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Home Federal Bancorp, Inc. of Louisiana Reports Results of Operations for the Three Months and Twelve Months Ended June 30, 2016

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Shreveport, Louisiana, July 28, 2016 (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 June 30, 2016 of $980,000, an increase of $125,000, or 14.6% compared to net income of $855,000 reported for the three months ended June 30, 2015. The Company's basic and diluted earnings per share were $0.53 and $0.52, respectively, for the three months ended June 30, 2016, compared to basic and diluted earnings per share of $0.44 and $0.43, respectively, for the three months ended June 30, 2015.

The Company reported net income of $3.38 million for the year ended June 30, 2016, an increase of $22,000, or 0.7%, compared to $3.36 million for the year ended June 30, 2015. The Company's basic and diluted earnings per share were $1.80 and $1.74, respectively, for the year ended June 30, 2016, compared to $1.70 and $1.65, respectively, for the year ended June 30, 2015.

The increase in net income for the three months ended June 30, 2016, resulted primarily from an increase of $235,000, or 7.5%, in net interest income, and a $155,000, or 19.6%, increase in non-interest income, partially offset by a $214,000, or 8.4%, increase in non-interest expense, and a $51,000, or 11.7%, increase in the provision for income tax expense. The increase in net interest income for the three months ended June 30, 2016, was due to a $210,000, or 5.5%, increase in total interest income, and a decrease of $25,000, or 3.8%, in aggregate interest expense primarily due to a decrease in interest paid on deposits.  The Company's average interest rate spread was 3.69% for the three months ended June 30, 2016, compared to 3.48% for the three months ended June 30, 2015. The Company's net interest margin was 3.85% for the three months ended June 30, 2016, compared to 3.66% for the three months ended June 30, 2015. The increase in the average interest rate spread on a comparative quarterly basis was primarily the result of an increase of 15 basis points in average yield on interest-earning assets.  The increase in net interest margin was primarily the result of a higher average volume of interest earning assets for the three months ended June 30, 2016 compared to the prior year quarterly period.

The increase in net income for the year ended June 30, 2016, resulted primarily from a $557,000, or 4.5%, increase in net interest income, an increase of $293,000, or 9.9%, in non-interest income, a decrease of $29,000, or 9.7%, in the provision for loan losses, and a decrease of $17,000, or 1.0%, in income tax expense, partially offset by an $874,000, or 8.8%, increase in non-interest expense. The increase in net interest income for the year ended June 30, 2016 was primarily due to a $686,000, or 4.6%, increase in total interest income, partially offset by a $129,000, or 5.2%, increase in interest expense on borrowings and deposits.  The Company's average interest rate spread was 3.53% for the year ended June 30, 2016, compared to 3.58% for the year ended June 30, 2015.  The Company's net interest margin was 3.71% for the year ended June 30, 2016, compared to 3.76% for the year ended June 30, 2015.  The decreases in net interest margin and average interest rate spread were attributable primarily to a decrease of six basis points in average yield on interest earning assets.

The following table sets 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 June 30,
   2016   2015 
  Average Average Average Average
  Balance Yield/Rate Balance Yield/Rate
  (Dollars in thousands)
         
 Interest-earning assets:       
   Loans receivable$300,776    5.06% $280,206    5.08%
   Investment securities 46,037   1.63   47,993   1.81 
   Interest-earning deposits   3,443   0.45     14,227   0.25 
           Total interest-earning assets$350,256   4.57% $342,426   4.42%
         
 Interest-bearing liabilities:       
   Savings accounts$  28,442   0.41% $  18,304   0.30%
   NOW accounts 37,663   0.63   31,861   0.86 
   Money market accounts 49,182   0.32   44,477   0.31 
   Certificates of deposit 133,949   1.27   143,456   1.31 
     Total interest-bearing deposits 249,236   0.89   238,098   0.99 
   Other Bank Borrowing
 4   3.80    --  
   --     
   FHLB advances  37,852   0.81    38,431   0.69 
           Total interest-bearing liabilities$287,092     0.88% $276,529     0.94%
         
  For the Year Ended June 30,
   2016   2015 
  Average Average Average Average
  Balance Yield/Rate Balance Yield/Rate
  (Dollars in thousands)
         
 Interest-earning assets:       
   Loans receivable$287,405   5.09% $269,408   5.11%
   Investment securities 43,562   1.78   51,965   1.92 
   Interest-earning deposits   15,604   0.36     5,585   0.26 
           Total interest-earning assets$346,571   4.46% $326,958   4.52%
         
