Thank you. Good morning, and welcome to Home Bank's third quarter 2026 earnings call.

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

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

All right, Dave. Good morning and thank you for joining our earnings call today.

We appreciate your interest in Home Bank as we discuss our results, expectations for the future, and our approach to creating long-term shareholder value. Before we discuss the quarter, I want to share some personal news.

I have informed our board of directors yesterday of my decision to retire as chief executive officer in January of 2027. The board has named Darren Guidry, our president, as my successor.

I will remain part of Home Bank's leadership as chairman of the board, and I look forward to working closely with Darren and the rest of our leadership team in that role. This is a planned and deliberate transition.

When we named Darren president in July, we said we were putting in place a leadership structure to sustain our next phase of growth. This is the next step in that plan.

Darren has more than 40 years of banking experience, more than three decades here at Home Bank. He knows our customers, our markets, our credit culture, as well as everyone in the company.

Our executive team has worked closely together for many years, and our shareholders, customers, and employees should not expect any significant change in how we operate. Leading Home Bank has been a privilege of my career.

Over my 45 years at the bank, including 33 years as CEO, I have watched Home Bank grow from a Lafayette-based savings institution into one of the leading community banks in the Deep South. Since our IPO in 2008, we have completed six acquisitions, expanded into Greater New Orleans, Baton Rouge, Mississippi, and Houston, and grown total assets at a compound annual rate of more than 11% to $3.6 billion with 43 locations.

What I am most proud of, however, is not the size of the balance sheet, but the quality of the franchise we have built. We have a core deposit base that is among the most valuable in our region, with a high level of non-interest-bearing deposits and a cost of deposits that is one of the lowest in our peer group.

We have a relationship-based lending culture, a strong capital position, and a long record of consistent profitability. Most importantly, we have a team of bankers who are committed to taking care of our customers and our communities.

I am confident that Home Bank's best days are ahead of it, and that the company is in very good hands. With that, I'll turn it over to president and soon-to-be CEO, Darren Guidry, to discuss our third quarter results.

Darren?

Thank you, John. Before turning to our results, I want to say a few words about John.

No one has had a greater impact on Home Bank. Under John's leadership, the bank has successfully navigated hurricanes, the S&L crisis, the financial crisis, a pandemic, and multiple interest rate cycles.

Through all of that, he kept his focus on disciplined underwriting, the strength of our core deposit franchise, and building long-term value for our shareholders. On a personal level, John has been a mentor and a friend to me for more than 30 years.

I'm honored by the confidence that John and the board have placed in me and in our team. I am very happy that John will continue to help lead Home Bank as chairman of the board.

His experience and perspective will continue to be a tremendous asset to this company. I look forward to working with John, the board, and our team as we build on the foundation he established and lead Home Bank into its next chapter.

Now, turning to our third quarter results. Yesterday afternoon, we reported third quarter net income of $10.1 million, or $1.28 per share, compared to $1.48 per share in the second quarter.

Return on assets was 1.12% for the quarter. Our results were impacted by higher credit-related costs, including elevated foreclosed asset expense and the reversal of interest on loans moved to nonaccrual status.

The quarter did demonstrate the resilience of our core earnings. Net interest income reached a record high for Home Bank, and our cost of deposits remained one of the lowest in our peer group.

Loans decreased $4 million in the third quarter. Production was steady, but payoffs were elevated and construction fundings slowed during the quarter.

Year to date, loans have grown at an annualized rate of approximately 1.5%, with our Houston market continuing to lead the way at 6% annualized. Looking ahead, our pipeline is healthy.

Both our approved commitments and the volume of loans in underwriting are running above normal levels. We expect a good portion of those commitments to close by the end of the year.

The pipeline is well diversified across our markets and loan types, and consists primarily of smaller business banking credits, with a heavy focus on C&I and owner-occupied commercial real estate, along with a few larger commercial relationships. However, as we work through our problem loans, we expect paydowns and payoffs from those workouts to offset a portion of the new production, which will likely temper net loan growth in the near term.

We will continue to focus on growing relationships that produce appropriate risk-adjusted returns. Deposits were down slightly in the third quarter.

Year to date, deposits have grown at an annualized rate of approximately 4%, and our loan-to-deposit ratio of 91% remains in our target range. Credit was the primary challenge this quarter, and we moved promptly to recognize and address emerging credit issues.

Six loan relationships totaling $19.5 million were placed on nonaccrual status during the quarter, which drove the increase in nonperforming assets. These reflect individual borrower situations rather than stress in any one industry or market.

