Home Bancorp Wisconsin (HWIS) 10-Q 2015 Q2 Quarterly report

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, 2015

OR

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                    to                    

Commission File No. 000-55183

Home Bancorp Wisconsin, Inc.

(Exact name of registrant as specified in its charter)

Maryland	46-3383278
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

3762 East Washington Avenue, Madison, Wisconsin	53704
(Address of Principal Executive Offices)	Zip Code

(608) 282-6000

(Registrant’s telephone number)

N/A

(Former name or former address, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such requirements for the past 90 days.    YES  x    NO  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    YES  x    NO  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one)

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES  ¨    NO  x

There were 899,190 shares of the Registrant’s common stock, par value $0.01 per share issued and outstanding as of May 10, 2015.

Home Bancorp Wisconsin, Inc.

Form 10-Q

Index

		Page
Part I. Financial Information
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of March 31, 2015 (unaudited) and September 30, 2014		2
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended March 31, 2015 and 2014 (unaudited)		3
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended March  31, 2015 and 2014 (unaudited)		4
	Condensed Consolidated Statements of Stockholders’ Equity for the Six Months Ended March 31, 2015 and 2014 (unaudited)		5
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended March 31, 2015 and 2014 (unaudited)		6
	Notes to Condensed Consolidated Financial Statements (unaudited)		7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		24
Item 3.	Quantitative and Qualitative Disclosures about Market Risk		29
Item 4.	Controls and Procedures		29
Part II. Other Information
Item 1.	Legal Proceedings		30
Item 1A.	Risk Factors		30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		30
Item 3.	Defaults upon Senior Securities		30
Item 4.	Mine Safety Disclosures		30
Item 5.	Other Information		30
Item 6.	Exhibits		30

PART I FINANCIAL INFORMATIONItem 1. Financial Statements

Home Bancorp Wisconsin, Inc. and Subsidiary

Condensed Consolidated Balance Sheets

March 31, 2015 and September 30, 2014

(Dollars in Thousands)

	(Unaudited)
	March 31, 2015			September 30, 2014
Assets
Cash and due from banks	$	4,393		$	2,474
Interest-bearing deposits		602			1,573
Cash and cash equivalents		4,995			4,047
Other interest-bearing deposits		6,066			7,556
Securities available for sale		5,633			7,922
Securities held to maturity (fair value of $3,738 and $3,927 for March 31, 2015 and September 30, 2014, respectively)		3,651			3,893
Loans held for sale		242			320
Loans, net of allowance for loan losses of $1,451 and $1,403 for March 31, 2015 and September 30, 2014, respectively.		95,570			84,757
Premises and equipment, net		5,318			5,423
Foreclosed assets		615			775
Cash value of life insurance		3,278			3,238
Federal Home Loan Bank stock		652			652
Other assets		797			849
TOTAL ASSETS	$	126,817		$	119,432
Liabilities and Stockholders’ Equity
Liabilities:
Demand deposits	$	30,675		$	28,280
Money market and savings deposits		43,365			42,991
Time deposits		28,889			26,414
Total deposits		102,929			97,685
Advance payments by borrowers for taxes and insurance		442			830
Federal funds purchased		—			1,965
Borrowed funds		9,600			5,000
Other liabilities		1,303			1,186
Total liabilities		114,274			106,666
Commitments and contingencies (Note 1)
Stockholders’ Equity:
Common stock $0.01 par value, 30,000,000 shares authorized; 899,190 shares issued and outstanding at March 31, 2015 and September 30, 2014	$	9		$	9
Additional paid-in capital		7,411			7,413
Retained earnings		5,768			6,050
Unearned Employee Stock Ownership Plan (ESOP) shares		(683	)		(698	)
Accumulated other comprehensive income (loss)		38			(8	)
Total stockholders’ equity		12,543			12,766
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	126,817		$	119,432

The accompanying notes are an integral part of these financial statements

2

Home Bancorp Wisconsin, Inc. and Subsidiary

Condensed Consolidated Statements of Operations

Three and Six Months Ended March 31, 2015 and 2014

(Unaudited)

(Dollars in Thousands, except per share data)

	Three Months Ended March 31,						Six Months Ended March 31,
	2015			2014			2015			2014
Interest and dividend income:
Loans, including fees	$	984		$	883		$	1,922		$	1,774
Interest-bearing deposits		31			22			64			48
Securities		46			56			100			114
Total interest and dividend income		1,061			961			2,086			1,936
Interest expense:
Deposits		63			84			131			174
Borrowed funds		55			44			102			93
Total interest expense		118			128			233			267
Net interest income		943			833			1,853			1,669
Provision for loan losses		30			116			60			167
Net interest income after provision for loan losses		913			717			1,793			1,502
Noninterest income:
Service fees		50			64			112			138
Mortgage banking income		70			19			95			26
Net gain on sale of securities		1			—			8			—
Increase in cash value of life insurance		20			20			40			41
Net gain on sale of premises and equipment		16			17			32			33
Rental income		24			26			50			52
Other		11			6			18			11
Total noninterest income		192			152			355			301
Noninterest expense:
Compensation and employee benefits		594			589			1,193			1,110
Occupancy and equipment		198			212			385			387
Data processing and office expense		228			245			462			479
Foreclosed assets, net		23			6			67			29
Advertising and promotions		31			51			59			116
Professional fees		28			39			59			74
Examinations and assessments		29			43			68			86
Other		73			75			135			129
Total noninterest expense		1,204			1,260			2,428			2,410
Loss before income taxes		(99	)		(391	)		(280	)		(607	)
Provision for income taxes		—			—			—			—
Net income (loss)	$	(99	)	$	(391	)	$	(280	)	$	(607	)
Earnings per share:
Basic		(.12	)		NA			(.34	)		NA
Dilutive		(.12	)		NA			(.34	)		NA

The accompanying notes are an integral part of these financial statements

3

Home Bancorp Wisconsin, Inc. and Subsidiary

Condensed Consolidated Statements of Comprehensive Income (Loss)

Three and Six Months Ended March 31, 2015 and 2014

(Unaudited)

(Dollars in Thousands)

	Three Months Ended March 31,						Six Months Ended March 31,
	2015			2014			2015			2014
Net income (loss)	$	(99	)	$	(391	)	$	(280	)	$	(607	)
Other comprehensive income (loss), net of tax:
Unrealized gain on securities during the year		27			62			54			48
Reclassification adjustment for gains realized in net income		(1	)		—			(8	)		—
Income tax effect		—			—			—			—
Net unrealized gain on securities		26			62			46			48
Other comprehensive income, net of tax		26			62			46			48
Comprehensive income (loss)	$	(73	)	$	(329	)	$	(234	)	$	(559	)

The accompanying notes are an integral part of these financial statements

4

Home Bancorp Wisconsin, Inc. and Subsidiary

Condensed Consolidated Statements of Stockholders’ Equity

Six Months Ended March 31, 2015 and 2014

(Unaudited)

(Dollars in Thousands)

	Common Stock		Additional Paid In Capital			Retained Earnings			Unearned ESOP Shares			Accumulated Other Comprehensive Income (Loss)			Total Stockholders’ Equity
Balance at October 1, 2013	$	—	$	—		$	7,266		$	—		$	4		$	7,270
Net loss		—		—			(607	)		—			—			(607	)
Other comprehensive income		—		—			—			—			48			48
Balance at March 31, 2014	$	—	$	—		$	6,659		$	—		$	52		$	6,711
Balance at October 1, 2014	$	9	$	7,413		$	6,050		$	(698	)	$	(8	)	$	12,766
Net loss		—		—			(280	)		—			—			(280	)
Allocation of 1,439 Shares from ESOP		—		(2	)		(2	)		15			—			11
Other comprehensive income		—		—			—			—			46			46
Balance at March 31, 2015	$	9	$	7,411		$	5,768		$	(683	)	$	38		$	12,543

The accompanying notes are an integral part of these financial statements

5

Home Bancorp Wisconsin, Inc. and Subsidiary

Condensed Consolidated Statements of Cash Flows

Six Months Ended March 31, 2015 and 2014

(Unaudited)

