q063009.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
[X]
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
quarterly period ended June 30, 2009
or
[ ]
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
For
the transition period from _____ to
_____
|
Commission
File Number: 001-33795
HOME FEDERAL BANCORP,
INC. |
(Exact
name of registrant as specified in its charter)
|
Maryland
|
|
68-0666697
|
|
|
(State or
other jurisdiction of incorporation |
|
(I.R.S.
Employer |
|
|
or
organization) |
|
I.D.
Number) |
|
|
|
|
|
|
|
500
12thAvenue
South, Nampa, Idaho
|
|
83651
|
|
|
(Address of
principal executive offices) |
|
(Zip
Code) |
|
|
|
|
|
|
|
Registrant’s
telephone number, including area code:
|
(208)
466-4634 |
|
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes
[X] No [ ]
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
Yes
[ ] No [ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
|
Large accelerated
filer |
[ ] |
Accelerated
filer |
[X] |
|
Non-accelerated
filer |
[ ] |
Smaller reporting
company |
[ ] |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes
[ ] No [X]
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date: Common
Stock, $.01 par value per share, 16,698,168 shares outstanding as of August 5,
2009.
HOME
FEDERAL BANCORP, INC.
FORM
10-Q
TABLE
OF CONTENTS
PART
1 - FINANCIAL INFORMATION
Item 1
- |
Financial
Statements |
|
|
|
Page |
|
Consolidated
Balance Sheets
|
1
|
|
Consolidated
Statements of Operations
|
2
|
|
Consolidated
Statements of Changes in Stockholders' Equity and
Comprehensive Income
|
3
|
|
Consolidated
Statements of Cash Flows
|
4
|
|
Selected
Notes to Interim Consolidated Financial Statements
|
6
|
|
|
|
Item
2 -
|
Management’s
Discussion and Analysis of Financial Condition
and Results of Operations
|
12
|
|
|
|
Item
3 -
|
Quantitative
and Qualitative Disclosures About Market Risk
|
29
|
|
|
|
Item
4 -
|
Controls
and Procedures
|
29
|
|
|
|
PART
II - OTHER INFORMATION
|
|
|
|
|
Item
1 -
|
Legal
Proceedings
|
30
|
|
|
|
Item
1A - Risk Factors
|
30
|
|
|
|
Item
2 -
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
30
|
|
|
|
Item
3 -
|
Defaults
Upon Senior Securities
|
30
|
|
|
|
Item
4 -
|
Submission
of Matters to a Vote of Security Holders
|
30
|
|
|
|
Item
5 -
|
Other
Information
|
30
|
|
|
|
Item
6 -
|
Exhibits
|
31
|
|
|
|
SIGNATURES
|
32
|
Item
1. Financial Statements
HOME
FEDERAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED
BALANCE SHEETS
(In
thousands, except share data) (Unaudited)
|
|
June
30,
2009
|
|
|
September
30,
2008
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Cash
and amounts due from depository institutions
|
|
$ |
26,778 |
|
|
$ |
23,270 |
|
Certificate
of deposit in correspondent bank
|
|
|
- |
|
|
|
5,000 |
|
Mortgage-backed
securities available for sale, at fair value
|
|
|
169,716 |
|
|
|
188,787 |
|
Loans
receivable, net of allowance for loan losses
of $8,266
|
|
|
|
|
|
|
|
|
and
$4,579
|
|
|
418,198 |
|
|
|
459,813 |
|
Loans
held for sale
|
|
|
5,064 |
|
|
|
2,831 |
|
Accrued
interest receivable
|
|
|
2,209 |
|
|
|
2,681 |
|
Property
and equipment, net
|
|
|
17,057 |
|
|
|
15,246 |
|
Mortgage
servicing rights, net
|
|
|
- |
|
|
|
1,707 |
|
Bank
owned life insurance
|
|
|
11,906 |
|
|
|
11,590 |
|
Federal
Home Loan Bank of Seattle (“FHLB”) stock, at cost
|
|
|
9,591 |
|
|
|
9,591 |
|
Real
estate and other property owned
|
|
|
8,614 |
|
|
|
650 |
|
Deferred
tax asset
|
|
|
1,853 |
|
|
|
1,770 |
|
Other
assets
|
|
|
1,757 |
|
|
|
2,134 |
|
TOTAL
ASSETS
|
|
$ |
672,743 |
|
|
$ |
725,070 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Deposit
accounts:
|
|
|
|
|
|
|
|
|
Noninterest-bearing
demand deposits
|
|
$ |
39,931 |
|
|
$ |
41,398 |
|
Interest-bearing
demand deposits
|
|
|
131,202 |
|
|
|
127,714 |
|
Savings
deposits
|
|
|
35,880 |
|
|
|
26,409 |
|
Certificates
of deposit
|
|
|
168,983 |
|
|
|
177,404 |
|
Total
deposit accounts
|
|
|
375,996 |
|
|
|
372,925 |
|
Advances
by borrowers for taxes and insurance
|
|
|
589 |
|
|
|
1,386 |
|
Interest
payable
|
|
|
370 |
|
|
|
552 |
|
Deferred
compensation
|
|
|
5,219 |
|
|
|
5,191 |
|
FHLB
advances and other borrowings
|
|
|
88,891 |
|
|
|
136,972 |
|
Other
liabilities
|
|
|
3,030 |
|
|
|
2,857 |
|
Total
liabilities
|
|
|
474,095 |
|
|
|
519,883 |
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY
|
|
|
|
|
|
|
|
|
Serial
preferred stock, $.01 par value; 10,000,000 authorized;
|
|
|
|
|
|
|
|
|
Issued
and outstanding, none
|
|
|
- |
|
|
|
- |
|
Common
stock, $.01 par value; 90,000,000 authorized;
|
|
|
|
|
|
|
|
|
Issued
and outstanding:
|
|
|
167 |
|
|
|
174 |
|
June 30, 2009 – 17,445,311 issued, 16,698,168 outstanding
|
|
|
|
|
|
|
|
|
Sept. 30, 2008 – 17,412,449 issued, 17,374,161 outstanding
|
|
|
|
|
|
|
|
|
Additional
paid-in capital
|
|
|
150,391 |
|
|
|
157,205 |
|
Retained
earnings
|
|
|
55,643 |
|
|
|
59,813 |
|
Unearned shares issued to employee stock ownership plan
(“ESOP”)
|
|
|
(9,926 |
) |
|
|
(10,605 |
) |
Accumulated
other comprehensive income (loss)
|
|
|
2,373 |
|
|
|
(1,400 |
) |
Total
stockholders’ equity
|
|
|
198,648 |
|
|
|
205,187 |
|
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
$ |
672,743 |
|
|
$ |
725,070 |
|
|
|
|
|
|
|
|
|
|
See
accompanying notes. |
1 |
HOME
FEDERAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF OPERATIONS
(In
thousands, except share data) (Unaudited)
|
|
Three
Months Ended
June
30,
|
|
|
Nine
Months Ended
June
30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
Interest
and dividend income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loan
interest
|
|
$ |
6,418 |
|
|
$ |
7,544 |
|
|
$ |
20,337 |
|
|
$ |
23,390 |
|
Mortgage-backed
security interest
|
|
|
1,983 |
|
|
|
2,372 |
|
|
|
6,311 |
|
|
|
6,463 |
|
Other
interest and dividends
|
|
|
9 |
|
|
|
177 |
|
|
|
20 |
|
|
|
1,001 |
|
Total
interest and dividend income
|
|
|
8,410 |
|
|
|
10,093 |
|
|
|
26,668 |
|
|
|
30,854 |
|
Interest
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
|
|
|
1,629 |
|
|
|
2,429 |
|
|
|
5,389 |
|
|
|
8,515 |
|
FHLB
advances and other borrowings
|
|
|
1,068 |
|
|
|
1,752 |
|
|
|
3,861 |
|
|
|
5,594 |
|
Total
interest expense
|
|
|
2,697 |
|
|
|
4,181 |
|
|
|
9,250 |
|
|
|
14,109 |
|
Net
interest income
|
|
|
5,713 |
|
|
|
5,912 |
|
|
|
17,418 |
|
|
|
16,745 |
|
Provision
for loan losses
|
|
|
3,450 |
|
|
|
652 |
|
|
|
8,085 |
|
|
|
1,317 |
|
Net
interest income after provision for loan losses
|
|
|
2,263 |
|
|
|
5,260 |
|
|
|
9,333 |
|
|
|
15,428 |
|
Noninterest
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
charges and fees
|
|
|
2,008 |
|
|
|
2,396 |
|
|
|
6,009 |
|
|
|
6,731 |
|
Gain
on sale of loans
|
|
|
416 |
|
|
|
213 |
|
|
|
1,013 |
|
|
|
560 |
|
Increase
in cash surrender value of bank owned life insurance
|
|
|
107 |
|
|
|
106 |
|
|
|
317 |
|
|
|
314 |
|
Loan
servicing fees
|
|
|
- |
|
|
|
116 |
|
|
|
54 |
|
|
|
369 |
|
Mortgage
servicing rights, net
|
|
|
- |
|
|
|
(63 |
) |
|
|
(31 |
) |
|
|
(206 |
) |
Other
|
|
|
80 |
|
|
|
(33 |
) |
|
|
55 |
|
|
|
75 |
|
Total
noninterest income
|
|
|
2,611 |
|
|
|
2,735 |
|
|
|
7,417 |
|
|
|
7,843 |
|
Noninterest
expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
and benefits
|
|
|
3,594 |
|
|
|
3,840 |
|
|
|
10,948 |
|
|
|
11,592 |
|
Occupancy
and equipment
|
|
|
804 |
|
|
|
771 |
|
|
|
2,303 |
|
|
|
2,242 |
|
Data
processing
|
|
|
654 |
|
|
|
615 |
|
|
|
1,773 |
|
|
|
1,668 |
|
Advertising
|
|
|
211 |
|
|
|
241 |
|
|
|
656 |
|
|
|
786 |
|
Postage
and supplies
|
|
|
126 |
|
|
|
147 |
|
|
|
409 |
|
|
|
468 |
|
Professional
services
|
|
|
236 |
|
|
|
130 |
|
|
|
870 |
|
|
|
533 |
|
Insurance
and taxes
|
|
|
783 |
|
|
|
158 |
|
|
|
1,244 |
|
|
|
383 |
|
Other
|
|
|
606 |
|
|
|
272 |
|
|
|
1,416 |
|
|
|
809 |
|
Total
noninterest expense
|
|
|
7,014 |
|
|
|
6,174 |
|
|
|
19,619 |
|
|
|
18,481 |
|
Income
(loss) before income taxes
|
|
|
(2,140 |
) |
|
|
1,821 |
|
|
|
(2,869 |
) |
|
|
4,790 |
|
Income
tax expense (benefit)
|
|
|
(894 |
) |
|
|
702 |
|
|
|
(1,298 |
) |
|
|
1,779 |
|
NET
INCOME (LOSS)
|
|
$ |
(1,246 |
) |
|
$ |
1,119 |
|
|
$ |
(1,571 |
) |
|
$ |
3,011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
(loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
(0.08 |
) |
|
$ |
0.07 |
|
|
$ |
(0.10 |
) |
|
$ |
0.19 |
(1) |
Diluted
|
|
|
(0.08 |
) |
|
|
0.07 |
|
|
|
(0.10 |
) |
|
|
0.19 |
(1) |
Weighted
average number of shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
15,352,714 |
|
|
|
16,007,599 |
|
|
|
15,742,102 |
|
|
|
16,237,911 |
(1) |
Diluted
|
|
|
15,352,714 |
|
|
|
16,043,435 |
|
|
|
15,742,102 |
|
|
|
16,255,548 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
declared per share:
|
|
$ |
0.055 |
|
|
$ |
0.055 |
|
|
$ |
0.165 |
|
|
$ |
0.158 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Earnings (loss) per share, average shares outstanding, and dividends per share
have been adjusted to reflect the impact of the second-step conversion and
reorganization of Home Federal Bancorp, Inc., which occurred on December 19,
2007.
See
accompanying notes. |
2 |
HOME
FEDERAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND COMPREHENSIVE
INCOME
(In
thousands, except share data) (Unaudited)
|
|
|
Common
Stock
|
|
|
|
Additional
Paid-In |
|
|
|
Retained
|
|
|
|
Unearned
Shares
Issued
to
Employee
Stock
Ownership
|
|
|
Comprehensive
|
|
|
|
|
|
|
|
Shares
|
|
|
|
Amount
|
|
|
|
Capital
|
|
|
|
Earnings
|
|
|
|
Plan
|
|
|
Income
(Loss)
|
|
|
Total
|
|
Balance
at Sept. 30, 2007
|
|
|
15,232,243 |
|
|
$ |
152 |
|
|
$ |
59,613 |
|
|
$ |
58,795 |
|
|
$ |
(3,698 |
)
|
|
$ |
(2,225 |
)
|
|
$ |
112,637 |
|
Second
Step Conversion(1)
|
|
|
2,073,619 |
|
|
|
21 |
|
|
|
95,938 |
|
|
|
|
|
|
|
(8,160 |
)
|
|
|
|
|
|
|
87,799 |
|
Dissolution
of Mutual
Holding Company
|
|
|
|
|
|
|
|
|
|
|
50 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50 |
|
Restricted
stock issued, net of forfeitures
|
|
|
13,502 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
ESOP
shares committed to be
released
|
|
|
|
|
|
|
|
|
|
|
(23 |
)
|
|
|
|
|
|
|
1,253 |
|
|
|
|
|
|
|
1,230 |
|
Exercise
of stock options
|
|
|
54,797 |
|
|
|
1 |
|
|
|
605 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
606 |
|
Share-based
compensation
|
|
|
|
|
|
|
|
|
|
|
1,022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,022 |
|
Dividends
paid
($0.213
per share) (2) (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,987 |
)
|
|
|
|
|
|
|
|
|
|
|
(2,987 |
)
|
Comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,005 |
|
|
|
|
|
|
|
|
|
|
|
4,005 |
|
Other
comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in unrealized
holding loss on
securities available for
sale, net of taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
825 |
|
|
|
825 |
|
Comprehensive
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,830 |
|
Balance
at Sept. 30, 2008
|
|
|
17,374,161 |
|
|
|
174 |
|
|
|
157,205 |
|
|
|
59,813 |
|
|
|
(10,605 |
)
|
|
|
(1,400 |
)
|
|
|
205,187 |
|
Restricted
stock issued, net of forfeitures
|
|
|
159,115 |
|
|
|
2 |
|
|
|
(2 |
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
ESOP
shares committed to be
released
|
|
|
|
|
|
|
|
|
|
|
12 |
|
|
|
|
|
|
|
679 |
|
|
|
|
|
|
|
691 |
|
Exercise
of stock options
|
|
|
32,862 |
|
|
|
|
|
|
|
353 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
353 |
|
Share-based
compensation
|
|
|
|
|
|
|
|
|
|
|
730 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
730 |
|
Treasury
shares purchased
|
|
|
(867,970 |
)
|
|
|
(9 |
)
|
|
|
(7,886 |
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(7,895 |
)
|
Dividends
paid
($0.165
per share)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,599 |
)
|
|
|
|
|
|
|
|
|
|
|
(2,599 |
)
|
Tax
adjustment
|
|
|
|
|
|
|
|
|
|
|
(21 |
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(21 |
)
|
Comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,571 |
)
|
|
|
|
|
|
|
|
|
|
|
(1,571 |
)
|
Other
comprehensive
income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
in unrealized
holding loss on
securities available for
sale, net of taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,804 |
|
|
|
3,804 |
|
Adjustment
for realized
gains, net of taxes of
$20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(31 |
)
|
|
|
(31 |
)
|
Comprehensive
income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,202 |
|
Balance
at June 30, 2009
|
|
|
16,698,168 |
|
|
$ |
167 |
|
|
$ |
150,391 |
|
|
$ |
55,643 |
|
|
$ |
(9,926 |
)
|
|
$ |
2,373 |
|
|
$ |
198,648 |
|
(1)
|
The
total effect on equity accounts from the second-step conversion has
changed from the December 31, 2007 reported numbers due to adjustments
such as the effect of fractional shares and payment of additional expenses
related to the second-step
conversion.
