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Home Federal Bancorp, Inc. of Louisiana Reports Results of Operations for the Three and Nine Months Ended March 31, 2019

SHREVEPORT, La., April 25, 2019 (GLOBE NEWSWIRE) -- Home Federal Bancorp, Inc. of Louisiana (the “Company”) (HFBL), the holding company of Home Federal Bank, reported net income for the three months ended March 31, 2019 of $1.2 million compared to net income of $1.0 million reported for the three months ended March 31, 2018. The Company’s basic and diluted earnings per share were $0.68 and $0.63, respectively, for the three months ended March 31, 2019 compared to basic and diluted earnings per share of $0.57 and $0.54, respectively, for the three months ended March 31, 2018. The Company reported net income of $3.6 million for the nine months ended March 31, 2019, compared to $2.4 million for the nine months ended March 31, 2018. The Company’s basic and diluted earnings per share were $2.02 and $1.88, respectively, for the nine months ended March 31, 2019 compared to $1.33 and $1.26, respectively, for the nine months ended March 31, 2018. The increase in net income for the nine month period ended March 31, 2019 as compared to the same period in the prior year reflected primarily the effect of the one-time non-cash charge in the quarter ended December 31, 2017 related to the re-measurement of the Company's deferred tax assets arising from the lower U.S. corporate tax rate provided for by the Tax Cuts and Jobs Act (the “Tax Act”) enacted in December 2017, combined with a reduction in the Company’s effective tax rate for the nine months ended March 31, 2019. The non-recurring deferred tax adjustment was $642,000 for the nine months ended March 31, 2018, representing $0.34 diluted earnings per share.

The increase in net income for the three months ended March 31, 2019 resulted primarily from a decrease of $250,000, or 71.4%, in provision for loan losses and a $188,000, or 5.2%, increase in net interest income, partially offset by an increase of $149,000, or 94.3%, in provision for income taxes, a decrease of $73,000, or 13.1%, in non-interest income, and an increase of $48,000, or 1.8%, in non-interest expense.  The increase in net interest income for the three months ended March 31, 2019 was primarily due to a $494,000, or 11.0%, increase in total interest income, primarily due to an increase in the average yield on loans receivable, partially offset by an increase of $306,000, or 35.5%, in interest expense.  The Company’s average interest rate spread was 3.56% for the three months ended March 31, 2019 compared to 3.58% for the three months ended March 31, 2018. The Company’s net interest margin was 3.86% for the three months ended March 31, 2019 compared to 3.76% for the three months ended March 31, 2018. The increase in net interest margin on a comparative quarterly basis was primarily the result of an increase of 47 basis points in average yield on average balances of loans receivable for the three months ended March 31, 2019 compared to the prior year quarterly period.

The increase in net income for the nine months ended March 31, 2019 resulted primarily from a decrease of $856,000, or 46.5%, in the provision for income taxes, a $524,000, or 4.7%, increase in net interest income, a decrease of $400,000, or 47.1%, in provision for loan losses, and a decrease of $40,000, or 0.5%, in non-interest expense partially offset by a decrease of $629,000, or 28.3%, in non-interest income.  The decrease in the provision for income taxes for the nine months ended March 31, 2019 over the same prior year period was primarily due to the reduction in the Company’s effective tax rate for the nine months ended March 31, 2019, combined with the $642,000 re-measurement charge of the Company’s net deferred tax asset as a result of the Tax Act during the nine months ended March 31, 2018. The increase in net interest income for the nine month period was primarily due to a $1.2 million, or 8.7%, increase in total interest income, partially offset by a $672,000, or 26.2%, increase in interest expense on borrowings and deposits. The Company’s average interest rate spread was 3.59% for the nine months ended March 31, 2019 compared to 3.55% for the nine months ended March 31, 2018. The Company’s net interest margin was 3.86% for the nine months ended March 31, 2019 compared to 3.78% for the nine months ended March 31, 2018.  The increase in the average interest rate spread is attributable primarily to an increase of 31 basis points in average yield on average balances of loans receivable.

