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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



☒		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2019



☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-34737

LEGACYTEXAS FINANCIAL GROUP, INC.

(Exact name of registrant as specified in its charter)



Maryland		27-2176993
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

5851 Legacy Circle
Plano,	Texas	75024
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (972) 578-5000



Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class	Trading Symbol	Name of Each Exchange on Which Registered

Common Stock, par value $0.01 per share	LTXB	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:



Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.			☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.



Class: Common Stock		Shares Outstanding as of July 22, 2019:
		48,836,238

LEGACYTEXAS FINANCIAL GROUP, INC.

FORM 10-Q

June 30, 2019

INDEX



PART I -- FINANCIAL INFORMATION	3
Item 1. Financial Statements:	3
Consolidated Balance Sheets at June 30, 2019 (unaudited) and December 31, 2018	3
Consolidated Statements of Income (unaudited) for the three and six months ended June 30, 2019 and 2018	4
Consolidated Statements of Comprehensive Income (unaudited) for the three and six months ended June 30, 2019 and 2018	5
Consolidated Statements of Changes in Shareholders’ Equity (unaudited) for the three and six months ended June 30, 2019 and 2018	6
Consolidated Statements of Cash Flows (unaudited) for the six months ended June 30, 2019 and 2018	7
Condensed Notes to Unaudited Consolidated Interim Financial Statements	9

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	35

Item 3. Quantitative and Qualitative Disclosures about Market Risk	54

Item 4. Controls and Procedures	57

PART II—OTHER INFORMATION	58

Item 1. Legal Proceedings	58

Item 1.A. Risk Factors	58

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	58

Item 3. Defaults Upon Senior Securities	58

Item 4. Mine Safety Disclosures	58

Item 5. Other Information	58

Item 6. Exhibits	59

SIGNATURE PAGE	61

PART 1 - FINANCIAL INFORMATION Item 1. Financial Statements

LEGACYTEXAS FINANCIAL GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share and per share data)



	June 30, 2019			December 31, 2018
ASSETS	(unaudited)
Cash and due from financial institutions	$	56,949		$	60,416
Short-term interest-bearing deposits in other financial institutions	206,894			208,777
Total cash and cash equivalents	263,843			269,193
Securities available for sale, at fair value	459,749			471,746
Securities held to maturity (fair value: June 30, 2019 — $128,864; December 31, 2018— $144,791)	127,836			146,046
Loans held for sale, at fair value	46,571			23,193
Loans held for investment:
Loans held for investment (net of allowance for loan losses of $92,219 at June 30, 2019 and $67,428 at December 31, 2018)	6,999,607			6,733,692
Loans held for investment - Warehouse Purchase Program	1,542,684			960,404
Total loans held for investment	8,542,291			7,694,096
Federal Home Loan Bank (“FHLB”) stock and other restricted securities, at cost	79,195			56,226
Bank-owned life insurance	59,724			59,036
Premises and equipment, net	106,313			73,073
Goodwill	178,559			178,559
Other assets	71,853			79,974
Total assets	$	9,935,934		$	9,051,142
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Non-interest-bearing demand	$	1,847,229		$	1,773,762
Interest-bearing demand	855,026			826,755
Savings and money market	2,548,966			2,455,787
Time	1,804,569			1,785,411
Total deposits	7,055,790			6,841,715
FHLB advances	1,384,765			825,409
Repurchase agreements	52,414			50,340
Subordinated debt	135,257			135,012
Accrued expenses and other liabilities	165,063			104,299
Total liabilities	8,793,289			7,956,775
Commitments and contingent liabilities (See Note 11)
Shareholders’ equity
Preferred stock, $.01 par value; 10,000,000 shares authorized; 0 shares issued — June 30, 2019 and December 31, 2018	—			—
Common stock, $.01 par value; 90,000,000 shares authorized; 48,833,238 shares issued — June 30, 2019 and 48,505,261 shares issued — December 31, 2018	488			485
Additional paid-in capital	628,730			619,983
Retained earnings	523,693			491,948
Accumulated other comprehensive income (loss), net	860			(6,658		)
Unearned Employee Stock Ownership Plan (ESOP) shares; 1,112,664 shares at June 30, 2019 and 1,139,140 shares at December 31, 2018	(11,126		)	(11,391		)
Total shareholders’ equity	1,142,645			1,094,367
Total liabilities and shareholders’ equity	$	9,935,934		$	9,051,142
See accompanying notes to consolidated financial statements.

LEGACYTEXAS FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

(Dollars in thousands, except per share data)



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Interest and dividend income
Loans, including fees	$	108,154		$	98,570		$	208,455		$	189,201
Taxable securities	3,460			3,132			7,062			6,043
Nontaxable securities	410			641			753			1,316
Interest-bearing deposits in other financial institutions	1,370			1,097			2,647			2,066
FHLB and FRB stock and other	683			551			1,264			1,031
	114,077			103,991			220,181			199,657
Interest expense
Deposits	20,444			13,732			38,659			25,764
FHLB advances	5,794			4,131			10,250			6,811
Repurchase agreements and other borrowings	2,285			2,199			4,554			4,540
	28,523			20,062			53,463			37,115
Net interest income	85,554			83,929			166,718			162,542
Provision for credit losses	16,100			17,478			25,900			33,141
Net interest income after provision for credit losses	69,454			66,451			140,818			129,401
Non-interest income
Service charges and other fees	9,882			8,844			17,137			16,771
Net gain on sale of mortgage loans held for sale	2,879			1,668			4,404			3,477
Bank-owned life insurance income	489			479			971			926
Net gain (loss) on securities transactions	—			—			6			(128		)
Gain (loss) on sale and disposition of assets	18			(153		)	4			2,060
Other	(1,036		)	14			(396		)	644
	12,232			10,852			22,126			23,750
Non-interest expense
Salaries and employee benefits	26,586			24,313			53,457			51,389
Merger costs	2,362			—			2,362			—
Advertising	982			1,358			1,885			2,246
Occupancy and equipment	3,950			3,980			7,849			7,840
Outside professional services	1,674			1,382			2,959			2,632
Regulatory assessments	831			731			1,449			1,885
Data processing	5,739			5,145			11,672			9,848
Office operations	2,568			2,224			4,903			4,524
Other	2,834			3,058			5,297			5,706
	47,526			42,191			91,833			86,070
Income before income tax expense	34,160			35,112			71,111			67,081
Income tax expense	7,177			7,275			15,048			13,482
Net income	$	26,983		$	27,837		$	56,063		$	53,599

