SOURCE: Home Federal Bancorp, Inc.

November 03, 2005 10:30 ET

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

NAMPA, ID -- (MARKET WIRE) -- November 3, 2005 -- 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 $0.12 per diluted share, for the quarter ended September 30, 2005, compared to $1.4 million for the same period a year ago. Net income for the fiscal year ended September 30, 2005 was $5.3 million, or $0.36 per diluted share, compared to $4.7 million for the fiscal year ended September 30, 2004. Results for the fiscal year ended September 30, 2005 include 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.

On December 6, 2004, the Bank completed its mutual holding company reorganization, at which time the Bank converted to stock form and the Company and Home Federal MHC, the federally chartered mutual holding company was organized. As a result, comparisons to prior periods refer to the results of the Bank as a federal mutual savings and loan association, and per share data is not applicable. The per share data for the fiscal year ended September 30, 2005 is being reported on shares outstanding from December 6, 2004 through September 30, 2005. In connection with the reorganization, the Company received $53.6 million in net proceeds from the sale of its common stock in a minority stock offering.

The following table reconciles the Company's actual net income to pro forma net income for the fiscal year ended September 30, 2005, exclusive of the sale of the branch and the contribution to the Foundation, and as adjusted for Federal and state taxes (in thousands, except per share data):

                                  Fiscal Year Ended
                                     September 30,
                                 2005            2004
                                ------          ------
Pro forma disclosure                 (unaudited)
 Net income, as reported        $5,283          $4,684
 Sale of branch                   (386)              -
 Contribution to Foundation      1,825               -
 Federal and state income
  tax expense                     (561)              -
                                ------          ------
Pro forma net income            $6,161          $4,684
                                ======          ======
Earnings per share
 Diluted as reported             $0.36           nm (1)
 Pro forma diluted               $0.42           nm (1)

(1) Earnings per share information is not meaningful.
    The Company did not complete its minority stock offering
    until December 6, 2004.
Revenues for the quarter ended September 30, 2005, which consisted of net interest income before the provision for loan losses plus noninterest income, increased 19% to $8.2 million for the quarter, compared to $6.9 million for the quarter ended September 30, 2004. Revenues for the fiscal year ended September 30, 2005 increased 19% to $31.8 million, compared to $26.8 million for the fiscal year ended September 30, 2004. Net interest income before the provision for loan losses increased 17% to $5.6 million for the quarter ended September 30, 2005, compared to $4.8 million for the same quarter of the prior year. For the fiscal year ended September 30, 2005, net interest income before the provision for loan losses increased 21% to $21.7 million, compared to $17.9 million for the fiscal year ended September 30, 2004.

For the quarter ended September 30, 2005, net interest income after provision for loan losses increased 17% to $5.6 million, compared to $4.8 million for the same quarter a year ago. For the quarter ended September 30, 2005, no provision for loan losses was established by management in connection with its analysis of the loan portfolio. Net interest income after provision for loan losses for the fiscal year ended September 30, 2005 increased 25% to $21.2 million, compared to $17.0 million for the fiscal year ended September 30, 2004.

The Company's net interest margin decreased 17 basis points to 3.48% for the quarter ended September 30, 2005, from 3.65% for the same quarter last year. The yield on deposits was 2.06% for the fourth quarter compared to 1.72% for the fourth quarter of the prior year. The increase was primarily attributable to general market rate increases following Federal Reserve rate increases during the past fiscal year. The net interest margin for the fiscal year ended September 30, 2005 decreased 27 basis points to 3.57% from 3.84% for the fiscal year ended September 30, 2004. During the year ended September 30, 2005, the Company increased its investment in mortgage-back securities by $98 million. The additional mortgage-backed securities, which generally have a lesser yield than comparable loans, were the primary reason for the decrease in the net interest margin for the fiscal year ended September 30, 2005.

Noninterest income increased 30% to $2.6 million for the quarter ended September 30, 2005, compared to $2.0 million for the same quarter a year ago. The growth in service charges and fees accounted for the majority of the increase from the prior quarter a year ago. For the fiscal year ended September 30, 2005, noninterest income increased 12% to $10.1 million, compared to $9.0 million for the fiscal year ended September 30, 2004. The increase in other noninterest income is primarily attributable to the $873,000 increase in service charges and fees, $386,000 gain on the sale of a branch and the receipt of $456,000 in life insurance proceeds, offset by a $300,000 impairment of the Company's mortgage servicing rights.