(Dollars in Thousands)

	Six Months Ended March 31,
	2015			2014
Increase (decrease) in cash and cash equivalents:
Cash flows from operating activities:
Net loss	$	(280	)	$	(607	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation		127			130
Net amortization of premiums and discounts		18			10
ESOP compensation expense		11			—
Provision for loan losses		60			167
Net (gain) loss on sale of securities		(8	)		—
Gain on sale of premises and equipment		(32	)		(33	)
Net loss on foreclosed assets		51			—
Increase in cash surrender value		(40	)		(41	)
Changes in operating assets and liabilities:
Loans held for sale		78			(107	)
Other assets		52			(462	)
Other liabilities		149			(71	)
Total adjustments		466			(407	)
Net cash provided by (used in) operating activities		186			(1,014	)
Cash flows from investing activities:
Net increase in other interest-bearing deposits		1,490			(97	)
Purchases of securities available for sale		—			(1,365	)
Proceeds from sales of securities available for sale		836			—
Proceeds from maturities, prepayments, and calls of securities available for sale		1,492			1,433
Proceeds from maturities, prepayments, and calls of securities held to maturity		239			106
Net (increase) decrease in loans		(11,112	)		(4,034	)
Proceeds from sale of foreclosed assets		348			6
Proceeds from sale of premises and equipment		—			78
Capital expenditures		(22	)		(81	)
Net cash used in investing activities		(6,729	)		(3,954	)
Cash flows from financing activities:
Net increase in deposits		5,244			7,131
Net (decrease) increase in advance payments by borrowers for taxes and insurance		(388	)		943
Net decrease in federal funds purchased		(1,965	)		(304	)
Proceeds from borrowings		8,000			—
Repayments of borrowed funds		(3,400	)		(500	)
Net cash provided by financing activities		7,491			7,270
Net increase in cash and cash equivalents		948			2,302
Cash and cash equivalents at beginning		4,047			11,652
Cash and cash equivalents at end	$	4,995		$	13,954
Supplemental cash flow information:
Cash paid for interest	$	241		$	283
Noncash operating and investing activities:
Loans transferred to foreclosed assets	$	239		$	—

The accompanying notes are an integral part of these financial statements

6

Home Bancorp Wisconsin, Inc. and Subsidiary Form 10-Q Notes to Condensed Consolidated Financial Statements (Unaudited) (Dollars in Thousands, except per share data) Home Bancorp Wisconsin, Inc. and Subsidiary   Notes to Financial Statements

Note 1 Basis of Financial Statement Presentation

The unaudited financial statements include the accounts of Home Bancorp Wisconsin, Inc. and its wholly-owned subsidiary, Home Savings Bank, the “Bank,” and collectively, (the “Company”).

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial reporting and with instructions for Form 10-Q and Regulation S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the balance sheet date and revenues and expenses for the period. Actual results could differ from these estimates.

In the opinion of management, the preceding unaudited condensed financial statements contain all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the financial condition of the Company as of March 31, 2015 and September 30, 2014, and the results of its operations and comprehensive income (loss) for the three and six months ended March 31, 2015 and 2014, and the statements of stockholders’ equity and cash flows for the six months ended March 31, 2015 and 2014. These financial statements should be read in conjunction with the financial statements of the Company for the year ended September 30, 2014 included as part of Home Bancorp Wisconsin, Inc.’s 10-K dated December 12, 2014 as filed with the Securities and Exchange Commission.

The results of operations for the three and six month periods ended March 31, 2015 are not necessarily indicative of the results that may be expected for the entire year. For further information, refer to the financial statements and footnotes thereto in the 10-K.

Note 2 Plan of Conversion and Change in Corporate Form

On June 4, 2013, the Board of Directors of Home Savings Bank adopted a plan of conversion to convert from the mutual form of organization to the capital stock form of organization. A new Maryland-chartered corporation, Home Bancorp Wisconsin, Inc. was formed on May 31, 2013 to become the stock bank holding company of the Bank upon consummation of the conversion. In the conversion the Bank became a wholly owned subsidiary of the Company, and the Company issued and sold shares of its stock at $10.00 per share to eligible members of the Bank and to the public. The conversion was completed with the sale of 899,190 shares, including 71,935 shares purchased by the Bank’s employee stock ownership plan, on April 23, 2014 and shares of the Company began trading on April 24, 2014.

The costs of reorganization and issuing the common stock have been deducted from the sales proceeds of the offering. The Company recognized $1.6 million in reorganization and stock issuance costs.

7

Note 3 New Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2015-03, Interest-Imputation of Interest (subtopic 835-30): Simplify the Presentation of Debt Issuance Costs. The primary purpose of this new guidance is to present debt issuance costs as a direct deduction from the carrying amount of the debt liability. This guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. The adoption of the guidance is not expected to have a material impact on the consolidated financial statements or the Notes thereto.

In January 2014, FASB issued ASU No. 2014-04, Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. The primary purpose of this new guidance is to clarify, for consumer mortgage loans, when an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a residential mortgage loan. This guidance is effective for annual and interim periods beginning after December 15, 2014. The adoption of the guidance is not expected to have a material impact on the consolidated financial statements or the Notes thereto.

In May 2014, FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The amendment supersedes and replaces nearly all existing revenue recognition guidance. Under the amended guidance, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance is effective for annual and interim periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. The adoption of the guidance is not expected to have a material impact on the consolidated financial statements, but significant disclosures to the Notes thereto will be required.

In August 2014, FASB issued ASU No. 2014-14, Receivables-Troubled Debt Restructurings by Creditors (subtopic 310-40): Classification of Certain Government-Guaranteed Mortgage Loans Upon Foreclosure. The amendments in this guidance require a mortgage loan be derecognized and a separate other receivable be recognized upon foreclosure if certain conditions are met. Upon foreclosure, the separate other receivable should be measured based on the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. This guidance is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The adoption of the standard is not expected to have a material effect on the Company’s operating results or financial condition.

8

Note 4 Earnings Per Share

Basic earnings per common share is computed by dividing net income by the weighted-average number of common shares outstanding during the period, including allocated and committed-to-be-released ESOP shares, during the applicable period. Diluted earnings per share is computed using the weighted-average number of shares determined for the basic earnings per common share computation plus the dilutive effect of stock compensation using the treasury stock method. The following table presents a reconciliation of the number of shares used in the calculation of basic and diluted earnings per common share:

	Three Months Ended March 31, 2015			Three Months Ended March 31, 2014		Six Months Ended March 31, 2015			Six Months Ended March 31, 2014
Net loss	$	(99	)	$	*	$	(280	)	$	*
Basic potential common shares:
Weighted average shares outstanding		899,190			*		899,190			*
Weighted average unallocated Employee Stock Ownership Plan shares		(68,699	)		*		(69,058	)		*
Basic weighted average shares outstanding		830,491			*		830,132			*
Dilutive potential common shares		—			*		—			*
Dilutive weighted average shares outstanding		830,491			*		830,132			*
Basic earnings per share	$	(.12	)	$	*	$	(.34	)	$	*
Diluted earnings per share	$	(.12	)	$	*	$	(.34	)	$	*

* Earnings per share for the three and six months ended March 31, 2014, is not applicable since the public offering was completed April 23, 2014.

9

Note 5 Securities

The amortized cost and estimated fair value of securities with gross unrealized gains and losses are as follows:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
March 31, 2015
Securities available for sale:
U.S. agency notes	$	2,000	$	—	$	1	$	1,999
U.S. agency pass-through		3,594		40	$	—		3,634
Total securities available for sale	$	5,594	$	40	$	1	$	5,633
Securities held to maturity:
U.S. agency notes	$	500	$	4	$	—	$	504
U.S. agency pass-through	$	3,151	$	83	$	—	$	3,234
Total securities held to maturity	$	3,651	$	87	$	—	$	3,738
September 30, 2014
Securities available for sale:
U.S. agency notes	$	3,000	$	—	$	12	$	2,988
U.S. agency pass-through		4,930		20		16		4,934
Total securities available for sale	$	7,930	$	20	$	28	$	7,922
Securities held to maturity:
U.S. agency notes	$	500	$	1	$	—	$	501
U.S. agency pass-through	$	3,393	$	33	$	—	$	3,426
Total securities held to maturity	$	3,893	$	34	$	—	$	3,927

Fair values of securities are estimated based on financial models or prices paid for similar securities. It is possible interest rates could change considerably, resulting in a material change in the estimated fair value.

