442 $ 63,221 $ 69,060 Subordinated Debt On June 30, 2022, the Company issued $ 55.0 million in aggregate principal amount of its 5.75% Fixed-to-Floating Rate Subordinated Notes (the "Notes") due 2032.
December 31, (dollars in thousands) 2023 2022 2021 3 months or less $ 46,372 $ 19,826 $ 19,481 3 - 6 months 33,421 13,646 13,586 6 - 12 months 89,262 26,620 21,631 12 - 36 months 20,366 8,040 7,355 More than 36 months 1,312 1,310 1,168 Total certificates of deposit greater than $250,000 $ 190,733 $ 69,442 $ 63,221 Subordinated Debt On June 30, 2022, the Company issued $ 55.0 million in aggregate principal amount of its 5.75% Fixed-to-Floating Rate Subordinated Notes (the "Notes") due 2032.
Excluding PPP loans, total loans increased by $627.6 million, or 34.9%. The following table summarizes the composition of the Company’s loan portfolio as of the dates indicated.
Excluding PPP loans, total loans increased by $152.0 million, or 6.3%. 23 The following table summarizes the composition of the Company’s loan portfolio as of the dates indicated.
December 31, 2022 (dollars in thousands) Recorded Investment Allowance for Loan Losses Allowance to Total Loans Loans Individually Evaluated One- to four-family first mortgage $ — $ — — % Home equity loans and lines — — — Commercial real estate 4,743 550 11.60 Construction and land — — — Multi-family residential — — — Commercial and industrial 204 171 83.82 Consumer 86 — — Total $ 5,033 $ 721 14.33 % December 31, 2021 (dollars in thousands) Recorded Investment Allowance for Loan Losses Allowance to Total Loans Loans Individually Evaluated One- to four-family first mortgage $ — $ — — % Home equity loans and lines — — — Commercial real estate 3,873 247 6.38 Construction and land — — — Multi-family residential — — — Commercial and industrial 744 425 57.12 Consumer — — — Total $ 4,617 $ 672 14.55 % Federal regulations and our policies require that we utilize an internal asset classification system as a means of reporting problem and potential problem assets.
December 31, 2023 (dollars in thousands) Recorded Investment Allowance for Loan Losses Allowance to Total Loans Loans Individually Evaluated One- to four-family first mortgage $ — $ — — % Home equity loans and lines — — — Commercial real estate 3,957 201 5.08 Construction and land 147 123 83.67 Multi-family residential — — — Commercial and industrial 112 95 84.82 Consumer — — — Total $ 4,216 $ 419 9.94 % December 31, 2022 (dollars in thousands) Recorded Investment Allowance for Loan Losses Allowance to Total Loans Loans Individually Evaluated One- to four-family first mortgage $ — $ — — % Home equity loans and lines — — — Commercial real estate 4,743 550 11.60 Construction and land — — — Multi-family residential — — — Commercial and industrial 204 171 83.82 Consumer 86 — — Total $ 5,033 $ 721 14.33 % Federal regulations and our policies require that we utilize an internal asset classification system as a means of reporting problem and potential problem assets.
December 31, (dollars in thousands) 2022 2021 2020 Fixed rate: Available for sale $ 511,960 $ 300,923 $ 230,056 Held to maturity 1,075 2,102 2,934 Total fixed rate 513,035 303,025 232,990 Adjustable rate: Available for sale 29,327 27,362 18,241 Total adjustable rate 29,327 27,362 18,241 Total investment securities $ 542,362 $ 330,387 $ 251,231 29 The following table sets forth the amount of investment securities which mature during each of the periods indicated and the weighted average yields for each range of maturities as of December 31, 2022.
December 31, (dollars in thousands) 2023 2022 2021 Fixed rate: Available for sale $ 451,517 $ 511,960 $ 300,923 Held to maturity 1,065 1,075 2,102 Total fixed rate 452,582 513,035 303,025 Adjustable rate: Available for sale 25,840 29,327 27,362 Total adjustable rate 25,840 29,327 27,362 Total investment securities $ 478,422 $ 542,362 $ 330,387 30 The following table sets forth the amount of investment securities which mature during each of the periods indicated and the weighted average yields for each range of maturities as of December 31, 2023.
Certificates of deposit in the amount of $250,000 and over increased $6.2 million, or 9.8%, from $63.2 million at December 31, 2021 to $69.4 million at December 31, 2022. The following table details the remaining maturity of large-denomination certificates of deposit of $250,000 and over as of the dates indicated.
Certificates of deposit in the amount of $250,000 and over increased $121.3 million, or 174.7%, from $69.4 million at December 31, 2022 to $190.7 million at December 31, 2023. The following table details the remaining maturity of large-denomination certificates of deposit of $250,000 and over as of the dates indicated.
(dollars in thousands) 2022 2021 2022 vs 2021 Percent Increase (Decrease) 2020 2021 vs 2020 Percent Increase (Decrease) Noninterest expense: Compensation and benefits $ 47,750 $ 39,151 22.0 % $ 37,935 3.2 % Occupancy 8,715 6,970 25.0 6,794 2.6 Marketing and advertising 2,263 1,871 21.0 1,132 65.3 Data processing and communication 9,307 8,500 9.5 7,343 15.8 Professional services 1,740 1,178 47.7 852 38.3 Forms, printing and supplies 766 644 18.9 625 3.0 Franchise and shares tax 2,108 1,475 42.9 1,487 (0.8) Regulatory fees 2,122 1,317 61.1 1,377 (4.4) Foreclosed assets, net 523 453 15.5 505 (10.3) Amortization of acquisition intangible 1,602 1,163 37.7 1,360 (14.5) Provision for credit losses on unfunded commitments 278 390 (28.7) — — Other expenses 4,735 3,870 22.4 3,571 8.4 Total noninterest expense $ 81,909 $ 66,982 22.3 % $ 62,981 6.4 % 2022 compared to 2021 Noninterest expense for 2022 totaled $81.9 million, up $14.9 million, or 22.3%, from 2021.