Earnings per share:
Basic	$	0.57		$	0.59		$	1.18		$	1.14
Diluted	$	0.56		$	0.58		$	1.17		$	1.12
Dividends declared per share	$	0.25		$	0.16		$	0.50		$	0.32

See accompanying notes to consolidated financial statements.

LEGACYTEXAS FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

(Dollars in thousands)



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2019			2018			2019			2018
Net income	$	26,983		$	27,837		$	56,063		$	53,599
Change in unrealized gains (losses) on securities available for sale	4,169			(1,532		)	9,522			(6,377		)
Reclassification of amount realized through securities transactions	—			—			(6		)	128
Tax effect	(876		)	322			(1,998		)	1,310
Reclassification of income tax effects of the Tax Cuts and Jobs Act	—			—			—			(741		)
Other comprehensive income (loss), net of tax	3,293			(1,210		)	7,518			(5,680		)
Comprehensive income	$	30,276		$	26,627		$	63,581		$	47,919

See accompanying notes to consolidated financial statements.

LEGACYTEXAS FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

(unaudited)

(Dollars in thousands, except share and per share data)



	Common Stock		Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Income (Loss), Net			Unearned ESOP Shares			Total Shareholders’ Equity
For the six months ended June 30, 2019
Balance at January 1, 2019	$	485	$	619,983	$	491,948		$	(6,658	)	$	(11,391	)	$	1,094,367
Net income	—		—		29,080			—			—			29,080
Other comprehensive income, net of tax	—		—		—			4,225			—			4,225
Dividends declared ($0.25 per share)	—		—		(12,141		)	—			—			(12,141		)
ESOP shares earned (13,238 shares)	—		385		—			—			132			517
Share-based compensation expense	—		2,550		—			—			—			2,550
Activity in employee stock plans (198,809 shares)	2		2,487		—			—			—			2,489
Balance at March 31, 2019	$	487	$	625,405	$	508,887		$	(2,433	)	$	(11,259	)	$	1,121,087
Net income	—		—		26,983			—			—			26,983
Other comprehensive income, net of tax	—		—		—			3,293			—			3,293
Dividends declared, ($0.25 per share)	—		—		(12,177		)	—			—			(12,177		)
ESOP shares earned, (13,238 shares)	—		387		—			—			133			520
Share-based compensation expense	—		2,015		—			—			—			2,015
Activity in employee stock plans, (129,168 shares)	1		923		—			—			—			924
Balance at June 30, 2019	$	488	$	628,730	$	523,693		$	860		$	(11,126	)	$	1,142,645


For the six months ended June 30, 2018
Balance at January 1, 2018	$	481	$	603,884	$	370,858		$	(3,429	)	$	(11,920	)	$	959,874
Net income	—		—		25,762			—			—			25,762
Other comprehensive (loss), net of tax	—		—		—			(4,470		)	—			(4,470		)
Reclassification of income tax effects of the Tax Cuts and Jobs Act	—		—		741			—			—			741
Dividends declared ($0.16 per share)	—		—		(7,708		)	—			—			(7,708		)
ESOP shares earned (13,238 shares)	—		447		—			—			131			578
Share-based compensation expense	—		2,055		—			—			—			2,055
Activity in employee stock plans (147,576 shares)	2		2,660		—			—			—			2,662
Balance at March 31, 2018	$	483	$	609,046	$	389,653		$	(7,899	)	$	(11,789	)	$	979,494
Net income	—		—		27,837			—			—			27,837
Other comprehensive (loss), net of tax	—		—		—			(1,210		)	—			(1,210		)
Dividends declared, ($.16 per share)	—		—		(7,725		)	—			—			(7,725		)
ESOP shares earned, (13,238 shares)	—		427		—			—			133			560
Share-based compensation expense	—		1,398		—			—			—			1,398
Activity in employee stock plans, (46,254 shares)	—		1,096		—			—			—			1,096
Balance at June 30, 2018	$	483	$	611,967	$	409,765		$	(9,109	)	$	(11,656	)	$	1,001,450

See accompanying notes to consolidated financial statements.