The following tables set forth the Company’s average balances and average yields earned and rates paid on its interest-earning assets and interest-bearing liabilities for the periods indicated.

  For the Three Months Ended March 31,
 
   2019
    2018
 
  Average
Balance
  Average
Yield/Rate
    Average
Balance
  Average
Yield/Rate
 
   
  (Dollars in thousands)
Interest-earning assets:        
  Loans receivable $ 324,521   5.66 % $ 319,163   5.19 %
  Investment securities   68,025   2.46     60,542   2.03  
  Interest-earning deposits    10,752   2.26      4,605   1.64  
  Total interest-earning assets $ 403,298   5.03 % $ 384,310   4.65 %
           
Interest-bearing liabilities:        
  Savings accounts $  34,348   0.53 % $  36,480   0.52 %
  NOW accounts   28,463   0.57     30,824   0.49  
  Money market accounts   72,227   1.19     54,205   0.59  
  Certificates of deposit    184,651   1.87      166,522   1.43  
  Total interest-bearing deposits    319,689   1.46     288,031   1.06  
  Other bank borrowings   250     3.25     226     3.51  
  FHLB advances    1,351   5.10      30,828   1.18  
  Total interest-bearing liabilities $ 321,290   1.47 % $ 319,085   1.07 %


    For the Nine Months Ended March 31,
 
      2019    2018
 
      Average
Balance
  Average 
Yield/Rate
    Average
Balance
  Average 
Yield/Rate
 
     
    (Dollars in thousands)
  Interest-earning assets:        
    Loans receivable $ 326,058   5.55 % $ 323,650   5.24 %
    Investment securities   61,416   2.29     59,941   1.91  
    Interest-earning deposits     14,063   2.22       8,157   1.37  
    Total interest-earning assets $ 401,537   4.94 % $ 391,748   4.65 %
           
  Interest-bearing liabilities:        
    Savings accounts $   35,384   0.53 % $   36,518   0.53 %
    NOW accounts   30,587   0.54     32,359   0.51  
    Money market accounts   70,929   1.00     45,780   0.47  
    Certificates of deposit   176,325   1.75     166,364   1.43  
    Total interest-bearing deposits   313,225   1.32     281,021   1.05  
  Other bank borrowings   218   3.67     116   4.59  
    FHLB advances     5,765   2.93       30,829   1.52  
    Total interest-bearing liabilities $ 319,208   1.35 % $ 311,966   1.10 %

The $73,000 decrease in non-interest income for the three months ended March 31, 2019, compared to the prior year quarterly period, was primarily due to an increase of $117,000 in loss on sale of real estate, partially offset by an increase of $23,000 in service charges on deposit accounts, an increase of $20,000 in gain on sale of loans, and a $1,000 increase in other income. The $629,000 decrease in non-interest income for the nine months ended March 31, 2019 compared to the prior year nine month period was primarily due to a $345,000 loss on sale of real estate, a decrease of $249,000 in gain on sale of loans, a decrease of $94,000 in gain on sale of securities, partially offset by a $52,000 increase in service charges on deposit accounts, and an $8,000 increase in other non-interest income. The Company sells most of its long term fixed rate residential mortgage loan originations primarily in order to manage interest rate risk. The decrease in gain on sale of loans for the nine months ended March 31, 2019 over the same prior year period reflects a reduced emphasis on the Company’s mortgage banking operations in recent periods and fewer loans originated for sale.

