NAMPA, Idaho, July 15, 2008 (PRIME NEWSWIRE) -- Home Federal Bancorp, Inc. (the "Company") (Nasdaq:HOME), the parent company of Home Federal Bank (the "Bank"), today announced third quarter earnings for the fiscal year ending September 30, 2008. For the quarter ended June 30, 2008, the Company reported net income of $1.1 million, or $0.07 per diluted share compared to $1.6 million, or $0.09 per diluted share, for the same period a year ago. Net income for the nine months ended June 30, 2008, was $3.0 million, or $0.19 per diluted share, compared to $4.1 million, or $0.24 per diluted share, for the same nine-month period a year ago. Earnings per share for the prior periods have been adjusted to reflect the impact of the second-step conversion and reorganization of the Company, which was completed on December 19, 2007.
Commenting on the third quarter's results and key strategic initiatives, Len E. Williams, President and CEO of Home Federal Bancorp, Inc., stated, "While we recorded a large provision for loan losses during the third quarter, we're pleased that our level of nonperforming assets has remained significantly below our peers. We are diligently monitoring our delinquent and nonperforming loans and our commitment to risk management is evidenced by our decision to realign our credit administration and workout team so that they report directly to me. We continue to take steps to build strong commercial and small business lending programs by acquiring key management personnel to lead the development of those programs. In order to become more efficient, lower costs and improve customer service in our consumer line of business, we reorganized our residential and consumer lending teams. We're also pleased to announce the groundbreaking of a new banking office in Boise, Idaho, which we expect to open in October 2008. Lastly, our capital position remains among the strongest in the industry with our stockholders' equity to assets ratio at 27.43%."
Operating Results
Revenues for the quarter ended June 30, 2008, which consisted of net interest income before the provision for loan losses plus noninterest income, increased 5% to $8.7 million, compared to $8.3 million for the quarter ended June 30, 2007. Net interest income before the provision for loan losses increased 11% to $5.9 million for the quarter ended June 30, 2008 compared to $5.3 million for the same quarter of the prior year. The increase in net interest income is primarily attributable to a decrease in interest expense. Federal Home Loan Bank borrowings balances are lower than in the same period of the prior year as maturing advances have been repaid with excess liquidity. In addition, current rates paid on deposits are lower than in the prior year.
Revenues for the nine months ended June 30, 2008, decreased 1% to $24.6 million, compared to $24.8 million for the same period of last year. Net interest income before the provision for loan losses for the nine months ended June 30, 2008, increased 4% to $16.7 million compared to $16.2 million for the same period of the prior year.
The Company's net interest margin increased 27 basis points to 3.29% for the quarter ended June 30, 2008, from 3.02% for the same quarter last year. The net interest margin for the nine months ended June 30, 2008 increased 12 basis points to 3.14% from 3.02% for the same period a year earlier. The improvement in the net interest margin is primarily attributable to the increase in interest earning assets that resulted from the proceeds of the Company's second step conversion and stock offering completed on December 19, 2007. In addition, decreases in interest expense and a shift in the loan portfolio toward higher yielding commercial loans from residential mortgage loans also contributed to the increase in the margin in 2008.
A provision for loan losses of $652,000 was established by management in connection with its analysis of the loan portfolio for the quarter ended June 30, 2008, compared to no provision for loan losses for the same quarter of the prior year. The provision for loan losses was $1.3 million for the nine months ended June 30, 2008, compared to $71,000 for the nine months ended June 30, 2007. The increase in the provision for the nine months ended June 30, 2008, reflects an increase in total classified assets compared to June 30, 2007, as well as a shift in the asset mix from residential loans toward commercial loans.
