Home Bancorp Announces 2016 Fourth Quarter And Annual Results And Increases Its Quarterly Dividend

LAFAYETTE, La., Jan. 24, 2017 /PRNewswire/ -- Home Bancorp, Inc. (Nasdaq:  "HBCP") (the "Company"), the parent company for Home Bank, N.A. (the "Bank") (www.home24bank.com), reported net income of $4.3 million for the fourth quarter of 2016, a decrease of $78,000, or 2%, compared to the third quarter of 2016 and an increase of $319,000, or 8%, compared to the fourth quarter of 2015. The fourth quarter of 2015 included merger-related expenses, net of taxes, totaling $407,000, related to the acquisition of Louisiana Bancorp, Inc. ("Louisiana Bancorp").  Excluding merger-related expenses, fourth quarter 2016 net income was down 2% compared to the same quarter last year. 

Diluted earnings per share were $0.60 for the fourth quarter of 2016, a decrease of $0.01, or 2%, from the third quarter of 2016 and an increase of $0.04, or 7%, compared to the fourth quarter of 2015.  Excluding merger-related expenses, fourth quarter 2016 diluted earnings per share were down $0.02 compared to the same quarter last year.    

Net income for the year ended December 31, 2016 was a record $16.0 million, an increase of $3.5 million, or 28%, compared to 2015.  Excluding merger-related expenses, net of taxes, of $560,000 and $1.2 million incurred during 2016 and 2015, respectively, and a gain on the sale of a banking center totaling $416,000, net of taxes, in 2016, net income for 2016 was $16.2 million, an increase of 18% compared to 2015.

Diluted earnings per share for 2016 were a record $2.25, an increase of 26% compared to $1.79 in 2015.  Excluding merger-related expenses and the banking center gain, 2016 diluted earnings per share were $2.27, an increase of 16% compared to 2015. 

"Though we faced a challenging economic environment in a few of our markets," stated John W. Bordelon, President and Chief Executive Officer of the Company and the Bank, "2016 was a record year from an earnings perspective.  We owe that success to our dedicated employees and loyal customers."

"Excluding pay downs in acquired loan portfolios," continued Bordelon, "organic loan growth during the year was 12%."   

The Company also announced that its Board of Directors increased its quarterly cash dividend by $0.01 to $0.13 per share payable on February 17, 2017, to shareholders of record as of February 6, 2017.

Loans and Credit Quality

Loans totaled $1.2 billion at December 31, 2016, a decrease of $5.5 million, or 0.4%, from September 30, 2016, and an increase of $3.5 million, or 0.3%, from December 31, 2015. Organic loan growth during 2016 totaled $94.1 million, or 12%.  Much of the organic loan growth has been offset by paydowns in acquired mortgage loans.  Loan declines during the fourth quarter of 2016 related primarily to one- to four-family first mortgage (down $11.2 million) and home equity loans (down $4.5 million), which were partially offset by increases in construction and land loans (up $5.9 million) and commercial real estate loans (up $5.1 million). 

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 ("PCI") loans,  totaled $16.6 million at December 31, 2016, a decrease of $4.5 million, or 21%, compared to September 30, 2016 and an increase of $5.3 million, or 46%, compared to December 31, 2015.  The decrease in NPAs at year-end 2016 was primarily the result of payoffs on certain loans placed on nonaccrual in the second quarter of 2016.  The ratio of total NPAs to total assets was 1.07% at December 31, 2016, compared to 1.37% at September 30, 2016 and 0.73% at December 31, 2015.    

The Company recorded net loan charge-offs of $182,000 during the fourth quarter of 2016, compared to net loan charge-offs of $54,000 in the third quarter of 2016 and the fourth quarter of 2015.  The Company's provision for loan losses for the fourth quarter of 2016 was $500,000, compared to $800,000 for the third quarter of 2016 and $670,000 for the fourth quarter of 2015. 

The ratio of the allowance for loan losses to total loans was 1.02% at December 31, 2016, compared to 0.99% and 0.78% at September 30, 2016 and December 31, 2015, respectively.  Excluding acquired loans, the ratio of the allowance for loan losses to total loans was 1.38% at December 31, 2016, compared to 1.36% and 1.15% at September 30, 2016 and December 31, 2015, respectively.   

Direct Energy Exposure

The outstanding balance of direct loans to borrowers in the energy sector totaled $34.0 million, or 3% of total outstanding loans, at December 31, 2016.  We also had unfunded loan commitments to customers in the energy sector amounting to $6.7 million at such date.    At December 31, 2016, loans constituting 93% of the balance of our direct energy-related loans were performing in accordance with their original loan agreements.  Of the remaining 7%, $571,000 had been restructured and were paying in accordance with the restructured terms as of December 31, 2016.  The Company holds no shared national credits.

