Investor Relations

LAFAYETTE, La., Oct. 29, 2019 /PRNewswire/ -- Home Bancorp, Inc. (Nasdaq: "HBCP") (the "Company"), the parent company for Home Bank, N.A. (the "Bank") (www.home24bank.com), reported financial results for the third quarter of 2019.  For the quarter, the Company reported net income of $6.9 million, or $0.75 per diluted common share ("EPS"), compared to $6.6 million, or $0.71 EPS, for the second quarter of 2019.

Key performance metrics for the third quarter of 2019 (compared to the second quarter 2019) include: 

• Loans increased $14.5 million, or 3% annualized;
• Nonperforming loans decreased $1.0 million, or 4%;
• Return on average assets, return on average equity and return on average tangible common equity were 1.23%, 8.64% and 11.39%, respectively;
• The net interest margin declined 24 basis points, 14 basis points of which were due to the write-off of the FDIC loss sharing indemnification receivable;
• Noninterest income included a non-taxable life insurance benefit of $1.2 million;
• Noninterest expense included $287,000 (pre-tax) in costs related to the departure of a former executive;
• The Company repurchased 123,902 shares of common stock at an average price of $37.32 per share; and
• Bank capital remained strong with a common equity ratio of 14.19% at quarter end.

"The loan portfolio grew by 3% on an annualized basis and deposit rates increased at a slower pace during the quarter," said John W. Bordelon, President and Chief Executive Officer of the Company and the Bank, "Our momentum is building because our bankers are focused on adding value to our customers, serving our communities, and providing a strong return for our shareholders."

The Company also announced that its Board of Directors increased its quarterly cash dividend on shares of its common stock to $0.22 per share payable on November 22, 2019, to shareholders of record as of November 8, 2019.

Loans and Credit Quality

Loans totaled $1.7 billion at September 30, 2019, up $14.5 million, or 1%, from June 30, 2019.  Third quarter net loan growth was primarily driven by increases in commercial real estate ("CRE") loans (up $27.5 million, or 4%) and multi-family residential loans (up $8.9 million, or 19%). CRE loan growth was strongest in the Acadiana and New Orleans markets. Multi-family residential loan growth was focused in the New Orleans market.  

CRE and multi-family loan growth was partially offset by net declines in construction and land loans (down $11.3 million, or 6%) and residential mortgage loans (down $9.9 million, or 2%).  Construction and land loans decreased primarily due to the completion of the construction phase of certain larger construction loans and their conversion to permanent CRE loans.

The following table sets forth the composition of the Company's loan portfolio as of the dates indicated. 

Nonperforming assets ("NPAs"), excluding purchased credit impaired loans, totaled $27.6 million at September 30, 2019, down $354,000, or 1%, compared to June 30, 2019. During the quarter, the Company transferred into other real estate owned $1.3 million of surplus bank-owned real estate, consisting of two unoccupied buildings acquired through mergers and two closed branches.  The ratio of NPAs to total assets was 1.24% at September 30, 2019, compared to 1.26% at June 30, 2019. Nonperforming loans ("NPLs"), excluding purchased credit impaired loans, totaled $25.0 million at September 30, 2019, down $1.0 million, or 4%, compared to June 30, 2019. The ratio of NPLs to total assets was 1.13% at September 30, 2019, compared to 1.17% at June 30, 2019.

The Company recorded net loan charge-offs of $787,000 during the third quarter of 2019, compared to net loan charge-offs of $96,000 for the second quarter of 2019.  The Company's provision for loan losses for the third quarter of 2019 was $1.1 million, compared to $765,000 for the second quarter of 2019.  The increase in net loan charge-offs and the provision for loan losses was primarily due to a previously recognized non-performing commercial relationship which filed for bankruptcy during the third quarter of 2019.  

The ratio of the allowance for loan losses to total loans was 1.03% at September 30, 2019, compared to 1.02% at June 30, 2019.  Excluding acquired loans, the ratio of the allowance for loan losses to total loans was 1.29% at September 30, 2019, compared to 1.33% at June 30, 2019. The decrease in the allowance for loan losses attributable to originated loans was primarily due to improvement in risk ratings and general economic conditions.

Direct Energy Exposure 

The outstanding balance of direct loans to borrowers in the energy sector totaled $40.1 million, or 2% of total outstanding loans, at September 30, 2019, compared to $40.5 million, or 2% of total outstanding loans, at June 30, 2019.  Unfunded loan commitments to customers in the energy sector totaled $6.0 million at September 30, 2019, compared to $7.3 million at June 30, 2019. At September 30, 2019, loans constituting 95% of the balance of the direct energy-related portfolio were performing in accordance with their original loan agreements. The Company holds no shared national credits.

The allowance for loan losses attributable to originated direct energy-related loans totaled 2.40% of the outstanding balance of originated energy-related portfolio at September 30, 2019, compared to 2.58% at June 30, 2019.

Deposits

Total deposits were $1.8 billion at September 30, 2019, up $2.2 million, or less than 1%, from June 30, 2019. The following table sets forth the composition of the Company's deposits as of the dates indicated.

