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Home Federal Bancorp, Inc. of Louisiana Reports Results of Operations for the Three and Six Months Ended December 31, 2016

SHREVEPORT, La., Jan. 26, 2017 (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, 2016 of $763,000, an increase of $82,000, or 12.0%, compared to net income of $681,000 reported for the three months ended December 31, 2015. The Company’s basic and diluted earnings per share were $0.42 and $0.40, respectively, for the three months ended December 31, 2016 compared to basic and diluted earnings per share of $0.36 and $0.35, respectively, for the quarter ended December 31, 2015.

The Company reported net income of $1.8 million for the six months ended December 31, 2016, an increase of $143,000, or 8.8%, compared to $1.6 million for the six months ended December 31, 2015. The Company’s basic and diluted earnings per share were $0.97 and $0.94, respectively, for the six months ended December 31, 2016 compared to $0.85 and $0.83, respectively, for the six months ended December 31, 2015.

The increase in net income for the three months ended December 31, 2016 resulted primarily from an increase of $322,000, or 10.4%, in net interest income, a $201,000, or 32.4%, increase in non-interest income, and a decrease of $13,000, or 3.9%, in the provision for income tax expense, partially offset by a $180,000, or 6.8%, increase in non-interest expense, and a $274,000 increase in the provision for loan losses. The increase in net interest income for the three months ended December 31, 2016 was primarily due to a $310,000, or 8.3%, increase in total interest income and a decrease of $12,000, or 1.8%, in aggregate interest expense primarily due to a decrease in the average interest rate paid on deposits. The increase in the provision for loan losses was primarily due to the increased level of non-performing assets discussed below. The Company’s average interest rate spread was 3.47% for the three months ended December 31, 2016 compared to 3.39% for the three months ended December 31, 2015. The Company’s net interest margin was 3.65% for the three months ended December 31, 2016 compared to 3.58% for the three months ended December 31, 2015. The increase in the average interest rate spread on a comparative quarterly basis was primarily the result of a decrease of nine basis points in average rate on interest-bearing liabilities. The increase in net interest margin was primarily the result of a higher average volume of interest-earning assets for the three months ended December 31, 2016 compared to the prior year quarterly period.

The increase in net income for the six months ended December 31, 2016 resulted primarily from an increase of $601,000, or 9.6%, in net interest income, and an increase of $407,000, or 26.6%, in non-interest income, partially offset by an increase of $322,000, or 6.1%, in non-interest expense, an increase of $34,000, or 4.4%, in income tax expense, and an increase of $509,000, or 559.3%, in the provision for loan losses. The increase in net interest income for the six month period was primarily due to a $560,000, or 7.4%, increase in total interest income, and a $41,000, or 3.1%, decrease in interest expense on borrowings and deposits due to a decrease in the average interest rate on interest bearing liabilities. The Company’s average interest rate spread was 3.53% for the six months ended December 31, 2016 compared to 3.43% for the six months ended December 31, 2015. The Company’s net interest margin was 3.71% for the six months ended December 31, 2016 compared to 3.62% for the six months ended December 31, 2015. The increase in the average interest rate spread is attributable primarily to a decrease of eight basis points in average rate on interest bearing liabilities. The increase in net interest margin was primarily the result of a higher average volume of interest earning assets for the six months ended December 31, 2016 compared to the prior six month period.

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,
2016
2015
Average
Balance
Average
Yield/Rate
Average
Balance
Average
Yield/Rate
(Dollars in thousands)
Interest-earning assets:
Loans receivable$ 306,598 4.95% $ 276,657 5.12%
Investment securities 60,512 1.72 41,236 1.85
Interest-earning deposits 6,463 0.46 26,337 0.31
Total interest-earning assets$ 373,573 4.35% $ 344,230 4.36%
Interest-bearing liabilities:
Savings accounts$ 33,230 0.45% $ 22,143 0.38%
NOW accounts 34,270 0.56 34,574 0.89
Money market accounts 46,055 0.32 46,635 0.30
Certificates of deposit 139,848 1.26 145,289 1.29
Total interest-bearing deposits 253,403 0.89 248,641 0.96
Other bank borrowings 550 3.25 742 3.58
FHLB advances 43,059 0.82 26,310 0.96
Total interest-bearing liabilities $ 297,012 0.88% $ 275,693 0.97%


