5. Earnings Per Share (continued)
The following table presents the components of weighted average outstanding shares for purposes of calculating earnings per share:
|
|
Three Months Ended
March 31,
|
|
|
Nine Months Ended
March 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In Thousands)
|
|
Average common shares issued
|
|
|
3,062
|
|
|
|
3,055
|
|
|
|
3,062
|
|
|
|
3,051
|
|
Average unearned ESOP shares
|
|
|
(171
|
)
|
|
|
(184
|
)
|
|
|
(174
|
)
|
|
|
(186
|
)
|
Average unearned RRP shares
|
|
|
(69
|
)
|
|
|
(52
|
)
|
|
|
(75
|
)
|
|
|
(17
|
)
|
Average treasury shares
|
|
|
(642
|
)
|
|
|
(26
|
)
|
|
|
(413
|
)
|
|
|
(9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
2,180
|
|
|
|
2,793
|
|
|
|
2,400
|
|
|
|
2,839
|
|
6. Stock-Based Compensation
Recognition and Retention Plan
On August 10, 2005, the shareholders of the Company approved the establishment of the Home Federal Bancorp, Inc. of Louisiana 2005 Recognition and Retention Plan and Trust Agreement (the “2005 Recognition Plan”) as an incentive to retain personnel of experience and ability in key positions. The aggregate number of shares of the Company’s common stock subject to award under the 2005 Recognition Plan totaled 63,547 shares (as adjusted for the exchange ratio of 0.9110 on December 22, 2010). As the shares were acquired for the 2005 Recognition Plan, the purchase price of these shares was recorded as a contra equity account. As the shares are distributed, the contra equity account is reduced. During the nine months ended March 31, 2013, 561 shares vested and were released from the 2005 Recognition Plan Trust and 1,686 shares remained in the 2005 Recognition Plan Trust at March 31, 2013.
On December 23, 2011, the shareholders of the Company approved the establishment of the Home Federal Bancorp, Inc. of Louisiana 2011 Recognition and Retention Plan and Trust Agreement (the “2011 Recognition Plan”, together with the 2005 Recognition Plan, the “Recognition Plan”) as an incentive to retain personnel of experience and ability in key positions. The aggregate number of shares of the Company’s common stock available for award under the 2011 Recognition Plan totaled 77,808 shares. During the nine months ended March 31, 2013, 13,842 shares vested and were released from the 2011 Recognition Plan Trust and 63,966 shares remained in the 2011 Recognition Plan Trust at March 31, 2013.
Recognition Plan shares are earned by recipients at a rate of 20% of the aggregate number of shares covered by the Recognition Plan award over five years. Generally, if the employment of an employee or service as a non-employee director is terminated prior to the fifth anniversary of the date of grant of Recognition Plan share award, the recipient shall forfeit the right to any shares subject to the award that have not been earned. In the case of death or disability of the recipient or a change in control of the Company, the Recognition Plan awards will be vested and shall be distributed as soon as practicable thereafter.
The Recognition Plan cost is recognized over the five year vesting period. During the nine months ended March 31, 2013, the Company recognized $157,000 in expense related to the Recognition Plans.
Stock Option Plan
On August 10, 2005, the shareholders of the Company approved the establishment of the Home Federal Bancorp, Inc. of Louisiana 2005 Stock Option Plan (the “2005 Option Plan”) for the benefit of directors, officers, and other key employees. The aggregate number of shares of common stock reserved for issuance under the 2005 Option Plan totaled 158,868 (as adjusted). Both incentive stock options and non-qualified stock options may be granted under the 2005 Option Plan. As of March 31, 2013, 71,709 options were outstanding under the 2005 Option Plan and 2,133 were available for future grant.
6. Stock-Based Compensation (continued)
Stock Option Plan (continued)
On December 23, 2011, the shareholders of the Company approved the establishment of the Home Federal Bancorp, Inc. of Louisiana 2011 Stock Option Plan (the “2011 Option Plan”, together with the 2005 Option Plan, the “Option Plans”) for the benefit of directors, officers, and other key employees. The aggregate number of shares of common stock reserved for issuance under the 2011 Option Plan totaled 194,522. Both incentive stock options and non-qualified stock options may be granted under the 2011 Option Plan. As of March 31, 2013, 169,235 options had been granted under the 2011 Option Plan of which 1,556 options had been exercised and 25,287 were available for future grant.
Under the Option Plans, the exercise price of each option cannot be less than the fair market value of the underlying common stock as of the date of the option grant and the maximum term is ten years. Incentive stock options and non-qualified stock options granted under the Option Plans become vested and exercisable at a rate of 20% per year over five years, commencing one year from the date of the grant, with an additional 20% vesting on each successive anniversary of the date the option was granted. No vesting shall occur after an employee’s employment or service as a director is terminated. In the event of the death or disability of an employee or director or change in control of the Company, the unvested options shall become vested and exercisable. The Company accounts for the Option Plans under the guidance of FASB ASC Topic 718,
Compensation – Stock Compensation.
7. Related Party Transactions
Certain directors and executive officers were indebted to the Bank in the approximate aggregate amounts of $2.2 million and $1.9 million at March 31, 2013 and June 30, 2012, respectively.
