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SOURCE: Home Federal Bancorp, Inc.
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October 31, 2006 16:00 ET
Home Federal Bancorp, Inc. Announces Fourth Quarter and Annual Earnings
NAMPA, ID -- (MARKET WIRE) -- October 31, 2006 -- Home Federal Bancorp, Inc. (the "Company")
(NASDAQ: HOME), the parent company of Home Federal Bank (the "Bank"), today
reported net income of $1.7 million, or $0.11 per diluted share, for the
quarter ended September 30, 2006, compared to $1.7 million, or $0.12 per
diluted share, for the same period a year ago. Net income for the fiscal
year ended September 30, 2006 was $6.2 million, or $0.43 per diluted share,
compared to $5.3 million, or $0.36 per diluted share, for the fiscal year
ended September 30, 2005. Results for the fiscal year ended September 30,
2005 included a $386,000 pre-tax gain on the sale of a former branch and a
$1.8 million pre-tax expense for establishing the Home Federal Foundation,
Inc. (the "Foundation"). Excluding the gain on the sale of the branch and
the expense for establishing the Foundation, the Company had net income of
$6.2 million, or $0.42 per diluted share, for the fiscal year ended
September 30, 2005.
"We have experienced continued growth this fiscal year, despite the
challenges of the current interest rate environment," said Daniel L.
Stevens, Chairman and CEO. "During the quarter ended September 30, 2006,
we experienced a 17% increase in interest and dividend income, net loans
increased 17% and deposits were up 9%, as compared to the same period a
year ago. During October 2006, we also opened our fifth branch in the
fast-growing Canyon County, bringing our branch network to 15 locations."
"I am also very excited to have Len Williams on board as President of the
Bank," continued Mr. Stevens. "The business banking and strategic planning
skills he brings to the table will be extremely valuable as we continue our
model of building strong customer relationships." Mr. Williams, age 47,
joined the company in September 2006 as part of the company's succession
plan for Mr. Stevens. He previously served as Senior Vice President and
Head of Business Banking with Fifth Third Bank and has more than 28 years
of banking experience. From 1987 to 2005, he held several management
positions with Key Bank, including President of Business Banking from 2003
to 2005.
The following table reconciles the Company's actual net income to pro forma
net income for the fiscal years ended September 30, 2006 and 2005 exclusive
of the sale of the branch and the contribution to the Foundation, as
adjusted for federal and state taxes (in thousands, except per share data):
Fiscal Year Ended
September 30,
---------------------
2006 2005
---------- ---------
(unaudited)
Pro forma disclosure
Net income, as reported $ 6,212 $ 5,283
Sale of branch - (386)
Contribution to Foundation - 1,825
Federal and state income taxes - (561)
---------- ---------
Pro forma net income $ 6,212 $ 6,161
========== =========
Earnings per share
Diluted as reported $ 0.43 $ 0.36
Pro forma diluted $ 0.43 $ 0.42
Fourth Quarter Highlights (at or for the periods ended September 30, 2006
compared to September 30, 2005):
-- Interest and dividend income increased 17% to $10.6 million
-- Noninterest income increased 7% to $2.8 million
-- Total assets increased 10% to $761.3 million
-- Net loans increased 17% to $503.1 million
-- Deposits increased 9% to $430.3 million
-- Non-performing assets decreased 62% to $388,000, or 0.05% of total
assets
Operating Results
Revenues for the quarter ended September 30, 2006, which consisted of net
interest income before the provision for loan losses plus noninterest
income, increased 2% to $8.4 million for the quarter, compared to $8.2
million for the quarter ended September 30, 2005. Net interest income
before the provision for loan losses remained unchanged at $5.6 million for
the quarters ended September 30, 2006 and 2005 as the cost of deposits
increased more rapidly than the yield on loans and investments.
Revenues for the fiscal year ended September 30, 2006 increased 7% to $34.1
million, compared to $31.8 million for the same period of last year. Net
interest income before the provision for loan losses increased 6% to $23.0
million, compared to $21.7 million for the same period of last year.
For the quarter ended September 30, 2006, net interest income after
provision for loan losses increased 3% to $5.8 million, compared to $5.6
million for the same quarter a year ago. As a result of an analysis of the
Company's historical loan loss rates, $182,000 of the current fiscal year
provision for loan losses was recaptured in the current quarter. For the
quarter ended September 30, 2005, there was no provision for loan losses.