For the Six Months Ended December 31,
2016 2015
Average
Balance
Average
Yield/Rate
Average
Balance
Average
Yield/Rate
(Dollars in thousands)
Interest-earning assets:
Loans receivable$ 306,572 5.02% $ 280,407 5.12%
Investment securities 58,782 1.56 42,603 1.82
Interest-earning deposits 4,563 0.52 23,342 0.28
Total interest-earning assets$ 369,917 4.41% $ 346,352 4.39%
Interest-bearing liabilities:
Savings accounts$ 31,389 0.44% $ 21,156 0.37%
NOW accounts 35,226 0.56 34,873 0.88
Money market accounts 46,982 0.32 47,168 0.31
Certificates of deposit 137,094 1.26 145,523 1.29
Total interest-bearing deposits 250,691 0.88 248,720 0.97
Other bank borrowings 475 3.25 371 3.58
FHLB advances 44,457 0.83 28,340 0.88
Total interest-bearing liabilities $ 295,623 0.88% $ 277,431 0.96%

The $201,000 increase in non-interest income for the three months ended December 31, 2016 compared to the prior year quarterly period was due to an increase of $159,000 in gain on sale of loans, and an increase of $45,000 in service charges on deposit accounts, partially offset by a decrease of $3,000 in income on bank owned life insurance. The $407,000 increase in non-interest income for the six months ended December 31, 2016 compared to the prior year period was primarily due to increases of $231,000 in gain on sale of loans, $110,000 in gain on sale of real estate, and $75,000 in service charges on deposit accounts, partially offset by a $6,000 decrease in income on bank owned life insurance and a $3,000 decrease 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 $180,000 increase in non-interest expense for the three months ended December 31, 2016, compared to the same period in 2015, is primarily attributable to increases of $136,000 in compensation and benefits expense, $35,000 in occupancy and equipment expense, $29,000 in advertising expense, $15,000 in loan and collection expense, $15,000 in franchise and bank share tax expense, and $12,000 in data processing expense. The increases were partially offset by a decrease of $40,000 in deposit insurance premiums, $16,000 in other non-interest expenses, $4,000 in legal fees, and $2,000 in audit and examination fees. The $322,000 increase in non-interest expense for the six months ended December 31, 2016, compared to the same period in 2015, is primarily attributable to increases of $149,000 in compensation and benefits expense, $104,000 in occupancy and equipment expense, $40,000 in advertising expense, $37,000 in data processing expense, $31,000 in loan and collection expense, $20,000 in franchise and bank share tax expense, and $10,000 in legal fees. These increases were partially offset by a decrease of $55,000 in deposit insurance premiums, and $14,000 in other non-interest expense. The increases in compensation and benefits expense were primarily due to increases in the compensation paid to mortgage lenders along with increases in support staff for the mortgage lenders and staffing a new branch that opened in North Shreveport in May 2016.

At December 31, 2016, the Company reported total assets of $410.3 million, an increase of $28.6 million, or 7.5%, compared to total assets of $381.7 million at June 30, 2016. The increase in assets was comprised primarily of increases in investment securities of $14.1 million, or 26.8%, from $52.5 million at June 30, 2016 to $66.6 million at December 31, 2016, loans receivable, net of $6.3 million, or 2.2%, from $290.8 million at June 30, 2016 to $297.1 million at December 31, 2016, and an increase in cash and cash equivalents of $8.9 million, or 186.9%, from $4.8 million at June 30, 2016 to $13.6 million at December 31, 2016. These increases were partially offset by a decrease in loans held for sale of $1.0 million, or 8.3%, from $11.9 million at June 30, 2016 to $10.9 million at December 31, 2016. The increase in investment securities was primarily due to the purchase of $22.8 million of held-to-maturity securities, partially offset by principal repayments on mortgage-backed securities of $7.8 million during the period. We chose to place the securities in held-to-maturity as part of our interest rate risk management strategy. The decrease in loans held-for-sale results primarily from a decrease at December 31, 2016 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.