Based on our current assessment, we believe these credits are appropriately reserved and we are working closely with each borrower to resolve. We also recorded elevated foreclosed asset expense in the third quarter, primarily due to writedowns on properties in other real estate owned, resulting from updated appraisals and list price reductions.

We're making progress on resolving these properties, with several currently under contract. Going forward, we expect foreclosed asset expense to be lower than what we saw in the third quarter, although likely above historical levels as we continue to work through our problem assets.

We are also seeing some encouraging signs across the rest of our watch list. Several substandard credits are positioned for upgrades or paydowns, and we expect to see some of those resolutions in the fourth quarter, with others extending into early 2027.

While we may see a few additional downgrades through year end, we do not currently expect any of significant size. Past due loans are limited to credits we've already identified and are actively monitoring.

We have workout strategies in place for all substandard and nonaccrual loans. Net charge-offs, which were 7 basis points annualized year to date, may be somewhat elevated over the next couple of quarters as we resolve these credits.

Our approach remains the same: identify problems early, work toward a resolution, and limit our loss exposure. At the same time, while higher interest rates benefit our net interest income, they could place pressure on certain borrowers over time.

We are monitoring these exposures closely as rates move. Importantly, the fundamentals of Home Bank remain very strong, with robust capital, a solid reserve position, ample liquidity, and a balance sheet that is well positioned for a rising rate environment.

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

Thanks, Darren. Please feel free to refer to the investor presentation we have provided as I discuss the company's third quarter financial performance.

Net interest income was a record $35.9 million in the third quarter, an increase of $110,000 from the second quarter and $1.8 million, or 5%, from a year ago. NIM was 4.19% in the third quarter, down 5 basis points from the second quarter.

Loan yields declined 6 basis points to 6.4%, as interest reversals of $862,000 on loans moved to nonaccrual status reduced loan yield by 12 basis points. Excluding interest reversals, NIM would have been 4.28%, up 4 basis points from the second quarter.

The yield on our investment portfolio increased 19 basis points to 2.87%, as we continue to reinvest cash flows at higher rates. On the funding side, our cost of interest-bearing liabilities increased 4 basis points to 2.42%.

Slide 14 details the repricing and maturity profile of our loan and investments portfolio. Approximately 27% of our loan portfolio is floating rate and reprices within three months, and 46% of the portfolio is variable rate.

Our investment portfolio, with a weighted average rate of 2.8%, has $69 million of cash flows expected over the next 12 months and 46% of the portfolio over the next three years that we can reinvest at current market yields. We believe our balance sheet remains well positioned for a rising rate environment.

As shown on slides 18 and 19, total deposits were $3.1 billion at quarter end, down $15.4 million, or less than 1%, from the second quarter. Core deposits decreased $28.3 million, primarily in NOW accounts, which was offset by an increase of $14.3 million in money market accounts and $30 million in CDs.

Non-interest-bearing deposits continue to represent 27% of total deposits. Our total cost of deposits was 1.69% for the quarter, and the average cost of interest-bearing deposits increased 5 basis points to 2.33%, reflecting the higher interest rate environment and competitive pricing in our markets.

We expect continued competition for deposits, but we will remain well disciplined in our pricing. Slides 15 and 16 provide additional detail on credit quality.

Nonperforming loans increased during the quarter from $26.4 million to $42.2 million, or from 95 basis points to 1.52% of total loans, primarily due to the six relationships Darren mentioned. Foreclosed assets declined $1.2 million to $11.6 million, reflecting property sales and writedowns.

Total nonperforming assets were $53.7 million, or 1.49% of total assets. Substandard loans increased $14 million to $82.9 million, while special mention loans declined $4.7 million to $22.2 million.

We provisioned $1 million in the third quarter compared to $762,000 in the second quarter, primarily reflecting higher specific reserves. Net charge-offs were $586,000 for the quarter.

The allowance for loan losses stands at $34.4 million, or 1.24% of total loans, and we are comfortable with our reserve levels given the composition and risk profile of the portfolio. Slide 22 provides detail on non-interest income and expenses.

Non-interest income totaled $4.2 million in the third quarter, up $282,000 from the second quarter, driven by higher service fees and other income. We expect quarterly non-interest income to remain stable in the range of $4 to $4.2 million.

Non-interest expense totaled $26.3 million in the third quarter, an increase of $1.8 million from the second quarter. As you can see on slide 22, excluding foreclosed asset expense, non-interest expense was essentially flat compared to the second quarter.

