FOR RELEASE: Monday, October 28, 2019 at 4:30 PM (Eastern)
HOME FEDERAL BANCORP, INC. OF LOUISIANA REPORTS RESULTS OF OPERATIONS FOR
THE THREE MONTHS ENDED SEPTEMBER 30, 2019
Shreveport, Louisiana – October 28, 2019 – Home Federal Bancorp, Inc. of Louisiana (the “Company”) (Nasdaq: HFBL), the holding company of Home Federal Bank, reported net income for the three months ended September 30, 2019 of $1.2 million, which was substantially consistent with net income for the three months ended September 30, 2018. The Company’s basic and diluted earnings per share were $0.73 and $0.68, respectively, for the three months ended September 30, 2019 compared to basic and diluted earnings per share of $0.68 and $0.63, respectively, for the three months ended September 30, 2018.
The $29,000 increase in net income for the three months ended September 30, 2019 resulted primarily from a $294,000, or 43.9%, increase in non-interest income, a decrease of $75,000, or 30.0%, in provision for loan losses and a decrease of $35,000, or 11.1%, in provision for income taxes, partially offset by an increase of $301,000, or 10.8%, in non-interest expense, and a $74,000, or 1.9%, decrease in net interest income. The $74,000 decrease in net interest income for the three months ended September 30, 2019 was primarily due to a $356,000, or 35.7%, increase in total interest expense, primarily due to an increase of 41 basis points in the average rate on total interest-bearing deposits, partially offset by an increase of $282,000, or 5.8%, in total interest income. The Company’s average interest rate spread was 3.30% for the three months ended September 30, 2019 compared to 3.60% for the three months ended September 30, 2018. The Company’s net interest margin was 3.63% for the three months ended September 30, 2019 compared to 3.86% for the three months ended September 30, 2018. The decrease in net interest margin on a comparative quarterly basis was primarily the result of the increase of 41 basis points in average cost of interest-bearing deposits for the three months ended September 30, 2019 compared to the prior year.
The following table sets forth the Company’s average balances and average yields earned and rates paid on its interest-earning assets and interest-bearing liabilities for the periods indicated.
For the Three Months Ended September 30, | ||||||||||||||||
2019 | 2018 | |||||||||||||||
Average Balance | Average Yield/Rate | Average Balance | Average Yield/Rate | |||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| Interest-earning assets: | ||||||||||||||||
Loans receivable | $ | 331,368 | 5.57 | % | $ | 325,720 | 5.47 | % | ||||||||
Investment securities | 65,520 | 2.46 | 57,652 | 2.15 | ||||||||||||
Interest-earning deposits | 19,659 | 2.20 | 16,221 | 1.96 | ||||||||||||
Total interest-earning assets | $ | 416,547 | 4.92 | % | $ | 399,593 | 4.85 | % | ||||||||
| Interest-bearing liabilities: | ||||||||||||||||
Savings accounts | $ | 46,630 | 1.03 | % | $ | 36,099 | 0.54 | % | ||||||||
NOW accounts | 31,254 | 0.62 | 33,079 | 0.50 | ||||||||||||
Money market accounts | 74,407 | 1.22 | 70,296 | 0.85 | ||||||||||||
Certificates of deposit | 176,897 | 2.10 | 166,889 | 1.63 | ||||||||||||
| Total interest-bearing deposits | 329,188 | 1.61 | 306,363 | 1.20 | ||||||||||||
Other bank borrowings | 343 | 4.63 | 98 | 4.05 | ||||||||||||
FHLB advances | 1,307 | 4.55 | 10,614 | 2.54 | ||||||||||||
| Total interest-bearing liabilities | $ | 330,838 | 1.62 | % | $ | 317,075 | 1.25 | % | ||||||||
The $294,000 increase in non-interest income for the three months ended September 30, 2019, compared to the prior year quarterly period, was primarily due to an increase of $175,000 in gain on sale of loans, $80,000 in gain on sale real estate, and $45,000 in service charges on deposit accounts, partially offset by a decrease of $3,000 in both other income and gain on sale of fixed assets. The Company sells most of its long term fixed rate residential mortgage loan originations primarily in order to manage interest rate risk. The increase in gain on sale of loans reflects an increase in loans originated for sale during the three months ended September 30, 2019.