|
(2)
|
Home
Federal MHC waived its receipt of dividends on the 8,979,246 shares that
it owned.
|
(3) |
Dividends
per share have been adjusted to reflect the impact of the second-step
conversion of Home Federal Bancorp, Inc., which occurred on December 19,
2007.
|
See
accompanying notes. |
3 |
HOME
FEDERAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In
thousands) (Unaudited)
|
|
Nine
Months Ended
June
30,
|
|
|
|
2009
|
|
|
2008
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Net
income (loss)
|
|
$ |
(1,571 |
) |
|
$ |
3,011 |
|
Adjustments
to reconcile net income (loss) to cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation
and amortization
|
|
|
1,294 |
|
|
|
1,247 |
|
Net
amortization (accretion) of premiums and discounts on
investments
|
|
|
9 |
|
|
|
(18 |
) |
Loss
on sale of fixed assets and repossessed assets
|
|
|
82 |
|
|
|
119 |
|
Gain
on sale of securities available for sale
|
|
|
(51 |
) |
|
|
- |
|
ESOP
shares committed to be released
|
|
|
691 |
|
|
|
423 |
|
Equity
compensation expense
|
|
|
730 |
|
|
|
779 |
|
Provision
for loan losses
|
|
|
8,085 |
|
|
|
1,317 |
|
Valuation
allowance on other real estate owned
|
|
|
552 |
|
|
|
- |
|
Accrued
deferred compensation expense, net
|
|
|
28 |
|
|
|
513 |
|
Net
deferred loan fees
|
|
|
(77 |
) |
|
|
54 |
|
Deferred
income tax benefit
|
|
|
(2,598 |
) |
|
|
(598 |
) |
Net
gain on sale of loans
|
|
|
(1,013 |
) |
|
|
(560 |
) |
Proceeds
from sale of loans held for sale
|
|
|
56,151 |
|
|
|
38,579 |
|
Originations
of loans held for sale
|
|
|
(57,371 |
) |
|
|
(37,193 |
) |
Net
decrease in value of mortgage servicing rights
|
|
|
31 |
|
|
|
207 |
|
Loss
on sale of mortgage servicing rights
|
|
|
74 |
|
|
|
|
|
Net
increase in value of bank owned life insurance
|
|
|
(316 |
) |
|
|
(314 |
) |
Change
in assets and liabilities:
|
|
|
|
|
|
|
|
|
Interest
receivable
|
|
|
472 |
|
|
|
5 |
|
Other
assets
|
|
|
368 |
|
|
|
158 |
|
Interest
payable
|
|
|
(182 |
) |
|
|
(151 |
) |
Other
liabilities
|
|
|
154 |
|
|
|
(903 |
) |
Net
cash provided by operating activities
|
|
|
5,542 |
|
|
|
6,675 |
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds
from maturities of mortgage-backed securities available for
sale
|
|
|
26,931 |
|
|
|
23,976 |
|
Proceeds
from sales of mortgage-backed securities available for
sale
|
|
|
1,203 |
|
|
|
- |
|
Purchases
of mortgage-backed securities available for sale
|
|
|
(2,734 |
) |
|
|
(56,257 |
) |
Maturity
of (Investment in) certificate of deposit
|
|
|
5,000 |
|
|
|
(5,000 |
) |
Sale
of mortgage servicing rights
|
|
|
1,602 |
|
|
|
- |
|
Purchases
of property and equipment
|
|
|
(3,088 |
) |
|
|
(3,218 |
) |
Net
decrease in loans
|
|
|
23,910 |
|
|
|
9,720 |
|
Proceeds
from sale of fixed assets and repossessed assets
|
|
|
1,090 |
|
|
|
501 |
|
Net
cash provided (used) by investing activities
|
|
|
53,914 |
|
|
|
(30,278 |
) |
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in deposits
|
|
|
3,071 |
|
|
|
(22,267 |
) |
Net
decrease in advances by borrowers for taxes and insurance
|
|
|
(797 |
) |
|
|
(948 |
) |
Proceeds
from FHLB advances
|
|
|
18,000 |
|
|
|
59,715 |
|
Repayment
of FHLB advances
|
|
|
(67,582 |
) |
|
|
(94,863 |
) |
Proceeds
from other borrowings
|
|
|
1,501 |
|
|
|
- |
|
Net
proceeds from stock issuance and exchange pursuant to second step
conversion
|
|
|
- |
|
|
|
88,336 |
|
Proceeds
from exercise of stock options
|
|
|
353 |
|
|
|
328 |
|
Repurchases
of common stock
|
|
|
(7,895 |
) |
|
|
- |
|
Dividends
paid
|
|
|
(2,599 |
) |
|
|
(2,099 |
) |
Net
cash (used) provided by financing activities
|
|
|
(55,948 |
) |
|
|
28,202 |
|
NET
INCREASE IN CASH AND CASH EQUIVALENTS
|
|
|
3,508 |
|
|
|
4,599 |
|
CASH
AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
|
|
23,270 |
|
|
|
20,588 |
|
CASH
AND CASH EQUIVALENTS, END OF PERIOD
|
|
$ |
26,778 |
|
|
$ |
25,187 |
|
|
|
|
|
|
|
|
|
|
(Continued)
See
accompanying notes. |
4 |
HOME
FEDERAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED
STATEMENTS OF CASH FLOWS (Continued)
(In
thousands) (Unaudited)
|
|
Nine
Months Ended
June
30,
|
|
|
|
2009
|
|
|
2008
|
|
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
Cash
paid during the period for:
|
|
|
|
|
|
|
Interest
|
|
$ |
9,433 |
|
|
$ |
14,259 |
|
Income taxes
|
|
|
2,545 |
|
|
|
2,610 |
|
|
|
|
|
|
|
|
|
|
NONCASH
INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Acquisition
of real estate and other assets in settlement of loans
|
|
$ |
9,682 |
|
|
$ |
1,137 |
|
Fair
value adjustment to securities available for sale, net of
taxes
|
|
|
3,804 |
|
|
|
117 |
|
See
accompanying notes. |
5 |
HOME
FEDERAL BANCORP, INC. AND SUBSIDIARY
SELECTED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note
1 - Basis of Presentation
The
consolidated financial statements presented in this quarterly report include the
accounts of Home Federal Bancorp, Inc., a Maryland corporation (the “Company”),
and its wholly-owned subsidiary, Home Federal Bank (the “Bank”). The
financial statements of the Company have been prepared in conformity with
accounting principles generally accepted in the United States of America for
interim financial information and are unaudited. In preparing these
financial statements, the Company has evaluated events and transactions for
potential recognition or disclosure through August 6, 2009, the date the
financial statements were available to be issued. All significant intercompany
transactions and balances have been eliminated. In the opinion of the
Company’s management, all adjustments consisting of normal recurring adjustments
necessary for a fair presentation of the financial condition and results of
operations for the interim periods included herein have been made. Operating
results for the three and nine month periods ended June 30, 2009, are not
necessarily indicative of the results that may be expected for the year ending
September 30, 2009.
The
Company was formed as the new stock holding company for the Bank in connection
with the Bank’s conversion from the mutual holding company structure to the
stock holding company structure, which was completed on December 19, 2007 (the
“Conversion”). Prior to the completion of the Conversion, the Bank
was the subsidiary of Home Federal Bancorp, Inc., a federally-chartered stock
mid-tier holding company (“Old Home Federal”), and Old Home Federal was a
subsidiary of Home Federal MHC, a federally-chartered mutual holding
company. The Bank formed the mutual holding company structure in
December 2004. As a result of the Conversion, Home Federal MHC and
Old Home Federal ceased to exist and were replaced by the Company as the
successor to Old Home Federal.
Certain
information and note disclosures normally included in the Company’s annual
consolidated financial statements have been condensed or omitted. Therefore,
these consolidated financial statements and notes thereto should be read in
conjunction with the audited financial statements and notes included in the
Annual Report on Form 10-K for the year ended September 30, 2008 (“2008 Form
10-K”), filed with the Securities and Exchange Commission (“SEC”) on December
15, 2008.
Note
2 - Critical Accounting Estimates and Related Accounting Policies
The
preparation of the consolidated financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect amounts
reported in the consolidated financial statements. Changes in these
estimates and assumptions are considered reasonably possible and may have a
material impact on the consolidated financial statements, and thus actual
results could differ from the amounts reported and disclosed
herein. The Company considers the allowance for loan losses, deferred
income taxes and valuation of real estate owned to be critical accounting
estimates.
Allowance for loan losses.
The procedures for assessing the adequacy of the allowance for loan losses
reflect evaluation of credit risk after careful consideration and interpretation
of relevant information. In developing this assessment, management must rely on
estimates and exercise judgment regarding matters where the ultimate outcome is
unknown, such as economic factors, developments affecting companies in specific
industries and issues with respect to single borrowers. The allowance for loan
losses is maintained at a level that management believes to be the best estimate
of probable incurred losses inherent in the loan portfolio at the balance sheet
dates presented. Depending on changes in circumstances, future assessments of
credit risk may yield materially different results, which may require an
increase or a decrease in the allowance for loan losses.
Deferred income taxes.
Deferred income taxes are computed using the asset and liability approach as
prescribed in Statement of Financial Accounting Standards (“SFAS”) No. 109,
Accounting for Income
Taxes. Under this method, a deferred tax asset or liability is
determined based on the currently enacted tax rates applicable to the period in
which the differences between the financial statement carrying amounts and tax
basis of the existing assets and liabilities are expected to be reported in the
Company’s income tax returns.
Real Estate Owned. Real
estate properties acquired through, or in lieu of, loan foreclosure are
initially recorded at the lesser of the outstanding loan balance or the fair
value at the date of foreclosure minus estimated costs to sell. Any valuation
adjustments required at the time of foreclosure are charged to the allowance for
loan losses. After foreclosure, the properties are carried at the lower of
carrying value or fair value less estimated costs to sell. Any subsequent
valuation adjustments, operating expenses or income, and gains and losses on
disposition of such properties are recognized in current operations. The
valuation allowance is established based on our historical realization of losses
and adjusted for current market trends.
Note
3 - Earnings (Loss) Per Share
Earnings
(Loss) per share (“EPS”) is computed using the basic and diluted weighted
average number of common shares outstanding during the period as applicable.
Basic EPS is computed by dividing the Company’s net income or loss by the
weighted average number of common shares outstanding for the
period. Diluted EPS is computed by dividing net income by the diluted
weighted average shares outstanding, which include common stock equivalent
shares outstanding using the treasury stock method, unless such shares are
anti-dilutive. Common stock equivalents arise from assumed conversion of
outstanding stock options and vesting of restricted stock
awards. ESOP shares are not considered outstanding for earnings per
share purposes until they are committed to be released.
The
following table presents the computation of basic and diluted EPS for the
periods indicated:
|
|
Three
Months Ended
June
30,
|
|
|
Nine
Months Ended
June
30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
(in
thousands, except share and per share data)
|
|
Basic
EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$ |
(1,246 |
) |
|
$ |
1,119 |
|
|
$ |
(1,571 |
) |
|
$ |
3,011 |
|
Weighted-average
common shares
outstanding
|
|
|
15,352,714 |
|
|
|
16,007,599 |
|
|
|
15,742,102 |
|
|
|
16,237,911 |
|
Basic
EPS
|
|
$ |
(0.08 |
) |
|
$ |
0.07 |
|
|
$ |
(0.10 |
) |
|
$ |
0.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income (loss)
|
|
$ |
(1,246 |
) |
|
$ |
1,119 |
|
|
$ |
(1,571 |
) |
|
$ |
3,011 |
|
Weighted-average
common shares
outstanding
|
|
|
15,352,714 |
|
|
|
16,007,599 |
|
|
|
15,742,102 |
|
|
|
16,237,911 |
|
Net
effect of dilutive stock options
|
|
|
- |
|
|
|
2,986 |
|
|
|
- |
|
|
|
- |
|
Net
effect of dilutive restricted stock
|
|
|
- |
|
|
|
32,850 |
|
|
|
- |
|
|
|
17,637 |
|
Weighted-average
common shares
outstanding and common stock
equivalents
|
|
|
15,352,714 |
|
|
|
16,043,435 |
|
|
|
15,742,102 |
|
|
|
16,255,548 |
|
Diluted
EPS
|
|
$ |
(0.08 |
) |
|
$ |
0.07 |
|
|
$ |
(0.10 |
) |
|
$ |
0.19 |
|
For the
nine months ended June 30, 2008, earnings (loss) per share and average shares
outstanding have been adjusted to reflect the impact of the second-step
conversion and reorganization of Home Federal Bancorp, Inc., which occurred on
December 19, 2007.
