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Home Federal Bancorp, Inc. of Louisiana Reports Results of Operations for the Quarter Ended September 30, 2014

SHREVEPORT, La., Oct. 23, 2014 (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 September 30, 2014 of $823,000, an increase of $110,000, or 15.4% compared to net income of $713,000 reported for the three months ended September 30, 2013. The Company's basic and diluted earnings per share were $0.41 and $0.40, respectively for the quarter ended September 30, 2014, compared to basic and diluted earnings per share of $0.34 and $0.33, respectively, for the quarter ended September 30, 2013.

The increase in net income for the three months ended September 30, 2014, resulted primarily from an increase of $274,000, or 10.1%, in net interest income, a $26,000, or 39.4%, decrease in the provision for loan losses and a $25,000, or 4.1%, increase in non-interest income, partially offset by a $60,000, or 17.4%, increase in the provision for income tax expense and a $155,000, or 7.1%, increase in non-interest expense. The increase in net interest income for the three months ended September 30, 2014, was primarily due to a $224,000, or 6.7%, increase in total interest income, and a decrease of $50,000, or 7.9%, in aggregate interest expense on borrowings and deposits primarily due to an overall decrease in rates paid on interest-bearing liabilities. The Company's average interest rate spread was 3.63% for the three months ended September 30, 2014, compared to 3.65% for the three months ended September 30, 2013. The Company's net interest margin was 3.83% for the three months ended September 30, 2014, compared to 3.91% for the quarter ended September 30, 2013. The decrease in the average interest rate spread on a comparative quarterly basis was primarily the result of a decrease of 25 basis points in average yield on interest-earning assets. The decrease in net interest margin was primarily the result of a higher average volume of interest earning assets for the quarter ended September 30, 2014 compared to the prior year quarterly period.

The following table sets 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 September 30,
2014 2013
Average
Balance
Average
Yield/Rate
Average
Balance
Average
Yield/Rate
(Dollars in thousands)
Interest-earning assets:
Loans Receivable $ 252,870 5.23% $ 215,741 5.65%
Investment Securities 53,820 1.82 55,312 2.00
Interest-earning deposits 4,191 0.28 5,314 0.31
Total interest-earning assets $ 310,881 4.57% $ 276,367 4.82%
Interest-bearing liabilities:
Savings accounts $ 12,788 0.20% $ 10,001 0.24%
NOW accounts 26,227 0.69 25,535 1.06
Money market accounts 45,002 0.36 44,026 0.41
Certificates of deposit 125,386 1.41 113,641 1.61
Total interest-bearing deposits 209,403 1.02 193,203 1.19
Other Bank Borrowings -- -- 733 4.01
FHLB advances 36,608 0.49 21,864 0.88
Total interest-bearing liabilities $ 246,011 0.94% $ 215,800 1.17%

The $25,000 increase in non-interest income for the quarter ended September 30, 2014, compared to the prior year quarterly period was due to an increase of $26,000 in service charges on deposit accounts and $6,000 in other non-interest income, partially offset by a decrease of $4,000 in gain on sale of loans and a $3,000 decrease in income on Bank Owned Life Insurance.

The $155,000 increase in non-interest expense for the three months ended September 30, 2014, compared to the same period in 2013, is primarily attributable to increases of $116,000 in compensation and benefits expense, $34,000 in occupancy and equipment expense, $34,000 in loan collection expense, $11,000 in advertising expense, $4,000 in data processing expense and $6,000 in other non-interest expenses. These increases were partially offset by decreases of $24,000 in legal fees, $20,000 in franchise and bank share taxes, $4,000 in audit and examination fees and $2,000 in deposit insurance premiums.

At September 30, 2014, the Company reported total assets of $340.5 million, an increase of $11.0 million, or 3.3%, compared to total assets of $329.5 million at June 30, 2014. The increase in assets was comprised primarily of increases in loans receivable, net of $8.7 million, or 3.7%, from $239.6 million at June 30, 2014, to $248.3 million at September 30, 2014, loans held-for-sale of $1.7 million, or 17.7%, from $9.4 million at June 30, 2014, to $11.0 million at September 30, 2014, other assets of $1.7 million, or 10.1%, from $16.8 million at June 30, 2014 to $18.5 million at September 30, 2014, and an increase in investment securities of $7.7 million, or 15.3%, from $50.2 million at June 30, 2014, to $57.9 million at September 30, 2014. These increases were partially offset by a decrease in cash and cash equivalents of $8.8 million or 64.8%, from $13.6 million at June 30, 2014 to $4.8 million at September 30, 2014. The increase in loans held-for-sale results primarily from an increase at September 30, 2014 in receivables from financial institutions purchasing the Company's loans held-for-sale.

