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Home Financial Bancorp Announces Second Quarter Results
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Rhea-AI Summary
Home Financial Bancorp (OTCPink: HWEN) reported a net loss of $719,000 for the second quarter ended December 31, 2020, compared to a net income of $118,000 in the same quarter last year. Key factors included a $1.1 million one-time expense related to a defined benefit plan transfer. Net interest income decreased by 5% to $642,000, while non-interest expenses surged to $1.8 million, an increase of 91%. For the six-month period, total assets declined to $70.6 million, and shareholders’ equity decreased by 10% to $8.2 million.
Positive
Non-performing assets decreased 16% to $345,000.
Total non-interest income increased 9% to $153,000 for the quarter.
Negative
Net loss of $746,000 for the six months ended December 31, 2020, compared to $215,000 net income a year earlier.
Shareholders’ equity decreased by $857,000 or 10%.
Non-interest expense increased by 91% due to extraordinary costs.
Home Financial Bancorp (“Company”) (OTCPink: “HWEN”), an Indiana corporation which is the holding company for Our Community Bank, (“Bank”) based in Spencer, Indiana, announces results for the second quarter and six months ended December 31, 2020. The following comparisons are made to the same time period in the prior fiscal year.
Second Quarter Highlights:
Net interest income decreased $36,000 or 5%;
Non-interest expense increased $1.1 million, to $1.8 million;
Net loss totaled $719,000, compared to $118,000 net income for the same period a year earlier;
Excluding the effect of benefit plan withdrawal expenses and professional costs, net income decreased $11,000 or 9%, to $107,000.
Six Month Highlights:
Non-performing assets decreased $65,000 or 16%;
Net interest income decreased $59,000 or 4%;
Non-interest expense increased $1.2 million;
Shareholders’ equity decreased $857,000 or 10%, and equaled 11.6% of total assets;
Net loss totaled $746,000, compared to $215,000 net income for the same period a year earlier;
Excluding the effect of benefit plan withdrawal expenses and professional fees, net income decreased $40,000 or 19%, to $175,000.
For the quarter ended December 31, 2020, the Company reported net loss of $719,000, or $(0.62) basic and diluted earnings per share. Net income was $118,000 or $.10 basic and diluted earnings per share for the quarter ended December 31, 2019. Second quarter 2021 resulted in a net loss due to extraordinary expenses incurred related to the August 19, 2020 announced sale of Our Community Bank to Crane Credit Union. Specifically, for the quarter-ended December 31, 2020, the Bank made a one-time payment of $1.1 million to withdrawal from a defined employee benefit plan and transfer the plan to an insurance company to provide annuity contracts for individual plan participants. Excluding the effects of the pension plan withdrawal expense and professional fees, net income was $107,000 or $0.09 basic and diluted earnings per share for the quarter ended December 31, 2020.
Net interest income decreased $36,000 or 5% and totaled $642,000. Total interest income fell $101,000 or 12%, while interest expense decreased $65,000 or 36%. Net interest margin for the quarter was 3.84%, compared to 3.96% for the same period a year earlier.
Loan loss provisions were $10,000 and $15,000 for the quarters-ended December 31, 2020 and December 31, 2019, respectively. A regular assessment of loan loss allowance adequacy indicated that these provisions were necessary to maintain an appropriate allowance level. Changes in volume, composition and quality of the loan portfolio, as well as actual loan loss experience, influences the need for future loan loss provisions.
Total non-interest income increased $13,000 or 9%, to $153,000 for the quarter. Total non-interest expense for second quarter 2021 increased substantially due to a withdrawal payment of $1.1 million during the quarter to transfer a defined benefit plan obligation from the Bank to individual annuity contracts provided by a selected insurance company. Consequently, non-interest expense increased $1.1 million, to $1.8 million, compared to $673,000 for second quarter 2020. Income tax benefit totaled $270,000, compared to income tax expense of $12,000 for the same quarter a year earlier.
For the six-month period ended December 31, 2020, the Company reported net loss of $746,000, or $(0.65) basic and diluted earnings per share. Net income was $215,000, or $.19 basic and diluted earnings per share for the six months ended December 31, 2019. As mentioned above, the Bank made a one-time payment of $1.1 million during the December 2020 quarter to withdrawal from a defined employee benefit plan and transfer the plan to an insurance company to provide annuity contracts for individual plan participants. This extraordinary expense, required as part of the announced sale of the Bank, resulted in a substantial decrease in earnings for the six months ending December 31, 2020, compared to the same period a year earlier. Excluding the effects of the pension plan withdrawal expense and professional fees, net income was $175,000 or $0.15 basic and diluted earnings per share for the six-month period ended December 31, 2020.
Net interest income decreased $59,000, or 4%, to $1.3 million for the six-month period ending December 31, 2020. Total interest income decreased $179,000 or 11%. Total interest expense decreased $120,000 or 33%.
