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Home Federal Bancorp, Inc. of Louisiana Reports Results of Operations for the Three and Six Months Ended December 31, 2020

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Home Federal Bancorp, Inc. of Louisiana
·22 min read
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Shreveport, Louisiana, Jan. 28, 2021 (GLOBE NEWSWIRE) -- Home Federal Bancorp, Inc. of Louisiana (the “Company”) (Nasdaq: HFBL), the holding company of Home Federal Bank, reported net income for the three months ended December 31, 2020 of $1.4 million compared to net income of $588,000 reported for the three months ended December 31, 2019. The Company’s basic and diluted earnings per share were $0.87 and $0.83, respectively, for the three months ended December 31, 2020 compared to basic and diluted earnings per share of $0.35 and $0.32, respectively, for the three months ended December 31, 2019. The Company reported net income of $2.7 million for the six months ended December 31, 2020, compared to $1.8 million for the six months ended December 31, 2019. The Company’s basic and diluted earnings per share were $1.63 and $1.58, respectively, for the six months ended December 31, 2020 compared to $1.07 and $1.00, respectively, for the six months ended December 31, 2019.

The Company reported the following key achievements during the six months ended December 31, 2020:

  • Total deposits increased $17.1 million or 3.7% to $477.9 million at December 31, 2020, compared to $460.8 million at June 30, 2020.

  • Total mortgage loans originated for sale were $114.9 million for the six months.

  • Total loan deferrals decreased from $84.1 million at June 30, 2020 to $5.9 million at December 31, 2020.

  • Time deposits decreased $17.7 million, or 11.2%, to $139.9 million at December 31, 2020, compared to $157.6 million at June 30, 2020.

In light of the events surrounding the COVID-19 epidemic, the Company is continually assessing the effects of the pandemic on its employees, customers and communities. In March 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted. The CARES Act contains many provisions related to banking, lending, mortgage forbearance and taxation. The Company has worked diligently to help support its customers through the SBA Paycheck Protection Program (“SBA PPP”), loan modifications and loan deferrals. On December 27, 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the “Economic Aid Act”) became law. The Economic Aid Act extends the authority to make SBA PPP loans through March 31, 2021. As of December 31, 2020, Home Federal Bank has funded 378 SBA PPP loans totaling approximately $46.3 million to existing customers and key prospects located primarily in our trade area of NW Louisiana. Our commercial lenders and operational support staff have worked diligently to accomplish what seemed to be an insurmountable task in providing a lifeline to our small community businesses. We believe the customer interaction during this time provides a real opportunity to broaden and deepen our customer relationships while benefiting our community. We have had $20.2 million of SBA PPP loans that have been forgiven which represents 44.7% of the total amount of loans funded. The provision for loan losses for the six months ended December 31, 2020 was $1.3 million compared to $1.1 million for the six months ended December 31, 2019. The increase in the provision for loans losses was primarily a result of the deterioration of market conditions which have been adversely affected by the COVID-19 pandemic and the related uncertainty regarding the pandemic’s future.

Home Federal Bank is also working with customers affected by COVID-19 through payment accommodations on their loans. Borrowers who were current prior to becoming affected by COVID-19, that received payment accommodations as a result of the pandemic, generally are not reported as past due. Effects of COVID-19 may negatively impact management assumptions and estimates, such as the allowance for loan losses. The Bank is evaluating all payment accommodations to customers to identify and quantify any impact they might have on the Bank. However, it is difficult to assess or predict how and to what extent COVID-19 will affect the Company in the future.

The increase in net income for the three months ended December 31, 2020, as compared to the prior year quarter resulted primarily from a $700,000, or 18.5%, increase in net interest income, an increase of $591,000, or 64.4%, in non-interest income, a decrease of $350,000, or 36.8%, in provision for loan losses, partially offset by an increase of $583,000, or 19.4%, in non-interest expense, and a $243,000, or 165.3%, increase in provision for income taxes. The decrease in the provision for loan losses for the three months ended December 31, 2020, was primarily due to improvement in credit quality factors. The increase in net interest income for the three months ended December 31, 2020 was primarily due to a $482,000, or 34.8%, decrease in total interest expense, primarily due to a decrease of 67 basis points in the average rate on total interest-bearing deposits, and an increase of $218,000, or 4.2%, in total interest income. The Company’s average interest rate spread was 3.23% for the three months ended December 31, 2020 compared to 3.18% for the three months ended December 31, 2019. The Company’s net interest margin was 3.50% for the three months ended December 31, 2020 compared to 3.52% for the three months ended December 31, 2019.