Noninterest income decreased $280,000, or 9%, to $2.7 million for the quarter ended June 30, 2008, compared to $3.0 million for the same quarter a year ago. The decrease was primarily attributable to a $278,000 decrease in gain on sale of one- to four-family residential loans in the secondary market, reflecting a slowdown in the local real estate market. For the nine months ended June 30, 2008, noninterest income decreased 10% to $7.8 million, compared to $8.7 million for the same period of the prior year. The decrease was primarily attributable to declines in the gain on sale of loans as well as service charges and fees which were $608,000 and $248,000 lower than the prior year, respectively.
Noninterest expense for the quarter ended June 30, 2008, increased $347,000, or 6%, to $6.2 million, from $5.8 million for the comparable period a year earlier. Compensation and benefit expenses increased $342,000, or 10%, to $3.8 million for the quarter ended June 30, 2008 as compared to $3.5 million for the same quarter a year ago. The majority of the increase is attributable to the reversal of incentive accruals in the prior year as well as the addition of employees to support the Bank's ongoing emphasis on commercial banking. However, compared to the prior quarter, compensation and benefit expenses decreased $213,000. The Company's efficiency ratio was 71.4% for the quarter ended June 30, 2008 compared to 70.0% for the same quarter a year ago and 77.8% in the fiscal second quarter.
Noninterest expense for the nine months ended June 30, 2008 increased $289,000 or 2% to $18.5 million from $18.2 million from the comparable period a year earlier. The efficiency ratio was 75.2% for the nine months ended June 30, 2008 compared to 73.2% for the same period of the prior year. The efficiency ratio increased as expenses increased slightly while the sum of net interest income and noninterest income decreased slightly for the nine months ended June 30, 2008.
Balance Sheet Growth
Total assets increased 2% to $741.9 million at June 30, 2008, compared to $728.3 million a year earlier. The increase in total assets was primarily attributable to $88.4 million in net proceeds raised from the Company's second-step conversion and stock offering completed on December 19, 2007, which was partially offset by a decrease in deposits and borrowings during this same period of $36.3 million and $43.7 million, respectively. Net loans (excluding loans held for sale) at June 30, 2008 decreased 4.8% to $468.3 million, compared to $491.8 million at June 30, 2007. One- to four-family residential loans represented 46% of the Bank's loan portfolio at June 30, 2008, compared to 53% at June 30, 2007. Commercial loans, including commercial real estate loans, accounted for 43% of the Bank's loan portfolio at June 30, 2008, compared to 39% at June 30, 2007. In the future, subject to market conditions, the Bank plans to continue its increased emphasis on commercial and small business banking products. Mortgage-backed securities increased $28.0 million to $194.8 million at June 30, 2008, compared to $166.8 million at June 30, 2007. The increase is attributable to purchases made with proceeds from the Company's second step conversion and stock offering. All securities purchased were issued by U.S. government sponsored enterprises.
Non-performing assets were $4.2 million or 0.56% of total assets at June 30, 2008, compared to $520,000 or 0.07% at June 30, 2007, and $2.3 million, or 0.30% at March 31, 2008. The increase in non-performing assets is consistent with both local and national trends. While we believe our credit quality remains solid, management continues to keep a vigilant watch on the local market, closely monitoring and managing credit quality, specifically acquisition and development and real estate construction loans. The Bank has recognized and identified the risk of acquisition and development lending and has limited its exposure in this area. However, approximately $318,000 of the provision for the third quarter was related to acquisition and development projects. The allowance for loan losses was $3.8 million, or 0.81% of gross loans, at June 30, 2008, compared to $2.7 million, or 0.56% of gross loans, at June 30, 2007.
Deposits decreased 9% to $382.3 million at June 30, 2008, compared to $418.7 million at June 30, 2007. Demand deposits and savings accounts increased $10.5 million, or 6%, to $202.1 million at June 30, 2008. The increase was a result of growth in money market and non-interest bearing commercial demand deposit accounts. Certificates of deposit decreased $46.8 million, or 21%, to $180.3 million at June 30, 2008, compared to $227.1 million at June 30, 2007. The decrease in certificates of deposit was primarily the result of the Bank choosing not to match rates offered by local competitors that in some instances exceeded the Bank's cost of alternative funding sources. Advances from the FHLB decreased 23% to $145.6 million at June 30, 2008 compared to $189.3 million at June 30, 2007. The decrease resulted from maturing advances being repaid with excess liquidity.
