Home Federal Bancorp, Inc. Announces Third Quarter Results

• Press Release
• Source: Home Federal Bancorp, Inc.
• On 4:00 pm EDT, Friday July 24, 2009

NAMPA, Idaho, July 24, 2009 (GLOBE NEWSWIRE) -- Home Federal Bancorp, Inc. (the "Company") (Nasdaq:HOME - News), the parent company of Home Federal Bank (the "Bank"), today announced third quarter results for the fiscal year ending September 30, 2009. For the quarter ended June 30, 2009, the Company reported a net loss of $1.2 million, or $0.08 per diluted share, compared to net income of $1.1 million, or $0.07 per diluted share, for the same period a year ago. For the nine months ended June 30, 2009, the Company reported a net loss of $1.6 million, or $0.10 per diluted share, compared to net income of $3.0 million, or $0.19 per diluted share, for the same period last year.

Related Quotes

Symbol	Price	Change
HOME	11.93	-0.37

{"s" : "home","k" : "c10,l10,p20,t10","o" : "","j" : ""}

The following summarizes key activities of the Company during the quarter ended June 30, 2009:

 * Nonperforming assets increased as the Idaho economy continued to
   decline and unemployment increased;
 * The Company's total assets declined and maturing borrowings were
   repaid with excess cash;
 * Total loans declined reflecting a decrease in lending opportunities
   to good credit customers in Southwestern Idaho;
 * Core deposits increased and certificates of deposit decreased as
   management continued to focus on low-cost relationship accounts;
 * The Bank launched a new checking account product that is expected
   to increase core deposit balances and generate interchange income;
 * While nonperforming loans increased during the quarter, loans
   delinquent less than 90 days declined compared to March 31, 2009;
 * Deteriorating asset quality and foreclosed asset valuations
   resulted in increased operating expenses through additional
   valuation allowances and maintenance and property tax expense; and,
 * The Bank accrued $250,000 related to a special assessment levied by
   the Federal Deposit Insurance Corporation ("FDIC") to be paid in
   September 2009.

Operating Results

Total revenue for the quarter ended June 30, 2009, which consisted of net interest income before the provision for loan losses plus noninterest income, decreased $323,000, or 4% to $8.3 million compared to $8.6 million for the same period of 2008. Total revenue for the third quarter of fiscal 2009 was unchanged at $8.3 million compared to the linked second quarter of fiscal 2009. Net interest income before the provision for loan losses decreased $199,000, or 3%, to $5.7 million for the quarter ended June 30, 2009, compared to $5.9 million for the same quarter of the prior year as interest reversed on loans in nonaccrual status during the fiscal third quarter of 2009 totaled approximately $307,000.

Total revenue for the nine months ended June 30, 2009 increased $247,000, or 1% to $24.8 million, compared to $24.6 million for the same period of last year. Net interest income before provision for loan losses for the nine months ended June 30, 2009 increased $673,000, or 4% to $17.4 million from $16.7 million for the same period of the prior year. This improvement was attributable to the existing low interest rate environment and the lower level of Federal Home Loan Bank of Seattle ("FHLB") borrowings, which significantly reduced interest expense.

The Company's net interest margin increased by 24 basis points to 3.53% for the quarter ended June 30, 2009, from 3.29% for the same quarter last year, but decreased seven basis points from 3.60% reported in the linked quarter. The improvement in the net interest margin from the prior year is primarily attributable to a decrease in interest expense as current rates paid on deposits are lower than in the prior periods as management has cautiously priced deposits. In addition, balances of high-cost certificates of deposit and FHLB advances were lower in fiscal 2009 and most of the advances that have matured this fiscal year have been repaid with excess liquidity.

A provision for loan losses of $3.5 million was established by management in connection with its analysis of the loan portfolio for the quarter ended June 30, 2009. The provision for loan losses was $652,000 for the same period of the prior year. The provision for loan losses was $8.1 million for the nine months ended June 30, 2009, compared to $1.3 million for the nine months ended June 30, 2008. The provision reflects the increase in delinquent loans in fiscal 2009 compared to 2008.

