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: October 31, 2006
Home Federal Bancorp, Inc.
(Exact name of registrant as specified in its charter)
| Federal | 000-50901 | 20-0945587 |
| (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))
<PAGE>
Item 2.02 Results of Operations and Financial Condition
On October 31, 2006, Home Federal Bancorp, Inc. issued its earnings release for the fourth quarter and fiscal year ended September 30, 2006. 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
(c) Exhibits
99.1 Press release of Home Federal Bancorp, Inc. dated October 31, 2006
<PAGE>
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: October 31, 2006 By: /s/ Robert A. Schoelkoph
Robert A. Schoelkoph
Senior Vice President and
Chief Financial Officer
<PAGE>
<PAGE>
Contact:
Home Federal Bancorp, Inc.
Daniel L. Stevens, Chairman, President & CEO
Robert A. Schoelkoph, SVP, Treasurer & CFO
208-466-4634
www.myhomefed.com
PRESS RELEASE - For Immediate Release
HOME FEDERAL BANCORP, INC.
ANNOUNCES FOURTH QUARTER AND ANNUAL EARNINGS
Nampa, ID (October 31, 2006) - Home Federal Bancorp, Inc. (the "Company") (Nasdaq GSM: HOME), the parent company of Home Federal Bank (the "Bank"), today reported net income of $1.7 million, or $0.11 per diluted share, for the quarter ended September 30, 2006, compared to $1.7 million, or $0.12 per diluted share, for the same period a year ago. Net income for the fiscal year ended September 30, 2006 was $6.2 million, or $0.43 per diluted share, compared to $5.3 million, or $0.36 per diluted share, for the fiscal year ended September 30, 2005. Results for the fiscal year ended September 30, 2005 included a $386,000 pre-tax gain on the sale of a former branch and a $1.8 million pre-tax expense for establishing the Home Federal Foundation, Inc. (the "Foundation"). Excluding the gain on the sale of the branch and the expense for establishing the Foundation, the Company had net income of $6.2 million, or $0.42 per diluted share, for the fiscal year ended September 30, 2005.
"We have experienced continued growth this fiscal year, despite the challenges of the current interest rate environment," said Daniel L. Stevens, Chairman and CEO. "During the quarter ended September 30, 2006, we experienced a 17% increase in interest and dividend income, net loans increased 17% and deposits were up 9%, as compared to the same period a year ago. During October 2006, we also opened our fifth branch in the fast-growing Canyon County, bringing our branch network to 15 locations."
"I am also very excited to have Len Williams on board as President of the Bank", continued Mr. Stevens. "The business banking and strategic planning skills he brings to the table will be extremely valuable as we continue our model of building strong customer relationships." Mr. Williams, age 47, joined the company in September 2006 as part of the company's succession plan for Mr. Stevens. He previously served as Senior Vice President and Head of Business Banking with Fifth Third Bank and has more than 28 years of banking experience. From 1987 to 2005, he held several management positions with Key Bank, including President of Business Banking from 2003 to 2005.
<PAGE>
Home Federal Bancorp, Inc.
The following table reconciles the Company's actual net income to pro forma net income for the fiscal years ended September 30, 2006 and 2005 exclusive of the sale of the branch and the contribution to the Foundation, as adjusted for federal and state taxes (in thousands, except per share data):
|
Fiscal Year Ended |
||||||
|
2006 |
2005 |
|||||
|
(unaudited) |
||||||
|
Pro forma disclosure |
||||||
|
Net income, as reported |
$6,212 |
$5,283 |
||||
|
Sale of branch |
- |
(386) |
||||
|
Contribution to Foundation |
- |
1,825 |
||||
|
Federal and state income taxes |
- |
(561) |
||||
|
Pro forma net income |
$6,212 |
$6,161 |
||||
|
Earnings per share |
||||||
|
Diluted as reported |
$0.43 |
$0.36 |
||||
|
Pro forma diluted |
$0.43 |
$0.42 |
||||
Fourth Quarter Highlights (at or for the periods ended September 30, 2006 compared to September 30, 2005):
Operating Results
Revenues for the quarter ended September 30, 2006, which consisted of net interest income before the provision for loan losses plus noninterest income, increased 2% to $8.4 million for the quarter, compared to $8.2 million for the quarter ended September 30, 2005. Net interest income before the provision for loan losses remained unchanged at $5.6 million for the quarters ended September 30, 2006 and 2005 as the cost of deposits increased more rapidly than the yield on loans and investments.
