PR Newswire
LAFAYETTE, La., Oct. 18, 2023
LAFAYETTE, La., Oct. 18, 2023 /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 2023. For the quarter, the Company reported net income of $9.8 million, or $1.22 per diluted common share ("diluted EPS"), down $27,000 from $9.8 million, or $1.21 diluted EPS, for the second quarter of 2023.
"Home Bank has delivered exceptional results during this cycle of rapidly increasing interest rates and the third quarter was a continuation of that success. We produced above average profitability metrics, grew both loans and deposits, and maintained strong credit quality." said John W. Bordelon, President and Chief Executive Officer of the Company and the Bank. "Strong customer relationships, built over years, have allowed us to retain deposits while still maintaining discipline on interest expense. We are confident that our long history and culture of relationship banking have positioned Home Bank to continue to thrive both in the near and long term."
Third Quarter 2023 Highlights
- Loans totaled $2.6 billion at September 30, 2023, up $58.3 million, or 2.3% (9% on an annualized basis) from June 30, 2023.
- Deposits totaled $2.6 billion at September 30, 2023, up $45.8 million, or 2%, from June 30, 2023.
- Net interest income totaled $29.5 million, down $797,000, or 3% from the prior quarter.
- The net interest margin ("NIM") was 3.75% in the third quarter of 2023 compared to 3.94% in the second quarter of 2023.
- The Company recorded a $351,000 provision to the allowance for loan losses primarily due to loan growth.
- Nonperforming assets totaled $12.3 million, or 0.37% of total assets compared to $12.4 million, or 0.38% of total assets, at June 30, 2023.
Loans
Loans totaled $2.6 billion at September 30, 2023, up $58.3 million, or 2%, from June 30, 2023. The following table summarizes the changes in the Company's loan portfolio, net of unearned income, from June 30, 2023 through September 30, 2023.
(dollars in thousands) | 9/30/2023 | 6/30/2023 | Increase (Decrease) | |||||
Real estate loans: | ||||||||
One- to four-family first mortgage | $ 432,092 | $ 419,091 | $ 13,001 | 3 % | ||||
Home equity loans and lines | 69,350 | 66,932 | 2,418 | 4 | ||||
Commercial real estate | 1,178,111 | 1,176,976 | 1,135 | — | ||||
Construction and land | 342,711 | 327,488 | 15,223 | 5 | ||||
Multi-family residential | 106,411 | 103,951 | 2,460 | 2 | ||||
Total real estate loans | 2,128,675 | 2,094,438 | 34,237 | 2 | ||||
Other loans: | ||||||||
Commercial and industrial | 407,189 | 382,292 | 24,897 | 7 | ||||
Consumer | 33,230 | 34,029 | (799) | (2) | ||||
Total other loans | 440,419 | 416,321 | 24,098 | 6 | ||||
Total loans | $ 2,569,094 | $ 2,510,759 | $ 58,335 | 2 % |
The average loan yield was 5.95% for the third quarter of 2023, up 13 basis points, from the second quarter of 2023. Loan growth during the third quarter of 2023 was across all loan types with the exception of consumer loans. Loans grew in the third quarter of 2023 across most of our markets with approximately 35% of the growth attributable to the Houston market.
Credit Quality and Allowance for Credit Losses
Nonperforming assets ("NPAs") totaled $12.3 million, or 0.37% of total assets, at September 30, 2023, down $86,000, or 1%, from $12.4 million, or 0.38% of total assets, at June 30, 2023. During the third quarter of 2023, the Company recorded net loan recoveries of $132,000, compared to net loan recoveries of $10,000 during the second quarter of 2023.
The Company provisioned $351,000 to the allowance for loan losses in the third quarter of 2023. At September 30, 2023, the allowance for loan losses totaled $31.1 million, or 1.21% of total loans, compared to $30.6 million, or 1.22% of total loans, at June 30, 2023. Provisions to the allowance for loan losses are based upon, among other factors, our estimation of current expected losses in our loan portfolio, which we evaluate on a quarterly basis. Changes in expected losses consider various factors including the changing economic activity, potential mitigating effects of governmental stimulus, borrower specific information impacting changes in risk ratings, projected delinquencies and the impact of industry-wide loan modification efforts, among other factors.
The following tables present the Company's loan portfolio by credit quality classification as of September 30, 2023 and June 30, 2023.