The increase in net income for the six months ended December 31, 2020 resulted primarily from a $1.3 million, or 70.7%, increase in non-interest income, an increase of $875,000, or 11.5%, in net interest income, partially offset by an increase of $929,000, or 15.3%, in non-interest expense, an increase of $287,000, or 67.4%, in provision for income taxes and a $175,000, or 15.6%, increase in provision for loan losses The increase in the provision for loan losses for the six-month period was primarily due to partial charge offs on two loans. The increase in net interest income for the six-month period was primarily due to an $841,000, or 30.7%, decrease in total interest expense, and a $34,000, or 0.3%, increase in total interest income. The Company’s average interest rate spread was 3.06% for the six months ended December 31, 2020 compared to 3.21% for the six months ended December 31, 2019. The Company’s net interest margin was 3.34% for the six months ended December 31, 2020 compared to 3.56% for the six months ended December 31, 2019.

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 December 31,

2020

2019

Average

Average

Average

Average

Balance

Yield/Rate

Balance

Yield/Rate

(Dollars in thousands)

Interest-earning assets:

Loans receivable

$

378,516

5.32

%

$

331,368

5.55

%

Investment securities

60,890

1.84

72,291

2.43

Interest-earning deposits

68,242

0.14

21,481

1.63

Total interest-earning assets

$

507,648

4.20

%

$

425,140

4.82

%

Interest-bearing liabilities:

Savings accounts

$

101,802

0.60

%

$

57,878

1.33

%

NOW accounts

43,605

0.22

31,133

0.64

Money market accounts

73,315

0.35

75,371

1.21

Certificates of deposit

147,322

1.71

168,834

2.08

Total interest-bearing deposits

366,044

0.95

333,216

1.62

Other bank borrowings

1,898

3.55

1,063

4.85

FHLB advances

971

4.49

1,233

4.66

Total interest-bearing liabilities

$

368,913

0.97

%

$

335,512

1.64

%


For the Six Months Ended December 31,

2020

2019

Average

Average

Average

Average

Balance

Yield/Rate

Balance

Yield/Rate

(Dollars in thousands)

Interest-earning assets:

Loans receivable

$

379,377

5.08

%

$

333,955

5.52

%

Investment securities

59,021

2.02

68,905

2.44

Interest-earning deposits

64,447

0.13

20,570

1.91

Total interest-earning assets

$

502,845

4.09

%

$

423,430

4.84

%

Interest-bearing liabilities:

Savings accounts

$

98,211

0.63

%

$

52,906

1.18

%

NOW accounts

42,108

0.26

31,321

0.62

Money market accounts

73,248

0.38

74,889

1.22

Certificates of deposit

151,821

1.75

172,866

2.09

Total interest-bearing deposits

365,388

1.00

331,982

1.61

Other bank borrowings

1,898

3.24

703

4.80

FHLB advances

971

4.70

1,270

4.69

Total interest-bearing liabilities

$

368,257

1.02

%

$

333,955

1.63

%

The $591,000 increase in non-interest income for the three months ended December 31, 2020, compared to the prior year quarterly period, was primarily due to an increase of $627,000 in gain on sale of loans, and a $4,000 increase in non-interest other income, partially offset by a decrease of $38,000 in service charges on deposit accounts, and a $2,000 decrease in income from bank owned life insurance. The $1.3 million increase in non-interest income for the six months ended December 31, 2020 compared to the prior year six-month period was primarily due to an increase of $1.5 million in gain on sale of loans, and an increase of $8,000 in other non-interest income, partially offset by an $80,000 decrease in gain on sale of real estate, a $64,000 decrease in service charges on deposit accounts, and a $4,000 decrease in income from bank owned life insurance. The Company sells most of its long term fixed rate residential mortgage loan originations primarily in order to manage interest rate risk.

The $583,000 increase in non-interest expense for the three months ended December 31, 2020, compared to the same period in 2019, is primarily attributable to increases of $248,000 in compensation and benefits expense, $200,000 in real estate owned valuation adjustment expense, $70,000 in data processing expense, $38,000 in deposit insurance premiums expense, $37,000 in occupancy and equipment expense, $33,000 in loan and collection expense, $21,000 in other non-interest expenses, and $6,000 in audit and examination fees. The increases were partially offset by decreases of $33,000 in franchise and bank shares tax expense, $19,000 in legal fees, and $18,000 in advertising expense. The $929,000 increase in non-interest expense for the six months ended December 31, 2020, compared to the same six month period in 2019, is primarily attributable to increases of $656,000 in compensation and benefits expense, $200,000 in real estate owned valuation adjustment expense, $104,000 in data processing expense, $68,000 in deposit insurance premium expense, $41,000 in occupancy and equipment expense, $15,000 in audit and examination fees expense, $13,000 in other non-interest expenses, $8,000 in loan and collection expense, and $2,000 in legal fees, partially offset by decreases of $139,000 in advertising expense and $39,000 in franchise and bank shares tax expense.

