Home Bancorp Q3 Profit Falls as Credit Metrics Weaken

Home Bancorp Inc. reported lower third-quarter 2026 earnings as higher expenses and a larger loan-loss provision outweighed modest growth in net interest income. Credit indicators also weakened during the quarter, with nonperforming and criticized loans rising, while loan and deposit balances were broadly stable.

The Lafayette, Louisiana-based bank holding company posted net income of $10.1 million, or $1.28 per diluted share, down from $11.6 million, or $1.48 per share, in the second quarter. A year earlier, net income was $12.4 million, or $1.59 per share.

Return on average assets fell to 1.12% from 1.31% in the prior quarter, while return on average equity declined to 8.7% from 10.3%. Non-GAAP return on average tangible common equity was 10.9%, compared with 12.9% in the second quarter.

Expenses and credit costs weigh on results

Net interest income edged up to $35.9 million from $35.8 million in the second quarter and $34.1 million a year earlier. However, net interest margin narrowed to 4.19% from 4.24% sequentially as the loan yield declined to 6.40% from 6.46% and the cost of total deposits increased to 1.69% from 1.66%.

The provision for loan losses rose to $1.0 million from $762,000 in the previous quarter. Home Bancorp had recorded a $229,000 provision reversal in the third quarter of 2025.

Noninterest expense increased to $26.3 million from $24.6 million sequentially and $22.5 million a year earlier. The latest quarter included $2.0 million of foreclosed-asset expense, up from $385,000 in the second quarter. Excluding foreclosed assets, noninterest expense was $24.3 million, little changed from the previous quarter.

Noninterest income improved to $4.2 million from $3.9 million sequentially, supported by higher service fees, bank-card fees and other income. The efficiency ratio nevertheless rose to 65.6% from 61.8% in the second quarter.

Core pre-provision net income, a non-GAAP measure that excludes credit provisions and certain other items, declined to $10.9 million from $12.2 million sequentially and $12.1 million a year earlier.

Asset quality metrics deteriorate

Total nonperforming loans increased to $42.2 million at September 30 from $26.4 million three months earlier, lifting the nonperforming-loan ratio to 1.52% from 0.95%. Criticized loans rose to $105.0 million, or 3.79% of total loans, from $95.8 million, or 3.45%, at the end of June.

The allowance for loan losses increased to $34.4 million and represented 1.24% of total loans, compared with 1.22% in the prior quarter. Nonperforming assets equaled 1.49% of total assets, while year-to-date net charge-offs were 0.07% of average loans.

Commercial real estate remained a significant part of the portfolio. Owner-occupied commercial real estate accounted for 28% of loans, while non-owner-occupied commercial real estate, including multifamily properties, represented 23%. The company reported $12.3 million of nonaccrual owner-occupied commercial real estate loans and $10.7 million of nonaccrual non-owner-occupied commercial real estate loans.

Total non-medical office exposure was $174.9 million, or 6.3% of loans. Commercial and industrial loans totaled $462.7 million, with $6.7 million on nonaccrual status.

Loans and deposits remain broadly stable

Total loans were $2.77 billion at quarter-end, down slightly from $2.78 billion in June but above $2.71 billion a year earlier. The presentation reported a 2% annualized loan-growth rate for the first nine months of 2026, including 6% annualized growth in the Houston market.

Deposits totaled $3.05 billion, compared with $3.07 billion at the end of the second quarter and $2.98 billion a year earlier. Money-market balances increased both sequentially and year over year, while NOW-account balances declined during the quarter. Noninterest-bearing deposits represented 27% of total deposits.

Uninsured deposits were approximately $760 million, or 25% of the total. Home Bancorp reported $1.42 billion of primary funding sources and $1.47 billion of combined primary and secondary liquidity, equivalent to 186% coverage of uninsured deposits. Total borrowings increased by $56 million during the quarter.

Home Bancorp ended September with $3.60 billion of assets and a tangible common equity ratio of 10.5%. Non-GAAP tangible book value was $46.97 per share, compared with $47.02 at the end of June. The company approved a new 400,000-share repurchase plan and declared a quarterly cash dividend of $0.32 per share, payable November 13, 2026.

The investment portfolio had a book value of $452.0 million and an unrealized loss of $36.5 million at quarter-end. Its market value declined by $11.4 million during the quarter, although book value increased by $17.9 million.

Home Bancorp did not provide earnings guidance in the presentation. Its interest-rate sensitivity model estimated that a 200-basis-point increase in rates would raise net interest income by 4.8% over one year, while a 200-basis-point decline would reduce it by 6.1%. The company identified credit conditions, deposit competition, interest-rate changes, cybersecurity incidents, regulatory developments and the realization of acquisition benefits among the factors that could cause actual results to differ from its expectations.