Home Federal Bancorp, Inc. Announces Fourth Quarter and Year End Results

• Press Release
• Source: Home Federal Bancorp, Inc.
• On 4:00 pm EDT, Friday October 30, 2009

NAMPA, Idaho, Oct. 30, 2009 (GLOBE NEWSWIRE) -- Home Federal Bancorp, Inc. (the "Company") (Nasdaq:HOME - News), the parent company of Home Federal Bank (the "Bank"), today announced earnings for the fourth quarter and fiscal year ended September 30, 2009. For the quarter ended September 30, 2009, the Company reported net income of $9.7 million, or $0.63 per diluted share, compared to net income of $994,000, or $0.06 per diluted share, for the same period a year ago. Net income for the fiscal year ended September 30, 2009, was $8.1 million, or $0.52 per diluted share, compared to net income of $4.0 million, or $0.25 per diluted share, for the fiscal year ended September 30, 2008. Net income for the fourth quarter and fiscal year ended September 30, 2009 included a $15.3 million after-tax extraordinary gain related to our Federal Deposit Insurance Corporation ("FDIC") assisted acquisition of the former Community First Bank headquartered in Prineville, Oregon (the "Acquisition").

Related Quotes

Symbol	Price	Change
HOME	12.43	+0.33

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

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

 * On August 7, 2009, the Bank purchased and assumed certain assets
   and liabilities of Community First Bank, which resulted in a
   $15.3 million after-tax extraordinary gain to the Company. Under
   the purchase and assumption agreement with the FDIC, the Bank
   received deposits, cash, marketable securities, loans and real
   estate and other repossessed assets ("REO") as well as deposits
   and borrowings of Community First Bank.  The loans and REO are
   covered by a loss share agreement between the FDIC and the Bank
   under which the FDIC will reimburse the Bank for 80% of losses
   and certain expenses up to $34.0 million, and 95% of losses and
   certain expenses that exceed that amount.  The Company filed a
   Form 8-K/A with the Securities and Exchange Commission on
   October 23, 2009, that provides significant detail on the
   transaction and the related impact on the Company's balance
   sheet.

 * A provision of $8.0 million was recorded during the quarter to
   reflect increases in charge-offs and concerns regarding the
   performance of home equity lines of credit and commercial real
   estate loans in the Bank's pre-acquisition loan portfolio. No
   provision expense was recorded related to loans acquired from
   the FDIC as certain troubled loans were booked at fair value,
   net of credit loss estimates, and a general valuation allowance
   was recorded for other acquired loans. These reductions in value
   resulted in a lower extraordinary gain.

 * The early retirement of FHLB borrowings acquired from the FDIC
   resulted in a pretax loss of $498,000, after fair value
   adjustments.

 * Losses on the sale of securities totaled $254,000.

 * Provision for the decline in the value of real estate owned
   totaled $601,000. Foreclosed real estate acquired from the FDIC
   was recorded at fair value, less estimated selling costs, and
   declines in value from the acquisition value reduced the
   extraordinary gain.

 * The Bank announced the closure of two WalMart branches, which
   resulted in the accrual of $305,000 of exit costs. The Bank will
   launch two new, full-service branch offices in October and
   November 2009.

Len E. Williams, the Company's President and CEO, commented, "While there are a number of items that affected the fourth quarter's earnings as a result of the FDIC-assisted acquisition of Community First Bank in Central Oregon, we believe we are well positioned for future growth opportunities. Also, the increased capital resulting from the acquisition gain lessened the impact of the additional loan loss provision recorded this quarter, which we believe was warranted given the economic volatility and uncertainty in both Central Oregon and Southwest Idaho."

Operating Results

Total revenue for the quarter ended September 30, 2009, which consisted of net interest income before the provision for loan losses plus noninterest income, decreased $267,000, or 3%, to $8.3 million compared to $8.6 million for the same period of 2008 and was unchanged at $8.3 million compared to the linked third quarter of fiscal 2009. Total revenue for the fiscal year ended September 30, 2009 decreased $169,000, or 1% to $33.1 million, compared to $33.3 million in fiscal year 2008, as a result of the decline in noninterest income.

