HF Financial Corp. Announces Quarterly Earnings From Continuing
Operations And Declares Quarterly Cash Dividend -- HF Financial
Corp. (the "Company") (Nasdaq: HFFC), Sioux Falls, SD, reported
basic earnings per share from continuing operations ("EPS") of
$0.41 for the first quarter of fiscal 2004 compared to $0.43 for
the same period in the prior fiscal year. -- Asset Quality
continues to improve with the ratio of non-performing assets as a
percent of total assets decreasing to 0.62% at September 30, 2003
compared to 0.77% at June 30, 2003 and 1.52% at September 30, 2002.
-- For the first quarter of fiscal 2004, health claims, net of stop
loss reimbursement, decreased $217,000 compared to the fourth
quarter of fiscal 2003, which resulted in an approximate $0.05
increase in EPS. -- The Company announced it will pay its regular
quarterly cash dividend of 11.75 cents per share for the first
quarter of the 2004 fiscal year. The dividend will be payable on
November 19, 2003 to shareholders of record on November 5, 2003.
This dividend payment represents a 2% increase over the previous
four quarters' payouts of 11.5 cents per share and an annualized
dividend yield of 2.65% based on HFFC stock price at September 30,
2003. -- The Company closed the sale of its property and casualty
book of business during the first quarter of fiscal 2004. This
transaction resulted in an after tax gain of $77,000 and a $0.03
increase in EPS. SIOUX FALLS, S.D., Oct. 27 /PRNewswire-FirstCall/
-- HF Financial Corp., the parent company for financial service
companies, including Home Federal Bank, Mid America Capital
Services, Inc. ("Mid America Leasing"), Hometown Insurors, Inc. and
HF Financial Group, Inc. announced earnings from continuing
operations today of $1.3 million for the three months ended
September 30, 2003 compared to $1.5 million for the same period in
the prior fiscal year. Curtis L. Hage, Chairman, President and CEO
stated, "The results for the quarter reflect continued strong
mortgage loan closings. However, as is the case with the industry,
the mortgage loan pipelines decreased back to more historical
levels. This will continue to be reflected in next quarter's
results." Mr. Hage continued, "Maintaining net interest margin
continues to be a challenge due to the historically low rates over
the past year. We remain conservative in avoiding long-term rate
commitments in this low rate environment. We believe the margin
compression now is less costly than the exposure to longer term
interest rate risk." Mr. Hage also stated, "We are pleased with our
continuing asset quality improvement. Our significant impaired loan
credits are being resolved and underwriting on new loan production
continues to be conservative." Net interest income decreased
$586,000 or 8.7%, for the three months ended September 30, 2003 as
compared to the same period in the prior fiscal year. The Company's
net interest margin was 3.38% for the first quarter of fiscal 2004
as compared to 3.95% for the same period in the prior fiscal year
and 3.45% for the fourth quarter of fiscal 2003. The increase in
noninterest income of $463,000, or 15.1%, for the three months
ended September 30, 2003 as compared to the same period in the
prior fiscal year was primarily attributed to increases in net gain
on sale of loans of $346,000, loan fees and service charges of
$198,000 and other noninterest income of $265,000 (primarily due to
income from the securitization of automobile loans and sale of
property and casualty book of business) offset by a decrease in net
gain on sale of securities of $350,000. Noninterest expense
increased $797,000, or 12.4%, for the three months ended September
30, 2003 as compared to the same period in the prior fiscal year
primarily due to increases in compensation and employee benefits of
$704,000 (primarily due to increases in employee base compensation
of $261,000 and increased health claims net of stop loss of
$342,000) and other expenses of $94,000. The Company had total
assets of $783.8 million and stockholders' equity of $50.5 million
at September 30, 2003. The Company is the largest publicly traded
financial institution based in South Dakota, with 34 offices, which
