HOME
FEDERAL BANCORP, INC. OF LOUISIANA
|
|
|
|
CONSOLIDATED
STATEMENTS OF FINANCIAL CONDITION
|
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
|
June
30,
|
|
|
|
|
|
|
|
|
|
|
(Unaudited)
|
|
|
(Audited)
|
|
ASSETS
|
(In
Thousands)
|
|
|
|
|
|
|
|
|
Cash
and Cash Equivalents
|
|
$ |
5,623 |
|
|
$ |
3,972 |
|
Securities
Available-for-Sale
|
|
|
100,355 |
|
|
|
83,752 |
|
Securities
Held-to-Maturity
|
|
|
1,702 |
|
|
|
1,408 |
|
Loans
Held for Sale
|
|
|
484 |
|
|
|
1,478 |
|
Loans
Receivable, Net
|
|
|
28,707 |
|
|
|
25,211 |
|
Accrued
Interest Receivable
|
|
|
558 |
|
|
|
499 |
|
Premises
and Equipment, Net
|
|
|
894 |
|
|
|
923 |
|
Deferred
Tax Asset
|
|
|
-- |
|
|
|
1,476 |
|
Other
Assets
|
|
|
274 |
|
|
|
66 |
|
Real
Estate Acquired Through Foreclosure
|
|
|
33 |
|
|
|
-- |
|
Total Assets
|
|
$ |
138,630 |
|
|
$ |
118,785 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
Deposits
|
|
$ |
79,342 |
|
|
$ |
77,710 |
|
Advances
from Borrowers for Taxes and Insurance
|
|
|
123 |
|
|
|
196 |
|
Advances
from Federal Home Loan Bank of Dallas
|
|
|
27,132 |
|
|
|
12,368 |
|
Other
Accrued Expenses and Liabilities
|
|
|
780 |
|
|
|
699 |
|
Total Liabilities
|
|
|
107,377 |
|
|
|
90,973 |
|
|
|
|
|
|
|
|
|
|
COMMITMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY
|
|
|
|
|
|
|
|
|
Common
stock - 8,000,000 shares of $.01
par
value authorized; 3,558,958 shares issued;
3,383,287
shares outstanding and 3,387,202
shares
outstanding at March 31, 2008 and
June
30, 2007, respectively
|
|
|
14 |
|
|
|
14 |
|
Additional
paid-in capital
|
|
|
13,554 |
|
|
|
13,509 |
|
Retained
Earnings - Partially Restricted
|
|
|
20,602 |
|
|
|
20,449 |
|
Unearned
ESOP Stock
|
|
|
(954 |
) |
|
|
(997 |
) |
Unearned RRP Trust Stock
|
|
|
(395 |
) |
|
|
(551 |
) |
Accumulated
Other Comprehensive Loss
|
|
|
241 |
|
|
|
(2,841 |
) |
Treasury
Stock – At Cost
|
|
|
(1,809 |
) |
|
|
(1,771 |
) |
|
|
|
|
|
|
|
|
|
Total Stockholders’
Equity
|
|
|
31,253 |
|
|
|
27,812 |
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS’
EQUITY
|
|
$ |
138,630 |
|
|
$ |
118,785 |
|
See
accompanying notes to consolidated financial
statements.
|
HOME
FEDERAL BANCORP, INC. OF LOUISIANA
|
CONSOLIDATED
STATEMENTS OF INCOME
|
(Unaudited)
|
|
|
|
|
|
|
Three
Months Ended
|
|
Nine
Months Ended
|
|
|
|
|
|
|
March
31,
|
|
March
31,
|
|
|
|
|
|
|
2008
|
|
2007
|
|
2008
|
|
2007
|
|
(In
Thousands, Except Per Share Data)
|
INTEREST
INCOME
|
|
|
|
|
|
|
|
|
Loans,
Including Fees
|
$ 514
|
|
$ 457
|
|
$
1,559
|
|
$ 1,258
|
|
Investment
Securities
|
60
|
|
67
|
|
204
|
|
219
|
|
Mortgage-Backed
Securities
|
1,088
|
|
1,089
|
|
3,319
|
|
3,222
|
|
Other
Interest-Earning Assets
|
54
|
|
76
|
|
140
|
|
200
|
|
|
|
Total
Interest Income
|
1,716
|
|
1,689
|
|
5,222
|
|
4,899
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INTEREST
EXPENSE
|
|
|
|
|
|
|
|
|
Deposits
|
|
760
|
|
711
|
|
2,327
|
|
2,019
|
|
Federal
Home Loan Bank Borrowings
|
247
|
|
186
|
|
647
|
|
512
|
|
|
|
Total
Interest Expense
|
1,007
|
|
897
|
|
2,974
|
|
2,531
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Interest Income
|
709
|
|
792
|
|
2,248
|
|
2,368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION
FOR LOAN LOSSES
|
--
|
|
--
|
|
--
|
|
--
|
|
|
|
Net
Interest Income after
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for Loan Losses
|
709
|
|
792
|
|
2,248
|
|
2,368
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-INTEREST
INCOME
|
|
|
|
|
|
|
|
|
Gain
on Sale of Loans
|
1
|
|
3
|
|
5
|
|
3
|
|
Gain
on Sale of Investments
|
55
|
|
67
|
|
149
|
|
168
|
|
Other
Income
|
7
|
|
7
|
|
29
|
|
57
|
|
|
|
|
|
Total
Non-Interest Income
|
63
|
|
77
|
|
183
|
|
228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-INTEREST
EXPENSE
|
|
|
|
|
|
|
|
|
Compensation
and Benefits
|
390
|
|
362
|
|
1,180
|
|
1,114
|
|
Occupancy
and Equipment
|
43
|
|
44
|
|
128
|
|
137
|
|
Data
Processing
|
19
|
|
22
|
|
52
|
|
56
|
|
Audit
and Professional Fees
|
52
|
|
52
|
|
184
|
|
176
|
|
Franchise
and Bank Shares Tax
|
26
|
|
40
|
|
102
|
|
118
|
|
Deposit
Insurance Premiums
|
2
|
|
2
|
|
7
|
|
7
|
|
Other
Expense
|
70
|
|
68
|
|
211
|
|
206
|
|
|
|
|
|
Total
Non-Interest Expense
|
602
|
|
590
|
|
1,864
|
|
1,814
|
|
|
|
|
|
Income
Before Income Taxes
|
170
|
|
279
|
|
567
|
|
782
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PROVISION
FOR INCOME TAX EXPENSE
|
58
|
|
95
|
|
192
|
|
266
|
|
|
|
|
|
Net
Income
|
$ 112
|
|
$ 184
|
|
$ 375
|
|
$ 516
|
|
|
|
|
|
INCOME
PER COMMON SHARE:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$0.03
|
|
$0.05
|
|
$0.12
|
|
$0.15
|
|
|
|
|
|
Diluted
|
$0.03
|
|
$0.05
|
|
$0.12
|
|
$0.15
|
|
|
|
|
|
DIVIDENDS
DECLARED
|
$0.06
|
|
$0.06
|
|
$0.18
|
|
$0.18
|
See
accompanying notes to consolidated financial statements.
