Published:
HF Financial Corp. Quarterly Earnings Per Share Increase 48%; Announces Quarterly Dividend; Announces Participation in Treasury Department's Capital Purchase Program
SIOUX FALLS, S.D., Oct. 27 /PRNewswire-FirstCall/ -- HF Financial Corp.
(Nasdaq: HFFC), reported earnings for the fiscal first quarter ended September
30, 2008 of $2.0 million, or $0.49 in diluted earnings per share, versus $1.3
million, or $0.33 in diluted earnings per share, in the comparable period in
fiscal 2008, a 48 percent increase in diluted earnings per share.
Revenue inclusive of net interest income and non-interest income totaled
$11.7 million for the quarter, an increase of $2.2 million, or 23.8 percent
over the same period last year. Net interest income totaled $8.7 million for
the quarter, an increase of $2.0 million, or 30.3 percent over the same period
last year. Net interest margin expressed on a fully taxable equivalent basis
for the quarter was 3.35 percent, compared to 2.92 percent in the first
quarter last year. The net interest margin benefitted primarily from lower
costs on interest-bearing liabilities, and also expanded due to earning asset
growth.
For the quarter, non-interest income increased to $3.0 million, up
$234,000 or 8.3 percent relative to the comparable period in fiscal year 2008.
Fees on deposits, loan servicing income and gain on securities sold, net, were
the primary factors in this overall increase, which amounted to $138,000,
$52,000 and $80,000, respectively.
"Despite the mood of the equity and credit markets, we are heartened by
the continued growth in our core earnings." said Curtis L. Hage, Chairman and
CEO of the company. "We suspect the challenges facing our national economy may
eventually affect the economy of easternSouth Dakota and our balance sheet.
However, our current results reflect the strength of our core business and the
positive effect that has had on our performance."
The company also announced that it had settled its previously disclosed
lawsuit against Meta Bank. The settlement occurred subsequent to the end of
the company's first fiscal quarter and will be recorded in the company's
second fiscal quarter. Pursuant to the settlement MetaBank has paid to the
company $2.75 million. The company expects to record net proceeds of $2.22
million, which include payoff of applicable loans and legal costs of $243,000
and $292,000, respectively, in the company's second fiscal quarter.
Mr. Hage commented, "We are pleased to have this settlement behind us and
move forward with our business plan. This settlement confirms our belief that
the process was worth the time invested in arriving at this favorable outcome
for our shareholders."
The ratio of non-performing loans and leases to total loans and leases at
the end of the first quarter of fiscal year 2009 was 0.37%, compared to 0.43%
at the end of the first quarter in the prior year period. Net loan charge offs
totaled $137,000 for the quarter ended September 30, 2008 compared to $704,000
for the same period last year. Home Federal's provision for loan losses
totaled $387,000 versus $325,000 for the first quarter last year.
Non-interest expense grew $1.3 million or 17.6 percent, over last year's
first quarter. The increase was due primarily to an increase of $678,000 in
compensation and employee benefits, an increase in federal deposit insurance
premiums of $118,000, and an increase in legal costs of $150,000. Net
healthcare costs, which are included in the total for compensation and
employee benefits, increased $137,000, to $358,000, up 62.0% from the prior
year's first quarter.
"The Bank remains well-capitalized and positioned for continued growth."
said Darrel Posegate, President of Home Federal Bank. "Our asset quality
performance reflects the resiliency of our region's business climate. We
continue to invest in our people for growth of our business lines. Our
expenses reflect the cost of acquiring and retaining the talent needed to
produce these strong results. We continue to manage the streamlining of
operations to provide the best positioning of costs for the company long
term."
Balance Sheet Performance
Total loans and leases receivable at September 30, 2008 totaled $802.1
million, an increase of $18.4 million from the balance at June 30, 2008. As
previously announced, the company made a decision in the first quarter of
fiscal year 2008 to cease origination of indirect automobile loans. During the
current fiscal year, consumer indirect loans decreased $6.9 million, to $37.4
million, while other lines of business produced an increase of $25.3 million
in loan and lease receivables since June 30, 2008.
