Search the web
Welcome, Guest
[Sign Out, My Account]
EDGAR_Online

Quotes & Info
Enter Symbol(s):
e.g. YHOO, ^DJI
Symbol Lookup | Financial Search
HFBL > SEC Filings for HFBL > Form 10-Q on 10-May-2013All Recent SEC Filings

Show all filings for HOME FEDERAL BANCORP, INC. OF LOUISIANA | Request a Trial to NEW EDGAR Online Pro

Form 10-Q for HOME FEDERAL BANCORP, INC. OF LOUISIANA


10-May-2013

Quarterly Report


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

The Company's results of operations are primarily dependent on the results of the Bank, which became a wholly owned subsidiary upon completion of the second-step conversion and reorganization of the Bank on December 22, 2010. The Bank's results of operations depend, to a large extent, on net interest income, which is the difference between the income earned on its loan and investment portfolios and the cost of funds, consisting of the interest paid on deposits and borrowings. Results of operations are also affected by provisions for loan losses and loan sale activities. Non-interest expense principally consists of compensation and employee benefits, office occupancy and equipment expense, data processing and other expense. Our results of operations are also significantly affected by general economic and competitive conditions, particularly changes in interest rates, government policies and actions of regulatory authorities. Future changes in applicable law, regulations or government policies may materially impact our financial conditions and results of operations.

Home Federal Bank operates from its main office in Shreveport, Louisiana and three full service branch offices and an agency office located in Shreveport and Bossier City, Louisiana. The Company's primary market area is the Shreveport-Bossier City metropolitan area. The Company offers security brokerage and advisory services through a third party provider at its agency office, which also serves as the office for the commercial lending division and as a loan production office. During the quarter ended March 31, 2013, the Bank determined to relocate its agency office from leased property to a building at 222 Florida Street, Shreveport, Louisiana that had been held for sale. The agency office relocation is expected to be completed in July 2013.

Critical Accounting Policies

Allowance for Loan Losses. The Company has identified the calculation of the allowance for loan losses as a critical accounting policy, due to the higher degree of judgment and complexity than its other significant accounting policies. Provisions for loan losses are based upon management's periodic valuation and assessment of the overall loan portfolio and the underlying collateral, trends in non-performing loans, current economic conditions and other relevant factors in order to maintain the allowance for loan losses at a level believed by management to represent all known and inherent losses in the portfolio that are both probable and reasonably estimable. Although management uses the best information available, the level of the allowance for loan losses remains an estimate which is subject to significant judgment and short-term change.

Income Taxes. Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various assets and liabilities and gives current recognition to changes in tax rates and laws. The realization of our deferred tax assets principally depends upon our achieving projected future taxable income. We may change our judgments regarding future profitability due to future market conditions and other factors. We may adjust our deferred tax asset balances if our judgments change.

Discussion of Financial Condition Changes from June 30, 2012 to March 31, 2013

At March 31, 2013, total assets amounted to $276.2 million compared to $296.2 million at June 30, 2012, a decrease of approximately $20.0 million, or 6.7%. The decrease in assets was comprised primarily of decreases in cash and cash equivalents of $27.8 million, from $34.9 million at June 30, 2012 to $7.0 million at March 31, 2013, investment securities of $14.6 million, or 20.9%, from $69.8 million at June 30, 2012, to $55.2 million at March 31, 2013, and loans held-for-sale of $7.0 million, or 62.6%, from $11.2 million at June 30, 2012 to $4.2 million at March 31, 2013, partially offset by an increase in net loans receivable of $28.2 million, or 16.7%, from $168.3 million at June 30, 2012 to $196.4 million at March 31, 2013. The $27.8 million decrease in cash and cash equivalents was due to a non-recurring deposit in the fourth quarter of the fiscal year ended June 30, 2012, which had a balance of $31.7 million at June 30, 2012. This deposit was short-term in nature and was fully withdrawn during the quarter ended September 30, 2012. The increase in net loans receivable at March 31, 2013 compared to June 30, 2012, was attributable primarily to increases in commercial real estate loans of $12.2 million, one- to-four family residential of $7.9 million, multi-family residential loans of $7.1 million, land loans of $3.6 million and


HOME FEDERAL BANCORP, INC. OF LOUISIANA

Discussion of Financial Condition Changes from June 30, 2012 to March 31, 2013
(continued)

commercial business loans of $3.2 million, partially offset by a decrease of $7.4 million in construction loans. The $14.6 million decrease in investment securities was due to normal principal repayments during the nine months ended March 31, 2013. The decrease in loans held-for-sale primarily reflects a decrease at March 31, 2013 in receivables from financial institutions purchasing the Company's loans held-for-sale.

