8-K
HOME BANCORP, INC. (HBCP)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
| Date of Report (Date of earliest event reported) | April 28, 2020 | |
|---|---|---|
| Home Bancorp, Inc. | ||
| --- | ||
| (Exact name of registrant as specified in its charter) | ||
| Louisiana | 001-34190 | 71-1051785 |
| --- | --- | --- |
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| 503 Kaliste Saloom Road, Lafayette, Louisiana | 70508 | |
| --- | --- | |
| (Address of principal executive offices) | (Zip Code) | |
| Registrant’s telephone number, including area code | (337) 237-1960 | |
| --- | --- | |
| N/A | ||
| --- | ||
| (Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock | HBCP | Nasdaq Stock Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 2.02 | Results of Operations and Financial Condition |
|---|
On April 28, 2020, the Registrant announced its results of operations for the quarter ended March 31, 2020. A copy of the related press release (the "Press Release") is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein. The Press Release attached hereto is being furnished to the SEC and shall not be deemed "filed" for any purpose except as otherwise provided herein.
| Item 8.01 | Other Events |
|---|
On April 28, 2020, the Registrant announced that its Board of Directors declared a cash dividend in the amount of $0.22 per share. The cash dividend will be paid on May 22, 2020 to shareholders of record at the close of business on May 11, 2020.
The following risk factor supplements the “Risk Factors” section in Item 1A of our 2019 Annual Report on Form 10-K.
The COVID-19 pandemic has adversely impacted our business and financial results, and the ultimate impact will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities in response to the pandemic.
The COVID-19 pandemic has negatively impacted the global economy, disrupted global supply chains, lowered equity market valuations, created significant volatility and disruption in financial markets, and increased unemployment levels. In addition, the pandemic has resulted in temporary closures of many businesses and the institution of social distancing and sheltering in place requirements in Louisiana and many other states and communities. Global markets for oil and gas have, and may continue to be, adversely impacted by the COVID-19 pandemic and/or other events beyond our control, and further volatility in commodity prices could have a negative impact on the economies of energy-dominated states in which we operate. As a result, the demand for our products and services may be significantly impacted, which could adversely affect our revenue. Furthermore, the pandemic could continue to result in the recognition of credit losses in our loan portfolios and increases in our allowance for credit losses, particularly if businesses remain closed, the impact on the global economy worsens, or more customers draw on their lines of credit or seek additional loans to help finance their businesses. Similarly, because of changing economic and market conditions affecting issuers, we may be required to recognize impairments on the securities we hold as well as reductions in other comprehensive income. Our business operations may also be disrupted if significant portions of our workforce are unable to work effectively, including because of illness, quarantines, government actions, or other restrictions in connection with the pandemic, and we have already temporarily limited access to certain of our branches and offices. In response to the pandemic, we have also suspended residential property foreclosure sales, evictions, and involuntary automobile repossessions, and are offering fee waivers, payment deferrals, and other expanded assistance for credit card, automobile, mortgage, small business and personal lending customers, and future governmental actions may require these and other types of customer-related responses. The extent to which the COVID-19 pandemic impacts our business, results of operations, and financial condition, as well as our regulatory capital and liquidity ratios, will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities and other third parties in response to the pandemic.
| Item 9.01 | Financial Statements and Exhibits |
|---|
(a)Not applicable.
(b)Not applicable.
(c)Not applicable.
(d)Exhibits
The following exhibit is filed herewith.
| Exhibit Number | Description |
|---|---|
| 99.1 | Press Release - Results of Operations and Financial Condition, datedApril 28, 2020. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| HOME BANCORP, INC. | ||
|---|---|---|
| Date: April 29, 2020 | By: | /s/ John W. Bordelon |
| John W. Bordelon | ||
| President and Chief Executive Officer |
EXHIBIT INDEX
| Exhibit Number | Description |
|---|---|
| 99.1 | Press Release - Results of Operations and Financial Condition, datedApril 28, 2020. |
Document
For further information contact:
John W. Bordelon, President and CEO
(337) 237-1960
| Release Date: | April 28, 2020 |
|---|---|
| For Immediate Release |
HOME BANCORP, INC. ANNOUNCES 2020 FIRST QUARTER RESULTS
AND DECLARES QUARTERLY DIVIDEND
Lafayette, Louisiana – 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 first quarter of 2020. For the quarter, the Company reported net income of $1.9 million, or $0.21 per diluted common share (“diluted EPS”), compared to $6.6 million, or $0.73 diluted EPS, for the fourth quarter of 2019.
“Our year got off to a strong start with loan growth totaling $24.8 million for the first quarter of 2020,” said John W. Bordelon, President and Chief Executive Officer of the Company and the Bank, “As the extent of the health and economic challenges resulting from COVID-19 became more apparent in March, we shifted our focus to providing payment relief to our customers most significantly impacted by the crisis and by injecting cash into our communities through the Small Business Association's ("SBA") Paycheck Protection Program ("PPP"). That focus continues today."
"During these tough times, our customers need us to be there for them," continued Bordelon. "I've been overwhelmed by the tremendous efforts of our bankers who have worked day and night to ensure our customers have access to the financial resources and tools they need to manage through the many challenges brought on by this health and economic crisis. As a company, we are so fortunate to be in a strong financial position at a time when our customers and communities need us to be strong. We’re going to weather this storm together, and come out stronger on the other side."
COVID-19 Response
The COVID-19 pandemic and its economic effects have had a significant impact on customers in each of our markets. State and local government stay-at-home orders have required schools, restaurants, bars, health clubs and other businesses to close or drastically limit their services. While banking operations have not been restricted by such orders, we have adapted to protect our employees and customers by working remotely as much as possible, limiting branch service to drive-through and scheduled appointments, enhancing cleaning procedures and maintaining appropriate social distancing while in the office.
