SOURCE: Home Federal Bancorp, Inc.

January 22, 2008 16:00 ET

Home Federal Bancorp, Inc. Announces First Quarter Earnings

NAMPA, ID--(Marketwire - January 22, 2008) - Home Federal Bancorp, Inc. (the "Company") (NASDAQ: HOME), the new holding company of Home Federal Bank (the "Bank"), today announced first quarter earnings for the fiscal year ending September 30, 2008. For the quarter ended December 31, 2007, the Company reported net income of $947,000, or $0.06 per diluted share compared to $1.3 million, or $0.08 per diluted share, for the same 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. As a result of the second-step conversion and reorganization, the Company became the holding company of the Bank and the mutual holding company, Home Federal MHC, and the mid-tier federally chartered stock corporation, Home Federal Bancorp, Inc., ceased to exist. The Company raised $88.4 million in net proceeds from its second-step stock offering.

"We are pleased that we were successful in completing our second step reorganization and conversion in a very difficult market at the end of our first fiscal quarter," stated Home Federal Bancorp, Inc. Chairman and CEO, Daniel L. Stevens. "Now that our long term capital plans are realized, we can focus on managing and leveraging that capital to provide for quality, sustainable, profitable growth," Stevens continued.

Stevens went on to say, "Our recent entry into the commercial banking market is off to a strong start, with the additions of exceptional commercial banking and credit teams individually selected from within the local market. Products, policies and procedures are in place to expand this business line with a focus on the client that differentiates Home Federal in the market place."

Operating Results

Revenues for the quarter ended December 31, 2007, which consisted of net interest income before the provision for loan losses plus noninterest income, decreased 9% to $7.7 million for the quarter, compared to $8.4 million for the quarter ended December 31, 2006. Net interest income before the provision for loan losses decreased 8% to $5.1 million for the quarter ended December 31, 2007 compared to $5.5 million for the same quarter of the prior year as the cost of deposits increased more rapidly than the yield on loans and investments.

A provision for loan losses of $287,000 was established by management in connection with its analysis of the loan portfolio for the current quarter, compared to a provision for loan losses of $71,000 established for the same quarter of the prior year. The increase in the provision reflects an increase in total classified assets.

The Company's net interest margin decreased eight basis points to 2.97% for the quarter ended December 31, 2007, from 3.05% for the same quarter last year. The decline in the net interest margin reflects competitive pricing pressures and the relatively flat yield curve that existed during the quarter, as the cost of shorter-term deposits 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 improve the net interest margin.

Noninterest income decreased $279,000, to $2.6 million for the quarter ended December 31, 2007, compared to $2.9 million for the same quarter a year ago. The decrease was primarily attributable to a $203,000 decrease in service charges and fees and an $113,000 decrease in gain on sale of loans.

Noninterest expense for the quarter ended December 31, 2007 decreased $384,000, or 6%, to $5.9 million, from $6.2 million for the comparable period a year earlier. Compensation and benefit expenses decreased $315,000, or 8%, to $3.7 million for the quarter ended December 31, 2007 as compared to $4.0 million for the same quarter a year ago. The majority of the decrease is attributable to a decrease in the number of full-time equivalent employees. As of December 31, 2007, the Company employed 208 full-time equivalent employees, compared to 247 at December 31, 2006. The decrease in full-time equivalent employees was the result of a targeted effort to gain efficiencies throughout the Company. The Company's efficiency ratio was 76.5% for the quarter ended December 31, 2007 compared to 74.5% for the same quarter a year ago; the increase in the ratio was primarily due to a decrease in revenues. The efficiency ratio indicates how much is spent on non-interest expenses as a percentage of total revenue.

Balance Sheet Growth

Total assets increased 2% to $782.6 million at December 31, 2007, compared to $767.6 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. Net loans (excluding loans held for sale) at December 31, 2007 decreased 7% to $477.4 million, compared to $511.6 million at December 31, 2006. One- to four-family residential loans represented 51% of the Bank's loan portfolio at December 31, 2007, compared to 57% at December 31, 2006. Commercial loans, including commercial real estate loans, accounted for 40% of the Bank's loan portfolio at December 31, 2007, compared to 36% at December 31, 2006. In the future, subject to market conditions, the Bank plans to increase its emphasis on commercial and small business banking products. Mortgage-backed securities decreased $32.0 million to $159.0 million at December 31, 2007, compared to $191.0 million at December 31, 2006. The decrease is attributable to principal repayments during the period.