The $301,000 increase in non-interest expense for the three months ended September 30, 2019, compared to the same period in 2018, is primarily attributable to increases of $190,000 in compensation and benefits expense, $89,000 in advertising expense, $57,000 in loan and collection expense, $52,000 in occupancy and equipment expense, $20,000 in other expenses, $15,000 in franchise and bank shares tax expense, $10,000 in data processing expense, and $2,000 in audit and examination fees. The increases were partially offset by decreases of $75,000 in real estate owned valuation adjustments, $30,000 in deposit insurance premium expense, and $29,000 in legal fees.
At September 30, 2019, the Company reported total assets of $459.9 million, an increase of $17.4 million, or 3.9%, compared to total assets of $442.5 million at June 30, 2019. The increase in assets was comprised primarily of increases in cash and cash equivalents of $15.0 million, or 83.0%, from $18.1 million at June 30, 2019 to $33.1 million at September 30, 2019, loans held-for-sale of $3.4 million, or 39.9%, from $8.6 million at June 30, 2019 to $12.0 million at September 30, 2019, investment securities of $496,000, or 0.7%, from $67.0 million at June 30, 2019 to $67.5 million at September 30, 2019, other assets of $177,000, or 2.0%, from $8.8 million at June 30, 2019 to $9.0 million at September 30, 2019, and deferred tax assets of $17,000, or 2.0%, from $849,000 at June 30, 2019 to $866,000 at September 30, 2019. These increases were partially offset by decreases in real estate owned of $886,000, or 64.9%, from $1.4 million at June 30, 2019 to $480,000 at September 30, 2019, premises and equipment of $440,000, or 3.2%, from $13.6 million at June 30, 2019 to $13.1 million at September 30, 2019, and loans receivable net of $393,000, or 0.1%, from $324.1 million at June 30, 2019 to $323.7 million at September 30, 2019. The increase in investment securities was primarily due to the purchase of $5.0 million of mortgage-backed securities partially offset by $4.5 million of principal repayments on mortgage-backed securities. The increase in loans held-for-sale resulted primarily from an increase in loans originated for sale during the three months ended September 30, 2019. The decrease in real estate owned was due to the sale of three one-to-four family residences during the quarter ended September 30, 2019.
Total liabilities increased $18.0 million, or 4.6%, from $392.1 million at June 30, 2019 to $410.2 million at September 30, 2019 primarily due to an increase in total deposits of $16.8 million, or 4.3%, to $405.0 million at September 30, 2019 compared to $388.2 million at June 30, 2019, an increase in other liabilities of $715,000, or 33.4%, from $2.1 million at June 30, 2019 to $2.9 million at September 30, 2019, and an increase in other borrowings of $550,000, or 122.2%, from $450,000 at June 30, 2019 to $1.0 million at September 30, 2019, partially offset by a decrease of $73,000, or 5.4%, in advances from the Federal Home Loan Bank from $1.4 million at June 30, 2019 to $1.3 million at September 30, 2019. The increase in deposits was primarily due to a $13.5 million, or 34.1%, increase in savings deposits from $39.6 million at June 30, 2019 to $53.1 million at September 30, 2019, a $12.3 million, or 20.7%, increase in non-interest bearing deposits from $59.4 million at June 30, 2019 to $71.7 million at September 30, 2019, and a $1.2 million, or 1.6%, increase in money market deposits from $74.9 million at June 30, 2019 to $76.1 million at September 30, 2019, partially offset by a decrease of $10.0 million, or 5.5%, in certificate of deposits from $183.2 million at June 30, 2019 to $173.2 million at September 30, 2019, and a decrease in NOW accounts of $138,000, or 0.4%, from $31.0 million at June 30, 2019 to $30.9 million at September 30, 2019. The Company had $19.2 million in brokered deposits at September 30, 2019 compared to $11.2 million at June 30, 2019. The brokered certificates of deposit which have maturity dates greater than twelve months are callable by Home Federal Bank after twelve months pursuant to early redemption provisions. The decrease in advances from the Federal Home Loan Bank was primarily due to growth in total deposits which replaced advances as a source of funds.