Revenues for the fiscal year ended September 30, 2006 increased 7% to $34.1 million, compared to $31.8 million for the same period of last year. Net interest income before the provision for loan losses increased 6% to $23.0 million, compared to $21.7 million for the same period of last year.
For the quarter ended September 30, 2006, net interest income after provision for loan losses increased 3% to $5.8 million, compared to $5.6 million for the same quarter a year ago. As a result of an analysis of the Company's historical loan loss rates, $182,000 of the current fiscal year provision for loan losses
<PAGE>
Home Federal Bancorp, Inc.
October 31, 2006
Page 3 of 8
was recaptured in the current quarter. For the quarter ended September 30, 2005, there was no provision for loan losses. As a result of the recapture, the allowance for loan losses was $3.0 million, or 0.58% of gross loans, including loans held for sale, at September 30, 2006 compared to $3.2 million, or 0.63% of gross loans, including loans held for sale, at June 30, 2006. Net interest income after provision for loan losses for the fiscal year ended September 30, 2006 increased 8% to $22.9 million, compared to $21.2 million for the same period of the prior year.
The Company's net interest margin decreased 36 basis points to 3.12% for the quarter ended September 30, 2006, from 3.48% for the same quarter last year. The net interest margin for the fiscal year ended September 30, 2006 decreased 24 basis points to 3.33% from 3.57% for the same period a year earlier. The decline in the net interest margin reflects competitive pricing pressures and the relatively flat yield curve that currently exists, as the cost of shorter-term deposits and borrowed funds increased more rapidly than the yield on longer-term assets. The Company believes the repricing of existing and new loans will help counter the trend in net interest margin, however, pressure will likely continue in the near term as a result of competitive pricing pressures and the flat yield curve environment.
Noninterest income increased 7% to $2.8 million for the quarter ended September 30, 2006, compared to $2.6 million for the same quarter a year ago. The increase was primarily attributable to a $182,000, or an 8%, increase in service charges and fees. For the current quarter, the Company also wrote-down the value of the mortgage servicing rights by $64,000. For the fiscal year ended September 30, 2006, noninterest income increased 10% to $11.1 million, compared to $10.1 million for the same period of the prior year. Increases in service charges and gain on sale of loans of $1.0 million and $674,000, respectively, account for the majority of the increase. Other noninterest income for the fiscal year ended September 30, 2005 included a $386,000 gain on the sale of a former branch and a $456,000 gain from life insurance proceeds, which were not experienced in the current fiscal year.
Noninterest expense for the quarter ended September 30, 2006 increased 10% to $5.9 million, from $5.4 million for the comparable period a year earlier. Compensation and benefits increased $361,000, or 11%, to $3.7 million for the quarter ended September 30, 2006 as compared to $3.3 million for the same quarter a year ago. The majority of the increase is attributable to the establishment of the equity compensation plans, annual merit increases, and an increase in employee commissions. The equity compensation plans include the Company's 2005 Recognition and Retention Plan and 2005 Stock Option and Incentive Plan. The efficiency ratio was 70.4% for the quarter ended September 30, 2006 compared to 65.7% 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 the fiscal year ended September 30, 2006 increased 3% to $23.9 million, compared to $23.2 million for the fiscal year ended September 30, 2005. Noninterest expense for the fiscal year ended September 30, 2005 included the $1.8 million contribution to the Foundation. Compensation and benefits increased $2.4 million, or 19%, to $15.1 million for the fiscal year ended September 30, 2006 as compared to $12.6 million for the same period a year ago. The majority of the increase is attributable to the establishment of the equity compensation plans during the prior fiscal year, annual merit increases, and an increase in employee commissions. The efficiency ratio was 70.2% for the fiscal year ended September 30, 2006 compared to 72.8% for the same period of the prior year. Excluding the non-recurring contribution to the Foundation and the gain on sale of the former branch, the efficiency ratio was 67.9% for the fiscal year ended September 30, 2005.
<PAGE>
Home Federal Bancorp, Inc.