Noninterest income decreased $124,000, or 5%, to $2.6 million for the quarter ended June 30, 2009, compared to $2.7 million for the same quarter a year ago. Mortgage rates were at historically low levels during the third quarter of fiscal 2009, which led to higher levels of mortgage loan refinancing. This higher volume of mortgage loan activity caused the gain on loan sales during the third quarter of 2009 to exceed gains during the same quarter of 2008 by $203,000. This increase in loan sale gains partially offset a decline in deposit service charges and fees of $388,000 during the third quarter of 2009 compared to the year-ago period. However, noninterest income increased $266,000, or 11%, from the linked quarter as checking account fees and interchange income increased and net losses on overdrafts declined from the second fiscal quarter of 2009.

Noninterest income for the nine months ended June 30, 2009 decreased $426,000, or 5%, to $7.4 million, from $7.8 million for the same period a year ago. The decrease is primarily attributable to decreases in deposit service charges and fees. Loan servicing fees are also lower than year ago numbers due to the sale of mortgage servicing rights completed in December 2008. However, gain on sale of loans for the nine months ended June 30, 2009 exceeded the year ago numbers due to the significant increase in refinancings in the current year.

Noninterest expense for the quarter ended June 30, 2009, increased $840,000, or 14% to $7.0 million from $6.2 million for the comparable period a year earlier. Compensation and benefits declined $246,000 from the year ago period as annual incentive accruals were reduced or eliminated during the third fiscal quarter of 2009 due to financial performance. Insurance and taxes increased $625,000, or 396%, from the year ago similar period as a result of increases in the regular quarterly FDIC deposit insurance assessment as well as a special assessment of approximately $250,000. In addition, $219,000 of expense was incurred on past due property taxes paid on foreclosed properties during the third fiscal quarter of 2009. Other expenses also increased $334,000 during the third quarter of fiscal 2009 compared to 2008 primarily as a result of a $367,000 provision for the decline in the value of foreclosed properties.

Noninterest expense for the nine months ended June 30, 2009, increased $1.1 million, or 6% to $19.6 million from $18.5 million for the comparable period a year earlier. This increase was primarily attributable to the current economic conditions including expenses incurred on overdue property taxes paid on foreclosed properties, increased assessments from the FDIC, and charges related to the write-down in value of real estate owned. These increases were partially offset by a decrease in compensation and benefits as incentive accruals have been reduced or eliminated in the current year based on results to date.

Balance Sheet

Total assets decreased $69.2 million, or 9%, to $672.7 million at June 30, 2009, compared to $741.9 million a year earlier. The majority of the decrease is the result of management's strategy to reduce reliance on fixed-rate assets and liabilities by using the liquidity generated by prepayments of mortgage-backed securities and one- to four-family residential loans to repay FHLB advances as they matured and to fund declining balances in certificates of deposit.

Securities. Mortgage-backed securities decreased $25.0 million, or 13%, to $169.7 million at June 30, 2009, compared to $194.8 million at June 30, 2008. The decrease is primarily attributable to regular principal repayments. Approximately 98% of the Company's mortgage-backed securities were issued by U.S. government sponsored enterprises. The Company does not own any trust preferred securities or collateralized debt obligations. Additionally, the Company held $9.6 million of stock in the FHLB at June 30, 2009.

Loans. Net loans (excluding loans held for sale) at June 30, 2009, decreased $50.1 million or 11% to $418.2 million, compared to $468.3 million at June 30, 2008, as one- to four-family residential loans declined $41.3 million. One- to four-family residential loans represented 41% of the Bank's loan portfolio at June 30, 2009, compared to 46% at June 30, 2008. Commercial loan balances, including commercial real estate, builder finance, and commercial business lending, were unchanged from a year ago at $200.2 million. Consumer loans decreased $4.4 million or 8% to $51.0 million, compared to $55.4 million at June 30, 2008.

