Home Bancorp Announces 2020 Fourth Quarter Results And Declares Quarterly Dividend - WIRE.RealEstate

Home Bancorp Announces 2020 Fourth Quarter Results And Declares Quarterly Dividend

Feb 1, 2021 12:31 PM ET


Home Bancorp Announc

iCrowdNewswire   Feb 1, 2021  12:31 PM ET

Home Bancorp, Inc. , the parent company for Home Bank, N.A. (the “Bank”) (www.home24bank.com), reported financial results for the fourth quarter of 2020.  For the quarter, the Company reported net income of $11.6 million, or $1.36 per diluted common share (“diluted EPS”), up $2.8 million from $8.8 million, or $1.01 diluted EPS, for the third quarter of 2020.

“2020 was a very challenging year for the Company and our customers with the impact of the COVID-19 pandemic and economic crisis”, said John W. Bordelon, Chairman, President and Chief Executive Officer of the Company and the Bank.  “The Bank remains well positioned with the reserve builds we made in the first half of 2020 to withstand potential losses given the impact of the ongoing COVID-19 pandemic on economic conditions and credit quality in our markets.”

“I am proud of the commitment by our employees to serve our communities and remain focused on loan and deposit growth in this challenging environment.  They are ready to assist customers in the second round of the Paycheck Protection Program.” 

“Our customers have proven to be resilient during troubling times and we will weather the storm together.”

COVID-19 Response

Banking operations remain unencumbered by state and local government COVID-19 restrictions. However, we have adapted to protect our employees and customers by working remotely, enhancing cleaning procedures, and enacting several other measures to reduce the risk of transmission of the virus. State government imposed COVID-19 restrictions continue to be in place within our Louisiana and Mississippi markets. The restrictions primarily place limits on capacity and hours of operation of certain businesses.

During the second and third quarters of 2020, the Company funded approximately 3,072 loans totaling $262.2 million under the Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”).  At December 31, 2020, the total recorded net investment in PPP loans was $221.2 million, of which approximately 2,495 loans with an aggregate outstanding balance of $70.5 million were for amounts of $150,000 or less.

To give immediate financial support to our customers, the Company began providing principal and/or interest payment relief options in March 2020.  When we last reported the level of such deferrals in our third quarter Form 10-Q (as of September 30, 2020), $70.2 million, or 4% of total loans, were under deferral agreements. As of December 31, 2020, the level of deferrals decreased to $36.0 million, or 2% of total loans. The level of COVID-19 related deferrals formerly totaled $558.8 million, or 28% of total loans, at June 30, 2020. Of the loans that have exited deferral agreements, $469.2 million, or 98%, were current and performing as of December 31, 2020.

Fourth Quarter 2020 Highlights

  • Net income totaled $11.6 million, up $2.8 million, or 32%, from the prior quarter primarily due to a $1.5 million increase in interest income on loans and the release of $1.3 million in the allowance for credit losses on unfunded lending commitments.
  • Loan income from the recognition of deferred PPP lender fees totaled $2.2 million, up $1.1 million from the prior quarter. Loan accretion income from acquired loans totaled $1.7 million, up $847,000 compared to the prior quarter.
  • A revision to the Company’s estimate of credit loss on unfunded lending commitments led to a release of $1.3 million in reserves through noninterest expense and a $740,000 (net of tax) increase to retained earnings to adjust the impact of CECL adoption.
  • Loans totaled $2.0 billion at December 31, 2020, up $24.7 million, or 5% annualized, from September 30, 2020. Excluding PPP loans, loan growth during the same comparative period was up $57.9 million, or 14% annualized.
  • For the second consecutive quarter, the Company recorded no provision for loan losses. In light of our reserve builds during the first half of 2020, no additional provisions were made.
  • The allowance for loan losses totaled $33.0 million, or 1.66% of total loans, at December 31, 2020. The allowance for credit losses (“ACL”), which includes the allowance for unfunded lending commitments, totaled $34.4 million, or 1.74% of total loans, at December 31, 2020. Excluding PPP loans, the ratio of allowance for loan losses to total loans and the ratio for allowance for credit losses was 1.87% and 1.96%, respectively, at such date.
  • Nonperforming assets totaled $20.0 million, or 0.77% of total assets, down $4.9 million, or 20%, from September 30, 2020 primarily due to pay-downs on nonaccrual loans.
  • Preliminary Tier 1 leverage capital and total risk-based capital ratios were 9.68% and 15.18% at December 31, 2020, compared to 9.44% and 15.29% at September 30, 2020.
  • The net interest margin was 4.11% for the fourth quarter of 2020, up 29 basis points from the third quarter of 2020 primarily due to an increase in interest income on loans and further aided by a decrease in the cost of deposits.
  • The average yield on total interest-bearing deposits was 0.50% for the fourth quarter of 2020, down 10 basis points from the third quarter of 2020.