Six Months Ended
December 31,
2016 2015 % Change
(In thousands)
Loan originations:
One- to four-family residential$ 65,992 $57,458 14.9%
Commercial — real estate secured:
Owner occupied 38,663 23,461 64.8%
Non-owner occupied 4,537 1,070 324.0%
Multi-family residential 986 15 6,473.3%
Commercial business 22,239 16,439 35.3%
Land 5,779 3,143 83.9%
Construction 10,410 9,901 5.1%
Home equity loans and lines of credit and other consumer 5,030 4,015 25.3%
Total loan originations$153,636 $115,502 33.0%
Loans sold$(59,017) $ (54,089) 9.1%

Included in the $10.4 million and $9.9 million of construction loan originations for the six months ended December 31, 2016 and 2015, respectively, are approximately $9.4 million and $9.8 million, respectively, of one- to four-family residential construction loans and $1.0 million and $135,000, respectively, of commercial and multi-family construction loans, all of which are primarily located in the Company’s market area.

Total liabilities increased $27.9 million, or 8.2%, from $338.3 million at June 30, 2016 to $366.2 million at December 31, 2016, primarily due to an increase in total deposits of $22.8 million, or 7.9%, to $310.7 million at December 31, 2016 compared to $287.8 million at June 30, 2016, and an increase in advances from the Federal Home Loan Bank of $5.4 million, or 11.3%, to $53.0 million at December 31, 2016 compared to $47.7 million at June 30, 2016. The increase in deposits was primarily due to a $17.8 million, or 45.3%, increase in non-interest bearing demand deposits from $39.3 million at June 30, 2016 to $57.1 million at December 31, 2016, an $8.7 million, or 6.6%, increase in certificates of deposit from $132.5 million at June 30, 2016 to $141.2 million at December 31, 2016, and a $5.6 million, or 19.3%, increase in savings deposits from $29.0 million at June 30, 2016 to $34.6 million at December 31, 2016, partially offset by a decrease of $4.7 million, or 12.4%, in NOW accounts from $37.8 million at June 30, 2016 to $33.1 million at December 31, 2016 and a decrease of $4.5 million, or 9.1%, in money market deposits from $49.3 million at June 30, 2016 to $44.8 million at December 31, 2016. At December 31, 2016, the Company had $14.4 million in brokered deposits compared to $8.2 million at June 30, 2016. The increase in brokered deposits is due to purchases of $10.0 million in brokered deposits during the six months ended December 31, 2016, partially offset by $3.8 million of brokered deposits that had matured during the period. 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.

At December 31, 2016, the Company had $4.2 million of non-performing assets compared to $114,000 of non-performing assets at June 30, 2016 consisting of five single-family residential loans, one land loan, and fifteen commercial business loans at December 31, 2016 compared to two single family residential loans at June 30, 2016. At December 31, 2016, the Company had four single family residential loans, one commercial real estate loan, one land loan, and fifteen commercial business loans to two borrowers classified as substandard compared to two single family residential loans, one commercial real estate loan and nine commercial business loans to one borrower at June 30, 2016. There were no loans classified as doubtful at December 31, 2016 or June 30, 2016. During the quarter ended December 31, 2016, we became aware that two borrowers related to the fifteen commercial business loans in the aggregate amount of $2.8 million that are classified as substandard filed for Chapter 11 (reorganization) bankruptcy protection during this period. We are continuing to monitor these credits and presently believe that our allowance for loan losses at December 31, 2016 is adequate. No additional losses are currently anticipated with respect to these loans.

Shareholders’ equity increased $746,000, or 1.7%, to $44.1 million at December 31, 2016 from $43.4 million at June 30, 2016. The primary reasons for the increase in shareholders’ equity from June 30, 2016 were net income of $1.8 million, the vesting of restricted stock awards, stock options and the release of employee stock ownership plan shares totaling $307,000, and proceeds from the issuance of common stock from the exercise of stock options and release of share awards of $177,000. These increases in shareholders’ equity were partially offset by dividends paid totaling $353,000, acquisition of Company stock of $525,000, and a decrease in the Company’s accumulated other comprehensive income of $625,000.

The Company repurchased 21,278 shares of its common stock under its stock repurchase program during the six months ended December 31, 2016 at an average price per share of $23.70. On October 12, 2016, the Company announced that its Board of Directors approved a seventh stock repurchase program for the repurchase of up to 97,000 shares to commence after the completion of the sixth stock repurchase program. As of December 31, 2016, there were an aggregate total of 107,533 shares remaining for repurchase under the sixth and seventh stock repurchase programs.