Noninterest expense for the quarter ended September 30, 2005 increased 17% to $5.4 million, compared to $4.6 million for the comparable period a year earlier. Compensation and benefits accounted for $833,000 of the increase with the majority of the increase attributable to the establishment of an employee stock ownership plan ("ESOP") and additional costs related to the employee incentive plan. The efficiency ratio improved to 65.72% for the quarter ended September 30, 2005 compared to 67.60% for the same quarter a year ago. Noninterest expense for the fiscal year ended September 30, 2005 increased 25% to $23.2 million, compared to $18.6 million for the fiscal year ended September 30, 2004. The $4.6 million increase was primarily a result of the $1.8 million contribution to the Foundation, the $206,000 death benefit paid to the family of a former Bank officer, additional compensation expense including $615,000 as a result of the establishment of the ESOP and professional expenses related to being a publicly held company. The efficiency ratio was 72.81% for the fiscal year ended September 30, 2005, compared to 69.20% for the fiscal year ended September 30, 2004. Excluding the non-recurring contribution to the Foundation and the gain on sale of the branch, the efficiency ratio was 67.89% for the fiscal year ended September 30, 2005. The efficiency ratio indicates how much is spent on non-interest expenses as a percentage of total revenue.

Total assets decreased 7% to $689.6 million at September 30, 2005 compared to $743.9 million at September 30, 2004. Assets at September 30, 2004 included $220.8 million that was received from subscribers in the Company's minority stock offering. These subscription funds were subsequently refunded to subscribers in the quarter ended December 31, 2004 as a result of a change in the appraisal of the Company, which increased the valuation range of the minority stock offering. Following the refund to subscribers, the Company conducted a resolicitation and received $153.1 million from subscribers. The Company's minority stock offering, however, was oversubscribed and as a result, $97.2 million of the $153.1 million of subscription funds received by the Company were returned to investors in the quarter ended December 31, 2004.

Net loans at September 30, 2005, increased 10% to $430.9 million, compared to $392.6 million at September 30, 2004. Single family lending represented 61% of the Bank's loan portfolio at September 30, 2005, compared to 63% at September 30, 2004. Commercial real estate loans accounted for 28% of the Bank's loan portfolio at September 30, 2005, compared to 26% at September 30, 2004.

Credit quality remains high, as non-performing assets were $1.0 million, or 0.15% of total assets, at September 30, 2005, compared to $723,000, or 0.10% of total assets, at September 30, 2004. The allowance for loan losses was $2.9 million, or 0.66% of gross loans, including loans held for sale, at September 30, 2005 compared to $2.6 million, or 0.66% of gross loans, at September 30, 2004.

Deposits increased 16% to $396.3 million at September 30, 2005 compared to $343.1 million at September 30, 2004. Noninterest-bearing demand deposits increased $16.7 million to $46.3 million at September 30, 2005, compared to $29.6 million at September 30, 2004. Interest-bearing deposits grew $3.6 million to $127.3 million at September 30, 2005, compared to $123.8 million at September 30, 2004. Certificates of deposit increased $33.2 million with the majority of the increase in 12 to 23 month terms.

Stockholders' equity increased $56.3 million to $101.4 million at September 30, 2005 compared to $45.1 million a year earlier. The increase was primarily the result of $55.1 million from the minority stock offering, $5.3 million net income, and $615,000 earned ESOP shares, offset by $564,000 of cash dividends paid to stockholders and $3.9 million for the repurchase of 298,092 shares of common stock. The Company's book value per share as of September 30, 2005 was $6.80 per share based upon 14,910,658 outstanding shares of common stock.

About the Company:

Home Federal Bancorp, Inc. is a 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, which includes Ada, Canyon, Elmore and Gem Counties, through 15 full-service banking offices and two mortgage loan centers. For more information, visit the Company's web site at www.myhomefed.com.