8. Fair Value Disclosures
The following disclosure is made in accordance with the requirements of ASC 825,
Financial Instruments
. Financial instruments are defined as cash and contractual rights and obligations that require settlement, directly or indirectly, in cash. In cases where quoted market prices are not available, fair values have been estimated using the present value of future cash flows or other valuation techniques. The results of these techniques are highly sensitive to the assumptions used, such as those concerning appropriate discount rates and estimates of future cash flows, which require considerable judgment. Accordingly, estimates presented herein are not necessarily indicative of the amounts the Company could realize in a current settlement of the underlying financial instruments.
ASC 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure requirements. These disclosures should not be interpreted as representing an aggregate measure of the underlying value of the Company.
The following methods and assumptions were used by the Company in estimating fair values of financial instruments:
|
Cash and Cash Equivalents
|
|
The carrying amount approximates the fair value of cash and cash equivalents.
|
Securities to be Held-to-Maturity and Available-for-Sale
Fair values for investment securities, including mortgage-backed securities, are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments. The carrying values of restricted or non-marketable equity securities approximate their fair values. The carrying amount of accrued investment income approximates its fair value.
HOME FEDERAL BANCORP, INC. OF LOUISIANA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8.
|
Fair Value Disclosures (continued)
|
Fair values of assets and liabilities measured on a recurring basis at March 31, 2013 and June 30, 2012 are as follows:
|
|
Fair Value Measurements Using:
|
|
|
|
|
March 31, 2013
|
|
Quoted Prices in
Active Markets for
Identical Assets
|
|
|
Significant
Other Observable
Inputs
|
|
|
|
|
|
|
|
|
|
(In Thousands)
|
|
|
|
|
Available-for-Sale
|
|
|
|
|
|
|
|
|
|
Debt Securities
|
|
|
|
|
|
|
|
|
|
FHLMC Mortgage-Backed Certificates
|
|
$
|
--
|
|
|
$
|
445
|
|
|
$
|
445
|
|
FNMA Mortgage-Backed Certificates
|
|
|
--
|
|
|
|
14,585
|
|
|
|
14,585
|
|
GNMA Mortgage-Backed Certificates
|
|
|
--
|
|
|
|
38,283
|
|
|
|
38,283
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
--
|
|
|
$
|
53,313
|
|
|
$
|
53,313
|
|
|
|
Fair Value Measurements Using:
|
|
|
|
|
June 30, 2012
|
|
Quoted Prices in
Active Markets for
Identical Assets
|
|
|
Significant
Other Observable
Inputs
|
|
|
|
|
|
|
|
|
|
(In Thousands)
|
|
|
|
|
Available-for-Sale
|
|
|
|
|
|
|
|
|
|
Debt Securities
|
|
|
|
|
|
|
|
|
|
FHLMC Mortgage-Backed Certificates
|
|
$
|
--
|
|
|
$
|
668
|
|
|
$
|
668
|
|
FBNA Mortgage-Backed Certificates
|
|
|
--
|
|
|
|
22,974
|
|
|
|
22,974
|
|
GNMA Mortgage-Backed Certificates
|
|
|
--
|
|
|
|
43,482
|
|
|
|
43,482
|
|
Equity Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
ARM Fund
|
|
|
1,302
|
|
|
|
--
|
|
|
|
1,302
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,302
|
|
|
$
|
67,124
|
|
|
$
|
68,426
|
|
HOME FEDERAL BANCORP, INC. OF LOUISIANA
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
General
The Company’s results of operations are primarily dependent on the results of the Bank, which became a wholly owned subsidiary upon completion of the second-step conversion and reorganization of the Bank on December 22, 2010. The Bank’s results of operations depend, to a large extent, on net interest income, which is the difference between the income earned on its loan and investment portfolios and the cost of funds, consisting of the interest paid on deposits and borrowings. Results of operations are also affected by provisions for loan losses and loan sale activities. Non-interest expense principally consists of compensation and employee benefits, office occupancy and equipment expense, data processing and other expense. Our results of operations are also significantly affected by general economic and competitive conditions, particularly changes in interest rates, government policies and actions of regulatory authorities. Future changes in applicable law, regulations or government policies may materially impact our financial conditions and results of operations.
Home Federal Bank operates from its main office in Shreveport, Louisiana and three full service branch offices and an agency office located in Shreveport and Bossier City, Louisiana. The Company’s primary market area is the Shreveport-Bossier City metropolitan area. The Company offers security brokerage and advisory services through a third party provider at its agency office, which also serves as the office for the commercial lending division and as a loan production office. During the quarter ended March 31, 2013, the Bank determined to relocate its agency office from leased property to a building at 222 Florida Street, Shreveport, Louisiana that had been held for sale. The agency office relocation is expected to be completed in July 2013.
Critical Accounting Policies
Allowance for Loan Losses.
The Company has identified the calculation of the allowance for loan losses as a critical accounting policy, due to the higher degree of judgment and complexity than its other significant accounting policies. Provisions for loan losses are based upon management’s periodic valuation and assessment of the overall loan portfolio and the underlying collateral, trends in non-performing loans, current economic conditions and other relevant factors in order to maintain the allowance for loan losses at a level believed by management to represent all known and inherent losses in the portfolio that are both probable and reasonably estimable. Although management uses the best information available, the level of the allowance for loan losses remains an estimate which is subject to significant judgment and short-term change.
