Earnings call transcript Q2 2023

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Operator

Welcome to the Home Bancorp Inc.

Second Quarter 2023 Earnings Call.

Our hosts for today's conference are John Bordelon, Chairman, President and CEO; and Mr. David Kirkley, CFO. At this time, all participants will be in a listen-only mode. a conduct will we question-and-answer session. Later,

now your host, would like to to over call the Mr. turn I Kirkley.

You may begin, sir.

David Kirkley

Thank and earnings you, welcome to Home morning, Paul. Bank's call. Good first

our please refer the and are investor investor Our in forward-looking to I SEC presentation earnings everyone available and disclaimer release our on that ask website, statements presentation the regarding that filings.

to few comments quarter. John? Now a I'll about make hand John to it over the

John Bordelon

appreciate and morning, sense live thank you attendance Home to joining strive first We and of our better Good for earnings approach long Bancorp’s give call. to David. value. your Bancorp a we as creating Thanks, you shareholder term Home

The you the the a haven't an John and began commercial day bill model. a don't Chairman, country people that the By employ we the in been CEO XXX the we in XX% bank For me, my balance old time. the savings in as XXXXs, signed. Bank. banking XXXX, had problems public and was oversubscribed, I the in became [TARP] XXX and the with that sheet Lafayette, industry Louisiana with was become Bordelon. company, those went in the capitalized We loan assets. October thrift was bank year years operation. founded to a that as I'm here name In banking is highest was transforming XXXX (ph) recognizing offering and that ago. We President changed whole of Home the the know of the capital

in Page believe ability core banks seven in with one which six at organic $X.X through and earnings strategy in to successfully Louisiana, branches expansion part in we presentation. you our Mississippi. our We XX growth acquisitions through our next The growth the tremendous forward. of time from and grew million can regions the XX a to billion our on see of going saw today assets $XXX expect We acquisitions, acquire to of play competencies, is six will continue years IPO and Texas

with largest Home We along who Bank. have XXX directors of employees, shareholders are the our the

Home exceptional operate. In look to proud we our technology, our here motto communities we've very value at to the creating and that up that newest team Bank and employees, build serving we motto that shareholder is, think Bank's talented customer live I'm of and positioned the goals, to day. order and strive we to every imperative built systems. continue delivery motto it's invest while in one attain Home we're very what to which in well experiences,

quarter. Now on to the

to The the previous were down $XX of second million, flat compared of volatility from million in NIM quarter core This in decline quarter with deposits movement came had Year-to-date, CDs. only have quarter $XX brought Deposits which the quarter. the the to of X.XX%. approximately first million the quarter. to for $X less moving the second deposits significantly X.XX% declined

with sheet We our which non-interest up total the deposits. bearing very makes of of very our deposits deposits, making core of of XX% balance total proud are XX% deposits up and proud

$XX Securities loan million and $XX that should of the securities The future. million total grew growth quarter. of was and duration $XX.X or or CRE, Assets year The annualized. with the for arise borrowing additional capacity loans majority need X.X% residential million or million under the million C&D. growing is X.X Uninsured $X.X totaled second declined X.X% or And in bank just the $XX for billion annualized have X.X% deposits. XX% years. our and $XXX deposits uncollateralized in the portfolio of in has

and tremendous our year. Freyou President Louisiana and we new We as CEO have of wish hope taken Chief front, Jason venture, to Officer, replacement the has bank. of announced On by end another the in position Jason the management Operations a his his success

Secondly, Home with and announce Jeff the Dudderar. spent Market hiring in Houston last the Prosperity with quality leader nine excited is Jeff have President, experience market. an new is market years Houston our of important with Bank. very of to BBVA to banking Jeff's a XX pleased in We're such of Bank leader a seasoned

With turn Financial it Kirkley, our Officer. that, I'll over Chief David to

David Kirkley

morning Good John. Thanks, again, everyone.

Despite which a $X.X income was This was per $X last of due income $X.XX net $XX.X NIM per net share. quarters, the in primarily quarter to $X.XX a expense. do million remained depending possibly increase very the due decline in pressure some NIM by XX expect increasing deposit few million on quarter's We does. two strong in the over to decrease the deposit costs, compression additional basis from share, Second our and million was and a driven or point second quarters more or quarter. X.XX% higher NIM next costs prior Fed what on over non-interest at some

deposit and guidance which could some current historic help what expect. you provide XX to about our statistics, Slide beta includes