Non-performing assets were $2.3 million or 0.30% of total assets at December 31, 2007 compared to none at December 31, 2006. The increase in non-performing assets is not concentrated in one specific type of loan, but rather was experienced throughout all major loan types. Although the Company experienced an increase in non-performing assets, overall credit quality remains strong. The allowance for loan losses was $3.0 million, or 0.63% of gross loans, at December 31, 2007 compared to $3.0 million, or 0.59% of gross loans, at December 31, 2006.

Deposits decreased 5% to $405.0 million at December 31, 2007 compared to $425.1 million at December 31, 2006. Demand deposits and savings accounts increased $4.0 million, or 2% to $195.3 million at December 31, 2007. The increase was a result of growth in money market accounts. Certificates of deposit decreased $24.2 million, or 10%, to $209.7 million at December 31, 2007, compared to $233.9 million at December 31, 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 cost of alternative funding sources. Advances from the Federal Home Loan Bank ("FHLB") decreased 26% to $163.6 million at December 31, 2007 compared to $221.2 million at December 31, 2006. The decrease resulted from maturing advances funded from excess liquidity.

Stockholders' equity increased $94.3 million, or 86%, to $203.8 million at December 31, 2007, compared to $109.5 million at December 31, 2006. 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 were used to make a loan to our employee stock ownership plan, which purchased approximately 816,000 shares of the Company's common stock for an aggregate of $8.2 million.

In addition, other significant activity among equity accounts included $4.9 million in net income and the allocation of earned employee stock ownership plan shares, equity compensation and the exercise of stock options totaling $2.6 million, offset by $1.3 million in cash dividends paid to stockholders and a $590,000 increase in unrealized losses on securities available for sale. The Company's book value per share as of December 31, 2007 was $11.76 per share based upon 17,326,565 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 two mortgage loan centers. 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. 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, 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
(In thousands, except share data) (Unaudited)

                                  December 31,  September 30, December 31,
                                      2007          2007          2006
                                  ------------  ------------  ------------
ASSETS

  Cash and amounts due from
   depository institutions        $    102,453  $     20,588  $     20,723
  Mortgage-backed securities
   available for sale, at fair
   value                               159,028       162,258        13,733
  Mortgage-backed securities
   held to maturity, at cost                 -             -       177,340
  FHLB stock, at cost                    9,591         9,591         9,591
  Loan receivable, net of
   allowance for loan losses of
   $3,015, $2,988 and $3,045           477,446       480,118       511,561
  Loans held for sale                    3,043         4,904         3,667
  Accrued interest receivable            3,016         2,804         3,127
  Property and equipment, net           12,572        12,364        12,721
  Mortgage servicing rights, net         1,979         2,047         2,409
  Bank owned life insurance             11,273        11,168        10,863
  Real estate and other property
   owned                                   672           549             -
  Deferred income tax asset                230         1,245
  Other assets                           1,266         2,318         1,849
                                  ------------  ------------  ------------
      TOTAL ASSETS                $    782,569  $    709,954  $    767,584
                                  ============  ============  ============

LIABILITIES AND STOCKHOLDERS'
 EQUITY

LIABILITIES
  Deposit accounts:
    Noninterest-bearing demand
     deposits                     $     36,474  $     38,643  $     37,939
    Interest-bearing demand
     deposits                          136,586       127,659       130,273
    Savings deposits                    22,195        23,116        23,023
    Certificates of deposit            209,717       215,191       233,888
                                  ------------  ------------  ------------
      Total deposit accounts           404,972       404,609       425,123

  Advances by borrowers for
   taxes and insurance                     772         1,605           950
  Interest payable                         675           731           950
  Deferred compensation                  4,694         4,515         4,037
  FHLB advances                        163,638       180,730       221,156
  Deferred income tax liability              -             -           842
  Other liabilities                      3,973         5,127         4,984
                                  ------------  ------------  ------------
      Total liabilities                578,724       597,317       658,042

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:
          Dec. 31, 2007 -
           17,369,853 issued,
           17,326,565 outstanding          173           152           152
          Sept. 30, 2007 -
           15,278,803 issued,
           15,232,243 outstanding
          Dec. 31, 2006 -
           15,208,750 issued,
           15,189,019 outstanding
  Additional paid-in capital           156,427        59,613        57,774
  Retained earnings                     59,418        58,795        55,756
  Unearned shares issued to
   ESOP                                (11,470)       (3,698)       (4,027)
  Accumulated other
   comprehensive loss                     (703)       (2,225)         (113)
                                  ------------  ------------  ------------
      Total stockholders' equity       203,845       112,637       109,542
                                  ------------  ------------  ------------
      TOTAL LIABILITIES AND
       STOCKHOLDERS' EQUITY       $    782,569  $    709,954  $    767,584
                                  ============  ============  ============







