HBCP Home Bancorp Inc

LAFAYETTE, La., Oct. 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 $923,000 for the third quarter of 2011, a decrease of $344,000, or 27%, compared to the second quarter of 2011 and an increase of $12,000, or 1%, compared to the third quarter of 2010.  The third quarter of 2011 includes $1.4 million of pre-tax expenses related to the acquisition of GS Financial Corp.  Excluding merger-related expenses, net income for the third quarter of 2011 was $1.9 million, increases of 30% and 107% compared to the second quarter of 2011 and the third quarter of 2010, respectively.  Diluted earnings per share were $0.13 for the third quarter of 2011, compared to $0.17 for the second quarter of 2011 and $0.12 for the third quarter of 2010.  Excluding merger-related expenses, diluted earnings per share were $0.26 for the third quarter of 2011, increases of 30% and 100% compared to the second quarter of 2011 and the third quarter of 2010, respectively.

"Since completing our IPO, we have worked diligently to expand our geographic footprint across South Louisiana to enhance our ability to serve our customers," stated John W. Bordelon, President and Chief Executive Officer of the Company and the Bank.  "We enter the last quarter of 2011 in the best position in our company's history to strengthen existing relationships and earn new customers."

"Excluding merger-related expenses, our disciplined growth has strengthened our earnings stream," added Mr. Bordelon, "We will continue to make investments in personnel, technology and processes to further enhance the customer experience and raise shareholder value."  

Acquisition of GS Financial Corp.

As previously reported, the Company now serves the Greater New Orleans area through its acquisition of GS Financial Corp., the former holding company of Guaranty Savings Bank of Metairie, Louisiana, on July 15, 2011.  As a result of the transaction, in which GS Financial Corp. was merged with and into the Company and Guaranty Savings Bank was merged with and into the Bank, the Company acquired $256.9 million of assets, including loans of $182.5 million, and $230.7 million in deposits and other liabilities.   Shareholders of GS Financial Corp. received $21.00 per share in cash, resulting in a total purchase price of $26.4 million.  

The assets and liabilities from GS Financial Corp. were recorded at their estimated fair values as of the acquisition date. Such fair values are preliminary estimates and are subject to adjustment for up to one year after the acquisition date. A summary of the assets and liabilities acquired and estimated fair value adjustments follows.

Loans and Credit Quality

Loans totaled $653.6 million at September 30, 2011, an increase of $204.1 million, or 45%, from June 30, 2011, and an increase of $207.4 million, or 47%, from September 30, 2010.  Growth in the loan portfolio was primarily driven by the acquisition of GS Financial Corp., which added $182.5 million in loans at acquisition date.  Organic loan growth during the quarter was related primarily to commercial and industrial (up $19.3 million) and construction and land (up $5.6 million) loans.

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

Nonperforming assets ("NPAs") totaled $24.9 million at September 30, 2011, an increase of $4.9 million compared to June 30, 2011 and an increase of $1.1 million compared to September 30, 2010.  The increase in NPAs from June 30, 2011 relates to the NPAs acquired from GS Financial Corp., which totaled $6.3 million at September 30, 2011.  Excluding Covered Assets, the ratio of NPAs to total assets was 0.97% at September 30, 2011, compared to 0.19% at June 30, 2011 and 0.23% at September 30, 2010.  The Company recorded net charge-offs of $53,000 during the third quarter of 2011, compared to net charge-offs of $227,000 in the second quarter of 2011 and $48,000 in the third quarter of 2010.

The Company's loan loss provision for the third quarter of 2011 was $526,000, compared to $265,000 and $168,000 for the second quarter of 2011 and the third quarter of 2010, respectively.  The increase was primarily attributable to organic loan growth during the third quarter of 2011.

At September 30, 2011, the Company's ratio of allowance for loan losses to total loans was 0.69%, compared to 0.90% and 0.88% at June 30, 2011 and September 30, 2010, respectively.  The decrease in the ratio of allowance for loan losses to total loans relates to the acquisition of GS Financial Corp. loan portfolio.  Under accounting rules generally accepted in the United States, an acquirer may not carry over the acquiree's allowance for loan losses.  Instead, the acquirer must fair value the cash flows expected to be derived from the acquired loan portfolio.  Management has included its credit loss expectations in the acquired loan portfolio's cash flow assumptions used to derive the portfolio's fair value.  Hence, management believes that expected credit losses in the acquired loan portfolio were appropriately addressed in the fair value adjustments recorded on the acquired loan portfolio.  Excluding acquired loans of GS Financial Corp. and Statewide Bank (March 2010), the ratio of allowance for loan losses to total organic (i.e., not acquired) loans was 1.09% at September 30, 2011.

