Results

Home Bancorp Inc.

03/06/2026 | Press release | Distributed by Public on 03/06/2026 15:47

Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

"Management's Discussion and Analysis of Financial Condition and Results of Operations - Financial Condition - Allowance for Credit Losses" provides additional information on the changes in the ALL and ACL.
Noninterest Income
The following table illustrates the primary components of noninterest income for the years indicated.
(dollars in thousands) 2025 2024
2025 vs 2024
Percent Increase (Decrease)
2023
2024 vs 2023
Percent Increase (Decrease)
Noninterest income:
Service fees and charges $ 5,500 $ 5,118 7.5 % $ 4,992 2.5 %
Bank card fees 6,598 6,525 1.1 7,051 (7.5)
Gain on sale of loans, net 860 470 83.0 816 (42.4)
Income from bank-owned life insurance 1,136 1,100 3.3 1,045 5.3
Loss on sale of securities, net - - - (249) (100.0)
Gain (loss) on sale of assets, net 3 33 (90.9) (27) (222.2)
Other income 1,364 1,379 (1.1) 1,008 36.8
Total noninterest income $ 15,461 $ 14,625 5.7 % $ 14,636 (0.1) %
2025 compared to 2024
Noninterest income for 2025 totaled $15.5 million, up $836,000, or 5.7%, compared to 2024. Gain on sale of loans for 2025 increased $390,000, or 83.0%, compared to 2024, primarily due to an increase in sales of SBA loans in 2025 compared to 2024.
Service fees and charges for 2025 increased $382,000, or 7.5%, compared to 2024, primarily due to an increase in service fees on deposit accounts in 2025 compared to 2024.
Bank card fees for 2025 increased $73,000, or 1.1%, compared to 2024, primarily due to an increase in credit card fees in 2025 compared to 2024.
2024 compared to 2023
Noninterest income for 2024 totaled $14.6 million, down $11,000, or 0.1%, compared to 2023. Income from bank card fees for 2024 was down $526,000, or 7.5%, from 2023, primarily due to to decreased transaction activity by our cardholders.
Gain on sale of loans for 2024 decreased $346,000, or 42.4%, compared to 2023, primarily due to less sales of SBA loans in 2024 compared to 2023.
Other income for 2024 increased $371,000, or 36.8%, compared to 2023 primarily due to derivative fee income and an increase in Small Business Investment Company ("SBIC") income.
Noninterest Expense
The following table illustrates the primary components of noninterest expense for the years indicated.
(dollars in thousands) 2025 2024
2025 vs 2024
Percent Increase (Decrease)
2023
2024 vs 2023
Percent Increase (Decrease)
Noninterest expense:
Compensation and benefits $ 53,479 $ 51,330 4.2 % $ 48,933 4.9 %
Occupancy 10,024 10,131 (1.1) 9,674 4.7
Marketing and advertising 1,965 2,000 (1.8) 2,146 (6.8)
Data processing and communication 10,374 10,241 1.3 9,372 9.3
Professional services 1,608 1,922 (16.3) 1,690 13.7
Forms, printing and supplies 802 794 1.0 781 1.7
Franchise and shares tax 1,868 1,863 0.3 1,755 6.2
Regulatory fees 1,908 1,954 (2.4) 2,040 (4.2)
Foreclosed assets, net 1,077 341 215.8 (547) 162.3
Amortization of acquisition intangible 1,087 1,328 (18.1) 1,601 (17.1)
(Reversal) provision for credit losses on unfunded commitments
(1,075) 106 (1,114.2) 501 (78.8)
Other expenses 6,446 5,279 22.1 4,895 7.8
Total noninterest expense $ 89,563 $ 87,289 2.6 % $ 82,841 5.4 %
2025 compared to 2024
Noninterest expense for 2025 totaled $89.6 million, up $2.3 million, or 2.6%, from 2024.
Compensation and benefits expense for 2025 was up $2.1 million, or 4.2%, compared to 2024, primarily due to increased salaries and compensation expense.
Other expenses for 2025 were up $1.2 million, or 22.1%, compared to 2024, primarily due to a write-off of an acquired SBA accounts receivable for guarantees in 2025.
Foreclosed assets, net for 2025 was up $736,000, or 215.8%, compared to 2024, primarily due to increased write-offs of foreclosed assets and related expenses in 2025.
In 2025, the Company recorded a $1.1 million reversal of provision for credit losses on unfunded commitments, compared to a $106,000 provision in 2024, primarily due to lower unfunded commitment levels and lower funding rate estimates based on observed historical funding in 2025.