Total non-performing assets decreased $14,000, or 0.4 percent, for the
first quarter of fiscal year 2009, as compared to the same quarter of fiscal
year 2008. The decrease in non-performing assets was primarily attributable to
a decrease of $1.1 million in accruing loans and leases delinquent more than
90 days to $831,000 at September 30, 2008. This decrease was partially offset
by an increase in non-accruing loans and leases of $777,000 and an increase in
foreclosed assets of $300,000 for the comparable period.
Deposits at September 30, 2008 totaled $765.0 million, a decrease of $19.2
million, or 2.5 percent from the balance at June 30, 2008. During the three-
month period, public fund account balances declined $29.7 million due to
typical seasonal fluctuations. Non-interest bearing checking, interest bearing
checking, money market accounts and savings accounts decreased $13.8 million,
$8.7 million, $6.3 million, and $15.7 million, respectively, in the comparable
period. In-market and out-of-market certificates of deposit increased a total
of $25.3 million from $353.3 million to $378.6 million for the first fiscal
quarter, which partially offset the other decreases in deposits.
Quarterly Dividend Declared
The company announced it will pay a quarterly cash dividend of 11.25 cents
per share for the first quarter of the 2009 fiscal year. The dividend will be
paid on November 13, 2008 to stockholders of record on November 6, 2008.
Participation in Treasury Department's Capital Purchase Program
The company announced it has received preliminary approval from the
Treasury Department to utilize the Treasury Department's Capital Purchase
Program. The company applied to the Treasury Department for the sale of $25
million of the company's preferred stock pursuant to the terms announced for
the program. The company's participation is subject to standard terms and
conditions, as well as final approval by the company's Board of Directors.
"HF Financial Corp. and Home Federal Bank are well capitalized and we
believe, as the Treasury has announced, we have a patriotic duty to this
country to get the economic engine going again," Mr. Hage said. "When first
approached by the Treasury about its capital plan, we were cautious about
participating. However, after further clarification that this program is
designed to strengthen the capital and liquidity of viable banks, we decided
to take a closer look."
Mr. Hage added, "If by participating in this historical program we can do
our part to move our economy forward through enhanced lending for the markets
we serve, then we are pleased to step up as a leader for our communities."
First Quarter Fiscal 2009 Conference Call and Webcast
The company will host its quarterly conference calls and webcasts to
discuss its quarterly financial and operational results. The conference call
and webcast is scheduled for Tuesday, October 28, 2008 at 9:00 am CT (10:00 am
ET) during which the company will discuss its first quarter fiscal 2009
earnings results.
Curtis L. Hage, Chairman of the Board, President and Chief Executive
Officer, and Darrel L. Posegate, Executive Vice President, Chief Financial
Officer and Treasurer, will recap the company's first quarter for fiscal 2009.
When: Tuesday, October 28, 2008
Conference call: 9:00 am CT / 10:00 am ET
Dial-in Number: 1-877-407-8033
Call ID: HF Financial First Quarter Fiscal 2009 Earnings Conference Call
Webcast: To listen to a live Webcast of the presentations, go to the
Investor Relations page of the HF Financial website site,
http://www.homefederal.com, and then the Webcast icon. The Webcast replay will
be available from 12 pm CT, Tuesday, October 28, 2008, until 6:00 pm CT,
Tuesday, November 11, 2008. Listening to the Webcast requires speakers and
Windows Media Player. If you do not have Media Player, download the free
software at http://www.windowsmedia.com.
Replay: If you do not have Internet access and want to listen to an audio
replay, call 1-877-660-6853 using Account #: 286, Conference ID #: 298702. The
audio replay will be available beginning at 12 pm CT on Tuesday, October 28,
2008, through 11:59 pm CT on Tuesday, November 25, 2008.