2
At September 30, 2019, the Company had $4.1 million of non-performing assets (defined as non-accruing loans, accruing loans 90 days or more past due, and other real estate owned) compared to $5.1 million of non-performing assets at June 30, 2019, consisting of two commercial business loans, four single-family residential loans, one lot loan, one land loan, and one residential lot in other real estate owned at September 30, 2019 compared to five single-family residential loans, two line of credit loans, two commercial business loans, one lot loan, one land loan, one residential lot in other real estate owned, and two properties that secured single-family residential loans in other real estate owned at June 30, 2019. At September 30, 2019, the Company had four single family residential loans, two commercial business loans, two commercial land and lot development loans, and six loans to one borrower consisting of three commercial real estate loans, two non-real estate loans, and one single family residential loan classified as substandard compared to four single family residential loans, one line of credit loan, two commercial business loans, two commercial land and lot development loans, and five loans to one borrower consisting of two commercial real estate loans, two non-real estate loans, and one single family residential loan classified as substandard at June 30, 2019. There were no loans classified as doubtful at September 30, 2019 or June 30, 2019.
Shareholders’ equity decreased $605,000, or 1.2%, to $49.7 million at September 30, 2019 from $50.3 million at June 30, 2019. The primary reasons for the changes in shareholders’ equity from June 30, 2019 were the acquisition of Company stock of $1.8 million, and dividends paid totaling $293,000, partially offset by net income of $1.2 million, the vesting of restricted stock awards, stock options, and the release of employee stock ownership plan shares totaling $154,000, an increase in the Company’s accumulated other comprehensive income of $66,000, and proceeds from the issuance of common stock from the exercise of stock options of $4,000.
The Company repurchased 55,002 shares of its common stock under its stock repurchase program during the quarter ended September 30, 2019 at an average price per share of $32.42. On September 11, 2019, the Company announced that its Board of Directors approved a ninth stock repurchase program for the repurchase of up to 90,000 shares upon completion of the eighth stock repurchase program. As of September 30, 2019, there were 90,396 shares remaining for repurchase under the eighth and ninth stock repurchase programs.
Home Federal Bancorp, Inc. of Louisiana is the holding company for Home Federal Bank which conducts business from its seven full-service banking offices and home office in northwest Louisiana.
Statements contained in this news release which are not historical facts may be forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include words like “believe”, “expect”, “anticipate”, “estimate”, and “intend”, or future or conditional verbs such as “will”, “would”, “should”, “could”, or “may”. We undertake no obligation to update any forward-looking statements.
3
| Home Federal Bancorp, Inc. of Louisiana | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | ||||||||
| (In thousands) | ||||||||
September 30, 2019 | June 30, 2019 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 33,140 | $ | 18,108 | ||||
| Securities available-for-sale at fair value | 43,470 | 41,655 | ||||||
| Securities held-to-maturity (fair value September 30, 2019: $24,319; June 30, 2019: $25,532) | 24,030 | 25,349 | ||||||
| Loans held-for-sale | 12,043 | 8,608 | ||||||
| Loans receivable, net of allowance for loan losses (September 30, 2019: $3,584; June 30, 2019: $3,452) | 323,741 | 324,134 | ||||||
| Premises and equipment, net | 13,114 | 13,554 | ||||||
| Deferred tax asset | 866 | 849 | ||||||