Net interest income before the provision for loan losses increased $529,000, or 9%, to $6.4 million for the quarter ended September 30, 2009, compared to $5.9 million for the same quarter of the prior year. Net interest income before provision for loan losses for the twelve months ended September 30, 2009 increased $1.2 million, or 5% to $23.9 million from $22.6 million for the same period of the prior year. The Company's net interest margin increased by 12 basis points to 3.53% for the quarter ended September 30, 2009, from 3.41% for the same quarter last year, and was virtually unchanged at 3.53% from 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 as most of the advances that matured during fiscal year 2009 were repaid with excess liquidity.

A provision for loan losses of $8.0 million was recorded in connection with management's analysis of the loan portfolio for the quarter ended September 30, 2009. The provision for loan losses was $1.1 million for the same period of the prior year. The provision for loan losses was $16.1 million for the twelve months ended September 30, 2009, compared to $2.4 million for the twelve months ended September 30, 2008, reflecting the increase in delinquent loans and charge-offs in fiscal 2009 compared to 2008.

Noninterest income decreased $796,000, or 30%, to $1.9 million for the quarter ended September 30, 2009, compared to $2.7 million for the same quarter a year ago. The most significant contributing factor in the decrease in noninterest income was a $498,000 prepayment penalty incurred on the repayment of $18.0 million in FHLB borrowings assumed in the Community First Bank acquisition. In addition, a $254,000 loss on the sale of securities was incurred during the quarter, which included a $184,000 loss on the sale of a private label collateralized mortgage obligation which was sold in order to reduce credit risk exposure. A portion of the securities sold included securities obtained via the Acquisition that were not consistent with the Bank's investment policy. Noninterest income decreased $737,000, or 28%, from the linked quarter primarily due to the Acquisition related items noted above.

Noninterest income for the fiscal year ended September 30, 2009 decreased $1.4 million, or 13%, to $9.3 million, from $10.7 million for the same period a year ago. In addition to the items mentioned above, fees and service charges were $775,000 lower in the fiscal year just ended than in the prior year as NSF fee income continued to decline by $913,000, or 15% in fiscal year 2009 compared to 2008. Lastly, gain on sale of loans for the twelve months ended September 30, 2009 exceeded the year ago numbers due to the significant increase in mortgage loan refinancings in 2009.

Noninterest expense for the quarter ended September 30, 2009, increased $3.4 million, or 56% to $9.4 million from $6.0 million for the comparable period a year earlier. Compensation and benefits increased $1.4 million from the year ago period primarily due to personnel assumed in the Acquisition and related incentive compensation. The Company will continue to operate separate back offices between the Idaho and Oregon regions until a full conversion and integration to a new core application platform is completed in the third calendar quarter of 2010. Additional efforts have been put in place to improve personnel efficiency and branch productivity including the closure of two WalMart branches and the consolidation of some branch manager positions.

Professional services expense increased mainly due to legal expenses associated with the Acquisition as well as legal expenses incurred in addressing troubled assets. Provision for REO increased $578,000 during the fourth quarter of fiscal 2009 from the same period of the prior year due to quarterly valuation assessments performed on the significantly increased REO balances that existed as of September 30, 2009. Other expenses increased $618,000 from the prior year primarily due to the expenses incurred to close two branches and a $217,000 reserve for losses on unfunded commitments which are not included in the allowance for loan losses.

Noninterest expense for the twelve months ended September 30, 2009, increased $4.4 million, or 18% to $29.0 million from $24.6 million for the comparable period a year earlier. This increase was primarily attributable to costs associated with the Community First Bank acquisition (including the compensation, bonus and legal expenses noted earlier), approximately $300,000 of expenses incurred on overdue property taxes and insurance paid on foreclosed properties, a $651,000 increase in deposit insurance assessments from the FDIC, and charges related to the write-down in value of real estate owned totaling $1.1 million.

Balance Sheet

Total assets increased $102.8 million, or 14%, to $827.9 million at September 30, 2009, compared to $725.1 million a year earlier. The increase is the acquisition of $189.8 million of assets from Community First Bank, partially offset by the repayment of FHLB advances using excess liquidity.