Home Federal Bancorp, Inc. of Louisiana is the holding company for Home Federal Bank which conducts business from its six 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)
December 31, 2016 June 30, 2016
ASSETS(Unaudited)
Cash and cash equivalents$ 13,646 $ 4,756
Securities available for sale at fair value 42,039 50,173
Securities held to maturity (fair value December 31, 2016: $21,242; June 30, 2016: $2,349) 24,542 2,349
Loans held-for-sale 10,931 11,919
Loans receivable, net of allowance for loan losses (December 31, 2016: $3,439; June 30, 2016: $2,845) 297,115 290,827
Premises and equipment, net 12,047 12,366
Other assets 9,988 9,311
Total assets$ 410,308 $381,701
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits$ 310,654 $287,822
Advances from the Federal Home Loan Bank of Dallas 53,037 47,665
Other borrowings 700 400
Other liabilities 1,779 2,422
Total liabilities 366,170 338,309
Shareholders’ equity 44,138 43,392
Total liabilities and shareholders’ equity$ 410,308 $ 381,701


Home Federal Bancorp, Inc. of Louisiana
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
Three Months Ended Six Months Ended
December 31, December 31,
2016
2015
2016 2015
(Unaudited)
Interest income
Loans, including fees$ 3,794 $3,541 $ 7,688 $7,177
Investment securities8 1 13 3
Mortgage-backed securities252 189 444 384
Other interest-earning assets 8 21 12 33
Total interest income 4,062 3,752 8,157 7,597
Interest expense
Deposits563 599 1,103 1,204
Federal Home Loan Bank borrowings89 63 184 125
Other bank borrowings 5 7 8 7
Total interest expense 657 669 1,295 1,336
Net interest income 3,405 3,083 6,862 6,261
Provision for loan losses 300 26 600 91
Net interest income after provision for loan losses 3,105 3,057 6,262 6,170
Non-interest income
Gain on sale of loans587 428 1,385 1,154
Gain on sale of real estate- - 110 -
Income on Bank Owned Life Insurance37 40 74 80
Service charges on deposit accounts184 139 347 272
Other income 13 13 23 26
Total non-interest income 821 620 1,939 1,532
Non-interest expense
Compensation and benefits1,737 1,601 3,459 3,310
Occupancy and equipment311 276 618 514
Data Processing159 147 314 277
Audit and Examination Fees81 83 133 133
Franchise and Bank Shares Tax106 91 201 181
Advertising94 65 166 126
Legal fees147 151 228 218
Loan and collection49 34 148 117
Deposit insurance premium20 60 65 120
Other expenses 142 158 289 303
Total non-interest expense 2,846 2,666 5,621 5,299
Income before income taxes1,080 1,011 2,580 2,403
Provision for income tax expense 317 330 815 781
NET INCOME$ 763 $ 681 $ 1,765 $1,622
EARNINGS PER SHARE
Basic$ 0.42 $ 0.36 0.97 $ 0.85
Diluted$ 0.40 $ 0.35 0.94 $ 0.83


Three Months Ended Six Months Ended
December 31,
December 31,
2016 2015 2016 2015
(Unaudited)
Selected Operating Ratios(1):
Average interest rate spread 3.47% 3.39% 3.53% 3.43%
Net interest margin 3.65% 3.58% 3.71% 3.62%
Return on average assets 0.76% 0.74% 0.89% 0.88%
Return on average equity 6.43% 5.94% 7.48% 7.08%
Asset Quality Ratios(2):
Non-performing assets as a percent of total assets 1.01% 0.07% 1.01% 0.07%
Allowance for loan losses as a percent of non-performing loans 82.67% 1,068.55% 82.67% 1,068.55%
Allowance for loan losses as a percent of total loans receivable 1.14% 0.98% 1.14% 0.98%
Per Share Data:
Shares outstanding at period end 1,955,039 2,037,861 1,955,039 2,037,861
Weighted average shares outstanding:
Basic 1,812,079 1,869,835 1,812,339 1,898,388
Diluted 1,895,901 1,941,371 1,887,090 1,964,824
Tangible book value at period end$ 22.58 $ 21.02 $ 22.58 $ 21.02

____________
(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

Source:Home Federal Bancorp, Inc. of Louisiana