Home Bancorp Q2 Earnings Call Highlights

Key Points

• Home Bancorp posted stronger Q2 results, with net income of $11.6 million, or $1.48 per share, and record quarterly net interest income of $35.8 million. Return on assets improved to 1.31% as the net interest margin expanded to 4.24%.
• Loan and deposit growth rebounded in the quarter, with loans up $50.7 million and total deposits up $42.1 million. Management said it still expects mid-single-digit loan growth in the second half of the year, led by the Houston market.
• Credit quality remains mixed but manageable: non-performing loans fell to 0.95% of total loans, though criticized loans increased. Management said charge-offs remain very low and expects more than $30 million of improvement in special assets by year-end.

Home Bancorp NASDAQ: HBCP reported higher second-quarter earnings and record quarterly net interest income, while management said loan growth rebounded and the company remains focused on resolving problem credits.

Chairman and CEO John Bordelon said the company earned net income of $11.6 million, or $1.48 per diluted share, for the second quarter of 2026. Earnings per share increased 2% from the first quarter and were up from $1.46 per share in the year-ago quarter. Return on assets increased to 1.31%.

Bordelon also announced that Darren Guidry has been named president of Home Bancorp. Guidry has served as chief risk officer since 2022, and previously held the roles of chief credit officer and chief lending officer. Bordelon said separating the CEO and president roles is intended to support the company’s “next phase of growth,” with Bordelon focused on corporate strategy, capital planning and shareholder relations, while Guidry leads day-to-day execution of strategic priorities.

Net Interest Income Reaches Record Level

Net interest income totaled $35.8 million in the quarter, which Bordelon said was the highest quarterly net interest income in Home Bancorp’s 118-year history. Chief Financial Officer David Kirkley said net interest income rose $1.3 million from the first quarter and $2.5 million from a year earlier.

The net interest margin expanded 8 basis points from the first quarter to 4.24%. Kirkley said the increase was driven by loan yields rising 5 basis points to 6.46%, while the cost of interest-bearing liabilities remained flat at 2.38%. Bordelon said the margin expansion reflected higher yields on earning assets and stable funding costs.

Home Bancorp’s cost of deposits was stable at 1.66% for the quarter. Bordelon called that “one of the lowest in our peer group” and said it reflected the strength of the company’s core deposit franchise. Kirkley said the average cost of interest-bearing deposits declined to 2.28% in the second quarter, helped by deposit mix improvement and certificates of deposit repricing at lower rates. However, he said the company does not expect “further material declines” in deposit costs.

In response to a question from Raymond James’ Joe Yanchunis about the timing of fixed-rate asset repricing benefits, Kirkley said he expects “a couple basis points” of margin increase in the third quarter and “a little bit into Q4.” He said moderation is more likely after the fourth quarter and into the first quarter of 2027.

Loans and Deposits Grow in the Quarter

Loans increased by $50.7 million in the second quarter, or about 7% annualized, rebounding from a slight contraction in the first quarter. Bordelon said the Houston market continued to lead growth, expanding at a 9% annualized rate year to date. He also said the Tomball branch in northwest Houston, opened in the first quarter, is gaining momentum.

Bordelon said the company believes its pipeline can support continued mid-single-digit loan growth in the second half of the year, though he noted that predicting when customers will make financing decisions has become challenging. During the question-and-answer session, he clarified that the mid-single-digit growth outlook applies to the back half of the year.

Total deposits grew by $42.1 million, or 6% annualized, during the quarter. Kirkley said total deposits increased to $3.1 billion, with core deposit growth of $46.6 million more than offsetting a modest decline in certificates of deposit. Non-interest-bearing demand deposits increased $5.1 million and represented 27% of total deposits.

Bordelon said the loan-to-deposit ratio remained in the middle of the company’s 90% to 92% target range. In response to Hovde Group’s Feddie Strickland, Bordelon said maintaining certificates of deposit is important to supporting growth, noting that the company lost about $60 million of CDs after reducing rates in the first quarter and has not moved rates since then.

Credit Quality Shows Mixed Trends

Management said credit quality remains an area of focus. Kirkley said non-performing loans declined to $26.4 million, or 0.95% of total loans, from $35.8 million, or 1.31% of total loans, in the prior quarter. The decline was primarily due to the transfer of about $10 million of non-performing loans into other real estate owned, or OREO.

Total non-performing assets were $39.2 million, or 1.09% of total assets, as foreclosed asset balances increased due to the foreclosure of multiple properties. Kirkley said the largest foreclosed property was $2.6 million.

Total criticized loans rose to $95.8 million, or 3.45% of total loans, primarily due to six relationships migrating into special mention status and a $7.4 million increase in substandard loans. Substandard loans increased largely because of the downgrade of a $12.4 million commercial and industrial credit, partially offset by the transfer of almost $10 million from substandard to OREO and paydowns.

Bordelon said the company does not see “specific industry-related stress,” but added that more individual customers are struggling in the current economy. He said net charge-offs remained “extremely low” at 6 basis points annualized and said the company expects conservative underwriting and active management to limit losses.

Guidry provided additional detail in response to Brean Capital’s Christopher Marinac, saying the special assets group has a significant number of resolutions in place. He said management expects more than $30 million of improvement in special assets between now and year-end, including resolutions in special mention loans, substandard credits and non-performing assets through payoffs, upgrades and OREO sales.

Expenses, Capital and Shareholder Returns

Non-interest income totaled $3.9 million in the second quarter, up $181,000 from the first quarter. Kirkley said management continues to expect quarterly non-interest income in the range of $3.8 million to $4.1 million.

Non-interest expense totaled $24.6 million, up $1.6 million from the first quarter. Kirkley said the increase was primarily driven by $1.3 million of compensation and benefits expense and a $331,000 increase in foreclosed asset expense. Given elevated expenses related to foreclosed assets, management expects non-interest expense to remain in a range of $24 million to $24.8 million over the next several quarters.

Tangible book value per share increased to $47.02, up from $46.04 in the first quarter and more than 13% from a year ago. Kirkley said capital ratios remained strong, with a Tier 1 leverage ratio of 12.1% and a total risk-based capital ratio of 15.6%. The company declared a quarterly cash dividend of $0.32 per share, an increase of $0.01 from the prior quarter.

Asked by Piper Sandler’s Stephen Scouten about capital uses if merger-and-acquisition opportunities remain limited, Bordelon said the company still expects M&A to be the primary use of excess capital and is “looking for that right partner.” Kirkley said the company has been selective with share repurchases after the stock’s recent run, and also noted that subordinated debt with a 5.75% coupon becomes callable in 2027.

Management Discusses Competition and Hiring

On competitive conditions, Bordelon said Texas is more competitive than Louisiana for both loans and deposits. He said some banks in the Texas market have offered deposit rates close to 4%, and in the first quarter a few were at 4.25%, making competition for deposits more challenging.

Guidry said the company is not planning major staffing changes following his appointment as president. He said Home Bancorp has a strong executive team and banking group, with little turnover, and is looking to add good bankers when available. Bordelon noted that the company recently added one relationship manager in the Baton Rouge market, which he described as its slowest-developing market.

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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