At March 31, 2013, the Company had $768,000 of non-performing assets compared to $14,000 at June 30, 2012. Our non-performing assets at March 31, 2013 consisted of three one- to four-family residential loans purchased from a local mortgage originator secured by property in our market area that are 90 days or more past due and accruing interest, a one- to four-family residential loan we originated that was 90 days or more past due and on non-accrual status and a line of credit totaling $27,000 that was on non-accrual status. Following the expansion of the Company's mortgage lending operations, the Company has not purchased mortgage loans since fiscal 2008. Non-performing assets at June 30, 2012 consisted of a $14,000 one- to four-family residential mortgage loan on non-accrual status.

The Company's total liabilities amounted to $233.9 million at March 31, 2013, a decrease of approximately $12.4 million, or 5.0%, compared to total liabilities of $246.3 million at June 30, 2012. The primary reason for the decrease in liabilities was due to a decrease in deposits of $18.4 million, or 8.3%, from $221.4 million at June 30, 2012 to $203.1 million at March 31, 2013, partially offset by an increase in advances from the Federal Home Loan Bank of $6.3 million, or 26.7%, to $29.7 million at March 31, 2013 from $23.5 million at June 30, 2012. The decrease in deposits was primarily due to the withdrawal during the quarter ended September 30, 2012 of the non-recurring deposit discussed above which had a balance of approximately $31.7 million at June 30, 2012. Certificates of Deposit increased $2.0 million, or 1.9%, from $108.6 million at June 30, 2012 to $110.7 million at March 31, 2013. Interest bearing NOW accounts increased $5.1 million, or 30.1%, from $16.9 million at June 30, 2012 to $22.0 million at March 31, 2013. Non-interest bearing accounts increased $2.8 million, or 13.8%, and passbook savings accounts increased $2.3 million, or 33.2%, at March 31, 2013 compared to June 30, 2012. The Company utilizes brokered certificates of deposit as a component of its strategy for lowering Home Federal Bank's overall cost of funds. The brokered certificates of deposit, all of which have maturity dates greater than twelve months, are callable by Home Federal Bank after twelve months pursuant to early redemption provisions. At March 31, 2013 and June 30, 2012, the Company had $12.7 million and $10.4 million, respectively, in brokered deposits.

Stockholders' equity decreased $7.6 million, or 15.2%, to $42.3 million at March 31, 2013 compared to $49.9 million at June 30, 2012. The primary reasons for the decrease in stockholders' equity from June 30, 2012, were the acquisition of treasury stock of $10.2 million, dividends paid of $492,000, and a decrease in the Company's accumulated other comprehensive income of $600,000. These decreases in stockholders' equity were partially offset by net income of $2.5 million for the nine months ended March 31, 2013, proceeds from the issuance of common stock from the exercise of stock options of $742,000 and the vesting of restricted stock awards, stock options and release of Employee Stock Ownership Plan shares totaling $525,000. The Company's book value per share increased from $17.34 at June 30, 2012 to $17.92 at March 31, 2013 based on shares outstanding of 2,877,032 and 2,361,879, respectively.

The Bank is required to meet minimum capital standards promulgated by the Office of the Comptroller of the Currency ("OCC"). At March 31, 2013, Home Federal Bank's regulatory capital was well in excess of the minimum capital requirements.

Comparison of Operating Results for the Three and Nine Month Periods Ended March 31, 2013 and 2012

General

Net income amounted to $676,000 for the three months ended March 31, 2013 compared to $587,000 for the same period in 2012, an increase of $89,000 or 15.2%. The increase was primarily due to a $126,000 or 5.0%, increase in net interest income, an $81,000, or 3.5%, decrease in non-interest expense and a $2,000, or 0.9%, decrease in the provision for loan losses, partially offset by a decrease of $56,000, or 6.8%, in non-interest income and a $64,000, or 24.7%, increase in income tax expense for the 2013 period compared to the same period in 2012. The increase in


HOME FEDERAL BANCORP, INC. OF LOUISIANA

Comparison of Operating Results for the Three and Nine Month Periods Ended March 31, 2013 and 2012 (continued)

net interest income for the three months ended March 31, 2013 was primarily due to a decrease in the Company's cost of funds for the three months ended March 31, 2013, compared to the prior year period. The decrease in non-interest expense was primarily due to decreases in compensation and benefit expense, audit and examination fees, occupancy and equipment expense and loan collection expense, partially offset by increases in data processing and legal fees.