Note
4 - Mortgage-Backed Securities
Mortgage-backed
securities available for sale consisted of the following:
|
|
Amortized
Cost
|
|
|
Gross
Unrealized Gains
|
|
|
Gross
Unrealized Losses
|
|
|
Fair
Value
|
|
|
|
(in
thousands)
|
|
June 30,
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued
by U.S. Government sponsored
enterprises
|
|
$ |
162,472 |
|
|
$ |
4,275 |
|
|
$ |
- |
|
|
$ |
166,747 |
|
Other
|
|
|
3,290 |
|
|
|
- |
|
|
|
(321 |
) |
|
|
2,969 |
|
Total
|
|
$ |
165,762 |
|
|
$ |
4,275 |
|
|
$ |
(321 |
) |
|
$ |
169,716 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2008
|
|
|
|
Issued
by U.S. Government sponsored
enterprises
|
|
$ |
187,730 |
|
|
$ |
669 |
|
|
$ |
(2,669 |
) |
|
$ |
185,730 |
|
Other
|
|
|
3,390 |
|
|
|
- |
|
|
|
(333 |
) |
|
|
3,057 |
|
Total
|
|
$ |
191,120 |
|
|
$ |
669 |
|
|
$ |
(3,002 |
) |
|
$ |
188,787 |
|
The fair
value of impaired securities, the amount of unrealized losses and the length of
time these unrealized losses existed as of June 30, 2009 were as
follows:
|
Less
than 12 months
|
|
12
months or longer
|
|
Total
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
Fair
Value
|
|
Unrealized
Losses
|
|
(in
thousands)
|
Mortgage-backed
|
|
|
|
|
|
|
|
|
|
|
|
securities,
available
|
|
|
|
|
|
|
|
|
|
|
|
for
sale
|
$ -
|
|
$ -
|
|
$2,969
|
|
$(321)
|
|
$2,969
|
|
$(321)
|
Management
has evaluated these securities and has determined that the decline in fair value
is not other than temporary. These securities have contractual
maturity dates and, at June 30, 2009, management believes it is reasonably
probable that principal and interest balances on these securities will be
collected based on the performance, underwriting, credit support and vintage of
the loans underlying the securities. However, continued deteriorating economic
conditions may result in degradation in the performance of the loans underlying
these securities in the future. The Company has the ability and intent to
hold these securities for a reasonable period of time for a forecasted recovery
of the amortized cost.
As of
June 30, 2009, the Bank had pledged mortgage-backed securities with an amortized
cost of $70.3 million and a fair value of $72.1 million as collateral for FHLB
advances. Mortgage-backed securities with an amortized cost of $3.4
million and a fair value of $3.5 million at June 30, 2009, were pledged as
collateral for a commercial repurchase agreement. Mortgage-backed
securities with an amortized cost of $4.8 million and a fair value of $5.0
million at June 30, 2009, were pledged to the Federal Reserve Bank as collateral
for treasury tax and loan funds held by the Bank and for borrowings from the
discount window. As of June 30, 2009, and September 30, 2008, there
was no balance owed by the Bank through the Federal Reserve Bank discount
window.
Note
5 - Loans Receivable
Loans
receivable are summarized as follows:
|
|
June
30, 2009
|
|
|
September
30, 2008
|
|
|
|
Balance
|
|
|
Percent
of
Total
|
|
|
Balance
|
|
|
Percent
of
Total
|
|
|
|
(dollars
in thousands)
|
|
Real
Estate:
|
|
|
|
|
|
|
|
|
|
|
|
|
One-
to four-family residential
|
|
$ |
176,038 |
|
|
|
41.21 |
% |
|
$ |
210,302 |
|
|
|
45.22 |
% |
Multi-family
residential
|
|
|
10,092 |
|
|
|
2.36 |
|
|
|
8,477 |
|
|
|
1.82 |
|
Commercial
|
|
|
154,209 |
|
|
|
36.10 |
|
|
|
151,733 |
|
|
|
32.62 |
|
Total
real estate
|
|
|
340,339 |
|
|
|
79.67 |
|
|
|
370,512 |
|
|
|
79.66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real
Estate Construction:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
One-
to four-family residential
|
|
|
9,710 |
|
|
|
2.27 |
|
|
|
13,448 |
|
|
|
2.89 |
|
Multi-family
residential
|
|
|
- |
|
|
|
- |
|
|
|
920 |
|
|
|
0.20 |
|
Commercial
and land development
|
|
|
21,349 |
|
|
|
5.00 |
|
|
|
18,674 |
|
|
|
4.01 |
|
Total
real estate construction
|
|
|
31,059 |
|
|
|
7.27 |
|
|
|
33,042 |
|
|
|
7.10 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Home
equity
|
|
|
48,404 |
|
|
|
11.33 |
|
|
|
52,954 |
|
|
|
11.38 |
|
Automobile
|
|
|
1,353 |
|
|
|
0.32 |
|
|
|
1,903 |
|
|
|
0.41 |
|
Other
consumer
|
|
|
1,217 |
|
|
|
0.29 |
|
|
|
1,370 |
|
|
|
0.29 |
|
Total
consumer
|
|
|
50,974 |
|
|
|
11.94 |
|
|
|
56,227 |
|
|
|
12.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
business
|
|
|
4,803 |
|
|
|
1.12 |
|
|
|
5,385 |
|
|
|
1.16 |
|
|
|
|
427,175 |
|
|
|
100.00 |
% |
|
|
465,166 |
|
|
|
100.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premium
on purchased loans
|
|
|
184 |
|
|
|
|
|
|
|
199 |
|
|
|
|
|
Deferred
loan fees
|
|
|
(895 |
) |
|
|
|
|
|
|
(973 |
) |
|
|
|
|
Allowance
for loan losses
|
|
|
(8,266 |
) |
|
|
|
|
|
|
(4,579 |
) |
|
|
|
|
Loans
receivable, net
|
|
$ |
418,198 |
|
|
|
|
|
|
$ |
459,813 |
|
|
|
|
|
Note
6 – Allowance for Loan Losses
Activity
in the allowance for loan losses for the three and nine month periods ended June
30, 2009 and 2008, was as follows:
|
|
Three
Months Ended
June
30,
|
|
|
Nine
Months Ended
June
30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning
balance
|
|
$ |
7,333 |
|
|
$ |
3,307 |
|
|
$ |
4,579 |
|
|
$ |
2,988 |
|
Provision
for loan losses
|
|
|
3,450 |
|
|
|
652 |
|
|
|
8,085 |
|
|
|
1,317 |
|
Losses
on loans charged-off
|
|
|
(2,616 |
) |
|
|
(168 |
) |
|
|
(4,524 |
) |
|
|
(528 |
) |
Recoveries
on loans charged-off
|
|
|
99 |
|
|
|
10 |
|
|
|
126 |
|
|
|
24 |
|
Ending
balance
|
|
$ |
8,266 |
|
|
$ |
3,801 |
|
|
$ |
8,266 |
|
|
$ |
3,801 |
|
Note
7 – Fair Value Measurement
SFAS No.
157 defines fair value, establishes a consistent framework for measuring fair
value and expands disclosure requirements about fair value
measurements. SFAS No. 157, among other things, requires the Company
to maximize the use of observable inputs and minimize the use of unobservable
inputs when measuring fair value. Observable inputs reflect market
data obtained from independent sources, while unobservable inputs reflect the
Company’s market assumptions. These two types of inputs create the
following fair value hierarchy:
· |
|
Level
1 – Quoted prices for identical instruments in active
markets.
|
· |
|
Level
2 – Quoted prices for similar instruments in active markets; quoted prices
for identical or similar instruments in markets that are not active; and
model-derived valuations whose inputs are observable or whose significant
value drivers are observable.
|
· |
|
Level
3 – Instruments whose significant value drivers are
unobservable.
|
The
following table summarized the Company’s financial instruments that were
measured at fair value on a recurring basis at June 30, 2009:
|
June
30, 2009
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
available for sale
|
|
$169,716
|
|
|
-
|
|
|
$169,716
|
|
|
-
|
Additionally,
certain assets are measured at fair value on a non-recurring
basis. These adjustments to fair value generally result from the
application of lower-of-cost-or-market accounting or write-downs of individual
assets due to impairment. The following table summarizes the
Company’s financial instruments that were measured at fair value on a
non-recurring basis at June 30, 2009:
|
June
30, 2009
|
|
|
Total
|
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
Impaired
loans
|
|
$7,424
|
|
|
-
|
|
|
-
|
|
|
$7,424
|
Real
estate owned
|
|
8,614
|
|
|
-
|
|
|
-
|
|
|
8,614
|
Impaired
loans, which are measured for impairment using the fair value of the collateral
at June 30, 2009, had a carrying amount of $9.9 million, net of valuation
allowances totaling $2.4 million, resulting in an additional provision for loan
losses of $1.6 million during the third quarter of fiscal 2009.
The
Company used the following methods and significant assumptions to estimate fair
value:
Securities: The
Company’s securities available for sale primarily consist of mortgage-backed
securities issued by U.S. Government sponsored enterprises and trade in active
markets. These securities are included under Level 2 because there
may or may not be daily trades in each of the individual securities and because
the valuation of these securities may be based on instruments that are not
exactly identical to those owned by the Company.
Impaired
loans: A loan is considered impaired when, based upon
currently known information, it is deemed probable that the Company will be
unable to collect all amounts due as scheduled according to the original terms
of the agreement. Impaired loans are measured based on the present
value of expected future cash flows discounted at the loan’s effective interest
rate or, as a practical expedient, based on the loan’s observable market price
or the fair value of collateral, if the loan is collateral
dependent. Impaired loans that are collateral dependent are included
in the table above.
Real estate
owned: Fair value for real estate owned is determined by obtaining
appraisals on the properties. The fair value under such appraisals is determined
by using an income, cost or comparable sales valuation technique. The fair value
is then reduced by management’s estimate for the direct costs expected to be
incurred in order to sell the property. Holding costs or maintenance expenses
are recorded as period costs when occurred and are not included in the fair
value estimate
Note
8 – Fair Value of Financial Instruments
The
estimated fair values of the Company’s financial instruments are as
follows:
|
|
June
30, 2009
|
|
|
|
Carrying
Amount
|
|
|
Estimated
Fair
Value
|
|
|
|
(in
thousands)
|
|
Financial
Assets:
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
26,778 |
|
|
$ |
26,778 |
|
Mortgage-backed
securities
available for sale
|
|
|
169,716 |
|
|
|
169,716 |
|
Loans
held for sale
|
|
|
5,064 |
|
|
|
5,064 |
|
Loans
receivable, gross
|
|
|
427,359 |
|
|
|
443,895 |
|
FHLB
stock
|
|
|
9,591 |
|
|
|
9,591 |
|
|
|
|
|
|
|
|
|
|
Financial
Liabilities:
|
|
|
|
|
|
|
|
|
Demand
and savings deposits
|
|
|
207,013 |
|
|
|
207,013 |
|
Certificates
of deposit
|
|
|
168,983 |
|
|
|
171,079 |
|
FHLB
advances and other borrowings
|
|
|
88,891 |
|
|
|
94,972 |
|
The
following methods and assumptions were used to estimate the fair value of each
class of financial instruments:
Cash
and cash equivalents:
The
carrying amount approximates fair value.
Mortgage-backed
securities available for sale:
The fair
values of mortgage-backed securities are based on quoted market prices or dealer
quotes. If a quoted market price is not available, fair value is estimated using
quoted market prices for similar securities.
Loans
held for sale:
The
carrying amount approximates fair value.
Loans
receivable:
Fair
values for loans are estimated using a discounted cash flow analysis, utilizing
interest rates currently being offered for loans with similar terms to borrowers
of similar credit quality. Fair values for loans that are classified
as substandard or doubtful under the Bank’s asset classification guidelines are
estimated using a similar methodology as that employed in computing the
appropriate loan loss reserve for classified loans. Fair value of
impaired loans is discussed in Note 7.
FHLB
stock:
The
carrying value of FHLB stock approximates fair value based on the respective
redemption provisions.
Deposits:
The fair
value of demand deposits, savings accounts and money market deposits is the
amount payable on demand at the reporting date. The fair value of fixed-maturity
certificates of deposit is estimated by discounted cash flow analysis using the
rates currently offered for deposits of similar remaining
maturities.
FHLB
advances and other borrowings:
The fair
value of the borrowings is estimated by discounting the future cash flows using
the current rate at which similar borrowings with similar remaining maturities
could be made.
Off-balance-sheet
instruments:
Fair
values of off-balance-sheet lending commitments are based on fees currently
charged to enter into similar agreements, taking into account the remaining
terms of the agreements and the borrower’s credit standing. The fair value of
the fees at June 30, 2009 were insignificant.
Item
2. Management’s Discussion and Analysis of Financial Condition and
Results of Operations
Forward-Looking
Statements
This
report contains forward-looking statements, which can be identified by the use
of words such as “believes,” “intends,” “expects,” “anticipates,” “estimates” or
similar expressions. Forward-looking statements include, but are not
limited to:
·
|
statements
of our goals, intentions and
expectations;
|
·
|
statements
regarding our business plan, prospects, growth and operating
strategies;
|
·
|
statements
regarding the quality of our loan and investment portfolios;
and,
|
·
|
estimates
of our risks and future costs and
benefits.
|
These
forward-looking statements are subject to significant risks and
uncertainties. Actual results may differ materially from those
contemplated by the forward-looking statements as a result of, among others, the
following factors:
·
|
general
economic conditions, including real estate values, either nationally or in
the Company’s market area continue to
decline;
|
·
|
changes
in the interest rate environment that reduce the Company’s interest
margins or reduce the fair value of financial
instruments;
|
·
|
the
credit risk of lending activities, including risks related to construction
and land development lending and commercial and small business
banking;
|
·
|
changes
in the level and trend of loan delinquencies and
write-offs;
|
·
|
results
of examinations by banking
regulators;
|
·
|
increased
competitive pressures among financial services
companies;
|
·
|
changes
in consumer spending, borrowing and savings
habits;
|
·
|
our
ability to successfully manage our
growth;
|
·
|
legislative
or regulatory changes that adversely affect the Company’s business,
including restrictions or limitations on permissible lending activities
for thrifts and savings banks;
|
·
|
our
ability to integrate the operations from any acquisition we may
make;
|
·
|
adverse
changes in the securities markets;
and
|
·
|
changes
in accounting policies and practices, as may be adopted by the bank
regulatory agencies, the Public Company Accounting Oversight Board or the
Financial Accounting Standards
Board.
|
These
factors should be considered in evaluating the forward-looking statements, and
undue reliance should not be placed on such statements. The Company
undertakes no obligation to publish revised forward-looking statements to
reflect the occurrence of unanticipated events or circumstances after the date
hereof.