About HF Financial
HF Financial Corp., based inSioux Falls, SD, is the parent company for
financial service companies, including Home Federal Bank, Mid America Capital
Services, Inc., dba Mid America Leasing Company, Hometown Insurors, Inc. and
HF Financial Group, Inc. As of September 30, 2008, the company had total
assets of $1.1 billion and stockholders' equity of $63.6 million. The company
is the largest publicly traded savings association headquartered inSouth
Dakota, with 33 offices in 19 communities, which includes a location in
Marshall, Minnesota. Internet banking is also available at
http://www.homefederal.com.
Forward-Looking Statements
This news release and other reports issued by the company, including
reports filed with the Securities and Exchange Commission, contain "forward-
looking statements" that deal with future results, expectations, plans and
performance. In addition, the company's management may make forward-looking
statements orally to the media, securities analysts, investors or others.
These forward-looking statements might include one or more of the following:
* Projections of income, loss, revenues, earnings or losses per share,
dividends, capital expenditures, capital structure, tax benefit or other
financial items.
* Descriptions of plans or objectives of management for future operations,
products or services, transactions, investments and use of subordinated
debentures payable to trusts.
* Forecasts of future economic performance.
* Use and descriptions of assumptions and estimates underlying or relating
to such matters.
Forward-looking statements can be identified by the fact they do not
relate strictly to historical or current facts. They often include words such
as "optimism," "look-forward," "bright," "pleased," "believe," "expect,"
"anticipate," "intend," "plan," "estimate" or words of similar meaning, or
future or conditional verbs such as "will," "would," "should," "could" or
"may."
Forward-looking statements about the company's expected financial results
and other plans are subject to certain risks, uncertainties and assumptions.
These include, but are not limited to the following: possible legislative
changes and adverse economic, business and competitive conditions and
developments (such as shrinking interest margins and continued short-term rate
environments); deposit outflows; reduced demand for financial services and
loan products; changes in accounting policies or guidelines, or in monetary
and fiscal policies of the federal government; changes in credit and other
risks posed by the company's loan and lease portfolios; the ability or
inability of the company to manage interest rate and other risks; unexpected
or continuing claims against the company's self-insured health plan; the
company's use of trust preferred securities; the ability or inability of the
company to successfully enter into a definitive agreement for and close
anticipated transactions; technological, computer-related or operational
difficulties; adverse changes in securities markets; results of litigation; or
other significant uncertainties.
Forward-looking statements speak only as of the date they are made. The
company does not undertake to update forward-looking statements to reflect
circumstances or events that occur after the date the forward-looking
statements are made. Although the company believes its expectations are
reasonable, it can give no assurance that such expectations will prove to be
correct. Based upon changing conditions, should any one or more of these risks
or uncertainties materialize, or should any underlying assumptions prove
incorrect, actual results may vary materially from those described in any
forward-looking statements.
HF Financial Corp.
Selected Consolidated Operating Highlights
(Dollars in Thousands, except share data)
(Unaudited)
Three Months Ended
September 30,
2008 2007
Interest, dividend and loan fee income:
Loans and leases receivable $13,018 $14,120
Investment securities and interest-
earning deposits 2,813 1,865
15,831 15,985
Interest expense:
Deposits 4,577 7,498
Advances from Federal Home Loan Bank
and other borrowings 2,565 1,819
7,142 9,317
Net interest income 8,689 6,668
Provision for losses on loans and leases 387 325
Net interest income after
provision for losses on
loans and leases 8,302 6,343
Noninterest income:
Fees on deposits 1,551 1,413
Loan servicing income 557 505
Gain on sale of loans, net 251 259
Trust income 222 249
Gain on sale of securities, net 80 - - - -
Other 388 389
3,049 2,815
Noninterest expense:
Compensation and employee benefits 5,121 4,443
Occupancy and equipment 977 937
Other 2,305 1,764
8,403 7,144
Income before income taxes 2,948 2,014
Income tax expense 973 667
Net income $1,975 $1,347
Basic earnings per share: $0.50 $0.34
Diluted earnings per share: 0.49 0.33
Basic weighted average shares: 3,972,055 4,002,458
Diluted weighted average shares: 4,004,126 4,067,075
Outstanding shares (end of period): 3,985,665 3,964,542
HF Financial Corp.