Note 6 Loans

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff generally are reported at their outstanding unpaid principal balances adjusted for charge-offs and the allowance for loan losses. Interest on loans is accrued and credited to income based on the unpaid principal balance. Loan-origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method.

The accrual of interest on loans is discontinued when, in the opinion of management, there is an indication the borrower may be unable to make payments as they become due. When loans are placed on nonaccrual or charged off, all unpaid accrued interest is reversed against interest income. The interest on these loans is subsequently accounted for on the cash-basis or cost-recovery method until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Allowance for Loan Losses

The allowance for loan losses is established through a provision for loan losses charged to expense as losses are estimated to have occurred. Loan losses are charged against the allowance when management believes that the collectability of the principal is unlikely. Subsequent recoveries, if any, are credited to the allowance.

10

Management regularly evaluates the allowance for loan losses using the Bank’s past loan loss experience, known and inherent risks in the portfolio, composition of the portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral, current economic conditions, and other relevant factors. This evaluation is inherently subjective since it requires material estimates that may be susceptible to significant change.

A loan is impaired when, based on current information, it is probable that the Bank will not collect all amounts due in accordance with the contractual terms of the loan agreement. Management determines whether a loan is impaired on a case-by-case basis, taking into consideration the payment status, collateral value, length and reason of any payment delays, the borrower’s prior payment record, and any other relevant factors. Large groups of smaller-balance homogeneous loans, such as residential mortgage and consumer loans, are collectively evaluated in the allowance for loan losses analysis and are not subject to impairment analysis unless such loans have been subject to a restructuring agreement. Specific allowances for impaired loans are based on discounted cash flows of expected future payments using the loan’s initial effective interest rate or the fair value of the collateral if the loan is collateral dependent.

In addition, various regulatory agencies periodically review the allowance for loan losses. These agencies may require additions to the allowance for loan losses based on their judgments of collectability.

The following table presents total loans by portfolio segment and class of loan as of March 31, 2015 and September 30, 2014:

	March 31, 2015			September 30, 2014
Commercial:
Commercial and industrial	$	2,170		$	1,662
Commercial real estate		18,797			19,273
Multifamily real estate		22,477			14,718
Construction		3,023			1,092
Residential real estate:
One- to four-family residential		38,438			37,076
Second mortgage		10,037			10,044
Consumer		2,346			2,470
Subtotals		97,288			86,335
Allowance for loan losses		(1,451	)		(1,403	)
Net deferred loan expenses		(36	)		(47	)
Undisbursed loan proceeds		(231	)		(128	)
Loans, net	$	95,570		$	84,757

11

Analysis of the allowance for loan losses for the six months ended March 31, 2015 and 2014 follows:

Three Months Ended	Commercial			Residential			Consumer			Totals
Balance at December 31, 2013		655			506			29			1,190
Provision for loan losses		(2	)		121			(3	)		116
Loans charged off		—			(93	)		(5	)		(98	)
Recoveries of loans previously charged off		8			—			—			8
Balance at March 31, 2014		661			534			21			1,216
Balance at December 31, 2014	$	973		$	436		$	20		$	1,429
Provision for loan losses		(57	)		71			16			30
Loans charged off		—			—			(10	)		(10	)
Recoveries of loans previously charged off		—			—			2			2
Balance at March 31, 2015	$	916		$	507		$	28		$	1,451

Six Months Ended	Commercial			Residential			Consumer			Totals
Balance at September 30, 2013	$	637		$	480		$	29		$	1,146
Provision for loan losses		16			154			(3	)		167
Loans charged off		(1	)		(100	)		(6	)		(107	)
Recoveries of loans previously charged off		9			—			1			10
Balance at March 31, 2014		661			534			21			1,216
Balance at September 30, 2014	$	877		$	504		$	22		$	1,403
Provision for loan losses		39			3			18			60
Loans charged off		—			—			(15	)		(15	)
Recoveries of loans previously charged off		—			—			3			3
Balance at March 31, 2015	$	916		$	507		$	28		$	1,451
	Commercial			Residential			Consumer			Totals
Allowance for loan losses at March 31, 2015:
Individually evaluated for impairment	$	131		$	120		$	—		$	251
Collectively evaluated for impairment		785			387			28			1,200
Totals	$	916		$	507		$	28		$	1,451
Allowance for loan losses at September 30, 2014:
Individually evaluated for impairment	$	134		$	98		$	—		$	232
Collectively evaluated for impairment		743			406			22			1,171
Totals	$	877		$	504		$	22		$	1,403

12

Analysis of loans evaluated for impairment as of March 31, 2015 and September 30, 2014, follows:

	Commercial		Residential		Consumer		Totals
Loans at March 31, 2015:
Individually evaluated for impairment	$	858	$	1,049	$	—	$	1,907
Collectively evaluated for impairment		45,609		47,426		2,346		95,381
Totals	$	46,467	$	48,475	$	2,346	$	97,288
Loans at September 30, 2014:
Individually evaluated for impairment	$	936	$	1,178	$	—	$	2,114
Collectively evaluated for impairment		35,809		45,942		2,470		84,221
Totals	$	36,745	$	47,120	$	2,470	$	86,335

13

Information regarding impaired loans as of March 31, 2015, follows:

	Recorded Investment		Principal Balance		Related Allowance		Average Investment		Interest Recognized
Loans with no related allowance for loan losses:
Commercial and industrial	$	80	$	80		N/A	$	124	$	—
Commercial real estate		554		554		N/A		564		17
Construction		—		—		N/A		—		—
One-to four-family		478		478		N/A		472		20
Totals		1,112		1,112		N/A		1,160		37
Loans with an allowance for loan losses:
Commercial and industrial		147		147		117		147		—
Commercial real estate		—		—		—		—		—
Construction		77		77		14		78		2
One-to four-family		571		571		120		572		9
Totals		795		795		251		797		11
Grand totals	$	1,907	$	1,907	$	251	$	1,957	$	48

Information regarding impaired loans as of September 30, 2014, follows:

	Recorded Investment		Principal Balance		Related Allowance		Average Investment		Interest Recognized
Loans with no related allowance for loan losses:
Commercial and industrial	$	83	$	83		N/A	$	125	$	—
Commercial real estate		575		575		N/A		560		36
Construction		—		—		N/A		—		—
One-to four-family		631		631		N/A		636		21
Totals		1,289		1,289		N/A		1,321		57
Loans with an allowance for loan losses:
Commercial and industrial		147		147		117		149		1
Commercial real estate		—		—		—		—		—
Construction		131		131		17		133		5
One-to four-family		547		547		98		550		19
Totals		825		825		232		832		25
Grand totals	$	2,114	$	2,114	$	232	$	2,153	$	82

No additional funds are committed to be advanced in connection with impaired loans.

The Company regularly evaluates various attributes of loans to determine the appropriateness of the allowance for loan losses. The credit quality indicators monitored differ depending on the class of loan.

Commercial loans are generally evaluated using the following internally prepared ratings:

“Pass” ratings are assigned to loans with adequate collateral and debt service ability such that collectibility of the contractual loan payments is highly probable.

“Special mention/watch” ratings are assigned to loans where management has some concern that the collateral or debt service ability may not be adequate, though the collectibility of the contractual loan payments is still probable.

“Substandard” ratings are assigned to loans that do not have adequate collateral and/or debt service ability such that collectibility of the contractual loan payments is no longer probable.

14

“Doubtful” ratings are assigned to loans that do not have adequate collateral and/or debt service ability, and collectibility of the contractual loan payments is unlikely.

Residential real estate and consumer loans are generally evaluated based on whether or not the loan is performing according to the contractual terms of the loan.