The $48,000 increase in non-interest expense for the three months ended March 31, 2019, compared to the same period in 2018, is primarily attributable to increases of $67,000 in compensation and benefit expense, $42,000 in advertising expense, $30,000 in loan and collection expense, $29,000 in legal fees, and a $1,000 increase in franchise and bank shares tax. The increases were partially offset by decreases of $57,000 in data processing expense, $22,000 in occupancy and equipment expense, $20,000 in deposit insurance premiums, $17,000 in other expense, and $5,000 in audit and examination fees.   The $40,000 decrease in non-interest expense for the nine months ended March 31, 2019, compared to the same nine month period in 2018, is primarily attributable to decreases of $92,000 in data processing expense, $65,000 in compensation and benefit expense, $46,000 in occupancy and equipment expense, $36,000 in deposit insurance premiums, $26,000 in other expense, $5,000 in audit and examination fees, and a $1,000 increase in franchise and bank shares tax. The decreases were partially offset by increases of $115,000 in advertising expense, $75,000 in real estate owned valuation adjustment expense, $37,000 in legal fees, and $4,000 in loan and collection expenses.

At March 31, 2019, the Company reported total assets of $434.4 million, an increase of $12.7 million, or 3.0%, compared to total assets of $421.7 million at June 30, 2018. The increase in assets was comprised primarily of increases in investment securities of $10.9 million, or 18.7%, from $58.2 million at June 30, 2018 to $69.1 million at March 31, 2019, loans receivable of $6.3 million, or 2.0%, from $317.5 million at June 30, 2018 to $323.8 million at March 31, 2019, premises and equipment of $1.3 million, or 10.6%, from $12.2 million at June 30, 2018 to $13.5 million at March 31, 2019, accrued interest receivable of $143,000, or 12.5%, from $1.1 million at June 30, 2018 to $1.3 million at March 31, 2019.  These increases were partially offset by decreases in cash and cash equivalents of $4.5 million, or 28.1%, from $15.9 million at June 30, 2018 to $11.4 million at March 31, 2019, loans held-for-sale of $1.3 million, or 19.3%, from $6.8 million at June 30, 2018 to $5.5 million at March 31, 2019, other assets of $95,000, or 1.2%, from $7.6 million at June 30, 2018 to $7.5 million at March 31, 2019, and deferred tax asset of $58,000, or 5.3%, from $1.1 million at June 30, 2018 to $1.0 million at March 31, 2019.  The increase in investment securities was primarily due to the purchase of $18.5 million of mortgage-backed securities offset by $8.1 million of principal repayments on mortgage-backed securities.  The decrease in loans held-for-sale resulted primarily from a decrease in loans originated for sale during the nine months ended March 31, 2019.    

Total liabilities increased $10.8 million, or 2.9%, from $374.6 million at June 30, 2018 to $385.4 million at March 31, 2019 primarily due to an increase in total deposits of $21.8 million, or 6.1%, to $382.1 million at March 31, 2019 compared to $360.3 million at June 30, 2018, partially offset by a decrease of $10.2 million, or 87.7%, in advances from the Federal Home Loan Bank from $11.6 million at June 30, 2018 to $1.4 million at March 31, 2019, a decrease in other liabilities of $576,000, or 23.8%,  from $2.4 million at June 30, 2018 to $1.8 million at March 31, 2019, and a decrease in other borrowings of $300,000, or 100.0%, from $300,000 at June 30, 2018 to zero at March 31, 2019.  The increase in deposits was primarily due to a $24.8 million, or 15.4%, increase in certificates of deposit from $161.3 million at June 30, 2018 to $186.1 million at March 31, 2019, a $3.1 million, or 4.5%, increase in money market deposits from $70.2 million at June 30, 2018 to $73.3 million at March 31, 2019, and a $979,000, or 1.7%, increase in non-interest deposits from $58.0 million at June 30, 2018 to $59.0 million at March 31, 2019,  partially offset by a decrease of $4.9 million, or 14.2%, in NOW accounts from $34.6 million at June 30, 2018 to $29.7 million at March 31, 2019, and a decrease in savings deposits of $2.2 million, or 6.1%, from $36.2 million at June 30, 2018 to $34.0 million at March 31, 2019. The Company had $8.7 million in brokered deposits at June 30, 2018 and $11.2 million at March 31, 2019. The brokered certificates of deposit which have maturity dates greater than twelve months are callable by Home Federal Bank after twelve months pursuant to early redemption provisions.  The decrease in advances from the Federal Home Loan Bank was primarily due to growth in total deposits which replaced advances as a source of funds. 