can quarters. see, our deposit deposits to X% yields everything were are above our expected has million this two points we X% and considering a we was this our the which pleased our basis and with $XX and quite the the XX% up we Despite but results. to over X.XX%. is feel ticked which in interest on you As increased X.XX% rate rate growth bearing happened ROA in two NIM, XX good Loans beta QX averaged that's last quarter, respectively, XX.X%, current cycles. ROATCE year bit little cycle, for about XX% prior the pressure loan

loan on bit multiyear at and provision go remains very Pages XX credit of expense $XXX,XXX strong our into and quality little metrics to deck of are detail XX growth, kept X.XX%. acquired which lows. $X.X credit a which recorded was We loans at a primarily substandard quarter this to credit. Overall, more allowance slide was due single in related the to ratio increase million in loan our a a relationship. There quarter,

as the increase the expenses due April. in prior in quarter the recovery from to million well a first as OREO $X compensation took unexpected about effect annual increased expense $XXX,XXX Non-interest quarter, raises in

and non-interest $XX million expenses expect quarters. the We be to in about fourth third

questions, for Slide up want rate value to recent I capital it XXXX, tangible discuss open which briefly we we've and per Since growth share. strategies. annualized before adjusted our X% highlights Finally, book management an experienced XX,

well through XXXX, and on any finished about rate growth market we annualized and During our arise. a acquisition to XXXX, succeed in CETX of XX% to a capital feel deployed have that $X.XX that a also shares. XX.X%. may outstanding our Since robust of bank QX we with share time, grown $X.XX capital cash from repurchased really ratio the ratios, our per positioned in we've dividend and we capitalize increased have opportunities have can With at assets quarterly XX%

for Thank you Q&A. Paul, for please the open that, your time. line And with

Operator

sir. Instructions] first [Operator Thank Hovde question And from Rabatin comes from Brett Group. you, our

Your line is open.

Brett Rabatin

Hey, guys. Good morning.

John Bordelon

morning, Good Brett.

Brett Rabatin

the the if I and might deposits wanted the quarter as to have month funding cost start last of the for see you quarter the well? costs of or potentially last with the margin for

David Kirkley

give X.XX% I X.XX% was -- one interest of a believe pages We Brett, a in bearing And deposits on had a here. that my NIM. right was June. -- Yes, having me cost of

Brett Rabatin

ish can you of deposit might here? the about talk Okay. billion- for And, on $X.X go that the betas David, where money your from market, savings assumption checking and maybe

David Kirkley

or to less couple going our than to any really no less cycles. cycle beta -- have of be is reason that going the previous this I believe is different to be

the higher the in last expect higher, fully are next increasing I resemble betas what the that duration potentially we've this it of deposit be non-maturity going So, than little -- experienced cycles. bit think Also I couple we've cycle, beta deposit quarters could last recognized. increasing with over a to that our two our Fed of

Brett Rabatin

Okay. seeing linked production would little yields, on quarter can would talk like yield given change in just you from and it the color see variable you the and And about rate headed? then side, where faster. lending you Any have seem current where a moved on you're that that on what have come loan the perspective, a new maybe loan

John Bordelon

Yeah.

quarter. pretty board loan we're a the slowly now quarters. four much of probably has in have and the considerably, over in we (ph), across our at kind next, everything nine] think last loan slow of would the rise looking in risen of yields part the those probably the I But upward. [eighth yields our pushed the is Competition anticipate

Brett Rabatin

on Okay. you're just I'm the me re to looking following going be lastly you Would And for presuming up that? capital. buyback. to then finish authorization the

David Kirkley

both. to Yes

Brett Rabatin

Okay, the great. Appreciate color.

John Bordelon

Thanks, Brett. Appreciate it.

Operator

Marinac And Janney our next Montgomery comes from Scott. from question Christopher

Your line is open.

Christopher Marinac

even to this about ask cetera, night Thank causes We to criticized out all that decisions from your you. the new of of occurred wanted you it's that you if for road credit. cadence down hosting the CRE kind other And to information. reductions? laid loans lead if the what criticized of of And any on? reserves, Whether the et criticized way the good thanks in to the come I see or categories, all information appreciate they assets sort what's higher were last to call the morning. or

John Bordelon

Yes.

are $X is, the that. rented there of about million, he he's one a that where In think this some we lot different had credit particular of quarter, I has reasons. property restructuring

tenants So some there. is more he he kicked get profitable out some in trying and to tenants

pay. is he slow to been So

so, to anticipate classified by to least quarter by be third year end of we well, of of off the And -- hopefully the that at end the the assets.

nonperforming are able happen, things aren't others off to are little so and and on flow others substandard some as come stay cash just there of so, longer. or bit And a their and lucky improve

and I nonperforming assets course of years, three those We work do over good we'll the to with that. think, job, have hard last continue to a the our reducing done of