Information regarding the credit quality indicators most closely monitored for commercial loans by class as of March 31, 2015 and September 30, 2014, follows:

	Pass		Special Mention/ Watch		Substandard		Doubtful		Totals
March 31, 2015
Commercial and industrial	$	1,943	$	—	$	227	$	—	$	2,170
Commercial real estate		17,231		1,012		554		—		18,797
Multifamily real estate		22,253		224		—		—		22,477
Construction		2,946		77		—		—		3,023
Totals	$	44,373	$	1,313	$	781	$	—	$	46,467
September 30, 2014
Commercial and industrial	$	1,432	$	—	$	230	$	—	$	1,662
Commercial real estate		17,671		1,027		575		—		19,273
Multifamily real estate		14,492		226		—		—		14,718
Construction		961		78		53		—		1,092
Totals	$	34,556	$	1,331	$	858	$	—	$	36,745

Information regarding the credit quality indicators most closely monitored for residential real estate and consumer loans by class as of March 31, 2015 and September 30, 2014, follows:

	Performing		Non- performing		Totals
March 31, 2015
One- to four-family	$	38,099	$	339	$	38,438
Second mortgage		10,010		27		10,037
Consumer		2,345		1		2,346
Totals	$	50,454	$	367	$	50,821
September 30, 2014
One- to four-family	$	36,659	$	417	$	37,076
Second mortgage		10,044		—		10,044
Consumer		2,462		8		2,470
Totals	$	49,165	$	425	$	49,590

15

Loan aging information as of March 31, 2015, follows:

	Loans Past Due 30-89 Days		Loans Past Due 90+ Days		Total Past Due Loans
Commercial and industrial	$	6	$	227	$	233
Commercial real estate		—		63		63
Construction		—		—		—
One- to four-family		160		339		499
Second mortgage		26		26		52
Consumer		6		1		7
Totals	$	198	$	656	$	854

	Total Past Due Loans		Total Current Loans		Total Loans		Loans 90+ Days Past Due and Accruing Interest		Total Nonaccrual Loans
Commercial and industrial	$	233	$	1,937	$	2,170	$	—	$	227
Commercial real estate		63		18,734		18,797		—		63
Multifamily real estate		—		22,477		22,477		—		—
Construction		—		3,023		3,023		—		—
One- to four-family		499		37,939		38,438		—		339
Second mortgage		52		9,985		10,037		—		26
Consumer		7		2,339		2,346		—		1
Totals	$	854	$	96,434	$	97,288	$	—	$	656

Loan aging information as of September 30, 2014, follows:

	Loans Past Due 30-89 Days		Loans Past Due 90+ Days		Total Past Due Loans
Commercial and industrial	$	—	$	230	$	230
Commercial real estate		—		—		—
Construction		—		53		53
One- to four-family		280		493		773
Second mortgage		83		—		83
Consumer		4		8		12
Totals	$	367	$	784	$	1,151

	Total Past Due Loans		Total Current Loans		Total Loans		Loans 90+ Days Past Due and Accruing Interest		Total Nonaccrual Loans
Commercial and industrial	$	230	$	1,432	$	1,662	$	—	$	230
Commercial real estate		—		19,273		19,273		—		—
Multifamily real estate		—		14,718		14,718		—		—
Construction		53		1,039		1,092		—		53
One- to four-family		773		36,303		37,076		76		417
Second mortgage		83		9,961		10,044		—		—
Consumer		12		2,458		2,470		—		8
Totals	$	1,151	$	85,184	$	86,335	$	76	$	708

16

When, for economic or legal reasons related to the borrower’s financial difficulties, the Company grants a concession to the borrower that the Company would not otherwise consider, the modified loan is classified as a troubled debt restructuring. Loan modifications may consist of forgiveness of interest and/or principal, a reduction of the interest rate, interest-only payments for a period of time, and/or extending amortization terms. One new troubled debt restructuring was entered into during the six months ended March 31, 2015.

During the year ended and as of September 30, 2014, there were no new troubled debt restructurings.

No troubled debt restructurings defaulted within 12 months of their modification date during the six months ended March 31, 2015 and year ended September 30, 2014.

Note 7 Regulatory Capital Ratios

The Bank is subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Bank’s consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings, and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier I capital to risk-weighted assets and of Tier I capital to average assets. For March 31, 2015, Interim Final Basel III rules require the Bank to maintain minimum amounts and ratios of common equity Tier 1 capital to risk-weighted assets. Additionally under Basel III rules, the decision was made to opt-out of including accumulated other comprehensive income in regulatory capital. For September 30, 2014 regulatory capital ratios were calculated under Basel I rules.

To be categorized as well capitalized, the Bank must maintain minimum Total risk-based, common equity Tier I risk-based (March 31, 2015) and Tier I leverage ratios as set forth in the table below. As of March 31, 2015 and September 30, 2014, the Bank met all capital adequacy requirements to be considered well capitalized. In order to be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the table. There are no conditions or events since March 31, 2015 that management believes have changed the Bank’s category.

The Bank’s actual capital amounts and ratios as of March 31, 2015 and September 30, 2014 are presented in the following table:

Actual

For Capital Adequacy Purposes

To Be Well Capitalized Under Prompt Corrective Action Provisions

Amount

Ratio

Amount

Ratio

Amount

Ratio

March 31, 2015

Total capital (to risk-weighted assets)

$

12,513

15.9% ³

$

6,299 ³

8.0% ³

$

7,874 ³

10.0

%

Tier I capital (to risk-weighted assets)

11,523

14.6% ³

4,725 ³

6.0% ³

6,299 ³

8.0

%

Common equity tier 1 capital to risk-weighted assets

11,523

14.6% ³

3,543 ³

4.5% ³

5,118 ³

6.5

%

Tier I capital (to average assets)

11,523

9.2% ³

5,012 ³

4.0% ³

6,265 ³

5.0

%

September 30, 2014

Total capital (to risk-weighted assets)

$

12,822

15.8% ³

$

6,513 ³

8.0% ³

$

8,141 ³

10.0

%

Tier I capital (to risk-weighted assets)

11,800

14.5% ³

3,256 ³

4.0% ³

4,885 ³

6.0

%

Tier I capital (to average assets)

11,800

9.7% ³

4,854 ³

4.0% ³

6,068 ³

5.0

%

17

As a state-chartered savings bank, the Bank is required to maintain a minimum net worth ratio. The Bank’s actual and required net worth ratios are as follows:

	Actual Net Worth					Required Net Worth
	Amount		Ratio			Amount		Ratio
March 31, 2015	$	12,513		9.9	%	$	7,609		6.0	%
September 30, 2014		12,822		10.7			7,166		6.0

Note 8 Fair Value Measurements

Accounting standards describe three levels of inputs that may be used to measure fair value (the fair value hierarchy). The level of an asset or liability within the fair value hierarchy is based on the lowest level of input significant to the fair value measurement of that asset or liability.

Following is a brief description of each level of the fair value hierarchy:

Level 1 - Fair value measurement is based on quoted prices for identical assets or liabilities in active markets.

Level 2 - Fair value measurement is based on: (1) quoted prices for similar assets or liabilities in active markets; (2) quoted prices for identical or similar assets or liabilities in markets that are not active; or (3) valuation models and methodologies for which all significant assumptions are or can be corroborated by observable market data.

Level 3 - Fair value measurement is based on valuation models and methodologies that incorporate at least one significant assumption that cannot be corroborated by observable market data. Level 3 measurements reflect the Company’s estimates about assumptions market participants would use in measuring fair value of the asset or liability.

Some assets and liabilities, such as securities available for sale, are measured at fair value on a recurring basis under accounting principles generally accepted in the United States. Other assets and liabilities, such as impaired loans, may be measured at fair value on a nonrecurring basis.

Following is a description of the valuation methodology used for each asset measured at fair value on a recurring or nonrecurring basis, as well as the classification of the asset within the fair value hierarchy.

Securities available for sale - Securities available for sale may be classified as Level 1 or Level 2 measurements within the fair value hierarchy. Level 1 securities include equity securities traded on a national exchange. The fair value measurement of a Level 1 security is based on the quoted price of the security. Level 2 securities include U.S. government and agency securities, obligations of states and political subdivisions, corporate debt securities, and mortgage-related securities. The fair value measurement of a Level 2 security is obtained from an independent pricing service and is based on recent sales of similar securities and other observable market data.

