FOR RELEASE: Thursday, January 22, 2015 at 4:30 PM (Eastern)

HOME FEDERAL BANCORP, INC. OF LOUISIANA REPORTS

RESULTS OF OPERATIONS FOR THE

THREE AND SIX MONTHS ENDED DECEMBER 31, 2014

Shreveport, Louisiana – January 22, 2015 – 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, 2014 of $835,000, an increase of $190,000, or 29.5% compared to net income of $645,000 reported for the three months ended December 31, 2013. The Company's basic and diluted earnings per share were $0.42 and $0.41, respectively, for the three months ended December 31, 2014, compared to basic and diluted earnings per share of $0.31 and $0.30, respectively, for the quarter ended December 31, 2013.

The Company reported net income of $1.7 million for the six months ended December 31, 2014, an increase of $300,000, compared to $1.4 million for the six months ended December 31, 2013. The Company's basic and diluted earnings per share were $0.83 and $0.81, respectively, for the six months ended December 31, 2014, compared to $0.64 and $0.63, respectively, for the six months ended December 31, 2013.

The increase in net income for the three months ended December 31, 2014, resulted primarily from an increase of $473,000, or 18.0%, in net interest income, and a $25,000, or 4.4%, increase in non-interest income, partially offset by a $150,000, or 6.7%, increase in non-interest expense, a $100,000, or 32.4%, increase in the provision for income tax expense and a $58,000, or 263.6% increase in the provision for loan losses. The increase in net interest income for the three months ended December 31, 2014, was primarily due to a $488,000, or 15.1%, increase in total interest income, partially offset by an increase of $15,000, or 2.5%, in aggregate interest expense primarily due to an increase in Federal Home Loan Bank borrowings.  The Company's average interest rate spread was 3.65% for the three months ended December 31, 2014, compared to 3.66% for the three months ended December 31, 2013. The Company's net interest margin was 3.83% for the three months ended December 31, 2014, compared to 3.91% for the quarter ended December 31, 2013. The decrease in the average interest rate spread on a comparative quarterly basis was primarily the result of a decrease of 21 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 three months ended December 31, 2014 compared to the prior year quarterly period.

The increase in net income for the six months ended December 31, 2014, resulted primarily from a $746,000, or 14.0%, increase in net interest income, and an increase of $52,000, or 4.4%, in non-interest income partially offset by a $306,000, or 6.9%, increase in non-interest expense, a $160,000, or 24.5%, increase in income tax expense and a $32,000, or 36.4%, increase in the provision for loan losses. The increase in net interest income for the six month period was primarily due to a $711,000, or 10.8%, increase in total interest income and a $35,000, or 2.8%, decrease in interest expense on borrowings and deposits due to an overall decline in the average cost of funds.  The Company's average interest rate spread was 3.64% for the six months ended December 31, 2014, compared to 3.66% for the six months ended December 31, 2013.  The Company's net interest margin was 3.83% for the six months ended December 31, 2014, compared to 3.91% for the six months ended December 31, 2013.  The decrease in net interest margin and average interest rate spread is attributable primarily to a decrease of 23 basis points in average yield on interest earning assets.

 

 

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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.

The $25,000 increase in non-interest income for the quarter ended December 31, 2014, compared to the prior year quarterly period was due to an increase of $34,000 in service charges on deposit accounts, an increase of $11,000 in gain on sale of loans and an increase of $7,000 in other non-interest income, partially offset by a $24,000 decrease in gain on sale of securities and a $3,000 decrease in income on Bank Owned Life Insurance.  The $52,000 increase in non-interest income for the six months ended December 31, 2014, compared to the prior year period was primarily due to increases of $59,000 in service charges on deposit accounts, $15,000 in other non-interest income, and $7,000 in gain on sale of loans, partially offset by a $24,000 decrease in gain on sale of securities and a $5,000 decrease in income on Bank Owned Life Insurance. The Company sells most of its fixed rate mortgage loan originations other than those loans selected for portfolio.