Christopher Marinac

come those little criticized typically quarter, level though this even a just slight mean, John, loan the you And higher a when on? have have does are changes reserve bit I

John Bordelon

we anticipate put don't the the on this loan criticized was not Well, What particular quarter. We on that with came in in growth quarter. had we necessarily. loss that the due second any loans to

the we little So when having. we're we a -- anticipated when than bit the we problems budgeted for more year, anticipated

and So, do we that at had all. think X.XX%] increasing our loan haven't I [X.XX%, I maybe (ph), we reserve loss to to anticipated

So first to expressed it's that in totally quarters. we've due the the growth two

Christopher Marinac

great. Okay,

just for kind have Just that coverage your goal know to question a might going do forward? I Is the great. lowering be you me that is of or with uninsured deposits. something next has objective

that's if Just this interest point? something of at that's curious

David Kirkley

-- the slide looking And that wanted XX, same want you That So, believe On just saying is the that uninsured that Chris, that I deposits? I under that out understands and everybody to of is sure million are uninsured we're and on something to sure reading collateralized. approximately relatively number at page. make I $XXX make from unchanged that quarter. to is graph hearing this we're prior point this

are are limits, of lot but FDIC So a we and collateralized. funds, deposits have about insurance those X% the of public are our deposits over

make to didn't sure everybody XX So can do Slide quarter. the this prior that we added something was That we see that chart on diversification.

And it like so, $XX that's what declined out it it at what and the there it That deposits I clearly when a makes quarter-over-quarter. you about collateralized. but look was seem actual break seem see under uninsured way, change, can you number million are this makes number if

John Bordelon

especially little bit. been Part reason for side, to of customer with our of account the base decline, on working we've the a change the some retail that ownership

been at payroll to them to at potentially the is reduce side. morning least secured. again look that's so, reading on to retail And just able being was accounts, that And that position FDIC fully this commercial I accounts number continuing

on will that side. that the commercial So help XX%

Christopher Marinac

you. Got

back question of bonds, And margin. at just for of to enhance for this disclosure that. any swap Last that securities the stuff Okay. portfolio. and you you out cost trade-offs see to No, helpful. point? kind Are to I'm curious for that's goes buy the thanks me there other opportunity and just additional opportunities yield on

David Kirkley

at So end a of of bit we little did March. this the very

about sold payback. $XX one very, year we less quick securities of had than and think I very one a million

going I with to present in those opportunities think with the volatility rates the them bouncing markets. around,

harder I little rates it went to when justify a think a good essentially was bit, up bit it.

essentially with the to as higher buying replacing the opposed -- investments securities purchasing cash As letting of flow overnight investment to now. advances second, new we or looking more CDs right them cost and are right and

Christopher Marinac

obviously then given you of sort we shared? can imply amortization Okay. duration information And the that national

David Kirkley

have I Slide a -- the amortization Yeah. expected XX do schedule. got on deck, I of slide

to expect over XX how see the we each year us. get much flow over You returned next cash to years,

Christopher Marinac

things does all that the unwind being play David, So you equal? into for AOCI

David Kirkley

does. Yes, yes, it

coming little a bullet CMBS due a at that flow You we products. a and have duration and the flows have you're cash we X.X bit is lot those the But effective looking manage. year XX, of you of lot of on type is know, that, a which could like -- than longer see a Slide XXXX, portfolio, to cash if XXXX lot

in have down that from coming to expect going come slowly XXXX. is to zero due bit XXXX, those as CMBS flow to of loss cash flows be cash we those that starting XXXX, a position And good unrealized know we So reverting due products.

Christopher Marinac

Got I you. background. the it. appreciate for additional Thank you Great.

David Kirkley

Thank you. Appreciate it.

John Bordelon

Chris. Thanks,

Operator

[Operator from D.A. Instructions] comes Kevin Davidson. And question Fitzsimmons our next from

is line Your open.

Kevin Fitzsimmons

everyone. morning. Good Hey,

John Bordelon

morning, Good Kevin.

