• Home Federal Bancorp, Inc. of Louisiana Reports Results of Operations for the Three and Six Months Ended December 31, 2020

    Source: Nasdaq GlobeNewswire / 28 Jan 2021 16:30:00   America/New_York

    Shreveport, Louisiana, Jan. 28, 2021 (GLOBE NEWSWIRE) -- Home Federal Bancorp, Inc. of Louisiana (the “Company”) (Nasdaq: HFBL), the holding company of Home Federal Bank, reported net income for the three months ended December 31, 2020 of $1.4 million compared to net income of $588,000 reported for the three months ended December 31, 2019. The Company’s basic and diluted earnings per share were $0.87 and $0.83, respectively, for the three months ended December 31, 2020 compared to basic and diluted earnings per share of $0.35 and $0.32, respectively, for the three months ended December 31, 2019. The Company reported net income of $2.7 million for the six months ended December 31, 2020, compared to $1.8 million for the six months ended December 31, 2019. The Company’s basic and diluted earnings per share were $1.63 and $1.58, respectively, for the six months ended December 31, 2020 compared to $1.07 and $1.00, respectively, for the six months ended December 31, 2019.

    The Company reported the following key achievements during the six months ended December 31, 2020:

    • Total deposits increased $17.1 million or 3.7% to $477.9 million at December 31, 2020, compared to $460.8 million at June 30, 2020.
    • Total mortgage loans originated for sale were $114.9 million for the six months.
    • Total loan deferrals decreased from $84.1 million at June 30, 2020 to $5.9 million at December 31, 2020.
    • Time deposits decreased $17.7 million, or 11.2%, to $139.9 million at December 31, 2020, compared to $157.6 million at June 30, 2020.

    In light of the events surrounding the COVID-19 epidemic, the Company is continually assessing the effects of the pandemic on its employees, customers and communities.  In March 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted.  The CARES Act contains many provisions related to banking, lending, mortgage forbearance and taxation.  The Company has worked diligently to help support its customers through the SBA Paycheck Protection Program (“SBA PPP”), loan modifications and loan deferrals.  On December 27, 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the “Economic Aid Act”) became law.  The Economic Aid Act extends the authority to make SBA PPP loans through March 31, 2021.  As of December 31, 2020, Home Federal Bank has funded 378 SBA PPP loans totaling approximately $46.3 million to existing customers and key prospects located primarily in our trade area of NW Louisiana.  Our commercial lenders and operational support staff have worked diligently to accomplish what seemed to be an insurmountable task in providing a lifeline to our small community businesses.  We believe the customer interaction during this time provides a real opportunity to broaden and deepen our customer relationships while benefiting our community.  We have had $20.2 million of SBA PPP loans that have been forgiven which represents 44.7% of the total amount of loans funded.   The provision for loan losses for the six months ended December 31, 2020 was $1.3 million compared to $1.1 million for the six months ended December 31, 2019.  The increase in the provision for loans losses was primarily a result of the deterioration of market conditions which have been adversely affected by the COVID-19 pandemic and the related uncertainty regarding the pandemic’s future. 

    Home Federal Bank is also working with customers affected by COVID-19 through payment accommodations on their loans. Borrowers who were current prior to becoming affected by COVID-19, that received payment accommodations as a result of the pandemic, generally are not reported as past due. Effects of COVID-19 may negatively impact management assumptions and estimates, such as the allowance for loan losses.  The Bank is evaluating all payment accommodations to customers to identify and quantify any impact they might have on the Bank. However, it is difficult to assess or predict how and to what extent COVID-19 will affect the Company in the future.