Stockholders' equity increased $93.5 million, or 85%, to $203.5 million at June 30, 2008, compared to $110.0 million at June 30, 2007. The increase was primarily a result of the $88.4 million in net proceeds received from the second-step conversion and stock offering. The Company sold approximately 9.4 million shares of stock in its subscription, community and syndicated community offerings and issued approximately 7.1 million shares of its stock in exchange for the previously outstanding shares of the Bank's former mid-tier holding company, Home Federal Bancorp, Inc. A portion of the offering proceeds was used to make a loan to our employee stock ownership plan ("ESOP"), which purchased approximately 816,000 shares of the Company's common stock for an aggregate of $8.2 million.
Other significant activity among equity accounts over the past twelve months included $4.2 million in net income, the allocation of earned ESOP shares, equity compensation and the exercise of stock options totaling $2.0 million, and a $1.4 million increase in unrealized gains on securities available for sale, offset by $2.4 million in cash dividends paid to stockholders. The Company's book value per share as of June 30, 2008 was $11.73 per share based upon 17,348,229 outstanding shares of common stock.
About the Company
Home Federal Bancorp, Inc. is a Maryland corporation headquartered in Nampa, Idaho, and is the savings and loan holding company of Home Federal Bank, a federal savings bank that was originally organized as a building and loan association in 1920. The Company serves the Treasure Valley region of southwestern Idaho that includes Ada, Canyon, Elmore and Gem Counties, through 15 full-service banking offices and one loan center. The Company's common stock is traded on the NASDAQ Global Select Market under the symbol "HOME." The Company's stock is also included in the America's Community Bankers NASDAQ Index. For more information, visit the Company's web site at www.myhomefed.com.
Forward-Looking Statements:
Statements in this news release regarding future events, performance or results are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA") and are made pursuant to the safe harbors of the PSLRA. These forward-looking statements relate to, among other things, expectations of the business environment in which the Company operates, projections of future performance, perceived opportunities in the market, potential future credit experience, and statements regarding the Company's mission and vision. These forward-looking statements are based upon current management expectations and may, therefore, involve risks and uncertainties. Actual results could be materially different from those expressed or implied by the forward-looking statements. Factors that could cause results to differ include but are not limited to: general economic and banking business conditions, competitive conditions between banks and non-bank financial service providers, interest rate fluctuations, the credit risk of lending activities, including changes in the level and trend of loan delinquencies and write-offs; results of examinations by our banking regulators, regulatory and accounting changes, the value of mortgage servicing rights, risks related to construction and development lending, commercial and small business banking and other risks. Additional factors that could cause actual results to differ materially are disclosed in Home Federal Bancorp, Inc.'s recent filings with the Securities and Exchange Commission, including but not limited to its Annual Report on Form 10-K for the year ended September 30, 2007, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Forward-looking statements are accurate only as of the date released, and we do not undertake any responsibility to update or revise any forward-looking statements to reflect subsequent events or circumstances.
