NAMPA, Idaho, April 24, 2009 (GLOBE NEWSWIRE) -- Home Federal Bancorp, Inc. (the "Company") (Nasdaq:HOME), the parent company of Home Federal Bank (the "Bank"), today announced second quarter results for the fiscal year ending September 30, 2009. For the quarter ended March 31, 2009, the Company reported net income of $476,000, or $0.03 per diluted share compared to $945,000, or $0.06 per diluted share, for the same period a year ago. For the six months ended March 31, 2009, a $4.6 million provision for loan losses ($3.6 million of which was taken in the quarter ended December 31, 2008), contributed to a net loss of ($325,000), or ($0.02) per diluted share, compared to net income of $1.9 million, or $0.12 per diluted share, for the same period last year. For the six months ended March 31, 2009, pre-tax, pre-provision earnings(1) increased 7% to $3.9 million from $3.6 million for the same period of the prior year.
President and Chief Executive Officer Len E. Williams commented, "While the economy continues to provide stress to the loan portfolio, we are pleased with several facets of our second quarter earnings. Core deposits increased, asset and liability composition continues to improve and net interest margin improvement continues to position us for future growth."
The following summarizes key activities of the Company during the quarter ended March 31, 2009:
* The previously announced 5% share repurchase program was completed. A total of 867,970 shares were purchased at an average purchase price of $9.04 per share during the quarter; * Delinquent loans continued to increase as a result of unemployment and real estate related pressures in the Boise metropolitan area while some nonperforming loans were transferred to real estate owned; * The slowdown in consumer spending reduced fee income; * The Bank's newly-formed Small Business Banking Group had a successful first quarter by generating new deposit balance relationships; and * Net interest margin continued to expand due to declining funding costs and continued deleveraging of low-spread assets and liabilities.
Operating Results
Total revenue for the quarter ended March 31, 2009, which consisted of net interest income before the provision for loan losses plus noninterest income, was unchanged at $8.3 million compared to the same period of 2008. Total revenue for the second quarter of fiscal 2009 increased $99,000, or 1%, from the linked first quarter of fiscal 2009. Net interest income before the provision for loan losses increased 3% to $6.0 million for the quarter ended March 31, 2009, compared to $5.8 million for the same quarter of the prior year.
Total revenue for the six months ended March 31, 2009 increased $570,000 or 4% to $16.5 million, compared to $15.9 million for the same period of last year. Net interest income before provision for loan losses for the six months ended March 31, 2009 increased $872,000 or 8% to $11.7 million from $10.8 million from the same period of the prior year. Net interest margin improvement and an increase in gain on loans sold offset declines in fee income, which resulted in the increase in revenue in fiscal year 2009.
The Company's net interest margin increased by 45 basis points to 3.60% for the quarter ended March 31, 2009, from 3.15% for the same quarter last year, and by 23 basis points from 3.37% reported in the linked quarter. The improvement in the net interest margin from both prior periods is primarily attributable to a decrease in interest expense as current rates paid on deposits are lower than in the prior periods as management has cautiously priced deposits. In addition, balances of high-cost certificates of deposit and borrowings from the Federal Home Loan Bank of Seattle ("FHLB") were lower in fiscal 2009 and most of the advances that have matured this fiscal year have been repaid with excess liquidity.
A provision for loan losses of $1.1 million was established by management in connection with its analysis of the loan portfolio for the quarter ended March 31, 2009. The provision for loan losses was $378,000 for the same period of the prior year. The provision for loan losses was $4.6 million for the six months ended March 31, 2009, compared to $665,000 for the six months ended March 31, 2008. The provision reflects the increase in delinquent loans in fiscal 2009 and adjusted valuations on nonperforming loans as well as losses on loans charged-off during the second quarter of fiscal 2009 that exceeded the losses previously estimated.
