HOME FEDERAL BANCORP, INC. OF LOUISIANA REPORTS RESULTS OF OPERATIONS FOR THE THREE MONTHS AND YEAR ENDED JUNE 30, 2022

Rhea-AI Summary

Home Federal Bancorp, Inc. of Louisiana (Nasdaq: HFBL) reported a net income of $1.1 million for Q2 2022, down from $1.3 million in Q2 2021. Earnings per share (EPS) also declined to $0.33 from $0.40 year-over-year. Annual net income was $4.9 million, a decrease from $5.4 million. Total deposits rose by 5.0% to $532 million, while core loans increased by 26.9% to $391.7 million. A notable drop in non-interest income was attributed to lower loan sales, despite a rise in net interest income. The provision for loan losses decreased, reflecting improved credit quality.

Positive

• Total deposits rose by 5.0%, reaching $532 million.
• Core loans increased by 26.9% to $391.7 million.
• Net interest income rose by 15.9% compared to Q2 2021.
• Decrease in provision for loan losses due to improved credit quality.

Negative

• Q2 net income declined to $1.1 million from $1.3 million.
• Total annual net income decreased to $4.9 million from $5.4 million.
• EPS fell to $0.33 from $0.40 year-over-year.
• 42.6% drop in non-interest income primarily due to lower loan sales.

Shreveport, Louisiana, July 28, 2022 (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 June 30, 2022 of $1.1 million compared to net income of $1.3 million reported for the three months ended June 30, 2021. The Company’s basic and diluted earnings per share were $0.33 and $0.31, respectively, for the three months ended June 30, 2022 compared to basic and diluted earnings per share of $0.40 and $0.37, respectively, for the three months ended June 30, 2021. The Company reported net income of $4.9 million for the year ended June 30, 2022 compared to $5.4 million for the year ended June 30, 2021. The Company’s basic and diluted earnings per share were $1.50 and $1.41, respectively, for the year ended June 30, 2022 compared to $1.66 and $1.57, respectively, for the year ended June 30, 2021.

The Company reported the following key achievements during the year ended June 30, 2022:

• Total deposits increased $25.4 million or 5.0% to $532.0 million at June 30, 2022, compared to $506.6 million at June 30, 2021.
• Core loans (Non-GAAP Measure), excluding SBA PPP loans and loans held-for-sale for the year ended June 30, 2022 increased $83.1 million, or 26.9% to $391.7 million at June 30, 2022, compared to $308.6 million at June 30, 2021. SBA PPP loans at June 30, 2022 and 2021 totaled $602,000 and $31.9 million, respectively. The pipeline for our commercial loan originations remains strong.
• Time deposits decreased $28.7 million, or 26.4%, to $80.3 million at June 30, 2022, compared to $109.0 million at June 30, 2021.
  

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 extended the authority to make SBA PPP loans through May 31, 2021. As of June 30, 2022, Home Federal Bank funded 597 SBA PPP loans totaling approximately $68.8 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 $68.2 million of SBA PPP loans that have been forgiven which represents 99.1% of the total amount of loans funded. The provision for loan losses for the year ended June 30, 2022 was $336,000 compared to $1.8 million for the year ended June 30, 2021. The decrease is mainly due to an improvement in our overall credit quality.

The decrease in net income for the three months ended June 30, 2022, as compared to the prior year quarter resulted primarily from a $438,000, or 42.6%, decrease in non-interest income, an increase of $342,000, or 10.1%, in non-interest expense, and an increase of $225,000, or 450.0%, in provision for loan losses, partially offset by an increase of $644,000, or 15.9%, in net interest income, and a $132,000, or 39.2%, decrease in provision for income taxes. The increase in the provision for loan losses for the three months ended June 30, 2022, was primarily due to loan growth. The increase in net interest income for the three months ended June 30, 2022 was primarily due to a $397,000, or 8.5%, increase in total interest income, and a decrease of $247,000, or 38.0%, in total interest expense. The Company’s average interest rate spread was 3.36% for the three months ended June 30, 2022 compared to 2.85% for the three months ended June 30, 2021. The Company’s net interest margin was 3.53% for the three months ended June 30, 2022 compared to 3.04% for the three months ended June 30, 2021.