 

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The $150,000 increase in non-interest expense for the three months ended December 31, 2014, compared to the same period in 2013, is primarily attributable to increases of $99,000 in compensation and benefits expense, $38,000 in data processing expense, $33,000 in occupancy and equipment expense, $18,000 in loan collection expense, $9,000 in deposit insurance premiums and $11,000 in other non-interest expenses.  These increases were partially offset by decreases of $38,000 in franchise and bank share taxes, $10,000 in legal fees, $9,000 in advertising expense, and $1,000 in audit and examination fees. The $306,000 increase in non-interest expense for the six months ended December 31, 2014, compared to the same period in 2013, is primarily attributable to increases of $217,000 in compensation and benefits expense, $67,000 in occupancy and equipment expense, $53,000 in loan collection expense, $42,000 in data processing, $7,000 in deposit insurance premiums, $14,000 in other non-interest expenses and $2,000 in advertising expense. These increases were partially offset by a decrease of $56,000 in franchise and bank share taxes, $35,000 in legal fees, and $5,000 in audit and examination fees.

At December 31, 2014, the Company reported total assets of $346.3 million, an increase of $16.8 million, or 5.1%, 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 $20.5 million, or 8.6%, from $239.6 million at June 30, 2014, to $260.1 million at December 31, 2014, loans held-for-sale of $386,000, or 4.1%, from $9.4 million at June 30, 2014, to $9.8 million at December 31, 2014, other assets of $1.8 million, or 11.1%, from $16.8 million at June 30, 2014 to $18.6 million at December 31, 2014, and an increase in investment securities of $3.0 million, or 5.9%, from $50.2 million at June 30, 2014, to $53.2 million at December 31, 2014.  These increases were partially offset by a decrease in cash and cash equivalents of $9.0 million, or 66.2%, from $13.6 million at June 30, 2014 to $4.6 million at December 31, 2014.  The increase in loans held-for-sale results primarily from an increase at December 31, 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.

Included in the $15.4 million and $13.8 million of construction loan originations for the six months ended December 31, 2014 and 2013, respectively, are approximately $8.1 million and $9.1 million, respectively, of one- to four-family residential construction loans and $7.3 million and $4.7 million, respectively, of commercial and multi-family construction loans, all of which are primarily located in the Company's market area.

 

 

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Total liabilities increased $16.3 million, or 5.7%, from $286.8 million at June 30, 2014, to $303.0 million at December 31, 2014, primarily due to an increase in advances from the Federal Home Loan Bank of Dallas of $36.1 million, or 280.2%, to $49.0 million at December 31, 2014, compared to $12.9 million at June 30, 2014, partially offset by a decrease in total deposits of $19.5 million, or 7.2%, to $252.8 million at December 31, 2014, compared to $272.3 million at June 30, 2014.  The decrease in deposits was primarily due to a $30.8 million, or 42.7%, decrease in money market deposits from $72.2 million at June 30, 2014 to $41.4 million at December 31, 2014, and a decrease in non-interest bearing demand deposits of $7.4 million, or 17.1%, from $43.4 million at June 30, 2014 to $36.0 million at December 31, 2014, partially offset by increases in certificates of deposit of $11.1 million, or 9.2%, from $120.4 million at June 30, 2014 to $131.5 million at December 31, 2014, increases in savings deposits of $900,000, or 7.9%, from $12.2 million at June 30, 2014 to $13.1 million at December 31, 2014 and NOW accounts of $6.9 million, or 28.8%, from $24.0 million at June 30, 2014 to $30.9 million at December 31, 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 December 31, 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 December 31, 2014, the Company had $171,000 of non-performing assets compared to $178,000 of non-performing assets at June 30, 2014, consisting of two single-family residential loans, one commercial real estate loan and one non-performing line of credit at December 31, 2014, compared to one single family residential loan and one non-performing line of credit at June 30, 2014. At December 31, 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 December 31, 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 December 31, 2014 and June 30, 2014.

Shareholders' equity increased $513,000, or 1.2%, to $43.3 million at December 31, 2014 from $42.8 million at June 30, 2014.  The primary reasons for the increase in shareholders' equity from June 30, 2014, were net income of $1.7 million, the vesting of restricted stock awards, stock options and the release of employee stock ownership shares totaling $211,000 and proceeds from the issuance of common stock from the exercise of stock options of $42,000.  These increases in shareholders' equity were partially offset by dividends paid totaling $310,000, acquisition of treasury stock of $1.1 million and a decrease in the Company's accumulated other comprehensive income of $35,000.

The Company repurchased 53,898 shares of its common stock under its stock repurchase program during the six months ended December 31, 2014 at an average price per share of $19.13.  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 December 31, 2014, there were a total of 51,874 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 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.

 

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