Published:
Home Federal Bancorp, Inc. Announces Third Quarter Earnings
Home Federal Bancorp, Inc. (the "Company")
(NASDAQ: HOME), the parent company of Home Federal Bank (the "Bank"), today
reported net income of $1.6 million, or $0.11 per diluted share, for the
quarter ended June 30, 2007, compared to $1.6 million, or $0.11 per diluted
share, for the same period a year ago. Net income for the nine months
ended June 30, 2007 was $4.1 million, or $0.28 per diluted share, compared
to $4.6 million, or $0.31 per diluted share, for the same nine-month period
a year ago.
"We are seeing very positive results from the implementation of our
commercial banking division as we extend our reputation for premier service
to a new group of clients," said Daniel L. Stevens, the Company's Chairman
and CEO. "The Bank has assembled a seasoned group of business bankers from
the local market, led by experienced officers who are well known and highly
regarded. I am very pleased with this new addition to the business model."
Operating Results
Revenues for the quarter ended June 30, 2007, which consisted of net
interest income before the provision for loan losses plus noninterest
income, decreased 6% to $8.3 million for the quarter, compared to $8.8
million for the quarter ended June 30, 2006. Net interest income before
the provision for loan losses decreased 8% to $5.3 million for the quarter
ended June 30, 2007 compared to $5.8 million for the same quarter of the
prior year as the cost of deposits increased more rapidly than the yield on
loans and investments. In addition, the current business strategy is to
reduce the outstanding balances of the residential mortgage portfolio and
mortgage-backed securities to re-deploy the proceeds in support of the
commercial banking initiative.
Revenues for the nine months ended June 30, 2007 decreased 4% to $24.8
million, compared to $25.8 million for the same period of last year. Net
interest income before the provision for loan losses decreased 7% to $16.2
million, compared to $17.4 million for the same period of last year.
A provision for loan losses was not required in connection with the
analysis of the loan portfolio for the current quarter, compared to a
provision for loan losses of $175,000 established for the same quarter of
the prior year. The decrease in the provision reflects a $12 million
reduction in loans receivable for the current quarter as compared to an
increase of $18 million for the same period of last year. The provision
for loan losses was $71,000 for the nine months ended June 30, 2007,
compared to $320,000 for the nine months ended June 30, 2006. The
$249,000, or 78%, decrease in the provision reflects the decrease in net
loans receivable for the comparable periods.
The Company's net interest margin decreased 23 basis points to 3.02% for
the quarter ended June 30, 2007, from 3.25% for the same quarter last year.
The net interest margin for the nine months ended June 30, 2007 decreased
39 basis points to 3.02% from 3.41% for the same period a year earlier.
The decline in the net interest margin reflects competitive pricing
pressures and the relatively flat yield curve that exists, as the cost of
shorter-term deposits and borrowed funds have increased more rapidly than
the yield on longer-term assets. The Company believes the repricing of
existing loans and the emphasis on expanding the commercial and small
business banking programs, including both loan and deposit products, will
help counter the trend in net interest margin.
Noninterest income decreased 2% to $3.0 million for the quarter ended June
30, 2007, compared to $3.1 million for the same quarter a year ago. The
decrease was primarily attributable to a $161,000 decrease related to the
value of the mortgage servicing rights and a $107,000 decrease in fees and
service charges offset by a $203,000 increase in gains on the sale of
residential loans. For the nine months ended June 30, 2007, noninterest
income increased 3% to $8.6 million, compared to $8.3 million for the same
period of the prior year. Increases in gains on the sale of residential
loans of $374,000 offset by a $176,000 decrease related to the value of the
mortgage servicing rights account for the majority of the increase. The
Company currently sells the majority of the one- to four-family residential
mortgage loans that it originates. For the three and nine months ended
June 30, 2006, a larger percentage of the residential mortgage loans
originated were held in the loan portfolio. During the quarter ended June
30, 2006, the Company had a $201,000 write-up of the value of the mortgage
servicing rights.
Noninterest expense for the quarter ended June 30, 2007 decreased $337,000,
or 5%, to $5.8 million, from $6.1 million for the comparable period a year
earlier. Compensation and benefit expenses decreased $354,000, or 9%, to
$3.5 million for the quarter ended June 30, 2007 as compared to $3.9
million for the same quarter a year ago. As of June 30, 2007, the Company
employed 215 full-time equivalent employees, compared to 240 at June 30,
2006. The Company's efficiency ratio was 69.9% for the quarter ended June
30, 2007, relatively unchanged from 69.3% for the same quarter a year ago.