2024 compared to 2023
Noninterest expense for 2024 totaled $87.3 million, up $4.4 million, or 5.4%, from 2023.
Compensation and benefits expense for 2024 was up $2.4 million, or 4.9%, compared to 2023, primarily due to increased salaries and compensation expense.
Data processing and communication for 2024 was up $869,000, or 9.3%, compared to 2023, primarily due to increases in cost of maintenance contracts in 2024.
Occupancy expense for 2024 was up $457,000, or 4.7%, compared to 2023, primarily due to an additional lease in our Houston market.
In 2024, the Company recorded a $341,000 expenses related to foreclosed assets, compared to a $547,000 reversal in 2023, primarily due to a $769,000 recovery of a previous loss on a foreclosed asset.
Provision for credit losses on unfunded commitments decreased $395,000, or 78.8%, compared to 2023, primarily due to a decrease in funding commitments.
Income Taxes
For the years ended December 31, 2025, 2024 and 2023, the Company incurred income tax expense of $12.0 million, $8.8 million and $9.9 million, respectively. The Company's effective tax rate was 20.6%, 19.4%, and 19.8% for 2025, 2024 and 2023, respectively.
The Company's effective tax rate in 2025 increased compared to 2024 due to variances in items that are non-taxable or non-deductible. The Company's effective tax rate in 2024 decreased compared to 2023 due to variances in items that are non-taxable or non-deductible. See Note 15to the Consolidated Financial Statements in Item 8 for additional information concerning our income taxes.
LIQUIDITY AND CAPITAL RESOURCES
Our primary sources of funds are from deposits, amortization of loans, loan prepayments and the maturity of loans, investment securities and other investments and other funds provided from operations. While scheduled payments from the amortization of loans and investment securities and maturing investment securities are relatively predictable sources of funds, deposit flows and loan prepayments can be greatly influenced by general interest rates, economic conditions and competition. We also maintain excess funds in short-term, interest-bearing assets that provide additional liquidity.
We use our liquidity to fund existing and future loan commitments, to fund maturing certificates of deposit and demand deposit withdrawals, to invest in other interest-earning assets and to meet operating expenses. At December 31, 2025, certificates of deposit maturing within the next 12 months totaled $781.2 million. Based upon historical experience, we anticipate that a significant portion of the maturing certificates of deposit will be redeposited with us.
In addition to cash flows from loan and securities payments and prepayments as well as from sales of available for sale securities, we have significant borrowing capacity available to fund liquidity needs. In recent years, we have utilized borrowings as a cost efficient addition to deposits as a source of funds. Our borrowings consist of advances from the FHLB, of which we are a member. Under terms of the collateral agreement with the FHLB, we may pledge residential mortgage loans and mortgage-backed securities as well as our stock in the FHLB as collateral for such advances. For the year ended December 31, 2025, the average balance of our outstanding FHLB advances was $83.7 million. At December 31, 2025, we had $3.0 million in outstanding FHLB advances and $1.3 billion in additional FHLB advances available to us.
Liquidity management is both a daily and long-term function of business management. Excess liquidity is generally invested in short-term investments such as overnight deposits. On a longer-term basis, the Company maintains a strategy of investing in various lending and investment security products. The Company uses its sources of funds primarily to meet its ongoing commitments and fund loan commitments. The Company has been able to generate sufficient cash through its deposits, as well as borrowings, and anticipates it will continue to have sufficient funds to meet its liquidity requirements.
ASSET/ LIABILITY MANAGEMENT AND MARKET RISK
The objective of asset/liability management is to implement strategies for the funding and deployment of the Company's financial resources that are expected to maximize soundness and profitability over time at acceptable levels of risk. Interest rate sensitivity is the potential impact of changing rate environments on both net interest income and cash flows. The Company measures its interest rate sensitivity over the near term primarily by running net interest income simulations.
Our interest rate sensitivity is also monitored by management through the use of models which generate estimates of the change in its net interest income over a range of interest rate scenarios. Based on the Company's interest rate risk model, the table below sets forth the results of immediate and sustained changes in interest rates as of December 31, 2025.
Shift in Interest Rates
(in bps) 		% Change in Projected
Net Interest Income
+200 7.1
+100 3.6
-100 (4.1)
-200 (8.3)
The actual impact of changes in interest rates will depend on many factors. These factors include the Company's ability to achieve expected growth in interest-earning assets and maintain a desired mix of interest-earning assets and interest-bearing liabilities, the actual timing of asset and liability repricing, the magnitude of interest rate changes and corresponding movement in interest rate spreads and the level of success of asset/liability management strategies.