Background
and Overview
Home
Federal Bank (the “Bank”) was founded in 1920 as a building and loan association
and reorganized as a federal mutual savings and loan association in
1936. On December 6, 2004, the Bank converted to stock form and
reorganized into the two-tiered mutual holding company form of organization and
formed Home Federal MHC and Home Federal Bancorp, Inc. (“Old Home Federal”). In
connection with that transaction, Old Home Federal sold 40.00% of its
outstanding shares of common stock (6,083,500 shares) to the public and issued
59.04% of its outstanding shares of common stock (8,979,246 shares) to Home
Federal MHC, the mutual holding company parent of Old Home
Federal. In connection with that transaction, Old Home Federal also
established and capitalized the Home Federal Foundation (“Foundation”) for the
purpose of supporting charitable organizations and activities that enhance the
quality of life for residents within the Bank’s market area. The Foundation was
capitalized with a $1.8 million one-time contribution, which consisted of
146,004 shares of its common stock and $365,010 in cash.
On May
11, 2007, the Boards of Directors of Old Home Federal, Home Federal MHC and the
Bank adopted a Plan of Conversion and Reorganization (the “Plan”) pursuant to
which the Bank reorganized from the mutual holding company structure to the
stock holding company structure. As a result of that transaction, Home Federal
Bank formed a new stock holding company, Home Federal Bancorp, Inc. (“we”, “us”,
the “Company”), that serves as the holding company for Home Federal Bank. Home
Federal Bancorp, Inc., is a Maryland corporation. The Conversion was completed
on December 19, 2007.
Pursuant
to the terms of the Plan, shares of outstanding common stock of Old Home Federal
were exchanged for 1.136 shares of the Company’s common stock. Cash was paid in
lieu of fractional shares. The Conversion was approved by the Bank’s
members, the Company’s stockholders (including the approval of a majority of the
shares held by persons other than Home Federal MHC) and regulatory
agencies. The Company’s common stock is traded on the NASDAQ Global
Select Market under the symbol “HOME” and is included in the U.S. Russell 2000®
Index.
The Bank
is a community-oriented financial institution dedicated to serving the financial
service needs of consumers and businesses within its market area. The
Bank’s primary business is attracting deposits from the general public and using
these funds to originate loans. The Bank emphasizes the origination
of commercial business loans, commercial real estate loans, construction and
residential development loans, consumer loans and loans secured by first
mortgages on owner-occupied residential real estate. As a result of a
comprehensive and continuing review of its strategic business plan, the Company
continues to expand its commercial and small business banking programs,
including a variety of loan and deposit products.
The Bank
serves the Treasure Valley region of southwestern Idaho, which includes Ada,
Canyon, Elmore and Gem counties, through its 15 full-service banking offices and
one loan center. Nearly 40% of the state’s population lives and works
in the four counties served by Home Federal Bank. Ada County has the
largest population and includes the city of Boise, the state
capital. Home Federal Bank maintains its largest branch presence in
Ada County with eight locations, followed by Canyon County with five branches,
including the Company’s corporate headquarters in Nampa. The two
remaining branches are located in Elmore and Gem Counties.
The
following items summarize the key factors affecting performance of the Company
and the key strategic initiatives undertaken by management during the Company’s
third quarter of fiscal year 2009:
|
Economic
conditions in the Treasure Valley continued to deteriorate as a result of
rising unemployment, bankruptcies and foreclosures and declining real
estate values, which resulted in rising levels of nonperforming assets and
the need for an additional provision for loan
losses;
|
|
The
Company’s total assets declined and maturing borrowings were repaid with
excess cash;
|
|
Total
loans declined reflecting a decrease in lending opportunities to good
credit customers in Southwestern Idaho and management’s strategy to reduce
1-4 family residential loan
exposure;
|
|
Core
deposits increased and certificates of deposit decreased as management
continued to focus on low-cost relationship
accounts;
|
|
The
Bank launched a new checking account product that is expected to increase
core deposit balances and generate interchange
income;
|
|
While
nonperforming loans increased during the quarter, loans delinquent less
than 90 days declined compared to March 31,
2009;
|
■
|
Deteriorating
asset quality and foreclosed asset valuations resulted in increased
operating expenses through additional valuation allowances and maintenance
and property tax expense;,
|
■
|
The
Bank accrued $250,000 related to a special assessment levied by the
Federal Deposit Insurance Corporation (“FDIC”) to be paid in September
2009; and
|
■
|
The
Bank maintained its strong capital position with a total risk-based
capital ratio of 33.6% at
|
|
June
30, 2009.
|
The
current economic and interest rate environments continue to challenge
management’s growth plans. Total assets declined during the third quarter of
fiscal year 2009 as a lack of demand for loans, or more importantly a diminished
supply of creditworthy lending opportunities, and residential loan refinancing,
limited the Company’s ability to increase outstanding loan
balances. Alternative investments are also unattractive as investment
securities offer very low yields within management’s credit and interest rate
risk tolerances. As competitor financial institutions continue to struggle with
liquidity, some are offering deposit rates that exceed the Company’s wholesale
borrowing costs. Therefore, certificate of deposit balances have declined as
some customers chose to move their maturing certificate of deposit balances to
competitors in search of higher returns.
Consistent
with its business strategy, the Company reduced fixed-term borrowing balances
with the Federal Home Loan Bank of Seattle (“FHLB”) and management of the Bank
continued to focus on growing core deposits, defined as non-maturity deposits
such as checking, savings and money market accounts, which management believes
will increase the franchise value of the Company and improve profitability by
reducing interest rate sensitivity and high-cost borrowing balances. Core
deposit relationships should also increase revenue through service and
interchange fee income. In response to recent declines in nonsufficient fund and
interchange income and to execute the strategy of increasing core deposit
balances, the Bank launched a new checking account, the “Ultimate Checking
Account,” during the third quarter of fiscal 2009. Management believes this will
result in higher checking account balances and provide an incentive for
customers to use their check cards more frequently, which should result in
higher interchange income.
While
balances on loans delinquent less than 90 days declined at June 30, 2009,
compared to March 31, 2009, nonperforming assets increased during the third
quarter of fiscal 2009. Commercial real estate loans are now being pressured as
property vacancies continue to climb in the Treasure Valley and the slowdown in
consumer spending is causing many independent and national retailers to close
stores or reduce inventory. The Bank’s Credit Administration Department is also
spending considerable time reviewing home equity lines of credit and, in some
cases, suspending lines at their current balances in order to mitigate future
loan losses.
Micron
Technology, Inc., one of the larger employers headquartered in our market area,
recently announced a plan to eliminate 2,000 jobs in the Treasure Valley during
calendar 2009. The unemployment rate in the Treasure Valley has increased
significantly over the last 12 months as total employment in the Boise-Nampa
metropolitan statistical area fell 7.3% in June 2009 to 255,000 nonfarm
employees from 275,000 in June 2008.
Nonetheless,
management is optimistic about the long-term outlook for the Company as capital
levels remain very high compared to peers and the level of liquidity in the
balance sheet provides flexibility to execute several strategies to weather this
economic recession.
Critical
Accounting Estimates and Related Accounting Policies
Allowance for Loan Losses.
Management recognizes that losses may occur over the life of a loan and
that the allowance for loan losses must be maintained at a level necessary to
absorb specific losses on impaired loans and probable losses inherent in the
loan portfolio. Management assesses the allowance for loan losses on a quarterly
basis by analyzing several factors including delinquency rates, charge-off rates
and the changing risk profile of the Bank’s loan portfolio, as well as local
economic conditions such as unemployment rates, bankruptcies and vacancy rates
of business and residential properties.
The
Company believes that the accounting estimate related to the allowance for loan
losses is a critical accounting estimate because it is highly susceptible to
change from period to period, requiring management to make assumptions about
probable incurred losses inherent in the loan portfolio at the balance sheet
date. The impact of a
sudden
large loss could deplete the allowance and require increased provisions to
replenish the allowance, which would negatively impact earnings.
The
Company’s methodology for analyzing the allowance for loan losses consists of
specific allocations on significant individual credits and a general allowance
amount, including a range of losses. The specific allowance component is
determined when management believes that the collectibility of an individually
reviewed loan has been impaired and a loss is probable. The general allowance
component relates to assets with no well-defined deficiency or weakness and
takes into consideration losses that are inherent within the portfolio but have
not been identified. The general allowance is determined by applying a
historical loss percentage to various types of loans with similar
characteristics and classified loans that are not analyzed specifically.
Adjustments are made to historical loss percentages to reflect current economic
and internal environmental factors, such as changes in underwriting standards
and management turnover, which may increase or decrease those loss factors. As a
result of the imprecision in calculating inherent and potential losses, a range
is added to the general allowance to estimate an allowance for loan losses that
is adequate to cover losses that may arise as a result of changing economic
conditions and other qualitative factors that may alter historical loss
experience. Additionally, future events may evidence additional losses that were
unknown at the time management estimated the allowance, which may require an
increase in the allowance for loan losses in future periods.
The
allowance is increased by the provision for loan losses, which is charged
against current period operating results and decreased by the amount of actual
loan charge-offs, net of recoveries.
The
Company also estimates a reserve related to unfunded loan commitments. In
assessing the adequacy of the reserve, the Company uses a similar approach used
in the development of the allowance for loan losses. The reserve for unfunded
loan commitments is included in other liabilities on the Consolidated Balance
Sheets. The provision for unfunded commitments is charged to noninterest
expense.
Deferred Income Taxes.
Deferred income taxes are reported for temporary differences between
items of income or expense reported in the financial statements and those
reported for income tax purposes. Deferred taxes are computed using the asset
and liability approach as prescribed in SFAS No. 109, Accounting for Income
Taxes. Under this method, a deferred tax asset or liability is determined based
on the enacted tax rates that will be in effect when the differences between the
financial statement carrying amounts and tax basis of existing assets and
liabilities are expected to be reported in an institution’s income tax returns.
The deferred tax provision for the year is equal to the net change in the net
deferred tax asset from the beginning to the end of the year, less amounts
applicable to the change in value related to investments available for sale. The
effect on deferred taxes of a change in tax rates is recognized as income in the
period that includes the enactment date. The primary differences between
financial statement income and taxable income result from depreciation expense,
mortgage servicing rights, loan loss reserves, deferred compensation, mark to
market adjustments on our available for sale securities, and dividends received
from the Federal Home Loan Bank of Seattle. Deferred income taxes do not include
a liability for pre-1988 bad debt deductions allowed to thrift institutions that
may be recaptured if the institution fails to qualify as a bank for income tax
purposes in the future.
Real Estate Owned. Real estate
properties acquired through, or in lieu of, loan foreclosure are initially
recorded at the lesser of the outstanding loan balance or the fair value at the
date of foreclosure minus estimated costs to sell. Any valuation adjustments
required at the time of foreclosure are charged to the allowance for loan
losses. After foreclosure, the properties are carried at the lower of carrying
value or fair value less estimated costs to sell. Any subsequent valuation
adjustments, operating expenses or income, and gains and losses on disposition
of such properties are recognized in current operations. The valuation allowance
is established based on our historical realization of losses and adjusted for
current market trends.
Comparison
of Financial Condition at June 30, 2009 and September 30, 2008
For the
nine months ended June 30, 2009, total assets decreased $52.3
million. The changes in total assets were primarily concentrated in
the following asset categories:
|
|
|
|
|
Increase/(Decrease)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at
June
30,
2009
|
|
|
Balance
at
September
30,
2008
|
|
|
Amount
|
|
|
Percent
|
|
|
|
(dollars
in thousands)
|
|
Mortgage-backed
securities, at fair value
|
|
$ |
169,716 |
|
|
$ |
188,787 |
|
|
$ |
(19,071 |
) |
|
|
(10.1 |
)% |
Loans
receivable, net
|
|
|
418,198 |
|
|
|
459,813 |
|
|
|
(41,615 |
) |
|
|
(9.1 |
) |
Real
estate and other property owned
|
|
|
8,614 |
|
|
|
650 |
|
|
|
7,964 |
|
|
|
1,225 |
|
Cash. Cash and amounts due
from depository institutions increased $3.5 million to $26.8 million at June 30,
2009, from $23.3 million at September 30, 2008. The increase was
primarily attributable to principal repayments on one- to four-family
residential mortgages and mortgage backed securities offset by maturing
borrowings from the Federal Home Loan Bank of Seattle (the “FHLB”). Management
has been maintaining higher than optimal levels of cash to provide liquidity in
the event of material degradation in the economy and flexibility for strategic
initiatives. Additionally, $9.3 million of FHLB borrowings with an average rate
of 5.00% are scheduled to mature in September 2009, which will be repaid with
excess cash if alternative, more profitable, investments are not available at
that time.
Securities. Mortgage-backed
securities decreased $19.1 million to $169.7 million at June 30, 2009, from
$188.8 million at September 30, 2008. The decrease was the net of
principal repayments and the increase in the value of the mortgage backed
securities portfolio during the nine months ended June 30, 2009. At
June 30, 2009, the unrealized gain on the portfolio was $4.0 million compared to
an unrealized loss of $2.3 million at September 30, 2008. Principal
reduction totaled $25.4 million for the nine months ended June 30, 2009 and is
occurring at an accelerating rate due to the historically-low rates available on
residential mortgages, which is increasing refinancing activity.
Nearly
all of the Company’s mortgage-backed securities are issued by U.S. Government
sponsored enterprises, primarily Fannie Mae and Freddie Mac. While
the U.S. Government has affirmed its support for government sponsored
enterprises and the mortgage-backed securities they issued, significant
deterioration in the financial strength of Fannie Mae, Freddie Mac or
mortgage-backed security insurers may have a material effect on the valuation
and performance of the Company’s mortgage-backed securities portfolio in future
periods.
