Edgar Filing: Home Federal Bancorp, Inc.

k8041808.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report: April 18, 2008

Home Federal Bancorp, Inc.

(Exact name of registrant as specified in its charter)

Maryland	000-52995	26-0886727
(State or other jurisdiction	(Commission File	(I.R.S. Employer
of incorporation)	Number)	Identification No.)

500 12th Avenue South

Nampa, Idaho 83651

(Address of principal executive offices and zip code)

(208) 466-4634

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions.

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17

CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17

CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On April 18, 2008, Home Federal Bancorp, Inc. issued its earnings release for the second quarter of our fiscal year ending September 30, 2008. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits

99.1 Press release of Home Federal Bancorp, Inc. dated April 18, 2008

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

	HOME FEDERAL BANCORP, INC.

Date: April 18, 2008	By: /s/ Robert A. Schoelkoph
	Robert A. Schoelkoph
	Senior Vice President and
	Chief Financial Officer

Exhibit 99.1

Contact:

Home Federal Bancorp, Inc.

Len E. Williams, President & CEO

Robert A. Schoelkoph, SVP, Treasurer & CFO

208-466-4634

www.myhomefed.com

500 12th Ave. South * Nampa, ID 83651

PRESS RELEASE — For Immediate Release

HOME FEDERAL BANCORP, INC. ANNOUNCES SECOND QUARTER EARNINGS

Nampa, ID (April 18, 2008) – Home Federal Bancorp, Inc. (the “Company”) (Nasdaq GSM: HOME), the parent company of Home Federal Bank (the “Bank”), today announced second quarter earnings for the fiscal year ending September 30, 2008. For the quarter ended March 31, 2008, the Company reported net income of $945,000, or $0.06 per diluted share compared to $1.2 million, or $0.07 per diluted share, for the same period a year ago. Net income for the six months ended March 31, 2008 was $1.9 million, or $0.12 per diluted share, compared to $2.5 million, or $0.15 per diluted share, for the same six-month period a year ago. Earnings per share for the prior periods have been adjusted to reflect the impact of the second-step conversion and reorganization of the Company, which was completed on December 19, 2007.

“We continue to operate according to our growth plan which includes driving net interest margin by focusing on gathering low cost deposits, generating higher yielding commercial loans and maintaining our fee generation discipline. Our priority remains on quality organic growth.” stated Home Federal Bancorp, Inc. President and CEO, Len E. Williams. “Our new Karcher branch was successfully opened in early March and we have completed the build of a highly talented credit support team and system. In addition, we are pleased with the improvement in our asset and liability mix along with our net interest margin progress.” Williams continued.

Operating Results

Revenues for the quarter ended March 31, 2008, which consisted of net interest income before the provision for loan losses plus noninterest income, increased 2% to $8.3 million, compared to $8.1 million for the quarter ended March 31, 2007. Net interest income before the provision for loan losses increased 8% to $5.8 million for the quarter ended March 31, 2008 compared to $5.4 million for the same quarter of the prior year. The increase in net interest income is primarily attributable to a decrease in interest expense on Federal Home Loan Bank of Seattle (“FHLB”) borrowings as maturing advances have been funded with excess liquidity.

Revenues for the six months ended March 31, 2008 decreased 4% to $15.9 million, compared to $16.5 million for the same period of last year. Net interest income before the provision for loan losses for the six months ending March 31, 2008 decreased less than one percent to $10.8 million compared to $10.9 million for the same period of the prior year.

A provision for loan losses of $378,000 was established by management in connection with its analysis of the loan portfolio for the quarter ended March 31, 2008, compared to no provision for loan losses for the same quarter of the prior year. The provision for loan losses was $665,000 for the six months ended March 31, 2008, compared to $71,000 for the six months ended March 31, 2007. The increase in the provision reflects a shift in the asset mix toward commercial loans, and an increase in total classified assets. The Company remains committed to increasing reserves as commercial assets are added or as conditions warrant.

Home Federal Bancorp, Inc.

April 18, 2008

Page 2 of 7

The Company’s net interest margin increased 15 basis points to 3.15% for the quarter ended March 31, 2008, from 3.00% for the same quarter last year. The net interest margin for the six months ended March 31, 2008 increased five basis points to 3.07% from 3.02% for the same period a year earlier. The improvement in the net interest margin is primarily attributable to the increase in interest income that resulted from the investment of the proceeds from the second step mutual to stock conversion and stock offering completed on December 19, 2007. In addition, decreases in interest expense during the quarter just ended also contributed to the increase in the net interest margin.