Kevin Fitzsimmons

second David, of the is expect say Is you're additional to compression it that, that that competition some to in that not seeing what you this likely margin saw quarter? just this is or we that in in slower, it once maybe kind little that the you does mentioned a try you the quarter pricing fair the -- Fed could plus but assume given kind grind hike see or to to deposit margin fair you that. unless similar put extent of saw -- would already context pressure, more,

David Kirkley

think Fed starting were decline half XXXX. the I of in prior anticipating or in of latter the pausing So we quarters, couple to the

think to pretty hikes and till two with then I rate the gone that one of the of expectation flat maybe remainder year for some is anticipation mid-XXXX. much

don't the experienced as and our to could the not much need Hopefully, advances of We also as change in compression. increase additional we prior borrow two -- I NIM to And expect go noninterest CDs another two quarters. overnight don't to the anticipate the the we that from out FHLB. from we to or see DDA So, runoff extent mix the quarter deposit quarters had.

answer So, NIM compression. more long

I be probably a XXXX first now. think bottom around quarter pace, it'll slower it'll and out on

John Bordelon

all would that, there's growth. a it's also to though I dependent banks very deposit add that to competition. by have seems big It Kevin, as upon need a

third happens So, with pointed this the David to on and have fourth, as I change think say, based have kind could we'll that's compressions competition. but asterisk that some we of what that and think, put that out, we NIM upon

Kevin Fitzsimmons

or about you the started hoping last over And you or on or the comment of quarter have deposit amount same or you hope the abating? second of seen evidence don't that Have far? outflow, a that more Have Or it abates. early started kind month really is noninterest-bearing have seeing two throughout this -- you at that that any fly -- just so point. of

David Kirkley

first down five year let's quarter, not from it It's there, but still -- first is there. months the four say I'm was year. or to months the of it four not in it's going where first slowing . of say, the the

Kevin Fitzsimmons

and -- Okay. And it’s at guess at obviously, where the settles XX% today. Is there any guys -- -- encouraged when But you've you now acquisition where look a bogey that a deposits. on more or structurally you have you've best at probably XX%. noninterest-bearing done do

David Kirkley

a guess It'd of if We I could that amount that in shrinkage tremendous good be get see don't portfolio. very right. a

pointed came you Texas As of that portfolio out acquisition. that some from the

levels, pre-COVID it the XXXX. So in closer than had above to we staying that XX% we're anticipating XX%

there, shrinkage it go I XX%. would little XX%, below a more would So, see bit we but think may not

Kevin Fitzsimmons

me, last And guys. one last Okay. for

Texas. change we shouldn't Is leadership from or expect strategic the change in -- any -- or is -- not do the expect it Or we noticeable mentioned outside? You that?

David Kirkley

to brings market the Jeff the the think table knowledge of in and knowledge I of market. people the

throughout We we anticipate with to do of talent our future particular this market. the Houston over. the period commercial and able So, expand about team that keep transition being to able to some able excited all that in very he's were bring of market whole

So, some early be in quarter market. talent looking late we'll probably quarter, fourth that third adding

Kevin Fitzsimmons

Okay. guys. Great. Thank you,

David Kirkley

you. Thank

Operator

Graham our And question from Dick next Sandler. from Thank Piper you. comes

line open. is Your

Graham Dick

Good guys. Hi, morning.

John Bordelon

Good morning.

David Kirkley

Good morning.

Graham Dick

deposit that did are of be of trying portion conversation deal sense like you that kind but has the to give remix? could the seeing you in said the up end to who book that there customers to know you outflows of that Texas, confidence the from just and I changed. to how a noninterest-bearing So, circle for deposit just get I that we make want for close back that

David Kirkley

relationship our clients. managers and in new of job markets our all and clients think out a existing done and I good Well, going expanding have securing

CDs that XXXX not of XXXX Some held the those of CDs. putting we're and existing yield low on in clients balances those because

out that has all one realistically, has but we've of all. And shrinkage, moved shrunk already. in that categories, the least Some some of seen

anticipate So that strong. being pretty do we

the more be Possibly, less of in a be this movement a there lot a yields there part, But most We third Will have CDs those the and little balances quarter. leakage? yes. into bit moved there'll that were of think low fourth point. for at lot large because

Graham Dick

Okay. That's helpful. makes It sense.

trying Just color there. little to a get

turn I to So guess wanted just And that's expenses good. quickly. to I

say $XX some happened. quarter of little said the each million you jump? environment half Because color year. got increases wanted accrual said said, obviously, revenue of like did back to million or there. the hard, the half You I you in merit the I isn't to assume, [indiscernible] back of already think the driving have around what's kind in kind you the a much $XX in -- as We is get maybe

what's provide Just you expenses any color around would could helpful? the be jump causing in

David Kirkley

probably little said, expect second noninterest quarters. one-offs the the a place Yes. the regards bit little would that like more probably with be all compensation in next also about data and bit some seasonality $XXX,XXX couple the have, bit reduction that little of a QX then And was point to in marketing of took combined in out that in we expense other. quarter. random processing a have And we're we That expense. sense doesn’t individually two really one-offs, to in a expecting not to There in make but I