Income Taxes.
Deferred income tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various assets and liabilities and gives current recognition to changes in tax rates and laws. The realization of our deferred tax assets principally depends upon our achieving projected future taxable income. We may change our judgments regarding future profitability due to future market conditions and other factors. We may adjust our deferred tax asset balances if our judgments change.
Discussion of Financial Condition Changes from June 30, 2012 to March 31, 2013
At March 31, 2013, total assets amounted to $276.2 million compared to $296.2 million at June 30, 2012, a decrease of approximately $20.0 million, or 6.7%. The decrease in assets was comprised primarily of decreases in cash and cash equivalents of $27.8 million, from $34.9 million at June 30, 2012 to $7.0 million at March 31, 2013, investment securities of $14.6 million, or 20.9%, from $69.8 million at June 30, 2012, to $55.2 million at March 31, 2013, and loans held-for-sale of $7.0 million, or 62.6%, from $11.2 million at June 30, 2012 to $4.2 million at March 31, 2013, partially offset by an increase in net loans receivable of $28.2 million, or 16.7%, from $168.3 million at June 30, 2012 to $196.4 million at March 31, 2013. The $27.8 million decrease in cash and cash equivalents was due to a non-recurring deposit in the fourth quarter of the fiscal year ended June 30, 2012, which had a balance of $31.7 million at June 30, 2012. This deposit was short-term in nature and was fully withdrawn during the quarter ended September 30, 2012. The increase in net loans receivable at March 31, 2013 compared to June 30, 2012, was attributable primarily to increases in commercial real estate loans of $12.2 million, one- to-four family residential of $7.9 million, multi-family residential loans of $7.1 million, land loans of $3.6 million and
HOME FEDERAL BANCORP, INC. OF LOUISIANA
Discussion of Financial Condition Changes from June 30, 2012 to March 31, 2013 (continued)
commercial business loans of $3.2 million, partially offset by a decrease of $7.4 million in construction loans. The $14.6 million decrease in investment securities was due to normal principal repayments during the nine months ended March 31, 2013. The decrease in loans held-for-sale primarily reflects a decrease at March 31, 2013 in receivables from financial institutions purchasing the Company’s loans held-for-sale.
At March 31, 2013, the Company had $768,000 of non-performing assets compared to $14,000 at June 30, 2012. Our non-performing assets at March 31, 2013 consisted of three one- to four-family residential loans purchased from a local mortgage originator secured by property in our market area that are 90 days or more past due and accruing interest, a one- to four-family residential loan we originated that was 90 days or more past due and on non-accrual status and a line of credit totaling $27,000 that was on non-accrual status. Following the expansion of the Company’s mortgage lending operations, the Company has not purchased mortgage loans since fiscal 2008. Non-performing assets at June 30, 2012 consisted of a $14,000 one- to four-family residential mortgage loan on non-accrual status.
The Company’s total liabilities amounted to $233.9 million at March 31, 2013, a decrease of approximately $12.4 million, or 5.0%, compared to total liabilities of $246.3 million at June 30, 2012. The primary reason for the decrease in liabilities was due to a decrease in deposits of $18.4 million, or 8.3%, from $221.4 million at June 30, 2012 to $203.1 million at March 31, 2013, partially offset by an increase in advances from the Federal Home Loan Bank of $6.3 million, or 26.7%, to $29.7 million at March 31, 2013 from $23.5 million at June 30, 2012. The decrease in deposits was primarily due to the withdrawal during the quarter ended September 30, 2012 of the non-recurring deposit discussed above which had a balance of approximately $31.7 million at June 30, 2012. Certificates of Deposit increased $2.0 million, or 1.9%, from $108.6 million at June 30, 2012 to $110.7 million at March 31, 2013. Interest bearing NOW accounts increased $5.1 million, or 30.1%, from $16.9 million at June 30, 2012 to $22.0 million at March 31, 2013. Non-interest bearing accounts increased $2.8 million, or 13.8%, and passbook savings accounts increased $2.3 million, or 33.2%, at March 31, 2013 compared to June 30, 2012. 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, all of which have maturity dates greater than twelve months, are callable by Home Federal Bank after twelve months pursuant to early redemption provisions. At March 31, 2013 and June 30, 2012, the Company had $12.7
million and $10.4 million, respectively, in brokered deposits.
Stockholders’ equity decreased $7.6 million, or 15.2%, to $42.3 million at March 31, 2013 compared to $49.9 million at June 30, 2012. The primary reasons for the decrease in stockholders’ equity from June 30, 2012, were the acquisition of treasury stock of $10.2 million, dividends paid of $492,000, and a decrease in the Company’s accumulated other comprehensive income of $600,000. These decreases in stockholders’ equity were partially offset by net income of $2.5 million for the nine months ended March 31, 2013, proceeds from the issuance of common stock from the exercise of stock options of $742,000 and the vesting of restricted stock awards, stock options and release of Employee Stock Ownership Plan shares totaling $525,000. The Company’s book value per share increased from $17.34 at June 30, 2012 to $17.92 at March 31, 2013 based on shares outstanding of 2,877,032 and 2,361,879, respectively.