Net income amounted to $2.5 million for the nine months ended March 31, 2013 compared to net income of $2.1 million for the same period in 2012, an increase of $426,000, or 20.6%. The increase was primarily due to a $911,000, or 12.9%, increase in net interest income, a $150,000, or 6.1%, increase in non-interest income, and a $49,000, or 10.0%, decrease in the provision for loan losses for the 2013 period compared to the same period for 2012. These changes were partially offset by an increase of $308,000, or 5.1%, in non-interest expense and a $376,000, or 44.0%, increase in income tax expense. The increase in net interest income for the nine months ended March 31, 2013 was primarily due to an increase in interest income and fees from higher loan originations combined with a decrease in the Company's cost of funds for the nine months ended March 31, 2013, compared to the prior year period. The increase in non-interest expense was primarily due to an increase in compensation and benefits expense of $310,000, or 8.2%, and other expenses associated with the Company's growth.

Net Interest Income

Net interest income for the three months ended March 31, 2013 was $2.6 million, an increase of $126,000, or 5.0%, in comparison to $2.5 million for the three months ended March 31, 2012. This increase was primarily due to a decrease of $126,000 or 16.9%, in the Company's cost of funds. Total interest income was constant at $3.3 million for both three month periods. The cost of funds from Federal Home Loan Bank borrowings decreased $61,000, or 44.5% during the period while interest paid on deposits also decreased $66,000, or 10.8% during the same period.

Net interest income for the nine months ended March 31, 2013 was $7.9 million, an increase of $911,000, or 12.9%, in comparison to $7.0 million for the nine months ended March 31, 2012. This increase was primarily due to an increase of $538,000 in total interest income and a decrease of $373,000 in the Company's cost of funds. The increase in total interest income was primarily due to an increase in interest income generated from loans of $1.2 million, or 15.8%, partially offset by a decrease in interest income from investment securities of $68,000, or 77.3%, and a decrease in interest income from mortgage-backed securities of $563,000 or 30.0%. The cost of funds from Federal Home Loan Bank borrowings decreased $211,000, or 44.5% during the period while interest paid on deposits also decreased $166,000, or 8.9%, during the same period.

The Company's average interest rate spread was 3.80% for both the three and nine months ended March 31, 2013, compared to 3.75% and 3.57% for the three and nine months ended March 31, 2012, respectively. The Company's net interest margin was 4.03% and 4.08% for the three and nine months ended March 31, 2013, respectively, compared to 4.11% and 3.97% for the three and nine months ended March 31, 2012, respectively. The increase in net interest margin and average interest rate spread for the three and nine month periods is attributable primarily to a higher volume of interest earning assets at relatively stable rates. Net interest income also increased primarily due to the increase in volume of average interest-earning assets. The increases in average interest rate spread and net interest income was also influenced by decreases in the average rates paid on interest bearing liabilities.

Provision for Losses on Loans

Based on an analysis of historical experience, the volume and type of lending conducted by Home Federal Bank, the status of past due principal and interest payments, general economic conditions, particularly as such conditions relate to our market area and other factors related to the collectability of Home Federal Bank's loan portfolio, a provision for loan losses of $214,000 and $441,000 was made during the three and nine months ended March 31, 2013, respectively, compared to a $216,000 and $490,000 provision made during the three and nine months ended March 31, 2012, respectively. The allowance for loan losses was $2.1 million, or 1.1% of total loans, at March 31,


HOME FEDERAL BANCORP, INC. OF LOUISIANA

Comparison of Operating Results for the Three and Nine Month Periods Ended March 31, 2013 and 2012 (continued)

2013 compared to $1.3 million, or 0.8%, of total loans at March 31, 2012. At March 31, 2013, Home Federal Bank had five non-performing loans in the aggregate amount of $768,000 and no other non-performing assets or troubled-debt restructurings. At March 31, 2012, Home Federal had one non-performing loan in the amount of $14,000. There can be no assurance that the loan loss allowance will be sufficient to cover losses on non-performing assets in the future.

Non-interest Income

Total non-interest income amounted to $770,000 for the three months ended March 31, 2013, a decrease of $56,000, or 6.8% compared to $826,000 for the same period in 2012. The decrease was due to decreases of $31,000 in other non-interest income, $19,000 in gain on sale of loans and $6,000 in income on bank owned life insurance compared to the same period in 2012.

Total non-interest income amounted to $2.6 million for the nine months ended March 31, 2013, an increase of $150,000, or 6.1%, compared to $2.5 million for the same period in 2012. The increase was primarily due to increases of $228,000 in gain on sale of loans held for sale, partially offset by decreases of $39,000 in gain on sale of investments, $22,000 in other non-interest income and $17,000 in income on bank owned life insurance.

