Home Bancorp(US:HBCP)2024-01-23 20:13Financial Data and Key Metrics Changes - Fourth quarter net income was $9.4 million or $1.17 per share, a decline of $369,000 or $0.05 per share from the third quarter [46] - Net interest margin (NIM) decreased slightly to 3.69%, but is stabilizing as asset yields increase and deposit cost increases slow [44][59] - Return on assets was 1.13% and return on average tangible common equity was 14.5% [46] Business Line Data and Key Metrics Changes - Loans increased by $12 million in the fourth quarter, with a total annual growth of 6.2%, meeting expectations [55] - Deposits increased by $73 million in the fourth quarter, following a $46 million increase in the third quarter, resulting in a year-over-year increase of 1.4% [56] - Nonperforming loans declined to 34 basis points of total loans from 47 basis points in the prior quarter [48] Market Data and Key Metrics Changes - The cost of interest-bearing deposits was 2.24%, about 41% of the upper limit of the Fed funds target range of 5.5% [47] - Total cost of deposits in Q4 was 1.58% [47] - Criticized loans decreased by $4 million from the third quarter, now at 1.4% of total loans [61] Company Strategy and Development Direction - The company continues to invest in Houston, which has outperformed expectations, and plans to relocate branches in the first half of 2024 [43] - The company aims for loan growth of 4% to 6% in 2024, while recognizing that Fed activity could impact growth and yields [60] - The company has a target list for potential M&A opportunities, with expectations for increased activity in 2024 and 2025 [37][26] Management's Comments on Operating Environment and Future Outlook - Management is cautiously optimistic about stabilizing NIM, despite anticipating some additional pressure [59] - The company is not seeing significant declines in borrowers' financial health, with no signs of deterioration in financial statements [10] - Management expects three rate cuts throughout 2024, which could help maintain NIM [35] Other Important Information - Non-interest expense decreased by $734,000 from the last quarter, primarily due to lower healthcare insurance costs [49] - The company has repurchased about 13% of its shares outstanding since 2017 and approved a 5% share repurchase plan [63] Q&A Session Summary Question: What is the outlook for expenses in the first quarter? - Management expects non-interest expense to be between $21.5 million and $22.5 million in the first and second quarters, with increases due to merit raises [16][62] Question: How many rate cuts have been factored into the model? - Management has budgeted for three rate cuts throughout 2024 based on general consensus [35] Question: What is the company's strategy regarding M&A? - Management is prepared to explore M&A opportunities, although they do not expect heavy activity in the first half of the year [26]