To give immediate financial support to our customers, the Company began providing the following payment relief options in mid-March:
•Deferral of principal and/or interest payments for up to three months;
•Short-term working-capital lines of credit with up to six months of interest only payments; and
•Refunds and waivers of certain fees and late charges.
The Company has also been active in providing SBA PPP loans. Through April 24, 2020, our bankers have funded or are currently in the process of funding approximately 961 loans totaling $151.3 million under the PPP.
First Quarter 2020 Highlights
•Loans grew by $24.8 million, or 6% annualized, on a linked-quarter basis;
•On January 1, 2020, the Company adopted the current expected credit loss ("CECL") framework, which resulted in a $7.0 million, or 39%, increase in the allowance for credit losses at the adoption date;
•Our provision for loan losses totaled $6.3 million, reflecting our assessment of the change in expected losses due primarily to the potential economic impact of the COVID-19 pandemic as well as the significant decline in wholesale market prices for oil and gas;
•The allowance for loan losses totaled $28.5 million, or 1.64% of total loans, at March 31, 2020; the allowance for credit losses, which includes the reserve for unfunded commitments, totaled $31.6 million, or 1.82% of total loans;
•Preliminary Tier 1 leverage capital and total risk-based capital ratios were 10.84% and 15.19% at March 31, 2020, compared to 11.17% and 15.28% at December 31, 2019; and
•Net interest margin increased four basis points to 4.18%, on a linked quarter basis.
Loans
Loans grew by $24.8 million, or 6% annualized, during the first quarter of 2020. The following table summarizes the changes in the Company’s loan portfolio from December 31, 2019 to March 31, 2020.
| March 31, | December 31, | Increase/(Decrease) | ||||||
|---|---|---|---|---|---|---|---|---|
| (dollars in thousands) | 2020 | 2019 | Amount | Percent | ||||
| Real estate loans: | ||||||||
| One- to four-family first mortgage | $ | 420,206 | $ | 430,820 | $ | (10,614) | (2) | % |
| Home equity loans and lines | 78,011 | 79,812 | (1,801) | (2) | ||||
| Commercial real estate | 736,694 | 722,807 | 13,887 | 2 | ||||
| Construction and land | 205,392 | 195,748 | 9,644 | 5 | ||||
| Multi-family residential | 57,333 | 54,869 | 2,464 | 4 | ||||
| Total real estate loans | 1,497,636 | 1,484,056 | 13,580 | 1 | ||||
| Other loans: | ||||||||
| Commercial and industrial | 198,236 | 184,701 | 13,535 | 7 | ||||
| Consumer | 43,270 | 45,604 | (2,334) | (5) | ||||
| Total other loans | 241,506 | 230,305 | 11,201 | 5 | ||||
| Total loans | $ | 1,739,142 | $ | 1,714,361 | $ | 24,781 | 1 | % |
Commercial real estate ("CRE") loan growth was primarily driven by non-owner-occupied real estate loans in the Acadiana and New Orleans markets. The growth included a $4.7 million increase in loans secured by hotels and short-term rentals. At March 31, 2020, non-owner-occupied CRE loans totaled $337.5 million, or 46% of total CRE loans, compared to $326.6 million, or 45%, at December 31, 2019.
Commercial and industrial ("C&I") loan growth was primarily driven by non-energy-related lines of credit to customers in the industrial services sector in the Acadiana and Baton Rouge markets.
Construction and land ("C&D") loan growth was primarily driven by commercial building construction projects across our Louisiana markets and two multi-family redevelopment projects in New Orleans. The multi-family projects are expected
to be used as short-term rentals. At March 31, 2020, hotel and short-term rental construction loans totaled $19.1 million, or 9% of total C&D loans, compared to $14.2 million, or 7% of total C&D loans, at December 31, 2019.
CECL Adoption
As of January 1, 2020, the Company adopted Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced a new framework known as CECL. The adoption of CECL resulted in a $7.0 million, or 39%, increase in the allowance for credit losses ("ACL"), and a corresponding $4.7 million after-tax decrease in retained earnings. At adoption, $1.0 million of the increase in the ACL resulted from the utilization of previously recorded discount on purchased credit impaired loans. At January 1, 2020, the ratio of ACL, which includes the reserve for unfunded commitments, to total loans was 1.45%, up 41 basis points from 1.04% at December 31, 2019. The increase in the ACL upon adoption of CECL primarily reflects a cumulative effect adjustment due to the change in accounting methodology for the credit risk associated with acquired loans (added $4.5 million) and reserves for unfunded lending commitments (added $2.4 million).
The guidance under ASC Topic 326 did not have an impact on the Company's held-to-maturity or available-for-sale debt securities.
Credit Quality and Allowance for Credit Losses
Nonperforming assets (“NPAs”) totaled $29.5 million, or 1.31% of total assets, and $28.5 million, or 1.30% of total assets, at March 31, 2020 and December 31, 2019, respectively. The increase in NPAs at March 31, 2020 compared to December 31, 2019 primarily reflects the adoption of CECL as of January 1, 2020. Due to the adoption of CECL, purchased credit deteriorated ("PCD") loans of $2.3 million were included in NPAs at March 31, 2020. Prior to January 1, 2020, these loans were classified as purchase credit impaired ("PCI") and, under prior accounting policies, were not considered NPAs because they continued to earn interest income from the accretable yield at the pool level. With the adoption of CECL, the pools were discontinued and performance is based on contractual terms for individual loans.
The Company recorded net loan charge-offs of $268,000 during the first quarter of 2020, compared to net loan charge-offs of $443,000 for the fourth quarter of 2019.