Asset Quality. Loans delinquent 30 to 89 days totaled $3.8 million at June 30, 2009, compared to $11.6 million at March 31, 2009, and $2.0 million at June 30, 2008. Nonperforming assets, which include impaired loans and real estate owned, totaled $25.1 million at June 30, 2009, compared to $19.1 million at March 31, 2009, and $4.2 million at June 30, 2008. The allowance for loan losses was $8.3 million, or 1.93%, of gross loans at June 30, 2009, compared to $7.3 million, or 1.64% of gross loans at March 31, 2009, and $3.8 million, or 0.81% of gross loans at June 30, 2008.

The following table summarizes nonperforming and impaired loans and real estate owned at June 30, 2009 and March 31, 2009:

                                      June 30, 2009    March 31, 2009
                                              Loss              Loss
 (in thousands)                     Balance  Reserve  Balance  Reserve
                                    -------  -------  -------  -------
 Land acquisition and development   $ 3,734  $ 1,352  $ 5,266  $ 1,029
 One- to four-family construction     3,478      390    2,307      286
 Commercial real estate               4,000      256    3,074      220
 One- to four-family residential      5,169      816    3,943      441
 Other                                   81        6       --       --
                                    -------  -------  -------  -------
  Total nonperforming and impaired
   loans                            $16,462    2,820  $14,590    1,976
                                    =======           =======
 General loss reserve                          5,446             5,357
                                             -------           -------
  Total allowance for loan losses            $ 8,266           $ 7,333
                                             =======           =======
 Real estate owned, net             $ 8,614           $ 4,478
                                    =======           =======

Net charge-offs totaled $2.5 million during the quarter ended June 30, 2009. Real estate owned increased $4.1 million during the third quarter of fiscal 2009 to $8.6 million at June 30, 2009. Real estate owned was comprised of $4.3 million of land development and speculative one- to four-family construction projects, $3.9 million of commercial real estate and $383,000 of one- to four-family residential properties. This activity represents prior identified loans evolving through the collection cycle.

Deposits and borrowings. Deposits decreased $6.3 million, or 2%, to $376.0 million at June 30, 2009, compared to $382.3 million at June 30, 2008. Demand deposits and savings accounts increased from $202.1 million at June 30, 2008 to $207.0 million at June 30, 2009, which is consistent with management's strategy to increase core deposits. Certificates of deposit decreased $11.3 million, or 6%, to $169.0 million at June 30, 2009, compared to $180.3 million at June 30, 2008. Management continues to observe certificate of deposit rates offered by competitors that in many instances exceeded the cost of the Bank's alternative funding sources, including FHLB advances.

FHLB advances and other borrowings decreased $56.7 million, or 39%, to $88.9 million at June 30, 2009, compared to $145.6 million at June 30, 2008. As previously noted, the decrease resulted from maturing FHLB advances being repaid with excess liquidity.

Equity. Stockholders' equity decreased $4.9 million, or 2%, to $198.7 million at June 30, 2009, compared to $203.5 million at June 30, 2008. The completion of the entire share repurchase program during the quarter ended March 31, 2009 was the primary cause for the decrease in stockholders' equity. Dividends and a year-to-date loss from operations in fiscal 2009 reduced retained earnings while a lower interest rate environment at June 30, 2009, increased the unrealized gain on securities by $4.5 million, net of tax, compared to June 30, 2008. The Company's book value per share as of June 30, 2009 was $11.90 per share based upon 16,698,168 outstanding shares of common stock, a 1.4% increase from June 30, 2008.

About the Company

Home Federal Bancorp, Inc. is headquartered in Nampa, Idaho, and is the parent company of Home Federal Bank, a community bank originally organized in 1920. The Company serves the Treasure Valley region of southwestern Idaho that includes Ada, Canyon, Elmore and Gem Counties, through 15 full-service banking offices and one commercial loan center. The Company's common stock is traded on the NASDAQ Global Select Market under the symbol "HOME" and is included in the Russell 2000 Index. For more information, visit the Company web site at www.myhomefed.com.