LEGACYTEXAS FINANCIAL GROUP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(Dollars in thousands)



	Six Months Ended June 30,
	2019			2018
Cash flows from operating activities
Net income	$	56,063		$	53,599
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses	25,900			33,141
Depreciation and amortization	5,678			3,401
Deferred tax benefit	(7,280		)	2,226
Premium amortization and accretion of securities, net	1,912			1,986
Accretion related to acquired loans	(491		)	(1,147		)
Net (gain) loss on securities transactions	(6		)	128
ESOP compensation expense	1,037			1,138
Share-based compensation expense	4,565			3,453
Excess tax benefit on vesting of stock awards	140			681
Net gain on loans held for sale	(4,404		)	(3,477		)
Loans originated or purchased for sale	(108,201		)	(100,470		)
Proceeds from sale of loans held for sale	89,227			87,106
FHLB stock dividends	(588		)	(391		)
Bank-owned life insurance income	(971		)	(926		)
(Gain) loss on sale and disposition of repossessed assets, premises and equipment	(31		)	190
Net change in deferred loan fees/costs	(1,354		)	(2,744		)
Net change in accrued interest receivable	(5,421		)	(1,093		)
Net change in other assets	10,972			(3,246		)
Net change in other liabilities	31,516			28,904
Net cash provided by operating activities	98,263			102,459
Cash flows from investing activities
Available-for-sale securities:
Maturities, prepayments and calls	343,727			1,087,449
Purchases	(347,545		)	(1,121,303		)
Proceeds from sale of AFS securities	23,886			—
Held-to-maturity securities:
Maturities, prepayments and calls	17,751			23,236
Purchases	—			(5,388		)
Originations of Warehouse Purchase Program loans	(10,460,194		)	(10,980,262		)
Proceeds from pay-offs of Warehouse Purchase Program loans	9,877,914			11,009,979
Net change in loans held for investment, excluding Warehouse Purchase Program loans	(290,389		)	(227,028		)
Purchase of FHLB and Federal Reserve Bank stock and other	(22,381		)	(880		)
Purchases of premises and equipment	(2,128		)	(4,454		)
Proceeds from sale of assets	1,146			1,225
Net cash (used in) investing activities	(858,213		)	(217,426		)

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) (Dollars in thousands)

	Six Months Ended June 30,
	2019			2018
Cash flows from financing activities
Net change in deposits	214,075			113,665
Proceeds from FHLB advances	1,380,000			1,055,000
Repayments on FHLB advances	(820,644		)	(1,032,222		)
Proceeds from (repayments of) borrowings	2,074			(43,346		)
Payment of dividends	(24,318		)	(15,433		)
Activity in employee stock plans	3,413			3,758
Net cash provided by financing activities	754,600			81,422
Net change in cash and cash equivalents	(5,350		)	(33,545		)
Beginning cash and cash equivalents	269,193			293,456
Ending cash and cash equivalents	$	263,843		$	259,911
Supplemental noncash disclosures:
Transfers from loans to other real estate owned	$	286		$	25
Leased assets obtained in exchange for new operating lease liabilities	$	36,503		$	—
See accompanying notes to consolidated financial statements.

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LEGACYTEXAS FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Note 1 - Basis of Financial Statement Presentation

The accompanying unaudited consolidated interim financial statements of LegacyTexas Financial Group, Inc. (the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“US GAAP”) and with the rules and regulations of the Securities and Exchange Commission for interim financial reporting. Accordingly, they do not include all of the information and footnotes required for complete financial statements. In the opinion of management, all normal and recurring adjustments which are considered necessary to fairly present the results for the interim periods presented have been included. Certain items in prior periods were reclassified to conform to the current presentation. These statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 (“2018 Form 10-K”). Interim results are not necessarily indicative of results for a full year.

In preparing the financial statements, management is required to make estimates and assumptions that affect the recorded amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the period. Actual results could differ from those estimates. For further information with respect to significant accounting policies followed by the Company in preparation of its consolidated financial statements, refer to the 2018 Form 10-K.

The accompanying unaudited consolidated interim financial statements include the accounts of the Company, whose business primarily consists of the operations of its wholly owned subsidiary, LegacyTexas Bank (the “Bank”). All significant intercompany transactions and balances are eliminated in consolidation.

On June 17, 2019, the Company and Prosperity Bancshares, Inc.^® (“Prosperity”) jointly announced the signing of a definitive merger agreement (the “merger agreement”) pursuant to which the Company will merge with Prosperity, with Prosperity as the surviving entity.

Under the terms of the merger agreement, shareholders of the Company will receive 0.5280 shares of Prosperity common stock and $6.28 cash for each share of common stock, subject to certain conditions. Based on Prosperity’s closing price of $67.24 on June 14, 2019, the total consideration was valued at approximately $2.1 billion, or approximately $41.78 per share.

Kevin Hanigan, the Company’s President and Chief Executive Officer, will join the Prosperity team as the President and Chief Operating Officer of Prosperity and President of Prosperity Bank; and Mays Davenport, the Company’s Chief Financial Officer, will be named Executive Vice President and Director of Corporate Strategy of Prosperity and Prosperity Bank. Scott Almy, Tom Swiley, Chuck Eikenberg and Aaron Shelby will hold senior management positions at Prosperity Bank.

In addition, upon completion of the merger, Kevin Hanigan and two independent directors of the Company will join the Board of Directors of Prosperity, which will be expanded accordingly. Mays Davenport will join the Board of Directors of Prosperity Bank.

The merger has been unanimously approved by the Board of Directors of Prosperity and unanimously approved by the independent directors of LegacyTexas, with Mr. Hanigan abstaining, and is expected to close during the fourth quarter of 2019, although delays could occur. The transaction is subject to certain conditions, including the approval by the Company shareholders and Prosperity shareholders and customary regulatory approvals.