Non-agency,
also referred to as “private label,” mortgage-backed securities had a fair value
of $3.0 million at June 30,
2009, compared to their amortized cost of $3.3 million. The securities carried a
rating of ‘AAA’ by Moody’s and Standard & Poor’s at that date. However, one
of theses securities was downgraded by Moody’s in July 2009 from AAA to A1.
Management has reviewed the delinquency status, credit support and collateral
coverage of the loans pooled in the private label securities portfolio and has
concluded the securities were not other than temporarily impaired at June 30,
2009, or after the ratings downgrade in July 2009. However, continued
deterioration in the economy and rapid increases in unemployment may result in a
change in the performance expectation for these securities in the future, which
may negatively impact the Company’s earnings. At June 30, 2009, the Company did
not own collateralized debt obligations or trust preferred
securities.
FHLB Stock. At June 30, 2009,
the Bank held $9.6 million of common stock in the FHLB. This security is
reported at par value, which represents the Bank’s cost. The FHLB recently
announced that it would report a risk-based capital deficiency under the
regulations of the Federal Housing Finance Agency (the “FHFA”), its primary
regulator. As a result, the FHLB has stopped paying a dividend and stated that
it would suspend the repurchase and redemption of outstanding common stock until
its retained earnings deficiency was reclaimed.
The FHLB
has communicated to the Company that it believes the calculation of risk-based
capital under the current rules of the FHFA significantly overstates the market
and credit risk of the FHLB’s private-label mortgage-backed securities in the
current market environment and that they have enough capital to cover the risks
reflected in the FHLB’s balance sheet. As a result, the Company has not recorded
an "other than temporary impairment" on its investment in FHLB stock. However,
continued deterioration in the FHLB’s financial position may result in
impairment
in the value of those securities, or the requirement that the Bank contribute
additional funds to recapitalize the FHLB, or reduce the Bank’s ability to
borrow funds from the FHLB, which would impair the Bank’s ability to meet
liquidity demands.
Loans. Net loans receivable
decreased $41.6 million to $418.2 million at June 30, 2009, from $459.8 million
at September 30, 2008. One- to four-family residential mortgage loans
decreased $34.3 million as mortgage rates remained at historically low levels
through the third quarter of fiscal 2009, which led to significantly higher
levels of mortgage loan refinancing. Additionally, the Bank originates
conventional one- to four-family residential loans for sale in the secondary
market. As a result, the residential loan portfolio will likely continue to
decline as new loans are not added to the portfolio. Consumer loans decreased
$5.3 million to $51.0 million as of June 30, 2009. Commercial real
estate, multifamily and acquisition and development loans increased $1.5 million
to $200.2 million at June 30, 2009 from $198.6 million at September 30,
2008. The Company plans to continue its emphasis on commercial and
small business banking products.
Asset Quality. Net charge-offs
totaled $2.5 million during the quarter ended June 30, 2009. Loans delinquent 30
to 89 days totaled $3.8 million at June 30, 2009, compared to $11.6 million
at March 31, 2009, and $6.5 million at September 30, 2008. The following table
summarizes loans delinquent 30 to 89 days:
|
|
June
30,
|
|
|
March
31,
|
|
|
September
30,
|
|
|
|
2009
|
|
|
2009
|
|
|
2008
|
|
|
|
(in
thousands)
|
|
Land
acquisition and development
|
|
$ |
623 |
|
|
$ |
133 |
|
|
$ |
1,150 |
|
One-
to four-family construction
|
|
|
245 |
|
|
|
760 |
|
|
|
241 |
|
Commercial
real estate
|
|
|
1,357 |
|
|
|
5,313 |
|
|
|
3,094 |
|
One-
to four-family residential
|
|
|
1,300 |
|
|
|
5,242 |
|
|
|
1,836 |
|
Other
|
|
|
256 |
|
|
|
193 |
|
|
|
190 |
|
Total loans delinquent 30 to 89
days
|
|
$ |
3,781 |
|
|
$ |
11,641 |
|
|
$ |
6,511 |
|
Nonperforming
assets, which includes all loans on nonaccrual status, impaired loans and real
estate owned, totaled $25.1 million at June 30, 2009, compared to $19.1 million
at March 31, 2009, and $10.6 million at September 30, 2008. The allowance
for loan losses was $8.3 million, or 1.93%, of gross loans at June 30, 2009,
compared to $7.3 million, or 1.64% of gross loans at March 31, 2009,
and $4.6 million, or 0.98% of gross loans at September 30,
2008.
When a
loan becomes 90 days delinquent, the Bank places the loan on nonaccrual status.
A loan is considered impaired when, based on current information and events, it
is probable that the Bank will be unable to collect the scheduled payments of
principal or interest when due according to the contractual terms of the loan
agreement. Factors considered by management in determining impairment include
payment status, collateral value, and the probability of collecting scheduled
principal and interest payments when due. Generally, an impaired loan is also
placed on nonaccrual status, regardless of delinquency. As a result, some loans
that are not 90 days or more past due may be in nonaccrual status if it is
considered impaired.
The
delinquency table above includes $1.5 million, $1.2 million, and
$5.1 million of loans that were placed on nonaccrual status at June 30,
2009, March 31, 2009 and September 30, 2008, respectively, which are also
included in the table below that summarizes total nonperforming loans (including
nonaccrual and impaired loans) and real estate owned:
|
|
June 30, 2009
|
|
|
March 31,
2009
|
|
|
September 30, 2008
|
|
|
|
(in
thousands)
|
|
|
|
Balance
|
|
|
Loss
Reserve
|
|
|
Balance
|
|
|
Loss
Reserve
|
|
|
Balance
|
|
|
Loss
Reserve
|
|
Land
acquisition and
development
|
|
$ |
3,734 |
|
|
$ |
1,352 |
|
|
$ |
5,266 |
|
|
$ |
1,029 |
|
|
$ |
3,975 |
|
|
$ |
916 |
|
One-
to four-family
construction
|
|
|
3,478 |
|
|
|
390 |
|
|
|
2,307 |
|
|
|
286 |
|
|
|
4,239 |
|
|
|
596 |
|
Commercial
real estate
|
|
|
4,000 |
|
|
|
256 |
|
|
|
3,074 |
|
|
|
220 |
|
|
|
- |
|
|
|
- |
|
One-
to four-family
residential
|
|
|
5,169 |
|
|
|
816 |
|
|
|
3,943 |
|
|
|
441 |
|
|
|
1,701 |
|
|
|
219 |
|
Other
|
|
|
81 |
|
|
|
6 |
|
|
|
- |
|
|
|
- |
|
|
|
30 |
|
|
|
2 |
|
Total nonperforming
and impaired loans
|
|
$ |
16,462 |
|
|
|
2,820 |
|
|
$ |
14,590 |
|
|
|
1,976 |
|
|
$ |
9,945 |
|
|
|
1,733 |
|
General
loss reserve
|
|
|
|
|
|
|
5,446 |
|
|
|
|
|
|
|
5,357 |
|
|
|
|
|
|
|
2,846 |
|
Total allowance for
loan losses
|
|
|
|
|
|
$ |
8,266 |
|
|
|
|
|
|
$ |
7,333 |
|
|
|
|
|
|
$ |
4,579 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real
estate owned, net
|
|
$ |
8,614 |
|
|
|
|
|
|
$ |
4,478 |
|
|
|
|
|
|
$ |
650 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
nonperforming assets
|
|
$ |
25,076 |
|
|
|
|
|
|
$ |
19,068 |
|
|
|
|
|
|
$ |
10,595 |
|
|
|
|
|
Troubled
debt restructurings that are not included in the delinquency or nonperforming
asset tables above totaled $1.1 million and $654,000 and $812,000 at
June 30, 2009, March 31, 2009 and September 30, 2008, respectively.
Real
estate owned increased $4.1 million during the third quarter of fiscal 2009 to
$8.6 million at June 30, 2009, and was comprised of $4.3 million of land
development and speculative one- to four-family construction projects, $3.9
million of commercial real estate and $383,000 of one- to four-family
residential properties.
Nearly
all of the Company’s loans are secured by collateral located in the Treasure
Valley or southern Idaho. The Bank’s commercial real estate and construction and
land development loans are secured by properties in the following locations in
Idaho: approximately 61% and 19% Ada and Canyon counties, respectively,
approximately 6% in eastern Idaho, 5% in Valley County, and 3% in the Twin Falls
and Ketchum areas.
In 2005,
the Bank purchased approximately $38.8 million of residential real estate loans
from Countrywide Financial, now Bank of America, who continues to service the
loans. Balances on the portfolio totaled $22.4 million at June 30, 2009.
Approximately 92% of the portfolio balance is secured by properties outside of
the state of Idaho and delinquencies and foreclosures are rising quickly in that
portfolio. At June 30, 2009, this portfolio had $3.1 million of nonperforming
loans that are reported in the table above. The total reserve allocated to loans
in this loan portfolio was $1.1 million at June 30, 2009, or 5% of the balance
of loans outstanding on that date.
At June
30, 2009, nearly all of the Company’s home equity lines of credit (“HELOC”) were
directly originated through the Bank’s branch network. However, approximately
$924,000 of HELOCs, or 3% of the HELOC portfolio at June 30, 2009, were referred
to the Bank through broker relationships. While nearly all of these loans are
secured by properties in southern Idaho, management ceased indirect origination
of HELOCs in fiscal 2008.
The
Treasure Valley economy continues to deteriorate as unemployment rose
quickly from 4.80% in September 2008 to an estimated 10.1% in June 2009. New
home and commercial real estate construction has nearly come to a standstill as
excess inventory in the residential and commercial real estate markets continues
to reduce property
values.
The pending closure of retail locations as a result of reduced consumer spending
will exacerbate this problem.
Management
believes the Treasure Valley is at the beginning of a downturn in the
commercial real estate market. As a result of this uncertainty, management
recorded a significant provision for loan losses during the nine months ended
June 30, 2009, in order to increase the general reserve component of the
allowance for loan losses. While the $2.4 million provision for loan losses for
the full fiscal year of 2008 and the $8.1 million provision recorded for the
first nine months of fiscal 2009 exceeds the level of net charge-offs during
those periods, management believes such an increase in the allowance for loan
losses is prudent and appropriate and that the allowance for loan losses
reflects management’s best estimate of probable, known and estimable losses
inherent in the loan portfolio at June 30, 2009. However, additional information
may later come to management’s attention, evidencing losses in excess of the
amounts estimated, which may negatively affect earnings in the
future.
Deposits. Deposits
increased $3.1 million, or 0.8%, to $376.0 million at June 30, 2009, from $372.9
million at September 30, 2008, primarily as a result of savings
accounts. Savings account balances have been steadily increasing
throughout fiscal 2009. The decrease in certificates of deposit was
due to choosing not to match rates offered by local competitors that in many
cases exceeded the Bank’s cost of alternative funding sources. The Bank had no
brokered deposits at June 30, 2009, or September 30, 2008.
The
following table details the composition of the deposit portfolio and changes in
deposit balances:
|
|
|
|
|
Increase
(decrease)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at
June
30,
2009
|
|
|
Balance
at
September
30,
2008
|
|
|
Amount
|
|
|
Percent
|
|
|
|
(dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing
demand deposits
|
|
$ |
39,931 |
|
|
$ |
41,398 |
|
|
$ |
(1,467 |
) |
|
|
(3.5 |
)% |
Interest-bearing
demand deposits
|
|
|
131,202 |
|
|
|
127,714 |
|
|
|
3,488 |
|
|
|
2.7 |
|
Savings
deposits
|
|
|
35,880 |
|
|
|
26,409 |
|
|
|
9,471 |
|
|
|
35.9 |
|
Certificates
of deposit
|
|
|
168,983 |
|
|
|
177,404 |
|
|
|
(8,421 |
) |
|
|
(4.7 |
) |
Total
deposit accounts
|
|
$ |
375,996 |
|
|
$ |
372,925 |
|
|
$ |
3,071 |
|
|
|
0.8 |
% |
Approximately
74% of the certificates of deposit portfolio at June 30, 2009, is scheduled to
mature within 12 months. While this presents an opportunity to reduce the cost
of interest bearing deposits in the current low interest rate environment, the
significant level of maturities of certificates also places a burden on the
Company’s liquidity if management is unable to retain the maturing
balances.
Borrowings. FHLB
advances decreased $48.1 million, or 35.1%, to $88.9 million at June 30, 2009,
from $137.0 million at September 30, 2008. Excess cash and principal
payment proceeds from mortgage-backed securities and residential loan portfolios
were used to repay FHLB advances as they matured. The Bank uses FHLB
advances as an alternative funding source to deposits, manage funding costs,
reduce interest rate risk, and, from time to time, to leverage the balance
sheet.
Deferred Income Tax
Asset/Liability. The Company had a deferred tax asset of $1.9
million at June 30, 2009 versus a deferred tax asset of $1.8 million at
September 30, 2008. There are three major components to the
change. There was a $2.5 million shift from an unrealized loss on the
Company’s mortgage-backed securities’ portfolio as of September 30, 2008 to an
unrealized gain as of June 30, 2009, as interest rates fell and spreads
narrowed, increasing the value of the securities portfolio during the quarter.
There was a $1.5 million increase in deferred tax assets due to an $8.1 million
provision for loan loss recorded during the nine month period ended June 30,
2009. Lastly, deferred tax liability decreased $710,000 due to the
sale of mortgage servicing rights completed in December 2008.
Equity. Stockholders’ equity
decreased $6.5 million, or 3%, to $198.7 million at June 30, 2009, compared to
$205.2 million at September 30, 2008. The execution of the entire
share repurchase program during the quarter ended March 31, 2009, was the
primary cause for the decrease in stockholders’ equity. Dividends and
a year-to-date loss from operations in fiscal 2009 reduced retained earnings
while a lower interest rate environment at June 30, 2009
increased
the unrealized gain on securities by $3.8 million, net of tax, compared to
September 30, 2008. The Company’s book value per share as of June 30,
2009 was $11.90 per share based upon 16,698,168 outstanding shares of common
stock.
Comparison
of Operating Results for the Three Months Ended June 30, 2009 and June 30,
2008
Net loss
for the three months ended June 30, 2009 was $1.2 million, or $0.08 per diluted
share, compared to net income of $1.1 million, or $0.07 per diluted share, for
the three months ended June 30, 2008. Total revenue for the quarter
ended June 30, 2009, which consisted of net interest income before the provision
for loan losses plus noninterest income, decreased $323,000 or 3.7% to $8.3
million from $8.6 million for the same period of the prior
year. Total revenue for the third quarter of fiscal 2009 was
unchanged at $8.3 million compared to the linked second quarter of fiscal
2009. The Company’s
efficiency ratio increased to 84.26% for the quarter ended June 30, 2009,
compared to 71.40% for the same quarter a year ago due to higher expenses and
lower revenue in the 2009 period.