Loans - Loans are not measured at fair value on a recurring basis. However, loans considered to be impaired may be measured at fair value on a nonrecurring basis. The fair value measurement of an impaired loan that is collateral dependent is based on the fair value of the underlying collateral. All other impaired loan measurements are based on the present value of expected future cash flows discounted at the applicable effective interest rate and, thus, are not fair value measurements. Fair value measurements of underlying collateral that utilize observable market data, such as independent appraisals reflecting recent comparable sales, are considered Level 2 measurements. Other fair value measurements that incorporate estimated assumptions market participants would use to measure fair value are considered Level 3 measurements.

Foreclosed assets - Real estate and other property acquired through or in lieu of loan foreclosure are not measured at fair value on a recurring basis. However, foreclosed assets are initially measured at fair value (less estimated costs to sell) when they are acquired and may also be measured at fair value (less estimated costs to sell) if they become subsequently impaired. The fair value measurement for each asset may be obtained from an independent firm or prepared internally. Fair value measurements obtained from independent firms are generally based on sales of comparable assets and other observable market data and are considered Level 2 measurements. Fair value measurements prepared internally are based on observable market data but include significant unobservable data and are therefore considered Level 3 measurements.

18

Information regarding the fair value of assets measured at fair value on a recurring basis as of March 31, 2015 and September 30, 2014 follows:

			Recurring Fair Value Measurements Using
	Assets Measured at Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2015
Assets - Securities available for sale	$	5,633	$	—	$	5,633	$	—
September 30, 2014
Assets - Securities available for sale	$	7,922	$	—	$	7,922	$	—

Information regarding the fair value of assets measured at fair value on a nonrecurring basis as of March 31, 2015 and September 30, 2014 follows:

			Nonrecurring Fair Value Measurements Using
	Assets Measured at Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2015
Loans	$	544	$	—	$	—	$	544
Foreclosed assets		615		—		—		615
Totals	$	1,159	$	—	$	—	$	1,159
September 30, 2014
Loans	$	593	$	—	$	—	$	593
Foreclosed assets		775		—		—		775
Totals	$	1,368	$	—	$	—	$	1,368

Loans with a carrying amount of $795 and $825 were considered impaired and were written down to their estimated fair value of $544 and $593 as of March 31, 2015 and September 30, 2014, respectively. As a result, the Company recognized a specific valuation allowance against these impaired loans totaling $251 and $232 during the six months ended March 31, 2015 and the year ended September 30, 2014, respectively. The loans were valued based on the value of the underlying collateral, adjusted for selling costs. The fair value of collateral is determined based on appraisals, broker price opinions, or automated valuation models. In some cases, adjustments were made to these values due to various factors including age of the appraisal, age of the comparable and other known changes in the market and in the collateral. When significant adjustments were based on unobservable inputs, the resulting fair value measurement has been categorized as a Level 3 measurement.

At March 31, 2015 and September 30, 2014, foreclosed assets with a fair value less estimated costs to sell of $615 and $775, respectively, were acquired through or in lieu of foreclosure. The fair value of foreclosed assets is determined based on appraisals, broker price opinions, or automated valuation models. In some cases, adjustments were made to these values due to various factors including age of the appraisal, age of the comparable and other known changes in the market and in the collateral. When significant adjustments were based on unobservable inputs, the resulting fair value measurement has been categorized as a Level 3 measurement.

The Company estimates fair value of all financial instruments regardless of whether such instruments are measured at fair value. The following methods and assumptions were used by the Company to estimate fair value of financial instruments not previously discussed.

Cash and cash equivalents - Fair value approximates the carrying value.

Other interest-bearing deposits - Fair value is estimated using discounted cash flow analyses based on current rates for similar types of deposits.

19

Securities held to maturity - Fair value is based on quoted market prices where available. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities.

Loans held for sale - Fair value is based on commitments on hand from investors or prevailing market prices.

Loans - Fair value of variable rate loans that reprice frequently is based on carrying values. Fair value of other loans is estimated by discounting future cash flows using current rates at which similar loans would be made to borrowers with similar credit ratings. Fair value of impaired and other nonperforming loans is estimated using discounted expected future cash flows or the fair value of underlying collateral, if applicable.

Federal Home Loan Bank stock - Fair value is the redeemable (carrying) value based on the redemption provisions of the Federal Home Loan Bank.

Accrued interest receivable and payable - Fair value approximates the carrying value.

Cash value of life insurance - Fair value is based on reported values of the assets.

20

Deposits and advance payments by borrowers for taxes and insurance - Fair value of deposits with no stated maturity, such as demand deposits, savings, and money market accounts, including advance payments by borrowers for taxes and insurance, by definition, is the amount payable on demand on the reporting date. Fair value of fixed rate time deposits is estimated using discounted cash flows applying interest rates currently being offered on similar time deposits.

Federal funds purchased - Fair value approximates carrying value.

Borrowed funds - Fair value of fixed rate, fixed term borrowings is estimated by discounting future cash flows using the current rates at which similar borrowings would be made. Fair value of borrowings with variable rates or maturing within 90 days approximates the carrying value of these borrowings.

Off-balance-sheet instruments - Fair value is based on quoted market prices of similar financial instruments where available. If a quoted market price is not available, fair value is based on fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreement and the counterparty’s credit standing. Since the estimated fair value of off-balance-sheet instruments is not material, no amounts are presented in the following schedule.

The carrying value and estimated fair value of financial instruments at March 31, 2015 and September 30, 2014 follow:

	March 31, 2015
			Fair Value
	Carrying Value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	4,995	$	4,995	$	—	$	—
Other interest-bearing deposits		6,066		—		—		6,018
Securities available for sale		5,633		—		5,633		—
Securities held to maturity		3,651		—		3,738		—
Loans held for sale		242		—		242		—
Loans		95,570		—		—		95,250
Accrued interest receivable		386		386		—		—
Cash value of life insurance		3,278		—		—		3,278
Federal Home Loan Bank stock		652		—		—		652
Financial liabilities:
Deposits	$	102,929	$	74,040	$	—	$	28,871
Advance payments by borrowers for taxes and insurance		442		442		—		—
Federal funds purchased		—		—		—		—
Borrowed funds		9,600		—		—		10,052
Accrued interest payable		45		45		—		—

	September 30, 2014
			Fair Value
	Carrying Value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	4,047	$	4,047	$	—	$	—
Other interest-bearing deposits		7,556		—		—		7,461
Securities available for sale		7,922		—		7,922		—
Securities held to maturity		3,893		—		3,927		—
Loans held for sale		320		—		320		—
Loans		84,757		—		—		84,182
Accrued interest receivable		402		402		—		—
Cash value of life insurance		3,238		—		—		3,238
Federal Home Loan Bank stock		652		—		—		652
Financial liabilities:
Deposits	$	97,685	$	71,271	$	—	$	26,412
Advance payments by borrowers for taxes and insurance		830		830		—		—
Federal funds purchased		1,965		1,965		—		—
Borrowed funds		5,000		—		—		5,398
Accrued interest payable		52		52		—		—

21

Limitations - The fair value of a financial instrument is the current amount that would be exchanged between market participants, other than in a forced liquidation. Fair value is best determined based on quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument. Consequently, the aggregate fair value amounts presented may not necessarily represent the underlying fair value of the Company.

Fair value estimates are made at a specific point in time based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company’s entire holdings of a particular instrument. Because no market exists for a significant portion of the Company’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters that could affect the estimates. Fair value estimates are based on existing on- and off-balance-sheet financial instruments without attempting to estimate the value of anticipated future business. Deposits with no stated maturities are defined as having a fair value equivalent to the amount payable on demand. This prohibits adjusting fair value derived from retaining those deposits for an expected future period of time. This component, commonly referred to as a deposit base intangible, is neither considered in the above amounts, nor is it recorded as an intangible asset on the consolidated balance sheets. In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in the estimates.

