PR Newswire
LAFAYETTE, La., July 17, 2023
LAFAYETTE, La., July 17, 2023 /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 2023. For the quarter, the Company reported net income of $9.8 million, or $1.21 per diluted common share ("diluted EPS"), down $1.5 million from $11.3 million, or $1.39 diluted EPS, for the first quarter of 2023.
"Considering everything that has happened in banking during this interest rate cycle, we're pleased with our second quarter performance," said John W. Bordelon, President and Chief Executive Officer of the Company and the Bank. "Like every other community bank, we've faced pressure on deposits but have so far been able to retain relationships while keeping the cost of our total deposits below 1% for the second quarter. I think this is due to the strength of our deposit franchise, which is something we were focused on even when rates were near zero. Loan growth continued in the second quarter despite the rise in interest rates as total loans increased 7% on an annualized basis. As we move forward in the second half of 2023, we remain committed to providing exceptional service to our new and existing customers as we have for the last 115 years."
Second Quarter 2023 Highlights
- Loans totaled $2.5 billion at June 30, 2023, up $44.4 million, or 1.8% (7% on an annualized basis) from March 31, 2023.
- Net interest income totaled $30.3 million, down $1.3 million, or 4% from the prior quarter.
- The net interest margin ("NIM") decreased 24 basis points from 4.18% for the first quarter of 2023 to 3.94%.
- The Company recorded a $511,000 provision to the allowance for loan losses primarily due to loan growth.
- Nonperforming assets totaled $12.4 million, or 0.38% of total assets, up $1.1 million, or 10%, from $11.3 million, or 0.35% of total assets, at March 31, 2023 primarily due to three credit relationships.
Loans
Loans totaled $2.5 billion at June 30, 2023, up $44.4 million, or 2%, from March 31, 2023. The following table summarizes the changes in the Company's loan portfolio, net of unearned income, from March 31, 2023 through June 30, 2023.
(dollars in thousands) | 6/30/2023 | 3/31/2023 | Increase (Decrease) | |||||
Real estate loans: | ||||||||
One- to four-family first mortgage | $ 419,091 | $ 405,638 | $ 13,453 | 3 % | ||||
Home equity loans and lines | 66,932 | 64,107 | 2,825 | 4 | ||||
Commercial real estate | 1,176,976 | 1,162,367 | 14,609 | 1 | ||||
Construction and land | 327,488 | 318,622 | 8,866 | 3 | ||||
Multi-family residential | 103,951 | 102,604 | 1,347 | 1 | ||||
Total real estate loans | 2,094,438 | 2,053,338 | 41,100 | 2 | ||||
Other loans: | ||||||||
Commercial and industrial | 382,292 | 379,119 | 3,173 | 1 | ||||
Consumer | 34,029 | 33,935 | 94 | — | ||||
Total other loans | 416,321 | 413,054 | 3,267 | 1 | ||||
Total loans | $ 2,510,759 | $ 2,466,392 | $ 44,367 | 2 % |
The average loan yield was 5.82% for the second quarter of 2023, up 15 basis points from the first quarter of 2023. Loan growth during the second quarter of 2023 was across all loan types. The loan growth was across most of our markets. Approximately 19% of the loan growth in the second quarter of 2023 was attributable to the Houston market.
Credit Quality and Allowance for Credit Losses
Nonperforming assets ("NPAs") totaled $12.4 million, or 0.38% of total assets, at June 30, 2023, up $1.1 million, or 10%, from $11.3 million, or 0.35% of total assets, at March 31, 2023. During the second quarter of 2023, the Company recorded net loan recoveries of $10,000, compared to net loan recoveries of $5,000 during the first quarter of 2023.
The Company provisioned $511,000 to the allowance for loan losses in the second quarter of 2023. At June 30, 2023, the allowance for loan losses totaled $30.6 million, or 1.22% of total loans, compared to $30.1 million, or 1.22% of total loans, at March 31, 2023. Provisions to the allowance for loan losses are based upon, among other factors, our estimation of current expected losses in our loan portfolio, which we evaluate on a quarterly basis. Changes in expected losses consider various factors including the changing economic activity, potential mitigating effects of governmental stimulus, borrower specific information impacting changes in risk ratings, projected delinquencies and the impact of industry-wide loan modification efforts, among other factors.
The following tables present the Company's loan portfolio by credit quality classification as of June 30, 2023 and March 31, 2023.