    The increase in net income for the three months ended December 31, 2020, as compared to the prior year quarter resulted primarily from a $700,000, or 18.5%, increase in net interest income, an increase of $591,000, or 64.4%, in non-interest income, a decrease of $350,000, or 36.8%, in provision for loan losses, partially offset by an increase of $583,000, or 19.4%, in non-interest expense, and a $243,000, or 165.3%, increase in provision for income taxes. The decrease in the provision for loan losses for the three months ended December 31, 2020, was primarily due to improvement in credit quality factors.  The increase in net interest income for the three months ended December 31, 2020 was primarily due to a $482,000, or 34.8%, decrease in total interest expense, primarily due to a decrease of 67 basis points in the average rate on total interest-bearing deposits, and an increase of $218,000, or 4.2%, in total interest income.  The Company’s average interest rate spread was 3.23% for the three months ended December 31, 2020 compared to 3.18% for the three months ended December 31, 2019. The Company’s net interest margin was 3.50% for the three months ended December 31, 2020 compared to 3.52% for the three months ended December 31, 2019.

    The increase in net income for the six months ended December 31, 2020 resulted primarily from a $1.3 million, or 70.7%, increase in non-interest income, an increase of $875,000, or 11.5%, in net interest income, partially offset by an increase of $929,000, or 15.3%, in non-interest expense, an increase of $287,000, or 67.4%, in provision for income taxes and a $175,000, or 15.6%, increase in provision for loan losses  The increase in the provision for loan losses for the six-month period was primarily due to partial charge offs on two loans. The increase in net interest income for the six-month period was primarily due to an $841,000, or 30.7%, decrease in total interest expense, and a $34,000, or 0.3%, increase in total interest income. The Company’s average interest rate spread was 3.06% for the six months ended December 31, 2020 compared to 3.21% for the six months ended December 31, 2019. The Company’s net interest margin was 3.34% for the six months ended December 31, 2020 compared to 3.56% for the six months ended December 31, 2019. 

    The following tables set forth the Company’s average balances and average yields earned and rates paid on its interest-earning assets and interest-bearing liabilities for the periods indicated.

     For the Three Months Ended December 31,
      2020   2019 
     Average Average Average Average
     Balance Yield/Rate Balance Yield/Rate
     (Dollars in thousands)
    Interest-earning assets:       
        Loans receivable$378,516 5.32% $331,368 5.55%
        Investment securities 60,890 1.84   72,291 2.43 
        Interest-earning deposits   68,242 0.14     21,481 1.63 
            Total interest-earning assets$507,648 4.20% $425,140 4.82%
            
    Interest-bearing liabilities:       
        Savings accounts$   101,802 0.60% $  57,878 1.33%
        NOW accounts 43,605 0.22   31,133 0.64 
        Money market accounts 73,315 0.35   75,371 1.21 
        Certificates of deposit 147,322 1.71   168,834 2.08 
             Total interest-bearing deposits 366,044 0.95   333,216 1.62 
        Other bank borrowings 1,898 3.55   1,063 4.85 
        FHLB advances       971 4.49       1,233 4.66 
                    Total interest-bearing liabilities$368,913 0.97% $335,512 1.64%


      For the Six Months Ended December 31,
       2020   2019 
      Average Average Average Average
      Balance Yield/Rate Balance Yield/Rate
      (Dollars in thousands)
     Interest-earning assets:       
         Loans receivable$379,377 5.08% $333,955 5.52%
         Investment securities 59,021 2.02   68,905 2.44 
         Interest-earning deposits   64,447 0.13     20,570 1.91 
             Total interest-earning assets$502,845 4.09% $423,430 4.84%
             
     Interest-bearing liabilities:       
         Savings accounts$  98,211 0.63% $  52,906 1.18%
         NOW accounts 42,108 0.26   31,321 0.62 
         Money market accounts 73,248 0.38   74,889 1.22 
         Certificates of deposit 151,821 1.75   172,866 2.09 
              Total interest-bearing deposits 365,388 1.00   331,982 1.61 
        Other bank borrowings 1,898 3.24   703 4.80 
         FHLB advances       971  4.70       1,270 4.69 
                     Total interest-bearing liabilities$368,257 1.02% $333,955 1.63%

