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 September 30, 2020 of $1.2
million, consistent with $1.2 million for the three months ended
September 30, 2019. The Company’s basic and diluted earnings per
share were $0.76 and $0.74, respectively, for the three months
ended September 30, 2020 compared to basic and diluted earnings per
share of $0.73 and $0.68, respectively, for the three months ended
September 30, 2019.
The Company reported the following key achievements
during the three months ended September 30, 2020:
- Total deposits increased $22.9 million or 5.0% to $483.7
million at quarter end.
- Total mortgage loans originated for sale were $60.3 million for
the quarter.
- Total loan deferrals decreased from $84.1 million at June 30,
2020 to $6.2 million at September 30, 2020.
- Time deposits decreased $6.0 million, or 3.8%, to $151.6
million at September 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. As of September
30, 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. The provision for loan losses for
the three months ended September 30, 2020 was $700,000 compared to
$175,000 for the three months ended September 30, 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.
Net income for both the three months ended September 30,
2020 and September 30, 2019 was $1.2 million. Net interest income
increased $173,000 for the three months ended September 30, 2020
compared to the prior year period due to a $357,000, or 26.4%,
decrease in total interest expense, partially offset by a decrease
of $184,000, or 3.6%, in total interest income, primarily due to a
54 basis point reduction in the average rate on interest bearing
liabilities. The Company’s average interest rate spread was 2.92%
for the three months ended September 30, 2020 compared to 3.30% for
the three months ended September 30, 2019. The Company’s net
interest margin was 3.21% for the three months ended September 30,
2020 compared to 3.63% for the three months ended September 30,
2019. The decrease in net interest margin on a comparative
quarterly basis was primarily the result of a decrease of 91 basis
points in the average yield on average balances of interest-earning
assets. This decrease in average yield was primarily due to
an increase in interest-earning deposits earning only 12 basis
points for the three months ended September 30, 2020 compared to
220 basis points for the prior year period due to the substantial
rate decrease in overnight rates at the Federal Home Loan Bank,
First National Bankers Bank, and Texas Independent Bank.
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 September 30, |
|
2020 |
|
2019 |
|
Average |
|
Average |
|
Average |
|
Average |
|
Balance |
|
Yield/Rate |
|
Balance |
|
Yield/Rate |
|
(Dollars in thousands) |
Interest-earning assets: |
|
|
|
|
|
|
|
Loans receivable |
$ |
373,311 |
|
4.94 |
% |
|
$ |
331,368 |
|
5.57 |
% |
Investment securities |
|
58,881 |
|
2.15 |
|
|
|
65,520 |
|
2.46 |
|
Interest-earning deposits |
|
60,651 |
|
0.12 |
|
|
|
19,659 |
|
2.20 |
|
Total interest-earning
assets |
$ |
492,843 |
|
4.01 |
% |
|
$ |
416,547 |
|
4.92 |
% |
|
|
|
|
|
|
|
|
Interest-bearing liabilities: |
|
|
|
|
|
|
|
Savings accounts |
$ |
90,621 |
|
0.69 |
% |
|
$ |
46,630 |
|
1.03 |
% |
NOW accounts |
|
40,611 |
|
0.32 |
|
|
|
31,254 |
|
0.62 |
|
Money market accounts |
|
73,180 |
|
0.41 |
|
|
|
74,407 |
|
1.22 |
|
Certificates of deposit |
|
156,320 |
|
1.79 |
|
|
|
176,897 |
|
2.10 |
|
Total
interest-bearing deposits |
|
360,732 |
|
1.07 |
|
|
|
329,188 |
|
1.61 |
|
Other bank borrowings |
|
1,752 |
|
3.17 |
|
|
|
343 |
|
4.63 |
|
FHLB advances |
|
1,010 |
|
4.71 |
|
|
|
1,307 |
|
4.55 |
|
Total interest-bearing liabilities |
$ |
363,494 |
|
1.09 |
% |
|
$ |
330,838 |
|
1.62 |
% |
During the quarter ended September 30, 2020, the Company
recorded a provision for loan losses of $700,000, compared to
$175,000 for the quarter ended September 30, 2019. The
$525,000, or 300.0%, increase in the provision for loan losses for
the three months ended September 30, 2020 over the three months
ended September 30, 2019 was based on an evaluation of the
allowance relative to such factors as prevailing economic
conditions, including provisions related to the COVID-19
recessionary environment, volume of the loan portfolio,
concentrations of credit risk, prior loan loss experience and
amount of non-performing loans at September 30, 2020.