The Bank is required to meet minimum capital standards promulgated by the Office of the Comptroller of the Currency (“OCC”). At March 31, 2013, Home Federal Bank’s regulatory capital was well in excess of the minimum capital requirements.
Comparison of Operating Results for the Three and Nine Month Periods Ended March 31, 2013 and 2012
General
Net income amounted to $676,000 for the three months ended March 31, 2013 compared to $587,000
for the same period in 2012, an increase of $89,000 or 15.2%. The increase was primarily due to a $126,000 or 5.0%, increase in net interest income, an $81,000, or 3.5%, decrease in non-interest expense and a $2,000, or 0.9%, decrease in the provision for loan losses, partially offset by a decrease of $56,000, or 6.8%, in non-interest income and a $64,000, or 24.7%, increase in income tax expense for the 2013 period compared to the same period in 2012. The increase in
HOME FEDERAL BANCORP, INC. OF LOUISIANA
Comparison of Operating Results for the Three and Nine Month Periods Ended March 31, 2013 and 2012 (continued)
net interest income for the three months ended March 31, 2013 was primarily due to a decrease in the Company’s cost of funds for the three months ended March 31, 2013, compared to the prior year period. The decrease in non-interest expense was primarily due to decreases in compensation and benefit expense, audit and examination fees, occupancy and equipment expense and loan collection expense, partially offset by increases in data processing and legal fees.
Net income amounted to $2.5 million for the nine months ended March 31, 2013 compared to net income of $2.1 million
for the same period in 2012, an increase of $426,000, or 20.6%. The increase was primarily due to a $911,000, or 12.9%, increase in net interest income, a $150,000, or 6.1%, increase in non-interest income, and a $49,000, or 10.0%, decrease in the provision for loan losses for the 2013 period compared to the same period for 2012. These changes were partially offset by an increase of $308,000, or 5.1%, in non-interest expense and a $376,000, or 44.0%, increase in income tax expense. The increase in net interest income for the nine months ended March 31, 2013 was primarily due to an increase in interest income and fees from higher loan originations combined with a decrease in the Company’s cost of funds for the nine months ended March 31, 2013, compared to the prior year period. The increase in non-interest expense was primarily due to an increase in compensation and benefits expense of $310,000, or 8.2%, and other expenses associated with the Company’s growth.
Net Interest Income
Net interest income for the three months ended March 31, 2013 was $2.6 million, an increase of $126,000, or 5.0%, in comparison to $2.5 million for the three months ended March 31, 2012. This increase was primarily due to a decrease of $126,000 or 16.9%, in the Company’s cost of funds. Total interest income was constant at $3.3 million for both three month periods. The cost of funds from Federal Home Loan Bank borrowings decreased $61,000, or 44.5% during the period while interest paid on deposits also decreased $66,000, or 10.8% during the same period.
Net interest income for the nine months ended March 31, 2013 was $7.9 million, an increase of $911,000, or 12.9%, in comparison to $7.0 million for the nine months ended March 31, 2012. This increase was primarily due to an increase of $538,000 in total interest income and a decrease of $373,000 in the Company’s cost of funds. The increase in total interest income was primarily due to an increase in interest income generated from loans of $1.2 million, or 15.8%, partially offset by a decrease in interest income from investment securities of $68,000, or 77.3%, and a decrease in interest income from mortgage-backed securities of $563,000 or 30.0%. The cost of funds from Federal Home Loan Bank borrowings decreased $211,000, or 44.5% during the period while interest paid on deposits also decreased $166,000, or 8.9%, during the same period.
The Company’s average interest rate spread was 3.80% for both the three and nine months ended March 31, 2013, compared to 3.75% and 3.57% for the three and nine months ended March 31, 2012, respectively. The Company’s net interest margin was 4.03% and 4.08% for the three and nine months ended March 31, 2013, respectively, compared to 4.11% and 3.97% for the three and nine months ended March 31, 2012, respectively. The increase in net interest margin and average interest rate spread for the three and nine month periods is attributable primarily to a higher volume of interest earning assets at relatively stable rates. Net interest income also increased primarily due to the increase in volume of average interest-earning assets. The increases in average interest rate spread and net interest income was also influenced by decreases in the average rates paid on interest bearing liabilities.
Provision for Losses on Loans
Based on an analysis of historical experience, the volume and type of lending conducted by Home Federal Bank, the status of past due principal and interest payments, general economic conditions, particularly as such conditions relate to our market area and other factors related to the collectability of Home Federal Bank’s loan portfolio, a provision for loan losses of $214,000 and $441,000 was made during the three and nine months ended March 31, 2013, respectively, compared to a $216,000 and $490,000 provision made during the three and nine months ended March 31, 2012, respectively. The allowance for loan losses was $2.1 million, or 1.1% of total loans, at March 31,
HOME FEDERAL BANCORP, INC. OF LOUISIANA
Comparison of Operating Results for the Three and Nine Month Periods Ended March 31, 2013 and 2012 (continued)
2013 compared to $1.3 million, or 0.8%, of total loans at March 31, 2012. At March 31, 2013, Home Federal Bank had five
non-performing loans in the aggregate amount of $768,000 and no
other non-performing assets or troubled-debt restructurings. At March 31, 2012, Home Federal had one non-performing loan in the amount of $14,000. There can be no assurance that the loan loss allowance will be sufficient to cover losses on non-performing assets in the future.