October 31, 2006
Page 4 of 8
Balance Sheet Growth
Total assets increased 10% to $761.3 million at September 30, 2006, compared to $689.6 million a year earlier. Net loans (excluding loans held for sale) at September 30, 2006 increased 17% to $503.1 million, compared to $430.9 million at September 30, 2005. One- to four-family residential loans represented 63% of the Bank's loan portfolio at September 30, 2006, compared to 61% at September 30, 2005. Commercial real estate loans accounted for 28% of the Bank's loan portfolio at September 30, 2006 and 2005.
Credit quality remains exceptional, as non-performing assets were $388,000, or 0.05% of total assets, at September 30, 2006, compared to $1.0 million, or 0.15% of total assets, at September 30, 2005. The allowance for loan losses was $3.0 million, or 0.58% of gross loans, including loans held for sale, at September 30, 2006 compared to $2.9 million, or 0.66% of gross loans, including loans held for sale, at September 30, 2005.
Deposits increased 9% to $430.3 million at September 30, 2006 compared to $396.3 million at September 30, 2005. Demand deposits and savings accounts decreased $2.3 million, or 1%, as customers migrated towards higher rate deposit products during the fiscal year. Noninterest-bearing demand deposits decreased $1.7 million, or 4%, to $44.6 million at September 30, 2006, compared to $46.3 million at September 30, 2005. Interest-bearing demand deposits increased $946,000, or less than 1%, to $128.3 million at September 30, 2006, compared to $127.3 million at September 30, 2005. Certificates of deposit increased $36.2 million, or 18%, to $233.7 million at September 30, 2006, compared to $197.5 million at September 30, 2005. The majority of the increase in certificates of deposits was in shorter-term deposits of six to 23 month terms. Advances from the Federal Home Loan Bank ("FHLB") increased 20% to $210.8 million at September 30, 2006 compared to $175.9 million at September 30, 2005. The Company utilizes advances from the FHLB as an alternative funding source to retail deposits in order to manage funding costs, reduce interest rate risk and to leverage the Balance Sheet.
Stockholders' equity increased $6.5 million, or 6%, to $107.9 million at September 30, 2006, compared to $101.4 million at September 30, 2005. The increase was primarily the result of $6.2 million in net income for the period, $681,000 in earned employee stock ownership ("ESOP") shares and $844,000 in equity compensation, offset by $1.2 million of cash dividends paid to stockholders. The Company's book value per share as of September 30, 2006 was $7.11 per share based upon 15,169,114 outstanding shares of common stock.
About the Company
Home Federal Bancorp, Inc. is a federally chartered savings and loan holding company headquartered in Nampa, Idaho. It is the subsidiary of Home Federal MHC, a federally chartered mutual holding company, and the parent 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 15 full-service banking offices and two mortgage loan centers. The Company's common stock is traded on the NASDAQ Global 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.
<PAGE>
Home Federal Bancorp, Inc.
October 31, 2006
Page 5 of 8
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, commercial real estate and consumer lending 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, 2005, 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.
<PAGE>
Home Federal Bancorp, Inc.
October 31, 2006
Page 6 of 8
|
HOME FEDERAL BANCORP, INC. AND SUBSIDIARY |
September 30, |
September 30, |
|||
|
ASSETS |
|||||
|
Cash and amounts due from depository institutions |
$ 18,385 |
$ 19,033 |
|||
|
Mortgage-backed securities available for sale, at fair value |
12,182 |
14,830 |
|||
|
Mortgage-backed securities held to maturity, at cost |
183,279 |
180,974 |
|||
|
FHLB stock, at cost |
9,591 |
9,591 |
|||
|
Loan receivable, net of allowance for loan losses of $2,974 |
503,065 |
430,944 |
|||
|
Loans held for sale |
4,119 |
5,549 |
|||
|
Accrued interest receivable |
3,025 |
2,458 |
|||
|
Property and equipment, net |
12,849 |
11,995 |
|||
|
Mortgage servicing rights, net |
2,492 |
2,671 |
|||
|
Bank owned life insurance |
10,763 |
