Attached files

file filename
EXCEL - IDEA: XBRL DOCUMENT - Home Federal Bancorp, Inc. of LouisianaFinancial_Report.xls
EX-10.0 - EXHIBIT 10.0 - Home Federal Bancorp, Inc. of Louisianaexh10-0.htm
EX-32.0 - EXHIBIT 32.0 - Home Federal Bancorp, Inc. of Louisianaexh320.htm
EX-31.3 - EXHIBIT 31.3 - Home Federal Bancorp, Inc. of Louisianaexh313.htm
EX-31.1 - EXHIBIT 31.1 - Home Federal Bancorp, Inc. of Louisianaexh311.htm
EX-31.2 - EXHIBIT 31.2 - Home Federal Bancorp, Inc. of Louisianaexh312.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC  20549
 
FORM 10-Q
(Mark One)
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the quarterly period ended:
   March 31, 2015
or
 
[   ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the transition period from
 
to
 
 
 
Commission file number:
   001-35019
 
 
HOME FEDERAL BANCORP, INC. OF LOUISIANA
(Exact name of registrant as specified in its charter)
 
Louisiana
 
02-0815311
(State or other jurisdiction of incorporation or organization)
 
(IRS Employer Identification No.)
 
624 Market Street, Shreveport, Louisiana
71101
(Address of principal executive offices)
(Zip Code)
 
(318) 222-1145
(Registrant's telephone number, including area code)
 
N/A
(Former name, former address and former fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   [X]  Yes   [   ]  No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).        [X]  Yes   [   ]  No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check One):
 
Large accelerated filer                                                     [   ]                                                           Accelerated filer                                          [   ]
Non-accelerated filer                                                         [   ]                                                           Smaller reporting company                        [X]
(Do not check if a smaller reporting company)
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
[   ]  Yes    [X]   No
 
Shares of common stock, par value $.01 per share, outstanding as of May 11, 2015: The registrant had 2,115,484 shares of common stock outstanding.


INDEX

 
   
            Page
PART I
FINANCIAL INFORMATION
 
     
Item 1:
Financial Statements (Unaudited)
 
     
 
Consolidated Statements of Financial Condition
  1
     
 
Consolidated Statements of Income
  2
     
 
Consolidated Statements of Comprehensive Income
  3
     
 
Consolidated Statements of Changes in Stockholders' Equity
  4
     
 
Consolidated Statements of Cash Flows
  5
     
 
Notes to Consolidated Financial Statements
  7
     
Item 2:
Management's Discussion and Analysis of Financial Condition and  Results of Operations
27
     
Item 3:
Quantitative and Qualitative Disclosures About Market Risk
35
     
Item 4:
Controls and Procedures
35
     
PART II
OTHER INFORMATION
 
     
Item 1:
Legal Proceedings
35
     
Item 1A:
Risk Factors
35
     
Item 2:
Unregistered Sales of Equity Securities and Use of Proceeds
36
     
Item 3:
Defaults Upon Senior Securities
36
     
Item 4:
Mine Safety Disclosures
36
     
Item 5:
Other Information
36
     
Item 6:
Exhibits
36
     
     
SIGNATURES
   

 

 
HOME FEDERAL BANCORP, INC. OF LOUISIANA
 
 
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
 
 
   
March 31, 2015
   
June 30, 2014
 
   
(Dollars In Thousands)
 
ASSETS
   
Cash and Cash Equivalents (Includes Interest-Bearing
Deposits with Other Banks of $6,896 and $9,317 for
March 31, 2015 and June 30, 2014, Respectively)
 
$
12,371
   
$
13,633
 
Securities Available-for-Sale
   
48,340
     
48,434
 
Securities Held-to-Maturity
   
2,244
     
1,765
 
Loans Held-for-Sale
   
10,294
     
9,375
 
Loans Receivable, Net of Allowance for Loan Losses
of $2,455 and $2,396, Respectively
   
265,500
     
239,563
 
Accrued Interest Receivable
   
950
     
965
 
Premises and Equipment, Net
   
10,170
     
8,454
 
Bank Owned Life Insurance
   
6,326
     
6,203
 
Deferred Tax Asset
   
785
     
723
 
Other Assets
   
754
     
414
 
                 
Total Assets
 
$
357,734
   
$
329,529
 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
                 
LIABILITIES
               
Deposits
 
$
274,806
   
$
272,295
 
Advances from Borrowers for Taxes and Insurance
   
402
     
428
 
Advances from Federal Home Loan Bank of Dallas
   
38,471
     
12,897
 
Other Accrued Expenses and Liabilities
   
906
     
1,130
 
 
Total Liabilities
   
314,585
     
286,750
 
         
STOCKHOLDERS' EQUITY
       
Preferred Stock – 10,000,000 Shares of $.01 Par Value Authorized; None Issued and Outstanding
   