Net Interest
Income. Net interest income decreased $199,000, or 3.4%, to
$5.7 million for the three months ended June 30, 2009, from $5.9 million for the
three months ended June 30, 2008. The decrease in net interest income
is primarily attributable to approximately $307,000 in interest income reversed
due to nonaccrual loans.
The
Company’s net interest margin increased 24 basis points to 3.53% for the quarter
ended June 30, 2009, from 3.29% for the same quarter last year. The
improvement in the net interest margin is primarily attributable to the decrease
in interest expense between the two periods.
The
following table sets forth the impacts to the Company’s net interest income from
changes in balances of interest earning assets and interest bearing liabilities
as well as changes in interest rates. The rate column shows the
effects attributable to changes in rate (changes in rate multiplied by prior
volume). The volume column shows the effects attributable to changes in volume
(changes in volume multiplied by prior rate). Changes attributable to
both rate and volume, which cannot be segregated, are allocated proportionately
to the changes in rate and volume.
|
|
Three
Months Ended June 30, 2009
Compared
to Three Months Ended
June 30,
2008
|
|
|
|
Increase
(Decrease) Due to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rate
|
|
|
Volume
|
|
|
Total
|
|
|
|
(in
thousands)
|
|
Interest-earning
assets:
|
|
|
|
|
|
|
|
|
|
Loans
receivable, net
|
|
$ |
(513 |
) |
|
$ |
(617 |
) |
|
$ |
(1,130 |
) |
Loans
held for sale
|
|
|
(11 |
) |
|
|
15 |
|
|
|
4 |
|
Interest-bearing
deposits in other banks
|
|
|
(93 |
) |
|
|
(15 |
) |
|
|
(108 |
) |
Mortgage-backed
securities
|
|
|
(78 |
) |
|
|
(311 |
) |
|
|
(389 |
) |
FHLB
stock
|
|
|
(60 |
) |
|
|
- |
|
|
|
(60 |
) |
Total
net change in income on interest-earning assets
|
|
$ |
(755 |
) |
|
$ |
(928 |
) |
|
$ |
(1,683 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings
deposits
|
|
$ |
(4 |
) |
|
$ |
16 |
|
|
$ |
12 |
|
Interest-bearing
demand deposits
|
|
|
(12 |
) |
|
|
4 |
|
|
|
(8 |
) |
Money
market accounts
|
|
|
(108 |
) |
|
|
(50 |
) |
|
|
(158 |
) |
Certificates
of deposit
|
|
|
(527 |
) |
|
|
(119 |
) |
|
|
(646 |
) |
Total
deposits
|
|
|
(651 |
) |
|
|
(149 |
) |
|
|
(800 |
) |
FHLB
advances
|
|
|
(121 |
) |
|
|
(563 |
) |
|
|
(684 |
) |
Total
net change in expense on interest-bearing liabilities
|
|
$ |
(772 |
) |
|
$ |
(712 |
) |
|
$ |
(1,484 |
) |
Total
decrease in net interest income
|
|
|
|
|
|
|
|
|
|
$ |
(199 |
) |
Interest and Dividend
Income. Total interest and dividend income for the three
months ended June 30, 2009, decreased $1.7 million, or 16.7%, to $8.4 million,
from $10.1 million for the three months ended June 30,
2008.
The
decrease during the quarter was attributable to a decrease on yields earned on
interest earning assets, a decrease in interest earning assets as well as due to
the reversal of interest income on nonaccrual loans.
The
following table compares detailed average earning asset balances, associated
yields, and resulting changes in interest and dividend income:
|
|
Three
Months Ended June 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
Increase/
|
|
|
|
Average
Balance
|
|
|
Yield
|
|
|
Average
Balance
|
|
|
Yield
|
|
|
(Decrease)
in Interest and Dividend
Income
from
2008
|
|
|
|
(dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
deposits in other
banks
|
|
$ |
20,252 |
|
|
|
0.18 |
% |
|
$ |
23,698 |
|
|
|
1.97 |
% |
|
$ |
(108 |
) |
Mortgage-backed
securities
|
|
|
175,522 |
|
|
|
4.52 |
|
|
|
202,904 |
|
|
|
4.68 |
|
|
|
(389 |
) |
Loans
receivable, net
|
|
|
437,762 |
|
|
|
5.82 |
|
|
|
478,806 |
|
|
|
6.26 |
|
|
|
(1,130 |
) |
Loans
held for sale
|
|
|
4,372 |
|
|
|
4.84 |
|
|
|
3,208 |
|
|
|
6.06 |
|
|
|
4 |
|
FHLB
stock
|
|
|
9,591 |
|
|
|
- |
|
|
|
9,591 |
|
|
|
2.50 |
|
|
|
(60 |
) |
Total
interest-earning assets
|
|
$ |
647,499 |
|
|
|
5.20 |
% |
|
$ |
718,207 |
|
|
|
5.71 |
% |
|
$ |
(1,683 |
) |
The
decline in the yield on interest-bearing deposits in other banks reflects the
significantly lower short-term interest rate environment in the third quarter of
fiscal 2009 compared to the third quarter of fiscal 2008.
The yield
on loans fell to 5.82% in the third quarter of fiscal 2009 also as a result of
the decrease in short-term interest rates. For example, the Wall Street Journal
Prime rate was 3.25% for the third fiscal quarter of 2009 compared to an average
of 5.09% during the same quarter last year. Loans on nonaccrual status during
the third quarter of 2009 reduced interest income by approximately
$307,000.
Interest
Expense. Interest expense decreased $1.5 million, or 35.5%, to
$2.7 million for the three months ended June 30, 2009 from $4.2 million for the
three months ended June 30, 2008. The average balance of total
interest-bearing liabilities decreased $63.6 million, or 12.6%, to $441.0
million for the three months ended June 30, 2009 from $504.7 million for the
three months ended June 30, 2008. The decrease in interest expense in
2009 was mainly due to a reduction in the outstanding balance of FHLB advances
and a lower rate paid on certificates of deposit.
The
following table details average balances, cost of funds and the change in
interest expense:
|
|
Three
Months Ended June 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
Increase/
|
|
|
|
Average
Balance
|
|
|
Cost
|
|
|
Average
Balance
|
|
|
Cost
|
|
|
(Decrease)
in Interest
Expense
from
2008
|
|
|
|
(dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings
deposits
|
|
$ |
35,173 |
|
|
|
0.67 |
% |
|
$ |
25,337 |
|
|
|
0.74 |
% |
|
$ |
12 |
|
Interest-bearing
demand deposits
|
|
|
83,319 |
|
|
|
0.48 |
|
|
|
80,634 |
|
|
|
0.54 |
|
|
|
(8 |
) |
Money
market deposits
|
|
|
49,731 |
|
|
|
1.09 |
|
|
|
61,902 |
|
|
|
1.90 |
|
|
|
(158 |
) |
Certificates
of deposit
|
|
|
172,146 |
|
|
|
3.10 |
|
|
|
183,791 |
|
|
|
4.31 |
|
|
|
(646 |
) |
FHLB
advances
|
|
|
100,667 |
|
|
|
4.24 |
|
|
|
153,016 |
|
|
|
4.58 |
|
|
|
(684 |
) |
Total
interest-bearing liabilities
|
|
$ |
441,036 |
|
|
|
2.45 |
% |
|
$ |
504,680 |
|
|
|
3.31 |
% |
|
$ |
(1,484 |
) |
The
slight increase in total interest expense of savings deposits was due to the
significant growth of the product over the past year. The decline in
the cost of all other interest-bearing deposits reflects the significantly lower
interest rate environment in the third quarter of fiscal 2009 compared to the
third quarter of fiscal 2008.
Provision for Loan
Losses. A provision for loan losses of $3.5 million was
recorded as a result of management’s analysis of the loan portfolio for the
quarter ended June 30, 2009, compared to a provision for loan losses of $652,000
for the same quarter of the prior year. The provision reflects
increases in specific reserves on nonperforming loans. Additionally, the
estimated loss rates have been adjusted upward based on recent charge-off
experience and the deterioration in the Treasure Valley economy.
While
management believes the estimates and assumptions used in its determination of
the adequacy of the allowance are reasonable, there can be no assurance that
such estimates and assumptions will not be proven incorrect in the future, or
that the actual amount of future provisions will not exceed the amount of past
provisions or that any increased provision that may be required will not
adversely impact the Company’s financial condition and results of
operations. In addition, the determination of the amount of the
allowance for loan losses is subject to review by bank regulators, as part of
the routine examination process, which may result in the establishment of
additional reserves based upon their judgment of information available to them
at the time of their examination.
The
provision for loan losses is impacted by the types of loans and the risk factors
associated with each loan type in the Bank’s portfolio. As the Bank increases
its commercial loan portfolio, the Bank anticipates it will increase its
allowance for loan losses based upon the higher risk characteristics associated
with commercial loans compared with one- to four- family residential loans,
which have historically comprised the majority of the Bank’s loan
portfolio.
The
following table details selected activity associated with the allowance for loan
losses:
|
|
At
or For the Three Months
Ended
June 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(dollars
in thousands)
|
|
Provision
for loan losses
|
|
$ |
3,450 |
|
|
$ |
652 |
|
Net
charge-offs
|
|
|
2,517 |
|
|
|
158 |
|
Allowance
for loan losses
|
|
|
8,266 |
|
|
|
3,801 |
|
Allowance
for loan losses as a percentage of gross loans receivable
|
|
|
1.93 |
% |
|
|
0.81 |
% |
Nonperforming loans
|
|
$ |
16,462 |
|
|
$ |
3,462 |
|
Allowance
for loan losses as a percentage of nonperforming loans
|
|
|
50.21 |
% |
|
|
109.79 |
% |
Nonperforming
loans as a percentage of gross loans receivable
|
|
|
3.85 |
|
|
|
0.73 |
|
Loans
receivable, net
|
|
$ |
418,198 |
|
|
$ |
468,343 |
|
Noninterest
Income. Noninterest income decreased $124,000, or 4.5%, to
$2.6 million for the three months ended June 30, 2009 from $2.7 million for the
three months ended June 30, 2008. The decrease was primarily attributable to
decreases of $388,000 and $116,000 in service charges and fees and loan
servicing fees, respectively, offset somewhat by an increase in gain on sale of
loans of $203,000. The decreases in service charges and fees reflect the
continuing slowdown in consumer spending, which has reduced nonsufficient fund
fees from the previous year period. However, nonsufficient fund fees and
interchange income increased $123,000 and $54,000, respectively, from the second
fiscal quarter of 2009. The decrease in loan servicing fees is due to the sale
of loan servicing rights completed in the first quarter of fiscal
2009. The increase in gain on sale of loans is attributed to the
historically low rates available on residential mortgages during the third
quarter of fiscal 2009.
The
following table provides a detailed analysis of the changes in components of
noninterest income:
|
|
Three
Months Ended
June
30,
|
|
|
Increase
(decrease)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Amount
|
|
|
Percent
|
|
|
|
(dollars
in thousands)
|
|
Service
fees and charges
|
|
$ |
2,008 |
|
|
$ |
2,396 |
|
|
$ |
(388 |
) |
|
|
(16.2 |
)% |
Gain
on sale of loans
|
|
|
416 |
|
|
|
213 |
|
|
|
203 |
|
|
|
95.3 |
|
Increase
in cash surrender value
of bank owned life insurance
|
|
|
107 |
|
|
|
106 |
|
|
|
1 |
|
|
|
0.9 |
|
Loan
servicing fees
|
|
|
- |
|
|
|
116 |
|
|
|
(116 |
) |
|
|
(100.0 |
) |
Mortgage
servicing rights, net
|
|
|
- |
|
|
|
(63 |
) |
|
|
63 |
|
|
|
(100.0 |
) |
Other
|
|
|
80 |
|
|
|
(33 |
) |
|
|
113 |
|
|
|
(342.4 |
) |
Total
noninterest income
|
|
$ |
2,611 |
|
|
$ |
2,735 |
|
|
$ |
(124 |
) |
|
|
(4.5 |
)% |
Noninterest
Expense. Noninterest expense increased $840,000, or 13.6%, to
$7.0 million for the three months ended June 30, 2009 from $6.2 million for the
three months ended June 30, 2008. The following table provides a detailed
analysis of the changes in components of noninterest expense:
|
|
Three
Months Ended
June
30,
|
|
|
Increase
(decrease)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Amount
|
|
|
Percent
|
|
|
|
(dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
and benefits
|
|
$ |
3,594 |
|
|
$ |
3,840 |
|
|
$ |
(246 |
) |
|
|
(6.4 |
)% |
Occupancy
and equipment
|
|
|
804 |
|
|
|
771 |
|
|
|
33 |
|
|
|
4.3 |
|
Data
processing
|
|
|
654 |
|
|
|
615 |
|
|
|
39 |
|
|
|
6.3 |
|
Advertising
|
|
|
211 |
|
|
|
241 |
|
|
|
(30 |
) |
|
|
(12.5 |
) |
Insurance
and taxes
|
|
|
783 |
|
|
|
158 |
|
|
|
625 |
|
|
|
395.6 |
|
Other
|
|
|
968 |
|
|
|
549 |
|
|
|
419 |
|
|
|
76.3 |
|
Total
noninterest expense
|
|
$ |
7,014 |
|
|
$ |
6,174 |
|
|
$ |
840 |
|
|
|
13.6 |
% |
Compensation
and benefits declined $246,000 or 6.4% in the third quarter of 2009 compared to
the year-ago period mainly due to the reduction of annual incentives based on
payout projections and lower expense related to the Bank’s
ESOP. Insurance and taxes increased primarily due to a one-time
special assessment by the Federal Deposit Insurance Corporation of $250,000 as
well as approximately $219,000 in past due property taxes paid on recently
foreclosed properties. Other expenses increased during the third
quarter of fiscal 2009 compared to 2008 primarily as a result of a $367,000
provision for the decline in the value of foreclosed properties.