HOME
FEDERAL BANCORP, INC. OF LOUISIANA
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
NINE
MONTHS ENDED MARCH 31, 2008 AND 2007
|
|
|
|
|
Additional
Paid-in
|
|
|
Unearned
|
|
|
Unearned
RRP
Trust
|
|
|
Retained
|
|
|
|
|
|
Accumulated
Other
Comprehensive
|
|
|
Total
Stockholders’
|
|
|
|
|
|
|
|
|
|
|
|
|
(In
Thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE
– JUNE 30, 2006
|
|
$ |
14 |
|
|
$ |
13,445 |
|
|
$ |
(1,054 |
) |
|
$ |
(688 |
) |
|
$ |
20,149 |
|
|
$ |
(211 |
) |
|
$ |
(3,116 |
) |
|
$ |
28,539 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
516 |
|
|
|
-- |
|
|
|
-- |
|
|
|
516 |
|
Other
Comprehensive Loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes
in Unrealized Gain
on
Securities Available-
for-Sale,
Net of Tax Effects
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
2,062 |
|
|
|
2,062 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RRP
Shares Earned
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
137 |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
137 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
Options Vested
|
|
|
-- |
|
|
|
46 |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
46 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESOP
Compensation Earned
|
|
|
-- |
|
|
|
2 |
|
|
|
43 |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
Declared
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
(253 |
) |
|
|
-- |
|
|
|
-- |
|
|
|
(253 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition
Treasury Stock
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
(508 |
) |
|
|
-- |
|
|
|
(508 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE
– MARCH 31, 2007
|
|
$ |
14 |
|
|
$ |
13,493 |
|
|
$ |
(1,011 |
) |
|
$ |
(551 |
) |
|
$ |
20,412 |
|
|
$ |
(719 |
) |
|
$ |
(1,054 |
) |
|
$ |
30,584 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE
– JUNE 30, 2007
|
|
$ |
14 |
|
|
$ |
13,509 |
|
|
$ |
(997 |
) |
|
$ |
(551 |
) |
|
$ |
20,449 |
|
|
$ |
(1,771 |
) |
|
$ |
(2,841 |
) |
|
$ |
27,812 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
374 |
|
|
|
-- |
|
|
|
-- |
|
|
|
374 |
|
Other
Comprehensive Loss:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes
in Unrealized Gain
on
Securities Available-
for-Sale,
Net of Tax Effects
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
3,082 |
|
|
|
3,082 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchase
of Common Stock for
RRP
Trust
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
156 |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
156 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
Options Vested
|
|
|
-- |
|
|
|
47 |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ESOP
Compensation Earned
|
|
|
-- |
|
|
|
(2 |
) |
|
|
43 |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
41 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
Declared
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
(221 |
) |
|
|
|
|
|
|
|
|
|
|
(221 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition
of Treasury Stock
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
|
|
|
|
(38 |
) |
|
|
-- |
|
|
|
(38 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BALANCE
– MARCH 31, 2008
|
|
$ |
14 |
|
|
$ |
13,554 |
|
|
$ |
(954 |
) |
|
$ |
(395 |
) |
|
$ |
20,602 |
|
|
$ |
(1,809 |
) |
|
$ |
241 |
|
|
$ |
31,253 |
|
See
accompanying notes to consolidated financial statements.
HOME
FEDERAL BANCORP, INC. OF LOUISIANA
|
|
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
(Unaudited)
|
|
|
|
|
|
Nine
Months Ended
|
|
|
|
March
31,
|
|
|
|
2008
|
|
|
2007
|
|
|
|
(In
Thousands)
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
|
|
|
Net
Income
|
|
$ |
374 |
|
|
$ |
516 |
|
Adjustments
to Reconcile Net Income to Net
|
|
|
|
|
|
|
|
|
Cash
Provided by Operating Activities
|
|
|
|
|
|
|
|
|
Net
Amortization and Accretion on Securities
|
|
|
(132 |
) |
|
|
(138 |
) |
Gain
on Sale of Investments
|
|
|
(149 |
) |
|
|
(168 |
) |
Amortization
of Deferred Loan Fees
|
|
|
(17 |
) |
|
|
(10 |
) |
Depreciation
of Premises and Equipment
|
|
|
41 |
|
|
|
48 |
|
ESOP
Expense
|
|
|
41 |
|
|
|
44 |
|
Stock
Option Expense
|
|
|
48 |
|
|
|
46 |
|
Recognition
and Retention Plan Expense
|
|
|
118 |
|
|
|
101 |
|
Deferred
Income Tax
|
|
|
(16 |
) |
|
|
(16 |
) |
Changes
in Assets and Liabilities:
|
|
|
|
|
|
|
|
|
Loans
Held-for-Sale – Originations
|
|
|
(10,712 |
) |
|
|
-- |
|
Loans
Held-for-Sale – Principal Repayments
|
|
|
11,706 |
|
|
|
-- |
|
Accrued
Interest Receivable
|
|
|
(60 |
) |
|
|
(22 |
) |
Other
Operating Assets
|
|
|
(209 |
) |
|
|
(20 |
) |
Other
Operating Liabilities
|
|
|
23 |
|
|
|
125 |
|
|
|
|
|
|
|
|
|
|
Net
Cash Provided by Operating Activities
|
|
|
1,056 |
|
|
|
506 |
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Loan
Originations and Purchases, Net of Principal Collections
|
|
|
(3,550 |
) |
|
|
(4,964 |
) |
Deferred
Loan Fees Collected
|
|
|
38 |
|
|
|
7 |
|
Acquisition
of Premises and Equipment
|
|
|
(12 |
) |
|
|
(37 |
) |
Activity
in Available-for-Sale Securities:
|
|
|
|
|
|
|
|
|
Proceeds
from Sales and Maturities of Securities
|
|
|
15,507 |
|
|
|
21,086 |
|
Principal
Payments on Mortgage-backed Securities
|
|
|
8,970 |
|
|
|
7,786 |
|
Purchases
of Securities
|
|
|
(36,129 |
) |
|
|
(24,770 |
) |
Activity
in Held-to-Maturity Securities
|
|
|
|
|
|
|
|
|
Proceeds
from Redemption or Maturity of Investments
|
|
|
-- |
|
|
|
-- |
|
Principal
Payments on Mortgage-Backed Securities
|
|
|
115 |
|
|
|
112 |
|
Purchases
of Securities
|
|
|
(407 |
) |
|
|
(124 |
) |
|
|
|
|
|
|
|
|
|
Net
Cash Used in Investing Activities
|
|
|
(15,468 |
) |
|
|
( 904 |
) |
See
accompanying notes to consolidated financial statements.