Noninterest income decreased $283,000, or 10%, to $2.5 million for the quarter ended March 31, 2008, compared to $2.8 million for the same quarter a year ago. The decrease was primarily attributable to a $217,000 decrease in gain on sale of one-to-four family residential loans in the secondary market, reflecting a slowdown in the local real estate market. For the six months ended March 31, 2008, noninterest income decreased 10% to $5.1 million, compared to $5.6 million for the same period of the prior year. The decrease was primarily attributable to gain on sale of loans, service charges and fees which were $330,000 and $327,000 lower than prior year respectively.

Noninterest expense for the quarter ended March 31, 2008 increased $325,000, or 5%, to $6.4 million, from $6.1 million for the comparable period a year earlier. Compensation and benefit expenses increased $202,000, or 5%, to $4.1 million for the quarter ended March 31, 2008 as compared to $3.9 million for the same quarter a year ago. The majority of the increase is attributable to increased headcount in individuals supporting the Bank’s ongoing emphasis on commercial banking. The Company’s efficiency ratio was 77.8% for the quarter ended March 31, 2008 compared to 75.0% for the same quarter a year ago. The efficiency ratio indicates how much is spent on non-interest expenses as a percentage of total revenue.

Noninterest expense for both the six months ended March 31, 2008 and March 31, 2007 was $12.3 million. The efficiency ratio was 77.2% for the six months ended March 31, 2008 compared to 74.8% for the same period of the prior year. The increase in the efficiency ratio was primarily the result of a decrease in revenue during the six months ended March 31, 2008.

Balance Sheet Growth

Total assets increased 3% to $768.1 million at March 31, 2008, compared to $745.9 million a year earlier. The increase in total assets was primarily attributable to $88.4 million in net proceeds raised from the Company’s second-step conversion and stock offering completed on December 19, 2007. Net loans (excluding loans held for sale) at March 31, 2008 decreased 5% to $477.1 million, compared to $503.7 million at March 31, 2007. One- to four-family residential loans represented 48% of the Bank’s loan portfolio at March 31, 2008, compared to 56% at March 31, 2007. Commercial loans, including commercial real estate loans, accounted for 42% of the Bank’s loan portfolio at March 31, 2008, compared to 37% at March 31, 2007. In the future, subject to market conditions, the Bank plans to continue its increased emphasis on commercial and small business banking products. Mortgage-backed securities increased $24.6 million to $209.2 million at March 31, 2008, compared to $184.7 million at March 31, 2007. The increase is attributable to purchases made with proceeds from the second step conversion. All purchases were agency backed, Fannie Mae and Freddie Mac mortgage-backed securities.

Home Federal Bancorp, Inc.

April 18, 2008

Page 3 of 7

Non-performing assets were $2.3 million or 0.30% of total assets at March 31, 2008 compared to $273,000 or 0.04% at March 31, 2007. The increase in non-performing assets is consistent with national trends in residential real estate. While our credit quality remains solid, Management continues to keep a watchful eye on the local market closely monitoring and managing credit quality, specifically acquisition and development and real estate construction loans. The Bank has recognized and identified the risk of acquisition and development lending and has limited its exposure in this area. The allowance for loan losses was $3.3 million, or 0.69% of gross loans, at March 31, 2008 compared to $2.8 million, or 0.56% of gross loans, at March 31, 2007.

Deposits decreased 6% to $396.1 million at March 31, 2008 compared to $422.2 million at March 31, 2007. Demand deposits and savings accounts increased $9.3 million, or 5% to $204.7 million at March 31, 2008. The increase was a result of growth in money market and non-interest bearing commercial demand deposit accounts. Certificates of deposit decreased $35.4 million, or 16%, to $191.4 million at March 31, 2008, compared to $226.9 million at March 31, 2007. The decrease in certificates of deposit was primarily the result of the Bank choosing not to match rates offered by local competitors that in some instances exceeded the Bank’s cost of alternative funding sources. Advances from the FHLB decreased 22% to $155.5 million at March 31, 2008 compared to $199.5 million at March 31, 2007. The decrease resulted from maturing advances being funded from excess liquidity.

Stockholders’ equity increased $94.3 million, or 85%, to $205.4 million at March 31, 2008, compared to $111.0 million at March 31, 2007. The increase was primarily a result of the $88.4 million in net proceeds received from the second-step reorganization and conversion stock offering. The Company sold approximately 9.4 million shares of stock in its subscription, community and syndicated community offerings and issued approximately 7.1 million shares of its stock in exchange for the previously outstanding shares of the Bank’s former mid-tier holding company, Home Federal Bancorp, Inc. A portion of the offering proceeds were used to make a loan to our employee stock ownership plan (“ESOP”), which purchased approximately 816,000 shares of the Company’s common stock for an aggregate of $8.2 million.

Other significant activity among equity accounts over the past twelve months included $4.7 million in net income, the allocation of earned employee stock ownership plan shares, equity compensation and the exercise of stock options totaling $2.5 million, and a $624,000 increase in unrealized gains on securities available for sale, offset by $1.9 million in cash dividends paid to stockholders. The Company’s book value per share as of March 31, 2008 was $11.84 per share based upon 17,343,229 outstanding shares of common stock.