Investments. Investments decreased $24.5 million, or 13%, to $169.3 million at September 30, 2009, compared to $193.8 million at September 30, 2008. The decrease is primarily attributable to the net of regular principal repayments and new investments purchased as well as investments acquired through the Acquisition. In addition, $10.4 million in securities were sold during the quarter ended September 30, 2009.

Loans. Net loans (excluding loans held for sale) at September 30, 2009, increased $50.8 million or 11% to $510.6 million, compared to $459.8 million at September 30, 2008. The fair value of loans acquired through the Acquisition was $112.4 million. This increase was offset by lower balances in all loan categories when compared to the year ago period for the organic loan portfolio. One- to four-family residential loans experienced the majority of this decrease with a $54.7 million decline in balances from the prior year, which is consistent with management's strategy to reduce exposure to residential real estate by selling nearly all residential real estate loans upon origination since 2006. As noted earlier, the Company filed a Form 8-K/A with the Securities and Exchange Commission on October 23, 2009, that provides greater detail on the accounting for the loans purchased from the FDIC.

Asset Quality. Loans delinquent 30 to 89 days totaled $7.9 million at September 30, 2009, compared to $3.8 million at June 30, 2009, and $6.5 million at September 30, 2008. Included in that $7.9 million are $6.1 million of delinquent loans purchased in the Acquisition. Net charge-offs totaled $4.3 million during the quarter ended September 30, 2009.

Nonperforming assets, which include impaired loans and real estate owned, totaled $56.9 million at September 30, 2009, compared to $25.1 million at June 30, 2009, and $10.6 million at September 30, 2008. The allowance for loan losses was $28.7 million, or 5.32%, of gross loans at September 30, 2009, compared to $8.3 million, or 1.93% of gross loans at June 30, 2009, and $4.6 million, or 0.98% of gross loans at September 30, 2008. Acquired loans that are subject to accounting under ASC 310-30 "Loans and Debt Securities Acquired with Deteriorated Credit Quality" are presented at estimated fair value, which includes embedded estimates for loan losses, and a separate allowance for losses on those loans is not presented on the balance sheet. Estimated credit losses included in the estimated fair value of ASC 310-30 loans totaled $14.3 million.

Real estate and other repossessed assets increased $9.8 million during the fourth quarter of fiscal 2009 to $18.4 million at September 30, 2009, with foreclosed assets from the Acquisition totaling $7.5 million. Real estate and other repossessed assets was comprised of $11.5 million of land development and speculative one- to four-family construction projects, $5.9 million of commercial real estate, $631,000 of one- to four-family residential properties, and $412,000 of other repossessed assets.

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

                                September 30, 2009
                      --------------------------------------  June 30,
                           Acquired                             2009
                      ------------------                      --------
                        ASC               Organic             Organic
 (in thousands)       310-30(1)   Other  Portfolio    Total  Portfolio
                      --------  --------  --------  --------  --------
 Land acquisition and
  development         $  6,985  $     --  $    623  $  7,608     3,734
 One- to four-family
  construction             481        --     2,283     2,764     3,478
 Commercial real
  estate                10,974        42     2,725    13,741     4,000
 One- to four-family
  residential            5,020               5,971    10,991     5,169
 Other                   2,763       443       182     3,388        81
                      --------  --------  --------  --------  --------
  Total nonperforming
   and impaired loans $ 26,223  $    485  $ 11,784  $ 38,492  $ 16,462
                      ========  ========  ========  ========  ========
 Real estate and other
  repossessed assets            $  7,516  $ 10,875  $ 18,391  $ 8,614
                                ========  ========  ========  ========
 Total nonperforming
  assets                                            $ 56,883
                                                    ========

 (1) Presented at estimated fair value, net of fair value adjustments
     of $14.3 million

Deposits and borrowings. Deposits increased $141.9 million, or 38%, to $514.9 million at September 30, 2009, compared to $372.9 million at September 30, 2008. The fair value of deposits acquired through the Acquisition was $143.5 million, including $68.0 million in non-term deposits and $75.5 million in certificates of deposit. Organic demand deposits and savings accounts increased from $195.5 million at September 30, 2008 to $217.9 million at September 30, 2009, which is consistent with management's strategy to increase core deposits. Organic certificate of deposit accounts decreased $16.7 million, to $160.7 million at September 30, 2009, compared to $177.4 million at September 30, 2008. Management continues to observe certificate of deposit rates offered by competitors that in many instances exceed the cost of the Bank's alternative funding sources, including FHLB advances.