June 30, 2023 | ||||||||
(dollars in thousands) | Pass | Special | Substandard | Total | ||||
One- to four-family first mortgage | $ 415,162 | $ 872 | $ 3,057 | $ 419,091 | ||||
Home equity loans and lines | 66,809 | — | 123 | 66,932 | ||||
Commercial real estate | 1,160,405 | 335 | 16,236 | 1,176,976 | ||||
Construction and land | 319,738 | 5,410 | 2,340 | 327,488 | ||||
Multi-family residential | 100,521 | — | 3,430 | 103,951 | ||||
Commercial and industrial | 377,529 | 2,894 | 1,869 | 382,292 | ||||
Consumer | 33,832 | — | 197 | 34,029 | ||||
Total | $ 2,473,996 | $ 9,511 | $ 27,252 | $ 2,510,759 | ||||
March 31, 2023 | ||||||||
(dollars in thousands) | Pass | Special | Substandard | Total | ||||
One- to four-family first mortgage | $ 401,296 | $ 1,224 | $ 3,118 | $ 405,638 | ||||
Home equity loans and lines | 64,076 | — | 31 | 64,107 | ||||
Commercial real estate | 1,148,828 | 340 | 13,199 | 1,162,367 | ||||
Construction and land | 311,638 | 5,431 | 1,553 | 318,622 | ||||
Multi-family residential | 99,221 | — | 3,383 | 102,604 | ||||
Commercial and industrial | 374,364 | 2,783 | 1,972 | 379,119 | ||||
Consumer | 33,672 | — | 263 | 33,935 | ||||
Total | $ 2,433,095 | $ 9,778 | $ 23,519 | $ 2,466,392 |
Investment Securities
The Company's investment securities portfolio totaled $450.5 million at June 30, 2023, a decrease of $17.1 million, or 3.7% from March 31, 2023. The Company recorded no sales of available-for-sale investment securities during the three months ended June 30, 2023. During the first quarter 2023, the Company recorded a net loss of $249,000 related to the sale of available-for-sale investment securities totaling $14.0 million. At June 30, 2023, the Company had a net unrealized loss position on its investment securities of $53.2 million, compared to a net unrealized loss of $47.1 million at March 31, 2023. The Company's investment securities portfolio had an effective duration of 4.5 years at June 30, 2023 and March 31, 2023.
The following table summarizes the composition of the Company's investment securities portfolio at June 30, 2023.
(dollars in thousands) | Amortized | Fair Value | ||
Available for sale: | ||||
U.S. agency mortgage-backed | $ 332,737 | $ 295,541 | ||
Collateralized mortgage obligations | 86,478 | 81,327 | ||
Municipal bonds | 56,316 | 47,855 | ||
U.S. government agency | 20,080 | 18,588 | ||
Corporate bonds | 6,981 | 6,085 | ||
Total available for sale | $ 502,592 | $ 449,396 | ||
Held to maturity: | ||||
Municipal bonds | $ 1,066 | $ 1,065 | ||
Total held to maturity | $ 1,066 | $ 1,065 |
Approximately 30% of the investment securities portfolio was pledged as of June 30, 2023. As of June 30, 2023 and March 31, 2023, the Company had $134.9 million and $146.5 million, respectively, of securities pledged to secure public deposits.
Deposits
Total deposits were $2.6 billion at June 30, 2023, down $6.0 million, or less than 1%, from March 31, 2023. Non-maturity deposits decreased $98.6 million, or 5% during the second quarter of 2023 to $2.1 billion. The following table summarizes the changes in the Company's deposits from March 31, 2023 to June 30, 2023.
(dollars in thousands) | 6/30/2023 | 3/31/2023 | Increase (Decrease) | |||||
Demand deposits | $ 816,555 | $ 854,736 | $ (38,181) | (4) % | ||||
Savings | 261,780 | 288,788 | (27,008) | (9) | ||||
Money market | 363,801 | 384,809 | (21,008) | (5) | ||||
NOW | 645,087 | 657,499 | (12,412) | (2) | ||||
Certificates of deposit | 464,495 | 371,912 | 92,583 | 25 | ||||
Total deposits | $ 2,551,718 | $ 2,557,744 | $ (6,026) | — % |
The average rate on interest-bearing deposits increased 53 basis points from 0.77% for the first quarter of 2023 to 1.30% for the second quarter of 2023. At June 30, 2023, certificates of deposit maturing within the next 12 months totaled $402.3 million.
We obtain most of our deposits from individuals, small businesses and public funds in our market areas. The following table presents our deposits per customer type for the periods indicated.
June 30, 2023 | March 31, 2023 | |||
Individuals | 51 % | 51 % | ||
Small businesses | 39 | 39 | ||
Public funds | 8 | 8 | ||
Broker | 2 | 2 | ||
Total | 100 % | 100 % | ||
The total amounts of our uninsured deposits (deposits in excess of $250,000, as calculated in accordance with FDIC regulations) were $735.4 million at June 30, 2023 and $778.0 million at March 31, 2023. Public funds in excess of the FDIC insurance limits are fully collateralized.
Net Interest Income
The net interest margin ("NIM") decreased 24 basis points from 4.18% for the first quarter of 2023 to 3.94% for the second quarter of 2023 primarily due to an increase in the average cost of interest-bearing liabilities, which was partially offset with an increase in the average yield on interest-earning assets. The increase in average cost of interest-bearing liabilities was primarily due to the higher costs on short-term FHLB borrowings and deposits in the second quarter of 2023.
