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Home Bancorp, Inc. Announces 2021 Third Quarter Results, New Share Repurchase Plan And Declares Quarterly Dividend

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  • HBCP

LAFAYETTE, La., Oct. 26, 2021 /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 2021. For the quarter, the Company reported net income of $15.1 million, or $1.79 per diluted common share ("diluted EPS"), up $3.7 million from $11.4 million, or $1.34 diluted EPS, for the second quarter of 2021.

Home Bank Logo. (PRNewsFoto/Home Bancorp, Inc.) (PRNewsFoto/)
Home Bank Logo. (PRNewsFoto/Home Bancorp, Inc.) (PRNewsFoto/)

"We are pleased to report strong earnings, stable credit quality and a reversal of loan loss provision as a result of improving economic conditions despite another surge of COVID-19 and the impact of Hurricane Ida in our markets," said John W. Bordelon, Chairman, President and Chief Executive Officer of the Company and the Bank. "Total loans declined on a reported basis of 2% from the previous quarter due to the increase level of Paycheck Protection Program ("PPP") loans forgiven. Excluding PPP loans, total loans increased $58.7 million, or 14% on an annualized basis."

"We are committed to help one another, our customers and communities as we recover from the hurricane and COVID 19. We believe this focus will drive growth and value for our shareholders."

COVID-19 Impacts

After an increase in COVID-19 cases during the quarter, Louisiana reinstituted its indoor mask mandate in August 2021. Mississippi's COVID-19 restrictions were lifted during the first quarter of 2021.

Under the Small Business Administration's ("SBA") Paycheck Protection Program ("PPP"), the Company funded 4,875 PPP loans totaling $388.7 million during 2020 and 2021, in aggregate. At September 30, 2021, the total recorded net investment in PPP loans was $95.6 million, of which 565 loans with an aggregate outstanding balance of $17.9 million were for amounts of $150,000 or less.

To give immediate financial support to customers, the Company began providing principal and/or interest payment deferral options in March 2020. At September 30, 2021, $4.5 million, or less than 1% of total loans, were under COVID-19 related deferral agreements. The level of COVID-19 deferrals previously totaled $558.8 million, or 28% of total loans, at June 30, 2020. Of the loans that have exited deferral agreements, $384.8 million, or 99%, were current and performing as of September 30, 2021.

Third Quarter 2021 Highlights

  • Net income totaled $15.1 million, up $3.7 million, or 32%, from the prior quarter.

  • Return on average assets, return on average equity and return on average tangible common equity were 2.17%, 17.46% and 21.68%, respectively.

  • The Company recorded a $2.4 million reversal to the allowance for loan losses, compared to a $3.4 million allowance reversal in the prior quarter, primarily due to improvements in our assessment of the economic impact of the COVID-19 pandemic.

  • Loan income from the recognition of deferred PPP lender fees totaled $4.4 million, up $2.6 million from the prior quarter.

  • Noninterest income was up $2.1 million, or 63%, from the prior quarter primarily due to income from bank-owned life insurance and the absence of a $457,000 loss on the sale of a branch location recorded in the prior quarter. The Company recognized a life insurance benefit of $1.7 million following the death of an employee during the third quarter of 2021.

  • Loans totaled $1.9 billion at September 30, 2021, down $43.3 million, or 2%, from June 30, 2021. Excluding PPP loans, total loans were up $58.7 million, or 14% annualized, from June 30, 2021.

  • PPP loans totaled $95.6 million at September 30, 2021, down $102.1 million, or 52%, from June 30, 2021.

  • The allowance for loan losses totaled $24.1 million, or 1.29% of total loans, at September 30, 2021. Excluding PPP loans, the ratio of allowance for loan losses to total loans was 1.36%, at such date.

  • Preliminary Tier 1 leverage capital and total risk-based capital ratios were 10.05% and 15.60%, respectively, at September 30, 2021, compared to 9.89% and 16.07%, respectively, at June 30, 2021.

Loans

Loans totaled $1.9 billion at September 30, 2021, down $43.3 million, or 2%, from June 30, 2021. PPP loans, included in commercial and industrial loans, decreased $102.1 million, or 52%, from June 30, 2021. The following table summarizes the changes in the Company's loan portfolio, net of unearned income, from June 30, 2021 to September 30, 2021.

(dollars in thousands)


9/30/2021


6/30/2021


Increase (Decrease)

Real estate loans:









One- to four-family first mortgage


$

360,150



$

365,640



$

(5,490)



(2)

%

Home equity loans and lines


59,667



64,614



(4,947)



(8)


Commercial real estate


802,401



755,707



46,694



6


Construction and land


241,286



233,714



7,572



3


Multi-family residential


92,062



82,966



9,096



11


Total real estate loans


1,555,566



1,502,641



52,925



4


Other loans:









Commercial and industrial


284,831



380,751



(95,920)



(25)


Consumer


34,779



35,096



(317)



(1)


Total other loans


319,610



415,847



(96,237)



(23)


Total loans


$

1,875,176



$

1,918,488



$

(43,312)



(2)

%

Excluding PPP loans, total loans grew by $58.7 million, or 14% annualized, from June 30, 2021 to September 30, 2021. Commercial real estate and construction and land loan growth was primarily within our New Orleans and Northshore markets. At September 30, 2021, our New Orleans and Northshore markets were responsible for approximately 50% of the commercial real estate portfolio and 46% of the construction and land portfolio. The growth in multifamily loans was primarily due to the conversion of existing construction loans to permanent financing.

