Home Bancorp, Inc. Announces 2021 Second Quarter Results And Declares Quarterly Dividend

LAFAYETTE, La., July 27, 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 second quarter of 2021.  For the quarter, the Company reported net income of $11.4 million, or $1.34 per diluted common share ("diluted EPS"), down $532,000 from $11.9 million, or $1.41 diluted EPS, for the first quarter of 2021.

"The credit quality of our loan portfolio and the economic conditions within our markets continued to strengthen through the second quarter of 2021," said John W. Bordelon, Chairman, President and Chief Executive Officer of the Company and the Bank.  "Since December 31, 2020, our nonperforming assets have declined $4.9 million, loans granted relief related to COVID-19 have fallen to less than 1% of total loans, and we have reversed $5.1 million of the allowance for loan losses."

"Increased liquidity for our customers due to government stimulus has contributed to the improvement in credit quality, but it has also limited loan growth during the quarter. Despite this challenge, our disciplined lending practices and strong capital levels keep us well positioned to take advantage of a rapidly growing economy. Our employees have done a tremendous job of supporting our customers and their communities and, as a result, we are optimistic about the second half 2021."

COVID-19 Impacts

Nearly all COVID-19 related restrictions were removed in Mississippi during the first quarter of 2021, while Louisiana lifted its mask mandate in April 2021 and ended capacity limits in May 2021.

Under the Small Business Administration's ("SBA") Paycheck Protection Program ("PPP"), the Company funded 3,072 PPP loans totaling $262.2 million during 2020. During the first six months of 2021, the Company funded an additional 1,803 PPP loans totaling $126.5 million. At June 30, 2021, the total recorded net investment in PPP loans was $197.6 million, of which 2,209 loans with an aggregate outstanding balance of $64.1 million were for amounts of $150,000 or less.

To give immediate financial support to our customers, the Company began providing principal and/or interest payment deferral options in March 2020. At June 30, 2021,  $7.0 million, or less than 1% of total loans, were under deferral agreements. The level of COVID-19 related deferrals previously totaled $558.8 million, or 28% of total loans, at June 30, 2020. Of the loans that have exited deferral agreements, $443.7 million, or 99%, were current and performing as of June 30, 2021.

Second Quarter 2021 Highlights

• Net income totaled $11.4 million, down $532,000, or 4%, from the prior quarter.
   
• Return on average assets, return on average equity and return on average tangible common equity were 1.67%, 13.68% and 17.18%, respectively.
   
• The Company recorded a $3.4 million reversal to the allowance for loan losses, compared to a $1.7 million allowance reversal in the prior quarter, primarily due to improvements in our assessment of the economic impact of the COVID-19 pandemic and an increase in prepayments on loans.
   
• Loan income from the recognition of deferred PPP lender fees totaled $1.8 million, down $1.5 million from the prior quarter.
   
• Noninterest income was down $766,000, or 19%, from the prior quarter primarily due to a $609,000 decrease in gains on the sale of loans and a $459,000 loss on the sale of a branch location.
   
• Loans totaled $1.9 billion at June 30, 2021, down $61.4 million, or 3%, from March 31, 2021. PPP loans totaled $197.6 million at June 30, 2021, down $38.1 million, or 16%, from March 31, 2021.
   
• The allowance for loan losses totaled $26.7 million, or 1.39% of total loans, at June 30, 2021. Excluding PPP loans, the ratio of allowance for loan losses to total loans was 1.55%, at such date. 
   
• Nonperforming assets totaled $15.1 million, or 0.55% of total assets, down $2.2 million, or 13%, from March 31, 2021.
   
• Preliminary Tier 1 leverage capital and total risk-based capital ratios were 9.89% and 16.07%, respectively, at June 30, 2021, compared to 9.89% and 15.37%, respectively, at March 31, 2021.

Loans

Loans totaled $1.9 billion at June 30, 2021, down $61.4 million, or 3%, from March 31, 2021. PPP loans, included in commercial and industrial loans, decreased $38.1 million, or 16%, from March 31, 2021. The following table summarizes the changes in the Company's loan portfolio from March 31, 2021 to June 30, 2021. 

During the second quarter of 2021, the Company continued to experience an increase in pay-downs across nearly all segments of the loan portfolio. The growth in commercial real estate and multifamily loans was primarily due to the conversion of existing construction loans to permanent financing.

Credit Quality and Allowance for Credit Losses

At June 30, 2021, loans under interest and/ or principal payment deferral agreements due to the COVID-19 crisis totaled $7.0 million, or less than 1% of total loans, down from $27.7 million at March 31, 2021. Of the loans that have exited deferral agreements, $443.7 million, or 99%, were current and performing as of June 30, 2021.