Income Tax Expense
(Benefit). The Company recorded an income tax benefit of
$894,000 for the three months ended June 30, 2009. Net loss before
income taxes was $2.1 million for the three months ended June 30, 2009 compared
to net income before taxes of $1.8 million for the three months ended June 30,
2008.
Comparison
of Operating Results for the Nine Months Ended June 30, 2009 and June 30,
2008
Net loss
for the nine months ended June 30, 2009 was ($1.6) million, or ($0.10) per
diluted share, compared to net income of $3.0 million, or $0.19 per diluted
share, for the nine months ended June 30, 2008. Earnings per share
for the prior period have been adjusted to reflect the impact of the second-step
conversion and reorganization of the Company, which occurred on December 19,
2007. Total revenue for the nine months ended June 30, 2009, which
consisted of net interest income before the provision for loan losses plus
noninterest income, increased $247,000 or 1.0% to $24.8 million compared to
$24.6 million for the same period of the prior year. The Company’s
efficiency ratio increased to 79.0% for the nine months ended June 30, 2009,
compared to 75.2% for the same period of the prior year.
Net Interest
Income. Net interest income increased $673,000, or 4.0%, to
$17.4 million for the nine months ended June 30, 2009, from $16.7 million for
the nine months ended June 30, 2008. The increase was mainly
attributable to a decrease in interest expense. Lower interest rates
as well as lower outstanding borrowings in the current year period than in the
same period a year ago were the main reasons for the decrease.
The
Company’s net interest margin increased 35 basis points to 3.49% for the nine
months ended June 30, 2009, from 3.14% for the same period last
year. The improvement in the net interest margin is primarily
attributable to the decrease in interest expense between the two
periods.
The
following table sets forth the impacts to the Company’s net interest income from
changes in balances of interest earning assets and interest bearing liabilities
as well as changes in interest rates. The rate column shows the
effects attributable to changes in rate (changes in rate multiplied by prior
volume). The volume column shows the effects attributable to changes in volume
(changes in volume multiplied by prior rate). Changes attributable to
both rate and volume, which cannot be segregated, are allocated proportionately
to the changes in rate and volume.
|
|
Nine
Months Ended June 30, 2009
Compared
to Nine Months Ended
June
30, 2008
|
|
|
|
Increase
(Decrease) Due to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rate
|
|
|
Volume
|
|
|
Total
|
|
|
|
(in
thousands)
|
|
Interest-earning
assets:
|
|
|
|
|
|
|
|
|
|
Loans
receivable, net
|
|
$ |
(1,924 |
) |
|
$ |
(1,149 |
) |
|
$ |
(3,073 |
) |
Loans
held for sale
|
|
|
(2 |
) |
|
|
22 |
|
|
|
20 |
|
Interest-bearing
deposits in other banks
|
|
|
(486 |
) |
|
|
(352 |
) |
|
|
(838 |
) |
Mortgage-backed
securities
|
|
|
(146 |
) |
|
|
(6 |
) |
|
|
(152 |
) |
FHLB
stock
|
|
|
(143 |
) |
|
|
- |
|
|
|
(143 |
) |
Total
net change in income on interest-
earning assets
|
|
$ |
(2,701 |
) |
|
$ |
(1,485 |
) |
|
$ |
(4,186 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings
deposits
|
|
$ |
6 |
|
|
$ |
41 |
|
|
$ |
47 |
|
Interest-bearing
demand deposits
|
|
|
(71 |
) |
|
|
(2 |
) |
|
|
(73 |
) |
Money
market accounts
|
|
|
(575 |
) |
|
|
(97 |
) |
|
|
(672 |
) |
Certificates
of deposit
|
|
|
(1,630 |
) |
|
|
(798 |
) |
|
|
(2,428 |
) |
Total
deposits
|
|
|
(2,270 |
) |
|
|
(856 |
) |
|
|
(3,126 |
) |
FHLB
advances
|
|
|
(172 |
) |
|
|
(1,561 |
) |
|
|
(1,733 |
) |
Total
net change in expense on interest-
bearing liabilities
|
|
$ |
(2,442 |
) |
|
$ |
(2,417 |
) |
|
$ |
(4,859 |
) |
Total
increase in net interest income
|
|
|
|
|
|
|
|
|
|
$ |
673 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and Dividend
Income. Total interest and dividend income for the nine months
ended June 30, 2009 decreased $4.2 million, or 13.6%, to $26.7 million, from
$30.9 million for the nine months ended June 30, 2008. The decrease
during the period was attributable to both a decrease in the average balance of
interest-earning assets of $45.5 million and a drop in yields earned on
interest-earning assets of 44 basis points.
The
following table compares detailed average earning asset balances, associated
yields, and resulting changes in interest and dividend income:
|
|
Nine
Months Ended June 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
Increase/
|
|
|
|
Average
Balance
|
|
|
Yield
|
|
|
Average
Balance
|
|
|
Yield
|
|
|
(Decrease)
in
Interest
and
Dividend
Income
from
2008
|
|
|
|
(dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest-bearing
deposits in other
banks
|
|
$ |
13,630 |
|
|
|
0.52 |
% |
|
$ |
35,301 |
|
|
|
3.37 |
% |
|
$ |
(838 |
) |
Mortgage-backed
securities
|
|
|
181,898 |
|
|
|
4.63 |
|
|
|
182,080 |
|
|
|
4.73 |
|
|
|
(152 |
) |
Loans
receivable, net
|
|
|
455,969 |
|
|
|
5.90 |
|
|
|
480,477 |
|
|
|
6.46 |
|
|
|
(3,073 |
) |
Loans
held for sale
|
|
|
3,585 |
|
|
|
5.47 |
|
|
|
2,716 |
|
|
|
6.22 |
|
|
|
20 |
|
FHLB
stock
|
|
|
9,591 |
|
|
|
(0.46 |
) |
|
|
9,591 |
|
|
|
1.53 |
|
|
|
(143 |
) |
Total interest-earning assets |
|
$ |
664,673 |
|
|
|
5.35 |
% |
|
$ |
710,165 |
|
|
|
5.79 |
% |
|
$ |
(4,186 |
) |
Interest
Expense. Interest expense decreased $4.9 million, or 34.4%, to
$9.3 million for the nine months ended June 30, 2009 from $14.1 million for the
nine months ended June 30, 2008. The average balance of total
interest-bearing liabilities decreased $68.5 million, or 13.1%, to $453.6
million for the nine months ended June 30, 2009 from $522.1 million for the nine
months ended June 30, 2008. Decreases in the average balances of
certificates of deposit and FHLB advances of $25.4 million and $46.6 million
respectively were primarily responsible for the decrease in interest bearing
liabilities.
The
following table details average balances, cost of funds and the change in
interest expense:
|
|
Nine
Months Ended June 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
Increase/
|
|
|
|
Average
Balance
|
|
|
Cost
|
|
|
Average
Balance
|
|
|
Cost
|
|
|
(Decrease)
in Interest
Expense
from
2008
|
|
|
|
(dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings
deposits
|
|
$ |
31,024 |
|
|
|
0.73 |
% |
|
$ |
23,570 |
|
|
|
0.70 |
% |
|
$ |
47 |
|
Interest-bearing
demand
deposits
|
|
|
80,434 |
|
|
|
0.51 |
|
|
|
79,065 |
|
|
|
0.64 |
|
|
|
(73 |
) |
Money
market deposits
|
|
|
52,532 |
|
|
|
1.26 |
|
|
|
57,793 |
|
|
|
2.69 |
|
|
|
(672 |
) |
Certificates
of deposit
|
|
|
173,765 |
|
|
|
3.39 |
|
|
|
199,179 |
|
|
|
4.58 |
|
|
|
(2,428 |
) |
FHLB
advances
|
|
|
115,833 |
|
|
|
4.44 |
|
|
|
162,471 |
|
|
|
4.59 |
|
|
|
(1,733 |
) |
Total
interest-bearing liabilities
|
|
$ |
453,588 |
|
|
|
2.72 |
% |
|
$ |
522,078 |
|
|
|
3.60 |
% |
|
$ |
(4,859 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for Loan
Losses. A provision for loan losses of $8.1 million was
recorded as a result of our analysis of the loan portfolio for the nine months
ended June 30, 2009, compared to a provision for loan losses of $1.3 million for
the same period of the prior year.
The
following table details selected activity associated with the allowance for loan
losses:
|
|
At
or For the Nine Months
Ended
June 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
|
(dollars
in thousands)
|
|
Provision
for loan losses
|
|
$ |
8,085 |
|
|
$ |
1,317 |
|
Net
charge-offs
|
|
|
4,398 |
|
|
|
505 |
|
Allowance
for loan losses
|
|
|
8,266 |
|
|
|
3,801 |
|
Allowance
for loan losses as a percentage of gross loans receivable
|
|
|
1.93 |
% |
|
|
0.80 |
% |
Nonperforming loans
|
|
$ |
16,462 |
|
|
$ |
3,462 |
|
Allowance
for loan losses as a percentage of nonperforming loans
|
|
|
50.21 |
% |
|
|
109.79 |
% |
Nonperforming
loans as a percentage of gross loans receivable
|
|
|
3.85 |
|
|
|
0.73 |
|
Loans
receivable, net
|
|
$ |
418,198 |
|
|
$ |
468,343 |
|
Noninterest
Income. Noninterest income decreased $426,000, or 5.4%, to
$7.4 million for the nine months ended June 30, 2009 from $7.8 million for the
nine months ended June 30, 2008. The decrease was primarily
attributable to decreases of $722,000 and $315,000 in service charges and fees
and loan servicing fees offset by an increase in gain on sale of loans of
$453,000. The decreases in service charges and fees reflect the
continuing slowdown in consumer spending and the decrease in loan servicing fees
is due to the sale of loan servicing rights completed in the first quarter of
fiscal 2009. The increase in gain on sale of loans is attributed to
the historically low rates available on residential mortgages during the first
nine months of fiscal 2009.
The
following table provides a detailed analysis of the changes in components of
noninterest income:
|
|
Nine
Months Ended
June
30,
|
|
|
Increase
(decrease)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Amount
|
|
|
Percent
|
|
|
|
(dollars
in thousands)
|
|
Service
fees and charges
|
|
$ |
6,009 |
|
|
$ |
6,731 |
|
|
$ |
(722 |
) |
|
|
(10.7 |
)% |
Gain
on sale of loans
|
|
|
1,013 |
|
|
|
560 |
|
|
|
453 |
|
|
|
80.9 |
|
Increase
in cash surrender value
of bank owned life insurance
|
|
|
317 |
|
|
|
314 |
|
|
|
3 |
|
|
|
1.0 |
|
Loan
servicing fees
|
|
|
54 |
|
|
|
369 |
|
|
|
(315 |
) |
|
|
(85.4 |
) |
Mortgage
servicing rights, net
|
|
|
(31 |
) |
|
|
(206 |
) |
|
|
175 |
|
|
|
85.0 |
|
Other
|
|
|
55 |
|
|
|
75 |
|
|
|
(20 |
) |
|
|
(26.7 |
) |
Total
noninterest income
|
|
$ |
7,417 |
|
|
$ |
7,843 |
|
|
$ |
(426 |
) |
|
|
(5.4 |
)% |
Noninterest
Expense. Noninterest expense increased $1.1 million, or 6.2%,
to $19.6 million for the nine months ended June 30, 2009 from $18.5 million for
the nine months ended June 30, 2008. Compensation and benefits declined $644,000
or 5.6% from the year ago period. This reduction is mainly
attributable to the absence of accruals in the current year for incentive awards
due to the Company’s financial results to date. The increase in
insurance and taxes is mainly due to a one-time FDIC assessment of approximately
$250,000 as well as property tax expense incurred on foreclosed
properties. The increase in other expense is mainly attributable to
write-downs in the value of real estate owned.
The
following table provides a detailed analysis of the changes in components of
noninterest expense:
|
|
Nine
Months Ended
June
30,
|
|
|
Increase
(decrease)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Amount
|
|
|
Percent
|
|
|
|
(dollars
in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
and benefits
|
|
$ |
10,948 |
|
|
$ |
11,592 |
|
|
$ |
(644 |
) |
|
|
(5.6 |
)% |
Occupancy
and equipment
|
|
|
2,303 |
|
|
|
2,242 |
|
|
|
61 |
|
|
|
2.7 |
|
Data
processing
|
|
|
1,773 |
|
|
|
1,668 |
|
|
|
105 |
|
|
|
6.3 |
|
Advertising
|
|
|
656 |
|
|
|
786 |
|
|
|
(130 |
) |
|
|
(16.5 |
) |
Insurance
and taxes
|
|
|
1,244 |
|
|
|
383 |
|
|
|
861 |
|
|
|
224.8 |
|
Other
|
|
|
2,695 |
|
|
|
1,810 |
|
|
|
885 |
|
|
|
48.9 |
|
Total
noninterest expense
|
|
$ |
19,619 |
|
|
$ |
18,481 |
|
|
$ |
1,138 |
|
|
|
6.2 |
% |
Income Tax Expense
(Benefit). The Company recorded an income tax benefit of $1.3
million for the nine months ended June 30, 2009. Net loss before
income taxes was $2.9 million for the nine months ended June 30, 2009 compared
to net income before taxes of $4.8 million for the nine months ended June 30,
2008.
Liquidity,
Commitments and Capital Resources
Liquidity. The
Company actively analyzes and manages the Bank’s liquidity with the objectives
of maintaining an adequate level of liquidity and to ensure the availability of
sufficient cash flows to support loan growth, fund deposit withdrawals, fund
operations and satisfy other financial commitments. See the
"Consolidated Statements of Cash Flows" contained in Item 1 - Financial
Statements, included herein.
The
primary sources of funds are customer deposits, loan repayments, loan sales,
maturing investment securities, and FHLB advances. These sources of
funds are used to make loans, acquire investment securities and other assets,
and fund continuing operations. While maturities and the scheduled
amortization of loans are a predictable source of funds, deposit flows and
mortgage prepayments are greatly influenced by the level of interest rates,
economic conditions and competition. Management believes the
Company’s current liquidity position and anticipated operating results are
sufficient to fund the Bank’s known existing commitments and activity
levels.
