Home Bancorp (HBCP) Q3 2026 earnings review
Home Bancorp's problem loans grow again, and profit falls 18%
Home Bancorp's problem loans keep growing, and the cost of dealing with them is now reducing profit. The Lafayette, Louisiana bank earned $10.1 million, 18% less than a year ago. Net interest income held steady because repricing loans replaced the interest that delinquent borrowers stopped paying, but foreclosed-property costs rose $1.7 million. President Darren Guidry said the bank does not expect sizable losses.
| Profit | $10.1M −18% from a year ago |
|---|---|
| Net interest margin | 4.19% 4.24% last quarter |
| Loans flagged as weak (criticized) | $105.0M $95.8M in June; 3.79% of loans |
| Second-half loan growth plan (4–6% a year) | Behind loans fell 0.1% in the quarter |
⚖️ Verdict: 🔴 Bearish
The story got worse because every credit measure moved the wrong way: more loans stopped paying, the reserve now covers only part of them, and loans shrank in the half-year meant for growth. The good news: capital rose and fee income beat the company's own range. One caution: Guidry's year-end clean-up targets are not due yet, so losses are not settled.
The question now is whether the new problem loans end in payoffs, as Guidry says, or in losses the reserve cannot absorb. If borrowers pay, criticized loans fall toward the $30 million improvement he promised by year-end; if not, provisions take more of next year's profit. The fourth-quarter credit tables will tell.
🐂 Bull Case
Loan Repricing Made Up for Lost Interest
Chief executive John W. Bordelon said net interest income held "essentially stable despite credit related interest reversals and continued deposit pricing pressure". Net interest income is what the bank earns on loans after paying for deposits, and it is about 90% of revenue.
- Net interest income: $35.9 million, up 5.3% from a year ago
- Interest reversed on loans that stopped paying: $862,000, or 0.12 points of loan yield by our math
- Net interest margin: 4.19%, down 0.05 points
- Cost of interest-bearing deposits: 2.33%, up 0.05 points
The total held because "Loan pricing and portfolio mix recaptured approximately half of that pressure", the company said. But the margin fell for the first time in three quarters, because the bank raised deposit rates "to remain competitive in the market", so repricing covered the credit hit and nothing more.
What to watch: the fourth-quarter margin, which carries no interest reversals. One that does not recover would mean deposit costs have caught up with loan repricing.
Capital Keeps Rising While Buybacks Stay Paused
Home Bancorp keeps adding capital rather than spending it. Chief executive John W. Bordelon said the bank remains "focused on protecting capital, preserving liquidity", and the quarter shows it: every capital ratio rose even though profit fell.
- Tier 1 leverage ratio (bank only): 12.33%, up from 12.11% in June
- Loss reserve: 1.24% of loans, up from 1.22%
- Buybacks: 350 shares, about $24,000 by our math
- Quarterly dividend: $0.32, up 10% from a year ago
This matters because capital, not the reserve, is the backstop if the no-loss view proves wrong: the reserve barely moved while nonperforming loans jumped, as the credit card sets out, so any loss beyond the reserve comes out of equity, which can absorb it.
What to watch: the fourth-quarter provision. One well above this quarter's $1.0 million would mean management now sees losses in the loans it expects to recover.
Positives this quarter didn't test
Three standing positives got no reading that would change them this quarter, so each carries over with the number that would.
- Houston share of loans: 21%, unchanged from June
- Houston loan growth: 6% a year so far in 2026, the company said, slower than at mid-year; a fourth-quarter figure would show whether the slowdown continued
- Loan-to-deposit ratio: 90.9%, inside the 90–92% target, so funding does not limit growth; a move above the range would change that
🐻 Bear Case
Problem Loans Now Exceed the Loss Reserve
"We moved promptly to recognize and address emerging credit issues during the quarter," president Darren E. Guidry said, adding that the bank does not anticipate "sizable losses from these relationships". The relationships are six borrowers owing $19.5 million whose loans Home Bank stopped accruing interest on, and they come on top of problem loans that have risen every quarter since early 2025.
- Criticized loans (loans the bank has flagged as weak): $105.0 million, or 3.79% of loans
- Nonperforming loans: $42.2 million, up 60% from June
- Commercial property loans not paying interest: $22.4 million, from $10.1 million in June
- Loss reserve: $34.4 million, up $433,000 in the quarter
- Reserve as a share of nonperforming loans: 82%, down from 129%
This cuts against the slide deck's "Conservative, well-managed credit culture", because the reserve no longer covers the loans that have stopped paying, and the gap opened in one quarter. The record argues for patience: net charge-offs are 0.07% of loans this year. But in July Guidry told analysts to expect more than $30 million of special-asset improvement by year-end, much of it in the third quarter, and instead substandard loans rose $14.0 million while special-mention loans fell only $4.7 million.
What to watch: criticized loans at December 31, when Guidry's year-end resolution targets come due. A total still above $100 million would mean new downgrades are outrunning the clean-up, and the reserve would have to grow out of profit.
Foreclosed Property Costs Broke the Expense Plan
In July the company said noninterest expense would run at $24.0–24.8 million a quarter for several quarters, because working through foreclosed property is costly. The third quarter went past that range, and the reason is the line the warning was about.
- Noninterest expense: $26.3 million, up 17% from a year ago
- Foreclosed assets, net: $2.0 million, against $385,000 in the second quarter
- Foreclosed-asset cost as a share of revenue: 5.1%, up 4.1 points from a year ago
- Compensation: 37.8% of revenue, up 2.0 points
Without foreclosure costs, expenses were $24.3 million, inside the plan, so the miss is a credit cost under another name. It will not fade quickly, because the bank now holds $11.6 million of foreclosed property that it must maintain and sell.