| Real estate owned | 480 | 1,366 | ||||||
| Other assets | 9,007 | 8,830 | ||||||
| Total assets | $ | 459,891 | $ | 442,453 | ||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| Deposits | $ | 405,015 | $ | 388,164 | ||||
| Advances from the Federal Home Loan Bank of Dallas | 1,282 | 1,355 | ||||||
| Other Borrowings | 1,000 | 450 | ||||||
| Other liabilities | 2,857 | 2,142 | ||||||
| Total liabilities | 410,154 | 392,111 | ||||||
| Shareholders’ equity | 49,737 | 50,342 | ||||||
| Total liabilities and shareholders’ equity | $ | 459,891 | $ | 442,453 | ||||
4
Home Federal Bancorp, Inc. of Louisiana CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share data) | ||||||||
| Three Months Ended | ||||||||
September 30, | ||||||||
2019 | 2018 | |||||||
| (Unaudited) | ||||||||
| Interest income | ||||||||
| Loans, including fees | $ | 4,653 | $ | 4,494 | ||||
| Investment securities | 16 | 14 | ||||||
| Mortgage-backed securities | 390 | 298 | ||||||
| Other interest-earning assets | 109 | 80 | ||||||
| Total interest income | 5,168 | 4,886 | ||||||
| Interest expense | ||||||||
| Deposits | 1,335 | 929 | ||||||
| Federal Home Loan Bank borrowings | 15 | 68 | ||||||
| Other bank borrowings | 4 | 1 | ||||||
| Total interest expense | 1,354 | 998 | ||||||
| Net interest income | 3,814 | 3,888 | ||||||
| Provision for loan losses | 175 | 250 | ||||||
| Net interest income after provision for loan losses | 3,639 | 3,638 | ||||||
| Non-interest income | ||||||||
| Gain on sale of loans | 567 | 392 | ||||||
| Gain on sale of fixed assets | -- | 3 | ||||||
| Gain on sale of real estate | 80 | -- | ||||||
| Income on Bank-Owned Life Insurance | 35 | 35 | ||||||
| Service charges on deposit accounts | 272 | 227 | ||||||
| Other income | 10 | 13 | ||||||
| Total non-interest income | 964 | 670 | ||||||
| Non-interest expense | ||||||||
| Compensation and benefits | 1,806 | 1,616 | ||||||
| Occupancy and equipment | 372 | 320 | ||||||
| Data processing | 160 | 150 | ||||||
| Audit and examination fees | 56 | 54 | ||||||
| Franchise and bank shares tax | 115 | 100 | ||||||
| Advertising | 147 | 58 | ||||||
| Legal fees | 110 | 139 | ||||||
| Loan and collection | 119 | 62 | ||||||
| Deposit insurance premium | -- | 30 | ||||||
| Real estate owned valuation adjustment | -- | 75 | ||||||
| Other expenses | 192 | 172 | ||||||
| Total non-interest expense | 3,077 | 2,776 | ||||||
| Income before income taxes | 1,526 | 1,532 | ||||||
| Provision for income tax expense | 279 | 314 | ||||||
| NET INCOME | $ | 1,247 | $ | 1,218 | ||||
| EARNINGS PER SHARE | ||||||||
| Basic | $ | 0.73 | $ | 0.68 | ||||
| Diluted | $ | 0.68 | $ | 0.63 | ||||
5
| Three Months Ended | ||||||||
September 30, | ||||||||
2019 | 2018 | |||||||
| (Unaudited) | ||||||||
| Selected Operating Ratios(1): | ||||||||
| Average interest rate spread | 3.30 | % | 3.60 | % | ||||
| Net interest margin | 3.63 | % | 3.86 | % | ||||
| Return on average assets | 1.11 | % | 1.14 | % | ||||
| Return on average equity | 10.12 | % | 10.33 | % | ||||
| Asset Quality Ratios(2): | ||||||||
| Non-performing assets as a percent of total assets | 0.89 | % | 0.64 | % | ||||
| Allowance for loan losses as a percent of non-performing loans | 98.85 | % | 127.29 | % | ||||
| Allowance for loan losses as a percent of total loans receivable | 1.09 | % | 1.05 | % | ||||
| Per Share Data: | ||||||||
| Shares outstanding at period end | 1,790,480 | 1,894,105 | ||||||
| Weighted average shares outstanding: | ||||||||
| Basic | 1,716,993 | 1,795,630 | ||||||
| Diluted | 1,842,091 | 1,932,225 | ||||||
| Tangible book value at period end | $ | 27.78 | $ | 26.58 | ||||
| __________________________ | ||||||||
(1) Ratios for the three month periods are annualized. | ||||||||
(2) Asset quality ratios are end of period ratios. | ||||||||
CONTACT: | James R. Barlow President and Chief Executive Officer (318) 222-1145 | |
6