includes a location in Marshall, Minnesota. Internet banking is
also available at http://www.homefederal.com/ . Forward-Looking
Statements This news release and other releases and reports issued
by the Company, including reports filed with the Securities and
Exchange Commission, contain "forward-looking statements" that deal
with future results, expectations, plans and performance. In
addition, the Company's management may make forward-looking
statements orally to the media, securities analysts, investors or
others. These forward-looking statements might include one or more
of the following: -- Projections of income, loss, revenues,
earnings or losses per share, dividends, capital expenditures,
capital structure, tax benefit or other financial items. --
Descriptions of plans or objectives of management for future
operations, products or services and transactions. -- Forecasts of
future economic performance. -- Descriptions of assumptions
underlying or relating to such matters. Forward-looking statements
can be identified by the fact that they do not relate strictly to
historical or current facts. They often include words such as
"optimism", "look forward", "bright", "believe", "expect",
"anticipate", "intend", "plan", "estimate" or words of similar
meaning, or future or conditional verbs such as "will", "would",
"should", "could" or "may". Forward-looking statements about the
Company's expected financial results and other plans are subject to
certain risks, uncertainties and assumptions. These include, but
are not limited to, possible legislative changes and adverse
economic, business and competitive developments, such as shrinking
interest margins; deposit outflows; reduced demand for financial
services and loan products; changes in accounting policies or
guidelines, or in monetary and fiscal policies of the federal
government; changes in credit and other risks posed by the
Company's loan portfolios; the ability or inability to successfully
enter into a definitive agreement for and close anticipated
transactions; technological, computer-related or operational
difficulties; adverse changes in securities markets; results of
litigation; or other significant uncertainties. Forward-looking
statements speak only as of the date they are made. The Company
does not undertake to update forward-looking statements to reflect
circumstances or events that occur after the date the
forward-looking statements are made. HF Financial Corp. Selected
Consolidated Operating Highlights (Dollars in Thousands, Except per
Share Data) Three Months Ended September 30, 2003 2002 (Unaudited)
(Unaudited) Continuing operations: Interest and dividend income:
Loans and leases receivable $9,386 $10,501 Investment securities
and interest-bearing deposits 678 1,005 10,064 11,506 Interest
expense: Deposits 2,596 3,388 Advances from Federal Home Loan Bank
and other borrowings 1,319 1,383 3,915 4,771 Net interest income
6,149 6,735 Provision for losses on loans and leases 437 1,034 Net
interest income after provision for losses on loans and leases
5,712 5,701 Noninterest income: Fees on deposits 1,072 1,083 Loan
fees and service charges 676 478 Gain on sale of loans, net 568 222
Loan servicing income 419 404 Gain on sale of securities, net - - -
- 350 Other 797 532 3,532 3,069 Noninterest expense: Compensation
and employee benefits 4,808 4,104 Occupancy and equipment 820 821
Other 1,608 1,514 7,236 6,439 Income from continuing operations
before income taxes 2,008 2,331 Income tax expense 686 880 Income
from continuing operations 1,322 1,451 Discontinued operations:
Income from operations of discontinued segment, net of income taxes
of $45 - - - - 88 (Loss) on discontinued segment, net of income
taxes of $(15) - - - - (29) Income from discontinued operations - -
- - 59 Net income $1,322 $1,510 HF Financial Corp. Selected
Consolidated Operating Highlights (Dollars in Thousands, Except per
Share Data) Three Months Ended September 30, 2003 2002 (Unaudited)
(Unaudited) Basic earnings per share: Income from continuing
operations $0.41 $0.43 Income from discontinued operations - - - -
0.02 Net income 0.41 0.45 Diluted earnings per share: Income from
continuing operations 0.40 0.43 Income from discontinued operations