Non-interest Income
Total non-interest income amounted to $770,000 for the three months ended March 31, 2013, a decrease of $56,000, or 6.8% compared to $826,000 for the same period in 2012. The decrease was due to decreases of $31,000 in other non-interest income, $19,000 in gain on sale of loans and $6,000 in income on bank owned life insurance compared to the same period in 2012.
Total non-interest income amounted to $2.6 million for the nine months ended March 31, 2013, an increase of $150,000, or 6.1%, compared to $2.5 million for the same period in 2012. The increase was primarily due to increases of $228,000 in gain on sale of loans held for sale, partially offset by decreases of $39,000 in gain on sale of investments, $22,000 in other non-interest income and $17,000 in income on bank owned life insurance.
Non-interest Expense
Total non-interest expense decreased $81,000, or 3.5%, for the three months ended March 31, 2013 compared to the prior year period. The decrease in non-interest expense was primarily due to decreases of $51,000 in audit and examination fees, $42,000 in occupancy and equipment expenses, $35,000 in loan and collection expense, $29,000 in compensation and benefits expense and $9,000 in advertising expense. These decreases were partially offset by increases of $46,000 in data processing costs and $38,000 in legal fees.
Total non-interest expense increased $308,000, or 5.1%, for the nine months ended March 31, 2013 compared to the prior year period. The increase in non-interest expense was primarily due to an increase in compensation and benefits expense of $310,000, or 8.2%, as well as increases of $82,000 in legal expenses, and $67,000 in data processing costs. These increases were partially offset by decreases of $60,000 in audit and examination fees, $30,000 in loan and collection expense, $26,000 in advertising expense, $19,000 in occupancy and equipment expense and $22,000 in other non-interest expense.
The increases in compensation and benefits expense were a result of normal compensation increases including stock options and recognition and retention plan expense and the hiring of additional commercial and residential loan officers. The aggregate compensation expense recognized by the Company for its Stock Option, ESOP and Recognition and Retention Plans amounted to $147,000 and $431,000 for the three and nine months ended March 31, 2013, compared to $105,000 and $189,000 for the three and nine months ended March 31, 2012, respectively.
The Louisiana bank shares tax is assessed on the Bank’s equity and earnings. For the three and nine months ended March 31, 2013, the Company recognized franchise and bank shares tax expense of $84,000 and $224,000, respectively, compared to $87,000 and $230,000 for the same periods in 2012.
Income Taxes
Income taxes amounted to $323,000 and $1.2 million for the three and nine months ended March 31, 2013, respectively, resulting in effective tax rates of 32.3% and 33.0%, respectively. Income taxes amounted to $259,000 and $855,000 for the three and nine months ended March 31, 2012, respectively, resulting in effective tax rates of 30.6% and 29.2%, respectively. The increase in the effective income tax rate for the nine months ended March 31, 2013, compared to the prior year period, is primarily the result of a return to more normalized rates in 2013 following the effect of a combination of a difference in capital gains and losses resulting in a 2.9% reduction, and non-taxable income resulting in a 1.9% reduction, in rate for the nine months ended March 31, 2012.
HOME FEDERAL BANCORP, INC. OF LOUISIANA
Comparison of Operating Results for the Three and Nine Month Periods Ended March 31, 2013 and 2012 (continued)
Average Balances, Net Interest Income, Yields Earned and Rates Paid.
The following tables show for the periods indicated the total dollar amount of interest from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates, and the net interest margin. Tax-exempt income and yields have not been adjusted to a tax-equivalent basis. All average balances are based on monthly balances. Management does not believe that the monthly averages differ significantly from what the daily averages would be.