Graham Dick

wanted the I hit thing just level I of to Okay. be That's then level, the would last reserve Great. helpful. And ratio. guess the on

anything you that of economy? about thinking to as the credit this around front into X.XX% build make the you it might it guess, Just look loans? Or keeping see conservatively, I you want on you out guys are

John Bordelon

it's we'll area. coming bad in credit. X.XX% far as to as [indiscernible] the be right And X.XX% be down X.XX% definitely deteriorating I whether but area, dependent Absolutely, or in to that's upon what going credit see we that think

we'll Right have just goes. are improving. eye So, to metrics that where an mostly on credit it now, our keep see and

the say is where X.XX% foreseeable So be would probably out. yes, X.XX%, for hang going we I future, to

Graham Dick

it's on small balance on, But I wanted Okay. exposure. what I some wanted to something hit just with Great. get guys pretty portfolio a I the I here. looks know that, the in And guess, then Houston average last I would office given saw be In -- XX, have guess, to that's the you just the thing exposures. around I credit. biggest office largest geographic the color particular, Slide like?

you any that after there the that you going if project what would guys market, So are helpful? what typical on color could and provide in just looks like be

John Bordelon

any there's I think office don't buildings, some that we I it's a array think rises have. high wide -- of

I Baton think our million in Rouge. $X.X credit largest is about

for and two So Baton Baton our $X Ridge. buildings of in well, Rouge those and million except are -- or Houston are the one most for biggest all less, office markets

just So whatever. buildings. Don't and big five, or a five three I high-rises, smaller Rouge in they're have not think, they're Baton of two significant number -- or

credits And occupied about had as $X.X in pretty I buildings, are that's that. think time. safe as a those million those far million government so $X.X for credit. some We've

most yes, estate doing I those of is one in in good And got So are part, right. that's Houston these it And expensive for a credits -- Louisiana. real Houston. some the all that in more All very top, are is And in lot think the and there, than we've are the of rest rest the of well. Houston.

Graham Dick

Thank you, appreciate Okay. guys. it. Great. I

John Bordelon

Thank you. it. Appreciate

Operator

from question Raymond our from James. And comes Yanchunis next Joe

line is open. Your

Joe Yanchunis

Good morning.

John Bordelon

Good morning.

Joe Yanchunis

taking for questions. you Thank my

the the go continue can you of drive hoping term for back the So over the to your mid-single you discuss growth current Can Houston I -- do digit this think and market. year? to was near expectations momentum to loan balance

John Bordelon

control interest is that. of they Fed some Well, going to rates with and surely, the what do

part will a most rate high and come think the early year, that have I the so, of out for year people we'll okay, or thinking, back maybe loans taking loan in we're down. it then were a

think has But most better slowing strong, we is what than So markets. down see. very that will but I down, it's volume been still very, slowing and Houston it's

anticipate So, below probably we growth again. probably quarter, we somewhere something second X% the in had -- or in mid-single we anticipate X% X% digits

David Kirkley

like and loan -- point that it to that said Yes, acquired to grown we've then, by Joe, bankers all out since grown there. Bank John XX%. we've Texan earlier, we we -- our since of have I'd portfolio maintain been we've able commercial

the also, We we market have are president. as out, new pointed

to in that we traffic, much more We're And market offices. he'll some to better a into more able that retail evaluating believe momentum. little branches So bit moving some also carry expand be locations. we're some higher

of feel the the franchise the Houston So couple quarters, we about pretty optimistic able loan over two of to being the help next growth future years.

Joe Yanchunis

any the can I on provide appreciate in the CDs you And then color the And the overall Perfect. you there had commentary. is rate of quarter? duration and the

David Kirkley

the So CDs to say month majority they -- XX of long. are the not XX CDs month added. that CDs we relatively XX or I the super were they're would

there. stay We couple little short. options of trying bit of a to have A customers are lot a out

before. that into we them but we But have XXand there now. which have the months ever said, buckets majority well, right XX a offered going five like a is term some really So really month I CDs are as we've month not CD, out of five

Joe Yanchunis

the all I Thank was That Perfect. had. much. questions you very

David Kirkley

you. Thank

John Bordelon

Thank you.

Operator

back no questions. I'll over call [Operator to our Instructions] seeing And turn the additional host.

John Bordelon

great coming thank interest to Home We again, first day. the next attending or very many speaking And release. thank for your live Home weeks. once Well, to Bancorp. Have you forward days for of much earnings you in a Bancorp's you look in

Operator

for concluded. pleasant now day. have and a Thank has meeting joining, The you

Home Bancorp (HBCP) 18 Jul 232023 Q2 Earnings call transcript