Note 9 Employee Stock Ownership Plan

The Company adopted an employee stock ownership plan (“ESOP”) for the benefit of substantially all employees effective January 1, 2014. On April 23, 2014, the date of conversion, the ESOP borrowed $719 from the Company and used those funds to acquire 71,935 shares of the Company’s stock at a price of $10.00 per share. The Company accounts for its ESOP in accordance with ASC 718-40. Accordingly, because the debt is intercompany, it is eliminated in consolidation for presentation in these financial statements. The shares pledged as collateral are reported as unearned ESOP shares in the balance sheet.

Shares issued to the ESOP are allocated to ESOP participants based on principal and interest repayment made by the ESOP on the loan. The loan is secured by shares purchased with the loan proceeds and will be repaid by the ESOP with funds from the Bank’s discretionary contributions to the ESOP and earnings on ESOP assets.

The $719 loan for the ESOP purchase was borrowed from the Company and requires annual payments to be made by the ESOP of approximately $41, including principal and interest at a rate of 3.25%.

As shares are committed to be released from collateral and allocated to active participants, the Company reports compensation expense equal to the current market price of the shares and the shares become outstanding for earnings-per-shares (EPS) computations. During the six months ended March 31, 2015, 1,439 shares, with an average fair value of $8.11 per share, were committed to be released resulting in ESOP compensation expense of $11 for the six months ended March 31, 2015 and $6 for the three months ended March 31, 2015. During the six months ended March 31, 2015, 719 shares of the 1,439 shares committed to be released were released, along with the 2,158 shares previously committed to be released, to total 2,877 shares released. No shares were released in the three month period ended March 31, 2015. No ESOP compensation expense was recorded for the three and six months ended March 31, 2014. The ESOP shares as of March 31, 2015 and September 30, 2014 were as follows:

	March 31, 2015		September 30, 2014
Allocated shares		2,877		—
Shares committed to be released and allocated to participants		719		2,158
Total unallocated shares		68,339		69,777
Total ESOP shares		71,935		71,935

22

Note 10 Subsequent Events

Management has reviewed operations for potential disclosure of information or financial statement impacts related to events occurring after March 31, 2015 but prior to the release of these financial statements.

Based on the results of this review, no additional subsequent events disclosures or financial statement impacts to the recently completed quarter are required as of the release date.

23

Home Bancorp Wisconsin, Inc. and Subsidiary

Form 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect” and words of similar meaning. These forward-looking statements include, but are not limited to:

• statements of our goals, intentions and expectations;

• statements regarding our business plans, prospects, growth and operating strategies;

• statements regarding the quality of our loan and investment portfolios; and

• estimates of our risks and future costs and benefits.

These forward-looking statements are based on current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements in this report:

• our ability to execute on our business strategy to increase our origination of multi-family residential loans, one- to four-family investment property loans, commercial real estate loans and home equity loans and lines of credit;

• our ability to comply with the regulatory agreements we have entered into with the FDIC and the WDFI;

• general economic conditions, either nationally or in our market areas, that are worse than expected;

• competition among depository and other financial institutions;

• inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments;

• adverse changes in the securities markets;

• changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements;

• our ability to enter new markets successfully and capitalize on growth opportunities;

• our ability to successfully integratede novoor acquired branches, if any;

• changes in consumer spending, borrowing and savings habits;

• changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission and the Public Company Accounting Oversight Board;

• changes in our organization, compensation and benefit plans; and

• changes in the financial condition, results of operations or future prospects of issuers of securities that we own.

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by the forward-looking statements in this report.

24

Critical Accounting Policies

We consider accounting policies involving significant judgments and assumptions by management that have, or could have, a material impact on the carrying value of certain assets or on income to be critical accounting policies. The following represent our critical accounting policies:

Allowance for Loan Losses.The allowance for loan losses is the estimated amount considered necessary to cover inherent, but unconfirmed, credit losses in the loan portfolio at the balance sheet date. The allowance is established through the provision for losses on loans which is charged against income. In determining the allowance for loan losses, management makes significant estimates and has identified this policy as one of our most critical accounting policies.

Management performs a quarterly evaluation of the allowance for loan losses. Consideration is given to a variety of factors in establishing this estimate including, but not limited to, current economic conditions, delinquency statistics, geographic and industry concentrations, the adequacy of the underlying collateral, the financial strength of the borrower, results of internal loan reviews and other relevant factors. This evaluation is inherently subjective as it requires material estimates that may be susceptible to significant change.

The analysis has two components, specific and general allocations. Specific percentage allocations can be made for unconfirmed losses related to loans that are determined to be impaired. Impairment is measured by determining the present value of expected future cash flows or, for collateral-dependent loans, the fair value of the collateral adjusted for market conditions and selling expenses. If the fair value of the loan is less than the loan’s carrying value, a charge is recorded for the difference. The general allocation is determined by segregating the remaining loans by type of loan, risk weighting (if applicable) and payment history. We also analyze historical loss experience, delinquency trends, general economic conditions and geographic and industry concentrations. This analysis establishes factors that are applied to the loan groups to determine the amount of the general reserve. Actual loan losses may be significantly more than the allowances we have established which could result in a material negative effect on our financial results.

Securities Valuation and Impairment. We classify our investments in debt and equity securities as either held-to-maturity or available-for-sale. Securities classified as held-to maturity are recorded at cost or amortized cost. Available-for-sale securities are carried at fair value. We obtain our fair values from a third party service. This service’s fair value calculations are based on quoted market prices when such prices are available. If quoted market prices are not available, estimates of fair value are computed using a variety of techniques, including extrapolation from the quoted prices of similar instruments or recent trades for thinly traded securities, fundamental analysis, or through obtaining purchase quotes. Due to the subjective nature of the valuation process, it is possible that the actual fair values of these investments could differ from the estimated amounts, thereby affecting our financial position, results of operations and cash flows. If the estimated value of investments is less than the cost or amortized cost, we evaluate whether an event or change in circumstances has occurred that may have a significant adverse effect on the fair value of the investment. If such an event or change has occurred and we determine that the impairment is other-than-temporary, we expense the impairment of the investment in the period in which the event or change occurred. We also consider how long a security has been in a loss position in determining if it is other than temporarily impaired. Management also assesses the nature of the unrealized losses taking into consideration factors such as changes in risk-free interest rates, general credit spread widening, market supply and demand, creditworthiness of the issuer, and quality of the underlying collateral. At December 31, 2014, 100%, of our securities were issued by the U.S. government, U.S. government agencies or U.S. government-sponsored enterprises.

Foreclosed Assets. Assets acquired through or in lieu of loan foreclosure are held for sale and are initially recorded at fair value at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management, and the assets are carried at the lower of carrying amount or fair value less cost to sell and are included in other assets. Revenue and expenses from operations and changes in the valuation allowance are included in net expenses from foreclosed assets.

Income Taxes and Accounting for Valuation Allowance on Deferred Tax Asset.We determine deferred tax assets and liabilities using the liability method. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the current enacted tax rates that will be in effect when these differences are expected to reverse. Provision (credit) for deferred taxes is the result of changes in the deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion of the deferred tax asset will not be realized. We exercise significant judgment in evaluating the amount and timing of recognition of the resulting tax liabilities and assets.

We assessed our operating losses during fiscal 2008 through 2011, 2013, and 2014, estimated future operating results, tax planning strategies and the timing of reversals of temporary differences. At September 30, 2014, and again at March 31, 2015 we determined that it is more likely than not that the deferred tax asset may not be realized. Accordingly, a valuation allowance has been established for the entire amount of our deferred tax asset.

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Overview

During the three months ended March 31, 2015, we experienced a net loss of $99,000, a $292,000 improvement from the $391,000 net loss for the three months ended March 31, 2014. Net interest income increased by $110,000 for the quarter ended March 31, 2015, compared to the quarter ended March 31, 2014, primarily due to loan growth. In addition, the provision for loan losses decreased by $86,000 for the 2015 quarter compared to 2014, as credit quality continued to improve. Noninterest expense decreased by $56,000 for the quarter ended 2015 compared to the same quarter of 2014.