Credit Quality and Allowance for Credit Losses

At September 30, 2021 and June 30, 2021, loans under interest and/ or principal payment deferral agreements due to the COVID-19 crisis amounted to less than 1% of total loans.

Nonperforming assets ("NPAs") totaled $15.5 million, or 0.56% of total assets, at September 30, 2021, up $443,000, or 3%, from $15.1 million, or 0.55% of total assets, at June 30, 2021. During the third quarter of 2021, the Company recorded net loan charge-offs of $153,000, compared to net recoveries of $119,000 during the second quarter of 2021.

The Company reversed $2.4 million of the allowance for loan losses in the third quarter of 2021 primarily due to improvements in our assessment of the economic impact of the COVID-19 pandemic. For the nine months ended September 30, 2021, we reversed a total of $7.5 million of the allowance for loan losses. At September 30, 2021, the allowance for loan losses totaled $24.1 million, or 1.29% of total loans, compared to $26.7 million, or 1.39% of total loans, at June 30, 2021. Excluding PPP loans, the ratios of the allowance for loan losses to total loans were 1.36% and 1.55% at September 30, 2021 and June 30, 2021, respectively. Changes in expected losses consider various factors including the changing economic activity, potential mitigating effects of governmental stimulus, the duration of the health crisis, customer specific information impacting changes in risk ratings, projected delinquencies and the impact of industry-wide loan modification efforts, among other factors.

Deposits

Total deposits were $2.4 billion at September 30, 2021, down $5.0 million, or less than 1%, from June 30, 2021. The following table summarizes the changes in the Company's deposits from June 30, 2021 to September 30, 2021.

(dollars in thousands)


9/30/2021


6/30/2021


Increase (Decrease)

Demand deposits


$

728,352



$

715,167



$

13,185



2

%

Savings


280,651



277,899



2,752



1


Money market


355,923



362,938



(7,015)



(2)


NOW


669,414



680,297



(10,883)



(2)


Certificates of deposit


331,377



334,463



(3,086)



(1)


Total deposits


$

2,365,717



$

2,370,764



$

(5,047)



%

The average rate on interest-bearing deposits decreased nine basis points from 0.36% for the second quarter of 2021 to 0.27% for the third quarter of 2021. At September 30, 2021, certificates of deposit maturing within the next 12 months totaled $271.6 million.

Net Interest Income

The net interest margin ("NIM") increased 41 basis points from 3.75% for the second quarter of 2021 to 4.16% for the third quarter of 2021 primarily due to an increase in the average yield on loans. Loan income from the recognition of deferred PPP lender fees totaled $4.4 million during the third quarter of 2021, up $2.6 million, or 146%, compared to the second quarter of 2021.

The average loan yield was 5.60% for the third quarter of 2021, up 65 basis points from the second quarter of 2021. During the third quarter of 2021, recognition of deferred lender fees from PPP loans increased the average loan yield by 60 basis points and increased the NIM by 52 basis points. During the second quarter of 2021, PPP loans decreased the average loan yield by 11 basis points and increased the NIM by four basis points. Excluding the impact of PPP loans, the average loan yield decreased six basis points and the NIM decreased seven basis points from the second quarter of 2021.

Average PPP loans were $144.6 million for the third quarter of 2021, down $83.5 million, or 37%, from the second quarter of 2021. Unrecognized PPP lender fees totaled $3.3 million at September 30, 2021.

Average other interest-earning assets were $388.7 million for the third quarter of 2021, up $74.8 million, or 24%, from the second quarter of 2021 primarily due to an increase in cash and cash equivalents. During the third quarter of 2021, the increase in cash and cash equivalents from the prior quarter negatively impacted the NIM by 12 basis points.

Loan accretion income from acquired loans totaled $556,000 for the third quarter of 2021 and $585,000 for the second quarter of 2021.