Market risk is the risk of loss from adverse changes in market prices and rates. Our market risk arises primarily from the interest rate risk, which is inherent in our lending and deposit taking activities. To that end, management actively monitors and manages interest rate risk exposure. In addition to market risk, our primary risk is credit risk on our loan portfolio. We attempt to manage credit risk through our loan underwriting and oversight policies.
The principal objective of our interest rate risk management function is to evaluate the interest rate risk embedded in certain balance sheet accounts, determine the level of risk appropriate given our business strategy, operating environment, capital and liquidity requirements, performance objectives and interest rate environment and manage the risk consistent with approved guidelines. We seek to manage our exposure to risks from changes in interest rates while at the same time trying to improve our net interest spread. We monitor interest rate risk as such risk relates to our operating strategies. ALCO is responsible for reviewing our asset/liability and investment policies and interest rate risk position. ALCO meets at least quarterly. The extent of the movement of interest rates is an uncertainty that could have a negative impact on future earnings.
We primarily have utilized the following strategies in our efforts to manage interest rate risk:
•we have increased our originations of shorter term loans, particularly commercial real estate and commercial and industrial loans;
•we generally sell our conforming long-term (30-year) fixed-rate one- to four--family residential mortgage loans into the secondary market; and
•we have invested in securities, consisting primarily of mortgage-backed securities and collateral mortgage obligations, with relatively short average lives, generally three to five years, and we maintain adequate amounts of liquid assets.
In addition to the strategies above, on occasion the Company has entered into certain interest rate swap agreements as part of its interest rate risk management strategy. The Company's objectives in using interest rate derivatives are to manage its exposure to interest rate movements. During 2025 and 2024, such derivatives were used to hedge the variable cost associated with existing variable rate liabilities. Refer to Note 14. Derivatives and Hedging Activitiesof the Consolidated Financial Statements in Item 8 for more information on the effects of the derivative financial instruments on the consolidated financial statements.
To meet the financing needs of its customers, the Company issues financial instruments which represent conditional obligations that are not recognized, wholly or in part, in the statements of financial condition. These financial instruments include commitments to extend credit and standby letters of credit. Such instruments expose the Company to varying degrees of credit and interest rate risk in much the same way as funded loans. The same credit policies are used in these commitments as for on-balance sheet instruments. The Company's exposure to credit losses from these financial instruments is represented by their contractual amounts.
The following table summarizes our outstanding commitments to originate loans and to advance additional amounts pursuant to outstanding letters of credit, lines of credit and the undisbursed portion of construction loans as of December 31 of the years indicated.
Contract Amount
(dollars in thousands) 2025 2024
Standby letters of credit $ 8,724 $ 6,502
Available portion of lines of credit 498,442 488,930
Undisbursed portion of loans in process 69,223 76,424
Commitments to originate loans 165,251 161,482
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many of the commitments are expected to be drawn upon, the total commitment amounts generally represent future cash requirements.
Unfunded commitments under commercial lines of credit and revolving credit lines are commitments for possible future extensions of credit to existing customers. These lines of credit usually do not contain a specified maturity date and may not be drawn upon to the total extent to which the Company is committed.
The following table summarizes our outstanding commitments to originate loans and to advance additional amounts pursuant to outstanding letters of credit, lines of credit and the undisbursed portion of construction loans as of December 31, 2025.
(dollars in thousands) Less
Than One
Year 		One to
Three
Years 		Three to
Five
Years 		Over Five
Years 		Total
Unused commercial lines of credit $ 164,393 $ 157,607 $ 13,672 $ 4,654 $ 340,326
Unused personal lines of credit 55,526 19,446 6,270 76,874 158,116
Undisbursed portion of loans in process 40,705 28,012 506 - 69,223
Standby letters of credit 7,909 815 - - 8,724
Commitments to originate loans 153,496 11,755 - - 165,251
Total $ 422,029 $ 217,635 $ 20,448 $ 81,528 $ 741,640
The Company has utilized leasing arrangements to support the ongoing activities of the Company. The required payments under such commitments and other contractual cash commitments as of December 31, 2025 are shown in the following table.
(dollars in thousands) 2026 2027 2028 2029 2030 Thereafter Total
Operating leases $ 1,303 $ 1,249 $ 1,159 $ 1,150 $ 1,126 $ 9,034 $ 15,021
Certificates of deposit 781,236 15,006 4,046 2,732 1,580 1,023 805,623
Subordinated debt - - - - - 55,000 55,000
Long-term FHLB advances 3,024 - - - - - 3,024
Total $ 785,563 $ 16,255 $ 5,205 $ 3,882 $ 2,706 $ 65,057 $ 878,668
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