Beginning in March 2020, in response to the economic challenges brought on by the COVID-19 crisis, we began offering our borrowers payment relief options primarily in the form of deferrals of principal and/or interest payments for 90 days. At March 31, 2020, borrowers with outstanding loan balances totaling $191.6 million, or 11% of total loans, were granted such payment relief. At April 24, 2020, that total has increased to $507.1 million, or 27% of total loans. Management anticipates the level of deferrals will continue to grow the longer stay-at-home orders remain in effect.
In addition to deferrals, the Company began offering short-term working-capital lines of credit with up to six months of interest only payments. Through March 31, 2020, the Company has originated $500,000 in short-term working capital lines of credit related to COVID-19 crisis relief. Through April 24, 2020, that total has increased to $1.1 million. At March 31, 2020 and April, 24 2020 the outstanding balance of these short-term lines totaled $28,000 and $380,000, respectively.
The provision for loan losses for the first quarter of 2020 totaled $6.3 million, up $5.5 million from the fourth quarter of 2019. The first quarter provision for loan losses reflects the change in expected losses due to the potential economic impact of the COVID-19 pandemic and a significant decline in oil prices.
The following table provides a summary of the loan portfolio at March 31, 2020, stratified by certain selected industry segments, and related reserve builds during the first quarter of 2020.
| Recorded Investment in Loans | CECL Adoption Impact | Reserve Build^(1)^<br><br>for the<br><br>Quarter Ended | Total ACL | ACL to Total Loans | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| March 31, | January 1, | March 31, | March 31, | March 31, | ||||||
| (dollars in thousands) | 2020 | 2020 | 2020 | 2020 | 2020 | |||||
| Retail CRE | $ | 159,483 | $ | 573 | $ | 744 | $ | 2,728 | 1.71 | % |
| Healthcare | 145,795 | 161 | 175 | 1,918 | 1.32 | |||||
| Hotels and short-term rentals | 86,039 | 39 | 1,885 | 2,796 | 3.25 | |||||
| Restaurants and bars | 60,940 | 85 | 545 | 1,219 | 2.00 | |||||
| Energy | 31,186 | 341 | 1,204 | 1,715 | 5.50 | |||||
| Credit cards | 4,151 | 33 | 327 | 415 | 10.00 | |||||
| Other loans | 1,251,548 | 3,401 | 1,109 | 17,699 | 1.41 | |||||
| Total | $ | 1,739,142 | $ | 4,633 | $ | 5,989 | $ | 28,490 | 1.64 | % |
| Unfunded lending commitments^(2)^ | — | 2,365 | 729 | 3,094 | — | |||||
| Total | $ | 1,739,142 | $ | 6,998 | $ | 6,718 | $ | 31,584 | 1.82 | % |
(1)"Reserve build" represents the amount by which the provision for credit losses ($6.3 million) exceeds net loan charge-offs ($268,000) during the quarter ended March 31, 2020.
(2)At March 31, 2020, the allowance of $3.1 million related to unfunded lending commitments of $327.9 million. The ACL on unfunded lending commitments is recorded within accrued interest payable and other liabilities on the Consolidated Statements of Financial Condition and the related provision is recorded in other noninterest expense on the Consolidated Statements of Income.
Retail CRE
At March 31, 2020, outstanding retail CRE loans amounted to $159.5 million, or 9% of our total loan portfolio, and included retail strip shopping centers of $76.8 million and convenience stores of $23.1 million. The weighted-average loan-to-value ("LTV") of the retail CRE loan portfolio was approximately 48% at March 31, 2020. This loan portfolio is concentrated in the following markets: Acadiana ($63.8 million, or 40%), New Orleans ($44.2 million, or 28%), Northshore ($31.0 million, or 19%) and Baton Rouge ($22.2 million, or 14%). In addition to retail CRE loans, our non-CRE-related retail loans totaled less than $10 million at March 31, 2020.
Healthcare
At March 31, 2020, outstanding loans to borrowers in the healthcare industry amounted to $145.8 million, or 8% of our total loan portfolio. The weighted-average LTV of the healthcare loan portfolio was approximately 53% at March 31, 2020. CRE loans comprised $111.7 million, or 77%, of the healthcare loan portfolio at such date. Loans to the dental industry totaled $33.5 million, or 23% of the healthcare loan portfolio at March 31, 2020.
Hotels and Short-term Rentals
At March 31, 2020, outstanding loans to borrowers in the hotels and short-term rentals industry amounted to $86.0 million or 5% of our total loan portfolio. Approximately 57% of this portfolio consists of short-term rentals. The weighted-average LTV of the hotels and short-term rentals loan portfolio was approximately 57% at March 31, 2020. CRE loans comprised $60.9 million, or 71%, and C&D loans comprised $19.1 million, or 22%, of the hotels and short-term rentals loan portfolio at such date. This loan portfolio is primarily located in the Greater New Orleans ($53.3 million, or 62%) and Acadiana ($26.7 million, or 31%) regions.
Restaurants and Bars
At March 31, 2020, outstanding loans to borrowers in the restaurants and bars industry amounted to $60.9 million, or 4% of our total loan portfolio. The weighted-average LTV of the restaurants and bars loan portfolio was approximately 52% at March 31, 2020. CRE loans comprised $55.0 million, or 90%, of this loan portfolio at such date. Of total restaurants and bars loans, $32.2 million, or 53%, relates to nationally-recognized fast-food franchise restaurants. This loan portfolio is concentrated in the following markets: Acadiana ($28.9 million, or 48%), Baton Rouge ($14.1 million, or 23%) and New Orleans ($14.1 million, or 23%).
