SOURCE: Home Federal Bancorp, Inc.

November 02, 2007 16:00 ET

Home Federal Bancorp, Inc. Announces Fourth Quarter and Annual Earnings

NAMPA, ID--(Marketwire - November 2, 2007) - Home Federal Bancorp, Inc. (the "Company") (NASDAQ: HOME), the parent company of Home Federal Bank (the "Bank"), today reported net income of $1.2 million, or $0.08 per diluted share, for the quarter ended September 30, 2007, compared to $1.7 million, or $0.11 per diluted share, for the same period a year ago. Net income for the fiscal year ended September 30, 2007 was $5.3 million, or $0.36 per diluted share, compared to $6.2 million, or $0.43 per diluted share, for the fiscal year ended September 30, 2006.

"We continue to experience increasing positive results from the implementation of our Bank's new commercial banking division and we are pleased with our employee's ability to leverage our market reputation for excellent service through our new commercial banking initiative," said Daniel L. Stevens, the Company's Chairman, President and CEO. "The Bank's management team has developed, and is successfully implementing, effective strategic and tactical plan elements which currently benefit our customers and shareholders and which will become the foundation for the future of the Company. One of the current business strategies is to redeploy the proceeds from amortization and payoffs in the residential mortgage and mortgage-backed securities portfolios to assets acquired through the commercial banking initiative."

Operating Results

Revenues for the quarter ended September 30, 2007, which consisted of net interest income before the provision for loan losses plus noninterest income, decreased 7.9% to $7.7 million for the quarter, compared to $8.4 million for the quarter ended September 30, 2006. Net interest income before the provision for loan losses decreased 8.2% to $5.1 million for the quarter ended September 30, 2007, compared to $5.6 million for the same quarter of the prior year as the cost of deposits increased more rapidly than the yield on loans and investments.

Revenues for the fiscal year ended September 30, 2007 decreased 4.7% to $32.5 million, compared to $34.1 million for the same period of last year. Net interest income before the provision for loan losses decreased 7.4% to $21.3 million, compared to $23.0 million for the same period of last year.

A provision of $338,000 was taken for the quarter ended September 30, 2007, compared to a recapture of provision of $182,000 for the same quarter of the prior year. The provision for loan losses was $409,000 for the fiscal year ended September 30, 2007, compared to $138,000 for the fiscal year ended September 30, 2006. The increases in the provision for both time periods reflect an increase in activity within non-performing assets.

The Company's net interest margin decreased eight basis points to 3.04% for the quarter ended September 30, 2007, from 3.12% for the same quarter last year. The net interest margin for the fiscal year ended September 30, 2007 decreased 30 basis points to 3.03% from 3.33% for the prior year. 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 7.3% to $2.6 million for the quarter ended September 30, 2007, compared to $2.8 million for the same quarter a year ago. The decrease was primarily attributable to a $90,000 decrease related to the value of the mortgage servicing rights and a $102,000 decrease in fees and service charges. For the fiscal year ended September 30, 2007, noninterest income increased .7% to $11.2 million, compared to $11.1 million for the same period of the prior year.

Noninterest expense for the quarter ended September 30, 2007 decreased $472,000, or 8.0%, to $5.4 million, from $5.9 million for the comparable period a year earlier. Compensation and benefit expenses decreased $767,000, or 21%, to $2.9 million for the quarter ended September 30, 2007 as compared to $3.7 million for the same quarter a year ago. This reduction was due to a combination of reduced number of employees and decreased incentive compensation in the fiscal year just ended. Advertising expenses increased $218,000 or 76.5% to $503,000 for the quarter ended September 30, 2007 as compared to $285,000 for the same quarter a year ago. The increase is primarily attributable to a debit card rewards program and a business banking campaign that were recently initiated. 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 Company's efficiency ratio was 70.3% for the quarter ended September 30, 2007, relatively unchanged from 70.4% 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, 2007 decreased $400,000, or 1.7% to $23.5 million, from $23.9 million for the fiscal year ended September 30, 2006. Compensation and benefits decreased and advertising expenses increased from the prior year, 5.5% or $832,000 and 43.9% or $450,000 respectively. The efficiency ratio was 72.5% for the fiscal year ended September 30, 2007 compared to 70.2% 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 $51.3 million, or 6.7%, to $710.0 million at September 30, 2007, compared to $761.3 million a year earlier. Net loans (excluding loans held for sale) at September 30, 2007 decreased 4.6% to $480.1 million, compared to $503.1 million at September 30, 2006. One- to four-family residential loans represented 52.0% of the Bank's loan portfolio at September 30, 2007, compared to 59.5% at September 30, 2006 as the Bank continues to sell the majority of the residential mortgage loans that it originates. Commercial loans accounted for 38.8% of the Bank's loan portfolio at September 30, 2007, compared to 33.3% at September 30, 2006. In the future, the Bank plans to increase its emphasis on commercial and small business banking products. Mortgage-backed securities decreased $33.3 million to $162.3 million at September 30, 2007, compared to $195.5 million at September 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.

