SOURCE: Home Federal Bancorp, Inc.

July 21, 2005 14:00 ET

Home Federal Bancorp, Inc. Announces Third Quarter Earnings

NAMPA, ID -- (MARKET WIRE) -- July 21, 2005 -- Home Federal Bancorp, Inc. (the "Company") (NASDAQ: HOME), the parent company of Home Federal Bank (the "Bank"), today reported net income of $1.8 million, or $0.12 per share, for the quarter ended June 30, 2005, compared to $1.3 million for the same period a year ago. Net income for the nine months ended June 30, 2005 was $3.5 million, or $0.24 per share, compared to $3.3 million for the same nine-month period a year ago. Results for the nine months ended June 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 $4.4 million, or $0.30 per share, for the nine months ended June 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 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 nine months ended June 30, 2005 is being reported on shares outstanding from December 6, 2004 through June 30, 2005. In connection with the reorganization, the Company received $53.6 million in net proceeds from a minority stock offering.

The following table reconciles the Company's actual net income to pro forma net income for the nine months ended June 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):

                                                        Nine Months Ended
                                                             June 30,
                                                      2005           2004
                                                     ------         ------
Pro forma disclosure                                      (unaudited)
 Net income, as reported                             $3,546         $3,271
 Sale of branch                                        (386)             -
 Contribution to Foundation                           1,825              -
 Federal and state income tax expense                  (561)             -
                                                     ------         ------
 Pro forma net income                                $4,424         $3,271
                                                     ======         ======
Earnings per share
 Basic as reported                                   $ 0.24          nm (1)
 Pro forma basic                                     $ 0.30          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 June 30, 2005, which consisted of net interest income before the provision for loan losses and noninterest income, increased 17% to $8.3 million for the quarter, compared to $7.1 million for the quarter ended June 30, 2004. Revenues for the nine months ended June 30, 2005 increased 18% to $23.6 million, compared to $20.0 million for the same period of last year. Net interest income before the provision for loan losses increased 24% to $5.6 million for the quarter ended June 30, 2005, compared to $4.5 million for the same quarter of the prior year. For the nine months ended June 30, 2005, net interest income before the provision for loan losses increased 24% to $16.1 million, compared to $13.0 million for the nine months ended June 30, 2004.

For the quarter ended June 30, 2005, net interest income after provision for loan losses grew 31% to $5.5 million, compared to $4.2 million for the same quarter a year ago. Net interest income after provision for loan losses for the nine months ended June 30, 2005 increased 29% to $15.6 million, compared to $12.1 million for the same period of the prior year.

The Company's net interest margin decreased 21 basis points to 3.64% for the quarter ended June 30, 2005, from 3.85% for the same quarter last year. The net interest margin for the nine months ended June 30, 2005 decreased 28 basis points to 3.61% from 3.89% for the same period a year earlier. During the quarter ended December 31, 2004, 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 nine months ended June 30, 2005.

Noninterest income increased 4% to $2.7 million for the quarter ended June 30, 2005, compared to $2.6 million for the same quarter a year ago. Other noninterest income includes the receipt of $460,000 in net life insurance proceeds as a result of the death of a former Bank officer. The Company also wrote down the value of its mortgage servicing rights by $200,000. For the nine months ended June 30, 2005, noninterest income increased 9% to $7.6 million, compared to $7.0 million for the same period of the prior year. The increase in other noninterest income is primarily attributable to the $386,000 gain on the sale of a branch and the receipt of $460,000 in life insurance proceeds which is offset by a $300,000 impairment of the Company's mortgage servicing rights.

Noninterest expense for the quarter ended June 30, 2005 increased 17% to $5.5 million, compared to $4.7 million for the comparable period a year earlier. Included in other noninterest expense was a $210,000 death benefit paid to the family of a former Bank officer, pursuant to a non-qualified retirement plan. The efficiency ratio was relatively unchanged at 66.76% for the third quarter, compared to 66.41% for the same quarter last year. Noninterest expense for the nine months ended June 30, 2005 increased 28% to $17.8 million, compared to $13.9 million for the nine months ended June 30, 2004. The $3.9 million increase was primarily a result of the $1.8 million contribution to the Foundation, the $210,000 death benefit paid to the family of a former Bank officer, additional employee compensation and professional expenses related to being a publicly held company. The efficiency ratio was 75.25% for the first nine months of fiscal year end 2005, compared to 69.75% for the same period of last fiscal year. Excluding the non-recurring contribution to the Foundation and the gain on sale of the branch, the efficiency ratio was 68.66% for the first nine months of fiscal year end 2005. The efficiency ratio indicates how much is spent on non-interest expenses as a percentage of total revenue.