Non-interest Expense

Total non-interest expense decreased $81,000, or 3.5%, for the three months ended March 31, 2013 compared to the prior year period. The decrease in non-interest expense was primarily due to decreases of $51,000 in audit and examination fees, $42,000 in occupancy and equipment expenses, $35,000 in loan and collection expense, $29,000 in compensation and benefits expense and $9,000 in advertising expense. These decreases were partially offset by increases of $46,000 in data processing costs and $38,000 in legal fees.

Total non-interest expense increased $308,000, or 5.1%, for the nine months ended March 31, 2013 compared to the prior year period. The increase in non-interest expense was primarily due to an increase in compensation and benefits expense of $310,000, or 8.2%, as well as increases of $82,000 in legal expenses, and $67,000 in data processing costs. These increases were partially offset by decreases of $60,000 in audit and examination fees, $30,000 in loan and collection expense, $26,000 in advertising expense, $19,000 in occupancy and equipment expense and $22,000 in other non-interest expense.

The increases in compensation and benefits expense were a result of normal compensation increases including stock options and recognition and retention plan expense and the hiring of additional commercial and residential loan officers. The aggregate compensation expense recognized by the Company for its Stock Option, ESOP and Recognition and Retention Plans amounted to $147,000 and $431,000 for the three and nine months ended March 31, 2013, compared to $105,000 and $189,000 for the three and nine months ended March 31, 2012, respectively.

The Louisiana bank shares tax is assessed on the Bank's equity and earnings. For the three and nine months ended March 31, 2013, the Company recognized franchise and bank shares tax expense of $84,000 and $224,000, respectively, compared to $87,000 and $230,000 for the same periods in 2012.

Income Taxes

Income taxes amounted to $323,000 and $1.2 million for the three and nine months ended March 31, 2013, respectively, resulting in effective tax rates of 32.3% and 33.0%, respectively. Income taxes amounted to $259,000 and $855,000 for the three and nine months ended March 31, 2012, respectively, resulting in effective tax rates of 30.6% and 29.2%, respectively. The increase in the effective income tax rate for the nine months ended March 31, 2013, compared to the prior year period, is primarily the result of a return to more normalized rates in 2013 following the effect of a combination of a difference in capital gains and losses resulting in a 2.9% reduction, and non-taxable income resulting in a 1.9% reduction, in rate for the nine months ended March 31, 2012.


HOME FEDERAL BANCORP, INC. OF LOUISIANA

Comparison of Operating Results for the Three and Nine Month Periods Ended March 31, 2013 and 2012 (continued)

Average Balances, Net Interest Income, Yields Earned and Rates Paid. The following tables show for the periods indicated the total dollar amount of interest from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates, and the net interest margin. Tax-exempt income and yields have not been adjusted to a tax-equivalent basis. All average balances are based on monthly balances. Management does not believe that the monthly averages differ significantly from what the daily averages would be.

                                                   Three Months Ended March 31,
                                          2013                                       2012
                                                       Average                                    Average
                          Average                      Yield/        Average                      Yield/
                          Balance       Interest        Rate         Balance       Interest        Rate
                                                      (Dollars In Thousands)
Interest-earning
assets:
   Investment
securities               $  55,851     $      388          2.78 %   $  76,900     $      643          3.34 %
   Loans receivable        201,100          2,880          5.73       164,113          2,624          6.40
Interest-earning
deposits                     6,352              2          0.12         4,332              3          0.28
     Total
interest-earning
assets                     263,303          3,270          4.97       245,345          3,270          5.33
Non-interest-earning
assets                      15,781                                     15,440
     Total assets        $ 279,084                                  $ 260,785
Interest-bearing
liabilities:
   Savings
accounts                     7,948              4          0.22         6,471             15          0.93
   NOW accounts             21,776             42          0.77        19,069             17          0.36
   Money market
accounts                    38,533             35          0.37        37,404             50          0.53
   Certificate
accounts                   110,439            462          1.67       101,053            527          2.09
     Total deposits        178,696            543          1.22       163,997            609          1.49
FHLB advances               33,567             77          0.91        25,404            137          2.16
     Total
interest-bearing
liabilities                212,263            620          1.17 %     189,401            746          1.58 %
Non-interest-bearing
liabilities:
   Non-interest
bearing demand
accounts                    23,258                                     19,133
   Other
liabilities                    879                                      1,293
     Total
liabilities                236,400                                    209,827
Total Stockholders'
Equity(1)                   42,684                                     50,958

     Total liabilities
and equity               $ 279,084                                  $ 260,785

Net interest-earning
assets                   $  51,040                                  $  55,944

Net interest income;
average interest rate
   spread(2)                           $    2,650          3.80 %                 $    2,524          3.75 %

Net interest
margin(3)                                                  4.03 %                                     4.11 %

Average
interest-earning
assets to average
 interest-bearing
liabilities                                              124.05 %                                   129.54 %


 __________________


(1) Includes retained earnings and accumulated other comprehensive loss.