The decrease in net income for the year ended June 30, 2022 resulted primarily from a $2.0 million, or 36.2%, decrease in non-interest income, and an increase of $714,000, or 5.2%, in non-interest expense, partially offset by a decrease of $1.5 million, or 81.3%, in provision for loan losses, an increase of $416,000, or 2.5%, in net interest income, and a decrease of $318,000 in provision for income taxes. The decrease in the provision for loan losses is mainly due to an improvement in overall credit quality. The increase in net interest income was primarily due to a $1.4 million, or 43.2%, decrease in total interest expense, partially offset by a $1.0 million, or 5.0%, decrease in total interest income. The Company’s average interest rate spread was 3.11% for the year ended June 30, 2022 compared to 3.07% for the year ended June 30, 2021. The Company’s net interest margin was 3.27% for the year ended June 30, 2022 compared to 3.31% for the year ended June 30, 2021.

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 June 30,
	2022							2021
	Average			Average			Average			Average
	Balance			Yield/Rate			Balance			Yield/Rate
	(Dollars in thousands)
Interest-earning assets:
Loans receivable	$	375,957		4.82	%		$	352,395		4.94	%
Investment securities		107,530		1.63				76,806		1.66
Interest-earning deposits		54,022		0.85				102,944		0.11
Total interest-earning assets	$	537,509		3.79	%		$	532,145		3.53	%
Interest-bearing liabilities:
Savings accounts	$	136,248		0.26	%		$	126,506		0.39	%
NOW accounts		55,746		0.11				48,552		0.12
Money market accounts		98,598		0.12				84,934		0.15
Certificates of deposit		78,840		1.21				117,990		1.55
Total interest-bearing deposits		369,432		0.40				377,982		0.66
Other bank borrowings		2,007		3.99				1,774		3.39
FHLB advances		835		4.85				870		5.07
Total interest-bearing liabilities	$	372,274		0.43	%		$	380,626		0.68	%

	For the Year Ended June 30,
		2022						2021
	Average			Average			Average			Average
	Balance			Yield/Rate			Balance			Yield/Rate
	(Dollars in thousands)
Interest-earning assets:
Loans receivable	$	360,774		4.85	%		$	366,546		5.16	%
Investment securities		98,229		1.57				65,721		1.87
Interest-earning deposits		72,189		0.26				79,028		0.13
Total interest-earning assets	$	531,192		3.62	%		$	511,295		3.96	%
Interest-bearing liabilities:
Savings accounts	$	136,139		0.29	%		$	108,592		0.52	%
NOW accounts		51,412		0.11				44,655		0.20
Money market accounts		91,862		0.12				77,198		0.28
Certificates of deposit		88,450		1.37				138,603		1.68
Total interest-bearing deposits		367,863		0.48				369,048		0.87
Other bank borrowings		1,921		3.44				1,991		3.21
FHLB advances		848		4.83				923		4.88
Total interest-bearing liabilities	$	370,632		0.51	%		$	371,962		0.89	%

The $438,000 decrease in non-interest income for the three months ended June 30, 2022, compared to the prior year quarterly period, was primarily due to a decrease of $530,000 in gain on sale of loans, and a $2,000 decrease in other non-interest income, partially offset by an increase of $50,000 in service charges on deposit accounts, a $42,000 decrease in loss on sale of real estate, and a $2,000 increase in income on bank owned life insurance. The $2.0 million decrease in non-interest income for the year ended June 30, 2022 compared to the prior year period was primarily due to a decrease of $2.3 million in gain on sale of loans, a $14,000 decrease in income from bank owned life insurance, and an increase of $6,000 in loss on sale of real estate, partially offset by an increase of $225,000 in other non-interest income, and a $156,000 increase in service charges on deposit accounts. The decreases in gain on sale of loans for both the quarter and year ended June 30, 2022 were primarily due to a decrease in refinance activity causing a decrease in mortgage loan originations. The Company sells most of its long-term fixed rate residential mortgage loan originations primarily in order to manage interest rate risk. The increase in other non-interest income for the year ended June 30, 2022 was due to a $228,000 bank-owned life insurance claim on a retired bank executive officer.

The $342,000 increase in non-interest expense for the three months ended June 30, 2022, compared to the same period in 2021, is primarily attributable to increases of $195,000 in compensation and benefits expense, $137,000 in occupancy and equipment expense, $107,000 in data processing expense, $27,000 in franchise and bank share tax expense, $25,000 in advertising expense, and a $5,000 increase in deposit insurance premium expense. The increases were partially offset by decreases of $64,000 in loan and collection expense, $45,000 in other non-interest expense, $26,000 in legal fees, and $19,000 in audit and examination fees. The $714,000 increase in non-interest expense for the year ended June 30, 2022, compared to the prior year period, is primarily attributable to increases of $354,000 in compensation and benefits expense, $299,000 in occupancy and equipment expense, $139,000 in advertising expense, $128,000 in franchise and bank shares tax expense, $95,000 in audit and examination fees, $70,000 in data processing expense, $52,000 in other non-interest expense, and a $17,000 increase in deposit insurance premium expense, partially offset by decreases of $200,000 in real estate owned valuation adjustment expense, $146,000 in loan and collection expense, and $94,000 in legal fees.