At December 31, 2020, the Company reported total assets of $535.4 million, an increase of $17.2 million, or 3.3%, compared to total assets of $518.2 million at June 30, 2020. The increase in assets was comprised primarily of increases in cash and cash equivalents of $24.9 million, or 45.4%, from $54.9 million at June 30, 2020 to $79.8 million at December 31, 2020, loans held-for-sale of $13.1 million, or 88.6%, from $14.8 million at June 30, 2020 to $27.9 million at December 31, 2020, premises and equipment of $1.6 million, or 12.1%, from $13.2 million at June 30, 2020 to $14.8 million at December 31, 2020, investment securities of $1.5 million, or 2.3%, from $62.9 million at June 30, 2020 to $64.4 million at December 31, 2020, and deferred tax assets of $30,000, or 4.0%, from $757,000 at June 30, 2020 to $787,000 at December 31, 2020. These increases were partially offset by decreases in loans receivable, net of $23.6 million, or 6.5%, from $359.9 million at June 30, 2020 to $336.4 million at December 31, 2020, real estate owned of $200,000, or 21.1%. from 950,000 at June 30, 2020 to $750,000 at December 31, 2020, and other assets of $176,000, or 1.6%, from $10.7 million at June 30, 2020 to $10.6 million at December 31, 2020. The increase in investment securities was primarily due to security purchases of $21.5 million offset by principal repayments on mortgage backed securities of $17.2 million and a redemption of FHLB stock for $2.4 million. The increase in loans held-for-sale resulted primarily from an increase in loans originated for sale during the six months ended December 31, 2020.

Total liabilities increased $16.2 million, or 3.5%, from $467.7 million at June 30, 2020 to $483.9 million at December 31, 2020 primarily due to an increase in total deposits of $17.0 million, or 3.7%, to $477.9 million at December 31, 2020 compared to $460.8 million at June 30, 2020, and an increase of $200,000, or 8.7%, in other borrowings from $2.3 million at June 30, 2020 to $2.5 million at December 31, 2020, partially offset by a decrease of $849,000, or 24.2% in other liabilities from $3.5 million at June 30, 2020 to $2.7 million at December 31, 2020, and a decrease of $153,000, or 14.4%, in advances from the Federal Home Loan Bank from $1.1 million at June 30, 2020 to $907,000 at December 31, 2020. The increase in deposits was primarily due to $24.5 million, or 29.2%, increase in savings deposits from $83.8 million at June 30, 2020 to $108.3 million at December 31, 2020, a $5.3 million, or 12.9%, increase in NOW accounts from $41.4 million at June 30, 2020 to $46.7 million at December 31, 2020, a $3.5 million, or 3.3%, increase in non-interest bearing deposits from $103.4 million at June 30, 2020 to $106.9 million at December 31, 2020, and a increase in money market deposits of $1.4 million, or 1.9%, from $74.6 million at June 30, 2020 to $76.1 million at December 31, 2020, partially offset by a decrease of $17.7 million, or 11.2%, in certificates of deposit from $157.6 million at June 30, 2020 to $139.9 million at December 31, 2020. The Company had $11.6 million in brokered deposits at December 31, 2020 compared to $16.1 million at June 30, 2020. The decrease in advances from the Federal Home Loan Bank was primarily due to principal paydowns on amortizing advances.

At December 31, 2020, the Company had $4.8 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 $7.2 million of non-performing assets at June 30, 2020, consisting of six commercial real estate loans to one borrower, five single-family residential loans, one lot loan, one land loan, and two commercial real estate properties in other real estate owned at December 31, 2020, compared to five single-family residential loans, five commercial real estate loans to one borrower, one lot loan, one land loan and two commercial real estate properties in other real estate owned at June 30, 2020. The decrease in non-performing assets from $7.2 million at June 30, 2020 to $4.8 million at December 31, 2020 was primarily due to a write-down of $907,000 on a lot loan, a write-down of $698,000 on a commercial real estate loan, and the paydown of a portion of the collateral on the same commercial real estate loan totaling $449,000. At December 31, 2020, the Company had four single family residential loans, two commercial land and lot development loans to one borrower, six commercial real estate loans to one borrower, and two commercial real estate loans to one borrower classified as substandard compared to four single family residential loans, two commercial land and lot development loans, and six commercial real estate loans to one borrower classified as substandard at June 30, 2020. There were no loans classified as doubtful at December 31, 2020 or June 30, 2020.