The third quarter increase was primarily driven by a $1.7 million increase in foreclosed asset expense, which totaled $2 million for the quarter. The writedowns are spread across several properties and our foreclosed asset portfolio remains granular, with no single property carried at more than $2.2 million.

Excluding foreclosed asset costs, we expect non-interest expense to be in the range of $24.2 to $24.6 million over the next couple of quarters. Beginning in the second quarter of 2027, we expect non-interest expense to reflect the typical annual increase of approximately 4% to 5%, primarily driven due to annual merit increases and other investments.

Slides 23 and 24 summarize our capital position and the progress of our capital management strategy. Tangible book value per share was $46.97 per share, essentially unchanged from the second quarter, as earnings were offset by a $9.1 million increase in unrecognized losses in our investment portfolio due to higher interest rates.

Tangible book value per share is up more than 8% from a year ago. Capital ratios remain strong, with a tangible common equity ratio of 10.5%, a Tier 1 leverage ratio of 12.3%, and a total risk-based capital ratio of 16.1%.

Since 2019, we have grown tangible book value per share at a compounded annual rate of more than 8%, repurchased approximately 17% of our shares outstanding, and consistently increased our dividend. With that, operator, please open the line for Q&A.

Thanks guys. Appreciate the time.

Congrats, John, on a storied career. It's shocking to see you go.

Kind of felt like you'd be around forever, be different days.

I can't leave these guys alone, haha. Going to have to be around a little bit.

He'll still be chairman, I know. It'll be different.

Exciting times, I'm sure, for the bank, too. I guess, our first question would just be these six loans that you guys noted, the problem loans, and forgive me if I missed this, but have you given any context on kind of geography of these loans, maybe what loan types these are, and kind of any specific reserves that are related to them that gives you confidence around potential loss rates?

The geography is, it's not consistent in any one of our markets. It's throughout.

There's one in almost every one of our markets, concentration of issues. Loan types, CRE multi-use facility, owner-occupied CRE, C&I credit, construction development.

There's no concentration that we can see. We've been looking for a tie, and at this point, we can't see anything.

Okay. Any specific reserves related to those loans currently?

Or again, what gives confidence kind of I think the commentary was that no sizable incremental losses are expected.

A couple of them already have specific reserves tied to them. Beyond that, we don't expect any significant losses.

Okay. Then on our reminder, I know you guys used to play a little bit in the kind of short-term rental property space.

Is there still any meaningful exposure there and if so, how's that book holding up?

We still have a significant amount of credit in short-term rentals. It is concentrated in the New Orleans market.

No credit issues that are apparent as of now. We're fairly pleased and optimistic that that will continue.

No concern with that exposure.

Great. Great.

Okay. Then maybe just thinking about the margin, what would be a good starting point to think about for fourth quarter?

I think, in my math, I was getting maybe a 9 or 10 basis point impact to the NIM from the interest reversal, just kind of wondering how you think about that heading into fourth quarter, and then, maybe the confidence in the balance sheet being well positioned for upside on higher rates?

It impacted, I believe, 9 basis points, the interest reversal, and, outside of surprises like that in the future, we continue to see good repricing opportunities from our loan portfolio and our investment portfolio. You can see the yield rising on the investment securities portfolio quarter over quarter as our reinvestment yields were north of 5%, with the runoff yield of 2.5% to 3%.

You have a loan portfolio that, for every rate hike, you get 6 basis points of additional loan yield from our loans that reprice automatically, which offsets our money market increases. As we continue to see CDs reprice upwards, I think that'll be offset, or more than offset, by investment cash flow repricing.

I think starting point for this quarter of 4.27%, 4.28% is your starting point going forward.

Okay. Perfect.

Yep, that makes sense. Great.

Thanks for the color there. Darren, congrats.

Look forward to working with you moving forward.

Thank you.

Hey, good morning. Congratulations to both.

Both John on a well-deserved retirement, and to Darren as well.

Just wanted Morning.

Wanted to ask on the deposit line here. Can you talk about a little bit what you've seen so far just in terms of rate and level of competition?

It seems like funding costs held in pretty well this quarter, but I know the rate hike came in pretty late. Just curious what you've seen so far.

From a competitive pricing standpoint, it's starting to get more divergence and duration of CDs that are being offered. You're seeing some competitors get more aggressive.

You're seeing some of the brokerage firms get even more aggressive than that, pricing more off of I guess Treasury curves. I would say by and large, the banking CD pricing for CD rates is generally in the 4% to 4.40% range, and so that's what we're seeing.