    The $591,000 increase in non-interest income for the three months ended December 31, 2020, compared to the prior year quarterly period, was primarily due to an increase of $627,000 in gain on sale of loans, and a $4,000 increase in non-interest other income, partially offset by a decrease of $38,000 in service charges on deposit accounts, and a $2,000 decrease in income from bank owned life insurance. The $1.3 million increase in non-interest income for the six months ended December 31, 2020 compared to the prior year six-month period was primarily due to an increase of $1.5 million in gain on sale of loans, and an increase of $8,000 in other non-interest income, partially offset by an $80,000 decrease in gain on sale of real estate, a $64,000 decrease in service charges on deposit accounts, and a $4,000 decrease in income from bank owned life insurance. The Company sells most of its long term fixed rate residential mortgage loan originations primarily in order to manage interest rate risk.  

    The $583,000 increase in non-interest expense for the three months ended December 31, 2020, compared to the same period in 2019, is primarily attributable to increases of $248,000 in compensation and benefits expense, $200,000 in real estate owned valuation adjustment expense, $70,000 in data processing expense, $38,000 in deposit insurance premiums expense, $37,000 in occupancy and equipment expense, $33,000 in loan and collection expense, $21,000 in other non-interest expenses, and $6,000 in audit and examination fees. The increases were partially offset by decreases of $33,000 in franchise and bank shares tax expense, $19,000 in legal fees, and $18,000 in advertising expense.  The $929,000 increase in non-interest expense for the six months ended December 31, 2020, compared to the same six month period in 2019, is primarily attributable to increases of $656,000 in compensation and benefits expense, $200,000 in real estate owned valuation adjustment expense, $104,000 in data processing expense, $68,000 in deposit insurance premium expense, $41,000 in occupancy and equipment expense, $15,000 in audit and examination fees expense, $13,000 in other non-interest expenses, $8,000 in loan and collection expense, and $2,000 in legal fees, partially offset by decreases of $139,000 in advertising expense and $39,000 in franchise and bank shares tax expense.

    At December 31, 2020, the Company reported total assets of $535.4 million, an increase of $17.2 million, or 3.3%, compared to total assets of $518.2 million at June 30, 2020. The increase in assets was comprised primarily of increases in cash and cash equivalents of $24.9 million, or 45.4%, from $54.9 million at June 30, 2020 to $79.8 million at December 31, 2020, loans held-for-sale of $13.1 million, or 88.6%, from $14.8 million at June 30, 2020 to $27.9 million at December 31, 2020, premises and equipment of $1.6 million, or 12.1%, from $13.2 million at June 30, 2020 to $14.8 million at December 31, 2020, investment securities of $1.5 million, or 2.3%, from $62.9 million at June 30, 2020 to $64.4 million at December 31, 2020, and deferred tax assets of $30,000, or 4.0%, from $757,000 at June 30, 2020 to $787,000 at December 31, 2020. These increases were partially offset by decreases in loans receivable, net of $23.6 million, or 6.5%, from $359.9 million at June 30, 2020 to $336.4 million at December 31, 2020, real estate owned of $200,000, or 21.1%. from 950,000 at June 30, 2020 to $750,000 at December 31, 2020, and other assets of $176,000, or 1.6%, from $10.7 million at June 30, 2020 to $10.6 million at December 31, 2020. The increase in investment securities was primarily due to security purchases of $21.5 million offset by principal repayments on mortgage backed securities of $17.2 million and a redemption of FHLB stock for $2.4 million.  The increase in loans held-for-sale resulted primarily from an increase in loans originated for sale during the six months ended December 31, 2020.

