LAFAYETTE, La., April 23, 2019 /PRNewswire/ -- Home Bancorp, Inc. (Nasdaq: "HBCP") (the "Company"), the parent company for Home Bank, N.A. (the "Bank") (www.home24bank.com), reported results for the first quarter of 2019. Net income for the first quarter of 2019 was $7.9 million, or $0.85 per diluted common share ("EPS"), compared to $8.1 million, or $0.87 EPS, for the fourth quarter of 2018.
Key performance metrics for the first quarter of 2019 include:
- Income before income tax expense increased $501,000, or 6%, compared to the previous quarter;
- Return on average assets, return on average equity and return on average tangible common equity were 1.48%, 10.45% and 13.86%, respectively;
- Loans declined $786,000 as CRE growth was offset by paydowns in other loan categories;
- Led by growth in certificates of deposit, total deposits were up $44.3 million, or 3%;
- The net interest margin was 4.41%, a decline of 16 basis points as deposit costs increased and loan yields declined;
- Nonperforming assets increased $3.1 million driven by acquired loans;
- Share repurchases totaled 134,005 shares at an average price of $35.71 per share; and
- Bank capital remained strong with the Tier 1 leverage and total risk-based capital ratios of 10.93% and 15.21%, respectively.
"Despite headwinds in the interest rate environment," stated John W. Bordelon, President and Chief Executive Officer of the Company and the Bank, "we posted a healthy ROA and ROE and continue to have a strong net interest margin."
"The second quarter promises to be an exciting one as we open an additional branch in Baton Rouge and relocate two existing branches to more prominent locations," continued Bordelon. "These branch moves give us greater access to highly-coveted businesses and individuals along the I-10/I-12 corridor."
The Company also announced that its Board of Directors increased its quarterly cash dividend on shares of its common stock to $0.21 per share payable on May 17, 2019, to shareholders of record as of May 6, 2019.
Loans and Credit Quality
Loans totaled $1.6 billion at March 31, 2019, a decrease of $786,000, from December 31, 2018. Growth in commercial real estate loans (up $20.9 million), was offset by paydowns in several other loan categories.
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 $29.1 million at March 31, 2019, an increase of $3.1 million, or 12%, compared to December 31, 2018. The ratio of NPAs to total assets was 1.32% at March 31, 2019, compared to 1.21% at December 31, 2018. The rise in NPAs during the first quarter was due primarily to three acquired loan relationships. Management believes it has sufficient fair-value discounts recorded on acquired loan portfolios to absorb any additional losses that may be associated with these loans.
The Company recorded net loan charge-offs of $168,000 during the first quarter of 2019, compared to net loan charge-offs of $1.0 million for the fourth quarter of 2018. The Company's provision for loan losses for the first quarter of 2019 was $390,000, compared to $1.6 million for the fourth quarter of 2018. The decrease in the provision for loan losses during the first quarter was primarily due to paydowns in the portfolio and modestly improved economic conditions across the Company's major markets.
The ratio of the allowance for loan losses to total loans was 1.00% at March 31, 2019, compared to 0.99% at December 31, 2018. Excluding acquired loans, the ratio of the allowance for loan losses to total loans was 1.34% at March 31, 2019, compared to 1.36% at December 31, 2018.
Direct Energy Exposure
The outstanding balance of direct loans to borrowers in the energy sector totaled $43.0 million, or 3% of total outstanding loans, at March 31, 2019, compared to $45.6 million, or 3% of total outstanding loans, at December 31, 2018. Unfunded loan commitments to customers in the energy sector totaled $7.4 million at March 31, 2019, compared to $10.1 million at December 31, 2018. At March 31, 2019, loans constituting 93% of the balance of our 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 2.43% of the outstanding balance of originated energy-related portfolio at March 31, 2019, compared to 2.39% at December 31, 2018.
Deposits
Total deposits were $1.8 billion at March 31, 2019, an increase of $44.3 million, or 3%, compared to December 31, 2018. Deposits increased due primarily to rate specials on certificates of deposit.
The following table sets forth the composition of the Company's deposits as of the dates indicated.
Share Repurchases
The Company repurchased 134,005 shares of its common stock during the first quarter of 2019 at an average price per share of $35.71 under the Company's outstanding share repurchase plan. An additional 202,077 shares remain eligible for purchase under the current repurchase plan. The book value per share and tangible book value per share of the Company's common stock was $32.62 and $25.69, respectively, at March 31, 2019.
Net Interest Income
Net interest income for the first quarter of 2019 totaled $21.7 million, a decrease of $933,000, or 4%, compared to the fourth quarter of 2018. On a linked quarter basis, net interest income decreased primarily due to a $657,000 decrease in income on loans and a $397,000 increase in interest expense on deposits. Loan interest income decreased primarily due to a decline in the average balance of acquired loans (which reduced interest income approximately $400,000) and a $350,000 decline in accretion income. The Company's net interest margin was 4.41% for the first quarter of 2019, 16 basis points lower than the fourth quarter of 2018, primarily due to the changes in income on loans and the cost of deposits.
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 first quarter of 2019 totaled $3.2 million, a decrease of $114,000, or 3%, compared to the fourth quarter of 2018. Services fees and charges were down primarily due to lower overdraft fees. Bank card fees and gain on sale of loans were down primarily due to seasonal factors.
Noninterest Expense
Noninterest expense for the first quarter of 2019 totaled $15.3 million, a decrease of $326,000, or 2%, compared to the fourth quarter of 2018. The decrease primarily resulted from lower data processing and communication and compensation and benefits expenses.
Income Tax Expense
Income tax expense for the first quarter of 2019 totaled $1.3 million, an increase of $700,000, or 114%, compared to the fourth quarter of 2018. The Company's effective tax rate for the first quarter of 2019 equaled 14.3% due primarily to elevated levels of stock option exercises. These options, which were associated with the 2009 stock option plan, were set up to expire in May 2019. Such option exercises reduced income tax expense by $514,000 during the first quarter.
The effective tax rate for the fourth quarter of 2018 was 7.1%, which included a one-time reduction of $819,000 due to an updated analysis of the Company's depreciation of certain assets as a result of a cost segregation study. In addition, income tax expense for the fourth quarter of 2018 included the full-year effect ($400,000) of recurring tax credits related to an investment in a Federal New Market Tax Credit ("NMTC"). The savings related to the NMTC are expected to be achieved annually for the next six years, including 2019.
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.
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.
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SOURCE Home Bancorp, Inc.