Total assets increased 31% to $679.2 million at June 30, 2005 compared to $519.3 million a year earlier. Total assets at June 30, 2005 decreased $64.7 million, or 9%, from $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 June 30, 2005, increased 12% to $433.9 million, compared to $386.8 million at June 30, 2004. Single family lending represented 61% of the Bank's loan portfolio at June 30, 2005, compared to 63% at June 30, 2004. Commercial real estate loans accounted for 29% of the Bank's loan portfolio at June 30, 2005, compared to 27% at June 30, 2004.

Credit quality remains high, as non-performing assets were $1.1 million, or 0.16% of total assets, at June 30, 2005, compared to $723,000, or 0.10% of total assets, at September 30, 2004 and $676,000, or 0.13% of total assets, at June 30, 2004. The allowance for loan losses was $2.9 million, or 0.66% of gross loans, including loans held for sale, at June 30, 2005 as compared to $2.6 million, or 0.66% of gross loans, at September 30, 2004 and $2.7 million, or 0.69% of gross loans, at June 30, 2004.

Deposits increased 14% to $381.1 million at June 30, 2005 compared to $333.5 million at June 30, 2004. In connection with the mutual holding company reorganization and the minority stock offering, stockholders' equity increased $55.1 million. In total, stockholders' equity increased $60.0 million to $103.7 million at June 30, 2005 compared to $43.7 million a year earlier. The Company's book value per share as of June 30, 2005 was $6.82 per share based upon 15,208,750 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 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)                                 June 30, September 30, June 30,

                                               2005      2004       2004
                                               ----      ----       ----
ASSETS
 Cash and amounts due from depository
  institutions                              $ 21,577   $215,663   $ 13,694
 Mortgage-backed securities available
  for sale, at fair value                     17,910        871        893
 Mortgage-backed securities held to
  maturity, at cost                          164,337     96,595     82,653
 Federal Home Loan Bank stock, at cost         9,591      7,317      7,117
 Loan receivable, net of allowance for
  loan losses of  $2,903, $2,637, and
  $2,706                                     433,892    392,634    386,837
 Loans held for sale                           3,521      3,577      1,813
 Accrued interest receivable                   2,337      2,019      1,797
 Property and equipment, net                  11,226     10,967     10,346
 Mortgage servicing rights, net                2,752      3,152      3,303
 Bank owned life insurance                    10,009     10,052      9,947
 Real estate and other property owned            604        113        114
 Other assets                                  1,467        907        737
                                            --------   --------   --------
  TOTAL ASSETS                              $679,223   $743,867   $519,251
                                            ========   ========   ========

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
 Deposit accounts
  Demand deposits                           $167,684   $153,409   $149,956
  Savings deposits                            25,375     25,453     25,104
  Certificates of deposit                    188,052    164,225    158,462
                                            --------   --------   --------
   Total deposit accounts                    381,111    343,087    333,522
 Advances by borrowers for taxes
  and insurance                                2,053      3,716      1,840
 Interest payable                              1,648      1,420      1,283
 Deferred compensation                         2,867      2,463      1,976
 Federal Home Loan Bank advances             181,750    122,797    131,756
 Deferred income tax liability                 1,548      2,264      2,120
 Other liabilities                             4,505    223,023      3,078
                                            --------   --------   --------
   Total liabilities                         575,482    698,770    475,575

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:
   June 30, 2005 - 15,208,750 issued
    and outstanding                              152          -          -
   September 30, 2004 - none issued
    and outstanding
   June 30, 2004 - none issued
    and outstanding
 Additional paid-in capital                   59,909          -          -
 Retained earnings                            48,359     45,099     43,686
 Unearned shares issued to employee
  stock ownership plan                        (4,635)         -          -
 Accumulated other comprehensive loss            (44)        (2)       (10)
                                            --------   --------   --------
  Total stockholders' equity                 103,741     45,097     43,676
                                            --------   --------   --------
  TOTAL LIABILITIES AND
   STOCKHOLDERS' EQUITY                     $679,223   $743,867   $519,251
                                            ========   ========   ========