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



9/30/2021


6/30/2021

(dollars in thousands)


Average
Balance


Interest


Average
Yield/ Rate


Average
Balance


Interest


Average
Yield/ Rate

Interest-earning assets:













Loans receivable


$

1,896,808



$

27,045



5.60

%


$

1,963,935



$

24,500



4.95

%

Investment securities (TE)


278,450



1,189



1.74



276,896



1,130



1.67


Other interest-earning assets


388,723



189



0.19



313,954



133



0.17


Total interest-earning assets


$

2,563,981



$

28,423



4.36

%


$

2,554,785



$

25,763



4.01

%

Interest-bearing liabilities:













Deposits:













Savings, checking, and money market


$

1,312,131



$

605



0.18

%


$

1,315,432



$

842



0.26

%

Certificates of deposit


332,916



515



0.61



341,300



638



0.75


Total interest-bearing deposits


1,645,047



1,120



0.27



1,656,732



1,480



0.36


Other borrowings


5,539



53



3.80



5,539



53



3.84


FHLB advances


27,011



116



1.72



27,699



120



1.73


Total interest-bearing liabilities


$

1,677,597



$

1,289



0.31

%


$

1,689,970



$

1,653



0.39

%

Net interest spread (TE)






4.05

%






3.62

%

Net interest margin (TE)






4.16

%






3.75

%

Noninterest Income

Noninterest income for the third quarter of 2021 totaled $5.4 million, up $2.1 million, or 63%, from the second quarter of 2021.

Income from bank-owned life insurance was up $1.7 million from the second quarter of 2021. The Company recognized a life insurance benefit of $1.7 million following the death of an employee during the third quarter of 2021.

Losses on the sale of assets fell $454,000 from the prior quarter. 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 were recognized at the time of the sale.

Gains on the sale of loans were down $144,000, or 26%, from the second quarter of 2021.

Noninterest Expense

Noninterest expense for the third quarter of 2021 totaled $16.4 million, down $137,000, or 1%, from the second quarter of 2021.

The Company did not record a provision for credit losses on unfunded loan commitments for the third quarter of 2021. During the second quarter of 2021, the Company provisioned $375,000 for credit losses on unfunded loan commitments primarily due to the growth in unfunded construction loan commitments.

Marketing and advertising expense was up $131,000 from the second quarter of 2021 primarily due to an increase in charitable donations and general advertising activities during the third quarter of 2021.

Dividend and Share Repurchases

The Company announced that its Board of Directors declared a quarterly cash dividend on shares of its common stock of $0.23 per share payable on November 19, 2021, to shareholders of record as of November 8, 2021.

The Company also announced that the Board of Directors approved a new share repurchase plan (the "2021 Repurchase Plan"). Under the 2021 Repurchase Plan, the Company may purchase up to 430,000 shares, or approximately 5% of the Company's outstanding common stock. Share repurchases under the 2021 Repurchase Plan may commence upon the completion of the Company's 2020 Repurchase Plan. There are 56,583 shares remaining that may be repurchased under the 2020 Repurchase Plan. The repurchase plans do not include specific price targets and may be executed through the open market or privately-negotiated transactions depending upon market conditions and other factors. The repurchase plans have no time limit and may be suspended or discontinued at any time.

The Company repurchased 159,762 shares of its common stock during the third quarter of 2021 at an average price per share of $37.45. An additional 56,583 shares remain eligible for purchase under the 2020 Repurchase Plan. The book value per share and tangible book value per share of the Company's common stock was $40.38 and $33.08, respectively, at September 30, 2021.

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 intangible assets and PPP loans. 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.



Quarter Ended

(dollars in thousands, except per share data)


9/30/2021


6/30/2021


9/30/2020

Reported net income


$

15,059



$

11,396



$

8,782


Add: Core deposit intangible amortization, net tax


230



232



267


Non-GAAP tangible income


$

15,289



$

11,628



$

9,049









Reported loan income


$

27,045



$

24,500



$

24,769


Less: PPP loan income


4,742



2,372



1,729


Loan income excluding PPP loan income


$

22,303



$

22,128



$

23,040









Loan yield


5.60

%


4.95

%


4.94

%

(Positive) negative impact of PPP loans


(0.60)



0.11



0.34


Loan yield excluding PPP loans


5.00

%


5.06

%


5.28

%








Net interest margin


4.16

%


3.75

%


3.82

%

(Positive) negative impact of PPP loans


(0.52)



(0.04)



0.14


Net interest margin excluding PPP loans


3.64

%


3.71

%


3.96

%








Total assets


$

2,763,466



$

2,764,756



$

2,578,735


Less: Intangible assets


62,229



62,520



63,439


Non-GAAP tangible assets


$

2,701,237



$

2,702,236



$

2,515,296









Total shareholders' equity


$

344,149



$

337,812



$

315,068


Less: Intangible assets


62,229



62,520



63,439


Non-GAAP tangible shareholders' equity


$

281,920



$

275,292



$

251,629









Total loans


$

1,875,176



$

1,918,488



$

1,955,297


Less: PPP loans


95,560



197,614



254,487


Total loans excluding PPP loans


$

1,779,616



$

1,720,874



$

1,700,810









Allowance for loan losses to total loans


1.29

%


1.39

%


1.69

%

Less: PPP loans


0.07



0.16



0.25


Non-GAAP allowance for loan losses to total loans


1.36

%


1.55

%


1.94

%








Return on average equity


17.46

%


13.68

%


11.11

%

Add: Average intangible assets


4.22



3.50



3.23


...