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Home Federal Bancorp Announces Annual Earnings.

Business Editors

COLUMBUS, Ind.--(BUSINESS WIRE)--July 23, 2002

Home Federal Bancorp (the "Company") (Nasdaq:HOMF), the holding Company of Home Federal Savings Bank of Columbus, Indiana (the "Bank"), announced today quarterly earnings of $2,612,000 or $0.60 basic and $0.57 diluted earnings per common share, for its fourth quarter ended June 30, 2002.

This compared to earnings of $2,365,000, or $0.54 basic and $0.52 diluted earnings per common share a year earlier. For the fiscal year ended June 30, 2002 net income was $10,339,000, or $2.34 basic and $2.25 diluted earnings per common share, compared to $9,549,000, or $2.13 basic and $2.07 diluted earnings per common share, a year earlier. Basic and diluted earnings per common share increased 10.1% and 9.1% for the annual period, respectively. The increase in net income for the year-to-date period was attributed to increases in gain on sale of loans due to the lower rate environment and increased loan originations compared to the year ago period, as well as improved net interest income after the loan loss provision.

In fiscal year 2002, net interest income after provision for loan losses increased by $679,000. The increase in net interest income after provision for loan losses was the result of interest expense for liabilities decreasing more than interest income on assets. This was the result of yields on assets decreasing at a slower pace than costs on liabilities. In addition, outstanding rate sensitive liabilities declined more than rate sensitive assets.

Other income increased $3,369,000 from $9,020,000 in fiscal year 2001 to $12,389,000 in fiscal year 2002. This increase was primarily due to the increases in gain on sale of loans of $2,481,000 and increases in other non-interest income categories of $888,000. These additional increases came from improved gain on sale of securities, brokerage and trust fees, real estate owned gains, and loan servicing income.

Other expenses increased $2,532,000 over the prior fiscal year to $20,045,000 from $17,513,000. The increases came primarily from three areas, compensation and employee benefits, occupancy and equipment, and miscellaneous expenses. Compensation and employee benefits increased mainly due to rising funding expenses for the Bank's pension plans, increased health insurance costs, and expenses due to overtime and commissions related to the increased loan activity during the year and extra time spent changing data processing systems during the year. Occupancy expense increased due to increased building depreciation expenses related to the remodeled Columbus, Indiana facility, as well as increased depreciation expense associated with new computer equipment and software required by the data processing system changes made during the year. Miscellaneous expenses increased primarily due to various real estate owned expenses, office supplies and data communication expenses.

Return on average assets for the year ended June 30, 2002, was 1.20%, up from the prior year of 1.12%. This ratio was up primarily due to the Bank's net interest income after loan loss provision improving as well as non-interest income growth exceeding non-interest expense growth.

Return on average equity for the year ended June 30, 2002, was 13.73%, slightly down from the prior year 13.76%.

Non-performing assets as a percentage of total assets declined to 0.70% at June 30, 2002, compared to 0.99%, at June 30, 2001. Non-performing loans to total gross loans declined to 0.58% for the current year-end compared to 1.04% at June 30, 2001. These decreases have come primarily from the resolution of several large commercial real estate loans and commercial loans totaling approximately $1,958,000. Most of the current non-performing assets are secured with residential real estate of some type.

For the quarter ended June 30, 2002 net interest income after provision for loan loss increased $875,000 to $6,435,000 compared to $5,560,000 for the same period a year ago. In addition, the fourth quarter ended June 30, 2002 had a $508,000 reduction in the loan loss provision, this coupled with the same changes described above for the year-to-date increases, resulted in improved net interest income for the period.

Total other income remained basically unchanged at $2,680,000 for the quarter ended June 30, 2002 compared to $2,653,000 for the quarter ended June 30, 2001. The slight increase was due primarily to increases in joint venture income and brokerage and trust income offsetting a decrease on gain on sale of loans for the quarter ended June 30, 2002.

Non-interest expenses in the quarter ended June 30, 2002 increased to $5,019,000, compared to the quarter ended June 30, 2001 of $4,877,000, an increase of $142,000. Compensation and employee benefits increases were somewhat offset by reductions in miscellaneous expenses.

The Company's assets totaled $856,012,000 as of June 30, 2002, a decrease of $7,381,000 or less than 1%, from June 30, 2001. The decrease in assets was mainly the result of adjustable rate loans in the residential loan portfolio refinancing to fixed rate loans and the cash from the sale of these loans being used to repay borrowings from the Federal Home Loan Bank of Indianapolis.