(dollars in thousands) 2023 2022 2023 vs 2022 Percent Increase (Decrease) 2021 2022 vs 2021 Percent Increase (Decrease) Noninterest expense: Compensation and benefits $ 48,933 $ 47,750 2.5 % $ 39,151 22.0 % Occupancy 9,674 8,715 11.0 6,970 25.0 Marketing and advertising 2,146 2,263 (5.2) 1,871 21.0 Data processing and communication 9,372 9,307 0.7 8,500 9.5 Professional services 1,690 1,740 (2.9) 1,178 47.7 Forms, printing and supplies 781 766 2.0 644 18.9 Franchise and shares tax 1,755 2,108 (16.7) 1,475 42.9 Regulatory fees 2,040 2,122 (3.9) 1,317 61.1 Foreclosed assets, net (547) 523 (204.6) 453 15.5 Amortization of acquisition intangible 1,601 1,602 (0.1) 1,163 37.7 Provision for credit losses on unfunded commitments 501 278 80.2 390 (28.7) Other expenses 4,895 4,735 3.4 3,870 22.4 Total noninterest expense $ 82,841 $ 81,909 1.1 % $ 66,982 22.3 % 2023 compared to 2022 Noninterest expense for 2023 totaled $82.8 million, up $932,000, or 1.1%, from 2022.
In accordance with ASC Topic 805, Business Combinations , the Company generally records provisional amounts at the time of acquisition based on the information available to the Company.
Business Combinations Assets and liabilities acquired in business combinations are recorded at their fair value. In accordance with ASC Topic 805, Business Combinations , the Company generally records provisional amounts at the time of acquisition based on the information available to the Company.
December 31, 2022 2021 2020 2019 2018 (dollars in thousands) Amount % Loans Amount % Loans Amount % Loans Amount % Loans Amount % Loans One-to four-family first mortgage $ 2,883 16.0 % $ 1,944 19.1 % $ 3,065 20.0 % $ 2,715 25.1 % $ 2,136 27.3 % Home equity loans and lines 624 2.6 508 3.2 676 3.4 1,084 4.6 1,079 5.1 Commercial real estate 13,814 47.4 10,454 43.6 18,851 37.9 6,541 42.2 6,125 38.8 Construction and land 4,680 12.9 3,572 14.1 4,155 11.2 2,670 11.4 2,285 11.7 Multi-family residential 572 4.1 457 4.9 1,077 4.4 572 3.2 550 3.3 Commercial and industrial 6,024 15.6 3,520 13.3 4,276 21.1 3,694 10.8 3,228 10.5 Consumer 702 1.4 634 1.8 863 2.0 592 2.7 945 3.3 Total $ 29,299 100.0 % $ 21,089 100.0 % $ 32,963 100.0 % $ 17,868 100.0 % $ 16,348 100.0 % The following table shows credit ratios at and for the periods indicated and each component of the ratio's calculation: For the Years Ended December 31, 2022 2021 2020 2019 2018 Allowance for loan losses as a percentage of total loans outstanding 1.21% 1.15% 1.66% 1.04% 0.99% Allowance for loan losses $ 29,299 $ 21,089 $ 32,963 $ 17,868 $ 16,348 Total loans outstanding $ 2,430,750 $ 1,840,093 $ 1,979,954 $ 1,714,361 $ 1,649,754 Nonaccrual loans as a percentage of total loans outstanding 0.43% 0.72% 0.94% 1.42% 1.48% Total nonaccrual loans $ 10,513 $ 13,269 $ 18,677 $ 24,386 $ 24,412 Total loans outstanding $ 2,430,750 $ 1,840,093 $ 1,979,954 $ 1,714,361 $ 1,649,754 Allowance for loan losses as a percentage of nonaccrual loans 278.69% 158.93% 176.49% 73.27% 66.97% Allowance for loan losses $ 29,299 $ 21,089 $ 32,963 $ 17,868 $ 16,348 Total nonaccrual loans $ 10,513 $ 13,269 $ 18,677 $ 24,386 $ 24,412 Net charge-offs during period to average loans outstanding: One-to four family residential loans (0.01)% (0.04)% (0.02)% —% —% Net charge-offs $ (41) $ (131) $ (86) $ (4) $ (1) Average loans outstanding $ 367,570 $ 372,207 $ 422,156 $ 441,183 $ 461,712 Net charge-offs during period to average loans outstanding: Home equity loans and lines 0.02% 0.03% (0.76)% (0.03)% 0.01% Net charge-offs $ 14 $ 19 $ (559) $ (26) $ 5 Average loans outstanding $ 60,023 $ 62,957 $ 73,396 $ 80,994 $ 89,085 Net charge-offs during period to average loans outstanding: Commercial real estate (0.03) % (0.17) % 0.01 % (0.05) % — % Net charge-offs $ (270) $ (1,337) $ 50 $ (360) $ — Average loans outstanding $ 1,024,610 $ 769,950 $ 728,959 $ 686,442 $ 619,690 24 For the Years Ended December 31, 2022 2021 2020 2019 2018 Net charge-offs during period to average loans outstanding: Construction and land — % 0.03 % (0.33) % — % — % Net charge-offs $ — $ 63 $ (688) $ (6) $ — Average loans outstanding $ 297,218 $ 241,725 $ 205,591 $ 194,976 $ 174,033 Net charge-offs during period to average loans outstanding: Multi-family residential — % — % — % — % — % Net charge-offs $ — $ — $ — $ — $ — Average loans outstanding $ 97,753 $ 87,101 $ 72,906 $ 50,474 $ 53,678 Net charge-offs during period to average loans outstanding: Commercial and industrial (0.10) % (0.08) % (0.24) % (0.49) % (1.30) % Net charge-offs $ (283) $ (286) $ (878) $ (868) $ (2,348) Average loans outstanding $ 294,459 $ 356,180 $ 360,930 $ 178,236 $ 180,456 Net charge-offs during period to average loans outstanding: Consumer (0.34) % (0.12) % (0.25) % (0.47) % (0.10) % Net charge-offs $ (114) $ (41) $ (105) $ (230) $ (58) Average loans outstanding $ 33,334 $ 35,647 $ 41,350 $ 49,297 $ 58,189 Additional Information on Loan Portfolio Composition and the Allowance for Credit Losses As the fallout of the COVID-19 pandemic continues to impact the national, regional and local economies, management continues to proactively monitor the loan portfolio to identify potential weaknesses that may develop.
