Home Bancorp (HBCP) Hits 52-Week High Post Merger Deal

Shares of Lafayette-based Home Bancorp, Inc. HBCP hit a new 52-week high of $25.41 on Jun 24. The stock has gained 9.2% to reach this level since the company announced its plans to acquire Metairie-based Louisiana Bancorp, Inc. LABC on Jun 18.

Acquisition Deal

Home Bancorp entered into a definitive merger agreement to acquire Louisiana Bancorp in a cash-only deal for an approximate value of $74.5 million. Per the agreement, Home Bancorp will pay $24.25 for each share of Louisiana Bancorp.

Additionally, the merged entity will have nearly $1.5 billion in loans and $1.2 billion in deposits. Bank of New Orleans ("BNO"), a subsidiary of Louisiana Bancorp, will merge with and into Home Bancorp's subsidiary Home Bank, N.A as part of this deal.

Having received approvals from the board of directors of each party, the merger is expected to close in the fourth quarter of 2015. However, the deal is subject to approvals from Louisiana's shareholders, regulators and other customary closing conditions.

Louisiana Bancorp's board is, however, likely to face potential charges related to the deal value. Notably, former U.S. Securities and Exchange Commission attorney Willie Briscoe, and Powers Taylor LLP, a securities litigation firm, are investigating whether the board acted in shareholders' interest to secure a fair takeover price for the company.

Despite the bad news, the stock continued to march higher.

What is in Store for Home Bancorp?

The acquisition provides Home Bancorp with means to strategically expand operations in the Southeast area; enjoying increased presence with additional 4 BNO branches in the Greater New Orleans region, capitalizing on BNO's "exceptional customer base".

Further, the merger is expected to be accretive to the company's earnings per share in the first full year of operating as a combined entity, and is predicted to boost its tangible book value per share.

Estimate Revision

Home Bancorp might be an interesting choice for investors right now. In the past 7 days, one estimate has moved north for 2016, while none have gone down. The trend has been pretty favorable too, with estimates increasing to $2.35 per share today from $1.72 per share 7 days ago, a rise of 36.6%.

Currently, Home Bancorp carries a Zacks Rank #3 (Hold).

Others in the Space

Barclays PLC BCS, Comerica Incorporated CMA and Heritage Commerce Corp. HTBK are other stocks in the space which have scaled new 52-week highs of $17.38, $53.45 and $9.78, respectively, in the same session.

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