Non-interest income increased $742,000 for the three months
ended September 30, 2020 compared to the prior year quarterly
period primarily due to increases of $844,000 in gain on sale of
loans, and $3,000 in other income, partially offset by decreases of
$80,000 in gain on sale of real estate, $24,000 in service charges
on deposit accounts, and $1,000 on 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 increase in gain on sale of loans for the
three months ended September 30, 2020 over the prior year period
reflects an increase in the amount of loans sold primarily due to
the low interest rate environment. Mortgage loans originated
for sale were $60.3 million for the three months ended September
30, 2020 compared to $24.4 million for the three months ended
September 30, 2019.
Non-interest expense increased $346,000 for the three months
ended September 30, 2020, compared to the same period in 2019,
primarily attributable to increases of $408,000 in compensation and
benefits expense, $34,000 in data processing, $30,000 in deposit
insurance premiums, $21,000 in legal fees, $10,000 in audit and
examination fees, and $4,000 in occupancy and equipment expense.
The increases were partially offset by decreases of $121,000
in advertising expense, $25,000 in loan and collection expense,
$8,000 in other non-interest expense, and $7,000 in franchise and
bank shares tax expense. The increase in compensation and benefits
expense for the three months ended September 30, 2020 was primarily
due to increased payroll costs in our mortgage division due to the
high volume of mortgage loan sales, along with additional hires in
our commercial department, and normal annual payroll increases.
At September 30, 2020, the Company reported total assets of
$541.6 million, an increase of $23.4 million, or 4.5%, 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 $20.7 million, or 37.8%, from $54.9 million at June
30, 2020 to $75.6 million at September 30, 2020, loans
held-for-sale of $13.0 million, or 88.1%, from $14.8 million at
June 30, 2020 to $27.8 million at September 30, 2020, premises and
equipment of $683,000, or 5.2%, from $13.2 million at June 30, 2020
to $13.9 million at September 30, 2020, deferred tax assets of
$188,000, or 24.8%, from $757,000 at June 30, 2020 to $945,000 at
September 30, 2020, and other assets of $59,000, or 0.5%, from
$10.7 million at June 30, 2020 to $10.8 million at September 30,
2020. These increases were partially offset by decreases in
investment securities of $6.2 million, or 9.8%, from $62.9 million
at June 30, 2020 to $56.7 million at September 30, 2020, and loans
receivable net of $5.1 million, or 1.4%, from $359.9 million at
June 30, 2020 to $354.8 million at September 30, 2020. The decrease
in investment securities was primarily due to $11.0 million of
principal repayments on mortgage backed securities offset by
purchases of $5.1 million in mortgage backed securities. The
increase in loans held-for-sale resulted primarily from an increase
in loans originated for sale during the three months ended
September 30, 2020.
Total liabilities increased $22.9 million, or 4.9%,
from $467.7 million at June 30, 2020 to $490.6 million at September
30, 2020 primarily due to an increase in total deposits of $22.9
million that consisted of approximately $46.3 million of initial
proceeds from PPP loans funded, or 5.0%, to $483.7 million at
September 30, 2020 compared to $460.8 million at June 30, 2020, and
an increase of $869,000, or 24.7%, in other liabilities from $3.5
million at June 30, 2020 to $4.4 million at September 30, 2020,
partially offset by a decrease in other borrowings of $800,000 that
was paid down from dividend proceeds, or 34.8%, from $2.3 million
at June 30, 2020 to $1.5 million at September 30, 2020, and a
decrease of $76,000, or 7.2%, in advances from the Federal Home
Loan Bank from $1.1 million at June 30, 2020 to $984,000 at
September 30, 2020. The increase in deposits was primarily
due to a $17.6 million, or 17.0%, increase in non-interest bearing
deposits from $103.4 million at June 30, 2020 to $121.0 million at
September 30, 2020, an $11.4 million, or 13.6%, increase in savings
deposits from $83.8 million at June 30, 2020 to $95.2 million at
September 30, 2020, and a $1.8 million, or 4.5%, increase in NOW
accounts from $41.4 million at June 30, 2020 to $43.2 million at
September 30, 2020, partially offset by a decrease of $6.0
million, or 3.8%, in certificates of deposit from $157.6 million at
June 30, 2020 to $151.6 million at September 30, 2020, and a
decrease in money market deposits of $2.0 million, or 2.6%, from
$74.6 million at June 30, 2020 to $72.6 million at September 30,
2020. The Company had $13.6 million in brokered deposits at
September 30, 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 September 30, 2020, the Company had $6.2 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,
four single-family residential loans, one lot loan, one land loan,
and two commercial real estate properties in other real estate
owned at September 30, 2020, compared to five single-family
residential loans, six 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 $6.2 million at September 30, 2020 was
primarily due to a write-down on a commercial real estate loan and
the sale of a portion of the collateral on the same commercial real
estate loan totaling $690,000. At September 30, 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 September 30, 2020 or June 30, 2020.