About the Company

Home Federal Bancorp, Inc. is a Maryland corporation headquartered in Nampa, Idaho, and is the savings and loan holding company of Home Federal Bank, a federal savings bank that was originally organized as a building and loan association in 1920. The Company serves the Treasure Valley region of southwestern Idaho that includes Ada, Canyon, Elmore and Gem Counties, through 16 full-service banking offices and one loan center. The Company’s common stock is traded on the NASDAQ Global Select Market under the symbol “HOME.” The Company’s stock is also included in the America’s Community Bankers NASDAQ Index. For more information, visit the Company’s web site at www.myhomefed.com.

Home Federal Bancorp, Inc.

April 18, 2008

Page 4 of 7

Forward-Looking Statements:

Statements in this news release regarding future events, performance or results are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”) and are made pursuant to the safe harbors of the PSLRA. Actual results could be materially different from those expressed or implied by the forward-looking statements. Factors that could cause results to differ include but are not limited to: general economic and banking business conditions, competitive conditions between banks and non-bank financial service providers, interest rate fluctuations, regulatory and accounting changes, the value of mortgage servicing rights, risks related to construction and development lending, commercial and small business banking and other risks. Additional factors that could cause actual results to differ materially are disclosed in Home Federal Bancorp, Inc.'s recent filings with the Securities and Exchange Commission, including but not limited to its Annual Report on Form 10-K for the year ended September 30, 2007, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Forward-looking statements are accurate only as of the date released, and we do not undertake any responsibility to update or revise any forward-looking statements to reflect subsequent events or circumstances.

Home Federal Bancorp, Inc.

April 18, 2008

Page 5 of 7

HOME FEDERAL BANCORP, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (In thousands, except share data) (Unaudited)	March 31, 2008			September 30, 2007			March 31, 2007

ASSETS

Cash and amounts due from depository institutions	$	36,353		$	20,588		$	12,558
Mortgage-backed securities available for sale, at fair value		209,239			162,258			13,001
Mortgage-backed securities held to maturity, at cost		-			-			171,668
FHLB stock, at cost		9,591			9,591			9,591
Loan receivable, net of allowance for loan losses of $3,307, $2,988 and $2,849		477,155			480,118			503,688
Loans held for sale		2,751			4,904			4,489
Accrued interest receivable		2,941			2,804			2,941
Property and equipment, net		13,613			12,364			12,630
Mortgage servicing rights, net		1,903			2,047			2,317
Bank owned life insurance		11,377			11,168			10,963
Real estate and other property owned		452			549			-
Deferred income tax asset		-			1,245			-
Other assets		2,736			2,318			2,108
TOTAL ASSETS	$	768,111		$	709,954		$	745,954

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES
Deposit accounts:
Noninterest-bearing demand deposits	$	37,323		$	38,643		$	36,006
Interest-bearing demand deposits		142,820			127,659			135,835
Savings deposits		24,524			23,116			23,486
Certificates of deposit		191,439			215,191			226,891
Total deposit accounts		396,106			404,609			422,218

Advances by borrowers for taxes and insurance		1,429			1,605			1,772
Interest payable		619			731			855
Deferred compensation		4,889			4,515			4,242
FHLB advances		155,553			180,730			199,495
Deferred income tax liability		377			-			604
Other liabilities		3,768			5,127			5,745
Total liabilities		562,741			597,317			634,931

STOCKHOLDERS’ EQUITY
Serial preferred stock, $.01 par value; 10,000,000 authorized,
issued and outstanding, none		-			-			-
Common stock, $.01 par value; 90,000,000 authorized,
issued and outstanding:
Mar. 31, 2008 - 17,386,517 issued, 17,343,229 outstanding		173			152			152
Sept. 30, 2007 - 15,278,803 issued, 15,232,243 outstanding
Mar. 31, 2007 - 15,208,750 issued, 15,189,019 outstanding
Additional paid-in capital		156,805			59,613			58,186
Retained earnings		59,475			58,795			56,677
Unearned shares issued to ESOP		(11,634	)		(3,698	)		(3,918	)
Accumulated other comprehensive loss		551			(2,225	)		(74	)
Total stockholders’ equity		205,370			112,637			111,023

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	768,111		$	709,954		$	745,954

Home Federal Bancorp, Inc.