Loans

Loans totaled $2.0 billion at December 31, 2020, up $24.7 million, or 1%, from September 30, 2020. The following table summarizes the changes in the Company’s loan portfolio from September 30, 2020 to December 31, 2020. 

             
   

December 31,

 

September 30,

 

Increase (Decrease)

(dollars in thousands)

 

2020

 

2020

 

Amount

 

Percent

Real estate loans:

               

One- to four-family first mortgage

 

$

395,638

   

$

409,282

   

$

(13,644)

   

(3)

%

Home equity loans and lines

 

67,700

   

67,766

   

(66)

   

 

Commercial real estate

 

750,623

   

707,638

   

42,985

   

6

 

Construction and land

 

221,823

   

201,575

   

20,248

   

10

 

Multi-family residential

 

87,332

   

86,619

   

713

   

1

 

Total real estate loans

 

1,523,116

   

1,472,880

   

50,236

   

3

 

Other loans:

               

Commercial and industrial

 

417,926

   

443,480

   

(25,554)

   

(6)

 

Consumer

 

38,912

   

38,937

   

(25)

   

 

Total other loans

 

456,838

   

482,417

   

(25,579)

   

(5)

 

Total loans

 

$

1,979,954

   

$

1,955,297

   

$

24,657

   

1

%

During the fourth quarter of 2020, substantial commercial real estate and construction and land loan growth was partially offset by pay-downs of commercial and industrial loans and residential mortgages. The change in commercial and industrial loans included a decrease in PPP loans of $33.3 million, or 13%, from September 30, 2020. Residential mortgages declined primarily due to refinances as borrowers sought to acquire lower interest rates.

Commercial real estate (“CRE”) loan growth was fairly evenly distributed across our major Louisiana markets and was primarily attributable to non-owner-occupied loans to borrowers outside of industry sectors that have been subject to increased monitoring during the COVID-19 pandemic. At December 31, 2020, CRE loans within our Acadiana and New Orleans markets accounted for approximately 65% of our total commercial real estate portfolio.

Construction and land (“C&D”) loan growth was spread across our New Orleans, Acadiana and Baton Rouge markets and was primarily driven by non-residential construction projects. At December 31, 2020, C&D loans within our Acadiana, New Orleans, and Northshore markets accounted for approximately 70% of our total construction and land portfolio.

Credit Quality and Allowance for Credit Losses

Nonperforming assets (“NPAs”), totaled $20.0 million, or 0.77% of total assets at December 31, 2020, down $4.9 million, or 20%, from $24.8 million, or 0.96% of total assets, at September 30, 2020.

The Company recorded net loan charge-offs of $39,000 during the fourth quarter of 2020, compared to net loan charge-offs of $821,000 for the third quarter of 2020.

At December 31, 2020, loans under interest and/or principal payment deferral agreements due to the COVID-19 crisis totaled $36.0 million, or 2% of total loans, down from $70.2 million, or 4% of total loans, as of September 30, 2020. Of the loans that have exited deferral agreements, $469.2 million, or 98%, were current and performing as of December 31, 2020.

The Company recorded no provision for loan losses for the fourth quarter of 2020. Upon review of our allowance for loan losses in light of, among other factors, our reserve builds during the first half of 2020, we determined that no additional provision was required during the quarter in order to reflect the expected losses for the full lives of the loans in our portfolio. The provision for loan losses for the year ended December 31, 2020 totaled $12.7 million, up $9.7 million from the prior year.  Changes in expected losses consider various factors including the changing economic activity, potential mitigating effects of governmental stimulus, the duration of the health crisis, customer specific information impacting changes in risk ratings, projected delinquencies and the impact of industry-wide loan modification efforts, among other factors.

In addition to the allowance for loan losses, our allowance for credit losses includes an allowance for unfunded lending commitments. The allowance for unfunded lending commitments amounted to $1.4 million at December 31, 2020 compared to $3.6 million at September 30, 2020. During the fourth quarter of 2020, we revised our estimate of losses on unfunded lending commitments which resulted in an aggregate release of $2.2 million of this allowance.  Of the $2.2 million release of the allowance for unfunded lending commitments, $1.3 million was recognized as a reduction of non-interest expense and $940,000 ($740,000 net of taxes) was recognized as an increase to retained earnings.

The following table provides a summary of the loan portfolio and related reserves at December 31, 2020. We have separately identified certain information regarding PPP loans which, due to the existence of full repayment guarantees from the SBA as well as the likelihood that the vast majority of such loans will be forgiven, we believe entail minimal credit risk to the Company.

