Texas Emerges as Key Market for Home Bancorp: Analysts' Insights

Home Bancorp, Inc. (NASDAQ:HBCP) has been identified as one of the top-performing regional bank stocks over the last three years. Texas is becoming increasingly important to the company, with the state accounting for a significant portion of its loan and deposit growth. The article highlights the company's strong financial performance and increasing importance of Texas to its operations.

Title: Home Bancorp's Strong Q2 2025 Performance and Strategic Focus on Texas

Home Bancorp, Inc. (NASDAQ: HBCP) has continued its strong financial performance in the second quarter of 2025, demonstrating robust net income growth and net interest margin (NIM) expansion. The company reported a net income of $11.3 million, a 3% increase from the first quarter and a 39% year-over-year increase. Earnings per share (EPS) stood at $1.45, up $0.08 from the prior quarter and $0.43 from the same period last year. The NIM expanded to 4.04%, a 13 basis point increase, driven by an 8 basis point increase in earning asset yields and stable interest-bearing deposit costs [1].

Loan growth in Q2 2025 was 3%, totaling $17.3 million, but this was slower than anticipated due to a slowdown in commercial construction activity and loan paydowns. Management anticipates loan growth to pick up in the second half of the year, contingent on Federal Reserve rate cuts. If rate cuts do not materialize, loan growth is expected to be at the lower end of the 4% to 6% guidance range [1].

Texas has become increasingly important to Home Bancorp, with the state accounting for a significant portion of its loan and deposit growth. The bank's strategic focus on Texas is evident in its plans for branch footprint upgrades and M&A activity. In Houston, a branch group that was moved from another bank has proven productive, and the bank is planning further upgrades to attract more deposits, particularly from commercial customers [1].

The company's deposit growth strategy has been successful, with deposits increasing at an 11% annualized rate in Q2 2025. Noninterest-bearing deposits increased by $41.9 million, maintaining their position at 27% of total deposits. The cost of deposits declined to 1.84%, and the cost of Certificates of Deposit (CDs) declined by 14 basis points to 3.86% even as balances increased by $64 million. The bank is keeping CD terms short, with 58% maturing in the next 6 months and 95% over 1 year, allowing for quick adjustments in a declining rate environment [1].

Credit quality remains strong, with net charge-offs of $335,000 in the quarter, related to smaller consumer and C&I loans. Nonperforming assets (NPAs) increased by $4 million to $25.4 million, representing 0.73% of total assets. The allowance for loan loss ratio remained stable at 1.21% [1].

Home Bancorp is also focusing on strategic M&A activity, with the potential to consider slightly larger acquisition targets in the $350 million to $1 billion range, primarily in Texas and Louisiana. The bank's solid capital levels, improving valuation, and strong regulatory relationships position it well to capitalize on suitable opportunities [1].

Looking ahead, Home Bancorp expects loan growth to be at the lower end of the 4% to 6% guidance if no Fed rate cuts materialize in the second half of 2025. Noninterest income is projected to be between $3.6 million and $3.8 million for the next two quarters, and noninterest expense is expected to be between $22.5 million and $23 million per quarter for the remainder of the year. The bank anticipates continued modest NIM and NII growth, even with potential rate cuts, due to loan repricing and investment portfolio rollovers [1].

References
[1] https://www.datainsightsmarket.com/companies/HBCP