As a result of the recapture, the allowance for loan losses was $3.0
million, or 0.58% of gross loans, including loans held for sale, at
September 30, 2006 compared to $3.2 million, or 0.63% of gross loans,
including loans held for sale, at June 30, 2006. Net interest income after
provision for loan losses for the fiscal year ended September 30, 2006
increased 8% to $22.9 million, compared to $21.2 million for the same
period of the prior year.
The Company's net interest margin decreased 36 basis points to 3.12% for
the quarter ended September 30, 2006, from 3.48% for the same quarter last
year. The net interest margin for the fiscal year ended September 30, 2006
decreased 24 basis points to 3.33% from 3.57% 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 currently
exists, as the cost of shorter-term deposits and borrowed funds increased
more rapidly than the yield on longer-term assets. The Company believes
the repricing of existing and new loans will help counter the trend in net
interest margin, however, pressure will likely continue in the near term as
a result of competitive pricing pressures and the flat yield curve
environment.
Noninterest income increased 7% to $2.8 million for the quarter ended
September 30, 2006, compared to $2.6 million for the same quarter a year
ago. The increase was primarily attributable to a $182,000, or an 8%,
increase in service charges and fees. For the current quarter, the Company
also wrote-down the value of the mortgage servicing rights by $64,000. For
the fiscal year ended September 30, 2006, noninterest income increased 10%
to $11.1 million, compared to $10.1 million for the same period of the
prior year. Increases in service charges and gain on sale of loans of $1.0
million and $674,000, respectively, account for the majority of the
increase. Other noninterest income for the fiscal year ended September 30,
2005 included a $386,000 gain on the sale of a former branch and a $456,000
gain from life insurance proceeds, which were not experienced in the
current fiscal year.
Noninterest expense for the quarter ended September 30, 2006 increased 10%
to $5.9 million, from $5.4 million for the comparable period a year
earlier. Compensation and benefits increased $361,000, or 11%, to $3.7
million for the quarter ended September 30, 2006 as compared to $3.3
million for the same quarter a year ago. The majority of the increase is
attributable to the establishment of the equity compensation plans, annual
merit increases, and an increase in employee commissions. The equity
compensation plans include the Company's 2005 Recognition and Retention
Plan and 2005 Stock Option and Incentive Plan. The efficiency ratio was
70.4% for the quarter ended September 30, 2006 compared to 65.7% for the
same quarter a year ago. The efficiency ratio indicates how much is spent
on non-interest expenses as a percentage of total revenue.
Noninterest expense for the fiscal year ended September 30, 2006 increased
3% to $23.9 million, compared to $23.2 million for the fiscal year ended
September 30, 2005. Noninterest expense for the fiscal year ended
September 30, 2005 included the $1.8 million contribution to the
Foundation. Compensation and benefits increased $2.4 million, or 19%, to
$15.1 million for the fiscal year ended September 30, 2006 as compared to
$12.6 million for the same period a year ago. The majority of the increase
is attributable to the establishment of the equity compensation plans
during the prior fiscal year, annual merit increases, and an increase in
employee commissions. The efficiency ratio was 70.2% for the fiscal year
ended September 30, 2006 compared to 72.8% for the same period of the prior
year. Excluding the non-recurring contribution to the Foundation and the
gain on sale of the former branch, the efficiency ratio was 67.9% for the
fiscal year ended September 30, 2005.
Balance Sheet Growth
Total assets increased 10% to $761.3 million at September 30, 2006,
compared to $689.6 million a year earlier. Net loans (excluding loans held
for sale) at September 30, 2006 increased 17% to $503.1 million, compared
to $430.9 million at September 30, 2005. One- to four-family residential
loans represented 63% of the Bank's loan portfolio at September 30, 2006,
compared to 61% at September 30, 2005. Commercial real estate loans
accounted for 28% of the Bank's loan portfolio at September 30, 2006 and
2005.
Credit quality remains exceptional, as non-performing assets were $388,000,
or 0.05% of total assets, at September 30, 2006, compared to $1.0 million,
or 0.15% of total assets, at September 30, 2005. The allowance for loan
losses was $3.0 million, or 0.58% of gross loans, including loans held for
sale, at September 30, 2006 compared to $2.9 million, or 0.66% of gross
loans, including loans held for sale, at September 30, 2005.
