Net Income: $9.4 million or $1.18 per share.
Net Interest Margin: Increased by 5 basis points to 3.71%.
Return on Assets: 1.1%, up 13 basis points from the second quarter.
Loan Growth: Slowed to $7 million or about 1% annualized.
Deposits: Increased by $55 million or 8% annualized.
Net Interest Income: Increased to $30.4 million, up $989,000 from the previous quarter.
Loan to Deposit Ratio: Reduced to 96.1%.
Nonperforming Loans: Increased by $1.3 million to $18.1 million, or 0.68% of total loans.
Allowance for Loan Loss Ratio: Stable at 1.21%.
Noninterest Income: Decreased slightly to $3.7 million.
Noninterest Expense: Increased by $450,000 to $22.3 million.
Share Repurchase: 24,000 shares at an average price of $38.50.
Dividend: Increased by $0.01 to $0.26 per share.
Release Date: October 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Home Bancorp Inc (NASDAQ:HBCP) reported a net income of $9.4 million or $1.18 per share, showing improvement from the previous quarter.
Net interest margin expanded by five basis points to 3.71%, indicating better profitability.
Deposits increased by $55 million or 8% annualized, primarily from money market and interest-bearing checking accounts.
The company has a strong capital management strategy, having increased dividends per share by 20% and repurchased 14% of shares over the last five years.
Home Bancorp Inc (NASDAQ:HBCP) has maintained robust capital ratios, positioning itself well for varying economic environments.
Negative Points
Loan growth slowed in the third quarter, impacted by the paydown of a $19 million medical C&I loan.
Nonperforming loans increased by $1.3 million to $18.1 million, representing 0.68% of total loans.
Loan demand is expected to finish at the lower end of the 4% to 6% guidance for 2024 due to sustained higher rates.
Noninterest income decreased slightly to $3.7 million, with expectations to remain between $3.6 million and $3.8 million over the next two quarters.
The company faces challenges in predicting deposit behavior with rate cuts, which could impact net interest income.
Q & A Highlights
Q: With potential rate cuts, can we expect loan growth to return to mid to high single-digit rates in 2025? A: John Bordelon, CEO, stated that loan growth could indeed return to mid to high single-digit rates if rate cuts occur. He noted that the 1 to 4 family mortgage portfolio has slowed due to higher mortgage rates, but rate cuts could stimulate growth. Additionally, commercial loan demand may increase as customers gain clarity on economic conditions.
Q: Do you expect New Orleans and Houston to continue driving commercial growth, or are there opportunities in other areas? A: John Bordelon, CEO, confirmed that Houston, New Orleans, and Lafayette are the strongest markets for Home Bancorp. While other markets may show improvement periodically, these three remain the primary drivers of growth.
Q: Can you provide more details on the nonaccrual relationship added this quarter? A: John Bordelon, CEO, explained that the nonaccrual credit involves a disagreement among partners over 15 rental properties in New Orleans. The properties are still rented, and there is about $2 million in equity. The situation is expected to resolve through a sheriff’s sale, with dates set for the coming months.
Q: How do you see loan payoffs behaving in a rate-cutting environment, and will new lending opportunities offset this? A: David Kirkley, CFO, noted that higher payoffs were seen in Q3, but new opportunities are emerging. John Bordelon added that a $19 million payoff was a one-off event, and he anticipates more projects as rates decrease, potentially offsetting payoffs.
Q: What is the outlook for deposit pricing and net interest income (NII) trajectory? A: John Bordelon, CEO, mentioned that most banks in their markets have reduced rates, and further Fed cuts could allow for continued reduction in deposit costs. David Kirkley, CFO, added that the ability to reprice loans higher should help offset rate cuts, and they are exploring options to manage maturing BTFP funding.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