Noninterest income decreased $138,000, or 6%, to $2.3 million for the quarter ended March 31, 2009, compared to $2.5 million for the same quarter a year ago and $2.5 million in the linked quarter. Mortgage rates fell during the second quarter of fiscal 2009, which led to significantly higher levels of mortgage loan refinancing. This higher volume of mortgage loan activity caused the gain on loan sales during the second quarter of 2009 to exceed gains during the same quarter of 2008 by $245,000. This increase in loan sale gains offset a decline in deposit service charges and fees of $210,000 during the second quarter of 2009 compared to the year-ago period. Management anticipates that deposit service charges and NSF fees will continue to decline while consumer spending remains weak. As a result, a new deposit product is scheduled to be launched in the third quarter of fiscal 2009 that management believes will prompt more frequent debit card usage, which is expected to generate interchange income. Loan servicing fees declined during the second quarter of fiscal 2009 as the Bank completed the sale of its mortgage servicing rights in December 2008.
Noninterest expense for the quarter ended March 31, 2009, increased $147,000, or 2% to $6.6 million from $6.4 million for the comparable period a year earlier. Compensation and benefits, which included severance accruals of $98,000, declined $274,000 or 7% in the second quarter of 2009 compared to the year-ago period. Insurance and taxes increased as Federal Deposit Insurance Corporation premiums were $109,000 higher in the second quarter of 2009 compared to the same period of 2008. Additionally, property taxes were $49,000 higher in the second quarter of fiscal 2009 compared to the second quarter of fiscal 2008 as a result of the payment of taxes on foreclosed properties. Other expenses increased $218,000 during the second quarter of fiscal 2009 compared to 2008 primarily as a result of a $161,000 provision for the decline in the value of foreclosed properties.
Balance Sheet
Total assets decreased 10% to $692.5 million at March 31, 2009, compared to $768.1 million a year earlier. The majority of the decrease is the result of management's strategy to reduce reliance on fixed-rate assets and liabilities by using the liquidity generated by prepayments of mortgage-backed securities and one- to four-family residential loans to repay FHLB advances as they matured and to fund declining balances in certificates of deposit.
Securities. Mortgage-backed securities decreased $27.7 million or 13% to $181.5 million at March 31, 2009, compared to $209.2 million at March 31, 2008. The decrease is primarily attributable to regular principal repayments. Approximately 98% of the Company's mortgage-backed securities were issued by U.S. government sponsored enterprises. The Company does not own any trust preferred securities or collateralized debt obligations. At March 31, 2009, the Company held $9.6 million of stock in the FHLB.
Loans. Net loans (excluding loans held for sale) at March 31, 2009, decreased $38.0 million or 8% to $439.2 million, compared to $477.2 million at March 31, 2008, as one- to four-family residential loans declined $43.9 million. One- to four-family residential loans represented 42% of the Bank's loan portfolio at March 31, 2009, compared to 48% at March 31, 2008. The Bank currently originates conventional one- to four-family residential loans for sale in the secondary market. As a result, the residential loan portfolio will likely continue to decline as new loans are not added to the portfolio. In contrast, commercial and consumer loans increased $8.8 million and $1.1 million, respectively, between March 31, 2008 and March 31, 2009. Commercial, multifamily and acquisition and development loans represented 46% of the Bank's loan portfolio at March 31, 2009, compared to 43% at March 31, 2008. However, commercial, multifamily and acquisition and development loans declined $6.9 million during the second quarter of fiscal 2009 as the repayment of a large loan was the primary cause for a $7.3 million reduction in the acquisition and development loan portfolio. The Company plans to continue its emphasis on commercial and small business banking products.
Asset Quality. Loans delinquent 30 to 89 days totaled $11.6 million at March 31, 2009, compared to $10.9 million at December 31, 2008, and $4.0 million at March 31, 2008. Nonperforming assets, which include impaired loans and real estate owned, totaled $19.1 million at March 31, 2009, compared to $18.4 million at December 31, 2008, and $2.3 million at March 31, 2008. The allowance for loan losses was $7.3 million, or 1.64%, of gross loans at March 31, 2009, compared to $8.0 million, or 1.69% of gross loans at December 31, 2008, and $3.3 million, or 0.69% of gross loans at March 31, 2008.