Deposits increased 9% to $430.3 million at September 30, 2006 compared to
$396.3 million at September 30, 2005. Demand deposits and savings accounts
decreased $2.3 million, or 1%, as customers migrated towards higher rate
deposit products during the fiscal year. Noninterest-bearing demand
deposits decreased $1.7 million, or 4%, to $44.6 million at September 30,
2006, compared to $46.3 million at September 30, 2005. Interest-bearing
demand deposits increased $946,000, or less than 1%, to $128.3 million at
September 30, 2006, compared to $127.3 million at September 30, 2005.
Certificates of deposit increased $36.2 million, or 18%, to $233.7 million
at September 30, 2006, compared to $197.5 million at September 30, 2005.
The majority of the increase in certificates of deposits was in
shorter-term deposits of six to 23-month terms. Advances from the Federal
Home Loan Bank ("FHLB") increased 20% to $210.8 million at September 30,
2006 compared to $175.9 million at September 30, 2005. The Company
utilizes advances from the FHLB as an alternative funding source to retail
deposits in order to manage funding costs, reduce interest rate risk and to
leverage the Balance Sheet.
Stockholders' equity increased $6.5 million, or 6%, to $107.9 million at
September 30, 2006, compared to $101.4 million at September 30, 2005. The
increase was primarily the result of $6.2 million in net income for the
period, $681,000 in earned employee stock ownership ("ESOP") shares and
$844,000 in equity compensation, offset by $1.2 million of cash dividends
paid to stockholders. The Company's book value per share as of September
30, 2006 was $7.11 per share based upon 15,169,114 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 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 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, commercial
real estate and consumer lending 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, 2005, 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 September 30, September 30,
(In thousands, except share data) (Unaudited) 2006 2005
----------- -----------
ASSETS
Cash and amounts due from depository
institutions $ 18,385 $ 19,033
Mortgage-backed securities available for
sale, at fair value 12,182 14,830
Mortgage-backed securities held to
maturity, at cost 183,279 180,974
FHLB stock, at cost 9,591 9,591
Loan receivable, net of allowance for loan
losses of $2,974 and $2,882 503,065 430,944
Loans held for sale 4,119 5,549
Accrued interest receivable 3,025 2,458
Property and equipment, net 12,849 11,995
Mortgage servicing rights, net 2,492 2,671
Bank owned life insurance 10,763 10,099
Real estate and other property owned - 534
Other assets 1,542 899
----------- -----------
TOTAL ASSETS $ 761,292 $ 689,577
=========== ===========
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Deposit accounts
Noninterest-bearing demand deposits $ 44,626 $ 46,311
Interest-bearing demand deposits 128,276 127,330
Savings deposits 23,655 25,219
Certificates of deposit 233,724 197,465
----------- -----------
Total deposit accounts 430,281 396,325
Advances by borrowers for taxes and
insurance 2,133 3,898
Interest payable 971 1,670
Deferred compensation 3,875 3,049
FHLB advances 210,759 175,932
Deferred income tax liability 800 1,205
Other liabilities 4,604 6,131
----------- -----------
Total liabilities 653,423 588,210
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:
Sept. 30, 2006 - 15,208,750 issued,
15,169,114 outstanding 152 149
Sept. 30, 2005 - 15,208,750 issued,
14,910,658 outstanding
Additional paid-in capital 57,222 56,115
Retained earnings 54,805 49,818
Unearned shares issued to ESOP (4,134) (4,550)
Accumulated other comprehensive loss (176) (165)
----------- -----------
Total stockholders’ equity 107,869 101,367
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS’
EQUITY $ 761,292 $ 689,577
=========== ===========
HOME FEDERAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except
share data) Three Months Ended Year Ended
(Unaudited) September 30, September 30,
---------------------- ----------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Interest and dividend
income:
Loan interest $ 8,216 $ 6,884 $ 30,175 $ 25,934
Investment interest 26 42 140 313
Mortgage-backed
security interest 2,378 2,154 9,598 7,633
FHLB dividends - - - 30
