Annual Report by an Employee Stock Purchase, Savings or Similar Plan — Form 11-K Filing Table of Contents
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‘11-K’ — Annual Report by an Employee Stock Purchase, Savings or Similar Plan Document Table of Contents
Report of Independent Registered Public Accounting Firm
To the Trustees, Plan Administrator and Plan Participants
Home Bank, N.A. Profit Sharing and 401(K) Plan
Opinion on the Financial Statements
We have
audited the accompanying statement of net assets available for benefits of the Home Bank, N.A. Profit Sharing and 401(K) Plan (the “Plan”) as of December 31, 2019, and the related statement of changes in net assets available for benefits for the year then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2019, and the changes in net assets available for benefits for the year then ended in conformity with accounting principles generally accepted in the United States.
Basis for Opinion
These financial statements are the responsibility of the Plan’s
management. Our responsibility is to express an opinion on the Plan’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Plan in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement, whether due to error or fraud.
Our audit included performing procedures to assess the risks of material misstatement of the financial
statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Supplementary Information
The supplemental information in the accompanying schedule of assets (held at end of year) as of December 31, 2019, has been subjected to audit procedures performed in conjunction with the audit of the Plan’s financial statements. The supplemental information is the responsibility of the Plan’s
management. Our audit procedures included determining whether the supplemental information reconciles to the financial statements or the underlying accounting and other records, as applicable, and performing procedures to test the completeness and accuracy of the information presented in the supplemental information.
In forming our opinion on the supplemental information in the accompanying schedule, we evaluated whether the supplemental information, including its form and content, is presented in conformity with the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. In our opinion, the supplemental information in the accompanying schedule is fairly stated, in all material respects, in relation to the financial statements as a whole.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees, Plan Administrator, and Plan Participants of
Home Bank Profit Sharing 401(k) Plan
Opinion
on the Financial Statements
We have audited the accompanying statement of net assets available for benefits of Home Bank Profit Sharing 401(k) Plan (the Plan) as of December 31, 2018, the related statement of changes in net assets available for benefits for the year ended December 31, 2018, and the related notes to the financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 2018, and the changes in net assets available for benefits for the year ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.
Basis
for Opinion
These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on the Plan’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Plan in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards required that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Interest income on notes receivable from participants
34,145
Dividends on registered investment company shares
384,787
Net increase in fair value of investments
4,528,346
Total investment income
4,947,278
Total
additions
7,855,834
Deductions:
Benefits paid to participants
1,717,668
Administrative expenses
79,211
Total deductions
1,796,879
Net
increase in net assets available for benefits
6,058,955
Net assets available for benefits:
Beginning of year
25,519,333
End of year
$
31,578,288
The accompanying notes are an integral part of these financial statements.
4
HOME
BANK, N. A. PROFIT SHARING AND 401(k) PLAN
Notes to Financial Statements
1.Plan Description
General
The following description of the Home Bank, N. A. Profit Sharing and 401(k) Plan (the “Plan”) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.
The Plan is a defined contribution plan covering all employees who are at least 21 years old and who have three months of service with Home Bank, N. A. (the “Bank”), the sponsor of the Plan and wholly-owned subsidiary of Home Bancorp, Inc. The
Plan is subject to the applicable provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).
Contributions
Eligible participants may elect to contribute, on a pre-tax basis, from 1% to 75% of their compensation, as defined in the Plan document, subject to certain limitations. Participants are also allowed to make rollover contributions from other qualified plans. Effective January 1, 2017, the Plan was amended to provide for automatic enrollment contributions for eligible participants of 6% of their compensation, unless the eligible employee affirmatively elects otherwise, and the deferral percentage will be increased annually by 1% limited to 8% unless the eligible participant affirmatively elects otherwise.
The Bank may make a discretionary profit sharing contribution as determined each year. Effective January 1, 2017, the Plan was amended to make safe harbor matching contributions equal to 100% of employee deferral contributions that are not over 2% of compensation, plus 50% of the employee deferral contributions that are over 2% of compensation but are not over 6% of compensation. No profit sharing contributions were made for the years ended December 31, 2019 and 2018. Participants age 50 or older may also make catch-up contributions up to limits specified under the Internal Revenue Code (“IRC”), but such contributions are not taken into account for purposes of determining the Bank’s matching contribution.
Vesting
Participants
are immediately vested in their contributions plus actual earnings thereon. Vesting in the employer’s safe harbor matching contributions is based on years of continuous service. A participant is 100% vested after two years of credited service. Vesting in the employer’s matching, other than safe harbor matching contributions, and discretionary contribution portions of their accounts plus actual earnings thereon is based on years of continuous service. A participant is 100% vested after six years of credited service. Prior to death or retirement, participants vest in employer contributions and related earnings in accordance with the following schedule:
Years
of Service
Vested Percent
1 year
- %
2 years
20
3 years
40
4 years
60
5 years
80
6 years
100
On
the occurrence of death, disability, retirement or Plan termination, a participant becomes fully vested in employer contributions and related earnings.