    Total liabilities increased $16.2 million, or 3.5%, from $467.7 million at June 30, 2020 to $483.9 million at December 31, 2020 primarily due to an increase in total deposits of $17.0 million, or 3.7%, to $477.9 million at December 31, 2020 compared to $460.8 million at June 30, 2020, and an increase of $200,000, or 8.7%, in other borrowings from $2.3 million at June 30, 2020 to $2.5 million at December 31, 2020, partially offset by a decrease of $849,000, or 24.2% in other liabilities from $3.5 million at June 30, 2020 to $2.7 million at December 31, 2020, and a decrease of $153,000, or 14.4%, in advances from the Federal Home Loan Bank from $1.1 million at June 30, 2020 to $907,000 at December 31, 2020.  The increase in deposits was primarily due to $24.5 million, or 29.2%, increase in savings deposits from $83.8 million at June 30, 2020 to $108.3 million at December 31, 2020, a  $5.3 million, or 12.9%, increase in NOW accounts from $41.4 million at June 30, 2020 to $46.7 million at December 31, 2020, a $3.5 million, or 3.3%, increase in non-interest bearing deposits from $103.4 million at June 30, 2020 to $106.9 million at December 31, 2020, and a increase in money market deposits of $1.4 million, or 1.9%, from $74.6 million at June 30, 2020 to $76.1 million at December 31, 2020, partially offset by a decrease of $17.7 million, or 11.2%, in certificates of deposit from $157.6 million at June 30, 2020 to $139.9 million at December 31, 2020. The Company had $11.6 million in brokered deposits at December 31, 2020 compared to $16.1 million at June 30, 2020.  The decrease in advances from the Federal Home Loan Bank was primarily due to principal paydowns on amortizing advances.

    At December 31, 2020, the Company had $4.8 million of non-performing assets (defined as non-accruing loans, accruing loans 90 days or more past due, and other real estate owned) compared to $7.2 million of non-performing assets at June 30, 2020, consisting of six commercial real estate loans to one borrower, five single-family residential loans, one lot loan, one land loan, and two commercial real estate properties in other real estate owned at December 31, 2020, compared to five single-family residential loans, five commercial real estate loans to one borrower, one lot loan, one land loan and two commercial real estate properties in other real estate owned at June 30, 2020.  The decrease in non-performing assets from $7.2 million at June 30, 2020 to $4.8 million at December 31, 2020 was primarily due to a write-down of $907,000 on a lot loan, a write-down of $698,000 on a commercial real estate loan, and the paydown of a portion of the collateral on the same commercial real estate loan totaling $449,000. At December 31, 2020, the Company had four single family residential loans, two commercial land and lot development loans to one borrower, six commercial real estate loans to one borrower, and two commercial real estate loans to one borrower classified as substandard compared to four single family residential loans, two commercial land and lot development loans, and six commercial real estate loans to one borrower classified as substandard at June 30, 2020. There were no loans classified as doubtful at December 31, 2020 or June 30, 2020.

    Under the CARES Act, loans less than 30 days past due as of December 31, 2020 will be considered current for COVID-19 modifications. Similarly, the Financial Accounting Standards Board has confirmed that short-term modifications made on a good-faith basis in response to COVID-19 to loan customers who were current prior to any relief will not be considered troubled debt restructurings.

    The Bank handles loan payment modification requests on a case-by-case basis. As of December 31,2020 the Bank had payment deferrals on 10 loans with principal balances totaling $5.9 million representing 1.7% of our loans outstanding as of December 31, 2020. A majority of deferrals are three-month payment deferrals of principal and interest, with payments after deferral increased to collect amounts deferred.  It is too early to determine if these modified loans will perform in accordance with their modified terms.

    Details with respect to actual loan modifications are as follows:

     Number of Covid-19
    Deferments Year Ended
    June 30, 2020    		 Balance
    (in thousands)    		 Percent of Total
    Loans at
    at June 30, 2020
    One-to-Four family residential101 $27,705        25.6%
    Commercial real estate40              28,278 32.5 
    Multi-family residential9              18,046 38.0 
    Land7                1,190 6.6 
    Construction1                   680 8.3 
    Equity and second mortgage--                      --                       -- 
    Equity lines of credit19                1,586 12.9 
    Commercial business39                6,609 8.1 
    Consumer   --                      --                       -- 
          Total216 $84,094                   23.0%