HOME
FEDERAL BANCORP, INC. OF LOUISIANA
|
|
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS (Continued)
|
|
(Unaudited)
|
|
|
|
|
|
Nine
Months Ended
|
|
|
|
March
31,
|
|
|
|
2008
|
|
|
2007
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
|
(In
Thousands)
|
|
Net
Increase in Deposits
|
|
|
1,632 |
|
|
|
4,723 |
|
Proceeds
from Federal Home Loan Bank Advances
|
|
|
17,700 |
|
|
|
4,750 |
|
Repayments
of Advances from Federal Home Loan Bank
|
|
|
(2,936 |
) |
|
|
(2,797 |
) |
Net
Decrease in Mortgage-Escrow Funds
|
|
|
(74 |
) |
|
|
(77 |
) |
Dividends
Paid
|
|
|
(221 |
) |
|
|
(253 |
) |
Acquisition
of Treasury Stock
|
|
|
(38 |
) |
|
|
(508 |
) |
|
|
|
|
|
|
|
|
|
Net
Cash Provided by Financing Activities
|
|
|
16,063 |
|
|
|
5,838 |
|
|
|
|
|
|
|
|
|
|
NET
INCREASE IN CASH AND CASH EQUIVALENTS
|
|
|
1,651 |
|
|
|
5,440 |
|
|
|
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS - BEGINNING
|
|
|
|
|
|
|
|
|
OF
PERIOD
|
|
|
3,972 |
|
|
|
4,930 |
|
|
|
|
|
|
|
|
|
|
CASH
AND CASH EQUIVALENTS - END OF PERIOD
|
|
$ |
5,623 |
|
|
$ |
10,370 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTARY
CASH FLOW INFORMATION
|
|
|
|
|
|
|
|
|
Interest
Paid on Deposits and Borrowed Funds
|
|
$ |
2,940 |
|
|
$ |
2,505 |
|
Income
Taxes Paid
|
|
|
185 |
|
|
|
251 |
|
Market
Value Adjustment for Gain on Securities
|
|
|
|
|
|
|
|
|
Available-for-Sale
|
|
|
4,670 |
|
|
|
3,125 |
|
|
|
|
|
|
|
|
|
|
NON
CASH INVESTING ACTIVITY
|
|
|
|
|
|
|
|
|
Real
Estate Acquired through Foreclosure
|
|
$ |
33 |
|
|
$ |
-- |
|
See
accompanying notes to consolidated financial statements.
HOME
FEDERAL BANCORP, INC. OF LOUISIANA
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY
OF ACCOUNTING POLICIES
Basis
of Presentation
The
consolidated financial statements include the accounts of Home Federal Bancorp,
Inc. of Louisiana (the “Company”) and its subsidiary, Home Federal Savings and
Loan Association (the “Association”). These consolidated financial
statements were prepared in accordance with instructions for Form 10-QSB and Regulation S-X and do not include information
or footnotes necessary for a complete presentation of financial condition,
results of operations, and cash flows in conformity with accounting principles
generally accepted in the United States of America. However, in the opinion of
management, all adjustments (consisting of normal recurring adjustments)
necessary for a fair presentation of the financial statements have been
included. The results of operations for the nine month period ended March 31,
2008, is not necessarily indicative of the results which may be expected for the
fiscal year ending June 30, 2008.
In
preparing consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America, management is
required to make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the Consolidated Statements of
Financial Condition and reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those
estimates. Material estimates that are particularly susceptible to
significant change in the near term relate to the allowance for loan
losses.
Nature
of Operations
On
January 18, 2005, Home Federal Savings and Loan Association (the “Association”),
completed its reorganization to the mutual holding company form of organization
and formed Home Federal Bancorp, Inc. of Louisiana (the “Company”) to serve as
the stock holding company for the Association. In connection with the
reorganization, the Company sold 1,423,583 shares of its common stock in a
subscription and community offering at a price of $10.00 per
share. The Company also issued 2,135,375 shares of common stock in
the reorganization to Home Federal Mutual Holding Company of Louisiana, or 63.1%
of our outstanding common stock at March 31, 2008. The Association is
a federally chartered, stock savings and loan association and is subject to
federal regulation by the Federal Deposit Insurance Corporation and the Office
of Thrift Supervision. Services are provided to its customers by
three offices, all of which are located in the City of Shreveport,
Louisiana. The area served by the Association is primarily the
Shreveport-Bossier City metropolitan area; however, loan and deposit customers
are found dispersed in a wider geographical area covering much of northwest
Louisiana.