The following table summarizes nonperforming and impaired loans and real estate owned at March 31, 2009 and December 31, 2008:
March 31, 2009 December 31, 2008
Loss Loss
(in thousands) Balance Reserve Balance Reserve
------- ------- ------- -------
Land acquisition and development $ 5,266 $ 1,029 $ 4,330 $ 936
One- to four-family construction 2,307 286 5,389 832
Commercial real estate 3,074 220 3,071 273
One- to four-family residential 3,943 441 4,240 713
Other -- -- 4 --
------- ------- ------- -------
Total nonperforming
and impaired loans $14,590 $ 1,976 $17,034 $ 2,754
======= =======
General loss reserve 5,357 5,273
------- -------
$ 7,333 $ 8,027
======= =======
Real estate owned, net $ 4,478 $ 1,352
------- -------
The largest increase in delinquent loans during the second quarter of fiscal 2009 occurred in the commercial real estate portfolio with balances delinquent more than 30 days increasing by $3.9 million to $8.4 million at March 31, 2009. Net charge-offs totaled $1.8 million during the quarter ended March 31, 2009. Other real estate owned increased $3.1 million during the second quarter of fiscal 2009 to $4.5 million at March 31, 2009. Other real estate owned was comprised of $2.9 million of land development and speculative one- to four-family construction projects, $1.0 million of commercial real estate and $610,000 of one- to four-family residential properties. This activity represents prior identified loans evolving through the collection cycle.
Deposits and borrowings. Deposits decreased $19.5 million, or 5%, to $376.6 million at March 31, 2009, compared to $396.1 million at March 31, 2008. Demand deposits and savings accounts increased slightly from $204.7 million at March 31, 2008 to $205.1 million at March 31, 2009. Certificates of deposit decreased $20.0 million, or 10%, to $171.5 million at March 31, 2009, compared to $191.4 million at March 31, 2008. The decrease in certificates of deposit was primarily the result of management choosing not to match rates offered by local competitors that in many instances exceeded the cost of the Bank's alternative funding sources.
Advances from the FHLB decreased $51.6 million or 33% to $103.9 million at March 31, 2009 compared to $155.6 million at March 31, 2008. As noted earlier, the decrease resulted from maturing advances being repaid with excess liquidity.
Equity. Stockholders' equity decreased $4.7 million, or 2%, to $200.6 million at March 31, 2009, compared to $205.4 million at March 31, 2008. The execution of the entire share repurchase program during the quarter ended March 31, 2009 was the primary cause for the decrease in stockholders' equity. Dividends and a year-to-date loss from operations in fiscal 2009 reduced retained earnings while a lower interest rate environment at March 31, 2009 increased the unrealized gain on securities by $4.2 million, net of tax, compared to September 30, 2008. The Company's book value per share as of March 31, 2009 was $12.15 per share based upon 16,515,168 outstanding shares of common stock, a 2.9% increase from September 30, 2008.
About the Company
Home Federal Bancorp, Inc. is headquartered in Nampa, Idaho, and is the parent company of Home Federal Bank, a community bank originally organized 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 commercial loan center. The Company's common stock is traded on the NASDAQ Global Select Market under the symbol "HOME" and is included in the Russell 2000 Index. For more information, visit the Company 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, 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, 2008, 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 March 31, Sept 30, March 31,
(In thousands, except share data) 2009 2008 2008
-------- -------- --------
(Unaudited) (Unaudited)
ASSETS
Cash and amounts due from
depository institutions $ 18,826 $ 23,270 $ 36,353
Certificates of deposit in
correspondent bank -- 5,000 --
Mortgage-backed securities
available for sale, at fair value 181,532 188,787 209,239
