SOURCE: Home Federal Bancorp, Inc.

April 22, 2005 16:00 ET

Home Federal Bancorp, Inc. Announces Second Quarter Earnings

NAMPA, ID -- (MARKET WIRE) -- April 22, 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 $0.11 per share, for the quarter ended March 31, 2005, compared to $915,000 for the same period a year ago. Results for the quarter ended March 31, 2005 include a $386,000 pre-tax gain on the sale of a former branch. Excluding the gain on the sale of the branch, the Company had net income of $1.4 million, or $0.10 per share for the quarter.

For the six months ended March 31, 2005 (the first six months of the Company's fiscal year ending September 30, 2005), the Company's net income was $1.7 million, or $0.12 per share, compared to $2.0 million for the same six-month period a year ago. Excluding the gain on the sale of the branch and the $1.8 million expense for establishing the Home Federal Foundation, Inc. (the "Foundation"), the Company had net income of $2.6 million, or $0.18 per share for the six months ended March 31, 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 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 six months ended March 31, 2005 is being reported on shares outstanding from December 6, 2004 through March 31, 2005.

The following table reconciles the Company's actual net income to pro forma net income for the first three and six months ended March 31, 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):

                                Three Months Ended      Six Months Ended
                                     March 31,               March 31,
                                  2005      2004         2005      2004
                                 ------   ------       ------    ------
Pro forma disclosure                           (unaudited)
  Net income, as reported        $1,674     $915       $1,748    $1,953
  Sale of branch                   (386)       -         (386)        -
  Contribution to Foundation          -        -        1,825         -
  Federal and state income
   tax benefit (expense)            151        -         (561)        -
                                 ------   ------       ------    ------
  Pro forma net income           $1,439     $915       $2,626    $1,953
                                 ======   ======       ======    ======
Earnings per share
  Basic as reported              $ 0.11       nm(1)    $ 0.12        nm(1)
 Pro forma basic                 $ 0.10       nm(1)    $ 0.18        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 March 31, 2005, which consisted of net interest income before the provision for loan losses and non-interest income, increased 29% to $8.1 million for the quarter, compared to $6.3 million in the quarter ended March 31, 2004. Revenues for the six months ended March 31, 2005 increased 19% to $15.3 million, compared to $12.9 million for the same period of last year. Net interest income before the provision for loan losses increased 28% to $5.5 million for the quarter ended March 31, 2005, compared to $4.3 million for the same quarter of the prior year. For the six months ended March 31 2005, net interest income before the provision for loan losses increased 24% to $10.5 million, compared to $8.5 million for the six months ended March 31, 2004.

For the quarter ended March 31, 2005, net interest income after provision for loan losses grew 32% to $5.3 million, compared to $4.0 million for the same quarter a year ago. Net interest income after provision for loan losses for the six months ended March 31, 2005 increased 29% to $10.2 million, compared to $7.9 million for the same period of the prior year.

The Company's net interest margin decreased 20 basis points to 3.67% for the second quarter, from 3.87% for the second quarter last year. The net interest margin for the six months ended March 31, 2005 decreased 32 basis points to 3.59% from 3.91% a year earlier. During the first quarter, the Company invested the majority of the proceeds from the Company's minority stock offering in lower-yielding mortgage-backed securities which was the primary reason for the decrease in the net interest margin for the quarter and the six months ended March 31, 2005.

Non-interest income increased 30% to $2.6 million for the quarter ended March 31, 2005, compared to $2.0 million for the same quarter a year ago. For the six months ended March 31, 2005, non-interest income increased 14% to $4.9 million, compared to $4.3 million for the same period of the prior year. The increase in non-interest income is primarily attributable to the $386,000 gain on the sale of a branch.

Non-interest expense for the quarter ended March 31, 2005 increased 13% to $5.2 million, compared to $4.6 million for the comparable period a year earlier. The efficiency ratio, excluding the gain on sale of the branch, improved to 67.01% for the quarter, compared to 72.83% for the second quarter last year. Non-interest expense for the six months ended March 31, 2005 increased 32% to $12.2 million, compared to $9.2 million for the six months ended March 31, 2004. The $3.0 million increase was primarily a result of the $1.8 million contribution to the Foundation, additional employee compensation and professional expenses related to being a publicly held company. Excluding the contribution to the Foundation and the gain on sale of the branch, the efficiency ratio was 69.71% for the first six months of fiscal year end 2005, compared to 71.59% for the same period of last fiscal year. The efficiency ratio indicates how much is spent on non-interest expenses as a percentage of total revenue.

Total assets increased 30% to $643.4 million at March 31, 2005 compared to $496.8 million a year earlier. Total assets at March 31, 2005 decreased $100.5 million, or 14%, from $743.9 million at September 30, 2004. Assets at September 30, 2004 included cash of $220.8 million that was received from subscribers in the 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 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.