At June 30, 2022, the Company reported total assets of $590.5 million, an increase of $24.7 million, or 4.4%, compared to total assets of $565.7 million at June 30, 2021. The increase in assets was comprised primarily of increases in loans receivable, net of $51.5 million, or 15.3%, from $336.4 million at June 30, 2021 to $387.9 million at June 30, 2022, investment securities of $23.8 million, or 28.2%, from $84.3 million at June 30, 2021 to $108.0 million at June 30, 2022, premises and equipment of $1.3 million, or 8.9%, from $14.9 million at June 30, 2021 to $16.2 million at June 30, 2022, and deferred tax assets of $324,000, or 39.6%, from $819,000 at June 30, 2021 to $1.1 million at June 30, 2022. These increases were partially offset by decreases in cash and cash equivalents of $40.3 million, or 38.6%, from $104.4 million at June 30, 2021 to $64.1 million at June 30, 2022, loans held-for-sale of $10.4 million, or 72.4%, from $14.4 million at June 30, 2021 to $4.0 million at June 30, 2022, bank owned life insurance of $617,000, or 8.6%, from $7.2 million at June 30, 2021 to $6.6 million at June 30, 2022, real estate owned of $383,000, or 100.0%, from $383,000 at June 30, 2021 to none at June 30, 2022, other assets of $366,000, or 20.9%, from $1.8 million at June 30, 2021 to $1.4 million at June 30, 2022, and accrued interest receivable of $39,000, or 3.4%, from $1.2 million at June 30, 2021to $1.1 million at June 30, 2022. The decrease in cash and cash equivalents was primarily due to the funding of additional loan growth and purchases of securities with excess liquidity. The increase in loans receivable, net, was primarily due to an increase of $31.1 million in commercial real estate loans. The pipeline for our commercial loan originations remains strong. The increase in investment securities was primarily due to security purchases of $44.1 million offset by principal repayments on mortgage backed securities of $17.7 million. The decrease in loans held-for-sale primarily reflected a reduction in loans originated for sale during the year ended June 30, 2022 due mainly to a decrease in mortgage refinance activity likely attributable to the increase in interest rates.

Core loans (Non-GAAP Measure), excluding SBA PPP loans and loans held-for-sale for the year ended June 30, 2022 increased $83.1 million, or 26.9%, to $391.7 million at June 30, 2022, compared to $308.6 million at June 30, 2021. SBA PPP loans at June 30, 2022 and 2021 totaled $602,000 and $31.9 million, respectively. The following table sets forth the Company’s core loans as of the periods indicated.

	June 30,				March 31,				December 31,				September 30,				June 30,
		2022				2022				2021				2021				2021
Total loans, before net items	$	396,302			$	369,390			$	375,659			$	354,124			$	354,943
SBA PPP loans		(602	)			(2,472	)			(10,923	)			(13,756	)			(31,938	)
Loans held-for-sale		(3,978	)			(2,417	)			(10,180	)			(10,573	)			(14,427	)
Core loans (Non-GAAP Measure)	$	391,722			$	364,501			$	354,556			$	329,795			$	308,578

Total liabilities increased $25.1 million, or 4.9%, from $513.0 million at June 30, 2021 to $538.1 million at June 30, 2022 primarily due to increases in total deposits of $25.4 million, or 5.0%, to $532.0 million at June 30, 2022 compared to $506.6 million at June 30, 2021, partially offset by a decrease of $111,000, or 4.1%, in other accrued expenses and liabilities from $2.7 million at June 30, 2021 to $2.6 million at June 30, 2022, a decrease of $72,000, or 16.9%, in advances from borrowers for taxes and insurance from $426,000 at June 30, 2021 to $354,000 at June 30, 2022, a decrease of $50,000, or 2.1%, in other borrowings from $2.4 million at June 30, 2021 to $2.3 million at June 30, 2022, and a decrease of $35,000, or 4.0%, in advances from the Federal Home Loan Bank from $867,000 at June 30, 2021 to $832,000 at June 30, 2022. The increase in deposits was primarily due to a $30.1 million, or 23.0%, increase in non-interest bearing deposits from $131.0 million at June 30, 2021 to $161.1 million at June 30, 2022, a $10.4 million, or 11.8%, increase in money market deposits from $88.2 million at June 30, 2021 to $98.6 million at June 30, 2022, a $9.7 million, or 19.7%, increase in NOW accounts from $49.3 million at June 30, 2021 to $59.0 million at June 30, 2022, and an increase in savings deposits of $3.9 million, or 3.0%, from $129.1 million at June 30, 2021 to $133.0 million at June 30, 2022, partially offset by a decrease of $28.7 million, or 26.4%, in certificates of deposit from $109.0 million at June 30, 2021 to $80.3 million at June 30, 2022. The Company had $6.0 million in brokered deposits at June 30, 2022 compared to $10.7 million at June 30, 2021. The decrease in advances from the Federal Home Loan Bank was primarily due to principal paydowns on amortizing advances. The entire balance in advances from the Federal Home Loan Bank are now short-term due to our only advance with a balloon maturity in January 2023.