April 18, 2008

Page 6 of 7

HOME FEDERAL BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (In thousands, except share data) (Unaudited)	Three Months Ended March 31,						Six Months Ended March 31,
	2008			2007			2008			2007

Interest and dividend income:
Loan interest	$	7,770		$	8,470		$	15,846		$	16,997
Investment interest		510			15			774			44
Mortgage-backed security interest		2,148			2,244			4,091			4,550
FHLB dividends		31			9			50			19
Total interest and dividend income		10,459			10,738			20,761			21,610

Interest expense:
Deposits		2,872			3,005			6,086			6,015
FHLB advances		1,810			2,372			3,842			4,735
Total interest expense		4,682			5,377			9,928			10,750
Net interest income		5,777			5,361			10,833			10,860
Provision for loan losses		378			-			665			71
Net interest income after provision for loan losses		5,399			5,361			10,168			10,789
Noninterest income:
Service charges and fees		2,098			2,222			4,309			4,636
Gain on sale of loans		162			379			347			677
Increase in cash surrender value of bank owned life insurance		104			99			208			199
Loan servicing fees		126			142			253			286
Mortgage servicing rights, net		(75	)		(92	)		(143	)		(175	)
Other		63			11			108			21
Total noninterest income		2,478			2,761			5,082			5,644

Noninterest expense:
Compensation and benefits		4,053			3,851			7,752			7,865
Occupancy and equipment		760			727			1,471			1,429
Data processing		531			493			1,053			1,001
Advertising		271			300			571			596
Postage and supplies		171			174			321			320
Professional services		191			215			403			411
Insurance and taxes		140			106			225			209
Other		302			228			485			509
Total noninterest expense		6,419			6,094			12,281			12,340
Income before income taxes		1,458			2,028			2,969			4,093
Income tax expense		513			787			1,077			1,583
NET INCOME	$	945		$	1,241		$	1,892		$	2,510

Earnings per common share:

Basic		$0.06			$0.08	(1)		$0.12	(1)		$0.15	(1)
Diluted		0.06			0.07	(1)		0.12	(1)		0.15	(1)
Weighted average number of shares outstanding:

Basic		15,962,325			16,576,439	(1)		16,352,427	(1)		16,562,244	(1)

Diluted		15,978,217			16,690,594	(1)		16,374,451	(1)		16,682,322	(1)

Dividends declared per share:		$0.055			$0.048	(1)		$0.103	(1)		$0.096	(1)

(1) Earnings per share, dividends per share and average common shares outstanding have been adjusted to reflect the impact of the second-step conversion and reorganization of the Company, which occurred on December 19, 2007.

Home Federal Bancorp, Inc.

April 18, 2008

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HOME FEDERAL BANCORP, INC. AND SUBSIDIARY ADDITIONAL FINANCIAL INFORMATION (Dollars in thousands, except share data) (Unaudited)	At Or For The Six Months Ended March 31, 2008			At Or For The Year Ended Sept. 30, 2007

FINANCIAL CONDITION DATA
Average interest-earning assets	$	706,169		$	703,675
Average interest-bearing liabilities		530,726			582,936
Net average earning assets		175,443			120,739
Average interest-earning assets to average interest-bearing liabilities		133.06	%		120.71	%
Stockholders’ equity to assets		26.74			15.87

ASSET QUALITY
Allowance for loan losses	$	3,307		$	2,988
Non-performing loans		1,852			1,531
Non-performing assets		2,304			2,080
Allowance for loan losses to non-performing loans		178.56	%		195.17	%
Allowance for loan losses to gross loans		0.69			0.62
Non-performing loans to gross loans		0.39			0.32
Non-performing assets to total assets		0.30			0.30

	At Or For The Three Months Ended Mar. 31,						At Or For The Six Months Ended Mar. 31,
	2008			2007			2008			2007
SELECTED PERFORMANCE RATIOS
Return on average assets (1)		0.49	%		0.66	%		0.51	%		0.66	%
Return on average equity (1)		1.83			4.47			2.28			4.55
Net interest margin (1)		3.15			3.00			3.07			3.02
Efficiency ratio (2)		77.76			75.03			77.17			74.77

PER SHARE DATA
Basic earnings per share	$	0.06		$	0.08	(4)	$	0.12	(4)	$	0.15	(4)
Diluted earnings per share		0.06			0.07	(4)		0.12	(4)		0.15	(4)
Book value per share		11.84			6.43	(4)		11.84			6.43	(4)
Cash dividends declared per share		0.055			0.048	(4)		0.103	(4)		0.096	(4)
Average number of shares outstanding:
Basic (3)		15,962,325			16,576,439	(4)		16,352,427	(4)		16,562,244	(4)
Diluted (3)		15,978,217			16,690,594	(4)		16,374,451	(4)		16,682,322	(4)

(1)	Amounts are annualized.
(2)	Noninterest expense divided by net interest income plus noninterest income.
(3)	Amounts calculated exclude ESOP shares not committed to be released and unvested restricted shares granted under the 2005 Recognition and Retention Plan.

(4)	Earnings per share, book value per share, dividends per share and average common shares outstanding have been adjusted to reflect the impact of the second-step conversion and reorganization of the Company, which occurred on December 19, 2007.