The efficiency ratio indicates how much is spent on noninterest expenses as
a percentage of total revenue.
Noninterest expense for the nine months ended June 30, 2007 was unchanged
at $18.1 million from the comparable period ended June 30, 2006.
Compensation and benefits were also unchanged at $11.4 million for the nine
months ended June 30, 2007 and 2006. Advertising costs increased $232,000,
or 31%, primarily as a result of marketing costs related to a debit card
rewards program and business banking campaign that were implemented during
the current fiscal year. The debit card rewards program is designed to
reward customers for their debit card usage which results in additional
interchange income to the Company. The efficiency ratio was 73.1% for the
nine months ended June 30, 2007 compared to 70.1% for the same period of
the prior year. The reduction in the Company's net interest income was the
primary factor related to the increase in the efficiency ratio.
Balance Sheet Growth
Total assets decreased $28.4 million, or 4%, to $728.3 million at June 30,
2007, compared to $756.7 million a year earlier. Net loans (excluding
loans held for sale) at June 30, 2007 decreased less than 1% to $491.8
million, compared to $494.0 million at June 30, 2006. One- to four-family
residential loans represented 57% of the Bank's loan portfolio at June 30,
2007, compared to 63% at June 30, 2006 as the Bank continues to sell the
majority of the residential mortgage loans that it originates. Commercial
real estate loans accounted for 32% of the Bank's loan portfolio at June
30, 2007, compared to 27% at June 30, 2006. In the future, the Bank plans
to increase its emphasis on commercial and small business banking products.
Mortgage-backed securities decreased $36.2 million to $166.8 million at
June 30, 2007, compared to $203.0 million at June 30, 2006. The decrease
is primarily attributable to normal principal repayments during the period.
During the quarter ended June 30, 2007, the Company transferred its entire
portfolio of held-to-maturity mortgage-backed securities to available for
sale to meet the additional liquidity needs associated with increasing
commercial banking activities.
The Company's credit quality remains excellent, as non-performing assets
were $520,000, or 0.07% of total assets, at June 30, 2007, compared to
$30,000, or 0.004% of total assets, at June 30, 2006. The allowance for
loan losses was $2.7 million, or 0.56% of gross loans, at June 30, 2007
compared to $3.2 million, or 0.64% of gross loans, at June 30, 2006. Prior
to March 31, 2007, the allowance for loan losses included the estimated
loss from unfunded loan commitments. The preferred accounting method is to
separate the unfunded loan commitments from the disbursed loan amounts and
record the unfunded loan commitment portion as a liability. At March 31,
2007, the reserve for unfunded loan commitments of $192,000 was reclassed
to other liabilities on the Consolidated Balance Sheet.
Deposits decreased $20.8 million, or 5%, to $418.7 million at June 30, 2007
compared to $439.5 million at June 30, 2006. Demand deposits and savings
accounts decreased $14.2 million, or 7%, as customers migrated towards
higher rate deposit products the past year. Noninterest-bearing demand
deposits decreased $14.4 million, or 30%, to $34.4 million at June 30,
2007, compared to $48.8 million at June 30, 2006. A significant portion of
the decrease in noninterest-bearing demand deposits was the result of a
single commercial relationship that reduced outstanding balances by
approximately $7.1 million. Interest-bearing demand deposits increased
$1.1 million, or less than 1%, to $133.8 million at June 30, 2007, compared
to $132.7 million at June 30, 2006. Certificates of deposit decreased $6.5
million, or 3%, to $227.1 million at June 30, 2007, compared to $233.6
million at June 30, 2006. 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 alternative
funding sources. Advances from the Federal Home Loan Bank ("FHLB")
decreased $8.4 million, or 4%, to $189.3 million at June 30, 2007 compared
to $197.7 million at June 30, 2006. The Company utilizes advances from the
FHLB as an alternative funding source to retail deposits in order to manage
funding costs, manage interest rate risk and to leverage the Balance Sheet.
Stockholders' equity increased $4.0 million, or 4%, to $110.0 million at
June 30, 2007, compared to $106.0 million at June 30, 2006. The increase
was primarily the result of $5.7 million in net income for the period,
$801,000 in earned employee stock ownership plan ("ESOP") shares, $1.0
million in equity compensation and $854,000 proceeds from the exercise of
stock options, offset by $1.3 million of cash dividends paid to
stockholders and $3.2 million increase in unrealized losses on securities.
