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

Rhea-AI Summary

Home Federal Bancorp reported strong financial results for Q2 2020, with net income reaching $1.4 million, up from $588,000 in the same quarter last year. Basic earnings per share (EPS) stood at $0.87, nearly triple from $0.35 in Q2 2019. For the first half, net income was $2.7 million, up from $1.8 million year-over-year. Deposits rose 3.7% to $477.9 million, while mortgage loans originated were $114.9 million. Despite an increase in provisions for loan losses due to COVID-19, the overall outlook remains positive with a focus on community support and loan modifications.

Positive

• Net income for Q2 2020 increased by $812,000 year-over-year.
• Basic EPS rose significantly from $0.35 to $0.87 in Q2 2020.
• Total deposits grew $17.1 million or 3.7% to $477.9 million.
• Loan deferrals decreased substantially from $84.1 million to $5.9 million.
• SBA PPP loans funded totaled $46.3 million, with 44.7% already forgiven.

Negative

• Total interest expense decreased by 34.8%, indicating potential pricing pressure.
• Non-interest expenses increased by $583,000 or 19.4% in Q2 2020.

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 residential	101		$	27,705		25.6	%
Commercial real estate	40			28,278		32.5
Multi-family residential	9			18,046		38.0
Land	7			1,190		6.6
Construction	1			680		8.3
Equity and second mortgage	--			--		--
Equity lines of credit	19			1,586		12.9
Commercial business	39			6,609		8.1
Consumer	--			--		--
Total	216		$	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 residential	2		$	2,314		2.4	%
Commercial real estate	2			2,937		3.4
Multi-family residential	--			--		--
Land	--			--		--
Construction	--			--		--
Equity and second mortgage	--			--		--
Equity lines of credit	2			228		2.2
Commercial business	4			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.

FAQ

What was Home Federal Bancorp's net income for Q2 2020?

Home Federal Bancorp reported a net income of $1.4 million for the three months ended December 31, 2020.

How much did the earnings per share increase for HFBL in Q2 2020?

The basic earnings per share for HFBL rose to $0.87 in Q2 2020, compared to $0.35 in Q2 2019.

What was the total deposit amount reported by HFBL?

As of December 31, 2020, HFBL reported total deposits of $477.9 million.

How many SBA PPP loans did Home Federal Bank fund?

Home Federal Bank funded 378 SBA PPP loans totaling approximately $46.3 million.

What trend was observed in loan deferrals for HFBL?

Loan deferrals decreased from $84.1 million at June 30, 2020, to $5.9 million at December 31, 2020.