Home Bancorp, Inc. Q4 FY2025 earnings call

• Net income: Fourth quarter net income was $11.4 million, an 8% decrease from the prior quarter but a 21% increase from the prior year, primarily due to increased provision expense from loan growth.
• Net interest income: Stable QoQ, decreasing $58,000 with NIM at 4.06%. Year-over-year, 2025 NIM increased 32 basis points and ROA increased 25 basis points.
• Loans and deposits: Loans grew $38 million in Q4; deposits grew 7% or $192 million, reducing loan-to-deposit ratio to 92%.
• Texas franchise: 15 commercial bankers in 5 branches and 1 loan production office in Houston; expect new full-service branch and close loan production office in Q1. Loans in Texas have grown at 15% annual rate and represent 20% of portfolio.
• Credit quality: Nonperforming loans increased, but charge-offs remain low due to conservative underwriting. Net charge-offs in 2025 were $908,000 (3 basis points of total loans).
• Noninterest income/expenses: Noninterest income was $4 million (slightly above expectations); noninterest expenses were $23 million, in line with expectations, with expectations for changes in Q1.
• Capital management: Tangible book value grew at 9.6% annualized rate since 2019; EPS grew at 11.5% annualized rate; quarterly dividend increased 55% to $0.31 per share, and 17% of shares repurchased.

Fourth quarter net income was $11.4 million or $1.46 per share. Full-year 2025 net income was $46 million or $5.87 per share, a record. Fourth quarter net interest margin was 4.06% and ROA was 1.29%. Loans grew by $38 million in the fourth quarter (6% annualized). Deposits grew by 7% or $192 million. Texas franchise loans represent 20% of the loan portfolio. Fourth quarter net interest income was stable compared to the prior quarter, decreasing $58,000 while NIM decreased 4 basis points to 4.06%. Year-over-year, 2025 net interest margin increased 32 basis points to 4.03% and ROA increased 25 basis points to 1.33%.

• Loan growth: Expect mid-single digit growth in 2026 as paydowns slow.
• NIM: Anticipate NIM to tick back up to 4.1% to 4.15% in 2026 due to deposit repricing and loan portfolio dynamics.
• M&A: Optimistic about 2026 M&A, looking at larger banks (potentially under $1.5 billion).
• Bond portfolio: Expected to increase by $15 million to $20 million in 2026, remaining 11% to 12% of assets.

• Credit trajectory: Potential shifts in Class 5 and NPAs, though Texas credits typically resolve faster (60 days or less).
• Deposit competition: Some outliers in CD rates creating competition for deposits.
• Economic uncertainties: Impact of interest rate changes and overall economic conditions on loan portfolio and NIM.

Q: Concern on credit trajectory shift A: John notes Texas credits move faster (60 days or less), with two Texas subdivision properties expected to be sold by Feb 3. Some one-off circumstances, not an economic-driven downturn Q: Loan pipeline shift A: Hope for less payoffs in 2026, with loan growth expected if payoffs slow Q: Growth in New Orleans vs Houston A: No negative comments, leaning positive as rates come down Q: SBA business in 2026 A: Anticipate better SBA business with lower interest rates, though not tremendous yet Q: M&A as capital deployment A: Optimistic about 2026 M&A, looking at larger banks (under $1.5 billion) Q: Bond portfolio size in 2026 A: Expected to increase by $15 million to $20 million, remaining 11% to 12% of assets Q: Texas team expansion A: Excited about Texas team, building new full-service branch in Northwest Houston for full branch capabilities Q: NIM expansion potential A: Potential NIM upside to 4.1% to 4.15% in 2026, with deposit repricing lag providing some benefit after rate cuts