December 31, 2023 2022 2021 2020 2019 (dollars in thousands) Amount % Loans Amount % Loans Amount % Loans Amount % Loans Amount % Loans One-to four-family first mortgage $ 3,255 16.8 % $ 2,883 16.0 % $ 1,944 19.1 % $ 3,065 20.0 % $ 2,715 25.1 % Home equity loans and lines 688 2.7 624 2.6 508 3.2 676 3.4 1,084 4.6 Commercial real estate 14,805 46.2 13,814 47.4 10,454 43.6 18,851 37.9 6,541 42.2 Construction and land 5,415 13.2 4,680 12.9 3,572 14.1 4,155 11.2 2,670 11.4 Multi-family residential 474 4.1 572 4.1 457 4.9 1,077 4.4 572 3.2 Commercial and industrial 6,166 15.7 6,024 15.6 3,520 13.3 4,276 21.1 3,694 10.8 Consumer 734 1.3 702 1.4 634 1.8 863 2.0 592 2.7 Total $ 31,537 100.0 % $ 29,299 100.0 % $ 21,089 100.0 % $ 32,963 100.0 % $ 17,868 100.0 % The following table shows credit ratios at and for the periods indicated and each component of the ratio's calculation: For the Years Ended December 31, 2023 2022 2021 2020 2019 Allowance for loan losses as a percentage of total loans outstanding 1.22% 1.21% 1.15% 1.66% 1.04% Allowance for loan losses $ 31,537 $ 29,299 $ 21,089 $ 32,963 $ 17,868 Total loans outstanding $ 2,581,638 $ 2,430,750 $ 1,840,093 $ 1,979,954 $ 1,714,361 Nonaccrual loans as a percentage of total loans outstanding 0.34% 0.43% 0.72% 0.94% 1.42% Total nonaccrual loans $ 8,814 $ 10,513 $ 13,269 $ 18,677 $ 24,386 Total loans outstanding $ 2,581,638 $ 2,430,750 $ 1,840,093 $ 1,979,954 $ 1,714,361 Allowance for loan losses as a percentage of nonaccrual loans 357.81% 278.69% 158.93% 176.49% 73.27% Allowance for loan losses $ 31,537 $ 29,299 $ 21,089 $ 32,963 $ 17,868 Total nonaccrual loans $ 8,814 $ 10,513 $ 13,269 $ 18,677 $ 24,386 Net charge-offs during period to average loans outstanding: One-to four family residential loans 0.01% (0.01)% (0.04)% (0.02)% —% Net charge-offs $ 31 $ (41) $ (131) $ (86) $ (4) Average loans outstanding $ 414,780 $ 367,570 $ 372,207 $ 422,156 $ 441,183 Net charge-offs during period to average loans outstanding: Home equity loans and lines 0.01% 0.02% 0.03% (0.76)% (0.03)% Net charge-offs $ 6 $ 14 $ 19 $ (559) $ (26) Average loans outstanding $ 66,428 $ 60,023 $ 62,957 $ 73,396 $ 80,994 Net charge-offs during period to average loans outstanding: Commercial real estate 0.01 % (0.03) % (0.17) % 0.01 % (0.05) % Net charge-offs $ 71 $ (270) $ (1,337) $ 50 $ (360) Average loans outstanding $ 1,170,475 $ 1,024,610 $ 769,950 $ 728,959 $ 686,442 26 For the Years Ended December 31, 2023 2022 2021 2020 2019 Net charge-offs during period to average loans outstanding: Construction and land — % — % 0.03 % (0.33) % — % Net charge-offs $ — $ — $ 63 $ (688) $ (6) Average loans outstanding $ 328,218 $ 297,218 $ 241,725 $ 205,591 $ 194,976 Net charge-offs during period to average loans outstanding: Multi-family residential — % — % — % — % — % Net charge-offs $ — $ — $ — $ — $ — Average loans outstanding $ 104,166 $ 97,753 $ 87,101 $ 72,906 $ 50,474 Net charge-offs during period to average loans outstanding: Commercial and industrial (0.02) % (0.10) % (0.08) % (0.24) % (0.49) % Net charge-offs $ (75) $ (283) $ (286) $ (878) $ (868) Average loans outstanding $ 392,397 $ 294,459 $ 356,180 $ 360,930 $ 178,236 Net charge-offs during period to average loans outstanding: Consumer (0.40) % (0.34) % (0.12) % (0.25) % (0.47) % Net charge-offs $ (136) $ (114) $ (41) $ (105) $ (230) Average loans outstanding $ 33,837 $ 33,334 $ 35,647 $ 41,350 $ 49,297 Asset Quality One of management’s key objectives has been, and continues to be, maintaining a high level of asset quality.
Management believes that the non-GAAP information provides useful data in understanding the Company’s operations and in comparing the Company’s results to peers. This non-GAAP information should be considered in addition to the Company’s financial information prepared in accordance with GAAP, and is not a substitute for, or superior to, GAAP results.
This non-GAAP information should be considered in addition to the Company’s financial information prepared in accordance with GAAP, and is not a substitute for, or superior to, GAAP results.