Under the CARES Act, loans less than 30 days past due as of December 31, 2020 will be considered current for COVID-19 modifications. Similarly, the Financial Accounting Standards Board has confirmed that short-term modifications made on a good-faith basis in response to COVID-19 to loan customers who were current prior to any relief will not be considered troubled debt restructurings.

The Bank handles loan payment modification requests on a case-by-case basis. As of December 31,2020 the Bank had payment deferrals on 10 loans with principal balances totaling $5.9 million representing 1.7% of our loans outstanding as of December 31, 2020. A majority of deferrals are three-month payment deferrals of principal and interest, with payments after deferral increased to collect amounts deferred. It is too early to determine if these modified loans will perform in accordance with their modified terms.

Details with respect to actual loan modifications are as follows:

Number of Covid-19
Deferments Year Ended
June 30, 2020

Balance
(in thousands)

Percent of Total
Loans at
at June 30, 2020

One-to-Four family residential

101

$

27,705

25.6

%

Commercial real estate

40

28,278

32.5

Multi-family residential

9

18,046

38.0

Land

7

1,190

6.6

Construction

1

680

8.3

Equity and second mortgage

--

--

--

Equity lines of credit

19

1,586

12.9

Commercial business

39

6,609

8.1

Consumer

--

--

--

Total

216

$

84,094

23.0

%


Number of Covid-19
Remaining Deferments at
December 31, 2020

Balance
(in thousands)

Percent of Total
Loans at
December 31, 2020

One-to-Four family residential

2

$

2,314

2.4

%

Commercial real estate

2

2,937

3.4

Multi-family residential

--

--

--

Land

--

--

--

Construction

--

--

--

Equity and second mortgage

--

--

--

Equity lines of credit

2

228

2.2

Commercial business

4

465

0.7

Consumer

--

--

--

Total

10

$

5,943

1.7

%

Shareholders’ equity increased $927,000, or 1.8%, to $51.5 million at December 31, 2020 from $50.5 million at June 30, 2020. The primary reasons for the changes in shareholders’ equity from June 30, 2020 were net income of $2.7 million, the vesting of restricted stock awards, stock options, and the release of employee stock ownership plan shares totaling $333,000, and proceeds from the issuance of common stock from the exercise of stock options of $174,000, partially offset by the acquisition of Company stock of $1.4 million, dividends paid totaling $565,000, and a decrease in the Company’s accumulated other comprehensive income of $262,000.

The Company repurchased 61,812 shares of its common stock during the six months ended December 31, 2020 at an average price per share of $24.41. On November 18, 2020, the Company announced that its Board of Directors approved a tenth stock repurchase program for the repurchase of up to 85,000 shares. As of December 31, 2020, there were 85,000 shares remaining for repurchase under the tenth stock repurchase program.

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.

In addition to factors previously disclosed in the reports filed by the Company with the Securities and Exchange Commission and those identified elsewhere in this press release, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the strength of the United States economy in general and the strength of the local economies in which the Company conducts its operations; general economic conditions; the scope and duration of the COVID-19 pandemic; the effects of the COVID-19 pandemic, including on the Company’s credit quality and operations as well as its impact on general economic conditions; legislative and regulatory changes including actions taken by governmental authorities in response to the COVID-19 pandemic; monetary and fiscal policies of the federal government; changes in tax policies, rates and regulations of federal, state and local tax authorities including the effects of the Tax Reform Act; changes in interest rates, deposit flows, the cost of funds, demand for loan products and the demand for financial services, in each case as may be affected by the COVID-19 pandemic, competition, changes in the quality or composition of the Company’s loans, investment and mortgage-backed securities portfolios; geographic concentration of the Company’s business; fluctuations in real estate values; the adequacy of loan loss reserves; the risk that goodwill and intangibles recorded in the Company’s financial statements will become impaired; changes in accounting principles, policies or guidelines and other economic, competitive, governmental and technological factors affecting the Company’s operations, markets, products, services and fees.