On
December 12, 2007, the Company announced that the Company, the Association and
Home Federal Mutual Holding Company of Louisiana had adopted a plan to convert
from the mutual holding company structure to a full stock-form holding company
structure and the Company had entered into an Agreement and Plan of Merger
pursuant to which it will acquire First Louisiana Bancshares, Inc. and its
wholly-owned subsidiary, First Louisiana Bank. For further
information, see the Company’s Current Reports on Form 8-K
filed with the Securities and Exchange Commission on December 13, 2007 and
December 17, 2007.
HOME
FEDERAL BANCORP, INC. OF LOUISIANA
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Cash
and Cash Equivalents
For
purposes of the Consolidated Statements of Cash Flows, cash and cash equivalents
include cash on hand, balances due from banks, and federal funds sold, all of
which mature within ninety days.
The
Company classifies its debt and equity investment securities into one of three
categories: held-to-maturity, available-for-sale, or
trading. Investments in nonmarketable equity securities and debt
securities, in which the Company has the positive intent and ability to hold to
maturity, are classified as held-to-maturity and carried at amortized
cost. Investments in debt securities that are not classified as
held-to-maturity and marketable equity securities that have readily determinable
fair values are classified as either trading or available-for-sale
securities. Securities that are acquired and held principally for the
purpose of selling in the near term are classified as trading
securities. Investments in securities not classified as trading or
held-to-maturity are classified as available-for-sale.
Trading
account and available-for-sale securities are carried at fair
value. Unrealized holding gains and losses on trading securities are
included in earnings while net unrealized holding gains and losses on
available-for-sale securities are excluded from earnings and reported in other
comprehensive income. Purchase premiums and discounts are recognized
in interest income using the interest method over the term of the
securities. Declines in the fair value of held-to-maturity and
available-for-sale securities below their cost that are deemed to be other than
temporary are reflected in earnings as realized losses. In estimating
other-than-temporary impairment losses, management considers (1) the length of
time and the extent to which the fair value has been less than cost, (2) the
financial condition and near-term prospects of the issuer, and (3) the intent
and ability of the Association to retain its investment in the issuer for a
period of time sufficient to allow for any anticipated recovery in fair
value. Gains and losses on the sale of securities are recorded on the
trade date and are determined using the specific identification
method.
Loans
originated and intended for sale in the secondary market are carried at the
lower of cost or estimated fair value in the aggregate. Net
unrealized losses, if any, are recognized through a valuation allowance by
charges to income.
Loans
receivable are stated at unpaid principal balances, less allowances for loan
losses and unamortized deferred loan fees. Net nonrefundable fees
(loan origination fees, commitment fees, discount points) and costs associated
with lending activities are being deferred and subsequently accreted into income
as an adjustment of yield on the related interest earning assets using the
interest method. Interest income on contractual loans receivable is
recognized on the accrual method. Unearned discount on property
improvement and automobile loans is deferred and amortized using the interest
method over the life of the loan.
HOME
FEDERAL BANCORP, INC. OF LOUISIANA
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Allowance
for Loan Losses
The
allowance for loan losses is established as losses are estimated to have
occurred through a provision for loan losses charged to
earnings. Loan losses are charged against the allowance when
management believes the uncollectability of a loan balance is
confirmed. Subsequent recoveries, if any, are credited to the
allowance.
The
allowance for loan losses is evaluated on a regular basis by management and is
based upon management’s periodic review of the collectability of the loans in
light of historical experience, the nature and volume of the loan portfolio,
adverse situations that may affect the borrower’s ability to repay, estimated
value of the underlying collateral and prevailing economic
conditions. The evaluation is inherently subjective as it requires
estimates that are susceptible to significant revision as more information
becomes available.
A loan is
considered impaired when, based on current information or events, it is probable
that the Association will be unable to collect the scheduled payments of
principal and interest when due according to the contractual terms of the loan
agreement. When a loan is impaired, the measurement of such
impairment is based upon the fair value of the collateral of the
loan. If the fair value of the collateral is less than the recorded
investment in the loan, the Association will recognize the impairment by
creating a valuation allowance with a corresponding charge against
earnings.
An
allowance is also established for uncollectible interest on loans classified as
substandard. Substandard loans are those which are in excess of ninety days
delinquent. The allowance is established by a charge to interest
income equal to all interest previously accrued and income is subsequently
recognized only to the extent that cash payments are received. When,
in management’s judgment, the borrower’s ability to make periodic interest and
principal payments is back to normal, the loan is returned to accrual
status.
Off-Balance
Sheet Credit Related Financial Instruments
In the
ordinary course of business, the Association has entered into commitments to
extend credit. Such financial instruments are recorded when they are
funded.
Premises
and Equipment
Land is
carried at cost. Buildings and equipment are carried at cost less
accumulated depreciation computed on the straight-line method over the estimated
useful lives of the assets.
Income
Taxes
Deferred
income tax assets and liabilities are determined using the liability (or balance
sheet) method. Under this method, the net deferred tax asset or
liability is determined based on the tax effects of the temporary differences
between the book and tax bases of the various assets and liabilities and gives
current recognition to changes in tax rates and laws.
HOME
FEDERAL BANCORP, INC. OF LOUISIANA
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Accounting
principles generally accepted in the United States of America require that
recognized revenue, expenses, gains and losses be included in net
income. Although certain changes in assets and liabilities, such as
unrealized gains and losses on available-for-sale securities, are reported as a
separate component of the equity section of the Consolidated Statements of
Financial Condition, such items, along with net income, are components of
comprehensive income.
