Home Bancorp Inc’s shocking Q3 surge: Profits soar and dividend boosted by 4%—Investors rejoice

Home Bancorp, Inc. (Nasdaq: “HBCP”), the parent company of Home Bank, N.A., has reported robust financial results for the third quarter of 2024, with a notable 4% increase in its quarterly dividend. The company announced a net income of $9.4 million or $1.18 per diluted share, an increase from $8.1 million or $1.02 per diluted share in Q2 2024.

The company’s President and CEO, John W. Bordelon, expressed satisfaction with the quarter’s outcomes, emphasizing that while loan growth had moderated, deposit growth remained strong, bringing down the loan-to-deposit ratio to 96%. The net interest margin (NIM) also saw an uptick, reaching 3.71% in Q3 2024, up from 3.66% in Q2.

Key Highlights of Q3 2024

• Loan Growth: Total loans stood at $2.7 billion as of September 30, 2024, a slight increase of $6.9 million (less than 1%) from Q2 2024.
• Deposit Growth: Deposits increased by $54.6 million, or 2%, from the previous quarter, amounting to $2.8 billion by the end of Q3.
• Net Interest Income: The company reported net interest income of $30.4 million, marking a 3% increase from the previous quarter.
• Net Interest Margin: The NIM grew to 3.71% in Q3, a 5-basis-point increase compared to Q2.
• Nonperforming Assets: NPAs totaled $18.4 million, representing 0.53% of total assets, up from 0.50% in Q2 due to two loans placed on nonaccrual status.
• Provision for Loan Losses: Home Bancorp set aside $140,000 for loan losses in Q3, significantly lower than the $1.3 million provision in Q2.
• Loan Charge-offs: Net loan charge-offs decreased substantially to $74,000, down from $510,000 in Q2.

Detailed Breakdown of Home Bancorp’s Loan Portfolio

The total loan portfolio reached $2.7 billion by the end of Q3, led by growth in several segments, including one- to four-family first mortgages and multi-family residential loans. However, commercial real estate loans saw a decline. The average loan yield increased to 6.43%, up by 15 basis points from the previous quarter, reflecting higher market rates for new loans.

Investment Securities and Liquidity Position

The company’s investment securities portfolio grew by 2% to $421.8 million, with a net unrealized loss position improving from $46.6 million in Q2 to $32.2 million in Q3. Approximately 66% of the portfolio was pledged to secure public deposits and borrowings.

Liquidity remained strong, with total primary and secondary sources available amounting to $1.4 billion as of September 30, 2024. Cash and cash equivalents stood at $135.9 million, with additional availability from the Federal Home Loan Bank and unsecured lines of credit.

Dividend Increase and Share Repurchases

In a positive move for shareholders, Home Bancorp’s Board of Directors approved a quarterly cash dividend of $0.26 per share, a 4% increase. This dividend is payable on November 8, 2024, to shareholders of record as of October 28, 2024. Additionally, the company repurchased 24,473 shares during Q3 at an average price of $38.50 per share, with 313,812 shares remaining eligible for repurchase under the 2023 plan.

Expert Analysis: What Does This Mean for Investors?

Financial analysts suggest that Home Bancorp’s focus on growing deposits and maintaining a strong net interest margin is a strategic move to sustain profitability. The decrease in loan charge-offs and provisions for loan losses indicates improved credit quality, which could boost investor confidence. Moreover, the dividend hike showcases the company’s commitment to returning value to shareholders, making it an attractive option for income-focused investors.