September 30, 2023 | ||||||||
(dollars in thousands) | Pass | Special Mention | Substandard | Total | ||||
One- to four-family first mortgage | $ 429,011 | $ 870 | $ 2,211 | $ 432,092 | ||||
Home equity loans and lines | 69,225 | — | 125 | 69,350 | ||||
Commercial real estate | 1,162,095 | 330 | 15,686 | 1,178,111 | ||||
Construction and land | 330,512 | 5,388 | 6,811 | 342,711 | ||||
Multi-family residential | 102,907 | — | 3,504 | 106,411 | ||||
Commercial and industrial | 402,252 | 2,458 | 2,479 | 407,189 | ||||
Consumer | 33,000 | — | 230 | 33,230 | ||||
Total | $ 2,529,002 | $ 9,046 | $ 31,046 | $ 2,569,094 | ||||
June 30, 2023 | ||||||||
(dollars in thousands) | Pass | Special Mention | Substandard | Total | ||||
One- to four-family first mortgage | $ 415,162 | $ 872 | $ 3,057 | $ 419,091 | ||||
Home equity loans and lines | 66,809 | — | 123 | 66,932 | ||||
Commercial real estate | 1,160,405 | 335 | 16,236 | 1,176,976 | ||||
Construction and land | 319,738 | 5,410 | 2,340 | 327,488 | ||||
Multi-family residential | 100,521 | — | 3,430 | 103,951 | ||||
Commercial and industrial | 377,529 | 2,894 | 1,869 | 382,292 | ||||
Consumer | 33,832 | — | 197 | 34,029 | ||||
Total | $ 2,473,996 | $ 9,511 | $ 27,252 | $ 2,510,759 |
Investment Securities
The Company's investment securities portfolio totaled $428.1 million at September 30, 2023, a decrease of $22.4 million, or 5.0%, from June 30, 2023. At September 30, 2023, the Company had a net unrealized loss position on its investment securities of $63.4 million, compared to a net unrealized loss of $53.2 million at June 30, 2023. The Company's investment securities portfolio had an effective duration of 4.5 years at September 30, 2023 and June 30, 2023.
The following table summarizes the composition of the Company's investment securities portfolio at September 30, 2023.
(dollars in thousands) | Amortized Cost | Fair Value | ||
Available for sale: | ||||
U.S. agency mortgage-backed | $ 324,459 | $ 280,171 | ||
Collateralized mortgage obligations | 84,009 | 78,279 | ||
Municipal bonds | 55,705 | 45,037 | ||
U.S. government agency | 19,278 | 17,444 | ||
Corporate bonds | 6,982 | 6,088 | ||
Total available for sale | $ 490,433 | $ 427,019 | ||
Held to maturity: | ||||
Municipal bonds | $ 1,065 | $ 1,052 | ||
Total held to maturity | $ 1,065 | $ 1,052 |
Approximately 30% of the investment securities portfolio was pledged as of September 30, 2023. As of September 30, 2023 and June 30, 2023, the Company had $127.9 million and $134.9 million, respectively, of securities pledged to secure public deposits.
Deposits
Total deposits were $2.6 billion at September 30, 2023, up $45.8 million, or 2%, from June 30, 2023. Non-maturity deposits decreased $46.2 million, or 2% during the third quarter of 2023 to $2.0 billion. The following table summarizes the changes in the Company's deposits from June 30, 2023 to September 30, 2023.
(dollars in thousands) | 9/30/2023 | 6/30/2023 | Increase (Decrease) | |||||
Demand deposits | $ 785,448 | $ 816,555 | $ (31,107) | (4) % | ||||
Savings | 246,402 | 261,780 | (15,378) | (6) | ||||
Money market | 392,174 | 363,801 | 28,373 | 8 | ||||
NOW | 617,003 | 645,087 | (28,084) | (4) | ||||
Certificates of deposit | 556,457 | 464,495 | 91,962 | 20 | ||||
Total deposits | $ 2,597,484 | $ 2,551,718 | $ 45,766 | 2 % |
The average rate on interest-bearing deposits increased 54 basis points from 1.30% for the second quarter of 2023 to 1.84% for the third quarter of 2023. At September 30, 2023, certificates of deposit maturing within the next 12 months totaled $460.6 million.
We obtain most of our deposits from individuals, small businesses and public funds in our market areas. The following table presents our deposits per customer type for the periods indicated.
September 30, 2023 | June 30, 2023 | |||
Individuals | 52 % | 51 % | ||
Small businesses | 39 | 39 | ||
Public funds | 7 | 8 | ||
Broker | 2 | 2 | ||
Total | 100 % | 100 % | ||
The total amounts of our uninsured deposits (deposits in excess of $250,000, as calculated in accordance with FDIC regulations) were $755.5 million at September 30, 2023 and $735.4 million at June 30, 2023. Public funds in excess of the FDIC insurance limits are fully collateralized.
Net Interest Income
The net interest margin ("NIM") decreased 19 basis points from 3.94% for the second quarter of 2023 to 3.75% for the third quarter of 2023 primarily due to an increase in the average cost of interest-bearing deposits, which was partially offset with an increase in the average yield on interest-earning assets. The average cost of interest-bearing deposits increased by 54 basis points in the third quarter of 2023 and our cost of deposits increased by $2.6 million, or 47%, in the third quarter of 2023 compared to the second quarter of 2023. The increase in deposit costs reflects the rise in market rates of interest as well as a migration to interest-bearing deposits from non-interest bearing deposits.