The following table shows total loans originated and sold during the periods indicated.

Quarter Ended
September 30,
2014 2013 % Change
(In thousands)
Loan originations:
One- to four-family residential $ 26,896 $ 26,481 1.6%
Commercial — real estate secured:
Owner occupied 18,065 10,306 75.3
Non-owner occupied 1,524 1,522 0.1
Multi-family residential 2,440 151 1,515.9
Commercial business 10,145 6,841 48.3
Land 1,884 2,422 (22.2)
Construction 8,673 5,569 55.7
Home equity loans and lines of credit and other consumer 2,314 1,343 72.3
Total loan originations $ 71,941 $ 54,635 31.7
Loans sold $ (21,402) $ (17,866) 19.8%

Included in the $8.7 million and $5.6 million of construction loan originations for the three months ended September 30, 2014 and 2013, respectively, are approximately $3.2 million and $4.3 million, respectively, of one- to four-family residential construction loans and $5.5 million and $1.3 million, respectively, of commercial and multi-family construction loans, all of which are primarily located in the Company's market area.

Total liabilities increased $11.1 million, or 3.9%, from $286.8 million at June 30, 2014, to $297.8 million at September 30, 2014, primarily due to an increase in advances from the Federal Home Loan Bank of Dallas of 30.7 million, or 238.0%, to 43.6 million at September 30, 2014, compared to 12.9 million at June 30, 2014, partially offset by a decrease in total deposits of $20.3 million, or 7.4%, to $252.0 million at September 30, 2014, compared to $272.3 million at June 30, 2014. The decrease in deposits was primarily due to a $27.0 million, or 37.4% decrease in money market deposits from $72.2 million at June 30, 2014 to $45.2 million at September 30, 2014, and a decrease in non-interest bearing demand deposits of $3.0 million, or 6.9%, from $43.4 million at June 30, 2014 to $40.4 million at September 30, 2014, partially offset by increases in certificates of deposit of $6.5 million, or 5.4%, from $120.4 million at June 30, 2014 to $126.9 million at September 30, 2014 and NOW accounts of $2.3 million, or 9.6%, from $24.0 million at June 30, 2014 to $26.3 million at September 30, 2014. The decrease in money market deposits was primarily due to a transitory deposit in the fourth quarter of fiscal 2014 which had a balance of approximately $30.6 million at June 30, 2014. The deposit was short-term in nature and was fully withdrawn as of September 30, 2014. At both September 30, 2014 and June 30, 2014, the Company had $12.7 million in brokered deposits. The Company utilizes brokered certificates of deposit as a component of its strategy for lowering Home Federal Bank's overall cost of funds. The brokered certificates of deposit which have maturity dates greater than twelve months are callable by Home Federal Bank after twelve months pursuant to early redemption provisions. The increase in advances from the Federal Home Loan Bank of Dallas was a result of the non-recurring deposit described above being used to pay down advances at June 30, 2014.

At September 30, 2014, the Company had $108,000 of non-performing assets compared to $178,000 of non-performing assets at June 30, 2014, consisting of two single-family residential loans and one non-performing line of credit at September 30, 2014, compared to one single family residential loan and one non-performing line of credit at June 30, 2014. At September 30, 2014, the Company had one single family residential loan classified as substandard, compared to none at June 30, 2014. The Company had one commercial loan secured by real estate classified as doubtful at September 30, 2014, in the amount of $64,000, one single-family residential loan classified as doubtful in the amount of $151,000 at June 30, 2014 and one line of credit classified as doubtful in the amount of $27,000 at both September 30, 2014 and June 30, 2014.

