Notes to Financial Statements
1. Plan Description
General
The following description of
the Home Bank Profit Sharing 401(k) Plan (the Plan) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plans provisions.
The Plan is a defined contribution plan covering all employees who are at least 21 years old and who have three months of service with Home Bank (the
Bank), the sponsor of the Plan and wholly-owned subsidiary of Home Bancorp, Inc. The Plan is subject to the applicable provisions of the Employee Retirement Income Security Act of 1974, as amended (ERISA).
Contributions
Eligible participants may elect to
contribute, on a pre-tax basis, from 1% to 75% of their compensation, as defined in the Plan document, subject to certain limitations. The Bank may make a discretionary matching and/or profit sharing contribution as determined each
year. For the years ended December 31, 2015 and 2014, the Bank made matching contributions equal to participant deferrals not to exceed 4% of participant compensation. No profit sharing contributions were made for the years ended
December 31, 2015 and 2014. Participants age 50 or older may also make catch-up contributions up to limits specified under the Internal Revenue Code (IRC), but such contributions are not taken into account for purposes of
determining the Banks matching contribution.
Vesting
Participants are immediately vested in their contributions plus actual earnings thereon. Vesting in the employers matching and discretionary contribution
portions of their accounts plus actual earnings thereon is based on years of continuous service. A participant is 100% vested after six years of credited service. Prior to death or retirement, participants vest in employer contributions and related
earnings in accordance with the following schedule:
|
|
|
Years of Service
|
|
Vested Percent
|
1 year
|
|
%
|
2 years
|
|
20
|
3 years
|
|
40
|
4 years
|
|
60
|
5 years
|
|
80
|
6 years
|
|
100
|
On the occurrence of death, disability, retirement or Plan termination, a participant becomes fully vested in employer
contributions and related earnings.
Payment of Benefits
Participants may elect to receive their account value in a lump-sum distribution or, if eligible, in the form of an IRA rollover when they terminate employment
or because of death, disability or retirement. Participants may also transfer their account balance to another tax deferred qualified plan. In accordance with the Plan provisions, hardship withdrawals and certain in-service distributions
may be made by the Plan.
Participant Accounts
Individual accounts are maintained for each of the Plans participants to reflect the participants contributions, the Banks matching
contributions and allocations of the Plans investment income or losses and administrative expenses. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit
that can be provided from the participants vested account.
4
Forfeited Accounts
At December 31, 2015 and 2014, the Plan had forfeited nonvested accounts of $32,987 and $9,998, respectively. In 2015 and 2014, employer contributions
were reduced by $232 and $21,068, respectively, from forfeited nonvested accounts. These accounts will be used to reduce future employer contributions.
Notes Receivable from Participants
Participants may
borrow from their accounts amounts ranging from a minimum of $1,000 to a maximum of 50% of the account balance, not to exceed $50,000. Loan maturities generally range from one to five years, but may extend up to ten years for the purchase of a
primary residence. The loans are collateralized by the balance in the participants account. The outstanding loan balances carried an interest rate of 7.00% for both 2015 and 2014. Principal and interest are paid ratably through
semi-monthly payroll deductions.
Investment Options
Under the provisions of the Plan, participating employees may direct contributions to various investment options, including a common collective trust fund,
mutual funds, pooled separate accounts and a common stock fund for Home Bancorp, Inc. The Home Bancorp, Inc. Stock Fund holds common stock of Home Bancorp, Inc. and uninvested cash to meet certain distributions and, on a short-term basis, pending
investment in additional Home Bancorp, Inc. common stock. Participants have the ability to change investment elections and transfer funds among the various fund options on a daily basis.
2. Summary of Significant Accounting Policies
Basis of Accounting
The financial
statements of the Plan are prepared using the accrual method of accounting and all assets of the Plan are participant directed.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
Investment Valuation and Income Recognition
Plan
investments, excluding the guaranteed investment contract, are stated at fair value. Home Bancorp, Inc. common stock is valued using quoted market prices. Shares of registered investment companies are valued at the net asset value of
shares held by the Plan at year end. The Plans interest in the common/collective trust is valued based on the daily net asset value of the fund as determined by the issuer of the fund.