FHLB advances and other borrowings decreased $52.2 million, or 38%, to $84.7 million at September 30, 2009, compared to $137.0 million at September 30, 2008. FHLB borrowings with a fair value of $19.0 million assumed in the Acquisition were paid off prior to September 30, 2009. As previously noted, the decrease resulted from maturing FHLB advances being repaid with excess liquidity.

Equity. Stockholders' equity increased $4.5 million, or 2%, to $209.7 million at September 30, 2009, compared to $205.2 million at September 30, 2008. The extraordinary gain of $15.3 million associated with the Acquisition was the primary cause for the increase in stockholders' equity. The gain was offset by the repurchase of shares of common stock during the year totaling $7.9 million. In addition, dividends of $3.5 million and a loss from operations of $7.2 million in fiscal 2009 reduced retained earnings while a lower interest rate environment at September 30, 2009, increased the unrealized gain on securities by $5.3 million, net of tax, compared to September 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 and the Tri-County Region of Central Oregon through 23 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." The Company's stock is also 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, our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel we have acquired or may in the future acquire into our operations and our ability to realize related revenue synergies and cost savings within expected time frames, 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                        Sept. 30, Sept. 30,
 (In thousands, except share data) (Unaudited)        2009      2008
                                                    --------  --------

 ASSETS

  Cash and amounts due from depository institutions $ 49,953  $ 23,270
  Certificates of deposit in correspondent bank           --     5,000
  Investments available for sale, at fair value      169,320   188,787
  FHLB stock, at cost                                 10,326     9,591
  Loans receivable, net of allowance for loan losses
   of $28,735 and $4,579                             510,629   459,813
  Loans held for sale                                    862     2,831
  Accrued interest receivable                          2,781     2,681
  Property and equipment, net                         20,462    15,246
  Mortgage servicing rights, net                          --     1,707
  Bank owned life insurance                           12,014    11,590
  Real estate and other property owned                18,391       650
  Deferred income tax asset, net                          --     1,770
  FDIC indemnification receivable, net                30,038        --
  Other assets                                         3,123     2,134
                                                    --------  --------
 TOTAL ASSETS                                       $827,899  $725,070
                                                    ========  ========

 LIABILITIES AND STOCKHOLDERS' EQUITY

 LIABILITIES
  Deposit accounts:
   Noninterest-bearing demand deposits              $ 68,156  $ 41,398
   Interest-bearing demand deposits                  176,049   127,714
   Savings deposits                                   41,756    26,409
   Certificates of deposit                           228,897   177,404
                                                    --------  --------
     Total deposit accounts                          514,858   372,925
  Advances by borrowers for taxes and insurance        1,132     1,386
  Interest payable                                       553       552
  Deferred compensation                                5,260     5,191
  FHLB advances and other borrowings                  84,737   136,972
  Deferred income tax liability, net                   5,571        --
  Other liabilities                                    6,123     2,857
                                                    --------  --------
   Total liabilities                                 618,234   519,883
 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:
   Sept. 30, 2009 - 17,445,311 issued; 16,698,168
    outstanding                                          167       174
   Sept. 30, 2008 - 17,412,449 issued; 17,374,161
    outstanding
  Additional paid-in capital                         150,782   157,205
  Retained earnings                                   64,483    59,813
  Unearned shares issued to ESOP                      (9,699)  (10,605)
  Accumulated other comprehensive income (loss)        3,932    (1,400)
                                                    --------  --------
   Total stockholders' equity                        209,665   205,187
                                                    --------  --------
   TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY       $827,899  $725,070
                                                    ========  ========