Forward-Looking Statements:

Statements in this report 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, 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)

                                                   Sept. 30,      Sept. 30,
                                                     2005           2004
                                                   --------       --------
ASSETS

    Cash and amounts due from
     depository institutions                       $ 19,033       $215,663
    Mortgage-backed securities available
     for sale, at fair value                         14,830            871
    Mortgage-backed securities held to
     maturity, at cost                              180,974         96,595
    Federal Home Loan Bank stock, at cost             9,591          7,317
    Loan receivable, net of allowance
     for loan losses of $2,882
     and $2,637                                     430,944        392,634
    Loans held for sale                               5,549          3,577
    Accrued interest receivable                       2,458          2,019
    Property and equipment, net                      11,995         10,967
    Mortgage servicing rights, net                    2,671          3,152
    Bank owned life insurance                        10,099         10,052
    Real estate and other property owned                534            113
    Other assets                                        899            907
                                                   --------       --------
      TOTAL ASSETS                                 $689,577       $743,867
                                                   ========       ========

LIABILITIES AND STOCKHOLDERS' EQUITY

LIABILITIES
    Deposit accounts
      Demand deposits                              $173,641       $153,409
      Savings deposits                               25,219         25,453
      Certificates of deposit                       197,465        164,225
                                                   --------       --------
          Total deposit accounts                    396,325        343,087
    Advances by borrowers for taxes
     and insurance                                    3,898          3,716
    Interest payable                                  1,670          1,420
    Deferred compensation                             3,049          2,463
    Federal Home Loan Bank advances                 175,932        122,797
    Deferred income tax liability                     1,205          2,264
    Other liabilities                                 6,131        223,023
                                                   --------       --------
      Total liabilities                             588,210        698,770

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, 2005 -
     15,208,750 issued, 14,910,658 outstanding          149              -
     Sept. 30, 2004 - none issued and outstanding
    Additional paid-in capital                       56,115              -
    Retained earnings                                49,818         45,099
    Unearned shares issued to employee
     stock ownership plan                            (4,550)             -
    Accumulated other comprehensive loss               (165)            (2)
                                                   --------       --------
      Total stockholders' equity                    101,367         45,097
                                                   --------       --------
      TOTAL LIABILITIES AND STOCKHOLDERS'
       EQUITY                                      $689,577       $743,867
                                                   ========       ========


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,
                                     2005      2004        2005      2004
                                   -------   -------     -------   -------
Interest and dividend income:
    Loan interest                  $ 6,884   $ 6,047     $25,934   $23,936
    Investment interest                 42       181         313       260
    Mortgage-backed
     security interest               2,154     1,120       7,633     3,038
    Federal Home Loan Bank
     dividends                           -        63          30       278
                                   -------   -------     -------   -------
      Total interest and
       dividend income               9,080     7,411      33,910    27,512
                                   -------   -------     -------   -------
Interest expense:
    Deposits                         1,796     1,338       6,288     4,955
    Federal Home Loan
     Bank advances                   1,703     1,239       5,943     4,695
                                   -------   -------     -------   -------
      Total interest expense         3,499     2,577      12,231     9,650
                                   -------   -------     -------   -------
      Net interest income            5,581     4,834      21,679    17,862
Provision for loan losses                -         -         456       900
                                   -------   -------     -------   -------
      Net interest income
       after provision for
       loan losses                   5,581     4,834      21,223    16,962
                                   -------   -------     -------   -------
Noninterest income:
    Service charges and fees         2,217     1,897       8,274     7,401
    Gain on sale of loans              180       (46)        382       375
    Increase in cash surrender
     value of bank owned life
     insurance                          90       122         343       493
    Loan servicing fees                166       171         672       671
    Mortgage servicing
     rights, net                       (81)     (151)       (480)       22
    Other                                6        32         937        20
                                   -------   -------     -------   -------
      Total noninterest income       2,578     2,025      10,128     8,982
                                   -------   -------     -------   -------
Noninterest expense:
    Compensation and benefits        3,292     2,459      12,636    10,553
    Occupancy and equipment            674       716       2,765     2,778
    Data processing                    370       451       1,616     1,549
    Advertising                        258       236       1,147     1,060
    Postage and supplies               201       204         785       805
    Professional services              207       180         905       433
    Insurance and taxes                100       109         341       434
    Charitable contribution
     to Foundation                       -         -       1,825         -
    Other                              260       282       1,138       964
                                   -------   -------     -------   -------
      Total noninterest expense      5,362     4,637      23,158    18,576
                                   -------   -------     -------   -------
Income before income taxes           2,797     2,222       8,193     7,368
Income tax expense                   1,060       809       2,910     2,684
                                   -------   -------     -------   -------
      NET INCOME                   $ 1,737   $ 1,413     $ 5,283   $ 4,684
                                   =======   =======     =======   =======