Non-performing assets were $2.1 million, or 0.30% of total assets, at September 30, 2007, compared to $388,000, or 0.05% of total assets, at September 30, 2006. The increase in non-performing assets isn't concentrated in one specific area, but rather was experienced throughout all major loan types. Although the Company experienced an increase in non-performing assets, overall credit quality remains excellent. The allowance for loan losses was $3.0 million, or 0.62% of gross loans, at September 30, 2007 compared to $3.0 million, or 0.59% of gross loans, at September 30, 2006.

Deposits decreased $25.7 million, or 6.0%, to $404.6 million at September 30, 2007 compared to $430.3 million at September 30, 2006. Demand deposits and savings accounts decreased $7.1 million, or 3.6%, to $189.4 million, compared to $196.6 million at September 30, 2006. Certificates of deposit decreased $18.5 million, or 7.9%, to $215.2 million at September 30, 2007, compared to $233.7 million at September 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 $30.0 million, or 14.3%, to $180.7 million at September 30, 2007 compared to $210.8 million at September 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 $4.8 million, or 4.4%, to $112.6 million at September 30, 2007, compared to $107.9 million at September 30, 2006. The increase was primarily the result of $5.3 million in net income and the allocation of earned employee stock ownership plan shares, equity compensation and the exercise of stock options totaling $2.2 million, offset by $1.3 million in cash dividends paid to stockholders and a $2.0 million increase in unrealized losses on securities available for sale. 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.

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 SHEETS
 (In thousands, except share data)             September 30, September 30,
 (Unaudited)                                         2007           2006
                                                ------------  ------------
ASSETS
    Cash and amounts due from depository
     institutions                               $     20,588  $     18,385
    Mortgage-backed securities available for
     sale, at fair value                             162,258        12,182
    Mortgage-backed securities held to maturity,
     at cost                                               -       183,279
    FHLB stock, at cost                                9,591         9,591
    Loan receivable, net of allowance for loan
     losses of  $2,988 and $2,974                    480,118       503,065
    Loans held for sale                                4,904         4,119
    Accrued interest receivable                        2,804         3,025
    Property and equipment, net                       12,364        12,849
    Mortgage servicing rights, net                     2,047         2,492
    Bank owned life insurance                         11,168        10,763
    Real estate and other property owned                 549             -
    Deferred income tax asset                          1,245             -
    Other assets                                       2,318         1,542
                                                ------------  ------------
     TOTAL ASSETS                               $    709,954  $    761,292
                                                ============  ============

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES
    Deposit accounts
     Noninterest-bearing demand deposits        $     38,643  $     44,626
     Interest-bearing demand deposits                127,659       128,276
     Savings deposits                                 23,116        23,655
     Certificates of deposit                         215,191       233,724
                                                ------------  ------------
      Total deposit accounts                         404,609       430,281
    Advances by borrowers for taxes and insurance      1,605         2,133
    Interest payable                                     731           971
    Deferred compensation                              4,515         3,875
    FHLB advances                                    180,730       210,759
    Deferred income tax liability                          -           800
    Other liabilities                                  5,127         4,604
                                                ------------  ------------
     Total liabilities                               597,317       653,423

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, 2007 - 15,278,803 issued,
       15,232,243 outstanding                            152           152
      Sept. 30, 2006 - 15,208,750 issued,
       15,169,114 outstanding
    Additional paid-in capital                        59,613        57,222
    Retained earnings                                 58,795        54,805
    Unearned shares issued to ESOP                    (3,698)       (4,134)
    Accumulated other comprehensive loss              (2,225)         (176)
                                                ------------  ------------
      Total stockholders’ equity                     112,637       107,869
                                                ------------  ------------
        TOTAL LIABILITIES AND STOCKHOLDERS’
         EQUITY                                 $    709,954  $    761,292
                                                ============  ============





HOME FEDERAL BANCORP, INC. AND SUBSIDIARY
 CONSOLIDATED STATEMENTS OF INCOME
 (In thousands, except share data)
 (Unaudited)
                              Three Months Ended         Year Ended
                                September 30,           September 30,
                            ----------------------  ----------------------
                                2007        2006        2007        2006
                            ----------  ----------  ----------  ----------