Selected Consolidated Financial Condition Data
(Dollars in Thousands, except share data)
(Unaudited)
09/30/2008 06/30/2008 09/30/2007
Balance Sheet Data
Total assets $1,127,724 $1,103,494 $1,015,776
Cash and cash equivalents 18,819 21,170 17,082
Securities available for sale 225,695 225,004 154,700
Loans and leases receivable, net 795,905 777,777 766,953
Loans held for sale 13,371 8,796 7,872
Deposits 765,022 784,237 772,360
Advances from Federal Home Loan
Bank and other borrowings 237,267 198,454 121,220
Subordinated debentures payable
to trusts 27,837 27,837 27,837
Stockholders' equity 65,453 64,203 63,144
Stockholder's equity before OCI
(1) to consolidated assets 6.16% 6.11% 6.32%
OCI components to consolidated
assets:
Net changes in unrealized
gain (loss) on securities
available for sale (0.25) (0.19) (0.06)
Net unrealized losses on
defined benefit plan (0.08) (0.08) (0.01)
Net unrealized losses on
derivatives and hedging
activities (0.01) (0.01) (0.00)
Goodwill to consolidated assets (0.44) (0.45) (0.49)
Tangible capital to consolidated
assets 5.39% 5.39% 5.76%
Book value per share (2) $16.42 $16.25 $15.93
Tier I (core) capital (3) 7.76% 7.78% 8.32%
Total Risk-based capital (3) 10.73% 10.83% 11.05%
Number of full-service offices 33 33 33
(1) Accumulated other comprehensive income (loss)
(2) Equity divided by number of shares of outstanding common stock.
(3) Capital ratios for Home Federal Bank.
HF Financial Corp.
Selected Consolidated Financial Condition Data
(Dollars in Thousands, except share data)
(Unaudited)
Loan and Lease Portfolio Composition
At September 30, 2008 At June 30, 2008
Amount Percent Amount Percent
(Dollars in Thousands)
One-to four-family (1) $97,713 12.18% $99,989 12.76%
Commercial business and real
estate (2) (3) 307,553 38.34% 303,415 38.72%
Multi-family real estate 44,854 5.59% 45,093 5.75%
Equipment finance leases 19,592 2.44% 19,288 2.46%
Consumer Direct (4) 109,556 13.66% 105,719 13.49%
Consumer Indirect (5) 37,418 4.67% 44,294 5.65%
Agricultural 176,042 21.95% 160,267 20.45%
Construction and development 9,360 1.17% 5,645 0.72%
Total Loans and Leases
Receivable (6) $802,088 100.00% $783,710 100.00%
(1) Excludes $10,311 and $7,958 loans held for sale at September 30, 2008
and June 30, 2008, respectively.
(2) Includes $3,012 and $3,012 tax exempt leases at September 30, 2008 and
June 30, 2008, respectively.
(3) Excludes $223 commercial loans held for sale at September 30, 2008 and
June 30, 2008.
(4) Excludes $2,837 and $614 student loans held for sale at September 30,
2008 and June 30, 2008, respectively.
(5) The Company announced Consumer Indirect originations ceased during the
first quarter of Fiscal 2008.
(6) Includes deferred loan fees and discounts and undisbursed portion of
loans in process.
Deposit Composition
At September 30, 2008 At June 30, 2008
Amount Percent Amount Percent
(Dollars in Thousands)
Noninterest bearing checking
accounts $76,844 10.04% $90,598 11.55%
Interest bearing checking
accounts 81,366 10.64% 90,125 11.49%
Money market accounts 165,409 21.62% 171,689 21.89%
Savings accounts 62,849 8.21% 78,575 10.02%
In-Market Certificates of
deposit 343,474 44.90% 325,995 41.57%
Out-of-Market Certificates of
deposit 35,080 4.59% 27,255 3.48%
Total Deposits $765,022 100.00% $784,237 100.00%
HF Financial Corp.