The average loan yield was 5.95% for the third quarter of 2023, up 13 basis points from the second quarter of 2023, primarily reflecting increased rates on variable loans coupled with new loan originations at higher market rates during the period.
Average other interest-earning assets were $54.0 million for the third quarter of 2023, up $1.8 million, or 3%, from the second quarter of 2023 primarily due to a reallocation of certain other interest-earning assets.
Loan accretion income from acquired loans totaled $634,000 for the third quarter of 2023, down $13,000, or 2%, from the second quarter of 2023.
The following table summarizes 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 have been calculated using a marginal tax rate of 21%.
Quarter Ended | ||||||||||||
9/30/2023 | 6/30/2023 | |||||||||||
(dollars in thousands) | Average Balance | Interest | Average Yield/ Rate | Average Balance | Interest | Average Yield/ Rate | ||||||
Interest-earning assets: | ||||||||||||
Loans receivable | $ 2,538,218 | $ 38,490 | 5.95 % | $ 2,491,029 | $ 36,530 | 5.82 % | ||||||
Investment securities (TE) | 495,219 | 2,939 | 2.39 | 507,050 | 2,986 | 2.37 | ||||||
Other interest-earning assets | 54,015 | 649 | 4.77 | 52,256 | 555 | 4.26 | ||||||
Total interest-earning assets | $ 3,087,452 | $ 42,078 | 5.36 % | $ 3,050,335 | $ 40,071 | 5.22 % | ||||||
Interest-bearing liabilities: | ||||||||||||
Deposits: | ||||||||||||
Savings, checking, and money market | $ 1,256,885 | $ 3,791 | 1.20 % | $ 1,300,245 | $ 3,023 | 0.93 % | ||||||
Certificates of deposit | 511,754 | 4,390 | 3.40 | 407,038 | 2,524 | 2.49 | ||||||
Total interest-bearing deposits | 1,768,639 | 8,181 | 1.84 | 1,707,283 | 5,547 | 1.30 | ||||||
Other borrowings | 5,539 | 53 | 3.80 | 5,651 | 55 | 3.88 | ||||||
Subordinated debt | 54,159 | 845 | 6.24 | 54,098 | 850 | 6.29 | ||||||
FHLB advances | 273,087 | 3,490 | 5.01 | 272,783 | 3,313 | 4.81 | ||||||
Total interest-bearing liabilities | $ 2,101,424 | $ 12,569 | 2.37 % | $ 2,039,815 | $ 9,765 | 1.91 % | ||||||
Noninterest-bearing deposits | $ 799,534 | $ 831,517 | ||||||||||
Net interest spread (TE) | 2.99 % | 3.31 % | ||||||||||
Net interest margin (TE) | 3.75 % | 3.94 % |
Noninterest Income
Noninterest income for the third quarter of 2023 totaled $4.4 million, up $951,000, or 28%, from the second quarter of 2023. The increase was related primarily to gains on sale of loans (up $661,000 of which $640,000 was related to the sale of SBA loans during the third quarter of 2023) and bank card fees (up $188,000) for the third quarter of 2023 compared to the second quarter of 2023.
Noninterest Expense
Noninterest expense for the third quarter of 2023 totaled $21.3 million, up $379,000, or 2%, from the second quarter of 2023. The increase was primarily related to data processing and communication expenses (up $364,000) and marketing and advertising expenses (up $196,000), which were partially offset by the absence of provision for credit losses on unfunded commitments (down $151,000) and a reduction in compensation and benefits expense (down $109,00) during the third quarter of 2023.
Capital and Liquidity
At September 30, 2023, shareholders' equity totaled $345.3 million, down $785,000, or less than 1%, compared to $346.1 million at June 30, 2023. The decrease was primarily due to the increase in accumulated other comprehensive loss on available for sale investment securities, shareholder dividends and repurchases of shares of the Company's common stock, which were partially offset by the Company's earnings of $9.8 million during the third quarter of 2023. The market value of the Company's available for sale securities at September 30, 2023 decreased $10.2 million, or 19%, during the third quarter of 2023. Preliminary Tier 1 leverage capital and total risk-based capital ratios were 10.71% and 13.73%, respectively, at September 30, 2023, compared to 10.78% and 14.07%, respectively, at June 30, 2023.
The following table summarizes the Company's primary and secondary sources of liquidity which were available at September 30, 2023.
(dollars in thousands) | September 30, 2023 | |
Cash and cash equivalents | $ 84,520 | |
Unencumbered investment securities, amortized cost | 79,015 | |
FHLB advance availability | 914,064 | |
Amounts available from unsecured lines of credit | 55,000 | |
Federal Reserve bank term funding program | 106,140 | |
Federal Reserve discount window availability | 500 | |
Total primary and secondary sources of available liquidity | $ 1,239,239 |
Dividend and Share Repurchases
The Company announced that