As of June 30, 2002, shareholders' equity was $77,086,000, an increase of 7.0% from $72,044,000 at June 30, 2001. Based on June 30, 2002, book value of $17.78 per share, Home Federal Bancorp stock was trading at 130% of book value on that date. The stock price at June 30, 2002 was $23.10 per share or 10.3 times fiscal year 2002 diluted earnings per share.

On March 26, 2002 the Board of Directors announced it had approved the fifth repurchase, from time to time, on the open market of up to 5% of the Company's outstanding shares of common stock, without par value ("Common Stock"), or 218,385 such shares. Such purchases will be made subject to market conditions in open market or block transactions. To date the Company has purchased 87,150 shares under this plan.

Home Federal Bancorp is a financial holding company, with Home Federal Savings Bank as its principal subsidiary. Home Federal Savings Bank, a FDIC insured state chartered commercial bank, founded in 1908, offers a wide range of consumer and commercial financial services through seventeen branch offices in southeastern Indiana and one commercial loan office in Indianapolis, Indiana.

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include expressions such as "expects," "intends," "believes," and "should," which are necessarily statements of belief as to the expected outcomes of future events. Actual results could materially differ from those presented. Home Federal Bancorp undertakes no obligation to release revisions to these forward-looking statements or reflect events or circumstances after the date of this release. The company's ability to predict future results involves a number of risks and uncertainties, some of which have been set forth in the company's most recent annual report on Form 10-K, which disclosures are incorporated by reference herein.


HOME FEDERAL BANCORP
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited) June 30, June 30,
 2002 2001
 ------- -------
ASSETS:
Cash $ 25,006 $ 25,814
Interest-bearing deposits 19,472 9,610
 ------- -------
 Total cash and cash equivalents 44,478 35,424
 ------- -------

Securities available for sale
 at fair value (amortized cost
 $113,132 and $79,826) 114,989 80,316
Securities held to maturity
 (fair value $3,619 and $7,409) 3,493 7,296
Loans held for sale
 (fair value $6,383 and $12,518) 6,302 12,383
Loans receivable, net of allowance
 for loan losses of $6,451 and $5,690 631,815 674,552
Investments in joint ventures 8,153 10,075
Federal Home Loan Bank stock 9,965 9,866
Accrued interest receivable, net 4,431 5,213
Premises and equipment, net 12,192 11,915
Real estate owned 2,239 1,298
Prepaid expenses and other assets 6,768 4,386
Cash surrender value of life insurance 9,792 9,274
Goodwill 1,395 1,395
 ------- -------
 TOTAL ASSETS $ 856,012 $ 863,393
 ======= =======

LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits $ 577,480 $ 576,543
Advances from Federal Home Loan Bank 174,139 192,067
Senior debt 11,200 11,200
Other borrowings 3,341 4,341
Advance payments by borrowers for
 taxes and insurance 442 441
Accrued expenses and other liabilities 12,324 6,757
 -------- --------
 Total liabilities 778,926 791,349
 -------- --------

Shareholders' equity:
 No par preferred stock;
 Authorized: 2,000,000 shares
 Issued and outstanding: None
 No par common stock;
 Authorized: 15,000,000 shares
 Issued and outstanding: 9,086 8,033
 4,336,515 shares at June 30, 2002
 4,415,704 shares at June 30, 2001
 Retained earnings, restricted 67,150 63,787
Accumulated other comprehensive income,
 net of taxes 850 224
 ------- -------
 Total shareholders' equity 77,086 72,044
 ------- -------
 TOTAL LIABILITIES AND SHAREHOLDERS'
 EQUITY $ 856,012 $ 863,393
 ======= =======

HOME FEDERAL BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share data)
(unaudited) Three Months Ended Twelve Months Ended
 June 30, June 30,
 ----------------------- ----------------------
Interest income: 2002 2001 2002 2001
 -------- --------- -------- --------
 Loans receivable $ 11,807 $ 14,206 $ 50,230 $ 57,590
 Securities available
 for sale and held
 to maturity 1,552 1,389 5,488 6,622
 Other interest
 income 111 94 580 545
 -------- --------- -------- --------
 Total interest
 income 13,470 15,689 56,298 64,757
 -------- --------- -------- --------