Energy
At March 31, 2020, outstanding loans to borrowers in the energy industry amounted to $31.2 million, or 2% of our total loan portfolio. This portfolio predominantly consists of loans to energy service companies. The weighted-average LTV of the energy loan portfolio was approximately 33% at March 31, 2020. At March 31, 2020, CRE loans comprised $19.6 million, or 63%, of total energy-related loans. Of total CRE energy-related loans, 93% are to borrowers in the Acadiana market. At March 31, 2020, energy-related C&I loans of $11.1 million primarily consisted of loans secured by equipment ($7.1 million) and accounts receivable ($2.7 million).
Investment Securities
The following table summarizes the composition of the Company’s investment securities portfolio at March 31, 2020.
| (dollars in thousands) | Recorded Investment | |
|---|---|---|
| Available-for-sale | ||
| U.S. agency mortgage-backed | $ | 106,984 |
| Collateralized mortgage obligations | 134,736 | |
| Municipal bonds | 15,234 | |
| U.S. government agency | 6,639 | |
| Corporate bonds | 2,053 | |
| Total available-for-sale | 265,646 | |
| Held to Maturity | ||
| Municipal Bonds | 6,607 | |
| Total investment securities | $ | 272,253 |
Securities available-for-sale ("AFS") made up 98% of total investment securities and net unrealized gains on AFS securities totaled $6.9 million at March 31, 2020.
Deposits
Total deposits increased $36.5 million, or 2.0%, from December 31, 2019 to $1.9 billion at March 31, 2020. The following table summarizes the changes in the Company’s deposits from December 31, 2019 to March 31, 2020.
| March 31, | December 31, | Increase/(Decrease) | ||||||
|---|---|---|---|---|---|---|---|---|
| (dollars in thousands) | 2020 | 2019 | Amount | Percent | ||||
| Demand deposits | $ | 455,512 | $ | 437,828 | $ | 17,684 | 4 | % |
| Savings | 206,597 | 201,887 | 4,710 | 2 | ||||
| Money market | 266,519 | 273,741 | (7,222) | (3) | ||||
| NOW | 536,643 | 512,054 | 24,589 | 5 | ||||
| Certificates of deposit | 392,230 | 395,465 | (3,235) | (1) | ||||
| Total deposits | $ | 1,857,501 | $ | 1,820,975 | $ | 36,526 | 2 | % |
At March 31, 2020, certificates of deposit maturing within the next 12 months totaled $295.7 million.
The average rate on interest bearing deposits decreased six basis points to 1.07% for the first quarter of 2020, compared to 1.13% for the fourth quarter of 2019. Management expects the average rate on its deposits to continue to fall through the second quarter of 2020.
Net Interest Income
The net interest margin increased four basis points from the fourth quarter of 2019 to 4.18% in the first quarter of 2020, primarily due to a six basis point decrease in the average rate on total interest-bearing deposits. Loan accretion income totaled $810,000 during the first quarter of 2020, down $172,000 from $982,000 for the fourth quarter of 2019. At March 31, 2020, variable rate loans totaled $460.2 million, or 26% of total loans.
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 are calculated using a marginal tax rate of 21%.
| For the Three Months Ended | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31, 2020 | December 31, 2019 | |||||||||||
| (dollars in thousands) | Average Balance | Interest | Average Yield/ Rate | Average Balance | Interest | Average Yield/ Rate | ||||||
| Interest-earning assets: | ||||||||||||
| Loans receivable | $ | 1,735,224 | $ | 23,699 | 5.43 | % | $ | 1,712,035 | $ | 23,842 | 5.48 | % |
| Investment securities^(TE)^ | 263,040 | 1,412 | 2.19 | 259,531 | 1,341 | 2.11 | ||||||
| Other interest-earning assets | 28,002 | 138 | 1.99 | 49,750 | 261 | 2.08 | ||||||
| Total interest-earning assets | $ | 2,026,266 | $ | 25,249 | 4.96 | % | $ | 2,021,316 | $ | 25,444 | 4.96 | % |
| Interest-bearing liabilities: | ||||||||||||
| Deposits: | ||||||||||||
| Savings, checking, and money market | $ | 989,028 | $ | 1,822 | 0.74 | % | $ | 989,177 | $ | 2,042 | 0.82 | % |
| Certificates of deposit | 392,670 | 1,845 | 1.89 | 395,073 | 1,892 | 1.90 | ||||||
| Total interest-bearing deposits | 1,381,698 | 3,667 | 1.07 | 1,384,250 | 3,934 | 1.13 | ||||||
| Other borrowings | 5,539 | 53 | 3.86 | 5,539 | 54 | 3.80 | ||||||
| FHLB advances | 45,729 | 206 | 1.80 | 43,570 | 198 | 1.82 | ||||||
| Total interest-bearing liabilities | $ | 1,432,966 | $ | 3,926 | 1.10 | % | $ | 1,433,359 | $ | 4,186 | 1.16 | % |
| Net interest spread^(TE)^ | 3.86 | % | 3.80 | % | ||||||||
| Net interest margin^(TE)^ | 4.18 | % | 4.14 | % |
Noninterest Income
Noninterest income for the first quarter of 2020 totaled $3.4 million, down $141,000, or 4%, from the fourth quarter of 2019 due primarily to a decrease in service fees and charges (down $80,000) and the change in accounting for recoveries on acquired loans (down $77,000) due to the adoption of CECL.
Noninterest Expense
Noninterest expense for the first quarter of 2020 totaled $16.1 million, up $394,000, or 3%, from the fourth quarter of 2019. The increase in noninterest expense was primarily due to $729,000 in provision for credit losses on unfunded commitments for the first quarter of 2020, partially offset by decreases in marketing and advertising expense (down $281,000) and foreclosed asset expense (down $211,000) over the comparable periods. The provision for credit losses on unfunded lending commitments is recorded in other noninterest expense on the Consolidated Statements of Income.