HOME FEDERAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME                  Three Months Ended
(In thousands, except share data) (Unaudited)         December 31,
                                                ------------------------
                                                    2007         2006
                                                -----------  -----------
Interest and dividend income:
    Loan interest                               $     8,076  $     8,527
    Investment interest                                 264           29
    Mortgage-backed security interest                 1,943        2,306
    FHLB dividends                                       19           10
                                                -----------  -----------
      Total interest and dividend income             10,302       10,872
                                                -----------  -----------
Interest expense:
    Deposits                                          3,214        3,010
    FHLB advances                                     2,032        2,363
                                                -----------  -----------
      Total interest expense                          5,246        5,373
                                                -----------  -----------
      Net interest income                             5,056        5,499

Provision for loan losses                               287           71
                                                -----------  -----------
      Net interest income after provision for
       loan losses                                    4,769        5,428
                                                -----------  -----------
Noninterest income:
    Service charges and fees                          2,211        2,414
    Gain on sale of loans                               185          298
    Increase in cash surrender value of bank owned
     life insurance                                     104          100
    Loan servicing fees                                 127          144
    Mortgage servicing rights, net                      (68)         (83)
    Other                                                45           10
                                                -----------  -----------
      Total noninterest income                        2,604        2,883
                                                -----------  -----------
Noninterest expense:
    Compensation and benefits                         3,699        4,014
    Occupancy and equipment                             711          702
    Data processing                                     522          508
    Advertising                                         300          296
    Postage and supplies                                150          146
    Professional services                               212          196
    Insurance and taxes                                  85          103
    Other                                               183          281
                                                -----------  -----------
      Total noninterest expense                       5,862        6,246
                                                -----------  -----------
Income before income taxes                            1,511        2,065

Income tax expense                                      564          796
                                                -----------  -----------
   NET INCOME                                   $       947  $     1,269
                                                ===========  ===========

Earnings per common share:
   Basic                                        $      0.06  $      0.08(1)
   Diluted                                             0.06         0.08(1)

Weighted average number of shares outstanding:


   Basic                                         16,738,289   16,548,408(1)
   Diluted                                       16,762,906   16,726,404(1)

Dividends declared per share:                   $   0.048(1) $     0.048(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
                                             Three Months    At Or For The
                                                Ended          Year Ended
                                             Dec. 31, 2007   Sept. 30, 2007
                                             -------------   --------------
FINANCIAL CONDITION DATA
    Average interest-earning assets          $     680,180   $     703,675
    Average interest-bearing liabilities           542,819         582,936
    Net average earning assets                     137,361         120,739
    Average interest-earning assets to
     average interest-bearing liabilities           125.31%         120.71%
    Stockholders' equity to assets                   26.05           15.87

ASSET QUALITY
    Allowance for loan losses                $       3,015   $       2,988
    Non-performing loans                             1,656           1,531
    Non-performing assets                            2,328           2,080
    Allowance for loan losses to non-performing
     loans                                          182.07%         195.17%
    Allowance for loan losses to gross loans          0.63            0.62
    Non-performing loans to gross loans               0.34            0.32
    Non-performing assets to total assets             0.30            0.30





                                            At Or For The Three Months
                                                  Ended Dec. 31,
                                           ----------------------------
                                               2007           2006
                                           -------------   -------------
SELECTED PERFORMANCE RATIOS
    Return on average assets (1)                    0.53%           0.66%
    Return on average equity (1)                    3.00            4.63
    Net interest margin (1)                         2.97            3.05
    Efficiency ratio (2)                           76.53           74.52
PER SHARE DATA
    Basic earnings per share               $        0.06   $        0.08(4)
    Diluted earnings per share                      0.06            0.08(4)
    Book value per share                           11.76            6.35(4)
    Cash dividends declared per share              0.048(4)        0.048(4)
    Average number of shares outstanding:
      Basic (3)                               16,738,289      16,548,408(4)
      Diluted (3)                             16,762,906      16,726,404(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.

Contact Information

  • Contact:
    Home Federal Bancorp, Inc.
    Daniel L. Stevens
    Chairman, President & CEO
    Robert A. Schoelkoph
    SVP, Treasurer & CFO
    208-466-4634
    www.myhomefed.com