 Interest-bearing liabilities:       
   Savings accounts$ 23,993   0.38% $ 14,762   0.23%
   NOW accounts 35,797   0.79   29,821   0.76 
   Money market accounts 47,953   0.31   43,770   0.32 
   Certificates of deposit 141,160   1.28   133,605   1.37 
             Total interest-bearing deposits 248,903   0.94   221,958   1.01 
  Other bank borrowings 421   4.25   65   4.25 
 FHLB advances   30,277   0.87     40,858   0.60 
             Total interest-bearing liabilities$279,601   0.93% $262,881   0.94%

The $155,000 increase in non-interest income for the three months ended June 30, 2016, compared to the prior year quarterly period was due to an increase of $138,000 in gain on sale of loans and an increase of $20,000 in service charges on deposit accounts, partially offset by a decrease of $2,000 in income on Bank Owned Life Insurance and $1,000 in other non-interest income.  The $293,000 increase in non-interest income for the year ended June 30, 2016, compared to the prior year period was primarily due to increases of $214,000 in gain on sale of loans and an increase of $103,000 in service charges on deposit accounts, partially offset by a $10,000 decrease in gain on sale of securities, a decrease of $8,000 in other non-interest income and a $6,000 decrease in income on 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 $214,000 increase in non-interest expense for the three months ended June 30, 2016, compared to the same period in 2015, is primarily attributable to increases of $110,000 in compensation and benefits expense, $40,000 in other non-interest expense, $30,000 in occupancy and equipment expense, $19,000 in loan and collections expense, $16,000 in legal fees, $11,000 in franchise and bank shares taxes, and $7,000 in audit and examination fees.  These increases were partially offset by decreases of $11,000 in advertising expense, $5,000 in data processing expense, and $3,000 in deposit insurance premiums. The $874,000 increase in non-interest expense for the year ended June 30, 2016, compared to the year ended June 30, 2015, is primarily attributable to increases of $553,000 in compensation and benefits expense, $84,000 in franchise and bank shares taxes, $82,000 in legal fees, $70,000 in other non-interest expense, $43,000 in deposit insurance premiums, $41,000 in occupancy and equipment expense, $35,000 in data processing expense, and $30,000 in audit and examination fees. These increases were partially offset by a decrease of $51,000 in loan and collection expense, and $13,000 in advertising expense.

At June 30, 2016, the Company reported total assets of $381.7 million, an increase of $11.9 million, or 3.2%, compared to total assets of $369.8 million at June 30, 2015. The increase in assets was comprised primarily of increases in loans receivable, net of $22.4 million, or 8.3%, from $268.4 million at June 30, 2015, to $290.8 million at June 30, 2016, investment securities of $5.6 million, or 11.9%, from $46.9 million at June 30, 2015 to $52.5 million at June 30, 2016, premises and equipment, net of $2.2 million, or 21.4% from $10.2 million at June 30, 2015, to $12.4 million at June 30, 2016, and other assets of $357,000, or 4.0%, from $9.0 million at June 30, 2015 to $9.3 million at June 30, 2016.  These increases were partially offset by a decrease in cash and cash equivalents of $16.4 million, or 77.5%, from $21.2 million at June 30, 2015, to $4.8 million at June 30, 2016, and a decrease in loans held for sale of $2.3 million, or 16.1%, from $14.2 million at June 30, 2015, to $11.9 million at June 30, 2016.  The increase in premises and equipment, net was primarily due to the completion costs on a new branch location in Bossier City and the acquisition of real estate and construction costs for our new branch location in the North Shreveport area that opened in May 2016.  The decrease in cash and cash equivalents was primarily used to fund loan growth.

The following table shows total loans originated and sold during the periods indicated.

 Year Ended  
 June 30,  
  2016   2015  % Change
 (In thousands)  
Loan originations:     
 One- to four-family residential$115,449  $103,052   12.0%
  Commercial — real estate secured:     
        Owner occupied 48,076   69,849   (31.2)%
        Non-owner occupied 8,169   5,307   53.9%
  Multi-family residential 5,914   3,035   94.9%
  Commercial business 33,092   48,309   (31.5)%
  Land
 8,302   7,176   15.7%
  Construction
 19,538   26,920   (27.4)%
  Home equity loans and lines of credit and other consumer  9,351    8,974     4.2%
              Total loan originations$247,891  $272,622    (9.1)%
Loans sold$ (101,295) $ (86,806)    16.7%

Included in the $19.5 million and $26.9 million of construction loan originations for the years ended June 30, 2016 and 2015, respectively, are approximately $18.5 million and $18.3 million, respectively, of one- to four-family residential construction loans and $1.0 million and $8.6 million, respectively, of commercial and multi-family construction loans, all of which are primarily located in the Company's market area.