2. EARNINGS
PER SHARE
Basic
earnings per common share is computed based on the weighted average number of
shares outstanding. Diluted earnings per share is computed based on
the weighted average number of shares outstanding and common share equivalents
that would arise from the exercise of dilutive securities. Earnings per share
for the three and nine month periods ended March 31, 2008 and 2007 were
calculated as follows:
|
|
Three
Months Ended
March
31, 2008
|
|
|
Three
Months Ended
March
31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income
|
|
$ |
111,816 |
|
|
$ |
111,816 |
|
|
$ |
184,200 |
|
|
$ |
184,200 |
|
Weighted
average shares outstanding
|
|
|
3,246,910 |
|
|
|
3,246,910 |
|
|
|
3,349,110 |
|
|
|
3,349,110 |
|
Effect
of unvested common stock awards
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
3,566 |
|
Adjusted
weighted average shares used in
earnings
per share computation
|
|
|
3,246,910 |
|
|
|
3,246,910 |
|
|
|
3,349,110 |
|
|
|
3,352,676 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per share
|
|
$ |
0.03 |
|
|
$ |
0.03 |
|
|
$ |
0.05 |
|
|
$ |
0.05 |
|
|
|
Nine
Months Ended
March
31, 2008
|
|
|
Nine
months Ended
March
31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Income
|
|
$ |
374,391 |
|
|
$ |
374,391 |
|
|
$ |
516,161 |
|
|
$ |
516,161 |
|
Weighted
average shares outstanding
|
|
|
3,242,712 |
|
|
|
3,242,712 |
|
|
|
3,363,589 |
|
|
|
3,363,589 |
|
Effect
of unvested common stock awards
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
4,064 |
|
Adjusted
weighted average shares used in
earnings per share computation
|
|
|
3,242,712 |
|
|
|
3,242,712 |
|
|
|
3,363,589 |
|
|
|
367,653 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings
per share
|
|
$ |
0.12 |
|
|
$ |
0.12 |
|
|
$ |
0.15 |
|
|
$ |
0.15 |
|
For the
three and nine months ended March 31, 2008, the average stock price was less
than the exercise price associated with the Company’s unvested common stock
awards, which resulted in an anti-dilutive effect to the earnings per share
calculations.
HOME
FEDERAL BANCORP, INC. OF LOUISIANA
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. RECOGNITION
AND RETENTION PLAN
On August
10, 2005, the shareholders of the Company approved the establishment of the Home
Federal Bancorp, Inc. of Louisiana 2005 Recognition and Retention Plan and Trust
Agreement (the “Recognition Plan”) for the benefit of directors, officers, and
employees as an incentive to retain personnel of experience and ability in key
positions. The aggregate number of shares of the Company’s common
stock subject to award under the Recognition Plan totals 69,756
shares. During fiscal 2006, the Company purchased 69,756 shares at an
aggregate cost of $688,439. As the shares were acquired for the
Recognition Plan, the purchase price of these shares was recorded as a contra
equity account. As the shares are distributed, the contra equity
account is reduced. During the nine months ended March 31, 2008,
15,810 shares vested and were released from the Recognition Plan Trust and
40,285 shares remained in the Recognition Plan Trust at March 31,
2008.
Recognition
Plan shares are earned by recipients at a rate of 20% of the aggregate number of
shares covered by the Recognition Plan award over five
years. Generally, if the employment of an employee or service as a
non-employee director is terminated prior to the fifth anniversary of the date
of grant of Recognition Plan share award, the recipient shall forfeit the right
to any shares subject to the award that have not been earned. In the
case of death or disability of the recipient or a change in control of the
Company, the Recognition Plan awards will be vested and shall be distributed as
soon as practicable thereafter. As of March 31, 2008, 1,490 awards had been
forfeited and vesting was accelerated on 2,270 shares as a result of the death
of two of the participants.
The
present cost associated with the Recognition Plan is based on a share price of
$9.85, which represents the market price of the Company’s stock on August 18,
2005, the date on which the Recognition Plan shares were granted. The
cost is being recognized over five years.
4. STOCK
OPTION PLAN
On August
10, 2005, the shareholders of the Company approved the establishment of the Home
Federal Bancorp, Inc. of Louisiana 2005 Stock Option Plan (the “Option Plan”)
for the benefit of directors, officers, and other key employees. The
aggregate number of shares of common stock reserved for the issuance under the
Option Plan totaled 174,389. Both incentive stock options and
non-qualified stock options may be granted under the Option Plan.
On August
18, 2005, the Company granted 174,389 options to directors and key
employees. Under the Option Plan, the exercise price of each option
cannot be less than the fair market value of the underlying common stock as of
the date of the option grant, which was $9.85, and the maximum term is ten
years. Incentive stock options and non-qualified stock options
granted under the Option Plan become vested and exercisable at a rate of 20% per
year over five years, commencing one year from the date of the grant, with an
additional 20% vesting on each successive anniversary of the date the option was
granted. No vesting shall occur after an employee’s employment or
service as a director is terminated. As of March 31, 2008, 3,532
stock options had been forfeited and are available for future
grant. In the event of the death or disability of an employee or
director or change in control of the Company, the unvested options shall become
vested and exercisable. The Company accounts for the Option Plan
under the guidance of SFAS No. 123(R).
HOME
FEDERAL BANCORP, INC. OF LOUISIANA
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
5. RECENT
ACCOUNTING PRONOUNCEMENTS
In June
2006, the FASB issued Interpretation Number (FIN) 48, Accounting for
Uncertainty in Income Taxes (as amended). This Interpretation
clarifies the accounting for uncertainty in income taxes recognized in an
enterprise’s financial statements in accordance with SFAS No. 109, Accounting for
Income Taxes. This Interpretation prescribes a recognition
threshold and measurement attribute for the financial statement recognition and
measurement of a tax position taken or expected to be taken in a tax
return. This Interpretation also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods,
disclosure, and transition. This Interpretation is effective for
fiscal years beginning after December 15, 2006.
In
September 2006, the FASB issued SFAS No. 157, Fair Value
Measurements. This Statement defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles,
and expands disclosures about fair value measurements. This Statement
is effective for financial statements issued for fiscal years beginning after
November 15, 2007.
In
September 2006, the FASB issued SFAS No. 158, Employers’
Accounting for Defined Benefit Pension and Other Postretirement Plans (as
amended). This Statement improves financial reporting by
requiring an employer to recognize the overfunded or underfunded status of a
defined benefit postretirement plan (other than a multiemployer plan) as an
asset or liability in its statement of financial position and to recognize
changes in that funded status in the year in which the changes occur through
comprehensive income. This Statement also requires an employer to
measure the funded status of a plan as of the date of its year-end statement of
financial position. An employer with publicly traded equity
securities shall initially apply the requirement to recognize the funded status
of a benefit plan as of the end of the fiscal year ending after December 31,
2006. The requirement to measure plan assets and benefit obligations
as of the date of the employer’s fiscal year-end statement of financial position
is effective for fiscal years ending after December 31, 2008.