(2) Interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average rate on interest-bearing liabilities.

(3) Net interest margin is net interest income divided by net average interest-earning assets.


                    HOME FEDERAL BANCORP, INC. OF LOUISIANA

Comparison of Operating Results for the Three and Nine Month Periods Ended March
31, 2013 and 2012 (continued)

                                                    Nine Months Ended March 31,
                                          2013                                       2012
                                                       Average                                    Average
                          Average                      Yield/        Average                      Yield/
                          Balance       Interest        Rate         Balance       Interest        Rate
                                                      (Dollars In Thousands)
Interest-earning
assets:
   Investment
securities               $  60,601     $    1,334          2.94 %   $  78,664     $    1,965          3.33 %
   Loans receivable        193,450          8,564          5.90       150,167          7,394          6.57
Interest-earning
deposits                     5,917             10          0.22         7,366             11          0.20
     Total
interest-earning
assets                     259,968          9,908          5.08       236,197          9,370          5.29
Non-interest-earning
assets                      15,647                                     14,237
     Total
assets                   $ 275,615                                  $ 250,434
Interest-bearing
liabilities:
   Savings accounts          7,140             14          0.26         6,519             44          0.90
   NOW accounts             19,719            118          0.80        16,926             74          0.58
   Money market
accounts                    40,363            131          0.43        36,326            167          0.61
   Certificate
accounts                   108,357          1,430          1.76        94,930          1,574          2.21
     Total deposits        175,579          1,693          1.29       154,701          1,859          1.60
FHLB advances               28,773            267          1.24        25,962            474          2.43
     Total
interest-bearing
liabilities                204,352          1,960          1.28 %     180,663          2,333          1.72 %
Non-interest-bearing
liabilities:
   Non-interest
bearing demand
accounts                    23,691                                     17,397
   Other liabilities         1,352                                      1,577
     Total
liabilities                229,395                                    199,637
Total Stockholders'
Equity(1)                   46,220                                     50,797

     Total liabilities
and equity               $ 275,615                                  $ 250,434

Net interest-earning
assets                   $  55,616                                  $  55,534

Net interest income;
average interest rate
   spread(2)                           $    7,948          3.80 %                 $    7,037          3.57 %

Net interest
margin(3)                                                  4.08 %                                     3.97 %

Average
interest-earning
assets to average
 interest-bearing
liabilities                                              127.22 %                                   130.74 %


 __________________


(1) Includes retained earnings and accumulated other comprehensive loss.

(2) Interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average rate on interest-bearing liabilities.

(3) Net interest margin is net interest income divided by net average interest-earning assets.

Liquidity and Capital Resources

Home Federal Bank maintains levels of liquid assets deemed adequate by management. The Bank adjusts its liquidity levels to fund deposit outflows, repay its borrowings and to fund loan commitments. Home Federal Bank also adjusts liquidity as appropriate to meet asset and liability management objectives.

Home Federal Bank's primary sources of funds are deposits, amortization and prepayment of loans and mortgage-backed securities, maturities of investment securities and other short-term investments, loan sales and earnings and funds provided from operations. While scheduled principal repayments on loans and mortgage-backed securities are a relatively predictable source of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions and competition. The Bank sets the interest rates on its deposits to maintain a desired level of total deposits. In addition, Home Federal Bank invests excess funds in short-term interest-earning accounts and other assets, which provide liquidity to meet lending requirements. Home Federal Bank's deposit accounts with the Federal Home Loan Bank of Dallas amounted to $1.1 million at March 31, 2013.

. . .

  Add HFBL to Portfolio     Set Alert         Email to a Friend  
Get SEC Filings for Another Symbol: Symbol Lookup
Quotes & Info for HFBL - All Recent SEC Filings
Sign Up for a Free Trial to the NEW EDGAR Online Pro
Detailed SEC, Financial, Ownership and Offering Data on over 12,000 U.S. Public Companies.
Actionable and easy-to-use with searching, alerting, downloading and more.
Request a Trial      Sign Up Now


Copyright © 2014 Yahoo! Inc. All rights reserved. Privacy Policy - Terms of Service
SEC Filing data and information provided by EDGAR Online, Inc. (1-800-416-6651). All information provided "as is" for informational purposes only, not intended for trading purposes or advice. Neither Yahoo! nor any of independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. By accessing the Yahoo! site, you agree not to redistribute the information found therein.