During the quarter ended June 30, 2007, the Company transferred its entire
portfolio of held-to-maturity mortgage-backed securities to available for
sale for additional liquidity purposes. As a result, stockholders' equity
was decreased by the securities unrealized holding loss of $1.9 million at
the date of transfer. The Company's book value per share as of June 30,
2007 was $7.22 per share based upon 15,232,243 outstanding shares of common
stock.
About the Company
Home Federal Bancorp, Inc. is a federally chartered savings and loan
holding company headquartered in Nampa, Idaho. It is the subsidiary of
Home Federal MHC, a federally chartered mutual holding company, and the
parent company of Home Federal Bank, a federally chartered 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 two mortgage loan centers. The Company's common stock
is traded on the NASDAQ Global 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. 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, regulatory and accounting changes, the value of mortgage
servicing rights, risks related to construction and development lending,
increased emphasis on 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, 2006,
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 SHEET
(In thousands, except share June 30, September 30, June 30,
data) (Unaudited) 2007 2006 2006
----------- ------------ -----------
ASSETS
Cash and amounts due from
depository institutions $ 23,086 $ 18,385 $ 14,358
Mortgage-backed securities
available for sale, at fair value 166,755 12,182 12,678
Mortgage-backed securities held to
maturity, at cost - 183,279 190,273
FHLB stock, at cost 9,591 9,591 9,591
Loan receivable, net of allowance
for loan losses of $2,748,
$2,974 and $3,160 491,768 503,065 494,016
Loans held for sale 4,363 4,119 5,065
Accrued interest receivable 2,880 3,025 2,984
Property and equipment, net 12,271 12,849 13,118
Mortgage servicing rights, net 2,269 2,492 2,624
Bank owned life insurance 11,065 10,763 10,665
Real estate and other property
owned 153 - -
Deferred income tax asset 1,757 - -
Other assets 2,357 1,542 1,306
----------- ------------ -----------
TOTAL ASSETS $ 728,315 $ 761,292 $ 756,678
=========== ============ ===========
LIABILITIES AND STOCKHOLDERS'
EQUITY
LIABILITIES
Deposit accounts:
Noninterest-bearing demand
deposits $ 34,368 $ 44,626 $ 48,798
Interest-bearing demand
deposits 133,770 128,276 132,652
Savings deposits 23,465 23,655 24,398
Certificates of deposit 227,095 233,724 233,622
----------- ------------ -----------
Total deposit accounts 418,698 430,281 439,470
Advances by borrowers for taxes
and insurance 921 2,133 1,096
Interest payable 773 971 978
Deferred compensation 4,418 3,875 3,634
FHLB advances 189,264 210,759 197,722
Deferred income tax liability - 800 782
Other liabilities 4,243 4,604 6,989
----------- ------------ -----------
Total liabilities 618,317 653,423 650,671
STOCKHOLDERS' EQUITY
Serial preferred stock, $.01
par value; 5,000,000 authorized,
issued and outstanding, none - - -
Common stock, $.01 par value;
50,000,000 authorized,
issued and outstanding:
June 30, 2007 - 15,278,803
issued, 15,232,243
outstanding 152 152 152
Sept. 30, 2006 - 15,208,750
issued, 15,169,114 outstanding
June 30, 2006 - 15,208,750
issued, 15,154,114 outstanding
Additional paid-in capital 59,209 57,222 56,923
Retained earnings 57,922 54,805 53,462
Unearned shares issued to ESOP (3,808) (4,134) (4,240)
Accumulated other comprehensive
loss (3,477) (176) (290)
----------- ------------ -----------
Total stockholders' equity 109,998 107,869 106,007
----------- ------------ -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 728,315 $ 761,292 $ 756,678
=========== ============ ===========
HOME FEDERAL BANCORP, INC. Three Months Ended Nine Months Ended
AND SUBSIDIARY CONSOLIDATED June 30, June 30,
STATEMENT OF INCOME ---------------------- ----------------------
(In thousands, except share 2007 2006 2007 2006
data) (Unaudited) ---------- ---------- ---------- ----------