|
|
Three Months Ended March 31,
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
Average
Yield/
|
|
|
Average
|
|
|
|
|
|
Average
Yield/
|
|
|
|
(Dollars In Thousands)
|
|
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities
|
|
$
|
55,851
|
|
|
$
|
388
|
|
|
|
2.78
|
%
|
|
$
|
76,900
|
|
|
$
|
643
|
|
|
|
3.34
|
%
|
Loans receivable
|
|
|
201,100
|
|
|
|
2,880
|
|
|
|
5.73
|
|
|
|
164,113
|
|
|
|
2,624
|
|
|
|
6.40
|
|
Interest-earning deposits
|
|
|
6,352
|
|
|
|
2
|
|
|
|
0.12
|
|
|
|
4,332
|
|
|
|
3
|
|
|
|
0.28
|
|
Total interest-earning assets
|
|
|
263,303
|
|
|
|
3,270
|
|
|
|
4.97
|
|
|
|
245,345
|
|
|
|
3,270
|
|
|
|
5.33
|
|
Non-interest-earning assets
|
|
|
15,781
|
|
|
|
|
|
|
|
|
|
|
|
15,440
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
279,084
|
|
|
|
|
|
|
|
|
|
|
$
|
260,785
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings accounts
|
|
|
7,948
|
|
|
|
4
|
|
|
|
0.22
|
|
|
|
6,471
|
|
|
|
15
|
|
|
|
0.93
|
|
NOW accounts
|
|
|
21,776
|
|
|
|
42
|
|
|
|
0.77
|
|
|
|
19,069
|
|
|
|
17
|
|
|
|
0.36
|
|
Money market accounts
|
|
|
38,533
|
|
|
|
35
|
|
|
|
0.37
|
|
|
|
37,404
|
|
|
|
50
|
|
|
|
0.53
|
|
Certificate accounts
|
|
|
110,439
|
|
|
|
462
|
|
|
|
1.67
|
|
|
|
101,053
|
|
|
|
527
|
|
|
|
2.09
|
|
Total deposits
|
|
|
178,696
|
|
|
|
543
|
|
|
|
1.22
|
|
|
|
163,997
|
|
|
|
609
|
|
|
|
1.49
|
|
FHLB advances
|
|
|
33,567
|
|
|
|
77
|
|
|
|
0.91
|
|
|
|
25,404
|
|
|
|
137
|
|
|
|
2.16
|
|
Total interest-bearing liabilities
|
|
|
212,263
|
|
|
|
620
|
|
|
|
1.17
|
%
|
|
|
189,401
|
|
|
|
746
|
|
|
|
1.58
|
%
|
Non-interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest bearing demand accounts
|
|
|
23,258
|
|
|
|
|
|
|
|
|
|
|
|
19,133
|
|
|
|
|
|
|
|
|
|
Other liabilities
|
|
|
879
|
|
|
|
|
|
|
|
|
|
|
|
1,293
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
236,400
|
|
|
|
|
|
|
|
|
|
|
|
209,827
|
|
|
|
|
|
|
|
|
|
Total Stockholders’ Equity(1)
|
|
|
42,684
|
|
|
|
|
|
|
|
|
|
|
|
50,958
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
279,084
|
|
|
|
|
|
|
|
|
|
|
$
|
260,785
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest-earning assets
|
|
$
|
51,040
|
|
|
|
|
|
|
|
|
|
|
$
|
55,944
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income; average interest rate
spread(2)
|
|
|
|
|
|
$
|
2,650
|
|
|
|
3.80
|
%
|
|
|
|
|
|
$
|
2,524
|
|
|
|
3.75
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin(3)
|
|
|
|
|
|
|
|
|
|
|
4.03
|
%
|
|
|
|
|
|
|
|
|
|
|
4.11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average interest-earning assets to average
interest-bearing liabilities
|
|
|
|
|
|
|
|
|
|
|
124.05
|
%
|
|
|
|
|
|
|
|
|
|
|
129.54
|
%
|
__________________
(1)
|
Includes retained earnings and accumulated other comprehensive loss.
|
(2)
|
Interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average rate on interest-bearing liabilities.
|
(3)
|
Net interest margin is net interest income divided by net average interest-earning assets.
|
HOME FEDERAL BANCORP, INC. OF LOUISIANA
Comparison of Operating Results for the Three and Nine Month Periods Ended March 31, 2013 and 2012 (continued)
|
|
Nine Months Ended March 31,
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
|
|
|
Average
Yield/
|
|
|
Average
|
|
|
|
|
|
Average
Yield/
|
|
|
|
(Dollars In Thousands)
|
|
Interest-earning assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment securities
|
|
$
|
60,601
|
|
|
$
|
1,334
|
|
|
|
2.94
|
%
|
|
$
|
78,664
|
|
|
$
|
1,965
|
|
|
|
3.33
|
%
|
Loans receivable
|
|
|
193,450
|
|
|
|
8,564
|
|
|
|
5.90
|
|
|
|
150,167
|
|
|
|
7,394
|
|
|
|
6.57
|
|
Interest-earning deposits
|
|
|
5,917
|
|
|
|
10
|
|
|
|
0.22
|
|
|
|
7,366
|
|
|
|
11
|
|
|
|
0.20
|
|
Total interest-earning assets
|
|
|
259,968
|
|
|
|
9,908
|
|
|
|
5.08
|
|
|
|
236,197
|
|
|
|
9,370
|
|
|
|
5.29
|
|
Non-interest-earning assets
|
|
|
15,647
|
|
|
|
|
|
|
|
|
|
|
|
14,237
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
275,615
|
|
|
|
|
|
|
|
|
|
|
$
|
250,434
|
|
|
|
|
|
|
|
|
|
Interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings accounts
|
|
|
7,140
|
|
|
|
14
|
|
|
|
0.26
|
|
|
|
6,519
|
|
|
|
44
|
|
|
|
0.90
|
|
NOW accounts
|
|
|
19,719
|
|
|
|
118
|
|
|
|
0.80
|
|
|
|
16,926
|
|
|
|
74
|
|
|
|
0.58
|
|
Money market accounts
|
|
|
40,363
|
|
|
|
131
|
|
|
|
0.43
|
|
|
|
36,326
|
|
|
|
167
|
|
|
|
0.61
|
|
Certificate accounts
|
|
|
108,357
|
|
|
|
1,430
|
|
|
|
1.76
|
|
|
|
94,930
|
|
|
|
1,574
|
|
|
|
2.21
|
|
Total deposits
|
|
|
175,579
|
|
|
|
1,693
|
|
|
|
1.29
|
|
|
|
154,701
|
|
|
|
1,859
|
|
|
|
1.60
|
|
FHLB advances
|
|
|
28,773
|
|
|
|
267
|
|
|
|
1.24
|
|
|
|
25,962
|
|
|
|
474
|
|