Forward-Looking Statements:

Statements in this news release regarding future events, performance or results are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA") and are made pursuant to the safe harbors of the PSLRA. These forward-looking statements relate to, among other things, expectations of the business environment in which the Company operates, projections of future performance, perceived opportunities in the market, potential future credit experience, and statements regarding the Company's mission and vision. These forward-looking statements are based upon current management expectations and may, therefore, involve risks and uncertainties. Actual results could be materially different from those expressed or implied by the forward-looking statements. Factors that could cause results to differ include but are not limited to: general economic and banking business conditions, competitive conditions between banks and non-bank financial service providers, interest rate fluctuations, the credit risk of lending activities, including changes in the level and trend of loan delinquencies and write-offs; results of examinations by our banking regulators, regulatory and accounting changes, risks related to construction and development lending, commercial and small business banking and other risks. Additional factors that could cause actual results to differ materially are disclosed in Home Federal Bancorp, Inc.'s recent filings with the Securities and Exchange Commission, including but not limited to its Annual Report on Form 10-K for the year ended September 30, 2008, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Forward-looking statements are accurate only as of the date released, and we do not undertake any responsibility to update or revise any forward-looking statements to reflect subsequent events or circumstances.

 HOME FEDERAL BANCORP, INC. AND SUBSIDIARY
 CONSOLIDATED BALANCE SHEETS
 (In thousands, except share data) (Unaudited)

                                          June 30,  Sept. 30, June 30,
                                            2009      2008      2008
                                          --------  --------  --------
 ASSETS
  Cash and amounts due from depository
   institutions                           $ 26,778  $ 23,270  $ 25,187
  Certificates of deposit in
   correspondent bank                           --     5,000     5,000
  Mortgage-backed securities available
   for sale, at fair value                 169,716   188,787   194,753
  FHLB stock, at cost                        9,591     9,591     9,591
  Loans receivable, net of allowance for
   loan losses of $8,266 and $4,579 and
   $3,801                                  418,198   459,813   468,343
  Loans held for sale                        5,064     2,831     3,971
  Accrued interest receivable                2,209     2,681     2,799
  Property and equipment, net               17,057    15,246    14,356
  Mortgage servicing rights, net                --     1,707     1,840
  Bank owned life insurance                 11,906    11,590    11,482
  Real estate and other property owned       8,614       650       707
  Deferred income tax asset, net             1,853     1,770     1,765
  Other assets                               1,757     2,134     2,154
                                          --------  --------  --------
   TOTAL ASSETS                           $672,743  $725,070  $741,948
                                          ========  ========  ========

 LIABILITIES AND STOCKHOLDERS' EQUITY

 LIABILITIES
  Deposit accounts:
   Noninterest-bearing demand deposits    $ 39,931  $ 41,398  $ 35,258
   Interest-bearing demand deposits        131,202   127,714   140,401
   Savings deposits                         35,880    26,409    26,409
   Certificates of deposit                 168,983   177,404   180,274
                                          --------  --------  --------
    Total deposit accounts                 375,996   372,925   382,342
  Advances by borrowers for taxes and
   insurance                                   589     1,386       657
  Interest payable                             370       552       580
  Deferred compensation                      5,219     5,191     5,028
  FHLB advances and other borrowings        88,891   136,972   145,582
  Other liabilities                          3,030     2,857     4,227
                                          --------  --------  --------
       Total liabilities                   474,095   519,883   538,416
 
 STOCKHOLDERS' EQUITY
  Serial preferred stock, $.01 par value;
   10,000,000 authorized; issued and
   outstanding, none                            --        --        --
  Common stock, $.01 par value; 90,000,000
   authorized; issued and outstanding:
   June 30, 2009 - 17,445,311 issued;          167       174       173
    16,698,168 outstanding
   Sept. 30, 2008 - 17,412,449 issued;
    17,374,161 outstanding
   June 30, 2008 - 17,391,517 issued,
    17,348,229 outstanding
  Additional paid-in capital               150,391   157,205   157,089
  Retained earnings                         55,643    59,813    59,707
  Unearned shares issued to ESOP            (9,926)  (10,605)  (11,329)
  Accumulated other comprehensive income
   (loss)                                    2,373    (1,400)   (2,108)
                                          --------  --------  --------
   Total stockholders' equity              198,648   205,187   203,532
                                          --------  --------  --------
   TOTAL LIABILITIES AND STOCKHOLDERS'
    EQUITY                                $672,743  $725,070  $741,948
                                          ========  ========  ========