Under the CARES Act, loans less than 30 days
past due as of December 31, 2019 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. During the three months ended
September 30, 2020, we modified 19 loans with principal balances
totaling $6.2 million representing 1.7% of our loans outstanding as
of September 30, 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 June |
|
|
|
|
|
Deferments Year Ended |
|
Balance |
|
Percent of Total Loans at |
|
June 30, 2020 |
|
(in thousands) |
|
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 |
|
Balance |
|
Percent of Total Loans at |
|
September 30, 2020 |
|
(in thousands) |
|
September 30, 2020 |
One-to-Four family residential |
7 |
|
|
|
$ |
1,115 |
|
1.1 |
% |
Commercial real estate |
2 |
|
|
|
|
2,937 |
|
3.3 |
|
Multi-family residential |
-- |
|
|
|
|
-- |
|
-- |
|
Land |
1 |
|
|
|
|
1,224 |
|
6.9 |
|
Construction |
-- |
|
|
|
|
-- |
|
-- |
|
Equity and second mortgage |
-- |
|
|
|
|
-- |
|
-- |
|
Equity lines of credit |
3 |
|
|
|
|
148 |
|
1.3 |
|
Commercial business |
6 |
|
|
|
|
752 |
|
0.9 |
|
Consumer |
-- |
|
|
|
|
-- |
|
-- |
|
Total |
19 |
|
|
|
$ |
6,176 |
|
1.7 |
% |
Shareholders’ equity increased $517,000, or 1.0%, to $51.0
million at September 30, 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 $1.2 million, the
vesting of restricted stock awards, stock options, and the release
of employee stock ownership plan shares totaling $103,000, and
proceeds from the issuance of common stock from the exercise of
stock options of $38,000, partially offset by the acquisition of
Company stock of $387,000, dividends paid totaling $282,000, and a
decrease in the Company’s accumulated other comprehensive income of
$203,000.
The Company repurchased 15,471 shares of its common stock during
the three months ended June 30, 2020 at an average price per share
of $25.00.
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) |
|
|
September 30, 2020 |
|
June 30, 2020 |
|
(Unaudited) |
ASSETS |
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
75,628 |
|
$ |
54,871 |
Securities available-for-sale at fair value |
|
38,375 |
|
|
42,060 |
Securities held-to-maturity (fair value September 30, 2020:
$19,261; June 30, 2020: $21,879) |
|
18,351 |
|
|
20,858 |
Loans held-for-sale |
|
27,842 |
|
|
14,798 |
Loans receivable, net of allowance for loan losses (September 30,
2020: $4,552; June 30, 2020: $4,081) |
|
354,793 |
|
|
359,927 |
Premises and equipment, net |
|
13,918 |
|
|
13,235 |
Deferred tax asset |
|
945 |
|
|
757 |
Real estate owned |
|
950 |
|
|
950 |
Other assets |
|
10,823 |
|
|
10,764 |
|
|
|
|
Total assets |
$ |
541,625 |
|
$ |
518,220 |
|
|
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
Deposits |
$ |
483,705 |
|
$ |
460,810 |
Advances from the Federal Home Loan Bank of Dallas |
|
984 |
|
|
1,060 |
Other Borrowings |
|
1,500 |
|
|
2,300 |
Other liabilities |
|
4,384 |
|
|
3,515 |
|
|
|
|
Total liabilities |
|
490,573 |
|
|
467,685 |
|
|
|
|
Shareholders’ equity |
|
51,052 |
|
|
50,535 |
|
|
|
|
Total liabilities and shareholders’ equity |
$ |
541,625 |
|
$ |
518,220 |
Home Federal Bancorp, Inc. of
LouisianaCONSOLIDATED STATEMENTS OF