(dollars in thousands)

 

Total Loans

 

PPP Loans

 

Total ACL

 

ACL to
Total Loans

 

ACL to
Total Non-PPP
Loans

December 31, 2020

                   

Retail CRE

 

$

190,085

   

$

   

$

6,641

   

3.49

%

 

3.49

%

Hotels and short-term rentals

 

103,875

   

3,587

   

5,754

   

5.54

   

5.74

 

Restaurants and bars

 

92,789

   

30,990

   

3,106

   

3.35

   

5.03

 

Energy

 

31,304

   

   

1,638

   

5.23

   

5.23

 

Credit cards

 

4,012

   

   

403

   

10.04

   

10.04

 

Other loans

 

1,557,889

   

186,643

   

15,421

   

0.99

   

1.12

 

Total

 

$

1,979,954

   

$

221,220

   

$

32,963

   

1.66

%

 

1.87

%

                     

Unfunded lending commitments(1)

 

   

   

1,425

   

   

 

Total

 

$

1,979,954

   

$

221,220

   

$

34,388

   

1.74

%

 

1.96

%

                     
   

(1)

At December 31, 2020, the allowance of $1.4 million related to unfunded lending commitments of $336.9 million. The ACL on unfunded lending commitments is recorded within accrued interest payable and other liabilities on the Consolidated Statements of Financial Condition.

Investment Securities

The following table summarizes the composition of the Company’s investment securities portfolio at December 31, 2020.

(dollars in thousands)

 

Recorded
Investment

Available for sale

   

U.S. agency mortgage-backed

 

$

142,812

 

Collateralized mortgage obligations

 

75,620

 

Municipal bonds

 

28,011

 

U.S. government agency

 

6,255

 

Corporate bonds

 

2,054

 

Total available for sale

 

254,752

 

Held to Maturity

   

Municipal Bonds

 

2,934

 

Total investment securities

 

$

257,686

 
     

Securities available for sale (“AFS”) made up 99% of total investment securities and net unrealized gains on AFS securities totaled $6.5 million at December 31, 2020.

Deposits

Total deposits were $2.2 billion at December 31, 2020, up $6.3 million, or less than 1%, from September 30, 2020. The following table summarizes the changes in the Company’s deposits from September 30, 2020 to December 31, 2020.

             
   

December 31,

 

September 30,

 

Increase/(Decrease)

(dollars in thousands)

 

2020

 

2020

 

Amount

 

Percent

Demand deposits

 

$

615,700

   

$

629,345

   

$

(13,645)

   

(2)

%

Savings

 

250,165

   

242,849

   

7,316

   

3

 

Money market

 

333,078

   

336,310

   

(3,232)

   

(1)

 

NOW

 

646,085

   

620,081

   

26,004

   

4

 

Certificates of deposit

 

368,793

   

378,909

   

(10,116)

   

(3)

 

Total deposits

 

$

2,213,821

   

$

2,207,494

   

$

6,327

   

%

Net Interest Income

The net interest margin (“NIM”) increased 29 basis points from 3.82% for the third quarter of 2020 to 4.11% for the fourth quarter of 2020 primarily due to an increase in loan income and further aided by a decrease in the cost of deposits.

The average loan yield was 5.20% for the fourth quarter of 2020, up 26 basis points from the third quarter of 2020. Loan income from the recognition of deferred PPP lender fees totaled $2.2 million during the fourth quarter of 2020, up $1.1 million, or 103%, compared to the third quarter of 2020. As a result, PPP loans positively impacted the average loan yield by 11 basis points and the NIM by 5 basis points during the fourth quarter of 2020. During the third quarter of 2020, PPP loans negatively impacted the average loan yield by 34 basis points and the NIM by 14 basis points. The receipt of forgiveness payments on PPP loans during the fourth quarter accelerated the recognition of deferred fees.  Management anticipates this trend to continue into the first quarter of 2021 as the forgiveness process for PPP loans under $150,000 is expected to be expedited. At December 31, 2020, the total recorded net investment in PPP loans was $221.2 million, of which $70.5 million, or 32%, were for amounts of $150,000 or less. Unrecognized PPP lender fees totaled $5.4 million at December 31, 2020.

Loan accretion income from acquired loans totaled $1.7 million for the fourth quarter of 2020, up $847,000, or 100%, compared to the third quarter of 2020. During the fourth quarter, the Company received pay-downs on an acquired CRE  and residential mortgage loans, which accelerated the accretion of discount into interest income on loans.

The average yield on total interest-bearing deposits was 0.50% for the fourth quarter of 2020, down 10 basis points from the third quarter of 2020.