|
|
2.43
|
|
Total interest-bearing liabilities
|
|
|
204,352
|
|
|
|
1,960
|
|
|
|
1.28
|
%
|
|
|
180,663
|
|
|
|
2,333
|
|
|
|
1.72
|
%
|
Non-interest-bearing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-interest bearing demand accounts
|
|
|
23,691
|
|
|
|
|
|
|
|
|
|
|
|
17,397
|
|
|
|
|
|
|
|
|
|
Other liabilities
|
|
|
1,352
|
|
|
|
|
|
|
|
|
|
|
|
1,577
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
229,395
|
|
|
|
|
|
|
|
|
|
|
|
199,637
|
|
|
|
|
|
|
|
|
|
Total Stockholders’ Equity(1)
|
|
|
46,220
|
|
|
|
|
|
|
|
|
|
|
|
50,797
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and equity
|
|
$
|
275,615
|
|
|
|
|
|
|
|
|
|
|
$
|
250,434
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest-earning assets
|
|
$
|
55,616
|
|
|
|
|
|
|
|
|
|
|
$
|
55,534
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income; average interest rate
spread(2)
|
|
|
|
|
|
$
|
7,948
|
|
|
|
3.80
|
%
|
|
|
|
|
|
$
|
7,037
|
|
|
|
3.57
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest margin(3)
|
|
|
|
|
|
|
|
|
|
|
4.08
|
%
|
|
|
|
|
|
|
|
|
|
|
3.97
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average interest-earning assets to average
interest-bearing liabilities
|
|
|
|
|
|
|
|
|
|
|
127.22
|
%
|
|
|
|
|
|
|
|
|
|
|
130.74
|
%
|
__________________
(1)
|
Includes retained earnings and accumulated other comprehensive loss.
|
(2)
|
Interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-average rate on interest-bearing liabilities.
|
(3)
|
Net interest margin is net interest income divided by net average interest-earning assets.
|
Liquidity and Capital Resources
Home Federal Bank maintains levels of liquid assets deemed adequate by management. The Bank adjusts its liquidity levels to fund deposit outflows, repay its borrowings and to fund loan commitments. Home Federal Bank also adjusts liquidity as appropriate to meet asset and liability management objectives.
Home Federal Bank’s primary sources of funds are deposits, amortization and prepayment of loans and mortgage-backed securities, maturities of investment securities and other short-term investments, loan sales and earnings and funds provided from operations. While scheduled principal repayments on loans and mortgage-backed securities are a relatively predictable source of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions and competition. The Bank sets the interest rates on its deposits to maintain a desired level of total deposits. In addition, Home Federal Bank invests excess funds in short-term interest-earning accounts and other assets, which provide liquidity to meet lending requirements. Home Federal Bank’s deposit accounts with the Federal Home Loan Bank of Dallas amounted to $1.1 million at March 31, 2013.
HOME FEDERAL BANCORP, INC. OF LOUISIANA
Comparison of Operating Results for the Three and Nine Month Periods Ended March 31, 2013 and 2012 (continued)
A significant portion of Home Federal Bank’s liquidity consists of securities classified as available-for-sale and cash and cash equivalents. Home Federal Bank’s primary sources of cash are net income, principal repayments on loans and mortgage-backed securities and increases in deposit accounts. If Home Federal Bank requires funds beyond its ability to generate them internally, borrowing agreements exist with the Federal Home Loan Bank of Dallas which provides an additional source of funds. At March 31, 2013, Home Federal Bank had $29.7 million in advances from the Federal Home Loan Bank of Dallas and had $107.3 million in additional borrowing capacity. Additionally, at March 31, 2013, Home Federal Bank was a party to a Master Purchase Agreement with First National Bankers Bank whereby Home Federal Bank may purchase Federal Funds from First National Bankers Bank in an amount not to exceed $17.4 million. There were no amounts purchased under this agreement as of March 31, 2013.
At March 31, 2013, Home Federal Bank had outstanding loan commitments of $30.9 million to originate loans. At March 31, 2013, certificates of deposit scheduled to mature in less than one year totaled $47.0 million.
Based on prior experience, management believes that a significant portion of such deposits will remain with us, although there can be no assurance that this will be the case. In addition, the cost of such deposits could be significantly higher upon renewal in a rising interest rate environment. Home Federal Bank intends to utilize its high levels of liquidity to fund its lending activities. If additional funds are required to fund lending activities, Home Federal Bank intends to sell its securities classified as available-for-sale as needed.