Capital and Liquidity
The Company's tangible common equity ratio was 11.32% and 11.79% at March 31, 2020 and December 31, 2019, respectively. At March 31, 2020, the Bank's preliminary Tier 1 leverage capital ratio was 10.84%, down 33 basis points from December 31, 2019, and preliminary total risk-based capital ratio was 15.19%, down nine basis points from December 31, 2019.
The following table summarizes the Company's primary and secondary sources of liquidity.
| March 31, | ||
|---|---|---|
| (dollars in thousands) | 2020 | |
| Cash and cash equivalents | $ | 64,102 |
| Unpledged investment securities, par value | 86,839 | |
| FHLB advance availability | 669,855 | |
| Unsecured lines of credit | 55,000 | |
| Federal Reserve discount window availability | 500 | |
| Total primary and secondary liquidity | $ | 876,296 |
Dividend and Share Repurchases
The Company announced that its Board of Directors declared a quarterly cash dividend on shares of its common stock of $0.22 per share payable on May 22, 2020, to shareholders of record as of May 11, 2020.
The Company repurchased 188,341 shares of its common stock during the first quarter of 2020 at an average price per share of $28.61, or an aggregate of $5.4 million, under the Company's 2019 Repurchase Plan. An additional 198,243 shares remain eligible for purchase under the 2019 Repurchase Plan. The book value per share and tangible book value per share of the Company’s common stock was $34.35 and $27.28, respectively, at March 31, 2020.
Non-GAAP Reconciliation
This news release contains financial information determined by methods other than in accordance with generally accepted accounting principles (“GAAP”). The Company's management uses this non-GAAP financial information in its analysis of the Company's performance. In this news release, information is included which excludes intangible assets. Management believes the presentation of this non-GAAP financial information provides useful information that is helpful to a full understanding of the Company’s financial position and operating results. This non-GAAP financial information should not be viewed as a substitute for financial information determined in accordance with GAAP, nor is it necessarily comparable to non-GAAP financial information presented by other companies. A reconciliation on non-GAAP information included herein to GAAP is presented below.
| For the Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| (dollars in thousands, except per share data) | March 31, 2020 | December 31, 2019 | March 31, 2019 | ||||||
| Reported net income | $ | 1,905 | $ | 6,606 | $ | 7,890 | |||
| Add: Core deposit intangible amortization, net tax | 279 | 302 | 324 | ||||||
| Non-GAAP tangible income | $ | 2,184 | $ | 6,908 | $ | 8,214 | |||
| Total Assets | $ | 2,248,601 | $ | 2,200,465 | $ | 2,202,675 | |||
| Less: Intangible assets | 64,119 | 64,472 | 65,645 | ||||||
| Non-GAAP tangible assets | $ | 2,184,482 | $ | 2,135,993 | $ | 2,137,030 | |||
| Total shareholders’ equity | $ | 311,497 | $ | 316,329 | $ | 308,935 | |||
| Less: Intangible assets | 64,119 | 64,472 | 65,645 | ||||||
| Non-GAAP tangible shareholders’ equity | $ | 247,378 | $ | 251,857 | $ | 243,290 | |||
| Return on average equity | 2.43 | % | 10.45 | % | 8.31 | % | |||
| Add: Average intangible assets | 1.07 | 0.48 | 5.55 | ||||||
| Non-GAAP return on average tangible common equity | 3.50 | % | 10.93 | % | 13.86 | % | |||
| Common equity ratio | 13.85 | % | 14.38 | % | 14.03 | % | |||
| Less: Intangible assets | 2.53 | 2.59 | 2.65 | ||||||
| Non-GAAP tangible common equity ratio | 11.32 | % | 11.79 | % | 11.38 | % | |||
| Book value per share | $ | 34.35 | $ | 34.19 | $ | 32.62 | |||
| Less: Intangible assets | 7.07 | 6.97 | 6.93 | ||||||
| Non-GAAP tangible book value per share | $ | 27.28 | $ | 27.22 | $ | 25.69 |
This news release contains certain forward-looking statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate” or words of similar meaning, or future or conditional verbs such as “will,” “would,” “should,” “could” or “may.”
Forward-looking statements, by their nature, are subject to risks and uncertainties. A number of factors - many of which are beyond our control - could cause actual conditions, events or results to differ significantly from those described in the forward-looking statements. Home Bancorp’s Annual Report on Form 10-K for the year ended December 31, 2019, as supplemented by its Current Report on Form 8-K dated April 28, 2020, describes some of these factors, including risk elements in the loan portfolio, the level of the allowance for credit losses, the impact of the COVID-19 pandemic, risks of
our growth strategy, geographic concentration of our business, dependence on our management team, risks of market rates of interest and of regulation on our business and risks of competition. Forward-looking statements speak only as of the date they are made. We do not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made or to reflect the occurrence of unanticipated events.