Liquidity
is essential to the Company’s business. An inability to raise funds through
deposits, borrowings, the sale of loans and other sources could have a
substantial negative effect on liquidity. The Company’s access to funding
sources in amounts adequate to finance the Bank’s activities on acceptable terms
could be impaired by factors that affect the Company and the Bank specifically
or within the financial services industry or economy in general. Factors that
could detrimentally impact the Company’s access to liquidity sources include
adverse regulatory action, a disruption in the financial markets or negative
views and expectations about the prospects for the financial services industry
in light of the recent turmoil faced by banking organizations and the continued
deterioration in credit markets.
At June
30, 2009, certificates of deposit were $169.0 million, or 44.9% of total
deposits, including $124.5 million that are scheduled to mature by June 30,
2010. Historically, the Bank has been able to retain a significant
amount of deposits as they mature. However, recent disruptions in the credit
markets have resulted in a highly price-competitive market for certificates of
deposit. These rates currently exceed alternative costs of borrowings and are
high compared to historical spreads to U.S. Treasury note rates. Additionally,
since loan demand continues to slow, management has been reluctant to offer
rates in excess of wholesale borrowing costs. This has resulted in some deposit
runoff as customers are moving their maturing balances to competitors at a
higher pace than the Bank has historically experienced.
At June
30, 2009, the Bank maintained a line of credit with the FHLB of Seattle equal to
40% of total assets to the extent the Bank provides qualifying collateral and
holds sufficient FHLB stock. At June 30, 2009, the Bank was in
compliance with the collateral requirements and $169.7 million of the line of
credit was available. The Bank is highly dependent on the FHLB of Seattle to
provide the primary source of wholesale funding for immediate liquidity
and
borrowing needs. The failure of the FHLB of Seattle or the FHLB
system in general, may materially impair the Company’s ability to meet our
growth plans or to meet short and long-term liquidity
demands. However, the Company’s mortgage backed securities are
marketable and could be sold to obtain cash to meet liquidity demands should
access to FHLB funding be impaired. Additionally, the Bank could access funding
from the Discount Window at the Federal Reserve Bank of San Francisco or through
the origination of out of market brokered deposits.
During
the second quarter of fiscal year 2009, the Bank was notified by a correspondent
bank that the Bank’s $10.0 million unsecured federal funds purchased line was
suspended due to the increase in the Bank’s nonperforming assets. This line was
available on a secured-borrowing basis at June 30, 2009. The Bank had no
balances drawn on the line of credit and management does not believe this has a
material impact on the Bank’s liquidity position or on the ability of management
to execute the Company’s strategic growth plan.
Off-Balance Sheet
Arrangements. The Bank is party to financial instruments with
off-balance sheet risk in the normal course of business in order to meet the
financing needs of the Bank’s customers. These financial instruments
generally include commitments to originate mortgage, commercial and consumer
loans, and involve to varying degrees, elements of credit and interest rate risk
in excess of amounts recognized in the consolidated balance
sheets. The Bank’s maximum exposure to credit loss in the event of
nonperformance by the borrower is represented by the contractual amount of those
instruments. Because some commitments may expire without being drawn
upon, the total commitment amounts do not necessarily represent future cash
requirements. The same credit policies are used in making commitments
as are used for on-balance sheet instruments. Collateral is required
in instances where deemed necessary.
Undisbursed
balances of loans closed include funds not disbursed but committed for
construction projects. Unused lines of credit include funds not
disbursed, but committed for, home equity, commercial and consumer lines of
credit.
Commercial
letters of credit are conditional commitments issued to guarantee the
performance of a customer to a third party. Those guarantees are
primarily used to support public and private borrowing
arrangements. The credit risk involved in issuing letters of credit
is essentially the same as that involved in extending loan facilities to
customers.
The
following is a summary of commitments and contingent liabilities with
off-balance sheet risks as of
June 30,
2009:
|
|
Contract
or
Notional
Amount
|
|
|
|
(in
thousands)
|
|
Commitments
to originate loans:
|
|
|
|
Fixed
rate
|
|
$ |
8,109 |
|
Adjustable
rate
|
|
|
3,713 |
|
Undisbursed
balance of loans closed
|
|
|
6,919 |
|
Unused
lines of credit
|
|
|
35,291 |
|
Commercial
letters of credit
|
|
|
137 |
|
Total
|
|
$ |
54,169 |
|
Capital. Consistent with the Bank’s
goal to operate a sound and profitable financial organization, efforts are
ongoing to actively seek to maintain a “well capitalized” institution in
accordance with regulatory standards. The Bank’s total regulatory capital was
$140.1 million at June 30, 2009, or 21.9%, of total assets on that date. As of
June 30, 2009, the Bank exceeded all regulatory capital requirements. The Bank’s
regulatory capital ratios at June 30, 2009 were as follows: Tier 1 capital
21.9%; Tier 1 (core) risk-based capital 32.3%; and total risk-based capital
33.6%. The applicable regulatory capital requirements to be considered well
capitalized are 5%, 6% and 10%, respectively.
Item
3. Quantitative and Qualitative Disclosures about Market
Risk
The
Company’s Board of Directors has established an asset and liability management
policy to guide management in maximizing net interest spread by managing the
differences in terms between interest-earning assets and interest-bearing
liabilities while maintaining acceptable levels of liquidity, capital adequacy,
interest rate sensitivity, credit risk and profitability. The
Asset/Liability Management Committee, consisting of certain members of senior
management, communicate, coordinate and manage asset/liability positions
consistent with the business plan and Board-approved policies, as well as to
price savings and lending products, and to develop new products.
One of
the Bank’s primary financial objectives is to generate ongoing
profitability. The Bank’s profitability depends primarily on its net
interest income, which is the difference between the income it receives on its
loan and investment portfolio and its cost of funds, which consists of interest
paid on deposits and borrowings. The rates the Company earns on
assets and pays on liabilities generally are established contractually for a
period of time. Market interest rates change over
time. The Bank’s loans generally have longer maturities than the
deposits. Accordingly, the Company’s results of operations, like
those of other financial institutions, are affected by changes in interest rates
and the interest rate sensitivity of assets and liabilities. The Bank
measures its interest rate sensitivity on a quarterly basis using an internal
model.
Management
employs various strategies to manage the Company’s interest rate sensitivity
including: (1) selling long-term fixed-rate mortgage loans in the secondary
market; (2) borrowing intermediate to long-term funds at fixed rates from the
FHLB; (3) originating commercial and consumer loans at shorter maturities or at
variable rates; (4) originating adjustable rate mortgage loans; (5)
appropriately modifying loan and deposit pricing to capitalize on the then
current market opportunities; and (6) increasing lower cost core deposits, such
as savings and checking accounts. At March 31, 2009, the Company had no
off-balance sheet derivative financial instruments, and the Bank did not
maintain a trading account for any class of financial instruments or engage in
hedging activities or purchase high risk derivative
instruments. Furthermore, the Company is not subject to foreign
currency exchange rate risk or commodity price risk.
There has
not been any material change in the market risk disclosures contained in the
Company’s 2008 Form 10-K.
Item 4. Controls
and Procedures
(a)
Evaluation of Disclosure Controls and Procedures.
An
evaluation of the Company’s disclosure controls and procedures (as defined in
Rule 13a-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)) was
carried out under the supervision and with the participation of the Company’s
Chief Executive Officer, Chief Financial Officer, and other members of the
Company’s management team as of the end of the period covered by this quarterly
report. The Company’s Chief Executive Officer and Chief Financial
Officer concluded that as of June 30, 2009, the Company’s disclosure controls
and procedures were effective in ensuring that the information required to be
disclosed by the Company in the reports it files or submits under the Act is (i)
accumulated and communicated to the Company’s management (including the Chief
Executive Officer and Chief Financial Officer) in a timely manner, and (ii)
recorded, processed, summarized, and reported within the time periods specified
in the SEC’s rules and forms.
(b)
Changes in Internal Controls.
There
have been no changes in the Company’s internal control over financial reporting
(as defined in 13a-15(f) of the Exchange Act) that occurred during the quarter
ended June 30, 2009, that have materially affected, or are reasonably likely to
materially affect, the Company’s internal control over financial
reporting. A number of internal control procedures were, however,
modified during the quarter in conjunction with the Bank's internal control
testing. The Company also continued to implement suggestions from its
internal auditor and independent auditors to strengthen existing
controls.
The
Company intends to continually review and evaluate the design and effectiveness
of its disclosure controls and procedures and to improve its controls and
procedures over time and to correct any deficiencies that it may discover in the
future. The goal is to ensure that senior management has timely access to all
material financial and non-
financial
information concerning the Company's business. While the Company
believes the present design of its disclosure controls and procedures is
effective to achieve its goal, future events affecting its business may cause
the Company to modify its disclosure controls and procedures. The
Company does not expect that its disclosure controls and procedures and internal
control over financial reporting will prevent every error or instance of
fraud. A control procedure, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the
objectives of the control procedure are met. Because of the inherent
limitations in all control procedures, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any,
within the Company have been detected. These inherent limitations
include the realities that judgments in decision-making can be faulty, and that
breakdowns in controls or procedures can occur because of simple error or
mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people, or by management
override of the control. The design of any control procedure is based
in part upon certain assumptions about the likelihood of future events, and
there can be no assurance that any design will succeed in achieving its stated
goals under all potential future conditions; over time, controls become
inadequate because of changes in conditions, or the degree of compliance with
the policies or procedures may deteriorate. Because of the inherent
limitations in a cost-effective control procedure, misstatements due to error or
fraud may occur and not be detected.
PART II - OTHER
INFORMATION
Item 1. Legal
Proceedings
From time
to time, the Company is engaged in legal proceedings in the ordinary course of
business, none of which are currently considered to have a material impact on
the Company’s financial position or results of operations.
Item 1A. Risk
Factors
The
Company believes there have been no significant changes in risk factors compared
to the factors identified in the Company’s Annual Report on Form 10-K for the
year ended September 30, 2009, and Form 10-Q for the period ended March 31,
2009
Item
2. Unregistered Sales of Equity Securities and Use of
Proceeds
Item 3. Defaults
Upon Senior Securities
Not
applicable.
Item
4. Submission of Matters to a Vote of Security
Holders
Not
applicable.
Item 5. Other
Information
Not
applicable.
Item
6. Exhibits
2.1
|
Plan
of Conversion and Reorganization (1)
|
3.1
|
Articles
of Incorporation of the Registrant (2)
|
3.2
|
Bylaws
of the Registrant (2)
|
10.1
|
Amended
Employment Agreement entered into by Home Federal Bancorp, Inc. with Len
E. Williams(8)
|
10.2
|
Amended
Severance Agreement with Eric S. Nadeau(8)
|
10.3
|
Amended
Severance Agreement with Steven D. Emerson(8)
|
10.4
|
Amended
Severance Agreement with Steven K. Eyre(8)
|
10.5
|
Form
of Home Federal Bank Employee Severance Compensation Plan
(3)
|
10.6
|
Form
of Director Indexed Retirement Agreement entered into by Home Federal
Savings and Loan Association of Nampa with each of its Directors
(2)
|
10.7
|
Form
of Director Deferred Incentive Agreement entered into by Home Federal
Savings and Loan Association of Nampa with each of its Directors
(2)
|
10.8
|
Form
of Executive Deferred Incentive Agreement, and amendment thereto, entered
into by Home Federal Savings and Loan Association of Nampa with Daniel L.
Stevens, Robert A. Schoelkoph, and Lynn A. Sander (2)
|
10.9
|
Form
of Amended and Restated Salary Continuation Agreement entered into by Home
Federal Savings and Loan Association of Nampa with Daniel L. Stevens
(2)
|
10.10
|
Amended
and Restated Salary Continuation Agreement entered into by Home Federal
Savings and Loan Association of Nampa with Len E.
Williams(8)
|
10.11
|
Amended
and Restated Salary Continuation Agreement entered into by Home Federal
Savings and Loan Association of Nampa with Eric S.
Nadeau(8)
|
10.12
|
Amended
and Restated Salary Continuation Agreement entered into by Home Federal
Savings and Loan Association of Nampa with Steven D.
Emerson(8)
|
10.13
|
Amended
and Restated Salary Continuation Agreement entered into by Home Federal
Savings and Loan Association of Nampa with Steven K.
Eyre(8)
|
10.14
|
2005
Stock Option and Incentive Plan approved by stockholders on June 23, 2005
and Form of Incentive Stock Option Agreement and Non-Qualified Stock
Option Agreement (4)
|
10.15
|
2005
Recognition and Retention Plan approved by stockholders on June 23, 2005
and Form of Award Agreement (4)
|
10.15
|
Form
of new Director Retirement Plan entered into by Home Federal Bank with
each of its Directors (5)
|
10.16
|
Transition
Agreement with Daniel L. Stevens (6)
|
10.17
|
2008
Equity Incentive Plan (7)
|
31.1
|
Certification
of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act *
|
31.2
|
Certification
of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act *
|
32
|
Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act
*
|
________
(1)
|
Filed
as an exhibit to the Registrant’s Current Report on Form 8-K dated May 11,
2007
|
(2)
|
Filed
as an exhibit to the Registrant's Registration Statement on Form S-1
(333-146289)
|
(3)
|
Filed
as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the
quarter ended December 31, 2008
|
(4)
|
Filed
as an exhibit to the Registrant’s Registration Statement on Form S-8
(333-127858)
|
(5)
|
Filed
as an exhibit to the Registrant’s Current Report on Form 8-K dated October
21, 2005
|
(6)
|
Filed
as an exhibit to the Registrant’s Current Report on Form 8-K dated August
21, 2006
|
(7)
|
Filed
as an exhibit to the Registrant’s Registration Statement on Form S-8
(333-157540)
|
(8)
|
Filed
as an exhibit to the Registrant’s Quarterly Report on Form 10-Q for the
quarter ended March 31, 2009
|
* Filed
herewith
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.
|
Home Federal
Bancorp, Inc. |
|
|
|
|
|
|
Date: August 7, 2009 |
/s/Len
E. Williams |
|
Len E.
Williams |
|
President
and |
|
Chief Executive
Officer |
|
(Principal Executive
Officer) |
|
|
|
|
|
|
Date: August 7, 2009 |
/s/Eric
S. Nadeau |
|
Eric S.
Nadeau |
|
Executive Vice
President and |
|
Chief Financial
Officer |
|
(Principal Financial
and Accounting Officer) |
EXHIBIT
INDEX |
|
|
31.1
|
Certification
of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act
|
31.2
|
Certification
of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
Act
|
32
|
Certification
Pursuant to Section 906 of the Sarbanes-Oxley
Act
|