HOME BANCORP, INC. Q4 FY2024 earnings call

• Fourth quarter net income was $9.7 million or $1.21 per share.
• Net interest margin expanded to 3.82% for the third consecutive quarter, driven by a 15 basis point decline in the cost of interest bearing liabilities, increase in average non-interest bearing deposits, stable yields on interest earning assets, and a slight increase in the loans to deposit ratio.
• Loan growth picked up in November and December, with 2024 loan growth at 5.3%. CRE, construction, and multi-family drove fourth quarter loan growth.
• Deposits were flat from the previous year but grew 4.1% in 2024, with growth from money market accounts and CDs. Non-interest bearing deposits accounted for 26% of total deposits.
• Plan to open a new branch in Northwest Houston, where a commercial team is making progress.
• Focus on customer service, expanding relationships, and maintaining a solid credit culture to build shareholder value.

Fourth quarter net income was $9.7 million or $1.21 per share. Net interest margin expanded to 3.82% for the third consecutive quarter. Loan growth in the fourth quarter was 7.5%, with annualized 2024 loan growth at 5.3%. CRE, construction, and multi-family drove the loan growth. Deposits were flat from the previous year but grew 4.1% in 2024, with growth coming from money market accounts and CDs. Non-interest bearing deposits make up 26% of total deposits.

• Expect loans to grow between 4% and 6% in 2025.
• NIM and earnings are expected to continue expanding in 2025.
• Anticipate incrementally reducing funding costs in the first half of 2025 assuming the yield curve doesn't invert again.
• Non-interest expenses are expected to increase by 3.5% in 2025, with most increases in compensation and technology, offset by some occupancy expense reductions.

• Potential impact of CFPB/OCC regulations on fees.
• Competition in loan pricing could affect yields.
• Uncertainty regarding deposit betas and possible deposit runoffs.

Q: Joe Yanchunis asked about NIM expansion in 2025, including rate environment impact.

A: John Bordelon stated that NIM is expected to expand in both the base case and a slight rate cut environment due to loans repricing higher and the CD portfolio having the opportunity to reprice lower.

Q: Joe Yanchunis inquired about deposit betas and the loan to deposit ratio.

A: David Kirkley responded that deposit betas may be slower on the non-maturity deposit side, but they are actively managing money market rates and are optimistic about right-sizing the loan to deposit ratio.

Q: Joe Yanchunis asked about the Northwestern Houston branch opening and occupancy expense.

A: John Bordelon mentioned they got out of a lease from the Texan Bank acquisition, reducing occupancy expenses, and the Northwest Houston branch is anticipated to open in the back half of 2025, leading to a reduction in occupancy expenses.

Q: Feddie Strickland asked about expense lumpiness.

A: John Bordelon said no specific lumpiness was expected, except for salary adjustments in Q2. David Kirkley also mentioned an initiative to change customer behavior to reduce branch transactions.

Q: Feddie Strickland asked about the loan pipeline and growth focus.

A: John Bordelon stated the focus is on C&I loans, with relationship managers being of the C&I type as they bring whole relationships and are deposit providers.

Q: Feddie Strickland asked about loan yield and competitive pricing.

A: John Bordelon said they expect loan yields to increase from back book repricing and new production, with pricing somewhat stabilized after third quarter pressure.

Q: Feddie Strickland asked about the non-interest income mix.

A: John Bordelon mentioned potential fee issues from regulations, and David Kirkley said fee income has been volatile but Treasury management fees increased due to a C&I focus.