At March 31, 2019, the Company had $5.3 million of non-performing assets (defined as non-accruing loans, accruing loans 90 days or more past due, and other real estate owned) compared to $3.0 million of non-performing assets at June 30, 2018, consisting of one commercial business loan, one commercial unsecured loan, two commercial land and lot development loans, six single-family residential loans, one line of credit loan, one residential lot in other real estate owned, and one single family residential loan in other real estate owned at March 31, 2019, compared to nine single-family residential loans, three line of credit loans, one commercial business loan, one residential lot in other real estate owned, and two single-family residential loans in other real estate owned at June 30, 2018. At March 31, 2019, the Company had six single family residential loans, one line of credit loan, one commercial business loan, two commercial land and lot development loans, and five loans to one borrower consisting of two commercial real estate loans, two non-real estate loans, and one single family residential loan classified as substandard, compared to eight single family residential loans, two line of credit loans, one commercial business loan, and five loans to one borrower consisting of two commercial real estate loans, two non-real estate loans, and one single family residential loan classified as substandard at June 30, 2018. There was a portion of a commercial raw land development loan that was classified as doubtful in the amount of $290,000 at March 31, 2019.

Shareholders’ equity increased $2.0 million, or 4.1%, to $49.0 million at March 31, 2019 from $47.0 million at June 30, 2018.  The primary reasons for the changes in shareholders’ equity from June 30, 2018 were net income of $3.6 million, the increase in the Company’s accumulated other comprehensive income of $405,000, the vesting of restricted stock awards, stock options, and the release of employee stock ownership plan shares totaling $538,000, and proceeds from the issuance of common stock from the exercise of stock options of $310,000. These increases in shareholders’ equity were partially offset by acquisition of Company stock of $2.1 million, and dividends paid totaling $792,000.

The Company repurchased 64,283 shares of its common stock under its stock repurchase program during the nine months ended March 31, 2019 at an average price per share of $31.93. On December 12, 2018, the Company announced that its Board of Directors approved an eighth stock repurchase program for the repurchase of up to 95,000 shares. As of March 31, 2019, there were an aggregate of 65,906 shares remaining for repurchase under the eighth stock repurchase programs.

Home Federal Bancorp, Inc. of Louisiana is the holding company for Home Federal Bank which conducts business from its seven full-service banking offices and home office in northwest Louisiana.

Statements contained in this news release which are not historical facts may be forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts.  They often include words like “believe”, “expect”, “anticipate”, “estimate”, and “intend”, or future or conditional verbs such as “will”, “would”, “should”, “could”, or “may”.  We undertake no obligation to update any forward-looking statements.



Home Federal Bancorp, Inc. of Louisiana
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands)
 
    March 31, 2019     June 30, 2018
  (Unaudited)
ASSETS  
     
Cash and cash equivalents $   11,413 $   15,867
Securities available-for-sale at fair value   43,113   29,324
Securities held-to-maturity (fair value March 31, 2019: $25,553;
  June 30, 2018: $27,818)
  25,967   28,888
Loans held-for-sale   5,457   6,762
Loans receivable, net of allowance for loan losses (March 31, 2019: $3,580;
  June 30, 2018: $3,425)
  323,783   317,493
Accrued Interest Receivable   1,289   1,146
Premises and equipment, net   13,538   12,243
Deferred tax asset   1,044   1,102
Real estate owned   1,200   1,177
Other assets     7,553    7,648
     
  Total assets $ 434,357 $ 421,650 
     
LIABILITIES AND SHAREHOLDERS’ EQUITY    
     
Deposits $ 382,108 $ 360,260
Advances from the Federal Home Loan Bank of Dallas   1,426   11,637
Other Borrowings   -   300
Other liabilities     1,840      2,416
     