Home Federal Bancorp, Inc. of Louisiana

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(In thousands)

December 31, 2020

June 30, 2020

(Unaudited)

ASSETS

Cash and cash equivalents

$

79,795

$

54,871

Debt Securities available-for-sale at fair value

33,060

42,060

Securities held-to-maturity (fair value December 31, 2020: $32,222;
June 30, 2020 $21,879)

31,309

20,858

Loans held-for-sale

27,904

14,798

Loans receivable, net of allowance for loan losses (December 31, 2020: $3,790;
June 30, 2020: $4,081)

336,363

359,927

Premises and equipment, net

14,838

13,235

Deferred tax asset

787

757

Real estate owned

750

950

Other assets

10,588

10,764

Total assets

$

535,394

$

518,220

LIABILITIES AND SHAREHOLDERS’ EQUITY

Deposits

$

477,859

$

460,810

Advances from the Federal Home Loan Bank of Dallas

907

1,060

Other Borrowings

2,500

2,300

Other liabilities

2,666

3,515

Total liabilities

483,932

467,685

Shareholders’ equity

51,462

50,535

Total liabilities and shareholders’ equity

$

535,394

$

518,220


Home Federal Bancorp, Inc. of Louisiana
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)

Three Months Ended

Six Months Ended

December 31,

December 31,

2020

2019

2020

2019

Interest income

Loans, including fees

$

5,074

$

4,632

$

9,721

$

9,284

Investment securities

1

15

4

31

Mortgage-backed securities

281

427

597

817

Other interest-earning assets

24

88

42

198

Total interest income

5,380

5,162

10,364

10,330

Interest expense

Deposits

877

1,360

1,848

2,695

Federal Home Loan Bank borrowings

11

14

23

30

Other bank borrowings

17

13

30

17

Total interest expense

905

1,387

1,901

2,742

Net interest income

4,475

3,775

8,463

7,588

Provision for loan losses

600

950

1,300

1,125

Net interest income after provision for loan losses

3,875

2,825

7,163

6,463

Non-interest income

Gain on sale of loans

1,207

580

2,618

1,147

Gain on sale of real estate

--

--

--

80

Income on Bank-Owned Life Insurance

33

35

67

71

Service charges on deposit accounts

253

291

500

564

Other income

15

11

28

20

Total non-interest income

1,508

917

3,213

1,882

Non-interest expense

Compensation and benefits

2,138

1,890

4,352

3,696

Occupancy and equipment

393

356

769

728

Data processing

201

131

395

291

Audit and examination fees

63

57

129

114

Franchise and bank shares tax

89

122

198

237

Advertising

47

65

73

212

Legal fees

134

153

264

262

Loan and collection

83

50

177

169

Real estate owned valuation adjustment

200

--

200

--

Deposit insurance premium

38

--

68

--

Other expenses

204

183

388

375

Total non-interest expense

3,590

3,007

7,013

6,084

Income before income taxes

1,793

735

3,363

2,261

Provision for income tax expense

390

147

713

426

NET INCOME

$

1,403

$

588

$

2,650

$

1,835

EARNINGS PER SHARE

Basic

$

0.87

$

0.35

$

1.63

$

1.07

Diluted

$

0.83

$

0.32

$

1.58

$

1.00


Three Months Ended

Six Months Ended

December 31,

December 31,

2020

2019

2020

2019

Selected Operating Ratios(1):

Average interest rate spread

3.23

%

3.18

%

3.06

%

3.21

%

Net interest margin

3.50

%

3.52

%

3.34

%

3.56

%

Return on average assets

1.03

%

0.51

%

0.99

%

0.81

%

Return on average equity

10.82

%

4.63

%

10.40

%

7.34

%

Asset Quality Ratios(2):

Non-performing assets as a percent of total assets

0.91

%

0.83

%

0.91

%

0.83

%

Allowance for loan losses as a percent of non-performing

loans

96.60

%

106.53

%

96.60

%

106.53

%

Allowance for loan losses as a percent of total loans

receivable

1.11

%

1.07

%

1.11

%

1.07

%

Per Share Data:

Shares outstanding at period end

1,689,527

1,792,763

1,689,527

1,792,763

Weighted average shares outstanding:

Basic

1,616,801

1,698,617

1,623,885

1,707,456

Diluted

1,684,101

1,832,133

1,680,654

1,836,241

Tangible book value at period end

$

30.46

$

27.88

$

30.46

$

27.88

(1) Ratios for the three and six 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