Interest and dividend income:
    Loan interest           $    8,222  $    8,216  $   33,553  $   30,175
    Investment interest            122          26         345         140
    Mortgage-backed
     security interest           2,019       2,378       8,692       9,598
    FHLB dividends                  15           -          48           -
                            ----------  ----------  ----------  ----------
     Total interest and
      dividend income           10,378      10,620      42,638      39,913
                            ----------  ----------  ----------  ----------
Interest expense:
    Deposits                     3,133       2,727      12,279       8,914
    FHLB advances                2,115       2,307       9,057       8,003
                            ----------  ----------  ----------  ----------
     Total interest expense      5,248       5,034      21,336      16,917
                            ----------  ----------  ----------  ----------
     Net interest income         5,130       5,586      21,302      22,996
Provision for loan losses          338        (182)        409         138
                            ----------  ----------  ----------  ----------
     Net interest income
      after provision for
      loan losses                4,792       5,768      20,893      22,858
                            ----------  ----------  ----------  ----------
Noninterest income:
    Service charges and fees     2,297       2,399       9,218       9,292
    Gain on sale of loans          251         262       1,419       1,056
    Increase in cash
     surrender value of bank
     owned life insurance          104          98         405         383
    Loan servicing fees            129         150         549         620
    Mortgage servicing
     rights, net                  (222)       (132)       (445)       (179)
    Other                            5         (11)         44         (63)
                            ----------  ----------  ----------  ----------
     Total noninterest income    2,564       2,766      11,190      11,109
                            ----------  ----------  ----------  ----------
Noninterest expense:
    Compensation and
     benefits                    2,886       3,653      14,249      15,081
    Occupancy and equipment        726         686       2,871       2,759
    Data processing                548         438       2,097       1,802
    Advertising                    503         285       1,475       1,025
    Postage and supplies           163         195         650         811
    Professional services          236         276         856         917
    Insurance and taxes            106         111         429         431
    Other                          243         239         918       1,119
                            ----------  ----------  ----------  ----------
     Total noninterest
      expense                    5,411       5,883      23,545      23,945
                            ----------  ----------  ----------  ----------
Income before income taxes       1,945       2,651       8,538      10,022
Income tax expense                 750         993       3,267       3,810
                            ----------  ----------  ----------  ----------
     NET INCOME             $    1,195  $    1,658  $    5,271  $    6,212
                            ==========  ==========  ==========  ==========

Earnings per common share:
     Basic                  $     0.08  $     0.11  $     0.36  $     0.43
     Diluted                $     0.08  $     0.11  $     0.36  $     0.43

Weighted average number of
 shares outstanding:
     Basic                  14,670,519  14,503,619  14,614,509  14,484,982
     Diluted                14,734,001  14,589,904  14,759,876  14,519,778

Dividends declared per

 share:                     $    0.055  $    0.055  $    0.220  $    0.215



HOME FEDERAL BANCORP, INC. AND SUBSIDIARY ADDITIONAL
FINANCIAL INFORMATION
(Dollars in thousands, except share data)
 (Unaudited)                                         At Or For  At Or For
                                                      The Year   The Year
                                                        Ended      Ended
                                                      Sept. 30,  Sept. 30,
                                                        2007       2006
                                                      ---------  ---------
FINANCIAL CONDITION DATA
    Average interest-earning assets                   $ 703,675  $ 689,688
    Average interest-bearing liabilities                582,936    563,834
    Net average earning assets                          120,739    125,854
    Average interest-earning assets to average
     interest-bearing liabilities                        120.71%    122.32%
    Stockholders’ equity to assets                        15.87      14.17

ASSET QUALITY
    Allowance for loan losses                         $   2,988  $   2,974
    Non-performing loans                                  1,531        388
    Non-performing assets                                 2,080        388
    Allowance for loan losses to non-performing loans    195.17%    766.49%
    Allowance for loan losses to gross loans               0.62       0.59
    Non-performing loans to gross loans                    0.32       0.08
    Non-performing assets to total assets                  0.30       0.05



                              At Or For The Three       At Or For The
                            Months Ended Sept. 30,   Year Ended Sept. 30,
                            ----------------------  ----------------------
                               2007        2006        2007        2006
                            ----------  ----------  ----------  ----------
SELECTED PERFORMANCE RATIOS
    Return on average
     assets (1)                   0.67%       0.88%       0.71%       0.85%
    Return on average
     equity (1)                   4.27        6.16        4.75        5.90
    Net interest margin (1)       3.04        3.12        3.03        3.33
    Efficiency ratio (2)         70.33       70.44       72.46       70.21
PER SHARE DATA
    Basic earnings per
     share                  $     0.08  $     0.11  $     0.36  $     0.43
    Diluted earnings per
     share                        0.08        0.11        0.36        0.43
    Book value per share          7.39        7.11        7.39        7.11
    Cash dividends declared
     per share                   0.055       0.055        0.22       0.215
    Average number of
     shares outstanding:
      Basic (3)             14,670,519  14,503,619  14,614,509  14,484,982
      Diluted (3)           14,734,001  14,589,904  14,759,876  14,519,778


(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.

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