As described in Financial Accounting Standards Boards (FASB) Accounting Standards Codification (ASC) Topic 946,
Financial
Services Investment Companies
, investment contracts held by a defined contribution plan are required to be reported at fair value. However, contract value is the relevant measurement attribute for that portion of the net assets
available for benefits of a defined contribution plan attributable to fully benefit-responsive investment contracts, because contract value is the amount participants would receive if they were to initiate permitted transactions under the terms of
the Plan. As of December 31, 2015, the Plan invests in a fully benefit-responsive investment contract through a group annuity contract. As required by the ASC 946, the statements of net assets available for benefits present the fair
value of the investment in the fully-benefit responsive investment contract as well as the adjustment of the investment in the fully-benefit responsive investment contract from fair value to contract value. The statement of changes in net
assets available for benefits is prepared on a contract value basis.
5
As of December 31, 2015 and 2014, The Plan invests in a guaranteed investment contract with Principal Life
Insurance Company, a guaranteed general-asset backed group annuity contract. The Plan reflected the investment at contract value as of December 31, 2015 and 2014 in the accompanying statement of net assets available for benefits. For the years
ended December 31, 2015 and 2014, the average yield of the Principal Fixed Income Guaranteed Option Contract was 1.55% and 1.45%, respectively, based on actual earnings and 1.55% and 1.45%, respectively, based on interest rates credited to
participants.
Purchases and sales of investments are recorded on a trade date basis. Dividends are recorded on the ex-dividend date.
Notes Receivable from Participants
Notes receivable from
participants are measured at their unpaid principal balance plus any accrued but unpaid interest.
Administrative Expenses
Investment management fees and administrative fees related to recordkeeping are charged against the earnings of the investment fund in which the participant
funds are invested. Fees for certain transactions, such as withdrawals and loan processing, are charged directly to the account of the participant reporting such a transaction. Other administrative expenses of the Plan were paid by the Bank for 2015
and 2014.
Payment of Benefits
Benefits are recorded
when paid.
Recent Accounting Pronouncements
In July
2015, the FASB issued Accounting Standards Update (ASU) 2015-12,
Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965)
: (Part I)
Fully Benefit-Responsive Investment Contracts, (Part II) Plan Investment Disclosures, (Part III) Measurement Date Practical Expedient. Part I eliminates the requirements to measure the fair value of fully benefit-responsive investment contracts and
provide certain disclosures. Contract value is the only required measure for fully benefit-responsive investment contracts. Part II eliminates the requirements to disclose individual investments that represent 5 percent or more of net assets
available for benefits and the net appreciation or depreciation in fair value of investments by general type. Part II also simplifies the level of disaggregation of investments that are measured using fair value. Plans will continue to disaggregate
investments that are measured using fair value by general type; however, plans are no longer required to also disaggregate investments by nature, characteristics and risks. Further, the disclosure of information about fair value measurements shall
be provided by general type of plan asset. Part III is not applicable to the Plan. The ASU is effective for fiscal years beginning after December 15, 2015, with early adoption permitted. Parts I and II are to be applied retrospectively.
Management has elected to adopt Parts I and II early.
Subsequent Events
Management has evaluated subsequent events for potential recognition or disclosure in the financial statements through June 27, 2016, the date on which
the financial statements were available to be issued.
6
3. Fair Value Measurements
The FASB ASC 820,
Fair Value Measurements and Disclosures
, provides the framework for measuring fair value. That framework provides a fair value
hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the
lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under FASB ASC 820 are described as follows:
Level 1 - Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the plan
has the ability to access.
Level 2 - Inputs to the valuation methodology include:
|
|
|
quoted prices for similar assets or liabilities in active markets;
|
|
|
|
quoted prices for identical or similar assets or liabilities in inactive markets;
|
|
|
|
inputs other than quoted prices that are observable for the asset or liability;
|
|
|
|
inputs that are derived principally from or corroborated by observable market data by correlation or other means.
|
If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset
or liability.
Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The Plan uses appropriate valuation techniques based on the available inputs to measure the fair value of its investments. The assets fair value
measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. When available, valuation techniques maximize the use of observable inputs and minimize the use of
unobservable inputs.
Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the
valuation methodologies used at December 31, 2015 and 2014.
Registered investment companies:
The fair values of these securities are based on
quoted market prices in an active market, which represent the net asset values of shares held by the Plan at year end.
Pooled separate accounts:
These accounts are valued daily based on the net asset value of the underlying investments and the account charges.
Common/collective trust:
The fair value of the investments in the common/collective trust is derived from the fair value of the underlying securities based on quoted market prices in an active market and short-term cash investments.
Affiliated stock:
The Home Bancorp Inc. Stock Fund is an account comprised of common stock of Home Bancorp, Inc. and short-term cash investments. The
fair value of the fund is derived from the fair value of the common stock based on quoted market prices in an active market and the short-term cash investments.
The Plans investments, excluding the guaranteed investment contract, are reported at fair value in the accompanying statement of net assets available
for benefits. The methods used to measure fair value may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Plan believes its valuation methods are
appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
7
The following table sets forth by level, within the fair value hierarchy, the Plans assets at fair value as
of the date indicated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using:
|
|
|
|
Fair Value at
December 31,
2015
|
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Registered investment companies
|
|
$
|
4,201,640
|
|
|
$
|
4,201,640
|
|
|
$
|
|
|
|
$
|
|
|
Common/collective trusts
|
|
|
2,351,294
|
|
|
|
|
|
|
|
2,351,294
|
|
|
|
|
|
Pooled separate accounts
|
|
|
3,351,842
|
|
|
|
|
|
|
|
3,351,842
|
|
|
|
|
|
Affiliated stock
|
|
|
6,430,661
|
|
|
|
6,430,661
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
16,335,437
|
|
|
$
|
10,632,301
|
|
|
$
|
5,703,136
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurements Using:
|
|
|
|
Fair Value at
December 31,
2014
|
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Registered investment companies
|
|
$
|
4,246,668
|
|
|
$
|
4,246,668
|
|
|
$
|
|
|
|
$
|
|
|
Common/collective trusts
|
|
|
774,547
|
|
|
|
|
|
|
|
774,547
|
|
|
|
|
|
Pooled separate accounts
|
|
|
3,274,511
|
|
|
|
|
|
|
|
3,274,511
|
|
|
|
|
|
Affiliated stock
|
|
|
6,156,098
|
|
|
|
6,156,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
14,451,824
|
|
|
$
|
10,402,766
|
|
|
$
|
4,049,058
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4. Risks and Uncertainties
The Plan provides for various investments in registered investment companies, a common/collective trust, pooled separate accounts, a guaranteed investment
contract and common stock of Home Bancorp, Inc. Investment securities, in general, are exposed to various risks, such as overall market volatility, credit and interest rate risk. Due to the level of risk associated with certain investment
securities, it is reasonably possible that changes in the values of investment securities will occur in the near term, and that such change could materially affect the value of participants account balances and the amounts to be reported in
the statements of net assets available for benefits for future periods.
5. Related Party and Party-in-Interest Transactions
The Plan invests in Home Bancorp, Inc. common stock, the parent company of the plan sponsor; these transactions qualify as related party transactions, which
are exempt from the prohibited transaction rules. Fees incurred by the Plan for investment management services are paid to the trustee, and other fees related to the Plans operations are paid by the Plan sponsor.
Certain Plan investments are held in pooled separate accounts, common/collective trust and a guaranteed investment contract managed by Principal Life
Insurance Company. Since Principal Life Insurance Company is the Plan custodian, these transactions qualify as party-in-interest transactions.
6. Tax
Status
The Internal Revenue Service has determined and informed the Bank by a determination letter dated February 8, 2011, that the Plan is
designed in accordance with applicable sections of the IRC. Although the Plan has been
8
amended since receiving the determination letter, the Plan administrator and the Plans tax counsel believe that the Plan is designed and is currently being operated in compliance with the
applicable requirements of the IRC, and, therefore, believe that the Plan, as amended, is qualified and tax exempt.
7. Plan Termination
While it has not expressed any intention to do so, the Bank has the right under the Plan to discontinue its contributions at any time and to terminate the Plan
subject to the provisions of ERISA. In the event of Plan termination, participants would become 100% vested in their employer contributions.
9