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LEGACYTEXAS FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Note 2 - Revenue Recognition

Revenue recognized from contracts with customers, which is accounted for under Accounting Standards Codification (“ASC”) 606, is entirely included in the Company’s non-interest income. Interest income and certain types of non-interest income are not accounted for under ASC 606 as it is accounted for under other accounting standards. Significant revenue streams recognized by the Company from contracts with customers accounted for under ASC 606 for the three and six months ended June 30, 2019 and 2018, are below:



		Three Months Ended June 30,				Six Months Ended June 30,
		2019		2018		2019		2018
Card services income	(a)	$	3,583	$	3,295	$	6,595	$	6,353
Service charges on deposits	(b)	2,058		1,957		4,030		3,730
Title income	(c)	1,562		1,196		2,348		2,253
Gains (losses) on the sale of other real estate owned	(d)	45		9		40		(31		)

(a) Card services income -

Card services income includes interchange income, which is income earned by the Company for each transaction a cardholder performs at a merchant. This performance obligation is settled on a daily basis as transactions are processed. Card services income also includes revenue earned from companies who provide our customers with debit cards and/or provide card processing services in exchange for the Company’s promotion of their card programs to the Company’s depositors. These payments are remitted based on contractual terms that dictate how much payment is remitted based on volume expectations. This performance obligation settles on a daily basis as our customers use cards and card processing services at merchants.

(b) Service charges on deposits -

The Company receives non-interest income for providing services related to deposit accounts, including fee income generated from non-sufficient funds transactions, wire transfers, ATM activity and treasury management services. This income is recorded when incurred in the case of deposit account service charges or when collected in the case of miscellaneous one-time fees, like wire transfer fees. Since most deposit agreements have a day-to-day term, the performance obligation between the Company and the depositor is satisfied on a daily basis, or as incurred.

Title services offered by the Company through its wholly-owned subsidiary, LegacyTexas Title, consists of referring title insurance policies to other title companies and performing real estate closing duties for a set fee. The performance obligation (referring title policies to other title insurance agencies and handling customary closing services) settles daily at each real estate closing.

(d) Gains/losses on the sale of other real estate owned -

The performance obligation in the sale of other real estate owned typically will be delivery of control over the property to the buyer. If the Company is not providing financing, the transaction price is typically identified in the purchase and sale agreement. However, if the Company provides seller financing, the Company must determine a transaction price, depending on if the sale contract is at market terms and taking into account the credit risk inherent in the sales arrangement.

The performance obligations described in (b), (c), and (d) above are typically related to contracts that have an original expected duration of less than one year.

In regards to card services income, because the Company has a right to consideration from card service providers in the form of transaction-based and support income, and from cardholders in the form of interchange income in an amount that corresponds directly with the value to the card service provider and cardholder of the Company’s performance completed to date, the Company recognizes revenue as incurred when transactions with merchants settle on a daily basis.

The Company has made no significant judgments in applying the revenue guidance prescribed in ASC 606 that affect the determination of the amount and timing of revenue from the above-described contracts with customers.

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LEGACYTEXAS FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The Company has applied ASC 606 using the modified retrospective approach effective on January 1, 2018 to all existing contracts with customers covered under the scope of the standard. The Company did not have an aggregate effect of modification resulting from adoption of ASC 606, and no financial statement line items were affected by this change in accounting standard.

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LEGACYTEXAS FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Note 3 - Earnings Per Common Share

Earnings per common share is computed using the two-class method as more fully described in the Company’s 2018 Form 10-K. A reconciliation of the numerator and denominator of the basic and diluted earnings per common share computation for the three and six months ended June 30, 2019 and 2018 is as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Basic earnings per share:
Numerator:
Net income	$	26,983		$	27,837		$	56,063		$	53,599
Distributed and undistributed earnings to participating securities	(146		)	(67		)	(273		)	(143		)
Income available to common shareholders	$	26,837		$	27,770		$	55,790		$	53,456
Denominator:
Weighted average common shares outstanding	48,762,922			48,287,755			48,674,727			48,242,925
Less: Average unallocated ESOP shares	(1,121,344		)	(1,174,297		)	(1,127,926		)	(1,180,879		)
Average unvested restricted stock awards	(258,264		)	(113,053		)	(231,625		)	(125,323		)
Average shares for basic earnings per share	47,383,314			47,000,405			47,315,176			46,936,723
Basic earnings per common share	$	0.57		$	0.59		$	1.18		$	1.14
Diluted earnings per share:
Numerator:
Income available to common shareholders	$	26,837		$	27,770		$	55,790		$	53,456
Denominator:
Average shares for basic earnings per share	47,383,314			47,000,405			47,315,176			46,936,723
Dilutive effect of share-based compensation plan	540,077			617,752			561,917			651,373
Average shares for diluted earnings per share	47,923,391			47,618,157			47,877,093			47,588,096
Diluted earnings per common share	$	0.56		$	0.58		$	1.17		$	1.12
Share awards excluded in the computation of diluted earnings per share because the exercise price was greater than the common stock average market price and were therefore antidilutive	254,171			479,531			348,630			553,390

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LEGACYTEXAS FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Note 4 - Securities

The amortized cost, related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) and the fair value of securities available for sale (“AFS”) were as follows:



June 30, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Agency residential mortgage-backed securities ¹	$	135,233	$	344	$	970	$	134,607
Agency commercial mortgage-backed securities ¹	8,187		—		34		8,153
Agency residential collateralized mortgage obligations ¹	292,946		2,387		961		294,372
Municipal bonds	22,294		330		7		22,617
Total securities	$	458,660	$	3,061	$	1,972	$	459,749
December 31, 2018
Agency residential mortgage-backed securities ¹	$	153,671	$	283	$	4,083	$	149,871
Agency commercial mortgage-backed securities ¹	9,063		—		143		8,920
Agency residential collateralized mortgage obligations ¹	284,886		603		4,850		280,639
US government and agency securities	1,500		43		—		1,543
Municipal bonds	31,053		87		367		30,773
Total securities	$	480,173	$	1,016	$	9,443	$	471,746


¹	Mortgage-backed securities and collateralized mortgage obligations are issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

The amortized cost (carrying amount), related gross unrealized gains and losses and fair value of securities held to maturity (“HTM”) were as follows:



June 30, 2019	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Agency residential mortgage-backed securities ¹	$	47,615	$	613	$	230	$	47,998
Agency commercial mortgage-backed securities ¹	21,612		343		—		21,955
Agency residential collateralized mortgage obligations ¹	13,890		96		31		13,955
Municipal bonds	44,719		300		63		44,956
Total securities	$	127,836	$	1,352	$	324	$	128,864
December 31, 2018
Agency residential mortgage-backed securities ¹	$	53,377	$	266	$	1,151	$	52,492
Agency commercial mortgage-backed securities ¹	21,872		60		167		21,765
Agency residential collateralized mortgage obligations ¹	17,645		25		124		17,546
Municipal bonds	53,152		305		469		52,988
Total securities	$	146,046	$	656	$	1,911	$	144,791


¹	Mortgage-backed securities and collateralized mortgage obligations are issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

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LEGACYTEXAS FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

The amortized cost (carrying amount) and fair value of HTM debt securities and the fair value of AFS debt securities at June 30, 2019 by contractual maturity are set forth in the table below. Securities with contractual payments not due at a single maturity date, including mortgage-backed securities and collateralized mortgage obligations, are shown separately. During the quarter ended March 31, 2019, the Company adopted Accounting Standards Update (“ASU”) 2017-08, Premium Amortization on Purchased Callable Debt, which required certain premiums on callable debt securities to be amortized to the earliest call date. The amortization period for callable debt securities purchased at a discount was not impacted by this ASU. The adoption of this ASU did not have a significant impact on the Company’s financial statements and disclosures.



	HTM				AFS
	Amortized Cost		Fair Value		Fair Value
Due in one year or less	$	967	$	972	$	1,800
Due after one to five years	16,619		16,725		7,129
Due after five to ten years	26,241		26,343		11,455
Due after ten years	892		916		2,233
Agency residential mortgage-backed securities	47,615		47,998		134,607
Agency commercial mortgage-backed securities	21,612		21,955		8,153
Agency residential collateralized mortgage obligations	13,890		13,955		294,372
Total	$	127,836	$	128,864	$	459,749

Securities with a carrying value of $219,119 and $211,198 at June 30, 2019 and December 31, 2018, respectively, were pledged to secure public deposits, repurchase agreements and for other purposes required or permitted by law.

At June 30, 2019 and December 31, 2018, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies of U.S. Government Sponsored Enterprises, in an amount greater than 10% of shareholders’ equity.

Securities sales activity during the three and six months ended June 30, 2019 and 2018 is shown below. All securities sold were classified as AFS, and gains and losses are recorded using the specific-identification method.



	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Proceeds	$	—	$	—	$	23,886	$	—
Gross gains	—		—		161		—
Gross losses	—		—		155		—
Tax expense of securities gains/losses	—		—		1		—

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LEGACYTEXAS FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Securities with unrealized losses at June 30, 2019 and December 31, 2018, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, were as follows:



AFS	Less than 12 Months				12 Months or More				Total
June 30, 2019	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Agency residential mortgage-backed securities ¹	$	—	$	—	$	100,776	$	970	$	100,776	$	970
Agency commercial mortgage-backed securities ¹	—		—		8,152		34		8,152		34
Agency residential collateralized mortgage obligations ¹	15,025		35		104,469		926		119,494		961
Municipal bonds	1,033		1		1,322		6		2,355		7
Total temporarily impaired	$	16,058	$	36	$	214,719	$	1,936	$	230,777	$	1,972
December 31, 2018
Agency residential mortgage-backed securities ¹	$	4,770	$	27	$	123,413	$	4,056	$	128,183	$	4,083
Agency commercial mortgage-backed securities¹	—		—		8,921		143		8,921		143
Agency residential collateralized mortgage obligations ¹	32,668		195		153,131		4,655		185,799		4,850
Municipal bonds	6,326		59		16,260		308		22,586		367
Total temporarily impaired	$	43,764	$	281	$	301,725	$	9,162	$	345,489	$	9,443



HTM	Less than 12 Months				12 Months or More				Total
June 30, 2019	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Agency residential mortgage-backed securities ¹	$	—	$	—	$	22,801	$	230	$	22,801	$	230
Agency residential collateralized mortgage obligations ¹	—		—		3,799		31		3,799		31
Municipal bonds	1,435		9		8,696		54		10,131		63
Total temporarily impaired	$	1,435	$	9	$	35,296	$	315	$	36,731	$	324
December 31, 2018
Agency residential mortgage-backed securities ¹	$	5,002	$	15	$	30,180	$	1,136	$	35,182	$	1,151
Agency commercial mortgage-backed securities¹	6,465		41		6,964		126		13,429		167
Agency residential collateralized mortgage obligations ¹	3,994		11		6,213		113		10,207		124
Municipal bonds	7,131		17		20,244		452		27,375		469
Total temporarily impaired	$	22,592	$	84	$	63,601	$	1,827	$	86,193	$	1,911


¹	Mortgage-backed securities and collateralized mortgage obligations are issued and/or guaranteed by U.S. government agencies or U.S. government-sponsored enterprises.

Other-than-Temporary Impairment

In determining other-than-temporary impairment for debt securities, management considers many factors, including: (1) the length of time and the extent to which the fair value has been less than amortized cost; (2) the financial condition and near-term prospects of the issuer; (3) whether the market decline was affected by macroeconomic conditions; and (4) whether the Company has the intent and ability to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

As of June 30, 2019, 171 securities had unrealized losses, 163 of which had been in an unrealized loss position for over 12 months. The Company does not believe these unrealized losses are other-than-temporary and expects full collection of the carrying amount of these securities. At June 30, 2019, the Company does not intend to sell the securities in an unrealized loss position, and it is not more-likely-than-not that the Company will be required to sell the securities prior to recovery of amortized cost. All principal and interest payments are being received on time and in full.