Deposits increased 13% to $373.1 million at March 31, 2005 compared to $329.5 million at March 31, 2004. In connection with the mutual holding company reorganization and the minority stock offering, shareholders' equity increased $55.1 million. In total, shareholders' equity increased $59.5 million to $101.9 million at March 31, 2005 compared to $42.4 million a year earlier. The Company's book value per share as of March 31, 2005 was $6.70 per share based upon 15,208,750 outstanding shares.

Net loans at March 31, 2005, increased 9% to $419.1 million, compared to $383.9 million at March 31, 2004. Single family lending represented 62% of the Bank's loan portfolio at March 31, 2005, compared to 64% at March 31, 2004. Commercial real estate loans accounted for 28% of the loan portfolio at March 31, 2005, compared to 27% of the loan portfolio at March 31, 2004.

Credit quality remains high, as non-performing assets were $803,000, or 0.12% of total assets, at March 31, 2005, compared to $723,000, or 0.10% of total assets, at September 30, 2004 and $566,000, or 0.11% of total assets, at March 31, 2004. The allowance for loan losses was $2.8 million, or 0.67% of gross loans, including loans held for sale, at March 31, 2005 as compared to $2.6 million, or 0.66% of gross loans, at September 30, 2004 and $2.4 million, or 0.62% of gross loans, at March 31, 2004.

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 our 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 Annual Reports 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)                             March 31, September 30, March 31,
                                           2005        2004        2004
                                        ----------  ----------  ----------
ASSETS

  Cash and amounts due from depository
   institutions                         $   11,875  $  215,663  $   15,992
  Securities available for sale,
   at fair value                                 -           -       6,404
  Mortgage-backed securities available
   for sale, at fair value                  19,120         871           -
  Mortgage-backed securities held to
   maturity, at cost                       155,030      96,595      55,033
  Federal Home Loan Bank stock, at cost      8,112       7,317       6,681
  Loan receivable, net of allowance for
   loan losses of  $2,827, $2,637, and
   $2,411                                  419,146     392,634     383,950
  Loans held for sale                        1,566       3,577       3,160
  Accrued interest receivable                2,261       2,019       1,700
  Property and equipment, net               10,992      10,967      10,101
  Mortgage servicing rights, net             2,998       3,152       3,016
  Bank owned life insurance                 10,214      10,052       9,842
  Real estate and other property owned         567         113           -
  Other assets                               1,549         907         894
                                        ----------  ----------  ----------

    TOTAL ASSETS                        $  643,430  $  743,867  $  496,773
                                        ==========  ==========  ==========

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES
  Deposit accounts
    Savings deposits                    $   25,917  $   25,453  $   24,620
    Demand deposits                        166,639     153,409     149,299
    Certificates of deposit                180,594     164,225     155,596
                                        ----------  ----------  ----------
      Total deposit accounts               373,150     343,087     329,515

  Advances by borrowers for taxes
   and insurance                             3,710       3,716       3,458
  Interest payable                           1,607       1,420       1,191
  Deferred compensation                      2,796       2,463       1,844
  Federal Home Loan Bank advances          154,717     122,797     113,074
  Deferred income tax liability              1,317       2,264       2,116
  Income taxes payable                         207           -         553
  Other liabilities                          3,984     223,023       2,666
                                        ----------  ----------  ----------

    Total liabilities                      541,488     698,770     454,417

SHAREHOLDERS' 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:
    Mar. 31, 2005 - 15,208,750 issued,
     15,208,750 outstanding                    152           -           -
    Sept.  30, 2004 - none issued
     and outstanding
    Mar. 31, 2004 - none issued
     and outstanding
  Additional paid-in capital                59,884           -           -
  Retained earnings                         46,847      45,099      42,368
  Unearned shares issued to employee
   stock ownership plan                     (4,784)          -           -
  Accumulated other comprehensive loss        (157)         (2)        (12)
                                        ----------  ----------  ----------

    Total shareholders' equity             101,942      45,097      42,356
                                        ----------  ----------  ----------

    TOTAL LIABILITIES AND SHAREHOLDERS'
     EQUITY                             $  643,430  $  743,867  $  496,773
                                        ==========  ==========  ==========


HOME FEDERAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data) (Unaudited)

                        Three Months Ended            Six Months Ended
                              March 31,                   March 31,
                         2005          2004          2005          2004
                      ----------    ----------    ----------    ----------

Interest and dividend
 income:
  Loan interest       $    6,315    $    5,965    $   12,384    $   11,941
  Investment interest         17            46           260            80
  Mortgage-backed
   security interest       2,045           608         3,408         1,048
  Federal Home Loan
   Bank dividends             30            66            30           148
                      ----------    ----------    ----------    ----------
    Total interest and
     dividend income       8,407         6,685        16,082        13,217
                      ----------    ----------    ----------    ----------