Loan loss provisions were $25,000 for the six-months ended December 31, 2020 and $30,000 for the same six-month period a year earlier. Loan loss provisions reflect management’s assessment of various risk factors including, but not limited to, the level and trend of loan delinquencies and losses.
Non-interest income increased $21,000, or 8%, to $307000 for the first half of fiscal 2021, compared to $285,000 for the year-earlier period. This change resulted from gain on sale of securities totaling $45,000 for the six-months ended December 31, 2020, compared to a $4,000 gain on sale of securities for the same period a year earlier. Limiting the overall increase in non-interest income, income from service charges on deposit accounts decreased $27,000 compared to the same period in fiscal 2020.
Non-interest expense increased $1.2 million or 91%. This increase was the result of a withdrawal payment of $1.1 million during the December 2020 quarter to transfer a defined benefit plan obligation from the Bank to individual annuity contracts provided by a selected insurance company. Contributing to the overall increase in non-interest expense, legal and professional fees increased to $327,000, compared to $151,000 for the same period last year. Of this increase, $178,000 was for legal and consulting services specifically tied to a definitive purchase and assumption agreement by and between the Bank and Crane that was announced on August 19, 2020.
At December 31, 2020, total assets were $70.6 million, compared to $73.9 million at June 30, 2020. Cash and cash equivalents decreased $4.5 million or 46% to $5.4 million. Investments available for sale declined 21% to $7.2 million. Total loans decreased $1.4 million or 3%, to $50.9 million.
Loans delinquent 90 days or more decreased 16% and were $331,000 or 0.7% of total loans at December 31, 2020, compared to $396,000 or 0.8% of total loans at June 30, 2020. Non-performing assets decreased 16% to $345,000 or 0.5% of total assets at December 31, 2020. This compares to non-performing assets of $410,000 or 0.6% of total assets at June 30, 2020. Non-performing assets included $14,000 in Other Real Estate Owned (“OREO”) and repossessed properties at both December 31, 2020 and June 30, 2020.
Loan loss allowances were $535,000 or 1.05% of total loans at December 31, 2020, compared to $522,000 or 1.00% of total loans at June 30, 2020. Management considered the level of loan loss allowances at December 31, 2020 to be adequate to cover estimated losses inherent in the loan portfolio at that date.
Total deposits decreased $1.1 million or 2%, to $54.7 million as of December 31, 2020. Total borrowings decreased $1.0 million or 12%, to $7.5 million at December 31, 2020.
Shareholders’ equity decreased $857,000 or 10%, to $8.2 million or 11.6% of total assets at December 31, 2020. Factors impacting shareholder equity during the first half of fiscal 2021 included net loss, two quarterly cash dividends totaling $.08 per share, and a $18,000 decrease in accumulated other comprehensive gain related to securities available for sale. At December 31, 2020, the Company’s book value per share was $7.10 based on 1,155,594 shares outstanding.
Home Financial Bancorp and Our Community Bank, an FDIC-insured, Indiana stock commercial bank, operate from headquarters in Spencer, Indiana, and a branch office in Cloverdale, Indiana. Additional information concerning Home Financial Bancorp and its subsidiaries is available at www.hfbancorp.com or www.ocbconnect.com.
HOME FINANCIAL BANCORP
Consolidated Financial Highlights
(Unaudited)
(Dollars in thousands, except per share and book value amounts)
FOR THREE MONTHS ENDED DECEMBER 31:
2020
2019
Net Interest Income
$642
$678
Provision for Loan Losses
10
15
Non-interest Income
153
140
Non-interest Expense
1,774
673
Income Tax
(270
)
12
Net Income
(719
)
118
Basic Earnings Per Share:
$(.62
)
$ .10
Diluted Earnings Per Share:
$(.62
)
$ .10
Average Shares Outstanding - Basic
1,155,594
1,155,594
Average Shares Outstanding - Diluted
1,155,594
1,155,594
FOR SIX MONTHS ENDED DECEMBER 31:
2020
2019
Net Interest Income
$1,287
$1,346
Provision for Loan Losses
25
30
Non-interest Income
307
285
Non-interest Expense
2,617
1,369
Income Tax
(302
)
17
Net Income
(746
)
215
Basic Earnings Per Share:
($.65
)
$ .19
Diluted Earnings Per Share:
($.65
)
$ .19
Average Shares Outstanding - Basic
1,155,594
1,155,594
Average Shares Outstanding - Diluted
1,155,594
1,155,594
December 31,
June 30,
2020
2020
Total Assets
$70,631
$73,945
Total Loans
50,936
52,354
Allowance for Loan Losses
535
522
Total Deposits
54,731
55,815
Borrowings
7,500
8,500
Shareholders’ Equity
8,204
9,061
Non-Performing Assets
345
410
Non-Performing Loans
331
396
Non-Performing Assets to Total Assets
0.49
%
0.56
%
Non-Performing Loans to Total Loans
0.65
0.76
Book Value Per Share*
$7.10
$7.84
*Based on 1,155,594 shares at December 31, 2020 and at June 30, 2020.