Earnings per common share:
      Basic                          $0.12    nm (1)       $0.36    nm (1)
      Diluted                        $0.12    nm (1)       $0.36    nm (1)

Weighted average number
 of shares outstanding:
      Basic                     14,629,608    nm (1)  14,696,071    nm (1)
      Diluted                   14,635,621    nm (1)  14,702,084    nm (1)


(1)  Shares outstanding and earnings per share information are not
     meaningful.  The Company did not complete its minority stock
     offering until December 6, 2004 and did not have any outstanding
     shares prior to that date.


HOME FEDERAL BANCORP, INC. AND SUBSIDIARY
ADDITIONAL FINANCIAL INFORMATION
(Dollars in thousands, except share data) (Unaudited)

                                                      At Or         At Or
                                                     For The       For The
                                                   Year Ended    Year Ended
                                                    Sept. 30,     Sept. 30,
                                                      2005          2004
                                                   ---------     ---------
FINANCIAL CONDITION DATA
    Average interest-earning assets                  $606,690     $465,384
    Average interest-bearing liabilities              501,124      409,591
    Net average earning assets                        105,566       55,793
    Average interest-earning assets to average                 .
      interest-bearing liabilities                     121 07%      113.62%
    Stockholders' equity to assets                      14.70%        6.06%

ASSET QUALITY
    Allowance for loan losses                           2,882        2,637
    Non-performing loans                                  478          610
    Non-performing assets                               1,012          723
    Allowance for loan losses to
     non-performing loans                              602.93%      432.30%
    Allowance for loan losses to gross loans             0.66%        0.66%
     and loans held for sale
    Non-performing loans to gross loans                  0.11%        0.15%
     and loans held for sale
    Non-performing assets to total assets                0.15%        0.10%





                                           At Or For           At Or For
                                       The Three Months        The Year
                                         Ended Sept. 30,    Ended Sept. 30,
                                         2005    2004        2005    2004
                                        ------  ------      ------  ------
SELECTED PERFORMANCE RATIOS
    Return on average
     assets (1)                          1.02%    0.98%       0.82%   0.93%
    Return on average
     equity (1)                          6.68%    nm(4)       5.69%   nm(4)
    Net interest margin (1)              3.48%    3.65%       3.57%   3.84%
    Efficiency ratio                    65.72%   67.60%      72.81%  69.20%
    Efficiency ratio,
     excluding non-recurring            65.72%   67.60%      67.89%  69.20%
     items (2)

PER SHARE DATA
    Basic earnings per share            $0.12     nm(4)      $0.36    nm(4)
    Diluted earnings per share          $0.12     nm(4)      $0.36    nm(4)
    Book value per share                 6.80     nm(4)       6.80    nm(4)
    Cash dividends declared
     per share                           0.05     nm(4)       0.10    nm(4)
    Average number of shares
     outstanding:
      Basic (3)                    14,629,608     nm(4) 14,696,071    nm(4)
      Diluted (3)                  14,667,755     nm(4) 14,702,084    nm(4)


(1) Amounts are annualized.

(2) Noninterest expense divided by net interest income plus noninterest
    income. The pro forma efficiency ratio for the fiscal year ended
    September 30, 2005 excludes the effect of the $1.8 million
    contribution to the Foundation and the $386,000 gain on sale of
    a branch.

(3) Amounts calculated exclude Employee Stock Ownership Plan shares not
    committed to be released.
(4) Shares outstanding and earnings per share information are not
    meaningful. The Company did not complete its minority stock
    offering until December 6, 2004.

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