We do not anticipate net income until we are able to achieve significant growth in our earnings base. While we have already started to increase our interest income by increasing our earnings base, including our loan portfolio, it will take additional time to fully deploy the proceeds of the offering into higher earning assets. Although we hope to return to profitability in 2016, we cannot predict with specificity when or whether this will occur. A return to profitability is dependent upon, among other things, continued portfolio and saleable loan growth, and expense management.

Comparison of Financial Condition at March 31, 2015 and September 30, 2014

Total assets increased $7.4 million, or 6.2% to $126.8 million at March 31, 2015 from $119.4 million at September 30, 2014. Net loans increased by $10.8 million and loans held for sale decreased by $78,000, as total investment securities decreased by $2.5 million and other interest-bearing deposits in other banks decreased by $1.5 million.

Net loans, excluding loans held for sale, increased by $10.8 million, or 12.8%, to $95.6 million at March 31, 2015 from $84.8 million at September 30, 2014. The increase in net loans during the six months ended March 31, 2015 was primarily the result of a $7.8 million increase in multifamily real estate loans, consistent with loan growth strategy, a $1.9 million increase in construction loans, a $1.2 million increase in one- to four-family residential mortgage loans, a $139,000 increase in one- to four-family investor mortgage loans, and a $124,000 reduction in consumer loans.

Loans held for sale decreased by $78,000, or 24.4%, to $242,000 at March 31, 2015 from $320,000 at September 30, 2014. The decrease in loans held for sale represents the timing of loan originations and loan sales.

Total investment securities decreased $2.5 million, or 21.4%, to $9.3 million at March 31, 2015. Securities available for sale decreased $2.3 million, while securities held to maturity decreased by $242,000.

Our investment in bank-owned life insurance increased $40,000 to $3.3 million during the six months ended March 31, 2015. We invest in bank-owned life insurance to provide us with a funding offset for our benefit plan obligations. Bank-owned life insurance also generally provides us noninterest income that is non-taxable.

Foreclosed assets decreased $160,000 to $615,000 at March 31, 2015.

Total deposits increased $5.2 million, or 5.4%, to 102.9 million at March 31, 2015 from $97.7 million at September 30, 2014. During the six month period certificates of deposit increased $2.5 million, or 9.4%, to $28.9 million. Total core deposits, which we consider to be all deposits except time deposits, increased by $2.8 million, or 3.9%, to $74.0 million as a result of a $2.4 million increase in demand accounts.

Our borrowings consist predominantly of Federal Home Loan Bank of Chicago advances. Federal Home Loan Bank advances increased by $4.6 million, or 92.0%, to $9.6 million at March 31, 2015. Overnight federal funds purchased decreased $2.0 million, or 100%, to none at March 31, 2015.

Other liabilities increased $117,000 to $1.3 million at March 31, 2015.

Total equity decreased $223,000, or 1.7%, to $12.5 million at March 31, 2015. The decrease was primarily due to the $280,000 net loss for the six months ended March 31, 2015. Additionally, accumulated other comprehensive income increased by $46,000 and $15,000 of ESOP shares were earned in the six months ended March 31, 2015.

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Comparison of Results of Operations for the three months ended March 31, 2015 and 2014

General. We recorded a net loss of $99,000 for the three months ended March 31, 2015, compared to a net loss of $391,000 for the three months ended March 31, 2014. For the three months ended March 31, 2015, net interest income increased by $110,000, noninterest income increased by $40,000, provision for loan losses decreased by $86,000, and noninterest expense declined $56,000 for the three months ended March 31, 2015

Net Interest Income. Net interest income increased $110,000, or 13.2%, to $943,000 for the three months ended March 31, 2015 from $833,000 for the three months ended March 31, 2014. The increase in net interest income resulted from an increase of $100,000 in interest and dividend income and a decrease of $10,000 in interest expense.

Interest and Dividend Income. Interest and dividend income increased $100,000, or 10.4%, to $1.1 million for the three months ended March 31, 2015 from $961,000 for the three months ended March 31, 2014. The increase was primarily due to a $101,000 increase in interest income on loans.

Interest income on loans increased $101,000, or 11.4%, to $984,000 for the quarter ended March 31, 2015 from $883,000 for the quarter ended March 31, 2014. This increase resulted from a $13.8 million increase in the average balance of loans to $95.7 million that was partially offset by a 22 basis point decrease in the average yield on loans to 4.15%. The average balance of loans held for sale rose $384,000 to $737,000. Total loans increased as we deployed funds raised in the stock conversion.

Interest income on interest-bearing deposits increased $9,000, or 40.9%, to $31,000 for the three month period ended March 31, 2015 from $22,000 for the three month period ended March 31, 2014.

Interest and dividend income on investment securities decreased by $10,000 to $46,000 for the quarter ended March 31, 2015 from $56,000 for the quarter ended March 31, 2014. The decrease was due to a 42 basis point decrease in the average yield on investment securities to 1.84%, partially offset by a $58,000 increase in the average balance of investment securities to $10.1 million.

Interest Expense.Interest expense, consisting of interest-bearing deposits and borrowings decreased by $10,000 to $118,000 for the quarter ended March 31, 2015 from $128,000 for the quarter ended March 31, 2014. The decrease was due to a $21,000, or 25.0%, decrease in the cost of interest-bearing deposits and an $11,000, or 25.0%, increase in the cost of borrowings.

The $21,000 decrease in interest expense from deposits was largely the result of a $17,000 decrease in interest expense from certificates of deposit. The average balance of certificates of deposit declined $2.9 million for the quarter ended March 31, 2015 compared to the quarter ended March 31, 2015, while the average cost of such deposits decreased to .80% from .95% for the same periods, respectively.

The cost of borrowings increased $11,000 for the quarter ended March 31, 2015, as average borrowings increased $7.1 million while the average cost of such borrowings decreased to 1.84% from 3.66%.

Provision for Loan Losses.We recorded a provision for loan losses of $30,000 for the three months ended March 31, 2015, compared to a provision for loan losses of $116,000 for the three months ended March 31, 2014. The decrease in the provision for loan losses was primarily due to a reduction in historical loan losses partially offset by an increase in the balance of loans. The allowance for loan losses increased $22,000 in the three months ended March 31, 2015 as the $30,000 provision for loan losses and the $2,000 recoveries on previously charged off loans more than offset loan charge offs totaling $10,000.

Noninterest Income. Noninterest income increased $40,000 to $192,000 for the three months ended March 31, 2015, compared to $152,000 for the three months ended March 31, 2014. The growth was primarily due to an $51,000 increase in mortgage banking income to $70,000 for the quarter ended March 31, 2015. Noninterest income from service fees declined by $14,000 to $50,000 for the quarter ended March 31, 2015.

Noninterest Expense. Noninterest expense decreased $56,000, or 4.4%, to $1.2 million for the three months ended March 31, 2015 compared to the three months ended March 31, 2014. The largest component decreases were advertising and promotions which decreased $20,000 from $51,000, data processing and office expense which decreased $17,000 from $245,000, occupancy and equipment which decreased $14,000 from $212,000, and examinations and assessments which decreased $14,000 from $43,000.

Income Tax Expense. We recorded no income tax expense for the three months ended March 31, 2015 and 2014. Although we had losses in both quarters, we recorded no tax benefit in the quarters ended March 31, 2015 and 2014 because we are continuing to provide a 100% valuation allowance against our deferred tax asset.

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Comparison of Results of Operations for the six months ended March 31, 2015 and 2014

General. We recorded a net loss of $280,000 for the six months ended March 31, 2015, compared to a net loss of $607,000 for the six months ended March 31, 2014. Net interest income increased by $184,000, noninterest income increased by $54,000, and the provision for loan losses decreased by $107,000 for the six months ended March 31, 2015. However, these improvements were partially offset by a $18,000 increase in noninterest expense.

Net Interest Income. Net interest income increased $184,000, or 11.0%, to $1.9 million for the six months ended March 31, 2015 from $1.7 million for the six months ended March 31, 2015. The increase in net interest income resulted from an increase of $150,000 in interest and dividend income and a decrease of $34,000 in interest expense.

Interest and Dividend Income. Interest and dividend income increased $150,000, or 7.7%, to $2.1 million for the six months ended March 31, 2015 from $1.9 million for the six months ended March 31, 2014. The increase resulted from a $148,000 increase in interest income on loans, and a $2,000 increase in interest and dividend income on interest-bearing deposits and securities.