Total liabilities increased $11.9 million, or 3.6%, from $326.4 million at June 30, 2015, to $338.3 million at June 30, 2016, primarily due to an increase in advances from the Federal Home Loan Bank of Dallas of $9.3 million, or 24.1%, to $47.7 million at June 30, 2016, compared to $38.4 million at June 30, 2015, and an increase in total deposits of $1.6 million, or 0.6%, to $287.8 million at June 30, 2016, compared to $286.2 million at June 30, 2015.  The increase in borrowings was primarily used to fund the increase in investment securities at June 30, 2016. The increase in deposits was primarily due to a $10.6 million, or 57.6%, increase in savings deposits from $18.4 million at June 30, 2015 to $29.0 million at June 30, 2016, a $6.6 million, or 21.2%, increase in NOW accounts from $31.2 million at June 30, 2015 to $37.8 million at June 30, 2016, a $3.7 million, or 8.1%, increase in money market deposits from $45.6 million at June 30, 2015 to $49.3 million at June 30, 2016, partially offset by a decrease of $13.5 million, or 9.2%, in certificates of deposit from $146.0 million at June 30, 2015 to $132.5 million at June 30, 2016 and a $5.7 million, or 12.7%, decrease in non-interest demand deposits from $45.0 million at June 30, 2015 to $39.3 million at June 30, 2016.  The Company has changed its deposit strategy to lower certificate of deposit rates and attract more savings deposits, NOW accounts, money market deposits, and non-interest demand deposit accounts.  The $5.7 million decrease in non-interest demand deposit accounts was primarily due to a reduction in balances of several large commercial accounts related to one customer. At June 30, 2016, the Company had $8.2 million in brokered deposits compared to $12.7 million at June 30, 2015. The brokered certificates of deposit which have maturity dates greater than twelve months are callable by Home Federal Bank after twelve months pursuant to early redemption provisions. The $4.5 million, or 35.4%, decrease in brokered deposits at June 30, 2016 compared to June 30, 2015 was primarily a result of Home Federal Bank replacing the brokered deposits with core deposits as part of our current strategy to reduce our reliance on brokered certificates of deposit.

At June 30, 2016, the Company had $114,000 of non-performing assets compared to $120,000 of non-performing assets at June 30, 2015, consisting of two single-family residential loans, at both June 30, 2016 and June 30, 2015 and one property that was collateral for a loan and held as other real estate owned at June 30, 2015. At June 30, 2016, the Company had two single-family residential loans, one commercial real estate loan, and nine commercial business loans to one borrower classified as substandard, compared to one single-family residential loan and one line of credit classified as substandard at June 30, 2015.  There were no loans classified as doubtful at June 30, 2016 or 2015.  After fiscal year end June 30, 2016, a one- to four-family residential loan secured by a vacant lot in an established residential subdivision in the amount of $556,000 was placed on non-accrual status.  The loan was 69 days past due and designated as special mention at year-end and is now more than 90 days past due.  The Company is continuing to monitor the credit and believes that it is well-collateralized.

Shareholders' equity remained unchanged at $43.4 million at June 30, 2016 and June 30, 2015.  Increases to shareholders' equity consisted of net income of $3.4 million, the vesting of restricted stock awards, stock options and the release of employee stock ownership plan shares totaling $574,000 and proceeds from the issuance of common stock from the exercise of stock options of $96,000.  These increases in shareholders' equity were offset by dividends paid totaling $660,000, acquisition of Company stock of $3.4 million, and a decrease in the Company's accumulated other comprehensive income of $16,000.

The Company repurchased 148,614 shares of its common stock during the year ended June 30, 2016 at an average price per share of $22.56. On December 9, 2015, the Company announced that its Board of Directors approved a sixth stock repurchase program for the repurchase of up to 102,000 shares.  As of June 30, 2016, there were a total of 31,811 shares remaining for repurchase under the program.

Home Federal Bancorp, Inc. of Louisiana is the holding company for Home Federal Bank which conducts business from its six 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.