INCOME(In thousands, except per share data) |
|
|
|
Three Months Ended |
|
September 30, |
|
|
2020 |
|
|
2019 |
Interest income |
|
|
|
Loans, including fees |
$ |
4,647 |
|
$ |
4,653 |
Investment securities |
|
2 |
|
|
16 |
Mortgage-backed securities |
|
317 |
|
|
390 |
Other interest-earning assets |
|
18 |
|
|
109 |
Total
interest income |
|
4,984 |
|
|
5,168 |
Interest expense |
|
|
|
Deposits |
|
971 |
|
|
1,335 |
Federal Home Loan Bank borrowings |
|
14 |
|
|
15 |
Other bank borrowings |
|
12 |
|
|
4 |
Total
interest expense |
|
997 |
|
|
1,354 |
Net interest income |
|
3,987 |
|
|
3,814 |
|
|
|
|
Provision for loan
losses |
|
700 |
|
|
175 |
Net interest income after provision for loan losses |
|
3,287 |
|
|
3,639 |
|
|
|
|
Non-interest
income |
|
|
|
Gain on sale of loans |
|
1,411 |
|
|
567 |
Gain on sale of real estate |
|
-- |
|
|
80 |
Income on bank owned life insurance |
|
34 |
|
|
35 |
Service charges on deposit accounts |
|
248 |
|
|
272 |
Other income |
|
13 |
|
|
10 |
|
|
|
|
Total non-interest income |
|
1,706 |
|
|
964 |
|
|
|
|
Non-interest
expense |
|
|
|
Compensation and benefits |
|
2,214 |
|
|
1,806 |
Occupancy and equipment |
|
376 |
|
|
372 |
Data processing |
|
194 |
|
|
160 |
Audit and examination fees |
|
66 |
|
|
56 |
Franchise and bank shares tax |
|
108 |
|
|
115 |
Advertising |
|
26 |
|
|
147 |
Legal fees |
|
131 |
|
|
110 |
Loan and collection |
|
94 |
|
|
119 |
Deposit insurance premium |
|
30 |
|
|
-- |
Other expenses |
|
184 |
|
|
192 |
|
|
|
|
|
Total non-interest expense |
|
3,423 |
|
|
3,077 |
|
|
|
|
|
|
Income
before income taxes |
|
1,570 |
|
|
1,526 |
|
Provision for income tax
expense |
|
323 |
|
|
279 |
|
|
|
|
|
|
NET
INCOME |
$ |
1,247 |
|
$ |
1,247 |
|
|
|
|
|
|
EARNINGS
PER SHARE |
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.76 |
|
$ |
0.73 |
|
Diluted |
$ |
0.74 |
|
$ |
0.68 |
|
Three Months Ended |
|
September 30, |
|
|
2020 |
|
|
|
2019 |
|
|
|
|
|
Selected Operating Ratios(1): |
|
|
|
Average interest rate spread |
|
2.92 |
% |
|
|
3.30 |
% |
Net interest margin |
|
3.21 |
% |
|
|
3.63 |
% |
Return on average assets |
|
0.94 |
% |
|
|
1.11 |
% |
Return on average equity |
|
9.97 |
% |
|
|
10.12 |
% |
|
|
|
|
Asset Quality Ratios(2): |
|
|
|
Non-performing assets as a percent of
total assets |
|
1.15 |
% |
|
|
0.89 |
% |
Allowance for loan losses as a percent of
non-performing loans |
|
86.08 |
% |
|
|
98.85 |
% |
Allowance for loan losses as a percent of
total loans receivable |
|
1.27 |
% |
|
|
1.09 |
% |
|
|
|
|
Per Share Data: |
|
|
|
Shares outstanding at period end |
|
1,716,842 |
|
|
|
1,790,480 |
|
Weighted average shares outstanding: |
|
|
|
Basic |
|
1,630,969 |
|
|
|
1,716,993 |
|
Diluted |
|
1,694,851 |
|
|
|
1,842,091 |
|
Tangible book value at period end |
$ |
29.74 |
|
|
$ |
27.78 |
|
|
|
|
|
|
(1) Ratios for the three month
periods are annualized. |
|
|
|
(2) Asset quality ratios are
end of period ratios. |
|
|
|
James R. Barlow
Chairman of the Board, President and Chief Executive Officer
(318) 222-1145
Home Federal Bancorp Inc... (NASDAQ:HFBL)
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