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LEGACYTEXAS FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Note 5 - Loans

Loans consist of the following.



	June 30, 2019			December 31, 2018
Loans held for sale, at fair value	$	46,571		$	23,193

Loans held for investment:
Commercial real estate	$	3,180,582		$	3,026,754
Commercial and industrial	2,102,917			2,057,791
Construction and land	288,491			270,629
Consumer real estate	1,460,417			1,390,378
Other consumer	47,668			45,171
Gross loans held for investment, excluding Warehouse Purchase Program	7,080,075			6,790,723
Net of:
Deferred costs (fees) and discounts, net	11,751			10,397
Allowance for loan losses	(92,219		)	(67,428		)
Net loans held for investment, excluding Warehouse Purchase Program	6,999,607			6,733,692
Warehouse Purchase Program	1,542,684			960,404
Total loans held for investment	$	8,542,291		$	7,694,096

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LEGACYTEXAS FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

Activity in the allowance for loan losses during the three and six months ended June 30, 2019 and 2018, segregated by portfolio segment and evaluation for impairment, is set forth below. The below activity does not include Warehouse Purchase Program loans, which are collectively evaluated for impairment and are purchased under several contractual requirements, providing safeguards to the Company. To date, the Company has not experienced a loss on its Warehouse Purchase Program loans and no allowance for loan losses has been allocated to them. At June 30, 2019 and 2018, the allowance for loan losses related to purchased credit impaired (“PCI”) loans totaled $163 and $310, respectively.



For the three months ended June 30, 2019	Commercial Real Estate		Commercial and Industrial			Construction and Land		Consumer Real Estate			Other Consumer			Total
Allowance for loan losses:
Beginning balance	$	21,525	$	44,721		$	3,837	$	6,072		$	1,375		$	77,530
Charge-offs	—		(1,348		)	—		—			(276		)	(1,624		)
Recoveries	—		112			—		4			74			190
Provision expense (benefit)	3,279		12,119			713		(170		)	182			16,123
Ending balance	$	24,804	$	55,604		$	4,550	$	5,906		$	1,355		$	92,219
For the six months ended June 30, 2019
Allowance for loan losses:
Beginning balance	$	20,045	$	36,398		$	3,910	$	5,843		$	1,232		$	67,428
Charge-offs	—		(1,440		)	—		(23		)	(520		)	(1,983		)
Recoveries	—		667			—		24			121			812
Provision expense	4,759		19,979			640		62			522			25,962
Ending balance	$	24,804	$	55,604		$	4,550	$	5,906		$	1,355		$	92,219
Allowance ending balance:
Individually evaluated for impairment	$	2,092	$	29,116		$	—	$	72		$	83		$	31,363
Collectively evaluated for impairment	22,712		26,488			4,550		5,834			1,272			60,856
Loans:
Individually evaluated for impairment	7,292		48,366			228		3,403			5			59,294
Collectively evaluated for impairment	3,173,069		2,054,472			288,263		1,456,850			47,488			7,020,142
PCI loans	221		79			—		164			175			639
Ending balance	$	3,180,582	$	2,102,917		$	288,491	$	1,460,417		$	47,668		$	7,080,075

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LEGACYTEXAS FINANCIAL GROUP, INC.

CONDENSED NOTES TO UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)



For the three months ended June 30, 2018	Commercial Real Estate			Commercial and Industrial			Construction and Land			Consumer Real Estate			Other Consumer			Total
Allowance for loan losses:
Beginning balance	$	21,538		$	42,764		$	3,938		$	5,029		$	1,239		$	74,508
Charge-offs	(236		)	(27,289		)	—			—			(212		)	(27,737		)
Recoveries	—			28			—			9			37			74
Provision expense (benefit)	374			17,369			(264		)	(41		)	162			17,600
Ending balance	$	21,676		$	32,872		$	3,674		$	4,997		$	1,226		$	64,445
For the six months ended June 30, 2018
Allowance for loan losses:
Beginning balance	$	21,587		$	39,005		$	4,644		$	4,838		$	1,227		$	71,301
Charge-offs	(239		)	(39,525		)	—			—			(500		)	(40,264		)
Recoveries	—			50			—			20			103			173
Provision expense (benefit)	328			33,342			(970		)	139			396			33,235
Ending balance	$	21,676		$	32,872		$	3,674		$	4,997		$	1,226		$	64,445
Allowance ending balance:
Individually evaluated for impairment	$	69		$	1,749		$	—		$	225		$	28		$	2,071
Collectively evaluated for impairment	21,607			31,123			3,674			4,772			1,198			62,374
Loans:
Individually evaluated for impairment	3,656			10,222			—			2,784			16			16,678
Collectively evaluated for impairment	3,015,188			2,041,619			265,745			1,284,168			44,402			6,651,122
PCI loans	2,304			114			—			751			170			3,339
Ending balance	$	3,021,148		$	2,051,955		$	265,745		$	1,287,703		$	44,588		$	6,671,139

The allowance for loan losses and related provision expense are susceptible to change if the credit quality of our loan portfolio changes, which is evidenced by many factors, including but not limited to charge-offs and non-performing loan trends. Generally, consumer real estate lending has a lower credit risk profile compared to other consumer lending (such as automobile loans). Commercial real estate and commercial and industrial lending, however, can have higher risk profiles than consumer loans due to these loans being larger in amount and non-homogeneous in structure and term. Changes in economic conditions, the mix and size of the loan portfolio, and individual borrower conditions can dramatically impact our level of allowance for loan losses in relatively short periods of time.