     Number of Covid-19
    Remaining Deferments at
    December 31, 2020    		 Balance
    (in thousands)    		 Percent of Total
    Loans at
    December 31, 2020
    One-to-Four family residential2 $  2,314         2.4%
    Commercial real estate2                2,937 3.4 
    Multi-family residential--                      --                       -- 
    Land--                      --                       -- 
    Construction--                      --                       -- 
    Equity and second mortgage--                      --                       -- 
    Equity lines of credit2                   228 2.2 
    Commercial business4                   465 0.7 
    Consumer   --                      --                       -- 
          Total 10 $5,943                     1.7%

    Shareholders’ equity increased $927,000, or 1.8%, to $51.5 million at December 31, 2020 from $50.5 million at June 30, 2020.  The primary reasons for the changes in shareholders’ equity from June 30, 2020 were net income of $2.7 million, the vesting of restricted stock awards, stock options, and the release of employee stock ownership plan shares totaling $333,000, and proceeds from the issuance of common stock from the exercise of stock options of $174,000, partially offset by the acquisition of Company stock of $1.4 million, dividends paid totaling $565,000, and a decrease in the Company’s accumulated other comprehensive income of $262,000.

    The Company repurchased 61,812 shares of its common stock during the six months ended December 31, 2020 at an average price per share of $24.41. On November 18, 2020, the Company announced that its Board of Directors approved a tenth stock repurchase program for the repurchase of up to 85,000 shares. As of December 31, 2020, there were 85,000 shares remaining for repurchase under the tenth stock repurchase program.

    Home Federal Bancorp, Inc. of Louisiana is the holding company for Home Federal Bank which conducts business from its seven full-service banking offices and home office in northwest Louisiana.

    Statements contained in this news release which are not historical facts may be forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995.  Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts.  They often include words like “believe”, “expect”, “anticipate”, “estimate”, and “intend”, or future or conditional verbs such as “will”, “would”, “should”, “could”, or “may”.  We undertake no obligation to update any forward-looking statements.

    In addition to factors previously disclosed in the reports filed by the Company with the Securities and Exchange Commission and those identified elsewhere in this press release, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the strength of the United States economy in general and the strength of the local economies in which the Company conducts its operations; general economic conditions; the scope and duration of the COVID-19 pandemic; the effects of the COVID-19 pandemic, including on the Company’s credit quality and operations as well as its impact on general economic conditions; legislative and regulatory changes including actions taken by governmental authorities in response to the COVID-19 pandemic; monetary and fiscal policies of the federal government; changes in tax policies, rates and regulations of federal, state and local tax authorities including the effects of the Tax Reform Act; changes in interest rates, deposit flows, the cost of funds, demand for loan products and the demand for financial services, in each case as may be affected by the COVID-19 pandemic, competition, changes in the quality or composition of the Company’s loans, investment and mortgage-backed securities portfolios; geographic concentration of the Company’s business; fluctuations in real estate values; the adequacy of loan loss reserves; the risk that goodwill and intangibles recorded in the Company’s financial statements will become impaired; changes in accounting principles, policies or guidelines and other economic, competitive, governmental and technological factors affecting the Company’s operations, markets, products, services and fees.

    Home Federal Bancorp, Inc. of Louisiana
    CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
    (In thousands)
     
     December 31, 2020 June 30, 2020
     (Unaudited)
    ASSETS   
        
    Cash and cash equivalents$   79,795 $   54,871
    Debt Securities available-for-sale at fair value 33,060  42,060
    Securities held-to-maturity (fair value December 31, 2020: $32,222;
         June 30, 2020 $21,879)    		 31,309  20,858
    Loans held-for-sale 27,904  14,798
    Loans receivable, net of allowance for loan losses (December 31, 2020: $3,790;
         June 30, 2020: $4,081)    		 336,363  359,927
    Premises and equipment, net 14,838  13,235
    Deferred tax asset 787  757
    Real estate owned   750    950
    Other assets     10,588      10,764
        
                    Total assets$       535,394 $       518,220
        
    LIABILITIES AND SHAREHOLDERS’ EQUITY   
        
    Deposits$ 477,859 $ 460,810
    Advances from the Federal Home Loan Bank of Dallas 907  1,060
    Other Borrowings 2,500  2,300
    Other liabilities     2,666      3,515
        