10,099 |
|||
|
Real estate and other property owned |
- |
534 |
|||
|
Other assets |
1,542 |
899 |
|||
|
TOTAL ASSETS |
$761,292 |
$689,577 |
|||
|
|||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
||||
|
LIABILITIES |
|||||
|
Deposit accounts |
|||||
|
Noninterest-bearing demand deposits |
$ 44,626 |
$ 46,311 |
|||
|
Interest-bearing demand deposits |
128,276 |
127,330 |
|||
|
Savings deposits |
23,655 |
25,219 |
|||
|
Certificates of deposit |
233,724 |
197,465 |
|||
|
Total deposit accounts |
430,281 |
396,325 |
|||
|
Advances by borrowers for taxes and insurance |
2,133 |
3,898 |
|||
|
Interest payable |
971 |
1,670 |
|||
|
Deferred compensation |
3,875 |
3,049 |
|||
|
FHLB advances |
210,759 |
175,932 |
|||
|
Deferred income tax liability |
800 |
1,205 |
|||
|
Other liabilities |
4,604 |
6,131 |
|||
|
Total liabilities |
653,423 |
588,210 |
|||
|
STOCKHOLDERS' EQUITY |
|||||
|
Serial preferred stock, $.01 par value; 5,000,000 authorized |
|||||
|
issued and outstanding, none |
- |
- |
|||
|
Common stock, $.01 par value; 50,000,000 authorized, |
|||||
|
issued and outstanding: |
|||||
|
Sept. 30, 2006 - 15,208,750 issued, 15,169,114 |
152 |
149 |
|||
|
Sept. 30, 2005 - 15,208,750 issued, 14,910,658 |
|||||
|
Additional paid-in capital |
57,222 |
56,115 |
|||
|
Retained earnings |
54,805 |
49,818 |
|||
|
Unearned shares issued to ESOP |
(4,134) |
(4,550) |
|||
|
Accumulated other comprehensive loss |
(176) |
(165) |
|||
|
Total stockholders' equity |
107,869 |
101,367 |
|||
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$761,292 |
$689,577 |
|||
<PAGE>
Home Federal Bancorp, Inc.
October 31, 2006
Page 7 of 8
|
HOME FEDERAL BANCORP, INC. AND SUBSIDIARY |
Three Months Ended |
Year Ended |
|||||
|
2006 |
|
2005 |
2006 |
2005 |
||
|
|||||||
|
Interest and dividend income: |
|||||||
|
Loan interest |
$8,216 |
$6,884 |
$30,175 |
$25,934 |
|||
|
Investment interest |
26 |
42 |
140 |
313 |
|||
|
Mortgage-backed security interest |
2,378 |
2,154 |
9,598 |
7,633 |
|||
|
FHLB dividends |
- |
- |
- |
30 |
|||
|
Total interest and dividend income |
10,620 |
9,080 |
39,913 |
33,910 |
|||
|
Interest expense: |
|
||||||
|
Deposits |
2,727 |
1,796 |
8,914 |
6,288 |
|||
|
FHLB advances |
2,307 |
1,703 |
8,003 |
5,943 |
|||
|
Total interest expense |
5,034 |
3,499 |
16,917 |
12,231 |
|||
|
Net interest income |
5,586 |
5,581 |
22,996 |
21,679 |
|||
|
Provision for loan losses |
(182) |
- |
138 |
456 |
|||
|
Net interest income after provision for loan losses |
5,768 |
5,581 |
22,858 |
21,223 |
|||
|
Noninterest income: |
|||||||
|
Service charges and fees |
2,399 |
2,217 |
9,292 |
8,274 |
|||
|
Gain on sale of loans |
262 |
180 |
1,056 |
382 |
|||
|
Increase in cash surrender value of bank owned life |
98 |
90 |
383 |
343 |
|||
|
Loan servicing fees |
150 |
166 |
620 |
672 |
|||
|
Mortgage servicing rights, net |
(132) |
(81) |
(179) |
(480) |
|||
|
Other |
(11) |
6 |
(63) |
937 |
|||
|
Total noninterest income |
2,766 |
2,578 |
11,109 |
10,128 |
|||
|
Noninterest expense: |
|||||||
|
Compensation and benefits |
3,653 |
3,292 |
15,081 |
12,636 |
|||
|
Occupancy and equipment |
686 |
674 |
2,759 |
2,765 |
|||
|
Data processing |
438 |
370 |
1,802 |
1,616 |
|||
|
Advertising |
285 |
258 |
1,025 |
1,147 |
|||
|
Postage and supplies |
195 |
201 |
811 |
785 |
|||
|
Professional services |
276 |
207 |
917 |
905 |
|||
|
Insurance and taxes |
111 |
100 |
431 |
341 |
|||
|
Charitable contribution to Foundation |
- |
- |
- |
1,825 |
|||
|
Other |
239 |
260 |
1,119 |
1,138 |
|||
|
Total noninterest expense |
5,883 |
5,362 |
23,945 |
23,158 |
|||
|
Income before income taxes |
2,651 |
2,797 |
10,022 |
8,193 |
|||
|
Income tax expense |
993 |
1,060 |
3,810 |
2,910 |
|||
|
NET INCOME |
$1,658 |
$1,737 |
$ 6,212 |
$ 5,283 |
|||
|
Earnings per common share: |
|||||||
|
Basic |
$ 0.11 |
$ 0.12 |
$ 0.43 |
$ 0.36 |
|||
|
Diluted |
$ 0.11 |
$ 0.12 |
$ 0.43 |
$ 0.36 |
|||
|
Weighted average number of shares outstanding: |
|||||||
|
Basic |
14,503,619 |
14,629,608 |
14,484,982 |
14,696,071 |
|||
|
Diluted |
14,589,904 |
14,667,755 |
14,519,778 |
14,702,084 |
|||
|
|||||||
|
Dividends declared per share: |
$0.055 |
$0.050 |
$0.215 |
$0.100 |
|||
<PAGE>
Home Federal Bancorp, Inc.
