Home Bancorp Profit Rises as Lending Rebounds
Net interest margin widened to 4.24% as asset yields outpaced funding costs.
Home Bancorp Inc. (HBCP), the holding company for Home Bank, reported higher second-quarter profit as loan growth resumed and net interest income increased. Net income rose to $11.6 million from $11.4 million in the first quarter and $11.3 million a year earlier, while diluted earnings increased to $1.48 a share from $1.45 in both periods.
The quarter marked a turn from the start of the year, when the bank's loan balance contracted. Loans grew $50.7 million, or 1.9%, to $2.779 billion, reversing the first quarter's decline and representing a 7% annualized pace. The loan-to-deposit ratio reached management's 91% target.
Net interest income increased 4% from the first quarter to $35.8 million and rose 7% from a year earlier. Net interest margin expanded eight basis points sequentially and 20 basis points from a year earlier as higher-yielding interest-bearing assets outpaced liabilities. Average loan yield rose five basis points to 6.46%, while the average cost of interest-bearing deposits declined one basis point to 2.28%.
Commercial real-estate loans increased $33.3 million, commercial-and-industrial loans rose $18.3 million and multifamily residential loans grew $17.6 million. Construction and land loans declined $16.5 million. Deposits increased $42.1 million to $3.069 billion, with growth concentrated in money-market and NOW accounts as certificates of deposit decreased.
Higher operating costs absorbed part of the revenue gain. Noninterest expense climbed 7% sequentially and 10% from a year earlier to $24.6 million, driven largely by compensation and benefits. The efficiency ratio rose to 61.81% from 60.02% in the first quarter and 60.45% a year earlier.
Asset-quality measures were mixed. Nonperforming assets declined 2% sequentially to $39.2 million, but remained above $25.4 million a year earlier. Special-mention loans rose to $26.9 million from $11.1 million, while substandard loans increased to $68.9 million from $61.5 million as commercial-and-industrial substandard balances rose.
Tangible book value increased to $47.02 a share from $46.04 in the first quarter and $41.54 a year earlier, while the tangible common-equity ratio reached 10.51%. Home Bancorp raised its quarterly dividend 3% to $0.32 a share and repurchased 2,720 shares during the quarter at an average price of $66.19.