Home Bancorp NASDAQ: HBCP reported third-quarter 2026 net income of $10.1 million, or $1.28 per share, as higher credit-related costs and foreclosed asset expenses weighed on results. The company also announced that Chairman and Chief Executive Officer John Bordelon plans to retire as CEO in January 2027, with President Darren Guidry set to succeed him.
Third-quarter earnings declined from $1.48 per share in the second quarter, while return on assets was 1.12%. Management said results were affected by interest reversals on loans placed on nonaccrual status and elevated expenses tied to foreclosed properties. Still, the bank recorded a quarterly record in net interest income and maintained what executives described as a comparatively low cost of deposits.
Leadership Transition Planned for January
Bordelon said the transition is part of a planned succession process following Guidry’s appointment as president in July. Bordelon will remain chairman of the board after retiring from the CEO role.
Guidry has more than 40 years of banking experience, including more than three decades at Home Bank, according to Bordelon. Bordelon said the company does not anticipate significant changes in its operating approach under the new leadership structure.
During Bordelon’s 33 years as CEO, Home Bancorp expanded from a Lafayette-based savings institution into a community bank operating across the Gulf South. Since its 2008 initial public offering, the company has completed six acquisitions, expanded into Greater New Orleans, Baton Rouge, Mississippi and Houston, and increased total assets at a compound annual rate of more than 11% to $3.6 billion across 43 locations, Bordelon said.
Guidry credited Bordelon with maintaining an emphasis on disciplined underwriting, core deposits and long-term shareholder value through multiple economic cycles and disruptions.
Record Net Interest Income, Though Margin Was Affected by Credit Costs
Net interest income increased to a record $35.9 million in the third quarter, up $110,000 from the prior quarter and $1.8 million, or 5%, from a year earlier. Net interest margin was 4.19%, down 5 basis points sequentially.
Chief Financial Officer David Kirkley said loan yields declined 6 basis points to 6.4%, including an $862,000 reversal of accrued interest on loans transferred to nonaccrual status. The reversals reduced loan yield by 12 basis points. Excluding that item, net interest margin would have been 4.28%, up 4 basis points from the second quarter.
The investment portfolio yield increased 19 basis points to 2.87% as the bank reinvested cash flows at higher rates. Meanwhile, the cost of interest-bearing liabilities rose 4 basis points to 2.42%.
Kirkley said approximately 27% of the loan portfolio is floating rate and reprices within three months, while 46% is variable rate. He said the company’s investment cash flows and repricing loan portfolio should help offset higher funding costs in a rising-rate environment. In response to an analyst question, he cited a 4.27% to 4.28% margin as a starting point going forward, absent unusual items such as interest reversals.
Total deposits stood at $3.1 billion at quarter-end, down $15.4 million, or less than 1%, from the second quarter. Core deposits fell $28.3 million, primarily in NOW accounts, while money market accounts increased $14.3 million and certificates of deposit rose $13 million. Noninterest-bearing deposits represented 27% of total deposits.
The total cost of deposits was 1.69%, and the average cost of interest-bearing deposits increased 5 basis points to 2.33%. Kirkley said competition for deposits remains elevated, particularly in Texas, though Home Bank intends to remain disciplined on pricing.
Credit Metrics Deteriorate as Bank Addresses Six Relationships
Credit quality was the primary challenge during the quarter. Home Bancorp placed six loan relationships totaling $19.5 million on nonaccrual status, increasing nonperforming loans to $42.2 million, or 1.52% of total loans, from $26.4 million, or 95 basis points, in the prior quarter.
Total nonperforming assets rose to $53.7 million, representing 1.49% of total assets. Substandard loans increased $14 million to $82.9 million, while special-mention loans declined $4.7 million to $22.2 million.
Guidry said the six credits were spread across the company’s markets and included commercial real estate multi-use facilities, owner-occupied commercial real estate, commercial and industrial loans, and construction and development credits. He said management had not identified a concentration by geography, loan type or industry. A couple of the relationships have specific reserves, and management does not expect significant additional losses from them, he said.
The company recorded a $1 million provision for credit losses, compared with $762,000 in the second quarter, primarily due to higher specific reserves. Net charge-offs totaled $586,000. The allowance for loan losses was $34.4 million, or 1.24% of total loans.
Management said it is encouraged by developments among other watch-list credits, with several substandard loans positioned for upgrades or paydowns. Some resolutions are expected in the fourth quarter, with others extending into early 2027. Guidry said the company may see additional downgrades through year-end but does not currently anticipate any of significant size.
Foreclosed assets declined $1.2 million to $11.6 million following property sales and write-downs. Noninterest expense increased $1.8 million from the second quarter to $26.3 million, largely because foreclosed asset expense rose $1.7 million to $2 million. The expenses primarily reflected appraisal-driven write-downs and list-price reductions on other real estate owned. Management said several properties are under contract and expects foreclosed asset expense to decline from third-quarter levels, though remain above historical levels while problem assets are resolved.
Loan Pipeline Remains Healthy, but Resolutions May Temper Growth
Loans decreased $4 million during the quarter as elevated payoffs and slower construction fundings offset steady production. Year-to-date loan growth has been running at an annualized rate of about 1.5%, led by Houston at a 6% annualized pace.
Guidry said the pipeline totaled roughly $440 million, including approximately $132 million of committed loans. Most of the pipeline is expected to close by year-end or in the middle of the first quarter, he said. The pipeline is concentrated primarily in smaller business banking credits, including commercial and industrial lending and owner-occupied commercial real estate, along with several larger commercial relationships.
However, management expects paydowns and payoffs connected to problem-loan resolutions to offset some new production. Guidry said the bank had received roughly $5 million in paydowns since the prior earnings call and expects another $5 million by year-end and an additional $5 million early in the first quarter.
The company’s loan-to-deposit ratio was 91%, within its target range. Tangible book value per share was $46.97, essentially unchanged from the second quarter as earnings were offset by a $9.1 million increase in unrealized investment portfolio losses resulting from higher rates. Home Bancorp reported a tangible common equity ratio of 10.5%, a Tier 1 leverage ratio of 12.3% and a total risk-based capital ratio of 16.1%.
Guidry also said the bank is positioned to pursue acquisitions that fit its geographic, cultural and talent objectives across its existing Gulf South, Texas and Mississippi markets.
About Home Bancorp (NASDAQ:HBCP)
Home Bancorp, Inc is the holding company for Home Bank, a community-focused bank headquartered in Lafayette Hill, Pennsylvania. The company serves individuals, families, professionals and businesses through a network of banking offices in southeastern Pennsylvania and surrounding communities.
Home Bank offers a range of deposit products, including checking, savings, money market and certificate of deposit accounts. Its lending activities include residential mortgage loans, home equity financing, commercial real estate loans, construction and development financing, commercial business loans and consumer loans.
Through its community banking model, Home Bancorp focuses on relationship-based service and local decision-making.
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