                    Total liabilities 483,932  467,685
        
    Shareholders’ equity             51,462              50,535
        
                    Total liabilities and shareholders’ equity$       535,394 $       518,220


    Home Federal Bancorp, Inc. of Louisiana
    CONSOLIDATED STATEMENTS OF INCOME
    (In thousands, except per share data)
    (Unaudited)
            
     Three Months Ended Six Months Ended
     December 31, December 31,
      2020  2019  2020  2019
            
            
    Interest income       
         Loans, including fees$5,074 $4,632 $9,721 $9,284
         Investment securities 1  15  4  31
         Mortgage-backed securities 281  427  597  817
         Other interest-earning assets      24       88        42       198 
              Total interest income 5,380  5,162   10,364  10,330
    Interest expense       
         Deposits 877  1,360  1,848  2,695
         Federal Home Loan Bank borrowings 11  14  23  30
         Other bank borrowings      17       13         30         17
              Total interest expense    905  1,387    1,901    2,742
                   Net interest income 4,475  3,775  8,463  7,588
            
    Provision for loan losses    600     950    1,300    1,125
         Net interest income after provision for loan losses          3,875  2,825    7,163    6,463
            
    Non-interest income       
         Gain on sale of loans 1,207  580  2,618  1,147
         Gain on sale of real estate --  --  --  80
         Income on Bank-Owned Life Insurance 33  35  67  71
         Service charges on deposit accounts 253  291  500  564
         Other income      15       11         28         20
            
                        Total non-interest income   1,508     917    3,213    1,882
            
    Non-interest expense       
         Compensation and benefits 2,138  1,890  4,352  3,696
         Occupancy and equipment 393  356  769  728
         Data processing 201  131  395  291
         Audit and examination fees 63  57  129  114
         Franchise and bank shares tax 89  122  198  237
         Advertising 47  65  73  212
         Legal fees 134  153  264  262
         Loan and collection 83  50  177  169
         Real estate owned valuation adjustment 200  --  200  --
         Deposit insurance premium 38  --  68  --
         Other expenses    204     183      388      375
            
                        Total non-interest expense 3,590  3,007   7,013   6,084 
            
         Income before income taxes 1,793  735  3,363  2,261
    Provision for income tax expense     390     147      713      426
            
         NET INCOME$1,403 $          588 $2,650 $1,835
            
         EARNINGS PER SHARE       
            
              Basic$            0.87 $            0.35 $           1.63 $           1.07
              Diluted$            0.83 $            0.32 $           1.58 $           1.00


     Three Months Ended Six Months Ended
     December 31, December 31,
      2020   2019   2020   2019 
            
    Selected Operating Ratios(1):       
         Average interest rate spread 3.23%  3.18%  3.06%  3.21%
         Net interest margin 3.50%  3.52%  3.34%  3.56%
         Return on average assets 1.03%  0.51%  0.99%  0.81%
         Return on average equity 10.82%  4.63%  10.40%  7.34%
            
    Asset Quality Ratios(2):       
         Non-performing assets as a percent of total assets 0.91%  0.83%  0.91%  0.83%
         Allowance for loan losses as a percent of non-performing                              
            loans 96.60%  106.53%  96.60%  106.53%
         Allowance for loan losses as a percent of total loans                                               
            receivable 1.11%  1.07%  1.11%  1.07%
            
    Per Share Data:       
         Shares outstanding at period end 1,689,527    1,792,763   1,689,527   1,792,763 
         Weighted average shares outstanding:       
              Basic 1,616,801    1,698,617   1,623,885   1,707,456 
              Diluted 1,684,101    1,832,133   1,680,654   1,836,241 
         Tangible book value at period end$    30.46  $      27.88  $          30.46  $      27.88 
             
    (1)       Ratios for the three and six month periods are annualized.       
    (2)       Asset quality ratios are end of period ratios.       



    James R. Barlow
President and Chief Executive Officer
(318) 222-1145

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