Interest and dividend
income:
Loan interest $ 8,334 $ 7,896 $ 25,331 $ 21,959
Investment interest 179 43 223 114
Mortgage-backed security
interest 2,123 2,448 6,673 7,220
FHLB dividends 14 - 33 -
---------- ---------- ---------- ----------
Total interest and
dividend income 10,650 10,387 32,260 29,293
---------- ---------- ---------- ----------
Interest expense:
Deposits 3,131 2,493 9,146 6,187
FHLB advances 2,207 2,100 6,942 5,696
---------- ---------- ---------- ----------
Total interest
expense 5,338 4,593 16,088 11,883
---------- ---------- ---------- ----------
Net interest income 5,312 5,794 16,172 17,410
Provision for loan losses - 175 71 320
---------- ---------- ---------- ----------
Net interest income
after provision for
loan losses 5,312 5,619 16,101 17,090
---------- ---------- ---------- ----------
Noninterest income:
Service charges and fees 2,285 2,392 6,921 6,893
Gain on sale of loans 491 288 1,168 794
Increase in cash surrender
value of bank owned life
insurance 102 95 301 285
Loan servicing fees 134 151 420 470
Mortgage servicing
rights, net (48) 113 (223) (47)
Other 18 14 39 (52)
---------- ---------- ---------- ----------
Total noninterest
income 2,982 3,053 8,626 8,343
---------- ---------- ---------- ----------
Noninterest expense:
Compensation and
benefits 3,498 3,852 11,363 11,428
Occupancy and equipment 716 651 2,145 2,073
Data processing 548 503 1,549 1,364
Advertising 376 269 972 740
Postage and supplies 167 196 487 616
Professional services 209 278 620 641
Insurance and taxes 114 106 323 320
Other 166 276 675 880
---------- ---------- ---------- ----------
Total noninterest
expense 5,794 6,131 18,134 18,062
---------- ---------- ---------- ----------
Income before income taxes 2,500 2,541 6,593 7,371
Income tax expense 934 980 2,517 2,817
---------- ---------- ---------- ----------
NET INCOME $ 1,566 $ 1,561 $ 4,076 $ 4,554
========== ========== ========== ==========
Earnings per common share:
Basic $ 0.11 $ 0.11 $ 0.28 $ 0.31
Diluted $ 0.11 $ 0.11 $ 0.28 $ 0.31
Weighted average number of
shares outstanding:
Basic 14,625,927 14,491,205 14,594,936 14,478,701
Diluted 14,714,933 14,563,609 14,716,165 14,503,587
Dividends declared per
share: $ 0.055 $ 0.055 $ 0.165 $ 0.160
HOME FEDERAL BANCORP, INC. AND At Or For The At Or For The
SUBSIDIARY ADDITIONAL FINANCIAL Nine Months Year Ended
INFORMATION (Dollars in thousands, Ended June 30, Sept. 30,
except share data) (Unaudited) 2007 2006
--------------- ---------------
FINANCIAL CONDITION DATA
Average interest-earning assets $ 713,455 $ 689,688
Average interest-bearing liabilities 592,398 563,834
Net average earning assets 121,057 125,854
Average interest-earning assets to
average interest-bearing liabilities 120.44% 122.32%
Stockholders' equity to assets 15.10 14.17
ASSET QUALITY
Allowance for loan losses $ 2,748 $ 2,974
Non-performing loans 367 388
Non-performing assets 520 388
Allowance for loan losses to
non-performing loans 748.77% 766.49%
Allowance for loan losses to gross loans 0.56 0.59
Non-performing loans to gross loans 0.07 0.08
Non-performing assets to total assets 0.07 0.05
At Or For The Three At Or For The Nine
Months Ended June 30, Months Ended June 30,
---------------------- ----------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
SELECTED PERFORMANCE RATIOS
Return on average
assets (1) 0.85% 0.83% 0.72% 0.85%
Return on average
equity (1) 5.63 5.89 4.92 5.81
Net interest margin (1) 3.02 3.25 3.02 3.41
Efficiency ratio (2) 69.86 69.30 73.13 70.14
PER SHARE DATA
Basic earnings per share $ 0.11 $ 0.11 $ 0.28 $ 0.31
Diluted earnings per
Share 0.11 0.11 0.28 0.31
Book value per share 7.22 7.00 7.22 7.00
Cash dividends declared
per share 0.055 0.055 0.165 0.160
Average number of shares
outstanding:
Basic (3) 14,625,927 14,491,205 14,594,936 14,478,701
Diluted (3) 14,714,933 14,563,609 14,716,165 14,503,587
(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.
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