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

                        Three Months Ended       Nine Months Ended
                             June 30,                June 30
                      ----------------------  ----------------------
                         2009        2008        2009        2008
                      ----------  ----------  ----------  ----------

 Interest and dividend
  income:
  Loan interest           $6,418      $7,544     $20,337     $23,390
  Mortgage-backed
   security interest       1,983       2,372       6,311       6,463
  Other interest and
   dividends                   9         177          20       1,001
                      ----------  ----------  ----------  ----------
   Total interest and
    dividend income        8,410      10,093      26,668      30,854
                      ----------  ----------  ----------  ----------
 Interest expense:
  Deposits                 1,629       2,429       5,389       8,515
  FHLB advances and
   other borrowings        1,068       1,752       3,861       5,594
                      ----------  ----------  ----------  ----------
   Total interest
    expense                2,697       4,181       9,250      14,109
                      ----------  ----------  ----------  ----------
   Net interest income     5,713       5,912      17,418      16,745
 Provision for loan
  losses                   3,450         652       8,085       1,317
                      ----------  ----------  ----------  ----------
   Net interest income
    after provision
    for loan losses        2,263       5,260       9,333      15,428
                      ----------  ----------  ----------  ----------
 Noninterest income:
  Service charges and
   fees                    2,008       2,396       6,009       6,731
  Gain on sale of
   loans                     416         213       1,013         560
  Increase in cash
   surrender value of
   bank owned life
   insurance                 107         106         317         314
  Loan servicing fees         --         116          54         369
  Mortgage servicing
   rights, net                --         (63)        (31)       (206)
  Other                       80         (33)         55          75
                      ----------  ----------  ----------  ----------
   Total noninterest
    income                 2,611       2,735       7,417       7,843
                      ----------  ----------  ----------  ----------
 Noninterest expense:
  Compensation and
   benefits                3,594       3,840      10,948      11,592
  Occupancy and
   equipment                 804         771       2,303       2,242
  Data processing            654         615       1,773       1,668
  Advertising                211         241         656         786
  Postage and supplies       126         147         409         468
  Professional
   services                  236         130         870         533
  Insurance and taxes        783         158       1,244         383
  Other                      606         272       1,416         809
                      ----------  ----------  ----------  ----------
   Total noninterest
    expense                7,014       6,174      19,619      18,481
                      ----------  ----------  ----------  ----------
 Income (loss) before
  income taxes            (2,140)      1,821      (2,869)      4,790
 Income tax expense
  (benefit)                 (894)        702      (1,298)      1,779
                      ----------  ----------  ----------  ----------
   NET INCOME (LOSS)     $(1,246)     $1,119     $(1,571)     $3,011
                      ==========  ==========  ==========  ==========

 Earnings (loss) per
  common share(1):
   Basic                  $(0.08)      $0.07      $(0.10)      $0.19(1)
   Diluted                 (0.08)       0.07      $(0.10)       0.19(1)

 Weighted average
  number of shares
  outstanding(1):
   Basic              15,352,714  16,007,599  15,742,102  16,237,911(1)
   Diluted            15,352,714  16,043,435  15,742,102  16,255,548(1)

 Dividends declared
  per share(1):           $0.055      $0.055      $0.165      $0.158(1)

 (1) Earnings per share, dividends per share and average common shares
     outstanding have been adjusted to reflect the impact of the
     second-step conversion and reorganization of the Company, which
     occurred on December 19, 2007.