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

                        Three Months Ended     Twelve Months Ended
                           September 30,          September 30,
                      ----------------------  ----------------------
                         2009        2008        2009        2008
                      ----------  ----------  ----------  ----------
 Interest and
  dividend income:
  Loan interest          $ 7,211     $ 7,296     $27,548     $30,686
  Mortgage-backed
   security interest       1,910       2,279       8,221       8,742
  Other interest and
   dividends                  38         154          58       1,155
                      ----------  ----------  ----------  ----------
   Total interest
    and dividend
    income                 9,159       9,729      35,827      40,583
                      ----------  ----------  ----------  ----------
 Interest expense:
  Deposits                 1,687       2,170       7,076      10,685
  FHLB advances and
   other borrowings        1,040       1,656       4,901       7,250
                      ----------  ----------  ----------  ----------
   Total interest
    expense                2,727       3,826      11,977      17,935
                      ----------  ----------  ----------  ----------
   Net interest income     6,432       5,903      23,850      22,648
   Provision for
    loan losses            8,000       1,114      16,085       2,431
                      ----------  ----------  ----------  ----------
   Net interest income
    (loss) after
    provision for loan
    losses                (1,568)      4,789       7,765      20,217
                      ----------  ----------  ----------  ----------
 Noninterest income:
  Service charges
   and fees                2,293       2,346       8,302       9,077
  Gain on sale
   of loans                  205         204       1,218         764
  Increase in cash
   surrender value of
   life insurance            107         107         424         421
  Prepayment penalty
   on FHLB borrowings,
   net                      (498)         --        (498)         --
  Loss on sale of
   securities, net          (254)         --        (254)         --
  Other                       21          13          99         400
                      ----------  ----------  ----------  ----------
   Total noninterest
    income                 1,874       2,670       9,291      10,662
                      ----------  ----------  ----------  ----------
 Noninterest expense:
  Compensation and
   benefits                4,970       3,619      15,918      15,211
  Occupancy and
   equipment                 911         765       3,214       3,007
  Data processing            710         530       2,483       2,198
  Advertising                257         257         913       1,043
  Postage and supplies       165         149         574         617
  Professional
   services                  590         255       1,460         788
  Insurance and taxes        297         150       1,541         533
  Provision for REO          601          23       1,129         172
  Other                      851         233       1,739       1,042
                      ----------  ----------  ----------  ----------
   Total noninterest
    expense                9,352       5,981      28,971      24,611
                      ----------  ----------  ----------  ----------
 Income (loss) before
  income taxes            (9,046)      1,478     (11,915)      6,268
 Income tax expense
  (benefit)               (3,452)        484      (4,750)      2,263
 Income (loss) before
  extraordinary item      (5,594)        994      (7,165)      4,005
 Extraordinary item:
 Gain on acquisition,
  less income tax of
  $9,756                  15,291          --      15,291          --
                      ----------  ----------  ----------  ----------
 Net income              $ 9,697       $ 994     $ 8,126     $ 4,005
                      ==========  ==========  ==========  ==========

 Earnings (loss) per
  common share before
  extraordinary
  item:(1)
   Basic                  $(0.36)      $0.06      $(0.46)      $0.25(1)
   Diluted                 (0.36)       0.06       (0.46)       0.25(1)
 Earnings per common
  share of
  extraordinary item:
   Basic                   $0.98         n/a       $0.99         n/a
   Diluted                  0.98         n/a        0.99         n/a
 Earnings per common
  share after
  extraordinary item:
  (1)
   Basic                   $0.63       $0.06       $0.52       $0.25(1)
   Diluted                  0.63        0.06        0.52        0.25(1)
 Weighted average
  number of shares
  outstanding:(1)
   Basic              15,381,657  16,042,720  15,651,250  16,233,200(1)
   Diluted            15,381,657  16,078,302  15,683,699  16,233,200(1)

 Dividends declared
  per share:(1)           $0.055      $0.055      $0.220      $0.213(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
                -------------------------------- ---------------------
                 Sept. 30   June 30    March 31    Dec. 31   Sept. 30
                ---------- ---------- ---------- ---------- ----------
 SELECTED
  PERFORMANCE
  RATIOS
  Return (loss)
   on average
   assets (1)         4.94%     (0.72)%     0.27%     (0.44)%     0.54%
  Return (loss)
   on average
   equity (1)        19.41      (2.48)      0.93      (1.55)      1.94
  Net interest
   margin (1)         3.53       3.53       3.60       3.37       3.41
  Efficiency
   ratio (2)        112.59      84.26      79.12      73.53      69.68