FHLB stock, at cost 9,591 9,591 9,591
Loans receivable, net of allowance
for loan losses of $7,333 and
$4,579 and $3,307 439,170 459,813 477,155
Loans held for sale 5,549 2,831 2,751
Accrued interest receivable 2,418 2,681 2,941
Property and equipment, net 16,327 15,246 13,613
Mortgage servicing rights, net -- 1,707 1,903
Bank owned life insurance 11,800 11,590 11,377
Real estate and other property owned 4,478 650 452
Deferred income tax asset, net 1,106 1,770 --
Other assets 1,700 2,134 2,736
-------- -------- --------
TOTAL ASSETS $692,497 $725,070 $768,111
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposit accounts:
Noninterest-bearing demand deposits $ 37,323 $ 41,398 $ 37,323
Interest-bearing demand deposits 134,047 127,714 142,820
Savings deposits 33,704 26,409 24,524
Certificates of deposit 171,494 177,404 191,439
-------- -------- --------
Total deposit accounts 376,568 372,925 396,106
Advances by borrowers for
taxes and insurance 1,309 1,386 1,429
Interest payable 428 552 619
Deferred compensation 5,225 5,191 4,889
FHLB advances 103,909 136,972 155,553
Deferred income tax liability, net -- -- 377
Other liabilities 4,409 2,857 3,768
-------- -------- --------
Total liabilities 491,848 519,883 562,741
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:
Mar. 31, 2009 - 17,445,311 issued;
16,515,168 outstanding 165 174 173
Sept. 30, 2008 - 17,412,449 issued;
17,374,161 outstanding
Mar. 31, 2008 - 17,386,517 issued;
17,343,229 outstanding
Additional paid-in capital 150,087 157,205 156,805
Retained earnings 57,746 59,813 59,475
Unearned shares issued to ESOP (10,152) (10,605) (11,634)
Accumulated other comprehensive
income (loss) 2,803 (1,400) 551
-------- -------- --------
Total stockholders' equity 200,649 205,187 205,370
-------- -------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $692,497 $725,070 $768,111
======== ======== ========
HOME FEDERAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data) (Unaudited)
Three Months Ended Six Months Ended
March 31, March 31
--------------------- ---------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
Interest and
dividend income:
Loan interest $ 6,806 $ 7,770 $ 13,919 $ 15,846
Investment interest 1 510 44 774
Mortgage-backed
security interest 2,123 2,148 4,328 4,091
FHLB dividends -- 31 (33) 50
---------- ---------- ---------- ----------
Total interest and
dividend income 8,930 10,459 18,258 20,761
---------- ---------- ---------- ----------
Interest expense:
Deposits 1,742 2,872 3,760 6,086
FHLB advances 1,228 1,810 2,793 3,842
---------- ---------- ---------- ----------
Total interest
expense 2,970 4,682 6,553 9,928
---------- ---------- ---------- ----------
Net interest income 5,960 5,777 11,705 10,833
Provision for
loan losses 1,060 378 4,635 665
---------- ---------- ---------- ----------
Net interest income
after provision for
loan losses 4,900 5,399 7,070 10,168
---------- ---------- ---------- ----------
Noninterest income:
Service charges
and fees 1,892 2,102 4,001 4,335
Gain on sale of loans 407 162 597 347
Increase in cash
surrender value of
bank owned life
insurance 104 104 210 208
Loan servicing fees (15) 126 54 253
Mortgage servicing
rights, net -- (75) (31) (143)
Other (43) 64 (25) 108
---------- ---------- ---------- ----------
Total noninterest
income 2,345 2,483 4,806 5,108
---------- ---------- ---------- ----------
Noninterest expense:
Compensation
and benefits 3,779 4,053 7,354 7,752
Occupancy and equipment 729 760 1,499 1,471
Data processing 577 531 1,119 1,053
Advertising 197 258 445 546
Postage and supplies 146 171 283 321
Professional services 299 191 634 403
Insurance and taxes 306 140 461 225
Other 538 320 810 536
---------- ---------- ---------- ----------
Total noninterest
expense 6,571 6,424 12,605 12,307
---------- ---------- ---------- ----------
Income (loss) before
income taxes 674 1,458 (729) 2,969
Income tax
expense (benefit) 198 513 (404) 1,077
---------- ---------- ---------- ----------
NET INCOME (LOSS) $ 476 $ 945 $ (325)$ 1,892