Nonperforming assets ("NPAs") totaled $15.1 million, or 0.55% of total assets, at June 30, 2021, down $2.2 million, or 13%, from $17.3 million, or 0.64% of total assets, at March 31, 2021. During the second quarter of 2021, the Company recorded net loan recoveries of $119,000, compared to net charge-offs of $1.3 million during the first quarter of 2021. Charge-offs during the first quarter were primarily attributable to an acquired hotel loan and one originated commercial loan relationship, both of which were nonperforming prior to the COVID-19 crisis.

The Company reversed $3.4 million of the allowance for loan losses in the second quarter of 2021 primarily due to improvements in our assessment of the economic impact of the COVID-19 pandemic and an increase in prepayments on loans. For the six months ended June 30, 2021, we reversed a total of $5.1 million of the allowance for loan losses. At June 30, 2021, the allowance for loan losses totaled $26.7 million, or 1.39% of total loans, compared to $30.0 million, or 1.51% of total loans, at March 31, 2021. Excluding PPP loans, the ratios of allowance for loan losses to total loans were 1.55% and 1.72% at June 30, 2021 and March 31, 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.

The following table provides a summary of the loan portfolio and related reserves at June 30, 2021. We have separately identified certain information regarding PPP loans which, due to the existence of full repayment guarantees from the SBA as well as the likelihood that the vast majority of such loans will be forgiven, we believe entail minimal credit risk to the Company.

Deposits

Total deposits were $2.4 billion at June 30, 2021, up $42.4 million, or 2%, from March 31, 2021. The following table summarizes the changes in the Company's deposits from March 31, 2021 to June 30, 2021.

The average rate on interest-bearing deposits decreased six basis points from 0.42% for the first quarter of 2021 to 0.36% for the second quarter of 2021. At June 30, 2021, certificates of deposit maturing within the next 12 months totaled  $282.1 million.

Net Interest Income

The net interest margin ("NIM") decreased 39 basis points from 4.14% for the first quarter of 2021 to 3.75% for the second quarter of 2021 primarily due to a decrease in the average yield on loans and an increase in lower yielding other interest-earning assets.

The average loan yield was 4.95% for the second quarter of 2021, down 26 basis points from the first quarter of 2021.  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. During the first quarter of 2021, PPP loans increased the average loan yield by 18 basis points and increased the NIM by 26 basis points. Excluding the impact of PPP loans, the average loan yield increased three basis points and the NIM decreased 17 basis points from the first quarter of 2021.

Average PPP loans were $228.1 million for the second quarter of 2021, down $10.7 million, or 4%, from the first quarter of 2021. Loan income from the recognition of deferred PPP lender fees totaled $1.8 million during the second quarter of 2021, down $1.5 million, or 46%, compared to the first quarter of 2021. Unrecognized PPP lender fees totaled $7.7 million at June 30, 2021, which will be amortized into interest income over the life of the loans.

Average other interest-earning assets were $314.0 million for the second quarter of 2021, up $130.2 million, or 71%, from the first quarter of 2021 primarily due to an increase in cash and cash equivalents. During the second quarter of 2021, the increase in cash and cash equivalents from the prior quarter negatively impacted the NIM by 19 basis points.

Loan accretion income from acquired loans totaled $585,000 for the second quarter of 2021 and $736,000 for the first 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%.

Noninterest Income

Noninterest income for the second quarter of 2021 totaled $3.3 million, down $766,000, or 19%, from the first quarter of 2021.

Gains on the sale of loans were down $609,000 from the first quarter of 2021.

Losses on the sale of assets totaled $457,000 for the second quarter of 2021 due to the sale of a branch location. During the quarter, 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.

Bank card fees were up $285,000 from the first quarter of 2021 primarily due to increased transaction activity by our cardholders. 

Noninterest Expense

Noninterest expense for the second quarter of 2021 totaled $16.6 million, up $602,000, or 4%, from the first quarter of 2021.

Data processing and communication expense was up $173,000 from the first quarter of 2021 primarily due to increases in the cost of loan management software, reflecting increased costs related to higher PPP loan origination volume as well as costs related to the implementation of enhancements to our lending software.

The Company provisioned $375,000 for credit losses on unfunded loan commitments for the second quarter of 2021 primarily due to the growth in unfunded construction loan commitments from first 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 August 20, 2021, to shareholders of record as of August 9, 2021. 

The Company repurchased 42,258 shares of its common stock during the second quarter of 2021 at an average price per share of $38.55. An additional 216,345 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 $38.92 and $31.72, respectively, at June 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.

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, 2020 describes some of these factors, including risk elements in the loan portfolio, the level of the allowance for credit losses, the impact of the COVID-19 pandemic, 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.