Investment Securities Portfolio

The Company's investment securities portfolio totaled $169.5 million at September 30, 2011, an increase of $21.2 million, or 14%, from June 30, 2011, and an increase of $37.1 million, or 28%, from September 30, 2010.  The increase resulted from the addition of $46.5 million in investment securities acquired from GS Financial Corp., less paydowns, calls and maturities received during the quarter.  At September 30, 2011, the Company had a net unrealized gain position on its investment securities portfolio of $2.5 million, compared to net unrealized gains of $1.9 million and $1.1 million as of June 30, 2011 and September 30, 2010, respectively.

The Company maintains a portfolio of non-agency mortgage-backed securities, which had an amortized cost of $15.9 million at September 30, 2011.  Each of these securities is rated investment grade by Standard & Poor's and/or Moody's.      

Deposits

Deposits totaled $719.5 million at September 30, 2011, increases of $192.1 million, or 36%, from June 30, 2011, and $172.8 million, or 32%, from September 30, 2010.  The acquisition of GS Financial Corp. added $193.5 million in deposits during the quarter.  The Company's organic core deposits (i.e., checking, savings and money market accounts) increased for the ninth consecutive quarter, posting growth of $9.2 million, or 2.7%, during the third quarter of 2011.  

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

Share Repurchases

The Company purchased 175,610 shares of its common stock during the third quarter of 2011 at an average price per share of $14.39 under the share repurchase plan announced in May 2011.  The Company may repurchase up to 402,835 shares, or approximately 5%, of the Company's outstanding common stock under the May 2011 plan.  To date, the Company has purchased 200,910 shares under the plan at an average price per share of $14.40; hence, 201,925 shares remain eligible for purchase under the plan.  

Net Interest Income

Net interest income for the third quarter of 2011 totaled $9.4 million, an increase of $2.4 million, or 35%, compared to the second quarter of 2011, and an increase of $2.1 million, or 29%, compared to the third quarter of 2010.  The addition of GS Financial's earning assets and interest-bearing liabilities accounted for the vast majority of the increase.  The Company's net interest margin was 4.58% for the third quarter of 2011, three basis points higher than the second quarter of 2011 and 17 basis points lower than the third quarter of 2010.  

The following table sets forth the Company's average volume and rate of its interest-earning assets and interest-bearing liabilities for the periods indicated.

Noninterest Income

Noninterest income for the third quarter of 2011 totaled $1.6 million, a decrease of $476,000, or 23%, compared to the second quarter of 2011, and an increase of $1.0 million, or 165%, compared to the third quarter of 2010.

The decrease in noninterest income in the third quarter of 2011 compared to the second quarter of 2011 resulted primarily from a litigation settlement of $525,000 received in the second quarter of 2011.  This decrease was partially offset by higher service fees and charges, bank card fees and gains on the sale of loans.

The increase in noninterest income in the third quarter of 2011 compared to the third quarter of 2010 resulted primarily from other-than-temporary impairment ("OTTI") of investment securities charges of $870,000 recorded during the third quarter of 2010 and higher service fees and charges and bank card fees.  These increases were partially offset by decreased gains on the sale of loans and decreased discount accretion of the FDIC loss sharing receivable.  

Noninterest Expense

Noninterest expense for the third quarter of 2011 totaled $9.2 million, an increase of $2.4 million, or 35%, compared to the second quarter of 2011 and an increase of $2.9 million, or 45%, compared to the third quarter of 2010.  Noninterest expense for the third quarter of 2011 includes $1.4 million of expenses related to the acquisition of GS Financial Corp.  Such merger-related expenses include professional fees, data conversion and severance and other employee costs associated with the merger and related systems conversion.  Excluding merger-related expenses, noninterest expense for the third quarter of 2011 totaled $7.8 million, an increase of $1.1 million, or 17%, compared to the second quarter of 2011 and an increase of $1.4 million, or 22%, compared to the third quarter of 2010.  The increases primarily relate to the growth of the Company's branch network due to the addition of GS Financial Corp. branches and employees.  

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 the impact of merger-related expenses. Management believes the presentation of this non-GAAP financial information provides useful information that is essential to a proper understanding of the Company's core operating results. This non-GAAP financial information should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP financial information presented by other companies.

This news release contains certain forwardlooking statements. Forwardlooking 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."

Forwardlooking 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 forwardlooking statements.  Home Bancorp's Annual Report on Form 10-K for the year ended December 31, 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 and risks of competition. Forwardlooking statements speak only as of the date they are made.  We do not undertake to update forwardlooking statements to reflect circumstances or events that occur after the date the forwardlooking statements are made or to reflect the occurrence of unanticipated events.