Contract Amount (dollars in thousands) 2022 2021 Standby letters of credit $ 6,969 $ 5,075 Available portion of lines of credit 367,167 320,611 Undisbursed portion of loans in process 194,182 142,048 Commitments to originate loans 164,682 153,487 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.
Contract Amount (dollars in thousands) 2023 2022 Standby letters of credit $ 7,289 $ 6,969 Available portion of lines of credit 368,398 367,167 Undisbursed portion of loans in process 221,997 194,182 Commitments to originate loans 127,076 164,682 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.
We have historically relied primarily on a high level of customer service and long-standing relationships with customers to attract and retain deposits; however, market interest rates and rates offered by competitors significantly affect our ability to attract and retain deposits. Total deposits were $2.6 billion as of December 31, 2022, up $97.3 million, or 3.8%, compared to December 31, 2021.
We have 31 historically relied primarily on a high level of customer service and long-standing relationships with customers to attract and retain deposits; however, market interest rates and rates offered by competitors significantly affect our ability to attract and retain deposits.
For the Years Ended December 31, (dollars in thousands) 2022 2021 2020 Average Balance Interest Expense Average Rate Paid Average Balance Interest Expense Average Rate Paid Average Balance Interest Expense Average Rate Paid Noninterest-bearing demand deposits $ 894,103 $ 717,536 $ 581,385 Interest-bearing deposits Interest-bearing demand deposits 313,151 $ 413 0.13 % 274,359 367 0.13 % 228,500 610 0.27 % Savings 745,463 1,941 0.26 689,991 1,940 0.28 606,623 3,353 0.55 Money market accounts 441,367 1,187 0.27 353,643 575 0.16 305,029 1,311 0.43 Certificates of deposit 358,729 1,674 0.47 338,487 2,348 0.69 385,363 5,760 1.49 Total interest-bearing deposits 1,858,710 5,215 0.28 % 1,656,480 5,230 0.32 % 1,525,515 11,034 0.72 % Total deposits $ 2,752,813 $ 2,374,016 $ 2,106,900 The total amount of our uninsured deposits (deposits in excess of $250,000, as calculated in accordance with FDIC regulations) were $830.9 million at December 31, 2022 and $820.0 million at December 31, 2021.
For the Years Ended December 31, (dollars in thousands) 2023 2022 2021 Average Balance Interest Expense Average Rate Paid Average Balance Interest Expense Average Rate Paid Average Balance Interest Expense Average Rate Paid Noninterest-bearing demand deposits $ 821,592 $ 894,103 $ 717,536 Interest-bearing deposits Interest-bearing demand deposits 265,850 $ 1,079 0.41 % 313,151 413 0.13 % 274,359 367 0.13 % Savings 638,846 5,464 0.86 745,463 1,941 0.26 689,991 1,940 0.28 Money market accounts 389,959 6,881 1.76 441,367 1,187 0.27 353,643 575 0.16 Certificates of deposit 465,710 14,080 3.02 358,729 1,674 0.47 338,487 2,348 0.69 Total interest-bearing deposits 1,760,365 27,504 1.56 % 1,858,710 5,215 0.28 % 1,656,480 5,230 0.32 % Total deposits $ 2,581,957 $ 2,752,813 $ 2,374,016 The total amount of our uninsured deposits (deposits in excess of $250,000, as calculated in accordance with FDIC regulations) were $748.6 million at December 31, 2023 and $830.9 million at December 31, 2022.
For the Years Ended December 31, (dollars in thousands) 2022 2021 2020 Average Balance Interest Average Yield/ Rate Average Balance Interest Average Yield/ Rate Average Balance Interest Average Yield/ Rate Interest-earning assets: Loans receivable (1) $ 2,174,967 $ 112,660 5.12 % $ 1,925,767 $ 101,577 5.22 % $ 1,905,288 $ 99,106 5.14 % Investment securities (TE) Taxable 455,757 9,647 2.12 263,459 4,301 1.63 240,161 4,228 1.76 Tax-exempt 24,371 481 2.50 19,506 339 2.20 14,304 335 2.96 Total investment securities 480,128 10,128 2.14 282,965 4,640 1.67 254,465 4,563 1.83 Other interest-earning assets 325,429 3,142 0.97 367,241 685 0.19 142,171 460 0.32 Total interest-earning assets (TE) 2,980,524 125,930 4.19 2,575,973 106,902 4.11 2,301,924 104,129 4.48 Noninterest-earning assets 198,338 189,905 189,688 Total assets $ 3,178,862 $ 2,765,878 $ 2,491,612 Interest-bearing liabilities: Deposits: Savings, checking and money market $ 1,499,981 $ 3,541 0.24 % $ 1,317,993 $ 2,882 0.22 % $ 1,140,152 $ 5,274 0.46 % Certificates of deposit 358,729 1,674 0.47 338,487 2,348 0.69 385,363 5,760 1.49 Total interest-bearing deposits 1,858,710 5,215 0.28 1,656,480 5,230 0.32 1,525,515 11,034 0.72 Other borrowings 5,603 213 3.80 5,581 212 3.81 5,539 212 3.83 Subordinated debt 27,396 1,710 6.24 — — — — — — FHLB advances 32,762 777 2.36 27,319 471 1.72 45,065 672 1.49 Total interest-bearing liabilities 1,924,471 7,915 0.41 1,689,380 5,913 0.35 1,576,119 11,918 0.76 Noninterest-bearing liabilities 918,937 738,491 599,362 Total liabilities 2,843,408 2,427,871 2,175,481 Shareholders’ equity 335,454 338,007 316,131 Total liabilities and shareholders’ equity $ 3,178,862 $ 2,765,878 $ 2,491,612 Net interest-earning assets $ 1,056,053 $ 886,593 $ 725,805 Net interest income; net interest spread (TE) $ 118,015 3.78 % $ 100,989 3.76 % $ 92,211 3.72 % Net interest margin (TE) 3.92 % 3.88 % 3.96 % (1) Nonperforming loans are included in the respective average loan balances, net of deferred fees, discounts and loans in process.
