GSLA GS Financial Corp. (MM)

LAFAYETTE, La., April 26, 2011 /PRNewswire/ -- Home Bancorp, Inc. (Nasdaq: HBCP) (the "Company"), the parent company for Home Bank (www.home24bank.com), a Federally chartered savings bank headquartered in Lafayette, Louisiana (the "Bank"), announced net income of $795,000 for the first quarter of 2011, a decrease of $670,000 compared to the fourth quarter of 2010 and a decrease of $51,000 compared to the first quarter of 2010.  Diluted earnings per share were $0.11 for the first quarter of 2011 and the fourth quarter of 2010, compared to $0.20 first quarter of 2010.

"Although loan demand was modest to start the year," stated John W. Bordelon, President and Chief Executive Officer of the Company and the Bank, "we continue to enjoy excellent core deposit growth, which increased at an annualized rate of over 14% during the first quarter."

"We finished the quarter by announcing our expansion into Orleans and Jefferson Parishes through the acquisition of Guaranty Savings Bank," added Mr. Bordelon.  "We are confident that Guaranty's talented team of bankers and Home Bank's commitment to enhancing the long-term success of our customers will set us apart in New Orleans just as it has in our other markets."

Acquisition of GS Financial Corp.

As previously disclosed on March 30, 2011, the Company entered into a definitive agreement to merge with GS Financial Corp. (Nasdaq: GSLA), the holding company of the 74-year-old Guaranty Savings Bank.  Under the terms of the agreement, GS Financial will be merged with and into Home Bancorp in a two-step transaction and Guaranty Savings Bank will be merged with and into the Bank.  Shareholders of GS Financial will receive $21.00 per share in cash upon completion of the merger.  The merger, which is expected to be completed in the third quarter of 2011, is subject to GS Financial Corp. shareholder approval, regulatory approval and other customary conditions.  The Company anticipates that the transaction will be over 10% accretive to earnings once savings are fully phased in by 2012.  The dilution to tangible book value is expected to be minimal.  Upon completion of the merger, the combined company will have total assets of approximately $950 million, $625 million in loans and $750 million in deposits.  The Company incurred $191,000 in pre-tax merger-related expenses during the first quarter of 2011.

Loans and Credit Quality

The Company's total loans were $442.0 million at March 31, 2011, an increase of $2.1 million, or 1%, from December 31, 2010, and a decrease of $8.3 million, or 2%, from March 31, 2010.  During the first quarter of 2011, Noncovered Loans increased $6.5 million, while Covered Loans decreased $4.5 million.  Growth in the Noncovered Loan portfolio was in commercial and industrial (up $6.2 million) and commercial real estate (up $1.3 million) loans.  Growth in these portfolios was partially offset by decreases in Noncovered one- to four-family first mortgage (down $933,000) and construction and land (down $918,000) loans.

The following table sets forth the composition of the Company's loan portfolio as of the dates indicated.

Credit quality statistics remained exceptional during the first quarter of 2011. Nonperforming assets, excluding Covered Assets, were $1.2 million at March 31, 2011, an increase of $34,000, or 3%, from December 31, 2010, and a decrease of $712,000, or 38%, from March 31, 2010.  The ratio of nonperforming assets, excluding Covered Assets, to total assets was 0.19% at March 31, 2011 and December 31, 2010, compared to 0.32% at March 31, 2010.

The Company recorded net charge-offs of $3,000 during the first quarter of 2011, compared to net charge-offs of $151,000 in the fourth quarter of 2010 and $21,000 in the first quarter of 2010. The Company's loan loss provision for the first quarter of 2011 was $102,000, compared to $147,000 and $350,000 for the fourth quarter of 2010 and the first quarter of 2010, respectively.

At March 31, 2011, the Company's ratio of allowance for loan losses to total Noncovered Loans was 1.10%, compared to 1.09% and 1.08% at December 31, 2010 and March 31, 2010, respectively.

Investment Securities Portfolio

Due to more favorable market pricing, the Company sold $3.6 million of its non-agency mortgage-backed securities portfolio during the first quarter of 2011.  The sale of these securities, which included the below-investment-grade securities held by the Company, resulted in a $166,000 pre-tax net loss.  The remaining portfolio of non-agency mortgage-backed securities, which had an amortized cost of $16.5 million at March 31, 2011, are all rated AAA or Aaa by Standard & Poor's or Moody's.