At June 30, 2022, the Company had $2.2 million, or 0.37%, of non-performing assets (defined as non-accruing loans, accruing loans 90 days or more past due, and other real estate owned) compared to $1.4 million on non-performing assets at June 30, 2021, consisting of six single-family residential loans and one line of credit loan at June 30, 2022, compared to six commercial real estate loans to one borrower, three single-family residential loans, and one commercial real estate property and one single family residence in other real estate owned at June 30, 2021. At June 30, 2022, the Company had five single family residential loans and two commercial real estate loans classified as substandard compared to one single family residential loan and eight commercial real estate loans classified as substandard at June 30, 2021. There were no loans classified as doubtful at June 30, 2022 or 2021.

Shareholders’ equity decreased $378,000, or 0.7%, to $52.3 million at June 30, 2022 from $52.7 million at June 30, 2021. The primary reasons for the changes in shareholders’ equity from June 30, 2021 were the repurchase of Company stock of $4.5 million, a decrease in the Company’s accumulated other comprehensive income of $2.0 million, and dividends paid totaling $1.4 million, partially offset by net income of $4.9 million, proceeds from the issuance of common stock from the exercise of stock options of $1.9 million, and the vesting of restricted stock awards, stock options, and the release of employee stock ownership plan shares totaling $670,000.

The Company repurchased 220,747 shares of its common stock during the year ended June 30, 2022 at an average price per share of $19.8. On February 16, 2022, the Company announced that its Board of Directors approved an eleventh stock repurchase program for the repurchase of up to 170,000 shares. As of June 30, 2022, there were 134,076 shares remaining for repurchase under the eleventh stock repurchase program.

Home Federal Bancorp, Inc. of Louisiana is the holding company for Home Federal Bank which conducts business from its nine 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)

	June 30,
	2022				2021
	(Unaudited)
ASSETS
Cash and Cash Equivalents (Includes Interest-Bearing
Deposits with Other Banks of $42,531 and $94,325
June 30, 2022 and 2021, Respectively)	$	64,078			$	104,405
Securities Available-for-Sale		28,099				29,550
Securities Held-to-Maturity (fair value June 30, 2022: $69,513;
June 30, 2021: $54,608, Respectively)		79,950				54,706
Loans Held-for-Sale		3,978				14,427
Loans Receivable, Net of Allowance for Loan Losses (June 30, 2022:
$4,451; June 30, 2021: $4,122, Respectively)		387,873				336,394
Accrued Interest Receivable		1,124				1,163
Premises and Equipment, Net		16,249				14,915
Bank Owned Life Insurance		6,597				7,214
Deferred Tax Asset		1,143				819
Real Estate Owned		--				383
Other Assets		1,389				1,755
Total Assets	$	590,480			$	565,731
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Deposits:
Non-interest bearing	$	161,142			$	131,014
Interest-bearing		370,849				375,582
Total Deposits		531,991				506,596
Advances from Borrowers for Taxes and Insurance		354				426
Short-term Federal Home Loan Bank Advances		832				35
Long-term Federal Home Loan Bank Advances		--				832
Other Borrowings		2,350				2,400
Other Accrued Expenses and Liabilities		2,606				2,717
Total Liabilities		538,133				513,006
SHAREHOLDERS’ EQUITY
Preferred Stock - $0.01 Par Value; 10,000,000 Shares
Authorized; None Issued and Outstanding		--				--
Common Stock - $0.01 Par Value; 40,000,000 Shares
Authorized: 3,387,839 and 3,350,966 Shares Issued and
Outstanding at June 30, 2022 and 2021, Respectively		34				34
Additional Paid-in Capital		40,145				37,701
Unearned ESOP Stock		(639	)			(754	)
Retained Earnings		14,506				15,469
Accumulated Other Comprehensive (Loss) Income		(1,699	)			275
Total Shareholders’ Equity		52,347				52,725
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	590,480			$	565,731