| HOME BANCORP, INC. AND SUBSIDIARY | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| CONDENSED STATEMENTS OF FINANCIAL CONDITION | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| (dollars in thousands) | March 31, 2020 | December 31, 2019 | % Change | March 31, 2019 | |||||||||||||||||
| Assets | |||||||||||||||||||||
| Cash and cash equivalents | $ | 64,102 | $ | 39,847 | 61 | % | $ | 103,786 | |||||||||||||
| Interest-bearing deposits in banks | 449 | 449 | — | 694 | |||||||||||||||||
| Investment securities available for sale, at fair value | 265,646 | 257,321 | 3 | 267,310 | |||||||||||||||||
| Investment securities held to maturity | 6,607 | 7,149 | (8) | 9,110 | |||||||||||||||||
| Mortgage loans held for sale | 9,753 | 6,990 | 40 | 1,986 | |||||||||||||||||
| Loans, net of unearned income | 1,739,142 | 1,714,361 | 1 | 1,648,968 | |||||||||||||||||
| Allowance for loan losses | (28,490) | (17,868) | 59 | (16,570) | |||||||||||||||||
| Total loans, net of allowance for loan losses | 1,710,652 | 1,696,493 | 1 | 1,632,398 | |||||||||||||||||
| Office properties and equipment, net | 46,541 | 46,425 | — | 47,030 | |||||||||||||||||
| Cash surrender value of bank-owned life insurance | 39,725 | 39,466 | 1 | 29,725 | |||||||||||||||||
| Goodwill and core deposit intangibles | 64,119 | 64,472 | (1) | 65,645 | |||||||||||||||||
| Accrued interest receivable and other assets | 41,007 | 41,853 | (2) | 44,991 | |||||||||||||||||
| Total Assets | $ | 2,248,601 | $ | 2,200,465 | 2 | $ | 2,202,675 | ||||||||||||||
| Liabilities | |||||||||||||||||||||
| Deposits | $ | 1,857,501 | $ | 1,820,975 | 2 | % | $ | 1,817,548 | |||||||||||||
| Other Borrowings | 5,539 | 5,539 | — | 5,539 | |||||||||||||||||
| Federal Home Loan Bank advances | 54,319 | 40,620 | 34 | 57,889 | |||||||||||||||||
| Accrued interest payable and other liabilities | 19,745 | 17,002 | 16 | 12,764 | |||||||||||||||||
| Total Liabilities | 1,937,104 | 1,884,136 | 3 | 1,893,740 | |||||||||||||||||
| Shareholders' Equity | |||||||||||||||||||||
| Common stock | 91 | 93 | (2) | % | 95 | ||||||||||||||||
| Additional paid-in capital | 167,249 | 168,545 | (1) | 169,091 | |||||||||||||||||
| Common stock acquired by benefit plans | (3,063) | (3,159) | 3 | (3,443) | |||||||||||||||||
| Retained earnings | 141,798 | 150,158 | (6) | 143,998 | |||||||||||||||||
| Accumulated other comprehensive income (loss) | 5,422 | 692 | 684 | (806) | |||||||||||||||||
| Total Shareholders' Equity | 311,497 | 316,329 | (2) | 308,935 | |||||||||||||||||
| Total Liabilities and Shareholders' Equity | $ | 2,248,601 | $ | 2,200,465 | 2 | $ | 2,202,675 | ||||||||||||||
| HOMEBANCORP, INC. AND SUBSIDIARY | |||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||||||
| CONDENSED STATEMENTS OF INCOME | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| For the Three Months Ended | |||||||||||||||||||||
| (dollars in thousands, except per share data) | March 31, 2020 | December 31, 2019 | % Change | March 31, 2019 | % Change | ||||||||||||||||
| Interest Income | |||||||||||||||||||||
| Loans, including fees | $ | 23,699 | $ | 23,842 | (1) | % | $ | 23,198 | 2 | % | |||||||||||
| Investment securities | 1,412 | 1,341 | 5 | 1,808 | (22) | ||||||||||||||||
| Other investments and deposits | 138 | 261 | (47) | 363 | (62) | ||||||||||||||||
| Total interest income | 25,249 | 25,444 | (1) | 25,369 | — | ||||||||||||||||
| Interest Expense | |||||||||||||||||||||
| Deposits | 3,667 | 3,934 | (7) | % | 3,331 | 10 | % | ||||||||||||||
| Other borrowings | 53 | 54 | (2) | 53 | — | ||||||||||||||||
| Federal Home Loan Bank advances | 206 | 198 | 4 | 263 | (22) | ||||||||||||||||
| Total interest expense | 3,926 | 4,186 | (6) | 3,647 | 8 | ||||||||||||||||
| Net interest income | 21,323 | 21,258 | — | 21,722 | (2) | ||||||||||||||||
| Provision for loan losses | 6,257 | 713 | 778 | 390 | 1504 | ||||||||||||||||
| Net interest income after provision for loan losses | 15,066 | 20,545 | (27) | 21,332 | (29) | ||||||||||||||||
| Noninterest Income | |||||||||||||||||||||
| Service fees and charges | 1,464 | 1,544 | (5) | % | 1,467 | — | % | ||||||||||||||
| Bank card fees | 1,137 | 1,102 | 3 | 1,061 | 7 | ||||||||||||||||
| Gain on sale of loans, net | 297 | 316 | (6) | 155 | 92 | ||||||||||||||||
| Income from bank-owned life insurance | 259 | 238 | 9 | 165 | 57 | ||||||||||||||||
| Gain on sale of assets, net | 2 | 1 | 100 | (1) | 300 | ||||||||||||||||
| Other income | 199 | 298 | (33) | 318 | (37) | ||||||||||||||||
| Total noninterest income | 3,358 | 3,499 | (4) | 3,165 | 6 | ||||||||||||||||
| Noninterest Expense | |||||||||||||||||||||
| Compensation and benefits | 9,416 | 9,438 | — | % | 9,098 | 3 | % | ||||||||||||||
| Occupancy | 1,736 | 1,713 | 1 | 1,606 | 8 | ||||||||||||||||