========== ========== ========== ==========
Earnings (loss) per
common share (1):
Basic $ 0.03 $ 0.06 $ (0.02)$ 0.12(1)
Diluted $ 0.03 $ 0.06 $ (0.02)$ 0.12(1)
Weighted average number
of shares
outstanding (1):
Basic 15,740,064 15,962,325 15,936,796 16,352,427(1)
Diluted 15,776,330 15,978,217 15,936,796 16,374,451(1)
Dividends declared
per share (1): $ 0.055 $ 0.055 $ 0.11 $ 0.103(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 and per share data) (Unaudited)
At or For the Quarter Ended
------------------------------------------------------
2009 2008
---------- -------------------------------------------
March 31 Dec 31 Sept 30 June 30 March 31
SELECTED
PERFORMANCE
RATIOS
Return (loss)
on average
assets (1) 0.27% (0.44)% 0.54% 0.59% 0.49%
Return (loss)
on average
equity (1) 0.93 (1.55) 1.94 2.18 1.83
Pre-tax,
pre-provision
return on
average
assets(4) 0.99 1.20 1.42 1.31 0.95
Net interest
margin (1) 3.60 3.37 3.41 3.29 3.15
Efficiency
ratio (2) 79.12 73.53 69.68 71.40 77.77
PER SHARE DATA
Basic earnings
(loss) per
share $ 0.03 $ (0.05)$ 0.06 $ 0.07 $ 0.06
Diluted
earnings
(loss) per
share 0.03 (0.05) 0.06 0.07 0.06
Book value per
outstanding
share 12.15 11.93 11.81 11.73 11.84
Cash dividends
declared per
share 0.055 0.055 0.055 0.055 0.055
Average number
of shares
outstanding:
Basic (3) 15,740,064 16,129,352 16,042,720 16,007,599 15,962,325
Diluted (3) 15,776,330 16,129,352 16,078,302 16,043,435 15,978,217
ASSET QUALITY
Allowance for
loan losses $ 7,333 $ 8,027 $ 4,579 $ 3,801 $ 3,307
Nonperforming
loans 14,590 17,034 9,945 3,462 1,852
Nonperforming
assets 19,068 18,386 10,595 4,169 2,304
Allowance for
loan losses
to non-
performing
loans 50.26% 47.12% 46.04% 109.79% 178.56%
Allowance for
loan losses
to gross loans 1.64 1.69 0.98 0.81 0.69
Nonperforming
loans to
gross loans 3.26 3.58 2.14 0.73 0.39
Nonperforming
assets to
total assets 2.75 2.56 1.46 0.56 0.30
FINANCIAL CONDITION DATA
Average
interest-
earning
assets $ 661,428 $ 681,374 $ 692,776 $ 718,207 $ 732,444
Average
interest-
bearing
liabilities 449,175 470,319 482,232 504,680 518,500
Net average
earning
assets 212,253 211,055 210,544 213,527 213,944
Average
interest-
earning
assets
to average
interest-
bearing
liabilities 147.25% 144.87% 143.66% 142.31% 141.26%
Stockholders'
equity to
assets 28.97 28.89 28.30 27.43 26.74
STATEMENT OF
INCOME DATA
Interest
income $ 8,930 $ 9,328 $ 9,729 $ 10,093 $ 10,459
Interest
expense 2,970 3,583 3,826 4,181 4,682
---------- ---------- ---------- ---------- ----------
Net interest
income 5,960 5,745 5,903 5,912 5,777
Provision for
loan losses 1,060 3,575 1,114 652 378
Noninterest
income 2,345 2,461 2,647 2,735 2,483
Noninterest
expense 6,571 6,034 5,958 6,174 6,424
---------- ---------- ---------- ---------- ----------
Net income
(loss)
before taxes 674 (1,403) 1,478 1,821 1,458
Income tax
expense
(benefit) 198 (602) 484 702 513
---------- ---------- ---------- ---------- ----------
Net income
(loss) $ 476 $ (801)$ 994 $ 1,119 $ 945
========== ========== ========== ========== ==========
Total
revenue (5) $ 8,305 $ 8,206 $ 8,550 $ 8,647 $ 8,260
Pre-tax
pre-provision
income (6) 1,734 2,172 2,592 2,473 1,836
(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.
(4) Income before income taxes plus provision for loan losses divided
by average assets for the period presented.
(5) Net interest income plus noninterest income.
(6) Income before income taxes plus provision for loan losses. See
"Reconciliation of Non-GAAP Financial Measures."
Reconciliation of Non-GAAP Financial Measures
(In thousands)
Three Months Six Months
Ended March 31, Ended March 31,
-------------- --------------
2009 2008 2009 2008
------ ------ ------ ------
NET INCOME (LOSS) $ 476 $ 945 $ (325) $1,892
Income tax expense (benefit) 198 513 (404) 1,077
------ ------ ------ ------
Income (loss) before income taxes 674 1,458 (729) 2,969
------ ------ ------ ------
Provision for loan losses 1,060 378 4,635 665
------ ------ ------ ------
Pre-tax, pre provision income $1,734 $1,836 $3,906 $3,634
====== ====== ====== ======