Home Bancorp NASDAQ: HBCP reported first-quarter 2026 net income of $11.4 million, or $1.45 per diluted share, as the company benefited from lower funding costs and continued improvement in its deposit mix. Chairman, President, and CEO John W. Bordelon said earnings per share were down a penny from the fourth quarter but up 6% from a year ago, calling the quarter “a good start to the year.”
Margin expansion driven by lower funding costs
Bordelon said net interest margin expanded to 4.16%, up 10 basis points from the prior quarter and 25 basis points from the year-ago period. He attributed the improvement to lower funding costs, noting a 22-basis-point decline in the cost of funds that contributed to a 25-basis-point drop in overall cost of funds.
Chief Financial Officer David Kirkley said net interest income rose to $34.5 million, up $434,000 sequentially and $2.8 million from a year earlier, calling it “the highest quarterly net interest income in Home Bank’s history.” Kirkley said the cost of interest-bearing liabilities peaked in the third quarter of 2024 and has fallen 64 basis points as the company reduced exposure to higher-cost funding.
In the first quarter, Kirkley said the average cost of interest-bearing deposits declined 22 basis points to 2.29%, while the overall cost of deposits fell 16 basis points to 1.68%, which he noted is “less than half of the current Fed funds target rate.”
During Q&A, management maintained that additional net interest margin expansion remains possible even if the Federal Reserve does not cut rates. Kirkley told Piper Sandler analyst Stephen Scouten that Home Bancorp still sees opportunity for repricing in both the loan and investment portfolios and continues to pick up “about 40 basis points on cash flow versus new originations.” Bordelon added that deposit pricing would likely “dictate the pace” of margin expansion.
Deposit growth offsets CD runoff; loan-to-deposit ratio improves
Total deposits increased $54 million during the quarter, or 7% annualized, according to Bordelon, driven by $118 million growth in core deposits and offset by a $64 million decline in non-core CDs. Non-interest-bearing deposits rose $37 million and represented 27% of total deposits.
Kirkley said 78% of the CD decline came from non-core CD customers, and he cited seasonal fluctuations in public deposits—up $43 million—as a contributor to growth in non-maturity deposits. He also said the company’s improved funding position allowed it to repay all Federal Home Loan Bank advances, calling it “a material improvement compared to the $175 million in advances we carried at year-end 2024.”
With deposit growth outpacing loans, Bordelon said the loan-to-deposit ratio declined to approximately 90%, which he said positions the bank well for future growth.
On competitive dynamics, Kirkley told Raymond James analyst Joseph Yanchunis that some banks reduced deposit rates as rate-cut expectations emerged, while a few competitors remained aggressive on CDs. Kirkley said Home Bancorp adjusted its top CD rate “slightly,” moving from 3.65% to 3.85% in most markets to slow runoff, while noting some Houston competitors were offering rates in the 4% to 4.25% range.
Loans decline amid paydowns; pipeline improves
Loans declined 1% in the first quarter as paydowns continued to outpace new production. Bordelon said customers have delayed projects and transactions while waiting for clarity on interest rates, though he said the company is maintaining “pricing and structure discipline” and continues generating originations at attractive spreads and risk-adjusted returns.
Management said the loan pipeline improved. In response to questions from Raymond James, Kirkley said the pipeline increased by about $30 million from December to approximately $122 million as of March.
Bordelon also discussed a shift in portfolio focus, saying the bank has reduced its appetite for non-owner-occupied loans over the past two years. He said runoff in that category contributed to the quarter’s loan decline, pointing to competitive rate pressures from other market participants for certain rental-property lending. On pricing, Kirkley told Hovde Group analyst Feddie Strickland that the average rate on new loan production is “about 7%.”
Looking ahead, Bordelon characterized first-quarter loan demand as more typical versus the prior few years, saying he believes borrowers had hoped for lower rates but have come to accept the current environment. He said demand could improve in the second and third quarters, while also citing geopolitical uncertainty as a potential headwind.
Credit trends: non-performing assets rise; reserves increase
Credit metrics weakened modestly. Bordelon said non-performing assets increased $3.8 million, primarily due to the downgrade of three relationships, though he said management expects losses to be “immaterial given the collateral protection and guarantor support.” He added that net charge-offs remained “extremely low” at six basis points annualized.
Kirkley provided additional detail, saying non-performing loans increased $1.6 million to $35.8 million, or 1.31% of total loans. He said the increase was primarily due to the downgrade of three relationships, partially offset by the foreclosure of a $2.6 million property in Houston.
The company recorded a provision for credit losses of $922,000 in the quarter, up from $480,000 in the fourth quarter. Kirkley said the increase was “primarily due to changes in individually required reserves associated with these downgraded credits.” The allowance for loan losses increased to $33.1 million, or 1.23% of loans, and Kirkley said management remains “very confident” in reserve levels.
In response to questions about workout timelines, Bordelon said the biggest challenge has been how long special assets take to move through the process, citing examples where bankruptcy filings or lengthy refinancing efforts have extended resolution timelines. He said the slower pace has contributed to some accumulation of problem assets over time.
Fees, expenses, capital management, and strategic outlook
Non-interest income decreased $260,000 to $3.7 million, which Kirkley said was slightly below expectations due to lower other income and bank card fees. He said the company continues to expect quarterly non-interest income in the $3.8 million to $4.0 million range.
Non-interest expense declined $106,000 to $22.9 million, in line with expectations, according to Kirkley. He said expenses are expected to increase modestly beginning in the second quarter as annual raises take effect and technology investments ramp up, with full-year 2026 quarterly non-interest expense expected in the $23.3 million to $23.7 million range.
Kirkley also highlighted capital management, saying that since 2019 the company has increased adjusted tangible book value per share at an annualized rate of approximately 9.7% and EPS at more than 11% annualized, while raising the quarterly dividend by more than 50% and repurchasing about 17% of shares. Tangible book value per share rose to $46.04 in the quarter, up almost $5, or 15%, from the first quarter of 2025, he said.
On strategic initiatives, Bordelon pointed to continued expansion in Texas, saying loans there have grown to about 21% of the total portfolio from 15% when the bank entered the market through an acquisition in 2022. He also noted the opening of a new Northwest Houston branch during the quarter, which he said provides a full-service presence in a fast-growing area.
In Q&A, Bordelon said M&A discussions may come more into focus, noting that prior efforts concentrated on smaller transactions because the company lacked the ability to use its stock as currency. With shares trading near 1.40 times tangible book value, Bordelon said the bank believes it “can do a deal this year,” potentially larger than opportunities considered in recent years.
About Home Bancorp NASDAQ: HBCP
Home Bancorp, Inc is the bank holding company for The Home National Bank, a full-service financial institution headquartered in Lafayette, Louisiana. The company operates as a regional commercial bank serving individuals, small businesses and municipalities across Louisiana and East Texas. Through its network of branches and digital banking platforms, Home Bancorp offers a range of deposit and lending solutions designed to meet the needs of its local markets.
The company's core offerings include retail deposit products such as checking, savings and money market accounts, as well as a variety of commercial and consumer lending services.
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