5
Payment of Benefits
Participants may elect to receive their account value in a lump-sum distribution or, if eligible, in the form of an IRA rollover when they terminate employment or because of death, disability or retirement. Participants may also transfer their account balance to another tax deferred qualified plan. In accordance with the Plan provisions, hardship withdrawals and certain in-service distributions may be made by the Plan.
Participant
Accounts
Individual accounts are maintained for each of the Plan’s participants to reflect the participant’s contributions, the Bank’s matching contributions and allocations of the Plan’s investment income or losses and administrative expenses. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
Forfeited Accounts
At December 31, 2019 and 2018, the Plan had forfeited nonvested accounts of $1,056 and $58, respectively. In 2019 and 2018, administrative expenses of $13,589
and $17,684, respectively, were paid from forfeited nonvested accounts.
Notes Receivable from Participants
Participants may borrow from their accounts amounts ranging from a minimum of $1,000 to a maximum of 50% of the account balance, not to exceed $50,000. Loan maturities generally range from one to five years, but may extend up to ten years for the purchase of a primary residence. The loans are collateralized by the balance in the participant’s account. The outstanding loan balances carried an interest rate of 7.00% for both 2019 and 2018. Principal and interest are paid ratably through bi-weekly payroll deductions.
Investment Options
Under
the provisions of the Plan, participating employees may direct contributions to various investment options, including collective investment trusts, mutual funds, pooled separate accounts and a common stock fund for Home Bancorp, Inc. The Home Bancorp, Inc. Stock Fund holds common stock of Home Bancorp, Inc. and uninvested cash to meet certain distributions and, on a short-term basis, pending investment in additional Home Bancorp, Inc. common stock. Participants have the ability to change investment elections and transfer funds among the various fund options on a daily basis.
Effective October 1, 2019, the investment options classified as collective interest trusts were discontinued and funds were transferred to mutual funds with similar investment strategies.
2.Summary
of Significant Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared using the accrual method of accounting and all assets of the Plan are participant directed.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and
6
liabilities
and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
Investment Valuation and Income Recognition
Plan investments, excluding the guaranteed investment contract (see Note 3), are stated at fair value. Home Bancorp, Inc. common stock is valued using quoted market prices. Shares of registered investment companies are valued at the net asset value ("NAV") of shares held by the Plan at year end. The Plan's interest in collective interest trusts is valued based on the daily NAV of the fund as determined by the issuer of the fund, which is the value at which units in the funds can be withdrawn
and approximates fair value as a practical expedient.
Purchases and sales of investments are recorded on a trade date basis. Dividends are recorded on the ex-dividend date.
Notes Receivable from Participants
Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid interest. Interest on notes receivable from participants is accrued as earned using the interest method over the life of the note.
Administrative Expenses
Investment management fees and administrative fees related to recordkeeping are charged
against the earnings of the investment fund in which the participant funds are invested. Fees for certain transactions, such as withdrawals and loan processing, are charged directly to the account of the participant reporting such a transaction. The Bank paid other administrative expenses of the Plan for 2019 and 2018.
Payment of Benefits
Benefits are recorded when paid.
3.Fixed Income Guaranteed Option
As of December 31, 2019 and 2018, the Plan invests in a fully-benefit
responsive guaranteed investment contract (“GIC”) with Principal Life Insurance Company, a guaranteed general-asset backed group annuity contract. The Plan’s portion of the net assets available for benefits attributable to the GIC are reported at contract value. Contract value represents the amount participants would receive if they were to initiate permitted transactions under the terms of the Plan, which approximates fair value.
The issuer of the GIC maintains the contributions in a general account.
The GIC does not have specific underlying assets assigned. The GIC issuer is contractually obligated to repay the principal and a specified interest rate that is guaranteed to the Plan. No redemption fees, early withdrawal charges, or market value adjustments are charged on participant transfers of assets into or out of the contract. There are no events in which the issuer can terminate the GIC with the Plan and settle at an amount different from contract value. However, a 5% surrender charge may apply in the event the Plan liquidates or transfers its interest in the GIC.
Certain events limit the ability of the Plan to transact at contract
value with the issuer. Such events include: (1) changes to the Plan’s policy on transfers to competing investment options or the related equity wash provision and (2) termination of the Plan’s interest in the GIC by the Plan’s administrator. The Plan Administrator does not believe that the occurrence of any such event is probable.