For the Years Ended December 31, (dollars in thousands) 2023 2022 2021 Average Balance Interest Average Yield/ Rate Average Balance Interest Average Yield/ Rate Average Balance Interest Average Yield/ Rate Interest-earning assets: Loans receivable (1) $ 2,510,301 $ 149,338 5.88 % $ 2,174,967 $ 112,660 5.12 % $ 1,925,767 $ 101,577 5.22 % Investment securities (TE) Taxable 485,201 11,537 2.38 455,757 9,647 2.12 263,459 4,301 1.63 Tax-exempt 19,322 367 2.41 24,371 481 2.50 19,506 339 2.20 Total investment securities 504,523 11,904 2.38 480,128 10,128 2.14 282,965 4,640 1.67 Other interest-earning assets 54,323 2,421 4.46 325,429 3,142 0.97 367,241 685 0.19 Total interest-earning assets (TE) 3,069,147 163,663 5.28 2,980,524 125,930 4.19 2,575,973 106,902 4.11 Noninterest-earning assets 193,673 198,338 189,905 Total assets $ 3,262,820 $ 3,178,862 $ 2,765,878 Interest-bearing liabilities: Deposits: Savings, checking and money market $ 1,294,655 $ 13,424 1.04 % $ 1,499,981 $ 3,541 0.24 % $ 1,317,993 $ 2,882 0.22 % Certificates of deposit 465,710 14,080 3.02 358,729 1,674 0.47 338,487 2,348 0.69 Total interest-bearing deposits 1,760,365 27,504 1.56 1,858,710 5,215 0.28 1,656,480 5,230 0.32 Other borrowings 5,567 214 3.84 5,603 213 3.80 5,581 212 3.81 Subordinated debt 54,128 3,390 6.26 27,396 1,710 6.24 — — — FHLB advances 243,513 11,863 4.81 32,762 777 2.36 27,319 471 1.72 Total interest-bearing liabilities 2,063,573 42,971 2.08 1,924,471 7,915 0.41 1,689,380 5,913 0.35 Noninterest-bearing liabilities 851,942 918,937 738,491 Total liabilities 2,915,515 2,843,408 2,427,871 Shareholders’ equity 347,305 335,454 338,007 Total liabilities and shareholders’ equity $ 3,262,820 $ 3,178,862 $ 2,765,878 Net interest-earning assets $ 1,005,574 $ 1,056,053 $ 886,593 Net interest income; net interest spread (TE) $ 120,692 3.20 % $ 118,015 3.78 % $ 100,989 3.76 % Net interest margin (TE) 3.89 % 3.92 % 3.88 % (1) Nonperforming loans are included in the respective average loan balances, net of deferred fees, discounts and loans in process.
(dollars in thousands) 2022 2021 2022 vs 2021 Percent Increase (Decrease) 2020 2021 vs 2020 Percent Increase (Decrease) Noninterest income: Service fees and charges $ 4,920 $ 4,702 4.6 % $ 4,646 1.2 % Bank card fees 6,279 5,935 5.8 4,868 21.9 Gain on sale of loans, net 663 2,518 (73.7) 2,925 (13.9) Income from bank-owned life insurance 915 2,603 (64.8) 994 161.9 Gain (loss) on sale of assets, net 26 (504) (105.2) (11) 4,481.8 Other income 1,082 1,017 6.4 883 15.2 Total noninterest income $ 13,885 $ 16,271 (14.7) % $ 14,305 13.7 % 2022 compared to 2021 Noninterest income for 2022 totaled $13.9 million, down $2.4 million, or 14.7%, compared to 2021.
(dollars in thousands) 2023 2022 2023 vs 2022 Percent Increase (Decrease) 2021 2022 vs 2021 Percent Increase (Decrease) Noninterest income: Service fees and charges $ 4,992 $ 4,920 1.5 % $ 4,702 4.6 % Bank card fees 7,051 6,279 12.3 5,935 5.8 Gain on sale of loans, net 816 663 23.1 2,518 (73.7) Income from bank-owned life insurance 1,045 915 14.2 2,603 (64.8) Loss on sale of securities, net (249) — — — — (Loss) gain on sale of assets, net (27) 26 (203.8) (504) (105.2) Other income 1,008 1,082 (6.8) 1,017 6.4 Total noninterest income $ 14,636 $ 13,885 5.4 % $ 16,271 (14.7) % 2023 compared to 2022 Noninterest income for 2023 totaled $14.6 million, up $751,000, or 5.4%, compared to 2022.
The provision for loan losses during 2022 primarily reflected our assessment of the risk characteristics of loans acquired in the acquisition of Friendswood, which amounted to $3.8 million of the 2022 provision amount.
The provision for loan losses during 2022 primarily reflected our assessment of the risk characteristics of loans acquired in the acquisition of Friendswood, which amounted to $3.8 million of the 2022 provision amount and loan growth. 25 The following table presents the allocation of the allowance for loan losses as of December 31 for the years indicated.
The Company’s net interest spread was 3.78%, 3.76% and 3.72% for the years ended December 31, 2022, 2021, and 2020, respectively. Net interest income totaled $118.0 million in 2022, up $17.0 million, or 16.9%, compared to $101.0 million in 2021. The increase was primarily due to the addition of Friendswood's interest-earning assets.
The Company’s net interest spread was 3.20%, 3.78% and 3.76% for the years ended December 31, 2023, 2022, and 2021, respectively. Net interest income totaled $120.7 million in 2023, up $2.7 million, or 2.3%, compared to $118.0 million in 2022. The increase was primarily due to the impact of a full year of Friendswood's interest-earning assets and loan growth.