Selected Consolidated Financial Condition Data
(Dollars in Thousands, except share data)
(Unaudited)
Allowance for Loan and Lease Loss Activity
Three Months Ended
09/30/2008 09/30/2007
Balance, beginning $5,933 $5,872
Provision charged to income 387 325
Charge-offs (192) (781)
Recoveries 55 77
Balance, ending $6,183 $5,493
Asset Quality
Nonaccruing loans and leases $2,178 $1,401
Accruing loans and leases delinquent
more than 90 days 831 1,922
Foreclosed assets 600 300
Total nonperforming assets $3,609 $3,623
FASB Statement No. 5 Allowance for
loan and lease losses $5,989 $5,443
FASB Statement No. 114 Impaired loan
valuation allowance 194 50
Total allowance for loans and lease losses $6,183 $5,493
Ratio of nonperforming assets to
total assets at end of period (1) 0.32% 0.36%
Ratio of nonperforming loan and
leases to total loans and leases at end of
period (2) 0.37% 0.43%
Ratio of allowance for loan and lease
losses to total loans and
leases at end of period 0.76% 0.70%
Ratio of allowance for loan and lease
losses to nonperforming loans and leases at
end of period (2) 205.48% 165.30%
(1) Nonperforming assets include nonaccruing loans and leases, accruing
loans and leases delinquent more than 90 days and foreclosed assets.
(2) Nonperforming loans and leases include both nonaccruing and accruing
loans and leases delinquent more than 90 days.
HF Financial Corp.
Selected Consolidated Financial Condition Data
(Dollars in Thousands, except share data)
(Unaudited)
Average Balances, Interest Yields and Rates
Three Months Ended
09/30/2008 09/30/2007
Yield/ Yield/
Average Rate Average Rate
Interest-earning assets:
Loans and leases receivable
(1) (3) $805,722 6.41% $776,254 7.24%
Investment securities (2) (3) 242,018 4.61% 150,813 4.92%
Total interest-earning assets 1,047,740 5.99% 927,067 6.86%
Noninterest-earning assets 66,173 68,334
Total assets $1,113,913 $995,401
Interest-bearing liabilities:
Deposits:
Checking and money market $246,147 1.38% $285,936 3.59%
Savings 70,538 1.47% 54,777 2.98%
Certificates of deposit 364,434 3.76% 363,832 4.93%
Total interest-bearing
deposits 681,119 2.67% 704,545 4.23%
FHLB advances and other borrowings 232,636 3.60% 92,296 4.98%
Subordinated debentures payable to
trusts (4) 27,837 6.50% 27,837 9.48%
Total interest-bearing liabilities 941,592 3.01% 824,678 4.49%
Noninterest-bearing deposits 78,730 78,968
Other liabilities 29,041 29,150
Total liabilities 1,049,363 932,796
Equity 64,550 62,605
Total liabilities and equity $1,113,913 $995,401
Net interest spread (5) 2.98% 2.37%
Net interest margin (5) (6) 3.29% 2.86%
Net interest margin, TE (7) 3.35% 2.92%
Return on average assets (8) 0.70% 0.54%
Return on average equity (9) 12.14% 8.61%
(1) Includes loan fees and interest on accruing loans and leases past due
90 days or more.
(2) Includes federal funds sold and Federal Home Loan Bank stock.
(3) Yields do not reflect the tax exempt nature of loans, equipment
leases and municipal securities.
(4) Includes $125 expense in July 2007 for unamortized debt issuance
costs.
(5) Percentages for the three months ended September 30, 2008 and
September 30, 2007 have been annualized.
(6) Net interest margin is net interest income divided by average
interest-earning assets.
(7) Net interest margin expressed on a fully taxable equivalent basis.
(8) Ratio of net income to average total assets.
(9) Ratio of net income to average equity.
SOURCE HF Financial Corp.
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Copyright © 2009, NewsBlaze,
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