Share Repurchases

During the third quarter, the Company completed the remaining share repurchases under the 2016 Repurchase Plan and announced the approval of a new repurchase program (the "2019 Repurchase Plan"). The Company repurchased 123,902 shares of its common stock during the third quarter of 2019 at an average price per share of $37.32. An additional 464,987 shares remain eligible for purchase under the 2019 Repurchase Plan.  The book value per share and tangible book value per share of the Company's common stock was $33.72 and $26.77, respectively, at September 30, 2019.    

Net Interest Income

Net interest income for the third quarter of 2019 was $21.1 million, down $734,000, or 3%, from the second quarter of 2019.  Interest income for the third quarter was reduced by $680,000 (pre-tax) due to the write-off of the Company's FDIC loss sharing indemnification receivable.  This write-off significantly decreased loan accretion income for the third quarter.  The receivable represented the present value of expected reimbursable losses on acquired loans covered by a FDIC loss sharing agreement. Loans covered by the agreement, which expires in March 2020, have performed better than originally projected and the Company does not expect to incur any reimbursable losses during the remaining term of the loss sharing agreement. The loss sharing agreement was entered in connection with the Company's acquisition of certain assets and liabilities of Statewide Bank in a FDIC assisted transaction in 2010. During the first six months of 2019, amortization of the FDIC loss sharing indemnification receivable reduced net interest income by $293,000 (pre-tax).  Loan accretion income totaled $1.0 million during the second quarter of 2019 and $420,000 during the third quarter of 2019.   

The Company's net interest margin was 4.12% for the third quarter of 2019, a decline of 24 basis points from the second quarter of 2019, 14 basis points of which were attributable to the write-off of the FDIC loss sharing indemnification receivable.  The write-off reduced the average yield on loans for the third quarter of 2019 by 16 basis points.  The cost of interest-bearing liabilities increased six basis points compared to the second quarter of 2019.

The following table sets forth the Company's average volume and rate of its interest-earning assets and interest-bearing liabilities for the periods indicated.  Taxable equivalent ("TE") yields on investment securities are calculated using a marginal tax rate of 21%. 

Noninterest Income

Noninterest income for the third quarter of 2019 was $4.8 million, up $1.8 million, or 60%, from the second quarter of 2019 due primarily to the increase in income from bank-owned life insurance and the absence of write-downs on bank properties. The Company received a non-taxable life insurance benefit of $1.2 million following the death of a former employee during the third quarter of 2019. In the second quarter of 2019, write-downs of several bank properties reduced noninterest income by $347,000 (pre-tax). Noninterest income for the third quarter of 2019 also benefited from increases in service fees and charges (up $103,000, or 7%) and gains on the sale of loans (up $107,000, or 43%) compared to the second quarter of 2019.

Noninterest Expense

Noninterest expense for the third quarter of 2019 totaled $16.6 million, up $658,000, or 4%, compared to the second quarter of 2019. The increase primarily resulted from higher compensation and benefits and data processing and communication expenses, partially offset by the absence of certain occupancy costs recorded in the second quarter of 2019. The rise in compensation and benefits (up $653,000, or 7%) was primarily driven by $287,000 (pre-tax) of costs related to the departure of a former executive and an increase in employee health care costs. The increase in data processing and communication expense (up $168,000, or 10.5%) was primarily due to the renewal of software maintenance contracts related to the Company's core service provider. During the second quarter of 2019, $291,000 (pre-tax) of occupancy expenses were incurred to terminate lease space acquired through a previous merger. Similar occupancy costs were not incurred for the third quarter.

Income Tax Expense

Income tax expense for the third quarter of 2019 totaled $1.3 million, down $252,000, or 16%, from the second quarter of 2019. The Company's effective tax rate was 16.0% for the third quarter of 2019, compared to 19.1% for the second quarter of 2019. Income tax expense decreased primarily due to the increase in non-taxable earnings from bank-owned life insurance.

Non-GAAP Reconciliation 

This news release contains financial information determined by methods other than in accordance with generally accepted accounting principles ("GAAP"). The Company's management uses this non-GAAP financial information in its analysis of the Company's performance. In this news release, information is included which excludes acquired loans and intangible assets. Management believes the presentation of this non-GAAP financial information provides useful information that is helpful to a full understanding of the Company's financial position and operating results. This non-GAAP financial information should not be viewed as a substitute for financial information determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP financial information presented by other companies.  A reconciliation on non-GAAP information included herein to GAAP is presented below.

This news release contains certain forward-looking statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts.  They often include the words "believe," "expect," "anticipate," "intend," "plan," "estimate" or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could" or "may."

Forward-looking statements, by their nature, are subject to risks and uncertainties.  A number of factors - many of which are beyond our control ‑ could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements.  Home Bancorp's Annual Report on Form 10-K for the year ended December 31, 2018, describes some of these factors, including risk elements in the loan portfolio, the level of the allowance for losses on loans, risks of our growth strategy, geographic concentration of our business, dependence on our management team, risks of market rates of interest and of regulation on our business and risks of competition. Forward-looking statements speak only as of the date they are made.  We do not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made or to reflect the occurrence of unanticipated events.