The following table illustrates the composition of the Company's loans to borrowers in the energy sector (which we consider direct energy-related loans) at December 31, 2016. 

The allowance for loan losses attributable to direct energy-related loans totaled 3.35% of the outstanding balance of energy-related loans at December 31, 2016.  Over the past 24 months, the Company has increased its overall allowance for loan losses to loans ratio on originated loans from 1.04% at December 31, 2014 to 1.38% at December 31, 2016 due primarily to the potential direct and indirect impact of continuing low energy prices on our borrowers.

Investment Securities Portfolio

The Company's investment securities portfolio totaled $197.1 million at December 31, 2016, an increase of $12.7 million, or 7%, from September 30, 2016, and an increase of $6.4 million, or 3%, from December 31, 2015. 

At December 31, 2016, the Company had a net unrealized gain position on its investment securities portfolio of $18,000, compared to net unrealized gains of $2.5 million and $1.3 million at September 30, 2016 and December 31, 2015, respectively.  The Company's investment securities portfolio had a modified duration of 3.6 years at December 31, 2016, compared to 3.0 and 3.3 years at September 30, 2016 and December 31, 2015, respectively.  

Deposits

Total deposits were $1.2 billion at December 31, 2016, an increase of $27.2 million, or 2%, from September 30, 2016, and an increase of $3.9 million, or 0.3%, from December 31, 2015. 

The following table sets forth the composition of the Company's deposits at the dates indicated.

Net Interest Income

Net interest income for the fourth quarter of 2016 totaled $15.6 million, an increase of $63,000, or 0.4%, compared to the third quarter of 2016, and a decrease of $155,000, or 1%, compared to the fourth quarter of 2015.  The Company's net interest margin was 4.30% for the fourth quarter of 2016, two basis points lower than the third quarter of 2016 and six basis points lower than the fourth quarter of 2015.  The decrease in the net interest margin in the fourth quarter 2016 compared to the third quarter 2016 was due primarily to changes in our interest-earning asset mix and a slight increase in funding cost.  The decrease in the net interest margin in the fourth quarter 2016 compared to the fourth quarter 2015 was due primarily to lower average 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 35%.

Noninterest Income

Noninterest income for the fourth quarter of 2016 totaled $2.6 million, an increase of $113,000, or 4%, compared to the third quarter of 2016 and an increase of $173,000, or 7%, compared to the fourth quarter of 2015.  The increase in noninterest income for the comparative periods resulted primarily from an increase in gains on the sale of mortgage loans (up $146,000 in the fourth quarter of 2016 compared to the third quarter of 2016 and up $156,000 in the fourth quarter 2016 compared to the fourth quarter 2015).

Noninterest Expense

Noninterest expense for the fourth quarter of 2016 totaled $12.0 million, an increase of $1.3 million, or 12%, compared to the third quarter of 2016 and an increase of $405,000, or 4%, compared to the fourth quarter of 2015. Noninterest expense for the fourth quarter of 2015 includes $563,000 of merger-related expenses related to the acquisition of Louisiana Bancorp. 

The increase in noninterest expense in the fourth quarter of 2016 compared to the third quarter of 2016 resulted primarily from higher foreclosed assets expenses (up $658,000 resulting from the absence of a $560,000 gain on the sale of foreclosed assets recorded during the third quarter of 2016), other expenses (up $446,000 due primarily to a $344,000 increase in deposit and debit card fraud) and marketing and advertising expenses (up $220,000).    

The increase in noninterest expense for the fourth quarter of 2016 compared to the fourth quarter of 2015 resulted primarily from increases in other expenses (up $359,000) and marketing and advertising expenses (up $279,000), which were partially offset by decreases in professional services expense (down $208,000).

Income Tax Expense

The effective tax rate recorded during the fourth quarter of 2016 was 25.8%, which was lower than the effective tax rate recorded in the comparative periods.  The lower effective tax rate resulted from our adoption of ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. This ASU simplified several aspects of share-based payment transactions, including the income tax consequences.  Excess tax benefits and tax deficiencies are now recognized as income tax expense or benefit in the income statement in the period exercise or vesting occurs, whereas they were previously recognized as adjustments to additional paid-in capital.  The adoption of ASU No. 2016-09 reduced income tax expense in the fourth quarter by $524,000.

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, intangible assets, impact of the gain on the sale of a banking center and the impact of merger-related expenses.  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 core operating results. This non-GAAP financial information should not be viewed as a substitute for financial information determined in accordance with GAAP, nor are they 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, 2015, 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.