The allowance for loan losses is maintained to cover incurred losses that are estimated in accordance with US GAAP. It is our estimate of credit losses inherent in our loan portfolio at each balance sheet date. Our methodology for analyzing the allowance for loan losses consists of general and specific components. For the general component, we stratify the loan portfolio into homogeneous groups of loans that possess similar loss potential characteristics and apply a loss ratio to these groups of loans to estimate the credit losses in the loan portfolio. We use both historical loss ratios and qualitative loss factors assigned to major loan collateral types to establish general component loss allocations, inclusive of estimated loss emergence periods. Qualitative loss factors are based on management’s judgment of company, market, industry or business specific data and external economic indicators, which are not yet reflected in the historical loss ratios, and that could impact the Company’s specific loan portfolios. The Allowance for Loan Loss Committee sets and adjusts qualitative loss factors by regularly reviewing changes in underlying loan composition and the seasonality of specific portfolios. The Allowance for Loan Loss Committee also considers credit quality and trends relating to delinquency, non-performing and adversely rated loans within the Company’s loan portfolio when evaluating qualitative loss factors. Additionally, the Allowance for Loan Loss Committee adjusts qualitative factors to account for the potential impact of external economic factors, including the unemployment rate, vacancy and capitalization rates and other pertinent economic data specific to our primary market area and lending portfolios.

For the specific component, the allowance for loan losses includes loans where management has concerns about the borrower’s ability to repay and on individually analyzed loans found to be impaired. Management evaluates current information and events regarding a borrower’s ability to repay its obligations and considers a loan to be impaired when the ultimate collectability of amounts due, according to the contractual terms of the loan agreement, is in doubt. If an impaired loan is collateral-dependent,

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the fair value of the collateral, less the estimated cost to sell, is used to determine the amount of impairment. If an impaired loan is not collateral-dependent, estimated discounted cash flows are used to determine the amount of impairment, if any. For impaired loans, the amount of the impairment can be adjusted, based on current data, until such time as the actual basis is established by acquisition of the collateral or until the basis is collected. Impairment losses are reflected in the allowance for loan losses through a charge to the provision for credit losses. Subsequent recoveries are credited to the allowance for loan losses. Cash receipts for accruing loans are applied to principal and interest under the contractual terms of the loan agreement. Cash receipts on impaired loans for which the accrual of interest has been discontinued are applied first to principal.

Large groups of smaller-balance homogeneous loans are collectively evaluated for impairment. As a result, the Company does not separately identify consumer real estate loans less than $417 or individual consumer non-real estate secured loans for impairment disclosures. The Company considers these loans to be homogeneous in nature due to the smaller dollar amount and the similar underwriting criteria.

Changes in the allowance for off-balance sheet credit losses on lending-related commitments and guarantees on credit card debt, included in “accrued expenses and other liabilities” on the consolidated balance sheets, are summarized in the following table. Please see Note 11 - Commitments and Contingent Liabilities for more information.



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Beginning balance	$	690		$	957		$	729		$	929
Charge-offs on lending-related commitments	—			—			—			—
Provision (benefit) for credit losses on lending-related commitments	(23		)	(122		)	(62		)	(94		)
Ending balance	$	667		$	835		$	667		$	835

Impaired loans at June 30, 2019 and December 31, 2018, were as follows¹:



June 30, 2019	Unpaid Contractual Principal Balance		Recorded Investment With No Allowance		Recorded Investment With Allowance		Total Recorded Investment		Related Allowance
Commercial real estate	$	7,312	$	628	$	6,664	$	7,292	$	2,082
Commercial and industrial	48,821		837		47,529		48,366		29,116
Construction and land	228		228		—		228		—
Consumer real estate	3,905		3,403		—		3,403		—
Other consumer	8		1		4		5		2
Total	$	60,274	$	5,097	$	54,197	$	59,294	$	31,200
December 31, 2018
Commercial real estate	$	177	$	159	$	—	$	159	$	—
Commercial and industrial	17,124		1,844		14,864		16,708		4,109
Consumer real estate	2,865		2,370		5		2,375		4
Other consumer	35		—		3		3		3
Total	$	20,201	$	4,373	$	14,872	$	19,245	$	4,116


¹	No Warehouse Purchase Program loans were impaired at June 30, 2019 or December 31, 2018. Loans reported do not include PCI loans.

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(Dollars in thousands, except per share data)

Income on impaired loans for the three and six months ended June 30, 2019 and 2018, was as follows¹:



	Three Months Ended June 30,
	2019				2018
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
Commercial real estate	$	7,057	$	2	$	6,025	$	2
Commercial and industrial	48,921		—		32,942		—
Construction and land	114		—		—		—
Consumer real estate	2,980		10		2,846		8
Other consumer	5		—		19		1
Total	$	59,077	$	12	$	41,832	$	11
	Six Months Ended June 30,
	2019				2018
Commercial real estate	$	4,100	$	4	$	5,124	$	4
Commercial and industrial	34,947		—		49,213		—
Construction and land	65		—		—		—
Consumer real estate	2,760		20		2,897		16
Other consumer	5		—		25		2
Total	$	41,877	$	24	$	57,259	$	22


¹	Loans reported do not include PCI loans.

Past due status is based on the contractual terms of the loan. Loans that are past due 30 days are considered delinquent. Interest income on loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. Non-mortgage consumer loans are typically charged off no later than 120 days past due. In all cases, loans are placed on nonaccrual status or charged-off at an earlier date if collection of principal or interest is considered doubtful. Nonaccrual loans include both smaller balance homogeneous loans that are collectively evaluated for impairment and larger individually classified impaired loans.