In
February 2007, the FASB issued SFAS No. 159, The Fair Value
Option for Financial Assets and Financial Liabilities (as
amended). This Statement permits entities to choose to measure
many financial instruments and certain other items at fair value. The
objective is to provide entities with the opportunity to mitigate volatility in
reported earnings caused by measuring related assets and liabilities differently
without having to apply complex hedge accounting provisions. This
Statement is effective as of the beginning of an entity’s first fiscal year that
begins after November 15, 2007.
In
December 2007, the FASB issued SFAS No. 160, Noncontrolling
Interests in Consolidated Financial Statements (an amendment of ARB No.
51). This Statement was issued to improve the relevance,
comparability, and transparency of the financial information that a reporting
entity provides in its consolidated financial statements. This
Statement is effective for fiscal years, and interim periods with those fiscal
years, beginning on or after December 31, 2008.
ITEM
2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
General
The
Company was formed by the Association in connection with the Association’s
reorganization and commenced operations on January 18, 2005. The
Company’s results of operations are primarily dependent on the results of the
Association, which became a wholly owned subsidiary upon completion of the
reorganization. The Association’s results of operations depend, to a
large extent, on net interest income, which is the difference between the income
earned on its loan and investment portfolios and the cost of funds, consisting
of the interest paid on deposits and borrowings. Results of
operations are also affected by provisions for loan losses and loan sale
activities. Non-interest expense principally consists of compensation
and employee benefits, office occupancy and equipment expense, data processing
and other expense. Our results of operations are also significantly
affected by general economic and competitive conditions, particularly changes in
interest rates, government policies and actions of regulatory
authorities. Future changes in applicable law, regulations or
government policies may materially impact our financial condition and results of
operations.
Critical
Accounting Policies
Allowance for Loan
Losses. The Company has identified the calculation of the allowance for
loan losses as a critical accounting policy, due to the higher degree of
judgment and complexity than its other significant accounting
policies. Provisions for loan losses are based upon management’s
periodic valuation and assessment of the overall loan portfolio and the
underlying collateral, trends in non-performing loans, current economic
conditions and other relevant factors in order to maintain the allowance for
loan losses at a level believed by management to represent all known and
inherent losses in the portfolio that are both probable and reasonably
estimable. Although management uses the best information available,
the level of the allowance for loan losses remains an estimate which is subject
to significant judgment and short-term change.
Income Taxes.
Deferred income tax assets and liabilities are determined using the
liability (or balance sheet) method. Under this method, the net
deferred tax asset or liability is determined based on the tax effects of the
temporary differences between the book and tax bases of the various assets and
liabilities and gives current recognition to changes in tax rates and
laws. The realization of our deferred tax assets principally depends
upon our achieving projected future taxable income. We may change our
judgments regarding future profitability due to future market conditions and
other factors. We may adjust our deferred tax asset balances if our
judgments change.
Discussion
of Financial Condition Changes from June 30, 2007 to March 31,
2008
At March
31, 2008, total assets amounted to $138.6 million compared to $118.8 million at
June 30, 2007, an increase of approximately $19.9 million, or
16.8%. This increase was primarily due to an increase in cash and
cash equivalents of $1.6 million, or 41.6%, and an increase in loans receivable
of $2.5 million, or 9.4% and an increase in investment securities of $16.9
million or 19.8%. These increases were partially offset by a decrease
in the Company’s deferred tax asset of $1.5 million.
The
increase in cash and cash equivalents was due primarily to proceeds received
through deposits, principal payments on securities and advances from the Federal
Home Loan Bank of Dallas. The increase in loans receivable was
primarily due to the purchase of first mortgage loans originated by another
mortgage loan company. The increase in investment securities was
primarily due to an increase in the market value of securities available for
sale and the purchase of new securities with funds generated primarily from
Federal Home Loan Bank borrowings.
MANAGEMENT'S DISCUSSION AND
ANALYSIS OR PLAN OF OPERATION (Continued)
The
Company’s total liabilities amounted to $107.4 million at March 31, 2008 an
increase of approximately $16.4 million, or 18.0%, compared to total liabilities
of $91.0 million at June 30, 2007. The primary reason for the increase in
liabilities was due to the $1.6 million, or 2.1%, increase of customers’
deposits due to normal deposits inflow, and a $14.7 million, or 118.5%, increase
in advances from the Federal Home Loan Bank.
Stockholders’
equity increased $3.5 million, or 12.4%, to $31.2 million at March 31, 2008
compared to $27.8 million at June 30, 2007. This increase was
primarily the result of the change in the Company’s Accumulated Other
Comprehensive Loss associated with securities available-for-sale of $3.1
million, the recognition of net income of $375,000 for the nine months ended
March 31, 2008, and the distribution of shares associated with the Company’s
Recognition and Retention Plan of $156,000. These increases were
offset by dividends of $221,000 paid during the nine months ended March 31,
2008, and the acquisition of treasury shares of $38,000.
The
Association is required to meet minimum capital standards promulgated by the
Office of Thrift Supervision (“OTS”). At March 31, 2008 Home Federal
Savings and Loan’s regulatory capital was well in excess of the minimum capital
requirements.
Comparison
of Operating Results for the Three and Nine Month Periods Ended March 31, 2008
and 2007
General
Net
income amounted to $112,000 for the three months ended March 31, 2008 compared
to $184,000 for the same period in 2007, a decrease of $72,000, or
39.1%. The decrease was primarily due to decreases in net interest
income and non-interest income, and an increase in non-interest
expense. These were partially offset by a decrease in income tax
expense.
For the
nine months ended March 31, 2008, net income amounted to $375,000, compared to
$516,000 for the
same period in 2007, a decrease of $141,000, or 27.3%. The decrease
was primarily due to decreases in net interest income and non-interest income,
and an increase in non-interest expense. These were partially offset
by a decrease in income tax expense.