| Marketing and advertising | 298 | 579 | (49) | 271 | 10 | ||||||||||||||||
| Data processing and communication | 1,819 | 1,829 | (1) | 1,422 | 28 | ||||||||||||||||
| Professional fees | 213 | 172 | 24 | 239 | (11) | ||||||||||||||||
| Forms, printing and supplies | 171 | 169 | 1 | 161 | 6 | ||||||||||||||||
| Franchise and shares tax | 389 | 248 | 57 | 399 | (3) | ||||||||||||||||
| Regulatory fees | 116 | 113 | 3 | 307 | (62) | ||||||||||||||||
| Foreclosed assets, net | 17 | 228 | (93) | 241 | (93) | ||||||||||||||||
| Amortization of acquisition intangible | 353 | 382 | (8) | 410 | (14) | ||||||||||||||||
| Other expenses | 1,618 | 881 | 84 | 1,137 | 42 | ||||||||||||||||
| Total noninterest expense | 16,146 | 15,752 | 3 | 15,291 | 6 | ||||||||||||||||
| Income before income tax expense | 2,278 | 8,292 | (73) | 9,206 | (75) | ||||||||||||||||
| Income tax expense | 373 | 1,686 | (78) | 1,316 | (72) | ||||||||||||||||
| Net income | $ | 1,905 | $ | 6,606 | (71) | $ | 7,890 | (76) | |||||||||||||
| Earnings per share - basic | $ | 0.21 | $ | 0.74 | (72) | % | $ | 0.86 | (76) | % | |||||||||||
| Earnings per share - diluted | $ | 0.21 | $ | 0.73 | (71) | $ | 0.85 | (75) | |||||||||||||
| Cash dividends declared per common share | $ | 0.22 | $ | 0.22 | — | % | $ | 0.20 | 10 | % | |||||||||||
| HOME BANCORP, INC. AND SUBSIDIARY | |||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||
| SUMMARY FINANCIAL INFORMATION | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| For the Three Months Ended | |||||||||||||||||||||
| (dollars in thousands, except per share data) | March 31, 2020 | December 31, 2019 | % Change | March 31, 2019 | % Change | ||||||||||||||||
| EARNINGS DATA | |||||||||||||||||||||
| Total interest income | $ | 25,249 | $ | 25,444 | (1) | % | $ | 25,369 | — | % | |||||||||||
| Total interest expense | 3,926 | 4,186 | (6) | 3,647 | 8 | ||||||||||||||||
| Net interest income | 21,323 | 21,258 | — | 21,722 | (2) | ||||||||||||||||
| Provision for loan losses | 6,257 | 713 | 778 | 390 | 1504 | ||||||||||||||||
| Total noninterest income | 3,358 | 3,499 | (4) | 3,165 | 6 | ||||||||||||||||
| Total noninterest expense | 16,146 | 15,752 | 3 | 15,291 | 6 | ||||||||||||||||
| Income tax expense | 373 | 1,686 | (78) | 1,316 | (72) | ||||||||||||||||
| Net income | $ | 1,905 | $ | 6,606 | (71) | $ | 7,890 | (76) | |||||||||||||
| AVERAGE BALANCE SHEET DATA | |||||||||||||||||||||
| Total assets | $ | 2,219,114 | $ | 2,219,049 | — | % | $ | 2,166,317 | 2 | % | |||||||||||
| Total interest-earning assets | 2,026,266 | 2,021,316 | — | 1,977,921 | 2 | ||||||||||||||||
| Total loans | 1,735,224 | 1,712,035 | 1 | 1,649,626 | 5 | ||||||||||||||||
| Total interest-bearing deposits | 1,381,698 | 1,384,250 | — | 1,350,798 | 2 | ||||||||||||||||
| Total interest-bearing liabilities | 1,432,966 | 1,433,359 | — | 1,414,532 | 1 | ||||||||||||||||
| Total deposits | 1,833,848 | 1,835,026 | — | 1,786,181 | 3 | ||||||||||||||||
| Total shareholders' equity | 315,607 | 315,487 | — | 306,240 | 3 | ||||||||||||||||
| SELECTED RATIOS ^(1)^ | |||||||||||||||||||||
| Return on average assets | 0.35 | % | 1.18 | % | (70) | % | 1.48 | % | (76) | % | |||||||||||
| Return on average equity | 2.43 | 8.31 | (71) | 10.45 | (77) | ||||||||||||||||
| Common equity ratio | 13.85 | 14.38 | (4) | 14.03 | (1) | ||||||||||||||||
| Efficiency ratio ^(2)^ | 65.42 | 63.63 | 3 | 61.44 | 6 | ||||||||||||||||
| Average equity to average assets | 14.22 | 14.22 | — | 14.14 | 1 | ||||||||||||||||
| Tier 1 leverage capital ratio ^(3)^ | 10.84 | 11.17 | (3) | 10.93 | (1) | ||||||||||||||||
| Total risk-based capital ratio ^(3)^ | 15.19 | 15.28 | (1) | 15.27 | (1) | ||||||||||||||||
| Net interest margin ^(4)^ | 4.18 | 4.14 | 1 | 4.41 | (5) | ||||||||||||||||
| SELECTED NON-GAAP RATIOS ^(1)^ | |||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||
| Tangible common equity ratio ^(5)^ | 11.32 | % | 11.79 | % | (4) | % | 11.38 | % | (1) | % | |||||||||||
| Return on average tangible common equity ^(6)^ | 3.50 | 10.93 | (68) | 13.86 | (75) | ||||||||||||||||
| PER SHARE DATA | |||||||||||||||||||||
| Earnings per share - basic | $ | 0.21 | $ | 0.74 | (72) | % | $ | 0.86 | (76) | % | |||||||||||
| Earnings per share - diluted | 0.21 | 0.73 | (71) | 0.85 | (75) | ||||||||||||||||
| Book value at period end | 34.35 | 34.19 | — | 32.62 | 5 | ||||||||||||||||
| Tangible book value at period end | 27.28 | 27.22 | — | 25.69 | 6 | ||||||||||||||||
| Shares outstanding at period end | 9,067,920 | 9,252,418 | (2) | 9,471,857 | (4) | ||||||||||||||||
| Weighted average shares outstanding | |||||||||||||||||||||
| Basic | 8,883,261 | 8,953,203 | (1) | % | 9,123,786 | (3) | % | ||||||||||||||
| Diluted | 8,927,448 | 9,018,142 | (1) | 9,247,851 | (3) | ||||||||||||||||