Interest income on loans increased $148,000, or 8.3%, to $1.9 million for the six months ended March 31, 2015 from $1.8 million for the six months ended March 31, 2014. This increase resulted from a $11.2 million increase in the average balance of loans to $91.8 million that was partially offset by a 23 basis point decrease in the average yield on loans to 4.17%. The average balance of loans held for sale rose $500,000 to $726,000. Total loans increased as we deployed funds raised in the stock conversion.

Interest income on interest-bearing deposits increased $16,000, or 33.3%, to $64,000 for the six month period ended March 31, 2015 from $48,000 for the six month period ended March 31, 2014.

Interest and dividend income on investment securities decreased $14,000 to $100,000 for the six months ended March 31, 2015 from $114,000 for the six months ended March 31, 2014. The decrease was due to a 41 basis point decrease in the average yield on investment securities to 1.85%, partially offset by a $718,000 increase in the average balance of investment securities to $10.8 million.

Interest Expense.Interest expense, consisting of interest-bearing deposits and borrowings, decreased $34,000, or 12.7%, to $233,000 for the six months ended March 31, 2015 from $267,000 for the six months ended March 31, 2014. The decrease was due to a $43,000, or 24.7%, decrease in the cost of interest-bearing deposits, partially offset by a $9,000, or 9.7%, increase in the cost of borrowings.

The $43,000 decrease in interest expense from deposits was largely the result of a $41,000 decrease in interest expense from certificates of deposit. The average balance of certificates of deposit declined $3.5 million for the six months ended March 31, 2015 compared to the six months ended March 31, 2014, while the average cost of such deposits decreased to .80% from .98% for the same periods, respectively.

The cost of borrowings increased $9,000 for the six month period ended March 31, 2015, as average borrowings increased $4.0 million and the average cost of such borrowings decreased to 2.22% from 3.60%.

Provision for Loan Losses.We recorded a provision for loan losses of $60,000 for the six months ended March 31, 2015, compared to a provision for loan losses of $167,000 for the six months ended March 31, 2014. The decrease in the provision for loan losses was primarily due to a reduction in historical loan losses, partially offset by an increase in the balance of loans. The allowance for loan losses increased $48,000 in the six months ended March 31, 2015 as the $60,000 provision for loan losses and the $3,000 recoveries on previously charged off loans more than offset loan charge offs totaling $15,000.

Noninterest Income. Noninterest income increased $54,000 to $355,000 for the six months ended March 31, 2015, compared to $301,000 for the six months ended March 31, 2014. The growth was primarily due to a $69,000 increase in mortgage banking income to $95,000 for the six months ended March 31, 2015. Noninterest income from service fees declined by $26,000 to $112,000 for the six months ended March 31, 2015

Noninterest Expense. Noninterest expense increased $18,000, or 0.7%, to $2.4 million for the six months ended March 31, 2015 compared to the six months ended March 31, 2014. The largest component increases were compensation and employee benefits which increased $83,000 from $1.1 million and foreclosed assets, net which increased $38,000 from $29,000. These increases were partially offset by decreases of $57,000 in advertising and promotions, $18,000 in examinations and assessments, $17,000 in data processing and office expense, and $15,000 in professional fees.

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Income Tax Expense. We recorded no income tax expense for the six months ended March 31, 2015 and 2014. Although we had losses in both periods, we recorded no tax benefit in the six months ended March 31, 2015 and 2014 because we are continuing to provide a 100% valuation allowance against our deferred tax asset.

Liquidity and Capital Resources

Liquidity describes our ability to meet the financial obligations that arise in the ordinary course of business. Liquidity is primarily needed to meet the borrowing and deposit withdrawal requirements of our customers and to fund current and planned expenditures. Our primary sources of funds are deposits, scheduled amortization and prepayments of loan principal and mortgage-backed securities, maturities and calls of investment securities and funds provided by our operations. In addition, we have the ability to borrow from the Federal Home Loan Bank of Chicago. At March 31, 2015, we had $9.6 million in borrowings from the Federal Home Loan Bank of Chicago. At that same date, we had the capacity to borrow an additional $11.6 million from the Federal Home Loan Bank of Chicago, subject to our pledging sufficient assets. At March 31, 2015, we also had the ability to borrow up to $1.8 million through Bankers Bank’s agent federal funds program. In addition, we have authority to borrow $7.5 million from the Federal Reserve’s “discount window,” but Federal Reserve policy generally requires savings institutions to exhaust all other sources before borrowing from the Federal Reserve.

Loan repayments and maturing securities are a relatively predictable source of funds. However, deposit flows, calls of securities and prepayments of loans and mortgage-backed securities are strongly influenced by interest rates, general and local economic conditions and competition in the marketplace. These factors reduce the predictability of these sources of funds.

Our primary investing activity is the origination of loans. We have also purchased investment securities in executing our business strategy to invest some of our excess liquidity in investment securities. Our loans, net of allowance for loan losses, increased $10.8 million during the six months ended March 31, 2015.

Total deposits increased $5.2 million during the six months ended March 31, 2015. Deposit flows are affected by the level of interest rates, the interest rates and products offered by competitors and other factors. At March 31, 2015, certificates of deposit scheduled to mature within one year totaled $17.1 million. Our ability to retain these deposits will be determined in part by the interest rates we are willing to pay on such deposits.

We are committed to maintaining a strong liquidity position. We monitor our liquidity position on a daily basis. We anticipate that we will have sufficient funds to meet our current funding commitments. Based on our deposit retention experience and current pricing strategy, we anticipate that a significant portion of maturing time deposits will be retained.

At March 31, 2015, the Bank’s capital levels exceeded the levels required to be considered “well capitalized” under federal regulations.

Off-Balance Sheet Arrangements and Aggregate Contractual Obligations

Commitments. As a financial services provider, we routinely are a party to various financial instruments with off-balance-sheet risks, such as commitments to extend credit and unused lines of credit. While these contractual obligations represent our future cash requirements, a significant portion of commitments to extend credit may expire without being drawn upon. Such commitments are subject to the same credit policies and approval process accorded to loans we make.

Contractual Obligations. In the ordinary course of our operations, we enter into certain contractual obligations. Such obligations include data processing services, operating leases for premises and equipment, agreements with respect to borrowed funds and deposit liabilities.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As of March 31, 2015, there were no material changes in interest rate risk from the analysis disclosed in the Company’s Form 10-K as filed with the Securities and Exchange Commission on December 12, 2014.

Item 4. Controls and Procedures

An evaluation was performed under the supervision and with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended) as of the period covered by this report. Based upon such evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures

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were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the “SEC”) (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.

During the period covered by this report, there have been no changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Home Savings Bank

Part II — Other Information

Item 1. Legal Proceedings

The Bank and Company are subject to various legal actions arising in the normal course of business. In the opinion of management, the resolution of these legal actions is not expected to have a material adverse effect on the Bank’s or the Company’s financial condition or results of operations.

Item 1A. Risk Factors

For information regarding the Company’s risk factors, see “Risk Factors” in the Company’s Form 10-K for the year ended September 30, 2014 as filed with the Securities and Exchange Commission on December 12, 2014. As of March 31, 2015, the risk factors of the Company have not changed materially from those disclosed in the 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32	Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Balance Sheets as of March 31, 2015 and September 30, 2014, (ii) the Statements of Income for the three and six months ended March 31, 2015 and 2014, (iii) the Statements of Comprehensive Income for the three and six months ended March 31, 2015 and 2014, (iv) the Statements of Stockholders’ Equity for the six months ended March 31, 2015 and 2014, (v) the Statements of Cash Flows for the six months ended March 31, 2015 and 2014, and (vi) the Notes to the Financial Statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	HOME BANCORP WISCONSIN, INC.
Date: May 13, 2015	/s/ James R. Bradley
	James R. Bradley
	President and Chief Executive Officer
Date: May 13, 2015	/s/ Mark A. Fritz
	Mark A. Fritz
	Senior Vice President and Chief Financial Officer

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