Home Federal Bank is required to maintain regulatory capital sufficient to meet tangible, core and risk-based capital ratios of at least 1.5%, 3.0% and 8.0%, respectively. At March 31, 2013, Home Federal Bank exceeded each of its capital requirements with ratios of 15.04 %, 15.04% and 25.90%, respectively.
Off-Balance Sheet Arrangements
At March 31, 2013, the Company did not have any off-balance sheet arrangements, as defined by Securities and Exchange Commission rules.
Impact of Inflation and Changing Prices
The financial statements and related financial data presented herein have been prepared in accordance with instructions to Form 10-Q, which require the measurement of financial position and operating results in terms of historical dollars, without considering changes in relative purchasing power over time due to inflation.
Unlike most industrial companies, virtually all of the Company’s assets and liabilities are monetary in nature. As a result, interest rates generally have a more significant impact on a financial institution’s performance than does the effect of inflation.
Forward-Looking Statements
This Form 10-Q contains certain forward-looking statements and information relating to the Company that are based on the beliefs of management as well as assumptions made by and information currently available to management. In addition, in those and other portions of this document, the words “anticipate,” “believe,” “estimate,” “except,” “intend,” “should” and similar expressions, or the negative thereof, as they relate to the Company or the Company’s management, are intended to identify forward-looking statements. Such statements reflect the current views of the Company with respect to future looking events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual results may vary from those described herein as anticipated, believed, estimated, expected or intended. The Company does not intend to update these forward-looking statements.
HOME FEDERAL BANCORP, INC. OF LOUISIANA
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosures Controls and Procedures.
Under the supervision and with the participation of our management, including our Chief Executive Officer and our President and Chief Operating Officer (together, the co-principal executive officers) and our Chief Financial Officer (principal financial officer), we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, the Chief Executive Officer, the President and Chief Operating Officer and the Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported within the applicable time periods specified by the Securities and Exchange Commission’s rules and forms.
Changes in Internal Control over Financial Reporting
. There has been no change in the Company’s internal control over financial reporting during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II
ITEM 1. LEGAL PROCEEDINGS
The Company is not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business, which involve amounts in the aggregate believed by management to be immaterial to the financial condition of the Company.
ITEM 1A. RISK FACTORS
Not applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(c)
|
Purchases of Equity Securities
|
The Company’s repurchases of its common stock made during the quarter ended March 31, 2013 are set forth in the table below:
|
|
Total Number of Shares
|
|
|
Average
Price Paid
per Share
|
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
|
|
|
Maximum Number
of Shares that May
Yet Be Purchased Under the Plans or Programs (a)
|
|
January 1, 2013 – January 31, 2013
|
|
|
139,214
|
|
|
$
|
17.73
|
|
|
|
14,214
|
|
|
|
139,522
|
|
February 1, 2013 – February 28, 2013
|
|
|
66,332
|
|
|
|
17.74
|
|
|
|
3,832
|
|
|
|
135,690
|
|
March 1, 2013 – March 31, 2013
|
|
|
1,345
|
|
|
|
18.25
|
|
|
|
1,345
|
|
|
|
134,345
|
|
Total
|
|
|
206,891
|
|
|
$
|
17.74
|
|
|
|
19,391
|
|
|
|
134,345
|
|
______________
Notes to this table:
(a)
|
On September 14, 2012, the Company announced by press release a repurchase program to repurchase up to 275,000 shares, or approximately 10.0% of the Company’s outstanding shares of common stock. The repurchase program does not have an expiration date.
|
(b)
|
On January 24, 2013, the Company announced by press release a repurchase program to repurchase up to 120,000 shares, or approximately 5.0% of the Company’s outstanding shares of common stock. The repurchase program does not have an expiration date.
|
HOME FEDERAL BANCORP, INC. OF LOUISIANA
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS
The following Exhibits are filed as part of this report:
|
No.
|
|
Description
|
|
|
10.1
|
|
Letter Agreement between Home Federal Bank and Adalberto Cantu, Jr., dated as of February 6, 2013*
|
|
|
31.1
|
|
Rule 13a-14(a)/15d-14(a) Certification of Co-Principal Executive Officer
|
|
|
31.2
|
|
Rule 13a-14(a)/15d-14(a) Certification of Co-Principal Executive Officer
|
|
|
31.3
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Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
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32.0
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Certification Pursuant to 18 U.S.C Section 1350
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The
following Exhibits are being furnished as part of this report:
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101.INS
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XBRL Instance Document.**
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101.SCH
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XBRL Taxonomy Extension Schema Document.**
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document.**
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document.**
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document.**
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101.DEF
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XBRL Taxonomy Extension Definitions Linkbase Document.**
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*
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Denotes a management contract or compensatory plan or arrangement.
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**
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These interactive data files are being furnished as part of this Quarterly Report, and, in accordance with Rule 402 of Regulation S-T, shall not be deemed filed for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, or Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under those sections.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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HOME FEDERAL BANCORP, INC. OF LOUISIANA
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Date: May 10, 2013
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By:
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/s/Clyde D. Patterson
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Clyde D. Patterson
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Executive Vice President and Chief Financial Officer
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(Duly authorized officer and principal financial and accounting officer)
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