HOME FEDERAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data)
(Unaudited)                      Three Months Ended       Nine Months Ended
                                       June 30,                June 30,
                                    2005     2004           2005     2004
                                    ----     ----           ----     ----
Interest and dividend income:
 Loan interest                $     6,666   $5,948    $    19,050  $17,889
 Investment interest                   11       10            271       79
 Mortgage-backed security
  interest                          2,071      859          5,479    1,918
 Federal Home Loan Bank
  dividends                             -       67             30      215
                              -----------   ------    -----------  -------
  Total interest and
   dividend income                  8,748    6,884         24,830   20,101
                              -----------   ------    -----------  -------
Interest expense:
 Deposits                           1,602    1,233          4,492    3,617
 Federal Home Loan Bank
  advances                          1,531    1,158          4,240    3,456
  Total interest expense            3,133    2,391          8,732    7,073
                              -----------   ------    -----------  -------
  Net interest income               5,615    4,493         16,098   13,028
Provision for loan losses             161      300            456      900
                              -----------   ------    -----------  -------
 Net interest income after
  provision for loan losses         5,454    4,193         15,642   12,128
                              -----------   ------    -----------  -------
Noninterest income:
 Service charges and fees           2,146    2,030          6,057    5,504
 Gain on sale of loans                 62       77            202      421
 Increase in cash surrender
  value of bank owned life
  insurance                            91      122            253      371
 Loan servicing fees                  166      168            506      500
 Mortgage servicing
  rights, net                        (245)     287           (399)     173
 Other                                472      (68)           931      (12)
                              -----------   ------    -----------  -------
  Total noninterest income          2,692    2,616          7,550    6,957
                              -----------   ------    -----------  -------
Noninterest expense:
 Compensation and benefits          3,195    2,753          9,344    8,094
 Occupancy and equipment              690      686          2,091    2,062
 Data processing                      427      374          1,246    1,098
 Advertising                          239      309            889      824
 Postage and supplies                 186      193            584      601
 Professional services                276       73            698      253
 Insurance and taxes                   91      117            241      325
 Charitable contribution
  to Foundation                         -        -          1,825        -
 Other                                442      216            878      682
                              -----------   ------    -----------  -------
  Total noninterest expense         5,546    4,721         17,796   13,939
                              -----------   ------    -----------  -------
Income before income taxes          2,600    2,088          5,396    5,146
Income tax expense                    802      770          1,850    1,875
                              -----------   ------     ----------- -------
  NET INCOME                  $     1,798   $1,318    $     3,546  $ 3,271
                              ===========   ======    ===========  =======

Earnings per common share:
  Basic                       $      0.12    nm (1)   $      0.24    nm (1)
  Diluted                     $      0.12    nm (1)   $      0.24    nm (1)
Weighted average number of
 shares outstanding:
  Basic                        14,735,474    nm (1)    14,725,923    nm (1)
  Diluted                      14,735,474    nm (1)    14,725,923    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
                                         Nine Months Ended       Year Ended
                                             June 30, 2005   Sept. 30, 2004
                                         -----------------   --------------


FINANCIAL CONDITION DATA
  Average interest-earning assets                $595,097         $465,384
  Average interest-bearing liabilities            494,649          409,591
  Net average earning assets                      100,448           55,793
  Average interest-earning assets to average
   interest-bearing liabilities                    120.31%          113.62%
  Stockholders' equity to assets                    15.27%            6.06%

ASSET QUALITY
  Allowance for loan losses                         2,903            2,637
  Non-performing loans                                449              610
  Non-performing assets                             1,053              723
  Allowance for loan losses to
   non-performing loans                            646.55%          432.30%
  Allowance for loan losses to gross loans
   and loans held for sale                           0.66%            0.66%
  Non-performing loans to gross loans
   And loans held for sale                           0.10%            0.15%
  Non-performing assets to total assets              0.16%            0.10%


                               At Or For The Three     At Or For The Nine
                              Months  Ended June 30,  Months Ended June 30,
                                 2005       2004          2005       2004
                               -------    -------       -------    -------

SELECTED PERFORMANCE RATIOS
  Return on average assets (1)    1.10%     1.05%          0.75%     0.91%
  Return on average equity (1)    6.92%    nm (4)          5.30%    nm (4)
  Net interest margin (1)         3.64%     3.85%          3.61%     3.89%
  Efficiency ratio               66.76%    66.41%         75.25%    69.75%
  Efficiency ratio, excluding
   non-recurring items (2)       66.76%    66.41%         68.66%    69.75%

PER SHARE DATA
  Basic earnings per share       $0.12     nm (4)         $0.24     nm (4)
  Diluted earnings per share     $0.12     nm (4)         $0.24     nm (4)
  Book value per share            6.82     nm (4)          6.82     nm (4)
  Cash dividends declared
   per share                      0.05     nm (4)          0.05     nm (4)
  Average number of shares
   outstanding:
    Basic (3)               14,735,474     nm (4)    14,725,923     nm (4)
    Diluted (3)             14,735,474     nm (4)    14,725,923     nm (4)
(1) Amounts are annualized.

(2) Noninterest expense divided by net interest income plus noninterest income. The pro forma efficiency ratio for the nine months ended June 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
    208-466-4634
    www.myhomefed.com

    Robert A. Schoelkoph
    SVP, Treasurer & CFO
    208-466-4634
    www.myhomefed.com