---------- ---------- ---------- ----------
Total interest and
dividend income 10,620 9,080 39,913 33,910
---------- ---------- ---------- ----------
Interest expense:
Deposits 2,727 1,796 8,914 6,288
FHLB advances 2,307 1,703 8,003 5,943
---------- ---------- ---------- ----------
Total interest expense 5,034 3,499 16,917 12,231
---------- ---------- ---------- ----------
Net interest income 5,586 5,581 22,996 21,679
Provision for loan losses (182) - 138 456
---------- ---------- ---------- ----------
Net interest income
after provision for
loan losses 5,768 5,581 22,858 21,223
---------- ---------- ---------- ----------
Noninterest income:
Service charges and
fees 2,399 2,217 9,292 8,274
Gain on sale of loans 262 180 1,056 382
Increase in cash
surrender value of bank
owned life insurance 98 90 383 343
Loan servicing fees 150 166 620 672
Mortgage servicing
rights, net (132) (81) (179) (480)
Other (11) 6 (63) 937
---------- ---------- ---------- ----------
Total noninterest income 2,766 2,578 11,109 10,128
---------- ---------- ---------- ----------
Noninterest expense:
Compensation and
benefits 3,653 3,292 15,081 12,636
Occupancy and equipment 686 674 2,759 2,765
Data processing 438 370 1,802 1,616
Advertising 285 258 1,025 1,147
Postage and supplies 195 201 811 785
Professional services 276 207 917 905
Insurance and taxes 111 100 431 341
Charitable contribution
to Foundation - - - 1,825
Other 239 260 1,119 1,138
---------- ---------- ---------- ----------
Total noninterest
expense 5,883 5,362 23,945 23,158
---------- ---------- ---------- ----------
Income before income taxes 2,651 2,797 10,022 8,193
Income tax expense 993 1,060 3,810 2,910
---------- ---------- ---------- ----------
NET INCOME $ 1,658 $ 1,737 $ 6,212 $ 5,283
========== ========== ========== ==========
Earnings per common share:
Basic $ 0.11 $ 0.12 $ 0.43 $ 0.36
Diluted $ 0.11 $ 0.12 $ 0.43 $ 0.36
Weighted average number of
shares outstanding:
Basic 14,503,619 14,629,608 14,484,982 14,696,071
Diluted 14,589,904 14,667,755 14,519,778 14,702,084
Dividends declared per
share: $ 0.055 $ 0.050 $ 0.215 $ 0.100
HOME FEDERAL BANCORP, INC. AND SUBSIDIARY
ADDITIONAL FINANCIAL INFORMATION At Or For The At Or For The
(Dollars in thousands, except share data) Year Ended Year Ended
(Unaudited) Sept, 30, 2006 Sept. 30, 2005
------------ ------------
FINANCIAL CONDITION DATA
Average interest-earning assets $ 689,688 $ 606,690
Average interest-bearing liabilities 563,834 501,124
Net average earning assets 125,854 105,566
Average interest-earning assets to
average interest-bearing liabilities 122.32% 121.07%
Stockholders’ equity to assets 14.17% 14.70%
ASSET QUALITY
Allowance for loan losses $ 2,974 $ 2,882
Non-performing loans 388 478
Non-performing assets 388 1,012
Allowance for loan losses to non-performing
loans 766.49% 602.93%
Allowance for loan losses to gross
loans and loans held for sale 0.58% 0.66%
Non-performing loans to gross loans
and loans held for sale 0.08% 0.11%
Non-performing assets to total assets 0.05% 0.15%
At Or For The Three At Or For The
Months Ended Sept. 30, Year Ended Sept. 30,
---------------------- ----------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
SELECTED PERFORMANCE RATIOS
Return on average
assets (1) 0.88% 1.02% 0.85% 0.82%
Return on average
equity (1) 6.16% 6.68% 5.90% 5.69%
Net interest margin (1) 3.12% 3.48% 3.33% 3.57%
Efficiency ratio (2) 70.44% 65.72% 70.21% 72.81%
Efficiency ratio,
excluding
non-recurring items (2) 70.44% 65.72% 70.21% 67.89%
PER SHARE DATA
Basic earnings per
share $ 0.11 $ 0.12 $ 0.43 $ 0.36
Diluted earnings per
share 0.11 0.12 0.43 0.36
Book value per share 7.11 6.80 7.11 6.80
Cash dividends declared
per share 0.055 0.050 0.215 0.100
Average number of
shares outstanding:
Basic (3) 14,503,619 14,629,608 14,484,982 14,696,071
Diluted (3) 14,589,904 14,667,755 14,519,778 14,702,084
(1) Amounts are annualized.
(2) Noninterest expense divided by net interest income plus noninterest
income. The pro forma efficiency ratio for the year ended
September 30, 2005 excludes the effect of the $386,000 gain on the
sale of a former branch and the $1.8 million contribution to the
Foundation.
(3) Amounts calculated exclude ESOP shares not committed to be released
and unvested restricted shares granted under the 2005 Recognition
and Retention Plan.