Shareholders' equity decreased $121,000, or 0.3%, to $42.7 million at September 30, 2014 from $42.8 million at June 30, 2014. The primary reasons for the decrease in shareholders' equity from June 30, 2014, were the acquisition of treasury stock in the amount of $756,000, a decrease in the Company's accumulated other comprehensive income of $159,000, and dividends paid of $156,000. These decreases were partially offset by net income of $823,000, the vesting of restricted stock awards, stock options and the release of employee stock ownership shares totaling $110,000, and proceeds from the issuance of common stock from the exercise of stock options of $17,000.

The Company repurchased 40,057 shares of its common stock under its stock repurchase program during the quarter ended September 30, 2014 at an average price per share of $18.88. On January 8, 2014, the Company announced that its Board of Directors approved a fourth stock repurchase program for the repurchase of up to 115,000 shares. As of September 30, 2014, there were a total of 65,715 shares remaining for repurchase under the program.

Home Federal Bancorp, Inc. of Louisiana is the holding company for Home Federal Bank which conducts business from its four full-service banking offices and one agency 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)
September 30,
2014
June 30,
2014
ASSETS (Unaudited)
Cash and cash equivalents $ 4,794 $ 13,633
Securities available for sale at fair value 55,494 48,434
Securities held to maturity (fair value September 30, 2014: $2,399 June 30, 2014: $1,765) 2,399 1,765
Loans held-for-sale 11,035 9,375
Loans receivable, net of allowance for loan losses (September 30, 2014: $2,285; June 30, 2014: $2,396) 248,309 239,563
Other assets 18,454 16,759
Total assets $ 340,485 $ 329,529
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits $ 252,011 $ 272,295
Advances from the Federal Home Loan Bank of Dallas 43,589 12,897
Other liabilities 2,227 1,558
Total liabilities 297,827 286,750
Shareholders' equity 42,658 42,779
Total liabilities and shareholders' equity $ 340,485 $ 329,529
Home Federal Bancorp, Inc. of Louisiana
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three Months Ended
September 30,
2014 2013
(Unaudited)
Interest income
Loans, including fees $ 3,307 $3,050
Investment securities 1 1
Mortgage-backed securities 244 276
Other interest-earning assets 3 4
Total interest income 3,555 3,331
Interest expense
Deposits 535 575
Federal Home Loan Bank borrowings 45 48
Other bank borrowings -- 7
Total interest expense 580 630
Net interest income 2,975 2,701
Provision for loan losses 40 66
Net interest income after provision for loan losses 2,935 2,635
Non-interest income
Gain on sale of loans 472 476
Income on Bank Owned Life Insurance 41 44
Service charges on deposit accounts 101 75
Other income 15 9
Total non-interest income 629 604
Non-interest expense
Compensation and benefits 1,500 1,384
Occupancy and equipment 229 195
Data processing 119 115
Audit and examination fees 53 57
Franchise and bank shares tax 73 93
Advertising 75 64
Legal fees 69 93
Loan and collection 66 32
Deposit insurance premium 31 33
Other expenses 122 116
Total non-interest expense 2,337 2,182
Income before income taxes 1,227 1,057
Provision for income tax expense 404 344
NET INCOME $ 823 $ 713
EARNINGS PER SHARE
Basic $0.41 $0.34
Diluted $0.40 $0.33
Three Months Ended
September 30,
2014 2013
(Unaudited)
Selected Operating Ratios(1):
Average interest rate spread 3.63% 3.65%
Net interest margin 3.83% 3.91%
Return on average assets 0.99% 1.00%
Return on average equity 7.10% 6.45%
Asset Quality Ratios(2):
Non-performing assets as a percent of total assets 0.03% 0.18%
Allowance for loan losses as a percent of non-performing loans 2,115.74% 437.57%
Allowance for loan losses as a percent of total loans receivable 0.91% 1.10%
Per Share Data:
Shares outstanding at period end 2,203,442 2,347,334
Weighted average shares outstanding:
Basic 2,005,487 2,112,679
Diluted 2,057,803 2,116,030
Tangible book value at period end $19.36 $17.96
____________
(1) Ratios for the three month periods are annualized.
(2) Asset quality ratios are end of period ratios.

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

Source:Home Federal Bancorp, Inc. of Louisiana