HOME FEDERAL BANCORP, INC. AND
SUBSIDIARY
CONSOLIDATED BALANCE SHEETS June 30, Sept. 30, June 30,
(In thousands, except share data) 2008 2007 2007
(Unaudited) --------- --------- ---------
ASSETS
Cash and amounts due from
depository institutions $ 25,187 $ 20,588 $ 23,086
Certificates of deposit in
correspondent bank 5,000 -- --
Mortgage-backed securities
available for sale, at fair value 194,753 162,258 166,755
FHLB stock, at cost 9,591 9,591 9,591
Loans receivable, net of allowance
for loan losses of $3,801, $2,988
and $2,748 468,343 480,118 491,768
Loans held for sale 3,971 4,904 4,363
Accrued interest receivable 2,799 2,804 2,880
Property and equipment, net 14,356 12,364 12,271
Mortgage servicing rights, net 1,840 2,047 2,269
Bank owned life insurance 11,482 11,168 11,065
Real estate and other property
owned 707 549 153
Deferred income tax asset 1,765 1,245 1,757
Other assets 2,154 2,318 2,357
--------- --------- ---------
TOTAL ASSETS $ 741,948 $ 709,954 $ 728,315
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposit accounts:
Noninterest-bearing demand
deposits $ 35,258 $ 38,643 $ 34,368
Interest-bearing demand deposits 140,401 127,659 133,770
Savings deposits 26,409 23,116 23,465
Certificates of deposit 180,274 215,191 227,095
--------- --------- ---------
Total deposit accounts 382,342 404,609 418,698
Advances by borrowers for taxes and
insurance 657 1,605 921
Interest payable 580 731 773
Deferred compensation 5,028 4,515 4,418
FHLB advances 145,582 180,730 189,264
Other liabilities 4,227 5,127 4,243
--------- --------- ---------
Total liabilities 538,416 597,317 618,317
STOCKHOLDERS' EQUITY
Serial preferred stock, $.01 par
value; 10,000,000 authorized,
issued and outstanding, none -- -- --
Common stock, $.01 par value;
90,000,000 authorized, issued and
outstanding:
June 30, 2008 - 17,391,517
issued, 17,348,229 outstanding 173 152 152
Sept. 30, 2007 - 15,278,803
issued, 15,232,243 outstanding
June 30, 2007 - 15,278,803
issued, 15,232,243 outstanding
Additional paid-in capital 157,089 59,613 59,209
Retained earnings 59,707 58,795 57,922
Unearned shares issued to ESOP (11,329) (3,698) (3,808)
Accumulated other comprehensive
loss (2,108) (2,225) (3,477)
--------- --------- ---------
Total stockholders' equity 203,532 112,637 109,998
--------- --------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 741,948 $ 709,954 $ 728,315
========= ========= =========
HOME FEDERAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data)
(Unaudited)
Three Months Ended Nine Months Ended
June 30, June 30,
------------------------ --------------------------
2008 2007 2008 2007
----------- ----------- ----------- -----------
Interest
and
dividend
income:
Loan
interest $ 7,544 $ 8,334 $ 23,390 $ 25,331
Investment
interest 117 179 891 223
Mortgage-
backed
security
interest 2,372 2,123 6,463 6,673
FHLB
dividends 60 14 110 33
----------- ----------- ----------- -----------
Total
interest
and
dividend
income 10,093 10,650 30,854 32,260
----------- ----------- ----------- -----------
Interest
expense:
Deposits 2,429 3,131 8,515 9,146
FHLB
advances 1,752 2,207 5,594 6,942
----------- ----------- ----------- -----------
Total
interest
expense 4,181 5,338 14,109 16,088
----------- ----------- ----------- -----------
Net
interest
income 5,912 5,312 16,745 16,172
Provision
for loan
losses 652 -- 1,317 71
----------- ----------- ----------- -----------
Net
interest
income
after
provision
for loan
losses 5,260 5,312 15,428 16,101
----------- ----------- ----------- -----------
Noninterest
income:
Service
charges
and fees 2,396 2,318 6,731 6,979
Gain on
sale of
loans 213 491 560 1,168
Increase in
cash
surrender
value of
bank owned
life
insurance 106 102 314 301
Loan
