HBCP Home Bancorp Inc

LAFAYETTE, La., Jan. 25, 2011 /PRNewswire/ -- Home Bancorp, Inc. (Nasdaq: HBCP) (the "Company"), the parent company for Home Bank (www.home24bank.com), a Federally chartered savings bank headquartered in Lafayette, Louisiana (the "Bank"), announced net income of $1.5 million for the fourth quarter of 2010, an increase of $554,000, or 61%, compared to the third quarter of 2010 and an increase of $1.4 million, or 6,674%, compared to the fourth quarter of 2009.  Net income for the year ended December 31, 2010 was $4.7 million, an increase of $9,000, or 0.2%, compared to 2009.  Diluted earnings per share were $0.20 for the fourth quarter of 2010, an increase of 67% compared to the third quarter of 2010.  Diluted earnings per share for the fourth quarter of 2009 were negligible.  Diluted earnings per share were $0.62 for the year ended December 31, 2010, an increase of 7% compared to 2009.  

"2010 proved to be a year of tremendous growth and opportunity for our company," stated John W. Bordelon, President and Chief Executive Officer of the Company and the Bank, "highlighted by our Northshore acquisition, the opening of our Baton Rouge headquarters and continued loan and deposit growth across each of our markets."

"Our superior capital position and exceptional loan quality have allowed us to remain focused on doing what we do best - serving our customers," added Mr. Bordelon.  "I congratulate our team on their success in differentiating Home Bank.  Their efforts yielded quality new borrowers and record core deposit growth in 2010."

Loans and Credit Quality

As previously reported, Home Bank entered into a purchase and assumption agreement with the Federal Deposit Insurance Corporation ("FDIC") on March 12, 2010 to purchase certain assets and to assume deposits and certain other liabilities of Statewide Bank, a full service community bank formerly headquartered in Covington, Louisiana.  As a result of the transaction, the Company acquired loans with contractual balances totaling $157.0 million.  After fair value adjustments, the book value of the loans acquired totaled $110.4 million.  Home Bank entered into loss sharing agreements with the FDIC which cover the acquired loan portfolio ("Covered Loans") and other repossessed assets (collectively referred to as "Covered Assets").  Under the terms of the loss sharing agreements, the FDIC will absorb 80% of the first $41 million of losses incurred on Covered Assets and 95% of losses on Covered Assets exceeding $41 million.  The Company distinguishes between Covered Loans and loans not covered by the loss sharing agreements ("Noncovered Loans") due to the differing risk exposure relating to the loans.  

Total loans were $439.9 million at December 31, 2010, a decrease of $6.3 million, or 1%, from September 30, 2010, and an increase of $103.3 million, or 31%, from December 31, 2009.  During the fourth quarter of 2010, Noncovered Loans increased $4.6 million, while Covered Loans decreased $10.9 million.  Growth in Noncovered commercial real estate (up $6.3 million during the fourth quarter) and commercial and industrial (up $5.6 million) loans was partially offset by a decrease in Noncovered 1-4 family first mortgage loans (down $6.8 million).  The fourth quarter decrease in Covered Loans related primarily to 1-4 family first mortgage (down $3.3 million) and construction and land (down $2.9 million) loans due primarily to loan repayments and foreclosures.  

The following table sets forth the composition of the Company's loan portfolio as of the dates indicated.  

Nonperforming assets, excluding Covered Assets, were $1.1 million at December 31, 2010, a decrease of $243,000, or 18%, from September 30, 2010, and a decrease of $548,000, or 32%, from December 31, 2009.  The ratio of nonperforming assets to total assets (excluding Covered Assets) was 0.19% at December 31, 2010, compared to 0.23% at September 30, 2010 and 0.32% at December 31, 2009.  Total nonperforming assets, including Covered Assets, were $22.8 million at December 31, 2010, a decrease of $1.1 million, or 5%, compared to $23.9 million at September 30, 2010.  The ratio of total nonperforming assets to total assets (including Covered Assets) was 3.25% at December 31, 2010, compared to 3.42% at September 30, 2010.  

The Company recorded net loan charge-offs of $151,000 during the fourth quarter of 2010, compared to $48,000 in the third quarter of 2010 and $119,000 in the fourth quarter of 2009. The Company's loan loss provision for the fourth quarter of 2010 was $147,000, compared to $168,000 for the third quarter of 2010 and $156,000 for the fourth quarter of 2009.    

At December 31, 2010, the Company's ratio of allowance for loan losses to Noncovered Loans was 1.09%, compared to 1.11% and 1.00% at September 30, 2010 and December 31, 2009, respectively.  The ratio of allowance for loan losses to total loans, including Covered Loans, was 0.89% at December 31, 2010, compared to 0.88% and 1.00% at September 30, 2010 and December 31, 2009, respectively.

Investment Securities Portfolio

The Company's investment securities portfolio totaled $127.2 million at December 31, 2010, a decrease of $5.2 million, or 4%, from September 30, 2010, and an increase of $7.3 million, or 6%, from December 31, 2009.  At December 31, 2010, the Company had a net unrealized gain position on its investment securities portfolio of $1.0 million, compared to a net unrealized gain of $1.1 million at September 30, 2010 and a net unrealized loss of $133,000 at December 31, 2009.  Due to increasing delinquencies and defaults in the mortgage loans underlying certain non-agency mortgage-backed securities, the Company recorded an other-than-temporary impairment ("OTTI") charge of $218,000 during the fourth quarter of 2010.  The Company recorded OTTI charges totaling $1.2 million in 2010 compared to $1.9 million in 2009.