 HOME FEDERAL BANCORP, INC. AND SUBSIDIARY
 ADDITIONAL FINANCIAL INFORMATION
 (Dollars in thousands, except share and per share data) (Unaudited)

                             At or For the Quarter Ended
              --------------------------------------------------------
                       2009                         2008
               June 30     March 31    Dec. 31    Sept. 30    June 30
               -------     --------    -------    --------    -------
 SELECTED
  PERFORMANCE
  RATIOS
  Return
   (loss) on
   average
   assets(1)       (0.72)%      0.27%     (0.44)%      0.54%      0.59%
  Return
   (loss) on
   average
   equity(1)       (2.48)       0.93      (1.55)       1.94       2.18
  Pre-tax,
   pre-
   provision
   return on
   average
   assets(4)        0.76        0.99       1.20        1.42       1.31
  Net interest
   margin(1)        3.53        3.60       3.37        3.41       3.29
  Efficiency
   ratio(2)        84.26       79.12      73.53       69.68      71.40

 PER SHARE
  DATA
  Basic
   earnings
   (loss) per
   share      $    (0.08) $     0.03 $    (0.05) $     0.06 $     0.07
  Diluted
   earnings
   (loss) per
   share           (0.08)       0.03      (0.05)       0.06       0.07
  Book value
   per
   outstanding
   share           11.90       12.15      11.93       11.81      11.73
  Cash
   dividends
   declared
   per share       0.055       0.055      0.055       0.055      0.055
  Average
   number of
   shares
   outstanding:
   Basic(3)   15,352,714  15,740,064 16,129,352  16,042,720 16,007,599

   Diluted(3) 15,352,714  15,776,330 16,129,352  16,078,302 16,043,435

 ASSET QUALITY
  Allowance
   for loan
   losses     $    8,266  $    7,333 $    8,027  $    4,579 $    3,801
  Non-
   performing
   loans          16,462      14,590     17,034       9,945      3,462
  Non-
   performing
   assets         25,076      19,068     18,386      10,595      4,169

  Allowance
   for loan
   losses
   to non-
   performing
   loans           50.21%      50.26%     47.12%      46.04%    109.79%
  Allowance
   for loan
   losses to
   gross loans      1.93        1.64       1.69        0.98       0.81
  Non-
   performing
   loans to
   gross loans      3.85        3.26       3.58        2.14       0.73
  Non-
   performing
   assets to
   total
   assets           3.73        2.75       2.56        1.46       0.56

 FINANCIAL
  CONDITION
  DATA
  Average
   interest-
   earning
   assets     $  647,499  $  661,428 $  681,374  $  692,776 $  718,207
  Average
   interest-
   bearing
   liabilities   441,036     449,175    470,319     482,232    504,680
  Net average
   earning
   assets        206,463     212,253    211,055     210,544    213,527
  Average
   interest-
   earning
   assets to
   average
   interest-
   bearing
   liabilities    146.81%     147.25%    144.87%     143.66%    142.31%
  Stock-
   holders'
   equity to
   assets          29.53       28.97      28.89       28.30      27.43

 STATEMENT OF
  INCOME DATA
  Interest
   income     $    8,410  $    8,930 $    9,328  $    9,729 $   10,093
  Interest
   expense         2,697       2,970      3,583       3,826      4,181
              ----------  ---------- ----------  ---------- ----------
   Net
    interest
    income         5,713       5,960      5,745       5,903      5,912
  Provision
   for loan
   losses          3,450       1,060      3,575       1,114        652
  Noninterest
   income          2,611       2,345      2,461       2,647      2,735
  Noninterest
   expense         7,014       6,571      6,034       5,958      6,174
              ----------  ---------- ----------  ---------- ----------
   Net income
    (loss)
    before
    taxes         (2,140)        674     (1,403)      1,478      1,821
  Income tax
   expense
   (benefit)        (894)        198       (602)        484        702
              ----------  ---------- ----------  ---------- ----------
    Net income
     (loss)   $   (1,246) $      476 $     (801) $      994 $    1,119
              ==========  ========== ==========  ========== ==========

  Total
   revenue(5) $    8,324  $    8,305 $    8,206  $    8,550 $    8,647

 (1) Amounts are annualized.
 (2) Noninterest expense divided by net interest income plus
     noninterest income.
 (3) Amounts calculated exclude ESOP shares not committed to be
     released and unvested restricted shares.
 (4) Income before income taxes plus provision for loan losses divided
     by average assets for the period presented.
 (5) Net interest income plus noninterest income.

Home Federal Bancorp, Inc.
Len E. Williams, President & CEO
Eric S. Nadeau, EVP, Treasurer & CFO
208-466-4634
www.myhomefed.com