The provision for loan losses during 2022 reflected our assessment of the change in expected losses due primarily to the acquisition of Friendswood's loan portfolio and organic loan growth. Net charge-offs were $694,000 for 2022, compared to net charge-offs of $1.7 million and $2.3 million for 2021 and 2020, respectively.
The provision for loan losses during 2023 reflected our assessment of the change in expected losses due primarily to loan growth during the year. Net charge-offs were $103,000 for 2023, compared to net charge-offs of $694,000 and $1.7 million for 2022 and 2021, respectively. Net loan charge-offs for 2023 were primarily attributable to originated commercial and industrial and consumer loans.
The provision charged in 2022 was primarily the result of the acquisition of Friendswood and organic loan growth. The provision charged in 2022 included $3.8 million for loans acquired in the Friendswood acquisition. • The ALL totaled $29.3 million, or 1.21% of total loans, at December 31, 2022.
The provision charged in 2022 included $3.8 million for loans acquired in the Friendswood acquisition. • The ALL totaled $31.5 million, or 1.22% of total loans, at December 31, 2023.
(8) Tangible calculation eliminates goodwill, core deposit intangible and the corresponding amortization expense, net of tax. (9) Tangible calculation eliminates goodwill and core deposit intangible. This Selected Financial Data contains financial information prepared other than in accordance with generally accepted accounting principles (“GAAP”). The Company uses these non-GAAP financial measures in its analysis of the Company’s performance.
(7) Capital ratios are for Home Bank only. (8) Tangible calculation eliminates goodwill, core deposit intangible and the corresponding amortization expense, net of tax. (9) Tangible calculation eliminates goodwill and core deposit intangible. This Selected Financial Data contains financial information prepared other than in accordance with generally accepted accounting principles (“GAAP”).
December 31, 2022 2021 2020 (dollars in thousands) Amortized Cost Market Value Amortized Cost Market Value Amortized Cost Market Value Available for sale: U.S. agency mortgage-backed $ 355,014 $ 316,832 $ 234,720 $ 233,773 $ 138,669 $ 142,812 Collateralized mortgage obligations 91,217 86,345 31,356 31,912 74,112 75,620 Municipal bonds 67,476 57,625 51,094 50,719 27,306 28,011 U.S. government agency 20,600 19,333 5,615 5,614 6,210 6,255 Corporate bonds 6,980 6,383 5,500 5,614 2,000 2,054 Total available for sale 541,287 486,518 328,285 327,632 248,297 254,752 Held to maturity: Municipal bonds 1,075 1,072 2,102 2,132 2,934 2,996 Total held to maturity 1,075 1,072 2,102 2,132 2,934 2,996 Total investment securities $ 542,362 $ 487,590 $ 330,387 $ 329,764 $ 251,231 $ 257,748 The following table sets forth the fixed versus adjustable rate profile of the investment securities portfolio as of the dates indicated.
December 31, 2023 2022 2021 (dollars in thousands) Amortized Cost Market Value Amortized Cost Market Value Amortized Cost Market Value Available for sale: U.S. agency mortgage-backed $ 314,569 $ 283,853 $ 355,014 $ 316,832 $ 234,720 $ 233,773 Collateralized mortgage obligations 82,764 79,262 91,217 86,345 31,356 31,912 Municipal bonds 53,891 46,674 67,476 57,625 51,094 50,719 U.S. government agency 19,151 18,049 20,600 19,333 5,615 5,614 Corporate bonds 6,982 6,088 6,980 6,383 5,500 5,614 Total available for sale 477,357 433,926 541,287 486,518 328,285 327,632 Held to maturity: Municipal bonds 1,065 1,066 1,075 1,072 2,102 2,132 Total held to maturity 1,065 1,066 1,075 1,072 2,102 2,132 Total investment securities $ 478,422 $ 434,992 $ 542,362 $ 487,590 $ 330,387 $ 329,764 The following table sets forth the fixed versus adjustable rate profile of the investment securities portfolio as of the dates indicated.
For the year ended December 31, 2022, the Company provisioned $7.5 million of the allowance for loan losses compared to a reversal of $10.2 million for the year ended December 31, 2021.
For the year ended December 31, 2023, the Company provisioned $2.3 million of the allowance for loan losses compared to a provision of $7.5 million for the year ended December 31, 2022. The provision for loan losses during 2023 primarily reflected our loan growth during the year.
Foreclosed assets and ORE were also down $728,000, or 61.2%, from December 31, 2021. 28 Investment Securities The Company invests in securities pursuant to our Investment Policy, which has been approved by our Board of Directors.
Foreclosed assets and ORE were up $1.1 million, or 241.6%, from December 31, 2022. 29 Investment Securities The Company invests in securities pursuant to our Investment Policy, which has been approved by our Board of Directors.
At adoption, the pools were discontinued and performance is based on contractual terms for individual loans. Refer to Note 2 to the Consolidated Financial Statements for more information on the adoption of ASC 326.
At adoption, the pools were discontinued and performance is based on contractual terms for individual loans. Refer to Note 2 to the Consolidated Financial Statements for more information on the adoption of ASC 326. PCI loans that were 90 days or more past due and were accounted for under ASC 310-30 totaled $2.2 million at December 31, 2019.
The Company had $155.0 million short-term FHLB advances as of December 31, 2022, compared to no short-term FHLB advances as of December 31, 2021. Long-term FHLB advances totaled $21.2 million as of December 31, 2022, down $4.8 million, or 18.6%, compared to $26.0 million as of December 31, 2021.
The Company had $150.0 million short-term FHLB advances as of December 31, 2023, down $5.0 million, or 3.2%, compared to $155.0 million as of December 31, 2022. Long-term FHLB advances totaled $42.7 million as of December 31, 2023, up $21.5 million, or 101.4%, compared to $21.2 million as of December 31, 2022.
RESULTS OF OPERATIONS Net income in 2022 was $34.1 million, down $14.5 million, or 29.9%, compared to 2021. Diluted EPS for 2022 was $4.16, down $1.61, or 27.9%, from 2021. The net income in 2022 was significantly impacted by the acquisition of Friendswood, less recognition of PPP lender fees and the provision for loan losses over the comparable period.