The Company's investment securities portfolio totaled $141.7 million at March 31, 2011, an increase of $14.5 million, or 11%, from December 31, 2010, and an increase of $3.5 million, or 3%, from March 31, 2010.  At March 31, 2011, the Company had a net unrealized gain position on its investment securities portfolio of $1.6 million, compared to a net unrealized gain of $1.0 million and a net unrealized loss of $191,000 at December 31, 2010 and March 31, 2010, respectively.

Deposits

Core deposits (i.e., checking, savings and money market accounts) increased for the seventh consecutive quarter, posting growth of $12.0 million, or 4%, during the first three months of 2011.  Total deposits were $543.6 million at March 31, 2011, a decrease of $9.6 million, or 2%, from December 31, 2010, and an increase of $3.7 million, or 1%, from March 31, 2010.

The following table sets forth the composition of the Company's deposits at the dates indicated.

Net Interest Income

Net interest income for the first quarter of 2011 totaled $6.9 million, a decrease of $265,000, or 4%, compared to the fourth quarter of 2010, and an increase of $1.0 million, or 17%, compared to the first quarter of 2010.  The Company's net interest margin was 4.67% for the first quarter of 2011, three basis points lower than the fourth quarter of 2010 and two basis points lower than the first quarter of 2010.  

The following table sets forth the Company's average volume and rate of its interest-earning assets and interest-bearing liabilities for the periods indicated.

Noninterest Income

Noninterest income for the first quarter of 2011 totaled $1.2 million, a decrease of $232,000, or 16%, compared to the fourth quarter of 2010 and an increase of $246,000, or 25%, compared to the first quarter of 2010.

The decrease in noninterest income in the first quarter of 2011 compared to the fourth quarter of 2010 resulted primarily from lower gains on the sale of mortgage loans and a net loss on the sale of a sizeable portion of the Company's non-agency mortgage-backed securities portfolio.  The sale of securities, which included the Company's holdings of below-investment-grade securities, resulted in a $166,000 pre-tax net loss.

The increase in noninterest income in the first quarter of 2011 compared to the first quarter of 2010 resulted primarily from higher levels of bank card fees and the discount accretion of the FDIC loss sharing receivable associated with the acquisition of Statewide Bank late in the first quarter of 2010. The increase in bank card fees was primarily the result of the addition of accounts through the Statewide acquisition.

Subsequent to the end of the first quarter of 2011, the Company entered into a settlement agreement with respect to litigation brought by the Company against a counterparty for losses reported by the Company in 2008 relating to the Company's former business line of providing cash to third-party ATM providers.  Under the terms of the settlement agreement, the Company received $525,000 in April 2011 and has foregone its right to pursue future claims related to any unrecovered loss.  The $525,000 will be reported as noninterest income in the second quarter of 2011.  The Company ceased providing cash to third-party ATM providers in 2009.

Noninterest Expense

Noninterest expense for the first quarter of 2011 totaled $6.7 million, an increase of $459,000, or 7%, compared to the fourth quarter of 2010 and an increase of $1.5 million, or 28%, compared the first quarter of 2010.

The increase in noninterest expense in the first quarter of 2011 compared to the fourth quarter of 2010 resulted primarily from an increase in franchise and shares taxes, compensation and benefits expense and $191,000 of merger-related expenses.  These increases were partially offset by a $101,000 decrease in repossessed asset expenses (reported in other noninterest expenses).

The increase in noninterest expense in the first quarter of 2011 compared to the first quarter of 2010 was primarily due to higher compensation and benefits, occupancy and data processing and communications expenses related to the Statewide Bank acquisition and the addition of our Baton Rouge headquarters location in mid-March 2010.  Additionally, regulatory fees increased during the quarter ended March 31, 2011 compared to the same quarter a year ago as a result of an increase in base insurance premium assessments on deposits by the FDIC.

This news release contains certain forwardlooking statements. Forwardlooking statements can be identified by the fact that they do not relate strictly to historical or current facts.  They often include the words "believe," "expect," "anticipate," "intend," "plan," "estimate" or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could" or "may."

Forwardlooking statements, by their nature, are subject to risks and uncertainties.  A number of factors many of which are beyond our control could cause actual conditions, events or results to differ significantly from those described in the forwardlooking statements.  Home Bancorp's Annual Report on Form 10-K for the year ended December 31, 2010, describes some of these factors, including risk elements in the loan portfolio, the level of the allowance for losses on loans, risks of our growth strategy, geographic concentration of our business, dependence on our management team, risks of market rates of interest and of regulation on our business and risks of competition. Forwardlooking statements speak only as of the date they are made.  We do not undertake to update forwardlooking statements to reflect circumstances or events that occur after the date the forwardlooking statements are made or to reflect the occurrence of unanticipated events.

SOURCE Home Bancorp, Inc.