LAFAYETTE, La., July 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 second quarter of 2019. Net income for the second quarter of 2019 was $6.6 million, or $0.71 per diluted common share ("EPS"), compared to $7.9 million, or $0.85 EPS, for the first quarter of 2019.
Key performance metrics for the second quarter of 2019 include:
- Loans grew by $44.0 million, or 11% annualized;
- Total deposits increased $11.6 million, or 3% annualized;
- Nonperforming assets decreased $1.1 million, or 4%;
- Return on average assets, return on average equity and return on average tangible common equity were 1.20%, 8.48% and 11.25%, respectively;
- Net income declined $1.3 million, or 17%, compared to the previous quarter, due primarily to facilities-related charges of $504,000 (net of tax), higher compensation and benefits expense and provisioning for loan growth;
- The net interest margin was 4.36%, a decline of 5 basis points as higher deposit costs outpaced an increase in loan yields;
- Share repurchases totaled 83,188 shares at an average price of $36.17 per share; and
- Bank capital remained strong with a common equity ratio of 14.12% at quarter end.
"The Home Bank team is focused on adding value to our customers' financial lives," stated John W. Bordelon, President and Chief Executive Officer of the Company and the Bank, "That focus provided loan portfolio growth in the second quarter at an annualized rate of 11% as our customers made significant investments in their businesses."
"Our team opened a new branch and relocated another branch in Baton Rouge to better serve our customers and to expand on the growth opportunities we see in that region," added Bordelon, "These new locations are off to a great start as more businesses and individuals learn of our commitment to helping them prosper."
The Company also announced that its Board of Directors declared a quarterly cash dividend on shares of its common stock of $0.21 per share payable on August 16, 2019, to shareholders of record as of August 5, 2019.
Loans and Credit Quality
Loans totaled $1.7 billion at June 30, 2019, an increase of $44.0 million, or 3%, from March 31, 2019. Loan growth for the second quarter, which totaled 11% on an annualized basis, was primarily driven by increases in commercial real estate loans (up $30.5 million), construction and land loans (up $6.6 million) and commercial and industrial loans (up $5.0 million). Commercial real estate loan growth was spread across our Louisiana markets in a variety of industries. Construction and land loans increased primarily due to growth in existing real estate development relationships located in the Baton Rouge and Northshore (of Lake Pontchartrain) markets. Commercial and industrial loan growth was due primarily to increases in agriculture production and farm-related loans in the southwest Acadiana market.
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 $28.0 million at June 30, 2019, a decrease of $1.1 million, or 4%, compared to March 31, 2019. The ratio of NPAs to total assets was 1.26% at June 30, 2019, compared to 1.32% at March 31, 2019.
The Company recorded net loan charge-offs of $96,000 during the second quarter of 2019, compared to net loan charge-offs of $168,000 for the first quarter of 2019. The Company's provision for loan losses for the second quarter of 2019 was $765,000, compared to $390,000 for the first quarter of 2019. The increase in the provision for loan losses during the second quarter was primarily due to loan growth.
The ratio of the allowance for loan losses to total loans was 1.02% at June 30, 2019, compared to 1.00% at March 31, 2019. Excluding acquired loans, the ratio of the allowance for loan losses to total loans was 1.33% at June 30, 2019, compared to 1.34% at March 31, 2019.
Direct Energy Exposure
The outstanding balance of direct loans to borrowers in the energy sector totaled $40.5 million, or 2% of total outstanding loans, at June 30, 2019, compared to $43.0 million, or 3% of total outstanding loans, at March 31, 2019. Unfunded loan commitments to customers in the energy sector totaled $7.3 million at June 30, 2019, compared to $7.4 million at March 31, 2019. At June 30, 2019, loans constituting 94% 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 2.58% of the outstanding balance of originated energy-related portfolio at June 30, 2019, compared to 2.43% at March 31, 2019.
Deposits
Total deposits increased $11.6 million, or 1%, during the second quarter of 2019 to $1.8 billion at June 30, 2019. The following table sets forth the composition of the Company's deposits as of the dates indicated.
Share Repurchases
The Company repurchased 83,188 shares of its common stock during the second quarter of 2019 at an average price per share of $36.17 under the Company's outstanding share repurchase plan. An additional 118,889 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 $33.20 and $26.29, respectively, at June 30, 2019.
Net Interest Income
Net interest income for the second quarter of 2019 totaled $21.9 million, an increase of $153,000, or 1%, compared to the first quarter of 2019. Net interest income increased primarily due to a $614,000, or 3%, increase in loan income, which was partially offset by a $404,000, or 12%, increase in the cost of deposits. The Company's net interest margin was 4.36% for the second quarter of 2019, five basis points lower than the first quarter of 2019, as the cost of deposits outpaced an increase in loan yields.
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 second quarter of 2019 totaled $3.0 million, a decrease of $188,000, or 6%, from the first quarter of 2019. Write-downs of three buildings acquired through mergers and two relocating branch locations totaled $347,000 (pre-tax) during the quarter. The decrease in noninterest income was partially offset by an increase in bank card fees.
Noninterest Expense
Noninterest expense for the second quarter of 2019 totaled $16.0 million, an increase of $661,000, or 4%, compared to the first quarter of 2019. The increase primarily resulted from higher compensation and benefits and occupancy expenses. The rise in compensation and benefits (up $515,000, or 6%) was driven primarily by routine annual salary adjustments and elevated employee health care claims. The increase in occupancy expenses (up $402,000, or 25%) was primarily due to $291,000 of costs incurred to terminate lease space acquired through a previous merger.
Income Tax Expense
Income tax expense for the second quarter of 2019 totaled $1.6 million, an increase of $239,000, or 18%, compared to the first quarter of 2019. The Company's effective tax rate was 19.1% for the second quarter of 2019, compared to 14.3% for the first quarter of 2019. The rise in income taxes was due primarily to reduced levels of stock option exercises. During the first quarter of 2019, elevated levels of stock option exercises decreased income tax expense by $514,000. These options were associated with the 2009 stock option plan and were scheduled to expire in May 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, write down on bank properties, early termination cost for office lease, merger expenses 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.