Home Bancorp (NASDAQ:HBCP) discussed record full-year results on its fourth quarter 2025 earnings call, highlighting stronger profitability metrics, deposit growth that reduced reliance on wholesale funding, and expectations for mid-single-digit loan growth in 2026.
Quarterly and full-year earnings
Chairman, President and CEO John Bordelon said the company reported fourth quarter net income of $11.4 million, or $1.46 per share. For full-year 2025, net income totaled $46 million, or $5.87 per share, which management described as a record and 29% higher than 2024 earnings per share.
CFO David Kirkley said fourth quarter net income declined 8% from the prior quarter but increased 21% year over year. He attributed the linked-quarter decline primarily to higher provision expense tied to loan growth. Net interest income was essentially stable versus the third quarter, decreasing by $58,000, while NIM dipped 4 basis points to 4.06%.
For the full year, Kirkley said NIM increased 32 basis points to 4.03%, while ROA rose 25 basis points to 1.33%.
Loan growth, deposits, and margin outlook
Bordelon said loans grew $38 million in the fourth quarter, a 6% annualized rate, as strong December originations outpaced “still elevated payoffs and paydowns.” He added that the loan pipeline is building and paydowns appear to be slowing, leading management to expect mid-single-digit loan growth in 2026.
Deposit growth was a key focus during 2025. Bordelon said deposits increased 7%, or $192 million, supported by growth in demand deposits and relatively low-cost money market accounts. The company reduced its loan-to-deposit ratio to 92% in the fourth quarter from 98% a year earlier.
Kirkley added that average deposits increased $58 million in the fourth quarter and $187 million for the year. Average non-interest-bearing deposits—27% of total deposits—increased $3 million in the fourth quarter and $40 million in 2025. He said the deposit gains allowed Home Bancorp to reduce more expensive Federal Home Loan Bank advances by $173 million to $3 million at quarter-end.
On funding costs, Kirkley said the cost of interest-bearing deposits fell 6 basis points in the fourth quarter and declined 15 basis points from the fourth quarter of 2024. The overall cost of deposits in the fourth quarter was 1.84%, and management expects additional reductions in the first quarter as recent Federal Reserve rate cuts flow through deposit pricing.
Management also discussed how rate changes impacted yields. Kirkley said loan yields fell 9 basis points quarter over quarter due to repricing of variable-rate loans following three Fed rate cuts in September. New loan originations carried a contractual rate of 7%, and the yield on interest-earning assets increased 14 basis points in 2025 to 5.88%.
Looking ahead, Kirkley said cash flows from loans and investment securities should support NIM expansion in 2026. He said that excluding mostly floating-rate loans repricing in the next three months, 41% of loans with a blended rate of 5.7% are expected to reprice or refinance over the next three years. Over the same period, about half of the investment portfolio is expected to mature, with a roll-off yield of 2.56%, which he said is well below current available yields.
In response to analyst questions, Kirkley said Home Bancorp’s base-case scenario assumes NIM increases to about 4.1% to 4.15% throughout 2026, aided by deposit repricing as certificates of deposit reset. He also noted competitive pressure from some “outliers” in deposit pricing, citing CD rates around 4.25% in certain markets.
Credit trends and nonperforming assets
Credit quality was a topic of multiple questions. Kirkley reported net charge-offs of $165,000 in the fourth quarter and $908,000 for 2025, equal to three basis points of total loans and $128,000 less than 2024. Bordelon said charge-offs remain very low and management does not expect that to change, citing conservative underwriting and proactive credit management.
However, Kirkley said fourth quarter nonperforming assets rose $5.2 million to $36.1 million, or 1.03% of total assets. The increase was primarily due to the downgrade of two relationships, partially offset by paydowns. He identified the largest as a $4.1 million relationship tied to two townhome development loans in Houston, and said management believed there would be no material losses due to loan values and guarantor strength.
During the Q&A, Bordelon said some problem credits are taking longer to resolve, particularly in Louisiana and Mississippi, while Texas credits typically move faster because foreclosure timelines can be around 60 days or less. He said the two subdivision properties in Texas were expected to be resolved—through payoff, refinance, or foreclosure—by early February, and Kirkley described that exposure as about $5.5 million. Management said the properties were in good locations and that they expected equity in the collateral, though they cautioned that permitting and other timing issues could slow a sale if the bank takes the properties back.
Texas expansion, SBA, and capital deployment
Bordelon highlighted the company’s Texas franchise, now in its fourth year. He said the company has 15 commercial bankers and five branches plus one loan production office (LPO) in Houston, and expects to open a new full-service branch and close the LPO in the first quarter. He added that a lending team hired in late 2023 is expected to be more productive going forward.
Since entering Texas in 2022, Bordelon said loans in that market have grown at a 15% annual rate and now account for 20% of the company’s loan portfolio.
Asked about Small Business Administration lending, Bordelon said Home Bancorp entered the SBA business after the Texan Bank acquisition but has been slow to develop it. He said demand weakened when rates rose and requests became smaller and less frequent, but he expects activity to improve as rates fall, though he did not anticipate a “tremendous” pickup yet.
On mergers and acquisitions, Bordelon said management has been evaluating opportunities for several years, but high rates and some bank balance sheets being “a little upside down” reduced the attractiveness of deals. He also noted that earlier the company did not believe it had a strong acquisition currency, leading it to focus on smaller, cash-funded transactions. With the stock price closer to “a 1.40 of tangible or so,” Bordelon said the company feels better positioned to consider larger targets and expressed optimism about 2026 M&A. He characterized a “larger deal” as likely not exceeding $1.5 billion in assets, or roughly half the size of Home Bancorp or less.
On the investment portfolio, Kirkley said the securities portfolio is expected to remain around 11% to 12% of assets. He anticipates that, as loan growth and balance sheet expansion continue, the investment portfolio could increase by approximately $15 million to $20 million on a par basis, with accumulated other comprehensive income (AOCI) changes influencing reported levels.
Fees, expenses, and shareholder returns
Kirkley said noninterest income was $4 million in the fourth quarter, slightly above management’s expectation of $3.6 million to $3.8 million. For the next several quarters, the company expects noninterest income of $3.8 million to $4 million.
Noninterest expense rose by $515,000 to $23 million in the quarter, in line with expectations. Management expects first-quarter noninterest expense between $22.5 million and $23 million, rising to $23.3 million to $23.7 million thereafter as annual raises take effect and new projects begin.
On capital management, Kirkley said that since 2019 the company has grown tangible book value per share (adjusted for AOCI) at a 9.6% annualized rate and increased EPS at an 11.5% annualized rate. He also said the company has increased its quarterly dividend per share by 55% to $0.31 and repurchased 17% of its shares, while maintaining what he described as robust capital ratios.
About Home Bancorp (NASDAQ:HBCP)
Home Bancorp, Inc is the bank holding company for The Home National Bank, a full-service financial institution headquartered in Lafayette, Louisiana. The company operates as a regional commercial bank serving individuals, small businesses and municipalities across Louisiana and East Texas. Through its network of branches and digital banking platforms, Home Bancorp offers a range of deposit and lending solutions designed to meet the needs of its local markets.
The company’s core offerings include retail deposit products such as checking, savings and money market accounts, as well as a variety of commercial and consumer lending services.