Net
Interest Income
Net
interest income for the three months ended March 31, 2008 was $709,000, a
decrease of $82,000, or 10.4%, in comparison to the three months ended March 31,
2007. This decrease was due primarily to the increase the Company’s cost of
funds, partially offset by an increase in total interest income.
Net
interest income for the nine months ended March 31, 2008, was $2.3 million, a
decrease of $120,000, or 5.1%, in comparison to the nine months ended March 31,
2007. This decrease was due primarily to the increase in interest
expense incurred on deposit accounts and advances from the Federal Home Loan
Bank, partially offset by an increase in total interest income.
The
Company’s average interest rate spread was 1.15% and 1.38% for the three and
nine months ended March 31, 2008, compared to 1.76% and 1.85% for the three and
nine months ended March 31, 2007. The Company’s net interest margin
was 2.14% and 2.36% for the three and nine months ended March 31, 2008, compared
to 2.66% and 2.72% for the three and nine months ended March 31,
2007. The decrease in net interest income and net interest margin is
attributable primarily to the increase in interest expense on interest-bearing
liabilities and average cost associated with deposits and advances from the
Federal Home Loan Bank.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION (Continued)
Provision
for Losses on Loans
Based on
an analysis of historical experience, the volume and type of lending conducted
by Home Federal, the status of past due principal and interest payments, general
economic conditions, particularly as such conditions relate to Home Federal’s
market area and other factors related to the collectability of Home Federal’s
loan portfolio, no provisions for loan losses were made during the three and
nine months ended March 31, 2008 or 2007. The Association’s allowance
for loan losses was $235,000, or 0.81% of total loans, at March 31, 2008
compared to $235,000, or 0.9% of total loans at March 31, 2007. At
March 31, 2008, Home Federal had non-performing loans of $19,000 and other
non-performing assets of $33,000. Home Federal did not have any
non-performing loans at March 31, 2007. There
can be no assurance that the loan loss allowance will be sufficient to cover
losses on non-performing assets in the future.
Non-interest
Income
Total
non-interest income amounted to $63,000 for the three months ended March 31,
2008, compared to $77,000 for the same period in 2007. The decrease
was primarily due to a decrease of $12,000 in gain on sale of investments and a
decrease of $2,000 in gain on sale of loans.
Total
non-interest income amounted to $183,000 for the nine months ended March 31,
2008, compared to $228,000 for the same period in 2007. The decrease
was primarily due to decreases in gain on sale of securities and other
income.
Non-interest
Expense
Total
non-interest expense increased $12,000, or 2.0%, for the three months ended
March 31, 2008 compared to the prior year period. The increase in
non-interest expense was primarily due to an increase in compensation and
benefits expense of $29,000, or 8.0%, over the prior year period partially
offset by a decrease in franchise and bank shares tax of $13,000, or 33.3%, and
a decrease in advertising expense.
Total
non-interest expense increased $50,000, or 2.7%, for the nine months ended March
31, 2008 compared to the prior year period. The increase was
primarily due to an increase of $66,000, or 5.9%, in compensation and benefits
expense, and an increase in audit and professional fees of $8,000, offset by a
decrease in occupancy and equipment expense of $9,000 and a decrease in
franchise and bank shares tax of $16,000.
The
increase in compensation and benefits expenses was a result of normal
compensation increases including increased recognition and retention plan
expense due to the acceleration of vesting of awards during the six months
following the death of a participant. Compensation expense recognized
by the Company for its Stock Option and Recognition and Retention Plans amounted
to $15,087 and $31,419, respectively, for the three months ended March 31, 2008,
and $47,533 and $117,794, respectively, for the nine months ended March 31,
2008.
Effective
January 1, 2006, the Company, through its subsidiary Home Federal Savings and
Loan Association, became subject to the Louisiana bank shares
tax. This tax is assessed on the Association’s equity and
earnings. For the three and nine months ended March 31, 2008, the
Company recognized bank shares tax expense of $24,200 and $96,800,
respectively.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION (Continued)
Income
Taxes
Income
taxes amounted to $58,000 and $95,000 for the three months ended March 31, 2008
and 2007, respectively, resulting in effective tax rates of 34.0% and 33.9%,
respectively. Income taxes amounted to $192,000 and $265,000 for the nine
months ended March 31, 2008 and 2007, respectively, resulting in an effective
tax rate of 33.9% and 34.0%, respectively.
Liquidity
and Capital Resources
Home
Federal Savings and Loan maintains levels of liquid assets deemed adequate by
management. The Association adjusts its liquidity levels to fund
deposit outflows, repay its borrowings and to fund loan
commitments. Home Federal Savings and Loan also adjusts liquidity as
appropriate to meet asset and liability management objectives.
Home
Federal Savings and Loan’s primary sources of funds are deposits, amortization
and prepayment of loans and mortgage-backed securities, maturities of investment
securities and other short-term investments, loan sales and earnings and funds
provided from operations. While scheduled principal repayments on
loans and mortgage-backed securities are a relatively predictable source of
funds, deposit flows and loan prepayments are greatly influenced by general
interest rates, economic conditions and competition. The Association
sets the interest rates on its deposits to maintain a desired level of total
deposits. In addition, Home Federal Savings and Loan invests excess
funds in short-term interest-earning accounts and other assets, which provide
liquidity to meet lending requirements. Home Federal Savings and
Loan’s deposit accounts with the Federal Home Loan Bank of Dallas amounted to
$1.8 million at March 31, 2008.
A
significant portion of Home Federal Savings and Loan’s liquidity consists of
securities classified as available-for-sale and cash and cash
equivalents. Home Federal Savings and Loan’s primary sources of cash
are net income, principal repayments on loans and mortgage-backed securities and
increases in deposit accounts. If Home Federal Savings and Loan
requires funds beyond its ability to generate them internally, borrowing
agreements exist with the Federal Home Loan Bank of Dallas which provide an
additional source of funds. At March 31, 2008, Home Federal Savings
and Loan had $27.1 million in advances from the Federal Home Loan Bank of
Dallas.