October 31, 2006
Page 8 of 8
|
HOME FEDERAL BANCORP, INC. AND SUBSIDIARY |
At Or For The |
|
At Or For The |
|
FINANCIAL CONDITION DATA |
|||
|
Average interest-earning assets |
$689,688 |
$606,690 |
|
|
Average interest-bearing liabilities |
563,834 |
501,124 |
|
|
Net average earning assets |
125,854 |
105,566 |
|
|
Average interest-earning assets to average |
122.32% |
121.07% |
|
|
Stockholders' equity to assets |
14.17% |
14.70% |
|
|
ASSET QUALITY |
|
||
|
Allowance for loan losses |
$ 2,974 |
$ 2,882 |
|
|
Non-performing loans |
388 |
478 |
|
|
Non-performing assets |
388 |
1,012 |
|
|
Allowance for loan losses to non-performing loans |
766.49% |
602.93% |
|
|
Allowance for loan losses to gross loans |
0.58% |
0.66% |
|
|
Non-performing loans to gross loans |
0.08% |
0.11% |
|
|
Non-performing assets to total assets |
0.05% |
0.15% |
|
At Or For The Three Months Ended Sept. 30, |
At Or For The Year |
||||||
|
2006 |
2005 |
2006 |
2005 |
||||
|
SELECTED PERFORMANCE RATIOS |
|||||||
|
Return on average assets (1) |
0.88% |
1.02% |
0.85% |
0.82% |
|||
|
Return on average equity (1) |
6.16% |
6.68% |
5.90% |
5.69% |
|||
|
Net interest margin (1) |
3.12% |
3.48% |
3.33% |
3.57% |
|||
|
Efficiency ratio (2) |
70.44% |
65.72% |
70.21% |
72.81% |
|||
|
Efficiency ratio, excluding non-recurring items (2) |
70.44% |
65.72% |
70.21% |
67.89% |
|||
|
PER SHARE DATA |
|||||||
|
Basic earnings per share |
$0.11 |
$0.12 |
$0.43 |
$0.36 |
|||
|
Diluted earnings per share |
0.11 |
0.12 |
0.43 |
0.36 |
|||
|
Book value per share |
7.11 |
6.80 |
7.11 |
6.80 |
|||
|
Cash dividends declared per share |
0.055 |
0.050 |
0.215 |
0.100 |
|||
|
Average number of shares outstanding: |
|||||||
|
Basic (3) |
14,503,619 |
14,629,608 |
14,484,982 |
14,696,071 |
|||
|
Diluted (3) |
14,589,904 |
14,667,755 |
14,519,778 |
14,702,084 |
|||
| (1) |
Amounts are annualized. |
| (2) | Noninterest expense divided by net interest income plus noninterest income. The pro forma efficiency ratio for the year ended September 30, 2005 excludes the effect of the $386,000 gain on the sale of a former branch and the $1.8 million contribution to the Foundation. |
| (3) | Amounts calculated exclude ESOP shares not committed to be released and unvested restricted shares granted under the 2005 Recognition and Retention Plan. |
<PAGE>