Interest expense:
  Deposits                 1,465         1,207         2,890         2,383
  Federal Home Loan
   Bank advances           1,448         1,146         2,709         2,299
                      ----------    ----------    ----------    ----------

    Total interest
     expense               2,913         2,353         5,599         4,682
                      ----------    ----------    ----------    ----------

    Net interest
     income                5,494         4,332        10,483         8,535

Provision for loan
 losses                      236           300           295           600
                      ----------    ----------    ----------    ----------

    Net interest
     income after
     provision for
     loan losses           5,258         4,032        10,188         7,935
                      ----------    ----------    ----------    ----------

Non-interest income:
  Service charges and
   fees                    1,952         1,770         3,911         3,475
  Gain on sale of
   loans                      72           125           140           344
  Increase in cash
   surrender value of
   bank owned life
   insurance                  87           124           162           249
  Loan servicing fees        168           166           340           332
  Mortgage servicing
   rights, net               (58)         (183)         (154)         (114)
  Other                      420            12           459            55
                      ----------    ----------    ----------    ----------

    Total noninterest
     income                2,641         2,014         4,858         4,341
                      ----------    ----------    ----------    ----------

Non-interest expense:
  Compensation and
   benefits                3,096         2,692         6,149         5,340
  Occupancy and
   equipment                 682           674         1,401         1,375
  Data processing            376           357           819           724
  Advertising                310           304           650           515
  Postage and supplies       188           214           398           408
  Professional
   services                  203            67           422           180
  Insurance and taxes         84           111           150           209
  Charitable
   contribution to
   Foundation                  -             -         1,825             -
  Other                      254           203           436           467
                      ----------    ----------    ----------    ----------

    Total noninterest
     expense               5,193         4,622        12,250         9,218
                      ----------    ----------    ----------    ----------

Income before income
 taxes                     2,706         1,424         2,796         3,058

Income tax expense         1,032           509         1,048         1,105
                      ----------    ----------    ----------    ----------

    NET INCOME        $    1,674    $      915    $    1,748    $    1,953
                      ==========    ==========    ==========    ==========

Earnings per common
 share:
    Basic             $     0.11         nm(1)    $     0.12         nm(1)
    Diluted           $     0.11         nm(1)    $     0.12         nm(1)

Weighted average
 number of shares
 outstanding:
    Basic             14,720,524         nm(1)    14,718,364         nm(1)
    Diluted           14,720,524         nm(1)    14,718,364         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 FOR THE   AT OR FOR THE
                                              SIX MONTHS         YEAR
                                                 ENDED           ENDED
                                            MARCH 31, 2005  SEPT. 30, 2004
                                            --------------  --------------
FINANCIAL CONDITION DATA
  Average interest-earning assets           $      583,760  $      465,384
  Average interest-bearing liabilities             491,359         409,591
  Net average earning assets                        92,401          55,793
  Average interest-earning assets to
   Average interest-bearing liabilities             118.81%         113.62%
  Shareholders' equity to assets                     15.84%           6.06%

ASSET QUALITY
  Allowance for loan losses                          2,827           2,637
  Non-performing loans                                 236             610
  Non-performing assets                                803             723
  Allowance for loan losses to
   non-performing loans                           1,197.88%         432.30%
  Allowance for loan losses to net loans              0.67%           0.66%
  Non-performing loans to total net loans             0.06%           0.15%
  Non-performing assets to total assets               0.12%           0.10%



                              AT OR FOR                   AT OR FOR
                       THE THREE MONTHS ENDED       THE SIX MONTHS ENDED
                              MARCH 31,                   MARCH 31,
                         2005          2004          2005          2004
                      ----------    ----------    ----------    ----------
SELECTED PERFORMANCE
 RATIOS
  Return on average
   assets (1)               1.05%         0.76%         0.56%         0.83%
  Return on average
   equity (1)               6.56%        nm(4)          4.28%        nm(4)
  Net interest
   margin (1)               3.67%         3.87%         3.59%         3.91%
  Efficiency ratio (2)     67.01%        72.83%        69.71%        71.59%

PER SHARE DATA
  Basic earnings
   per share          $     0.11         nm(4)    $     0.12         nm(4)
  Diluted earnings
   per share          $     0.11         nm(4)    $     0.12         nm(4)
  Book value per share      6.70         nm(4)          6.70         nm(4)
  Cash dividends
   declared per share          -         nm(4)             -         nm(4)
  Average number of
   shares outstanding:
    Basic (3)         14,720,524         nm(4)    14,718,364         nm(4)
    Diluted (3)       14,720,524         nm(4)    14,718,364         nm(4)

(1) Amounts are annualized.
(2) Non-interest expense divided by net interest income plus non-interest
    income.  Amounts calculated exclude 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