Home Federal Bancorp, Inc. of Louisiana
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
(Unaudited)

	Three Months Ended							Year Ended
	June 30,							June 30,
Interest income		2022			2021			2022				2021
Loans, including fees	$	4,516		$	4,339			$	17,501			$	18,913
Investment securities		4			--				4				5
Mortgage-backed securities		438			318				1,505				1,223
Other interest-earning assets		124			28				224				104
Total interest income		5,082			4,685				19,234				20,245
Interest expense
Deposits		373			624				1,770				3,195
Federal Home Loan Bank borrowings		10			11				41				45
Other bank borrowings		20			15				66				64
Total interest expense		403			650				1,877				3,304
Net interest income		4,679			4,035				17,357				16,941
Provision for loan losses		275			50				336				1,800
Net interest income after provision for loan losses		4,404			3,985				17,021				15,141
Non-interest income
Gain on sale of loans		236			766				1,982				4,319
Loss on sale of real estate and fixed assets		--			(42	)			(48	)			(42	)
Income on Bank-Owned Life Insurance		31			29				113				127
Service charges on deposit accounts		310			260				1,147				991
Other income		12			14				282				57
Total non-interest income		589			1,027				3,476				5,452
Non-interest expense
Compensation and benefits		2,309			2,114				9,019				8,665
Occupancy and equipment		494			357				1,813				1,514
Data processing		286			179				820				750
Audit and examination fees		35			54				328				233
Franchise and bank shares tax		132			105				535				407
Advertising		97			72				329				190
Legal fees		71			97				358				452
Loan and collection		36			100				220				366
Real estate owned valuation adjustment		--			--				--				200
Deposit insurance premium		39			34				154				137
Other expenses		221			266				921				869
Total non-interest expense		3,720			3,378				14,497				13,783
Income before income taxes		1,273			1,634				6,000				6,810
Provision for income tax expense		205			337				1,127				1,445
NET INCOME	$	1,068		$	1,297			$	4,873			$	5,365
EARNINGS PER SHARE
Basic	$	0.33		$	0.40			$	1.50			$	1.66
Diluted	$	0.31		$	0.37			$	1.41			$	1.57

	Three Months Ended								Year Ended
	June 30,								June 30,
	2022				2021				2022				2021
Selected Operating Ratios(1):
Average interest rate spread		3.36	%			2.85	%			3.11	%			3.07	%
Net interest margin		3.53	%			3.04	%			3.27	%			3.31	%
Return on average assets		0.74	%			0.91	%			0.85	%			0.98	%
Return on average equity		8.13	%			9.88	%			9.24	%			10.45	%
Asset Quality Ratios(2):
Non-performing assets as a percent of total assets		0.37	%			0.24	%			0.37	%			0.24	%
Allowance for loan losses as a percent of non-performing loans		202.91	%			420.70	%			202.91	%			420.70	%
Allowance for loan losses as a percent of total loans receivable		1.13	%			1.21	%			1.13	%			1.21	%
Per Share Data:
Shares outstanding at period end		3,387,839				3,350,966				3,387,839				3,350,966
Weighted average shares outstanding:
Basic		3,263,324				3,206,916				3,250,320				3,230,499
Diluted		3,440,244				3,498,976				3,465,299				3,426,203
Tangible book value at period end	$	15.45			$	15.73			$	15.45			$	15.73
_______________ (1)        Ratios for the three month periods are annualized.
(2)        Asset quality ratios are end of period ratios.

FAQ

What were Home Federal Bancorp's earnings for Q2 2022?

Home Federal Bancorp reported a net income of $1.1 million for Q2 2022.

How did Home Federal Bancorp's total deposits change?

Total deposits increased by 5.0% to $532 million at June 30, 2022.

What was the EPS for Home Federal Bancorp for the year ended June 30, 2022?

The basic and diluted EPS for the year was $1.50 and $1.41, respectively.

What caused the decline in non-interest income for Q2 2022?

The decline was primarily due to a $438,000 decrease in gains on the sale of loans.

What was the provision for loan losses for Home Federal Bancorp?

The provision for loan losses decreased to $336,000 for the year ended June 30, 2022.