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 have been calculated using a marginal tax rate of 21%.

   

For the Three Months Ended

   

December 31, 2020

 

September 30, 2020

(dollars in thousands)

 

Average
Balance

 

Interest

 

Average
Yield/ Rate

 

Average
Balance

 

Interest

 

Average
Yield/ Rate

Interest-earning assets:

                       

Loans receivable

 

$

1,984,969

   

$

26,267

   

5.20

%

 

$

1,971,174

   

$

24,769

   

4.94

%

Investment securities (TE)

 

246,547

   

1,002

   

1.66

   

252,314

   

967

   

1.56

 

Other interest-earning assets

 

182,833

   

99

   

0.22

   

170,957

   

106

   

0.25

 

Total interest-earning assets

 

$

2,414,349

   

$

27,368

   

4.46

%

 

$

2,394,445

   

$

25,842

   

4.25

%

                         

Interest-bearing liabilities:

                       

Deposits:

                       

Savings, checking, and money market

 

$

1,217,430

   

$

970

   

0.32

%

 

$

1,195,455

   

$

1,136

   

0.38

%

Certificates of deposit

 

375,597

   

1,017

   

1.08

   

381,949

   

1,232

   

1.28

 

Total interest-bearing deposits

 

1,593,027

   

1,987

   

0.50

   

1,577,404

   

2,368

   

0.60

 

Other borrowings

 

5,539

   

53

   

3.81

   

5,539

   

53

   

3.81

 

FHLB advances

 

29,742

   

129

   

1.74

   

34,612

   

149

   

1.73

 

Total interest-bearing liabilities

 

$

1,628,308

   

$

2,169

   

0.53

%

 

$

1,617,555

   

$

2,570

   

0.63

%

                         

Net interest spread (TE)

         

3.93

%

         

3.62

%

Net interest margin (TE)

         

4.11

%

         

3.82

%

Noninterest Income

Noninterest income for the fourth quarter of 2020 was $4.1 million, up $256,000, or 7%, from the third quarter of 2020 due primarily to gains on the sale of loans (up $178,000) and other income (up $97,000). Other income increased primarily due to fees earned on a risk participation agreement entered into during the fourth quarter of 2020.

Noninterest Expense

Noninterest expense for the fourth quarter of 2020 totaled $14.7 million, down $1.4 million, or 9%, compared to the third quarter of 2020.

The Company released $2.2 million of the allowance for credit losses on unfunded lending commitments during the fourth quarter of 2020, reflecting, among other factors, refinement of our estimate of future funding rates on unfunded lending commitments. The release of a portion of the allowance for unfunded loan commitments reduced noninterest expense by $1.3 million during  the fourth quarter of 2020, with the remaining $940,000 of the release ($740,000 net of taxes) being recorded as an increase in retained earnings.

Compensation and benefits expense was down $323,000 from the third quarter of 2020 primarily due to the absence of bonuses, which were paid during the third quarter. 

Regulatory fees were down $153,000 from the third quarter of 2020 due to a decrease in the FDIC assessment for the fourth quarter. The Company’s improved financial condition led to a more favorable assessment rate.

Other expenses were up $198,000 from the third quarter of 2020 primarily due to certain loan servicing fees and expenses. 

Capital and Liquidity

The Company’s tangible common equity ratio was 10.23% and 9.93% at December 31, 2020 and September 30, 2020, respectively. At December 31, 2020, the Bank’s preliminary Tier 1 leverage capital ratio was 9.68%, up 24 basis points from September 30, 2020, and preliminary total risk-based capital ratio was 15.18%, down 11 basis points from September 30, 2020. Loans covered under the PPP are included in the Bank’s Tier 1 leverage capital ratio.

The following table summarizes the Company’s primary and secondary sources of liquidity.

   

December 31,

(dollars in thousands)

 

2020

Cash and cash equivalents

 

$

187,952

 

Unpledged investment securities, amortized cost

 

125,342

 

FHLB advance availability

 

787,232

 

Unsecured lines of credit

 

55,000

 

Federal Reserve discount window availability

 

500

 

Total primary and secondary liquidity

 

$

1,156,026

 

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 February 19, 2021, to shareholders of record as of February 8, 2021.

The Company repurchased 91,612 shares of its common stock during the fourth quarter of 2020 at an average price per share of $26.23 under the Company’s 2020 Repurchase Plan. An additional 300,080 shares remain eligible for purchase under the 2020 Repurchase Plan.  The book value per share and tangible book value per share of the Company’s common stock was $36.82 and $29.60, respectively, at December 31, 2020.

Contact Information:

http://www.home24bank.com


iCrowdNewswire