Interest expense:
 Deposit 3,951 6,321 18,716 26,710
 Advances from
 Federal Home
 Loan Bank 2,688 2,901 11,106 11,987
 Other borrowings 203 206 813 819
 -------- --------- -------- --------
 Total interest
 expense 6,842 9,428 30,635 39,516
 -------- --------- -------- --------

Net interest income 6,628 6,261 25,663 25,241
Provision for loan
 losses 193 701 1,423 1,680
 -------- --------- -------- --------
Net interest income
 after provision for
 loan losses 6,435 5,560 24,240 23,561
 -------- --------- -------- --------

Other income:
 Gain on sale of loans 635 790 4,456 1,975
 Gain(loss) on sale
 of securities -- -- 92 (196)
 Income (loss) from
 joint ventures 266 77 880 811
 Insurance, annuity
 income, other fees 406 312 1,400 1,159
 Service fees on
 NOW accounts 595 607 2,241 2,316
 Net gain (loss)
 on real estate
 owned and repossessed
 assets 56 8 271 107
 Loan servicing income 238 296 1,031 836
 Miscellaneous 484 563 2,018 2,012
 -------- --------- -------- --------
 Total other income 2,680 2,653 12,389 9,020
 -------- --------- -------- --------

Other expenses:
 Compensation and
 employee benefits 2,880 2,446 10,813 9,270
 Occupancy and equipment 705 665 2,850 2,530
 Service bureau expense 240 263 1,029 938
 Federal insurance
 premium 25 27 104 113
 Marketing 148 153 571 549
 Goodwill amortization - 25 - 101
 Miscellaneous 1,021 1,298 4,678 4,012
 -------- --------- -------- --------
 Total other expenses 5,019 4,877 20,045 17,513
 -------- --------- -------- --------

Income before income
 taxes 4,096 3,336 16,584 15,068
Income tax provision 1,484 971 6,245 5,519
 -------- --------- -------- --------
Net Income $ 2,612 $ 2,365 $ 10,339 $ 9,549
 ======== ======== ======== ==========

Basic earnings per
 common share $ 0.60 $ 0.54 $ 2.34 $ 2.13
Diluted earnings
 per common share $ 0.57 $ 0.52 $ 2.25 $ 2.07

Basic weighted average
 number of shares 4,346,629 4,414,675 4,409,829 4,485,583
Dilutive weighted
 average number of
 shares 4,593,603 4,570,940 4,588,594 4,623,419
Dividends per share $ 0.150 $ .138 $ 0.575 $ 0.550



Supplemental Data: Three Months Ended Year to Date
(unaudited) June 30, June 30,
 ------------------------ --------------------
 2002 2001 2002 2001
 ------ ------ ------ ------
Weighted average
 interest rate
 earned on total
 interest-earning
 assets 6.93% 7.98% 7.17% 8.25%
Weighted average cost
 of total
 interest-bearing
 liabilities 3.61% 4.87% 3.98% 5.12%
Interest rate spread
 during period 3.32% 3.10% 3.19% 3.12%

Net yield on
 interest-earning assets
 (net interest income
 divided by average
 interest-earning
 assets on annualized
 basis) 3.41% 3.18% 3.27% 3.21%
Total interest income
 divided by average
 total assets (on
 annualized basis) 6.33% 7.28% 6.55% 7.60%
Total interest expense
 divided by average
 total assets (on
 annualized basis) 3.22% 4.39% 3.57% 4.64%
Net interest income
 divided by average
 total assets (on
 annualized basis) 3.11% 2.91% 2.99% 2.96%

Return on assets
 (net income divided by
 average total assets
 on annualized basis) 1.23% 1.10% 1.20% 1.12%
Return on equity (net
 income divided by
 average total equity
 on annualized basis) 13.72% 13.30% 13.73% 13.76%


 At June 30,
 ------------------------------
 2002 2001
 ----- -----

Book value per share
 outstanding $17.78 $16.32

Nonperforming Assets:
 Loans: Non-accrual $2,281 $6,351
 Past due 90 days or more 1,110 0
 Restructured 374 879
 ------ ------
 Total nonperforming loans 3,765 7,230
 Real estate owned, net 2,168 1,238
 Other repossessed assets, net 71 60
 ------ ------
 Total Nonperforming Assets $6,004 $8,528

Nonperforming assets divided
 by total assets 0.70% 0.99%
Nonperforming loans divided
 by total loans 0.58% 1.04%

Balance in Allowance for Loan Losses $6,451 $5,690

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Publication:Business Wire
Geographic Code:1U3IN
Date:Jul 23, 2002
Words:2195
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