servicing
fees 116 134 369 420
Mortgage
servicing
rights,
net (63) (48) (206) (223)
Other (33) 18 75 39
----------- ----------- ----------- -----------
Total
non-
interest
income 2,735 3,015 7,843 8,684
----------- ----------- ----------- -----------
Noninterest
expense:
Compensation
and
benefits 3,840 3,498 11,592 11,363
Occupancy
and
equipment 771 716 2,242 2,145
Data
processing 615 548 1,668 1,549
Advertising 241 362 786 940
Postage and
supplies 147 167 468 487
Professional
services 130 209 533 620
Insurance
and
taxes 158 114 383 323
Other 272 213 809 765
----------- ----------- ----------- -----------
Total
non-
interest
expense 6,174 5,827 18,481 18,192
----------- ----------- ----------- -----------
Income
before
income
taxes 1,821 2,500 4,790 6,593
Income tax
expense 702 934 1,779 2,517
----------- ----------- ----------- -----------
NET
INCOME $ 1,119 $ 1,566 $ 3,011 $ 4,076
=========== =========== =========== ===========
Earnings
per
common
share:
Basic $ 0.07 $ 0.09(1) $ 0.19(1) $ 0.25(1)
Diluted 0.07 0.09(1) 0.19(1) 0.24(1)
Weighted
average
number of
shares
out-
standing:
Basic 16,007,599 16,615,053(1) 16,237,911(1) 16,579,847(1)
Diluted 16,043,435 16,716,164(1) 16,255,548(1) 16,717,563(1)
Dividends
declared
per
share: $ 0.055 $ 0.048(1) $ 0.158(1) $ 0.145(1)
(1) Earnings per share, dividends per share and average common
shares outstanding have been adjusted to reflect the impact of the
second-step conversion and reorganization of the Company, which
occurred on December 19, 2007.
HOME FEDERAL BANCORP, INC. AND SUBSIDIARY
ADDITIONAL FINANCIAL INFORMATION
(Dollars in thousands, except share data) (Unaudited)
At Or For The
Nine Months At Or For The
Ended Year Ended
June 30, 2008 Sept. 30, 2007
--------------- ---------------
FINANCIAL CONDITION DATA
Average interest-earning
assets $710,165 $703,675
Average interest-bearing
liabilities 522,078 582,936
Net average earning assets 188,087 120,739
Average interest-earning
assets to average
interest-bearing liabilities 136.03% 120.71%
Stockholders' equity to assets 27.43 15.87
ASSET QUALITY
Allowance for loan losses $3,801 $2,988
Non-performing loans 3,462 1,531
Non-performing assets 4,169 2,080
Allowance for loan losses to
non-performing loans 109.79% 195.17%
Allowance for loan losses to
gross loans 0.81 0.62
Non-performing loans to
gross loans 0.73 0.32
Non-performing assets to
total assets 0.56 0.30
At Or For The At Or For The
Three Months Nine Months Ended
Ended June 30, June 30,
---------------------- -------------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
SELECTED
PERFORMANCE
RATIOS
Return on
average
assets (1) 0.59% 0.85% 0.54% 0.72%
Return on
average
equity (1) 2.18 5.63 2.24 4.92
Net interest
margin (1) 3.29 3.02 3.14 3.02
Efficiency
ratio (2) 71.40 69.98 75.16 73.19
PER SHARE DATA
Basic
earnings
per share $ 0.07 $ 0.09(4) $ 0.19(4) $ 0.25(4)
Diluted
earnings
per share 0.07 0.09(4) 0.19(4) 0.24(4)
Book value
per share 11.73 6.36(4) 11.73 6.36(4)
Cash dividends
declared per
share 0.055 0.048(4) 0.158(4) 0.145(4)
Average
number of
shares
outstanding:
Basic (3) 16,007,599 16,615,053(4) 16,237,911(4) 16,579,847(4)
Diluted (3) 16,043,435 16,716,164(4) 16,255,548(4) 16,717,563(4)
(1) Amounts are annualized.
(2) Noninterest expense divided by net interest income plus
noninterest income.
(3) Amounts calculated exclude ESOP shares not committed to be
released and unvested restricted shares granted under the 2005
Recognition and Retention Plan.
(4) Earnings per share, book value per share, dividends per share and
average common shares outstanding have been adjusted to reflect
the impact of the second-step conversion and reorganization of
the Company, which occurred on December 19, 2007.