7
For the years ended December 31, 2019 and 2018, the average yield of the Principal Fixed Income Guaranteed Option Contract was approximately 1.29% and 1.21%, respectively, based on actual interest
earnings credited to participants.
4.Investments that Calculate Net Asset Value
The Plan's investments in pooled separate accounts are valued at NAV of the shares held at year-end. These investment options are available through a group annuity contract with the Principal Life Insurance Company. Principal Life Insurance Company reserves the right to defer payments or transfers from Principal Life Separate Accounts as described in the group annuity contracts providing access to the Separate Accounts or as required by applicable law. Such deferment will be based on factors that may include situations such
as: unstable or disorderly financial markets; investment conditions which do not allow for orderly investment transactions; or investment, liquidity, and other risks. If a participant elects to allocated funds to a pooled separate account, the participant may not be able to immediately withdraw the funds.
Pooled separate account investments allow one transfer per 30 day period. The transfer restriction applies to all participant directed transfers out of this investment, including non-scheduled rebalancing activity. Once the number of allowed transfers out is met, participants are not allowed to transfer back into this investment option until the holding period elapses. Contributions into the investment option are not impacted.
5.Fair Value Measurements
The
FASB ASC 820, Fair Value Measurements and Disclosures, provides the framework for measuring fair value. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of the fair value hierarchy under FASB ASC 820 are described as follows:
Level 1 - Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the plan has the ability to access.
Level 2 - Inputs to the valuation methodology include:
•quoted prices for similar assets or liabilities in active markets;
•quoted prices for identical or similar assets or liabilities in inactive markets;
•inputs other than quoted prices that are observable for the asset or liability;
•inputs that are derived principally from or corroborated by observable market data by correlation or other means.
If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability.
Level
3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The Plan uses appropriate valuation techniques based on the available inputs to measure the fair value of its investments. The asset’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. When available, valuation techniques maximize the use of observable inputs and minimize the use of unobservable inputs.
8
Following is a description of the valuation methodologies used for assets measured at fair value. There have
been no changes in the valuation methodologies used at December 31, 2019 and 2018.
•Registered investment companies: The fair values of these securities are based on quoted market prices in an active market, which represent the NAVs of shares held by the Plan at year end.
•Affiliated stock: The Home Bancorp Inc. Stock Fund is an account comprised of common stock of Home Bancorp, Inc. and short-term cash investments. The fair value of the fund is derived from the fair value of the common stock based on quoted market prices in an active market and the short-term cash investments.
•Collective
interest trusts and pooled separate accounts: Valued at NAV of shares held by the Plan at year-end, provided by the administrator of the fund. The NAV of the investments in the collective interest trust is derived from the fair value of the underlying securities based on quoted market prices in an active market and short-term cash investments. The NAV is used as the practical expedient to estimate fair value.
The Plan’s investments, excluding the guaranteed investment contract, are reported at fair value in the accompanying statement of net assets available for benefits. The methods used to measure fair value may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Plan believes
its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.
The following table sets forth by level, within the fair value hierarchy, the Plan’s assets at fair value as of the date indicated:
Quoted Prices in Active Markets for Identical Assets
(Level 1)
Significant Other Observable Inputs
(Level 2)
Significant Unobservable Inputs
(Level 3)
Registered investment companies
$
4,606,794
$
4,606,794
$
—
$
—
Affiliated
stock
8,407,689
8,407,689
—
—
Total assets in fair value hierarchy
13,014,483
13,014,483
—
—
Investments
measured at NAV(1)
10,589,936
—
—
—
Total
$
23,604,419
$
13,014,483
$
—
$
—
(1)
In accordance with Subtopic 820-10, certain investments that were measured at net asset value per share (or its equivalent) have not been classified in the fair value hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the line items presented in the statement of net assets available for benefits.
6.Risks and Uncertainties
The Plan provides for various investments in registered investment companies, pooled separate accounts, a guaranteed investment contract and common stock of Home Bancorp, Inc. Investment securities, in general, are exposed to various risks, such as overall market volatility, credit and interest rate
risk. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near term, and that such change could materially affect the value of participants’ account balances and the amounts to be reported in the statements of net assets available for benefits for future periods.
7.Related Party and Party-in-Interest Transactions
The Plan invests in Home Bancorp, Inc. common stock, the parent company of the plan sponsor; these transactions qualify as related party transactions, which are exempt from the prohibited transaction rules. Fees incurred by the Plan for investment management services are paid to the trustee, and other fees related to the Plan's operations are paid
by the Plan sponsor.
Certain Plan investments are held in pooled separate accounts and a guaranteed investment contract managed by Principal Life Insurance Company. Since Principal Life Insurance Company is the Plan custodian, these transactions qualify as party-in-interest transactions.