Home Federal Bancorp, Inc. of Louisiana
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands)

 
June 30,
  2016   2015 
 (Unaudited)
ASSETS   
    
Cash and cash equivalents$ 4,756
  $ 21,166 
 
Securities available for sale at fair value 50,173   44,885 
Securities held to maturity (fair value June 30, 2016: $2,349;
  June 30, 2015: $2,010)
 2,349   2,010 
Loans held-for-sale 11,919   14,203 
Loans receivable, net of allowance for loan losses (June 30, 2016: $2,845;
  June 30, 2015: $2,515)
 290,827   268,427 
Premises and equipment, net  12,366    10,188 
Other assets  9,311    8,954 
    
              Total assets$381,701  $369,833 
    
LIABILITIES AND SHAREHOLDERS' EQUITY   
    
Deposits$287,822  $286,238 
Advances from the Federal Home Loan Bank of Dallas 47,665   38,411 
Other Borrowings 400    --  
Other liabilities  2,422    1,798 
    
              Total liabilities 338,309   326,447 
    
Shareholders' equity  43,392    43,386 
    
            Total liabilities and shareholders' equity$ 381,701  $ 369,833 


Home Federal Bancorp, Inc. of Louisiana
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
    
 Three Months Ended Year Ended
 June 30, June 30,
  2016   2015   2016   2015 
 (Unaudited) (Unaudited)

Interest income
       
  Loans, including fees$ 3,807   $ 3,561   $  14,628  $13,762 
  Investment securities 4   2   11   7 
  Mortgage-backed securities 183   216   763   989 
  Other interest-earning assets  4    9    56    14 
          Total interest income   3,998     3,788   15,458   14,772 
Interest expense       
  Deposits 552   587   2,329   2,234 
  Federal Home Loan Bank borrowings 76   66   263   244 
  Other bank borrowings            --  
         --  
    18      3 
          Total interest expense    628      653      2,610      2,481 
                    Net interest income 3,370   3,135   12,848   12,291 
Provision for loan losses    90      90    271    300 
                    Net interest income after provision for loan losses  3,280    3,045    12,577    11,991 
        
Non-interest income       
  Gain on sale of loans 748   610   2,492   2,278 
  Gain on sale of securities              --  
   --  
   --  
  10 
  Income on Bank Owned Life Insurance 38   40   157   163 
  Service charges on deposit accounts 148   128   559   456 
  Other income    12      13      46      54 
        
              Total non-interest income  946    791    3,254    2,961 
        
Non-interest expense       
  Compensation and benefits 1,755   1,645   6,814   6,261 
  Occupancy and equipment 302   272   1,091   1,050 
  Data processing 145   150   562   527 
  Audit and examination fees 56   49   246   216 
  Franchise and bank shares tax 83   72   349   265 
  Advertising 55   66   236   249 
  Legal fees 62   46   412   330 
  Loan and collection 90   71   281   332 
  Deposit insurance premium 42   45   207   164 
  Other expenses  170    130    612    542 
        
             Total non-interest expense   2,760     2,546    10,810    9,936 
         
   Income before income taxes 1,466   1,290   5,021   5,016 
 Provision for income tax expense  486    435    1,644    1,661 
         
   NET INCOME$   980  $   855  $ 3,377  $ 3,355 
         
   EARNINGS PER SHARE       
         Basic$   0.53  $   0.44  $  1.80  $  1.70 
         Diluted$ 0.52  $ 0.43  $1.74  $1.65 


 Three Months Ended Year Ended
 June 30, June 30,
  2016   2015   2016   2015 
 (Unaudited)
Selected Operating Ratios(1):       
  Average interest rate spread 3.69%  3.48%  3.53%  3.58%
  Net interest margin 3.85%  3.66%  3.71%  3.76%
  Return on average assets 1.04%  0.93%  0.91%  0.96%
  Return on average equity 8.65%  7.64%  7.44%  7.45%
        
Asset Quality Ratios(2):       
  Non-performing assets as a percent of total assets 0.03%  0.03%  0.03%  0.03%
  Allowance for loan losses as a percent of
               
      non-performing loans
 2,501.99%  3,143.75%  2,501.99%  3,143.75%
  Allowance for loan losses as a percent of total loans
               
      receivable 0.97%  0.93%  0.97%  0.93%
        
Per Share Data:       
  Shares outstanding at period end 1,967,955   2,109,606   1,967,955   2,109,606 
  Weighted average shares outstanding:       
        Basic 1,833,466   1,939,888   1,877,388   1,978,232 
        Diluted 1,893,570   1,991,663   1,941,702   2,031,859 
  Tangible book value at period end$22.05  $20.57  $22.05  $20.57 
____________       
(1)  Ratios for the three month periods are annualized.       
(2)  Asset quality ratios are end of period ratios.       


CONTACT: James R. Barlow President and Chief Executive Officer (318) 222-1145

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