- - - - 0.02 Net income 0.40 0.45 Weighted average shares: Basic
3,236,338 3,335,189 Diluted 3,338,431 3,364,660 Outstanding shares:
(end of period) 3,259,347 3,348,514 HF Financial Corp. Selected
Consolidated Financial Condition Data (Dollars in Thousands, Except
per Share Data) (Unaudited) 9/30/2003 6/30/2003 9/30/2002 Balance
Sheet Data Total assets $783,759 $800,483 $762,475 Cash and cash
equivalents 32,172 44,214 21,814 Securities available for sale
77,753 88,527 93,464 Loans and leases receivable, net 604,868
595,417 586,419 Loans held for sale 14,542 15,984 13,304 Deposits
603,770 621,381 540,035 Advances from Federal Home Loan Bank and
other borrowings 80,061 89,819 135,364 Company obligated
mandatorily redeemable preferred securities of subsidiary trusts
that solely hold subordinated debentures 27,000 20,000 15,000
Stockholders' equity 50,471 49,358 49,424 Equity to total assets
(end of period) 6.44% 6.17% 6.48% Book value per share (a) $15.49
$15.32 $14.76 Tier I (core) capital (b) 8.62% 8.25% 7.42%
Risk-based capital (b) 10.40% 10.20% 10.14% Number of full-service
offices 34 34 33 Asset Quality Nonaccruing loans and leases $3,472
$4,365 $9,718 Accruing loans and leases delinquent more than 90
days 1,112 1,466 1,516 Foreclosed assets (c) 261 335 367 Total
nonperforming assets $4,845 $6,166 $11,601 Ratio of nonperforming
assets to total assets (end of period) 0.62% 0.77% 1.52% Ratio of
allowance for loan and lease losses to total loans and leases (end
of period) 0.64% 0.62% 0.86% Ratio of allowance for loan and lease
losses to nonperforming loans and leases (end of period) (d) 87.22%
65.89% 46.31% (a) Equity divided by number of shares of outstanding
common stock. (b) Capital ratios for Home Federal Bank. (c) Total
foreclosed assets do not include land or other real estate owned
held for sale. (d) Nonperforming loans and leases include both
nonaccruing and accruing loans and leases delinquent more than 90
days. HF Financial Corp. Selected Consolidated Financial Condition
Data From Continuing Operations (Dollars in Thousands) (Unaudited)
Allowance for Loan and Lease Loss Activity Three Months Ended
9/30/2003 9/30/2002 Balance, beginning $3,842 $4,461 Provision
charged to income 437 1,034 Charge-offs (343) (397) Recoveries 62
104 Balance, ending $3,998 $5,202 Average Balances, Interest Yields
and Rates Three Months Ended 9/30/2003 9/30/2002 Average Yield/Rate
Average Yield/Rate Interest-earning assets: Loans and leases
receivable (a) $623,533 5.97% $581,730 7.16% Investment securities
(b) (c) 99,166 2.71% 94,472 4.22% Total interest-earning assets
722,699 5.52% 676,202 6.75% Noninterest-earning assets 61,676
47,510 Total assets $784,375 $723,712 Interest-bearing liabilities:
Deposits: Checking and money market $224,138 1.12% $189,719 1.55%
Savings 47,183 0.59% 40,752 0.98% Certificates of deposit 264,447
2.84% 253,892 3.98% Total interest-bearing deposits 535,768 1.92%
484,363 2.78% FHLB advances and other borrowings 85,774 4.69%
104,371 4.44% Company obligated mandatorily redeemable preferred
securities of subsidiary trusts that solely hold subordinated
debentures 22,333 5.42% 14,176 5.99% Total interest-bearing
liabilities 643,875 2.41% 602,910 3.14% Noninterest-bearing
deposits 69,924 52,909 Other liabilities 20,813 18,633 Total
liabilities 734,612 674,452 Equity 49,763 49,260 Total liabilities
and equity $784,375 $723,712 Net interest spread (d) 3.11% 3.61%
Net interest margin (d) (e) 3.38% 3.95% Return on average assets
(d) (f) 0.67% 0.80% Return on average equity (d) (g) 10.63% 11.78%
(a) Includes interest on accruing loans and leases past due 90 days
or more. (b) Includes federal funds sold. (c) Yields do not reflect
the tax-exempt nature of municipal securities. (d) Percentages for
the three months ended 9/30/03 and 9/30/02 have been annualized.
(e) Net interest margin is net interest income divided by average
interest-earning assets. (f) Ratio of income from continuing
operations to average total assets. (g) Ratio of income from
continuing operations to average equity. DATASOURCE: HF Financial
Corp. CONTACT: Curtis L. Hage, Chairman, President and CEO of HF
Financial Corp., +1-605-333-7556 Web site:
http://www.homefederal.com/
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