The average loan yield was 5.82% for the second quarter of 2023, up 15 basis points from the first quarter of 2023, primarily reflecting increased market rates of interest on variable loans coupled with new loan originations at higher market rates during the period.
Average other interest-earning assets were $52.3 million for the second quarter of 2023, down $1.2 million, or 2%, from the first quarter of 2023 primarily due to a reallocation of certain other interest-earning assets.
Loan accretion income from acquired loans totaled $647,000 for the second quarter of 2023, down $21,000, or 3%, from the first quarter of 2023.
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 | ||||||||||||
6/30/2023 | 3/31/2023 | |||||||||||
(dollars in thousands) | Average | Interest | Average | Average | Interest | Average | ||||||
Interest-earning assets: | ||||||||||||
Loans receivable | $ 2,491,029 | $ 36,530 | 5.82 % | $ 2,437,770 | $ 34,498 | 5.67 % | ||||||
Investment securities (TE) | 507,050 | 2,986 | 2.37 | 535,195 | 3,142 | 2.38 | ||||||
Other interest-earning assets | 52,256 | 555 | 4.26 | 53,456 | 475 | 3.60 | ||||||
Total interest-earning assets | $ 3,050,335 | $ 40,071 | 5.22 % | $ 3,026,421 | $ 38,115 | 5.05 % | ||||||
Interest-bearing liabilities: | ||||||||||||
Deposits: | ||||||||||||
Savings, checking, and money market | $ 1,300,245 | $ 3,023 | 0.93 % | $ 1,349,185 | $ 2,048 | 0.62 % | ||||||
Certificates of deposit | 407,038 | 2,524 | 2.49 | 349,683 | 1,192 | 1.38 | ||||||
Total interest-bearing deposits | 1,707,283 | 5,547 | 1.30 | 1,698,868 | 3,240 | 0.77 | ||||||
Other borrowings | 5,651 | 55 | 3.88 | 5,539 | 53 | 3.89 | ||||||
Subordinated debt | 54,098 | 850 | 6.29 | 54,041 | 851 | 6.30 | ||||||
FHLB advances | 272,783 | 3,313 | 4.81 | 215,478 | 2,376 | 4.41 | ||||||
Total interest-bearing liabilities | $ 2,039,815 | $ 9,765 | 1.91 % | $ 1,973,926 | $ 6,520 | 1.33 % | ||||||
Noninterest-bearing deposits | $ 831,517 | $ 879,501 | ||||||||||
Net interest spread (TE) | 3.31 % | 3.72 % | ||||||||||
Net interest margin (TE) | 3.94 % | 4.18 % |
Noninterest Income
Noninterest income for the second quarter of 2023 totaled $3.4 million, up $137,000, or 4%, from the first quarter of 2023. The increase was related primarily to the absence of a net loss on sale of securities totaling $249,000 during the first quarter of 2023, which was partially offset by decreases in bank card fees of $72,000 and gain on sale of loans of $31,000 for the second quarter of 2023 compared to the first quarter of 2023.
Noninterest Expense
Noninterest expense for the second quarter of 2023 totaled $21.0 million, up $1.0 million, or 5%, from the first quarter of 2023. The increase was primarily related to foreclosed assets expense (up $789,000 primarily due to the absence of a $739,000 recovery of a previous loss on a foreclosed asset in the first quarter of 2023), other expenses (up $167,000), compensation and benefits expense (up $162,000), and marketing and advertising expenses (up $135,000), which were partially offset by a decrease in data processing and communication fees and expenses (down $189,000) during the second quarter of 2023.
Capital and Liquidity
At June 30, 2023, shareholders' equity totaled $346.1 million, up $1.0 million, or less than 1%, compared to $345.1 million at March 31, 2023. The increase was primarily due to the Company's earnings of $9.8 million in the quarter, which was partially offset with an increase in the accumulated other comprehensive loss on available for sale investment securities and repurchase of the Company's common shares of stock during the second quarter of 2023. The market value of the Company's available for sale securities at June 30, 2023 decreased $6.1 million, or 13%, compared to $47.1 million at March 31, 2023. Preliminary Tier 1 leverage capital and total risk-based capital ratios were 10.78% and 14.07%, respectively, at June 30, 2023, compared to 10.69% and 14.00%, respectively, at March 31, 2023.
The following table summarizes the Company's primary and secondary sources of liquidity which were available at June 30, 2023.
(dollars in thousands) | June 30, 2023 | |
Cash and cash equivalents | $ 96,873 | |
Unencumbered investment securities, amortized cost | 72,354 | |
FHLB advance availability | 897,776 | |
Amounts available from unsecured lines of credit | 55,000 | |
Federal Reserve bank term funding program | 109,379 |