At March
31, 2008, Home Federal Savings and Loan had outstanding loan commitments of $1.2
million to originate loans. At March 31, 2008, certificates of
deposit scheduled to mature in less than one year, totaled $41.9
million.
Based on
prior experience, management believes that a significant portion of such
deposits will remain with us, although there can be no assurance that this will
be the case. In addition, the cost of such deposits could be significantly
higher upon renewal, in a rising interest rate environment. Home
Federal Savings and Loan intends to utilize its high levels of liquidity to fund
its lending activities. If additional funds are required to fund
lending activities, Home Federal Savings and Loan intends to sell its securities
classified as available-for-sale as needed.
Home
Federal Savings and Loan is required to maintain regulatory capital sufficient
to meet tangible, core and risk-based capital ratios of at least 1.5%, 3.0% and
8.0%, respectively. At March 31, 2008, Home Federal Savings and Loan
exceeded each of its capital requirements with ratios of 20.40%, 20.40% and
75.41%, respectively.
MANAGEMENT'S DISCUSSION
AND ANALYSIS OR PLAN OF OPERATION (Continued)
In
connection with the Association’s reorganization to the mutual holding company
form of organization, Home Federal Bancorp, Inc., the parent holding company of
the Association, sold 1,423,583 shares of its common stock in a subscription and
community offering, which was completed on January 18, 2005 at a price of $10.00
per share. This includes 113,887 shares acquired by the Association’s
Employee Stock Ownership Plan. The Company has invested 50% of the
net proceeds from the reorganization in the Association.
Off-Balance
Sheet Arrangements
At March
31, 2008, the Association did not have any off-balance sheet arrangements, as
defined by Securities and Exchange Commission rules.
Impact of
Inflation and Changing Prices
The
financial statements and related financial data presented herein have been
prepared in accordance with instructions to Form 10-QSB, which require the
measurement of financial position and operating results in terms of historical
dollars, without considering changes in relative purchasing power over time due
to inflation.
Unlike
most industrial companies, virtually all of the Association’s assets and
liabilities are monetary in nature. As a result, interest rates
generally have a more significant impact on a financial institution’s
performance than does the effect of inflation.
Forward-Looking
Statements
This Form
10-QSB contains certain forward-looking statements and information relating to
the Company that are based on the beliefs of management as well as assumptions
made by and information currently available to management. In
addition, in those and other portions of this document, the words “anticipate,”
“believe,” “estimate,” “except,” “intend,” “should” and similar expressions, or
the negative thereof, as they relate to the Company or the Company’s management,
are intended to identify forward-looking statements. Such statements
reflect the current views of the Company with respect to future looking events
and are subject to certain risks, uncertainties and
assumptions. Should one or more of these risks or uncertainties
materialize or should underlying assumptions prove incorrect, actual results may
vary from those described herein as anticipated, believed, estimated, expected
or intended. The Company does not intend to update these
forward-looking statements.
ITEM
3. CONTROLS AND
PROCEDURES
Under the
supervision and with the participation of our management, including our Chief
Executive Officer and our principal financial officer, we evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities
Exchange Act of 1934) as of the end of the period covered by this report. Based
upon that evaluation, the Chief Executive Officer and the principal financial
officer have concluded that, as of the end of the period covered by this report,
our disclosure controls and procedures are effective to ensure that information
required to be disclosed in the reports that the Company files or submits under
the Securities Exchange Act of 1934, is recorded, processed, summarized and
reported within the applicable time periods specified by the Securities and
Exchange Commission’s rules and forms. There has been no change in the Company’s
internal control over financial reporting during the Company’s most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial
reporting.
PART
II
ITEM
1. LEGAL PROCEEDINGS
The
Company is not involved in any pending legal proceedings other than routine
legal proceedings occurring in the ordinary course of business, which involve
amounts in the aggregate believed by management to be immaterial to the
financial condition of the Company.
ITEM
2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(a)
|
Not
applicable. |
|
|
(b)
|
Not
applicable. |
|
|
(c)
|
Purchases of Equity Securities |
|
|
The
following table represents the repurchasing activity of the stock
repurchase program during the third quarter of fiscal
2008:
|
|
|
Total
Number of Shares Purchased
|
|
|
Average
Price Paid per Share
|
|
|
Total
Number of Shares Purchased as Part of Publicly Announced Plans or
Programs
|
|
|
Maximum
Number of Shares that May Yet Be Purchased Under the Plans or
Programs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Month
#1 January 1, 2008 – January 31, 2008
|
|
|
-- |
|
|
$ |
-- |
|
|
|
-- |
|
|
|
94,809 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Month
#2 February 1, 2008 – February 29, 2008
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
94,809 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Month
#3 March 1, 2008 – March 31, 2008
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
94,809 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
-- |
|
|
$ |
-- |
|
|
|
-- |
|
|
|
94,809 |
|
Notes
to this table:
(a)
|
On
May 10, 2007, the Company issued a press release announcing that the Board
of Directors authorized a second stock repurchase program (the "program")
on May 9, 2007.
|
(b)
|
The
Company was authorized to repurchase 10% or 128,122 of the outstanding
shares other than shares held by Home Federal Mutual Holding
Company.
|
(c)
|
The
program had an expiration date of May 9,
2008.
|
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
|
The following Exhibits are filed as part of this
report: |
|
|
|
|
|
|
|
31.1
|
|
Rule
13a-14(a)/15d-14(a) Certification of Chief Executive Officer
|
|
31.2
|
|
Rule
13a-14(a)/15d-14(a) Certification of Chief Financial Officer
|
|
32.0
|
|
Certification
Pursuant to 18 U.S.C Section 1350
|
SIGNATURES
In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: |
May 15,
2008 |
|
By: |
/s/ Daniel R.
Herndon |
|
|
|
Daniel R.
Herndon |
|
|
|
President and Chief Executive
Officer |
|
|
|
|
|
|
|
|
Date: |
May 15,
2008 |
|
By: |
/s/ Clyde D.
Patterson |
|
|
|
Clyde D. Patterson |
|
|
|
Executive Vice
President |
|
|
|
(principal financial
officer) |