Diluted EPS for 2022 was $4.16, down $1.61, or 27.9% from 2021. The net income in 2022 was significantly impacted by the acquisition of Friendswood and the provision for loan losses.
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). 2022 Compared to 2021 Change Attributable To 2021 Compared to 2020 Change Attributable To (dollars in thousands) Rate Volume Total Increase (Decrease) Rate Volume Total Increase (Decrease) Interest income: Loans receivable $ 4,086 $ 6,997 $ 11,083 $ 1,320 $ 1,151 $ 2,471 Investment securities 2,505 2,983 5,488 (84) 161 77 Other interest-earning assets 1,599 858 2,457 (4) 229 225 Total interest income 8,190 10,838 19,028 1,232 1,541 2,773 Interest expense: Savings, checking and money market accounts 314 345 659 (1,645) (747) (2,392) Certificates of deposit (451) (223) (674) (2,006) (1,406) (3,412) Other borrowings — 1 1 — — — Subordinated debt — 1,710 1,710 — — — FHLB advances 157 149 306 (81) (120) (201) Total interest expense 20 1,982 2,002 (3,732) (2,273) (6,005) Increase (decrease) in net interest income $ 8,170 $ 8,856 $ 17,026 $ 4,964 $ 3,814 $ 8,778 Interest income includes interest income earned on earning assets as well as applicable loan fees earned.
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). 2023 Compared to 2022 Change Attributable To 2022 Compared to 2021 Change Attributable To (dollars in thousands) Rate Volume Total Increase (Decrease) Rate Volume Total Increase (Decrease) Interest income: Loans receivable $ 18,114 $ 18,564 $ 36,678 $ 4,086 $ 6,997 $ 11,083 Investment securities 972 804 1,776 2,505 2,983 5,488 Other interest-earning assets 1,401 (2,122) (721) 1,599 858 2,457 Total interest income 20,487 17,246 37,733 8,190 10,838 19,028 Interest expense: Savings, checking and money market accounts 6,501 3,382 9,883 314 345 659 Certificates of deposit 7,296 5,110 12,406 (451) (223) (674) Other borrowings 1 — 1 — 1 1 Subordinated debt 630 1,050 1,680 — 1,710 1,710 FHLB advances 4,461 6,625 11,086 157 149 306 Total interest expense 18,889 16,167 35,056 20 1,982 2,002 Increase (decrease) in net interest income $ 1,598 $ 1,079 $ 2,677 $ 8,170 $ 8,856 $ 17,026 Interest income includes interest income earned on earning assets as well as applicable loan fees earned.
Net loan charge-offs for 2022 were primarily attributable to an originated commercial and industrial loan and one acquired Friendswood commercial relationship. Charge-offs during 2021 were primarily attributable to an acquired hotel loan and one originated commercial relationship, both of which were nonperforming prior to the COVID-19 crisis. Item 7.
Charge-offs during 2022 were primarily attributable to an originated commercial and industrial loan and one acquired Friendswood commercial relationship. Item 7.
(4) The efficiency ratio represents noninterest expense as a percentage of total revenues. Total revenues is the sum of net interest income and noninterest income. (5) Asset quality and capital ratios are end-of-period ratios.
(4) The efficiency ratio represents noninterest expense as a percentage of total revenues. Total revenues is the sum of net interest income and noninterest income. (5) Asset quality and capital ratios are end-of-period ratios. (6) Due to the adoption of ASC 326, asset quality ratios are based on total non-performing assets at December 31, 2023, 2022, 2021 and 2020.
Acquired assets, which were foreclosed assets or ORE, totaled $2.4 million and $1.4 million at December 31, 2019 and 2018, respectively. Refer to Note 2 to the Consolidated Financial Statements for more information on the adoption of ASC 326. (7) Capital ratios are for Home Bank only.
Acquired nonimpaired loans, which were on nonaccrual or 90 days or more past due totaled $9.8 million at December 31, 2019. Acquired assets, which were foreclosed assets or ORE, totaled $2.4 million at December 31, 2019. Refer to Note 2 to the Consolidated Financial Statements for more information on the adoption of ASC 326.
Certificates of deposits totaled $335.4 million as of December 31, 2022, up $16.1 million, or 5.0%, compared to December 31, 2021. The following table sets forth the composition of the Company’s deposits as of the dates indicated.
Total deposits were $2.7 billion as of December 31, 2023, up $37.4 million, or 1.4%, compared to December 31, 2022. Certificates of deposits totaled $644.7 million as of December 31, 2023, up $309.3 million, or 92.2%, compared to December 31, 2022. The following table sets forth the composition of the Company’s deposits as of the dates indicated.
In addition to market risk, our primary risk is credit risk on our loan portfolio. We attempt to manage credit risk through our loan underwriting and oversight policies.
In addition to market risk, our primary risk is credit risk on our loan portfolio.
The ratio of nonperforming assets to total assets was 0.34% at December 31, 2022, compared to 0.49% at December 31, 2021. As of December 31, 2022, total nonperforming loans were down $2.8 million, or 20.8%, from December 31, 2021 primarily due to improved performance of loans and paydowns on nonaccrual loans.
As of December 31, 2023, total nonperforming loans were down $1.7 million, or 16.2%, from December 31, 2022 primarily due to improved performance of loans and paydowns on nonaccrual loans.
Acquired nonimpaired loans, which were on nonaccrual or 90 days or more past due, and acquired assets, which were foreclosed assets or ORE, are not included for periods prior to January 1, 2020. Acquired nonimpaired loans, which were on nonaccrual or 90 days or more past due totaled $9.8 million and $9.0 million at December 31, 2019 and 2018, respectively.