Cost for services related to Plan administration (which qualify as party-in-interest transactions) paid for by the Plan amounted to $79,211 for the year ended December 31, 2019.
The above party-interest transactions, as well as, notes receivable from participants, are not considered prohibited transactions by
statutory exemptions under ERISA regulations.
8.Tax Status
The Internal Revenue Service has determined and informed the Bank by a determination letter dated March 17, 2017, that the Plan, as designed, was in accordance with applicable sections of the IRC. The Plan administrator and the Plan’s tax counsel believe that the Plan is designed and is currently being operated in compliance with the applicable requirements of the IRC, and, therefore, believe that the Plan is qualified and tax exempt.
10
9.Plan
Termination
While it has not expressed any intention to do so, the Bank has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants would become 100% vested in their employer contributions.
10.Subsequent Events
Management has evaluated subsequent events for potential recognition or disclosure in the financial statements through June 23, 2020, the date on which the financial statements were available to be issued.
The COVID-19 pandemic has caused
significant economic dislocation in the United States as many state and local governments have ordered non-essential businesses to close and residents to shelter in place at home. Given its ongoing and dynamic nature, it is difficult to predict the full impact of COVID-19 on our business. The extent of such impact will depend on future developments, which are highly uncertain, including when the coronavirus can be controlled and abated and when and how the national and local economies may be reopened. As a result, negative impact to the Bank's results of operations, cash flows, and financial condition, and the ability for the Bank to continue to make contributions to the Plan, cannot be reasonably estimated or determined at this time. The Plan has adopted certain optional provisions under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) that was signed into law on March 27, 2020. The provisions were
adopted on April 3, 2020 and include coronavirus-related distributions, coronavirus-related loans, suspended loan payments, increased loan limits and waivers of required minimum distributions for impacted participants.
11
SUPPLEMENTAL SCHEDULE
HOME BANK, N. A. PROFIT SHARING AND 401(k) PLAN
EIN: 72-0214660 PN: 002
Form 5500 Schedule H Line 4(i) – Schedule of Assets (Held at End of Year)
American Funds Target Date Retirement 2010 R6 Fund
489,458
American Funds Service Company
American Funds Target Date Retirement 2015 R6 Fund
96
American Funds Service Company
American Funds Target Date Retirement 2020 R6 Fund
856,322
American
Funds Service Company
American Funds Target Date Retirement 2025 R6 Fund
806,611
American Funds Service Company
American Funds Target Date Retirement 2030 R6 Fund
1,294,275
American Funds Service Company
American Funds Target Date Retirement 2035 R6 Fund
679,613
American
Funds Service Company
American Funds Target Date Retirement 2040 R6 Fund
978,477
American Funds Service Company
American Funds Target Date Retirement 2045 R6 Fund
732,240
American Funds Service Company
American Funds Target Date Retirement 2050 R6 Fund
400,803
American
Funds Service Company
American Funds Target Date Retirement 2055 R6 Fund
423,493
American Funds Service Company
American Funds Target Date Retirement 2060 R6 Fund
34,811
BlackRock
BlackRock Global Allocation Investment A Fund
3,454
Delaware
Investments
Delaware Small Cap Value R6 Fund
653,742
Eaton Vance
Eaton Vance Atlanta Capital SMID Cap R6 Fund
173,768
*
Home Bancorp, Inc.
Home Bancorp, Inc. Stock
9,584,204
Janus
International Holding, LLC
Janus Henderson Triton N Fund
822,777
PIMCO Funds
PIMCO Total Return Instl Fund
918,558
PIMCO Funds
PIMCO Total Return R Fund
557
*
Principal
Life Insurance Company
Principal Equity Income Separate Account
1,673,536
*
Principal Life Insurance Company
Principal Fixed Income Guaranteed Option
2,246,614
*
Principal Life Insurance Company
Principal Large Cap S&P 500 Index Separate Account
1,418,902
*
Principal
Life Insurance Company
Principal Mid Cap S&P 400 Index Separate Account
1,296,627
*
Principal Life Insurance Company
Principal Small Cap S&P 600 Index Separate Account
256,865
*
Principal Life Insurance Company
Principal Large Cap Growth I Separate
Account
2,814,387
Victory Funds
Victory Sycamore Established Value R6 Fund
240,116
31,066,573
*
Participant’s loan accounts
7%
interest with various maturities
511,715
Total investments
$
31,578,288
Cost information has not been included above because all included investments are participant directed.
*Indicates party-in-interest to the Plan.
See
Report of Independent Registered Public Accounting Firm.
12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the administrator for the Plan has duly caused this annual report to be signed on its behalf by the undersigned thereunto duly authorized.
