Home Bancorp's NIM Compression Reverses After Prior Expansion

The Tip Desk · October 22, 2026 · 3 min read

Net interest margin fell 5 bps to 4.19% as six $19.5 million loan relationships moved to nonaccrual and net income dropped to $10.1 million.

Home Bancorp (HBCP), the Lafayette, Louisiana parent of Home Bank, N.A., reversed a second-quarter net interest margin expansion as six loan relationships totaling $19.5 million moved to nonaccrual and deposit costs ticked higher. Net interest margin compressed 5 bps to 4.19% in the third quarter of 2026, after expanding 8 bps to 4.24% in the second quarter.

Net interest income held essentially stable at $35.9 million, up only $110,000 from $35.8 million, after a $1.3 million sequential increase in the second quarter. Chief Executive Officer John W. Bordelon said the result showed core earnings resilience despite credit-related interest reversals and continued deposit pricing pressure.

The average loan yield fell 6 bps to 6.40% from 6.46%. The company said transfers to nonaccrual and about $862,000 of related interest reversals cut the yield about 12 bps, with loan pricing and portfolio mix recapturing roughly half of that pressure. The average cost of interest-bearing deposits rose 5 bps to 2.33% from 2.28%, which the company attributed to competitive rate increases. Average other interest-earning assets were $150.9 million, down $7.3 million, or 5%, from the second quarter, primarily on a lower average cash balance.

Loans reversed to a $4.0 million, or less than 1%, decline to $2.77 billion at September 30, 2026, after a $50.7 million, or 1.9%, increase in the second quarter. Construction and land fell $19.8 million to $303.7 million, while commercial and industrial loans rose $16.3 million to $462.7 million. Commercial real estate increased $8.4 million to $1.22 billion. One- to four-family first mortgages were $469.7 million.

Total deposits declined $15.4 million, or 0.5%, to $3.05 billion after a $42.1 million, or 1.4%, increase in the second quarter. Core deposits fell $28.3 million, or 1.2%, to $2.3 billion. Certificates of deposit rose $13.0 million to $750.0 million; NOW accounts fell $29.9 million to $697.9 million. Uninsured deposits were $933.7 million.

Nonperforming assets jumped $14.5 million, or 37%, to $53.7 million, or 1.49% of total assets, from $39.2 million, or 1.09%, at June 30, after a modest $0.7 million decline in the second quarter. President Darren E. Guidry said the bank moved promptly to recognize emerging credit issues and, based on its current assessment, does not anticipate sizable losses from the six relationships. Net loan charge-offs were $586,000. The provision for loan losses rose to $1.0 million from $762,000, which the company said primarily reflected higher reserves on individually analyzed loans, partially offset by the reduction in total loans. The allowance ended at $34.4 million, or 1.24% of loans.

Net income fell $1.5 million to $10.1 million, or $1.28 a share, from $11.6 million, or $1.48, after a $255,000 sequential increase in the second quarter. Return on average assets declined to 1.12% from 1.31%. Noninterest expense rose $1.8 million, or 7%, to $26.3 million, driven primarily by foreclosed assets, net, up $1.7 million to $2.0 million. The efficiency ratio widened to 65.62% from 61.81%. Noninterest income increased $282,000, or 7%, to $4.2 million, led by other income and service fees, partially offset by a $75,000 drop in gain on sale of loans.

The Bank’s preliminary Tier 1 leverage and total risk-based capital ratios rose to 12.33% and 16.09% from 12.11% and 15.61%. The board declared a $0.32 quarterly cash dividend payable November 13, 2026. Book value was $57.55 a share and tangible book value $46.97. The company repurchased 350 shares at an average $69.34; 382,820 shares remain eligible under the 2025 repurchase plan.