I think we've had success at maintaining our CD portfolio so far after the rate hike. Our top stated rate, I believe, is around 4.10%, and that works for the majority of our customers, and we can adjust accordingly pretty quickly going forward as well if need be.

Got it. Are you seeing any more competition in one market versus the other?

I would assume Texas is probably more competitive than Louisiana, but you never know.

Texas is always a little bit more competitive. There's just a larger number of banks with varying balance sheet strategies over there, there are some banks that are more aggressive.

You are seeing some of the big global institutions that are offering some nice pricing with the marketing that goes along with it.

Got it. Just switching gears for a second to the margin, just want to make sure I understood correctly.

Obviously, you'll have the interest reversal piece backed out, but as we get through '27 here, if we get another, let's say we get another hike in December, another one early in the first quarter, you guys should be in pretty good position for the margin to continue to march higher under those conditions, assuming deposit competition doesn't run off into something crazy. Is that fair?

I think one aspect of it is the deposit pricing, and two is how loan pricing plays out over this period. We've seen, I would say, more aggressive loan pricing that is questionable as opposed to CD pricing, which is kind of in line with alternative funding.

It's the ability to be able to reprice the loan portfolio at proper margin and see how competitors price their loans going forward is just lots of reinvestment opportunities, and new business is getting harder and harder to come by with rates increasing. Overall, our balance sheet is well positioned to take on some rising rate environment and continue a slight upward march in NIM, or at least stability after a quarter or two more hikes.

Got it. Thanks for all the color.

I'll step back.

Thanks, Feddie. Thank you.

Good morning.

Morning.

Morning,

Joe.

John, for starters, want to echo a lot of the comments made earlier. Congrats on the retirement.

Will certainly miss hearing you on these earnings calls and seeing you throughout the year.

The problem with it is I got to keep these guys in line, and I don't get paid anymore, what kind of deal is that, Joe?

All right. Wanted to kind of start on credit here.

On the last call, you outlined a road map for about $30 million of problem asset resolutions by year end. Then, your prepared remarks sounded like you expect some credits to resolve in the fourth quarter.

Are you optimistic that we're at peak NPAs right now?

We'd love to say definitively yes, but we're optimistic. We're looking at the past due report, and it appears that we've identified all of our issues.

We continue to get updated financial information to be able to recognize issues, but we're optimistic that we've gotten close to the peak if we're not there already.

I would just add to that, Joe, that obviously the Fed's moves are going to, I think, impact lending throughout the country. A lot of people have elevated NPAs at this particular point, and if the Fed tightens again in fourth quarter and first quarter, that's going to just exacerbate those issues.

I don't think to the degree that we saw this quarter, for sure, but we're kind of on high alert, just making sure that we pay attention to a lot of our customers.

Appreciate it. That was helpful.

To kind of touch on that and follow up here, in your prepared remarks, you talked about paydowns remaining elevated, it's likely to remain a headwind in the coming quarters. Can you quantify the paydowns you experienced in the September quarter, and give an update on the loan pipeline relative to where it stood at the end of June?

I guess I'm also just trying to see how are borrowers looking at projects now in this current environment?

We have received about $5 million in paydowns already, Joe, since we've mentioned it last quarter. We also anticipate, very realistically, another $5 million by the end of the year, and early in the first quarter, another $5 million.

In addition, we have lots of plans out there, and hopeful that we continue to get paydowns or potentially upgrades for some of our clients going forward.

How about the pipeline?

Joe, the pipeline is robust. It's about $440 million of loans in the pipeline, with about $132 million of that that's committed.

Most of the 400 will close by the end of the year and mid- first quarter. Healthy pipeline, possibly offset by some success in problem resolution.

That was great. Then, last one for me here.

I know you've looked and passed on a lot of deals over the years, but, Darren, I'm curious, what's your view on bank M&A?

We're well positioned to take advantage of any acquisition that would be available. We're hopeful that it happens.

We look to continue to grow our franchise, both within our markets and connecting the dots between the markets where we're not in. We're hopeful to continue to do what we do throughout the South Louisiana, our Texas market, as well as Mississippi and North.

Where it makes sense geographically, culturally, and acquisition of talent, we are well positioned to take advantage.

All right, well, I appreciate taking my questions. John and Darren, again, congrats on the milestones.

Thank you, Joe.

Thank you. Once again, thank you all for joining us today.

I also want to thank our shareholders, the analysts who cover us, and many of the investors I have had the opportunity to get to know over the years for your support of Home Bancorp. We look forward to speaking to many of you in the next coming hours or days.

Thank you very much for participating today. Have a great day.