 PER SHARE DATA
  Basic earnings
   (loss) per
   share before
   extr. item   $    (0.36)$    (0.08)$     0.03 $    (0.05)$     0.06
  Diluted
   earnings
   (loss) per
   share before
   extr. item        (0.36)     (0.08)      0.03      (0.05)      0.06
  Basic earnings
   (loss) per
   share of
   extr. item         0.98         --         --         --         --
  Diluted
   earnings
   (loss) per
   share of
   extr. item         0.98         --         --         --         --
  Basic earnings
   (loss) per
   share after
   extr. item         0.63         --         --         --         --
  Diluted
   earnings
   (loss) per
   share after
   extr. item         0.63         --         --         --         --
  Book value per
   outstanding
   share             12.56      11.90      12.15      11.93      11.81

  Cash dividends
   declared per
   share             0.055      0.055      0.055      0.055      0.055
  Average number
   of shares
   outstanding:
    Basic (3)   15,381,657 15,352,714 15,740,064 16,129,352 16,042,720
    Diluted (3) 15,381,657 15,352,714 15,776,330 16,129,352 16,078,302

 ASSET QUALITY

  Allowance for
   loan losses  $   28,735 $    8,266 $    7,333 $    8,027 $    4,579
  Nonperforming
   loans            38,492     16,462     14,590     17,034      9,945
  Nonperforming
   assets           56,883     25,076     19,068     18,386     10,595
  Allowance for
   loan losses
   to non-
   performing
   loans             74.65%     50.21%     50.26%     47.12%     46.04%
  Allowance for
   loan losses
   to gross
   loans              5.32       1.93       1.64       1.69       0.98
  Nonperforming
   loans to
   gross loans        7.13       3.85       3.26       3.58       2.14
  Nonperforming
   assets to
   total assets       6.87       3.73       2.75       2.56       1.46

 FINANCIAL
  CONDITION DATA
  Average
   interest
   -earning
   assets       $  728,515 $  647,499 $  661,428 $  681,374 $  692,776
  Average
   interest
   -bearing
   liabilities     503,636    441,036    449,175    470,319    482,232
  Net average
   earning
   assets          224,879    206,463    212,253    211,055    210,544
  Average
   interest
   -earning
   assets to
   average
   interest
   -bearing
   liabilities      144.65%    146.81%    147.25%    144.87%    143.66%
  Stockholders'
   equity to
   assets            25.32      29.53      28.97      28.89      28.30

 STATEMENT OF
  INCOME DATA
  Interest
   income       $    9,159 $    8,410 $    8,930 $    9,328 $    9,729
  Interest
   expense           2,727      2,697      2,970      3,583      3,826
                ---------- ---------- ---------- ---------- ----------
   Net interest
    income           6,432      5,713      5,960      5,745      5,903
  Provision for
   loan losses       8,000      3,450      1,060      3,575      1,114
  Noninterest
   income            1,874      2,611      2,345      2,461      2,647
  Noninterest
   expense           9,352      7,014      6,571      6,034      5,958
                ---------- ---------- ---------- ---------- ----------
  Net income
   (loss) before
   taxes            (9,046)    (2,140)       674     (1,403)     1,478
  Income tax
   expense
   (benefit)        (3,452)      (894)       198       (602)       484
                -------------------------------- ---------- ----------
   Net income
    (loss) before
    extraordinary
    item        $   (5,594)$   (1,246)$      476 $     (801)$      994

  Extraordinary
   gain, net of
   tax              15,291         --         --         --         --
                ---------- ---------- ---------- ---------- ----------
   Net income
    (loss)      $    9,697 $   (1,246)$      476 $     (801)$      994
                ========== ========== ========== ========== ==========

  Total revenue
   (4)          $    8,306 $    8,324 $    8,305 $    8,206 $    8,550

 (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)  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