The amortized cost of the Company's non-agency mortgage-backed securities portfolio decreased $18.4 million, or 46%, during 2010 primarily due to paydowns and security sales.  The following table summarizes the Company's non-agency mortgage-backed securities portfolio as of the dates indicated (in thousands).

The Company holds no Federal National Mortgage Association (Fannie Mae) or Federal Home Loan Mortgage Corporation (Freddie Mac) preferred stock, equity securities, corporate bonds, trust preferred securities, hedge fund investments, collateralized debt obligations or structured investment vehicles.

Deposits

The Company's strong growth in core deposits (i.e., checking, savings and money market) continued during the fourth quarter of 2010, increasing $22.7 million during the quarter.  Excluding the core deposits acquired from Statewide Bank, core deposits increased $67.7 million, or 31%, in 2010.  Total deposits, which includes certificates of deposit, were $553.2 million at December 31, 2010, an increase of $6.6 million, or 1%, from September 30, 2010, and an increase of $181.6 million, or 49%, from December 31, 2009.  The Statewide Bank acquisition added $206.9 million in deposits during the first quarter of 2010, including $46.2 million of higher-cost, out-of-state brokered deposits which the Company elected to re-price.  Consistent with management's expectations, the vast majority of out-of-state depositors elected to withdraw their deposits.  

The following table sets forth the composition of the Company's deposits at the dates indicated.

Net Interest Income

Net interest income for the fourth quarter of 2010 totaled $7.1 million, a decrease of $121,000, or 2%, compared to the third quarter of 2010, and an increase of $1.6 million, or 30%, compared to the fourth quarter of 2009.  The Company's net interest margin was 4.70% for the fourth quarter of 2010, five basis points lower than the third quarter of 2010 and 30 basis points higher than the fourth quarter of 2009.  The decrease in net interest margin compared to the third quarter of 2010 was primarily due to lower average yields on interest-earning assets.  The increase in the net interest margin compared to the fourth quarter of 2009 was primarily due to the lower average cost of interest-bearing liabilities.

Net interest income for 2010 totaled $27.8 million, an increase of $4.2 million, or 18%, compared to 2009.   The Company's net interest margin was 4.62% in 2010, 10 basis points lower than 2009, which was primarily the result of lower yields on interest-earning assets.

The following table sets forth the Company's average balance and average yields earned and rates paid on its interest-earning assets and interest-bearing liabilities for the periods indicated.

Noninterest Income

Noninterest income for the fourth quarter of 2010 totaled $1.3 million, an increase of $691,000, or 113%, compared to the third quarter of 2010 and an increase of $2.1 million, or 261%, compared to the fourth quarter of 2009.  Noninterest income for 2010 totaled $4.3 million, an increase of $2.1 million, or 102%, from 2009.

The increase in noninterest income in the fourth quarter of 2010 compared to the third quarter of 2010 was primarily the result of increased gains on the sale of mortgage loans and a decrease in OTTI charges on securities.  

The increase in noninterest income in the fourth quarter of 2010 compared to the fourth quarter of 2009 was primarily the result of increased gains on the sale of mortgage loans, higher levels of service fees and charges and bank card fees, a decrease in OTTI charges on securities and discount accretion related to the FDIC loss sharing receivable, which was not present in 2009. The increase in gains on the sale of mortgage loans was the result of increased loan originations and refinancing due to the current low interest rate environment.  The increase in service fees and charges and bank card fees was primarily the result of the addition of accounts through the Statewide Bank acquisition.  

The increase in noninterest income in 2010 compared to 2009 was primarily the result of increased gains on the sale of mortgage loans, higher levels of service fees and charges and bank card fees, a decrease in OTTI charges on securities and accretion related to the FDIC loss sharing receivable.  

Noninterest Expense

Noninterest expense for the fourth quarter of 2010 totaled $6.1 million, a decrease of $255,000, or 4%, compared to the third quarter of 2010 and an increase of $1.6 million, or 36%, compared to the fourth quarter of 2009.  Noninterest expense for 2010 totaled $24.1 million, an increase of $6.3 million, or 36%, from 2009.

The decrease in noninterest expense in the fourth quarter of 2010 compared to the third quarter of 2010 was primarily attributable to decreases in compensation and benefits and occupancy expenses resulting from efficiencies gained from the conversion of the former Statewide Bank's loan and deposit accounts into Home Bank's operating system completed during the third quarter of 2010.

The increases in noninterest expense in the fourth quarter of 2010 compared to the fourth quarter of 2009 were driven by higher compensation and benefits, occupancy and data processing and communications expenses related to the Statewide Bank acquisition and the addition of our Baton Rouge headquarters location in March 2010.  The Company began 2010 with 11 full-service banking offices.  The acquisition of six Statewide Bank locations and the opening of our Baton Rouge headquarters has increased our total number of full-service banking offices to 18.  Additionally, other expenses increased due to the amortization of the core deposit intangible resulting from the Statewide Bank acquisition, which amounted to $65,000 and $208,000 during the quarter and year ended December 31, 2010, respectively.  

The increase in noninterest expense in 2010 compared to 2009 was primarily the result of higher compensation and benefits, occupancy and data processing and communications expenses related to the Statewide Bank acquisition and the addition of our Baton Rouge headquarters.

This news release contains certain forwardlooking 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.  The Company's Annual Report on Form 10-K for the year ended December 31, 2009 and our Quarterly Report on Form 10-Q for the quarter ended September 30, 2010, describes some of these factors, including risk elements in the loan portfolio, the level of the allowance for losses on loans, 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, risks of competition, risks of our decisions regarding the fair value of assets acquired and risks regarding our ability to obtain reimbursement under the loss sharing agreements on Covered Assets. 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.