What to watch: fourth-quarter noninterest expense against $24.0–24.8 million. Another quarter above it would mean the range describes the bank without its credit problem, not the bank as it is.
Loans Shrank in the Half Meant for Growth
In July Bordelon told investors the loan pipeline would support mid-single-digit loan growth in the second half of 2026. The bank had missed twice before: it cut its 2025 target last October, and the first half delivered 1.3% against a mid-single-digit plan.
- Total loans: $2.77 billion, down $4.0 million from June
- Construction and land loans: down $19.8 million, or 6%
- Commercial and industrial loans: up $16.3 million, or 4%
- Growth since December: 1.1%, about 1.5% a year by our math
By our math, even the low end of the plan now needs loans to grow 2.1% in the fourth quarter alone, faster than any quarter since the start of 2024. Guidry's own words point the other way: he now wants "measured balance sheet growth that produces appropriate risk adjusted returns".
What to watch: year-end loans against $2.83–2.86 billion, the range the July plan implies by our math. A figure below it would be the third missed loan-growth target in a row.
Risks this quarter didn't answer
Five standing concerns got no new numbers in the release or the slide deck, so each carries over with the reading that would move it.
- Margin plateau: the margin fell for the first time in three quarters (see the repricing card); a fourth-quarter margin without interest reversals would show whether loan repricing still adds income.
- Deposit competition: the bank raised deposit rates to stay competitive and its interest-bearing deposit cost rose for the first time in a year; the fourth-quarter cost shows whether that continues.
- Acquisitions and idle capital: return on tangible common equity fell to 10.9% from 15.0% a year ago while the slide deck still calls the bank a "Disciplined acquirer"; an announced deal, or a resumed buyback, would move this.
- Deposit-fraud losses, raised on two calls this year: still not quantified; a figure in the quarterly filing would move it.
- The $55 million of subordinated notes callable in June 2027: no word on repaying them or letting the rate float; either choice changes next year's interest cost.
👓 Other Themes
Bordelon Retires as CEO; Guidry Takes Over in January
John W. Bordelon will retire as chief executive on January 8, 2027 after more than 45 years at the bank and stay on as chairman. Darren E. Guidry, president since July and formerly the bank's chief risk officer, takes over. The board said he has brought "a balanced approach to growth and risk management"; he will now own both the credit clean-up and the growth plan.
Rate Cuts Would Now Cost Home Bancorp Less
Home Bancorp now estimates that a full-point cut in interest rates would take 3.3% off net interest income over a year, against 3.8% in April. The gain from a rise shrank too, to 2.5%. The bank is less exposed in both directions because 97% of its certificates of deposit mature within a year, so deposit costs follow rates down quickly, and 46% of loans carry variable rates.
💲 Other KPIs
Fell $15.4 million in the quarter, the first decline in three quarters, and the mix moved the wrong way. Core deposits are the checking, savings and money-market balances the bank pays little for, and they set its funding cost. They fell $28.3 million while certificates of deposit rose $13.0 million. Deposits are still up 2.6% from a year ago.
Slipped 5 cents in the quarter, the first fall in more than a year. The cause was the bond portfolio: unrealised losses rose to $36.5 million from $25.0 million as market rates moved. Tangible book value is equity per share with goodwill removed. It is still 8.5% higher than a year ago, but that growth was 17% in December.
Rose 12% from a year ago and came in above the $3.8–4.1 million range the Lafayette lender gave in July. Bank card fees and service charges did the work; the gain on loan sales fell. Fees are about a tenth of revenue, so the beat adds little to profit, but after one quarter below the range and one inside it, this is the first above.
🔮 Guidance
Unchanged. The board held the quarterly dividend at $0.32, 10% above a year ago. The rate of increase is slowing, as the chart shows, after two years of double-digit raises. Dividends cost about a quarter of this quarter's profit by our math, so the payout is covered even at the lower earnings.
Unchanged. Guidry said the bank does not anticipate "sizable losses from these relationships", the same line Home Bancorp used in July about the rise in criticized loans and in January about two relationships then placed on nonaccrual. The record so far supports it: net charge-offs are $1.4 million this year, or 0.07% of loans. Whether it holds for the six new relationships is the open question of this quarter.
Unchanged. The bank bought back 350 shares in the quarter, about $24,000 by our math, so the authorisation is almost untouched. It spent $14.2 million on buybacks in 2025 and $456,000 so far this year, so capital now builds on the balance sheet instead of returning to shareholders.
❓ Key Questions
What secures the six loans that stopped paying?
Guidry expects no sizable losses on the $19.5 million, but the reserve rose little. Collateral values, guarantor support and any specific reserves would show whether the reserve or his view is right.
Is the $30 million year-end clean-up still on track?
In July Guidry promised more than $30 million of special-asset improvement by December, most of it in the third quarter. Special-mention loans fell $4.7 million; the rest did not show. Which loans resolved, and which were downgraded instead?
Where does the loan pipeline stand?
The last figure was $122 million in March. With loans shrinking in the third quarter and classified loans due to leave, the second-half plan needs a pipeline and a payoff assumption investors can check.
How large were the deposit-fraud losses?
Losses from deposit fraud came up on two calls this year but were never quantified. The size, where they sit in expenses and what controls changed would show whether the cost range has another hidden line.
Does the CEO handover change the acquisition plan?
Guidry takes over in January with a credit clean-up to finish. Will the bank still pursue a deal in 2027, and what dilution to tangible book value would it accept?