All interest accrued but not received for loans placed on nonaccrual status is reversed against interest income. Subsequent receipts on non-accrual loans are recorded as a reduction of principal, and interest income is recorded only after principal recovery is reasonably assured. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

No loans past due over 90 days were still accruing interest at June 30, 2019. Loans past due over 90 days that were still accruing interest at December 31, 2018 totaled $58, which consisted entirely of PCI loans. At June 30, 2019, no PCI loans were considered non-performing loans. No Warehouse Purchase Program loans were non-performing at June 30, 2019 or December 31, 2018. Non-performing (nonaccrual) loans were as follows:



	June 30, 2019		December 31, 2018
Commercial real estate	$	7,293	$	159
Commercial and industrial	48,367		16,710
Construction and land	228		—
Consumer real estate	6,144		5,506
Other consumer	24		46
Total	$	62,056	$	22,421

A loan that has been modified is considered a troubled debt restructuring (“TDR”) when two conditions are met: 1) the borrower is experiencing financial difficulty and 2) concessions are made for the borrower’s benefit that would not otherwise be considered for a borrower or transaction with similar credit risk characteristics. Modifications to loan terms may include a modification of the contractual interest rate to a below-market rate (even if the modified rate is higher than the original rate),

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(Dollars in thousands, except per share data)

forgiveness of accrued interest, forgiveness of a portion of principal, an extended repayment period or a deed in lieu of foreclosure or other transfer of assets other than cash to fully or partially satisfy a debt. The Company’s policy is to place all TDRs on nonaccrual for a minimum period of six months. Loans qualify for return to accrual status once they have demonstrated performance with the restructured terms of the loan agreement for a minimum of six months and the collection of principal and interest under the revised terms is deemed probable. All TDRs are considered to be impaired loans.

The outstanding balances of TDRs as of June 30, 2019 and December 31, 2018 are shown below:



	June 30, 2019		December 31, 2018
Nonaccrual TDRs⁽¹⁾	$	8,938	$	1,160
Performing TDRs ⁽²⁾	837		926
Total	$	9,775	$	2,086
Outstanding commitments to lend additional funds to borrowers with TDR loans	—		—


¹	Nonaccrual TDR loans are included in the nonaccrual loan totals.


²	Performing TDR loans are loans that have been performing under the restructured terms for at least six months and the Company is accruing interest on these loans.

The following tables provide the recorded balances of loans modified as a TDR during the three and six months ended June 30, 2019 and 2018.



	Three Months Ended June 30, 2019				Six Months Ended June 30, 2019
	Combination of Rate Reduction and Principal Deferral		Total		Principal Deferrals		Combination of Rate Reduction and Principal Deferral		Total
Commercial and industrial	$	—	$	—	$	7,401	$	—	$	7,401
Consumer real estate	600		600		—		600		600
Other consumer	—		—		3		—		3
Total	$	600	$	600	$	7,404	$	600	$	8,004
	Three Months Ended June 30, 2018				Six Months Ended June 30, 2018
Commercial and industrial	$	—	$	—	$	83	$	—	$	83
Total	$	—	$	—	$	83	$	—	$	83

No loans modified as a TDR during the three and six months ended June 30, 2019 or 2018, experienced a subsequent payment default in the preceding twelve months. A payment default is defined as a loan that was 90 days or more past due.

Loans acquired with evidence of credit quality deterioration at acquisition, for which it was probable that the Company would not be able to collect all contractual amounts due, were accounted for as PCI loans. The carrying amount of PCI loans included in the consolidated balance sheets and the related outstanding balances at June 30, 2019 and December 31, 2018 are set forth in the table below. The outstanding balance represents the total amount owed, including accrued but unpaid interest, and any amounts previously charged off.



	June 30, 2019		December 31, 2018
Carrying amount ¹	$	476	$	939
Outstanding balance	585		1,170


¹	The carrying amounts are reported net of allowance for loan losses of $163 and $250 as of June 30, 2019 and December 31, 2018, respectively.

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(Dollars in thousands, except per share data)

Changes in the accretable yield for PCI loans for the three and six months ended June 30, 2019 and 2018 were as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018
Beginning balance	$	609		$	2,167		$	624		$	2,279
Reclassifications (to) from nonaccretable	(467		)	10			(432		)	61
Disposals	287			17			287			(47		)
Accretion	(37		)	(96		)	(87		)	(195		)
Balance at end of period	$	392		$	2,098		$	392		$	2,098

Below is an analysis of the age of recorded investment in loans that were past due at June 30, 2019 and December 31, 2018. No Warehouse Purchase Program loans were delinquent at June 30, 2019 or December 31, 2018 and therefore these loans are not included in the following tables.



June 30, 2019	30-59 Days Past Due		60-89 Days Past Due		90 Days and Greater Past Due		Total Loans Past Due		Current Loans		Total Loans
Commercial real estate	$	2,746	$	5	$	7,264	$	10,015	$	3,170,567	$	3,180,582
Commercial and industrial	4,519		1,340		26,450		32,309		2,070,608		2,102,917
Construction and land	1,345		—		228		1,573		286,918		288,491
Consumer real estate	1,912		6,073		1,836		9,821		1,450,596		1,460,417
Other consumer	256		61		—		317		47,351		47,668
Total	$	10,778	$	7,479	$	35,778	$	54,035	$	7,026,040	$	7,080,075
December 31, 2018
Commercial real estate	$	6	$	—	$	—	$	6	$	3,026,748	$	3,026,754
Commercial and industrial	289		—		217		506		2,057,285		2,057,791
Construction and land	557		—		—		557		270,072

LegacyTexas Financial Group, Inc. 10-Q