For the periods prior to January 1, 2020, asset quality ratios represent originated non-performing assets. Acquired nonimpaired loans, which were on nonaccrual or 90 days or more past due, and acquired assets, which were foreclosed assets or ORE, are not included for periods prior to January 1, 2020.
The remaining balance of $94,000 in deferred lender fees at December 31, 2022 will be amortized into interest income over the remaining life of the PPP loans.
The remaining balance of $60,000 in deferred lender fees at December 31, 2023 will be amortized into interest income over the remaining life of the PPP loans. 33 In 2022, net interest income totaled $118.0 million, up $17.0 million, or 16.9%, compared to $101.0 million in 2021.
(dollars in thousands) Available for Sale Held to Maturity Balance, December 31, 2021 $ 327,632 $ 2,102 Purchases 238,498 — Acquired from Friendswood, at fair value 33,411 — Sales — — Principal maturities, prepayments and calls (57,922) (1,000) Amortization of premiums and accretion of discounts (985) (27) Decrease in market value (54,116) Balance, December 31, 2022 $ 486,518 $ 1,075 As of December 31, 2022, the Company had a net unrealized loss on its available for sale investment securities portfolio of $54.8 million, compared to a net unrealized loss of $653,000 as of December 31, 2021.
(dollars in thousands) Available for Sale Held to Maturity Balance, December 31, 2022 $ 486,518 $ 1,075 Sales (14,011) — Principal maturities, prepayments and calls (49,554) — Amortization of premiums and accretion of discounts (364) (10) Increase in market value 11,337 Balance, December 31, 2023 $ 433,926 $ 1,065 As of December 31, 2023, the Company had a net unrealized loss on its available for sale investment securities portfolio of $43.4 million, compared to a net unrealized loss of $54.8 million as of December 31, 2022.
At December 31, 2022, shareholders’ equity totaled $330.0 million, down $21.9 million, or 6.2%, compared to $351.9 million at December 31, 2021. The decrease was primarily due to other comprehensive loss, repurchase of shares and dividends paid to shareholders, which were partially offset by the Company’s earnings for the year ended December 31, 2022.
At December 31, 2023, shareholders’ equity totaled $367.4 million, up $37.5 million, or 11.4%, compared to $330.0 million at December 31, 2022. The increase was primarily due to the Company’s earnings for the year ended December 31, 2023 and a reduction in other comprehensive loss, partially offset by shareholders' dividends and repurchases of shares of the Company's common stock.
EXECUTIVE OVERVIEW The Company reported net income for 2022 of $34.1 million, or $4.16 diluted EPS compared to $48.6 million, or $5.77 diluted EPS, reported for 2021. Key components of the Company's performance in 2022 are summarized below.
EXECUTIVE OVERVIEW The Company reported net income for 2023 of $40.2 million, or $4.99 diluted EPS compared to $34.1 million, or $4.16 diluted EPS, reported for 2022.
The increase in loans was due to the Friendswood acquisition and organic loan growth. • During the year ended December 31, 2022, the Company provisioned $7.5 million of the allowance for loan losses compared to a $10.2 million reversal for the year ended December 31, 2021.
For the year ended December 31, 2023, the Company provisioned $2.3 million of the allowance for loan losses compared to a provision of $7.5 million for the year ended December 31, 2022. The provision during 2022 was significantly impacted by the acquisition of Friendswood. Net income in 2022 was $34.1 million, down $14.5 million, or 29.9%, compared to 2021.
In addition, occupancy costs increased by $1.7 million in 2022 compared to 2021, primarily reflecting costs related to the additional offices in the Houston market area acquired in the Friendswood acquisition. 2021 compared to 2020 Noninterest expense for 2021 totaled $67.0 million, up $4.0 million, or 6.4%, from 2020.
In addition, occupancy costs increased by $1.7 million in 2022 compared to 2021, primarily reflecting costs related to the additional offices in the Houston market area acquired in the Friendswood acquisition. Income Taxes For the years ended December 31, 2023, 2022 and 2021, the Company incurred income tax expense of $9.9 million, $8.4 million and $11.8 million, respectively.
The Company's effective tax rate in 2021 remained consistent with 2020. 36 LIQUIDITY AND CAPITAL RESOURCES 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.
During 2021, the Company recognized a life insurance benefit of $1.7 million following the death of an employee during the third quarter of 2021. LIQUIDITY AND CAPITAL RESOURCES 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.
December 31, Increase/(Decrease) (dollars in thousands) 2022 2021 Amount Percent Demand deposit $ 904,301 $ 766,385 $ 137,916 18.0 % Savings 305,871 285,728 20,143 7.0 Money market 423,990 371,478 52,512 14.1 NOW 663,574 792,919 (129,345) (16.3) Certificates of deposit 335,445 319,339 16,106 5.0 Total deposits $ 2,633,181 $ 2,535,849 $ 97,332 3.8 % The following table shows the daily average balances of deposits by type and weighted-average rate paid for the periods indicated.
December 31, Increase/(Decrease) (dollars in thousands) 2023 2022 Amount Percent Demand deposit $ 744,424 $ 904,301 $ (159,877) (17.7) % Savings 231,624 305,871 (74,247) (24.3) Money market 408,024 423,990 (15,966) (3.8) NOW 641,818 663,574 (21,756) (3.3) Certificates of deposit 644,734 335,445 309,289 92.2 Total deposits $ 2,670,624 $ 2,633,181 $ 37,443 1.4 % The following table shows the daily average balances of deposits by type and weighted-average rate paid for the periods indicated.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeItem 7A. Quantitative and Qualitative Disclosures about Market Risk . The information contained in the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Asset/Liability Management and Market Risk” in Item 7 hereof is incorporated herein by reference. 39
Biggest changeItem 7A. Quantitative and Qualitative Disclosures about Market Risk . The information contained in the section captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Asset/Liability Management and Market Risk” in Item 7 hereof is incorporated herein by reference. 40

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