  Total liabilities   385,374   374,613
     
Shareholders’ equity    48,983    47,037
     
  Total liabilities and shareholders’ equity $ 434,357 $    421,650



Home Federal Bancorp, Inc. of Louisiana
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)
     
    Three Months Ended
  Nine Months Ended
    March 31,
  March 31,
    2019     2018   2019     2018
Interest income        
  Loans, including fees $ 4,530    $ 4,179 $ 13,593    $ 12,743
  Investment securities   16     12   45     35
  Mortgage-backed securities   396     298   1,012     826
  Other interest-earning assets      60       19      234         84
  Total interest income   5,002      4,508   14,884     13,688
Interest expense        
  Deposits   1,149     768   3,108     2,213
  Federal Home Loan Bank borrowings   17      92   127     352
  Other bank borrowings      2       2     6        4
  Total interest expense    1,168       862    3,241       2,569
  Net interest income   3,834     3,646   11,643     11,119
         
Provision for loan losses      100       350     450      850
  Net interest income after provision for loan losses     3,734     3,296   11,193     10,269
         
Non-interest income        
  Gain on sale of loans   305     285   1,071     1,320
   (Loss)/Gain on sale of real estate and fixed assets   (117 )   --   (345 )   1
  Gain on sale of securities   --     --   --     94
  Income on Bank-Owned Life Insurance   35     35   105     105
  Service charges on deposit accounts   246     223   712     660
  Other income      14       13      49        41
         
  Total non-interest income      483       556   1,592       2,221
         
Non-interest expense        
  Compensation and benefits   1,632     1,565   4,795     4,860
  Occupancy and equipment   323     345   971     1,017
  Data processing   108     165   405     497
  Audit and examination fees   62     67   189     194
  Franchise and bank shares tax   97     96   295     296
  Advertising   89     47   232     117
  Legal fees   136     107   433     396
  Loan and collection   83     53   209     205
  Real estate owned valuation adjustment   --     --   75       --
  Deposit insurance premium   7     27   59     95
  Other expenses     184       201      556        582
         
  Total non-interest expense    2,721     2,673    8,219       8,259
         
  Income before income taxes   1,496     1,179   4,566     4,231
Provision for income tax expense     307      158    984       1,840
         
  NET INCOME $ 1,189   $ 1,021 $ 3,582   $ 2,391
         
  EARNINGS PER SHARE        
         
  Basic $     0.68   $     0.57 $     2.02   $     1.33
  Diluted $    0.63   $     0.54 $     1.88   $     1.26


    Three Months Ended
    Nine Months Ended
 
    March 31,
    March 31,
 
    2019     2018     2019     2018  
         
Selected Operating Ratios(1):        
  Average interest rate spread     3.56 %   3.58 %   3.59 %   3.55 %
  Net interest margin   3.86 %   3.76 %   3.86 %   3.78 %
  Return on average assets   1.12 %   0.99 %   1.11 %   0.76 %
  Return on average equity   10.07 %   8.80 %   9.98 %   6.88 %
         
Asset Quality Ratios(2):        
  Non-performing assets as a percent of total assets   1.22 %   0.90 %   1.22 %   0.90 %
  Allowance for loan losses as a percent of non-performing loans     87.1 %   100.99 %     87.1 %   100.99 %
  Allowance for loan losses as a percent of total loans receivable   1.09 %   1.16 %   1.09 %   1.16 %
         
Per Share Data:        
  Shares outstanding at period end     1,854,990       1,908,581       1,854,990       1,908,581  
  Weighted average shares outstanding:        
  Basic      1,761,002       1,792,621       1,774,213       1,803,608  
  Diluted     1,878,475       1,895,034       1,900,453       1,903,971  
  Tangible book value at period end $    26.41   $    24.32   $      26.41   $      24.32  
           
(1)  Ratios for the three and nine month periods are annualized.        
(2)  Asset quality ratios are end of period ratios.        


 
CONTACT: James R. Barlow
President and Chief Executive Officer
(318) 222-1145