| (1)With the exception of end-of-period ratios, all ratios are based on average daily balances during the respective periods.<br><br>(2)The efficiency ratio represents noninterest expense as a percentage of total revenues. Total revenues is the sum of net interest income and noninterest income.<br><br>(3)Estimated capital ratios are end of period ratios for the Bank only.<br><br>(4)Net interest margin represents net interest income as a percentage of average interest-earning assets. Taxable equivalent yields are calculated using a marginal tax rate of 21%.<br><br>(5)Tangible common equity ratio is common shareholders' equity less intangible assets divided by total assets less intangible assets. See "Non-GAAP Reconciliation" for additional information.<br><br>(6)Return on average tangible common equity is net income plus amortization of core deposit intangible, net of taxes, divided by average common shareholders' equity less average intangible assets. See "Non-GAAP Reconciliation" for additional information. | |||||||||||||||||||||
| HOME BANCORP, INC. AND SUBSIDIARY | |||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| SUMMARY CREDIT QUALITY INFORMATION | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| December 31, 2019 | March 31, 2019 | ||||||||||||||||||||
| (dollars in thousands) | Acquired | Total | Originated | Acquired | Total | Originated | Acquired | Total | |||||||||||||
| CREDIT QUALITY (1) (2) | |||||||||||||||||||||
| Nonaccrual loans(3) | 15,235 | $ | 11,686 | $ | 26,921 | $ | 14,628 | $ | 9,758 | $ | 24,386 | $ | 14,838 | $ | 11,733 | $ | 26,571 | ||||
| Accruing loans past due 90 days and over | — | — | — | — | — | — | — | — | |||||||||||||
| Total nonperforming loans | 11,686 | 26,921 | 14,628 | 9,758 | 24,386 | 14,838 | 11,733 | 26,571 | |||||||||||||
| Foreclosed assets and ORE | 1,628 | 2,606 | 1,793 | 2,363 | 4,156 | 145 | 2,336 | 2,481 | |||||||||||||
| Total nonperforming assets | 13,314 | 29,527 | 16,421 | 12,121 | 28,542 | 14,983 | 14,069 | 29,052 | |||||||||||||
| Performing troubled debt restructurings | 695 | 1,684 | 1,903 | 475 | 2,378 | 1,131 | 219 | 1,350 | |||||||||||||
| Total nonperforming assets and troubled debt restructurings | 17,202 | $ | 14,009 | $ | 31,211 | $ | 18,324 | $ | 12,596 | $ | 30,920 | $ | 16,114 | $ | 14,288 | $ | 30,402 | ||||
| Nonperforming assets to total assets | 1.31 | % | 1.30 | % | 1.32 | % | |||||||||||||||
| Nonperforming loans to total assets | 1.20 | 1.11 | 1.21 | ||||||||||||||||||
| Nonperforming loans to total loans | 1.55 | 1.42 | 1.61 | ||||||||||||||||||
| Allowance for loan losses to nonperforming assets | 96.49 | 62.60 | 57.04 | ||||||||||||||||||
| Allowance for loan losses to nonperforming loans | 105.83 | 73.27 | 62.36 | ||||||||||||||||||
| Allowance for loan losses to total loans | 1.64 | 1.04 | 1.00 | ||||||||||||||||||
| Allowance for credit losses to total loans(4) | 1.82 | 1.04 | 1.00 | ||||||||||||||||||
| Year-to-date loan charge-offs | $ | 387 | $ | 1,577 | $ | 180 | |||||||||||||||
| Year-to-date loan recoveries | 119 | 83 | 12 | ||||||||||||||||||
| Year-to-date net loan charge-offs | $ | 268 | $ | 1,494 | $ | 168 | |||||||||||||||
| Annualized YTD net loan charge-offs to average loans | 0.02 | % | 0.09 | % | 0.04 | % | |||||||||||||||
| (1)Nonperforming loans consist of nonaccruing loans and accruing loans 90 days or more past due. Due to the adoption of CECL, PCD loans of 2.3 million are included in nonperforming loans at March 31, 2020. Prior to January 1, 2020, these loans were classified as PCI and excluded from nonperforming loans because they continued to earn interest income from the accretable yield at the pool level. With the adoption of CECL, the pools were discontinued and performance is based on contractual terms for individual loans. (2)It is our policy to cease accruing interest on loans 90 days or more past due. Nonperforming assets consist of nonperforming loans, foreclosed assets and surplus real estate (ORE). Foreclosed assets consist of assets acquired through foreclosure or acceptance of title in-lieu of foreclosure. ORE consists of closed or unused bank buildings.(3)Nonaccrual loans include originated restructured loans placed on nonaccrual totaling 8.7 million, 7.6 million and 9.9 million at March 31, 2020, December 31, 2019 and March 31, 2019, respectively. Acquired restructured loans placed on nonaccrual totaled 2.8 million, 2.2 million and 1.2 million at March 31, 2020, December 31, 2019 and March 31, 2019, respectively.(4)The allowance for credit losses includes 3.1 million for unfunded lending commitments at March 31, 2020. The allowance for unfunded lending commitments is recorded within accrued interest payable and other liabilities on the Consolidated Statements of Financial Condition. |
All values are in US Dollars.
15