--
     
--
 
            Common Stock – 40,000,000 Shares of $.01 Par Value Authorized; 2,131,343 Shares Issued and
               2,131,343 Shares Outstanding at March 31, 2015; 2,241,967 Shares Outstanding at June 30, 2014
   
25
     
34
  
            Additional Paid-in Capital
   
33,164
     
32,853
 
            Treasury Stock, at Cost – 820,419 shares at June 30, 2014
   
--
     
(15,698
)
            Unearned ESOP Stock
   
(1,475
)
   
(1,561
)
            Unearned RRP Trust Stock
   
(333
)
   
(609
)
            Retained Earnings
   
11,632
     
27,588
    
           Accumulated Other Comprehensive Income
   
136
     
172
 
         
Total Stockholders' Equity
   
43,149
     
42,779
 
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
 
$
357,734
   
$
329,529
 
 
 
 
 
 
See accompanying notes to unaudited consolidated financial statements.
 
1

HOME FEDERAL BANCORP, INC. OF LOUISIANA

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

   
For the Three Months Ended
March 31,
   
For the Nine Months Ended
March 31,
 
   
2015
   
2014
   
2015
   
2014
 
   
(In Thousands, Except per Share Data)    
 
INTEREST INCOME
               
Loans, Including Fees
 
$
3,457
   
$
2,968
   
$
10,201
   
$
8,979
 
Investment Securities
   
2
     
1
     
5
     
4
 
Mortgage-Backed Securities
   
246
     
235
     
773
     
780
 
Other Interest-Earning Assets
   
1
     
2
     
6
     
10
 
Total Interest Income
   
3,706
     
3,206
     
10,985
     
9,773
 
                                 
INTEREST EXPENSE
                               
Deposits
   
560
     
522
     
1,647
     
1,652
 
Federal Home Loan Bank Borrowings
   
66
     
37
     
178
     
125
 
Other Bank Borrowings
   
3
     
--
     
3
     
14
 
Total Interest Expense
   
629
     
559
     
1,828
     
1,791
 
Net Interest Income
   
3,077
     
2,647
     
9,157
     
7,982
 
                                 
PROVISION FOR LOAN LOSSES
   
90
     
30
     
210
     
118
 
Net Interest Income after
Provision for Loan Losses
   
2,987
     
2,617
     
8,947
     
7,864
 
                                 
NON-INTEREST INCOME
                               
Gain on Sale of Real Estate
   
--
     
129
     
--
     
129
 
Gain on Sale of Loans
   
781
     
360
     
1,668
     
1,240
 
     Gain on Sale of Securities
   
--
     
1
     
10
     
35
 
Income on Bank Owned Life Insurance
   
40
     
43
     
123
     
131
 
     Service Charges on deposit accounts
   
116
     
85
     
329
     
239
 
Other Income
   
9
     
9
     
40
     
25
 
Total Non-Interest Income
   
946
     
627
     
2,170
     
1,799
 
                                 
NON-INTEREST EXPENSE
                               
Compensation and Benefits
   
1,669
     
1,474
     
4,616
     
4,204
 
Occupancy and Equipment
   
280
     
202
     
778
     
634
 
Data Processing
   
133
     
152
     
377
     
353
 
Audit and Examination Fees
   
66
     
57
     
167
     
163
 
Franchise and Bank Shares Tax
   
72
     
85
     
193
     
263
 
Advertising
   
48
     
62
     
183
     
195
 
Legal Fees
   
81
     
82
     
284
     
320
 
Loan Collection
   
144
     
28
     
261
     
92
 
Deposit Insurance Premium
   
45
     
39
     
119
     
107
 
Other Expense
   
139
     
123
     
412
     
381
 
Total Non-Interest Expense
   
2,677
     
2,304
     
7,390
     
6,712
 
Income Before Income Taxes
   
1,256
     
940
     
3,727
     
2,951
 
                                 
PROVISION FOR INCOME TAX EXPENSE
   
413
     
302
     
1,226
     
955
 
Net Income
 
$
843
   
$
638
   
$
2,501
   
$
1,996
 
EARNINGS PER COMMON SHARE:
                               
Basic
 
$
0.43
   
$
0.31
   
$
1.26
   
$
0.96
 
Diluted
 
$
0.42
   
$
0.31
   
$
1.22
   
$
0.94
 
DIVIDENDS DECLARED
 
$
0.07
   
$
0.06
   
$
0.21
   
$
0.18
 
 
 
See accompanying notes to unaudited consolidated financial statements.
2

HOME FEDERAL BANCORP, INC. OF LOUISIANA

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

   
For the Three Months Ended
March 31,
   
For the Nine Months Ended
March 31,
 
   
2015
   
2014
   
2015
   
2014
 
   
(In Thousands)  
 
                 
Net Income
 
$
843
   
$
638
   
$
2,501
   
$
1,996
 
                                 
Other Comprehensive Income (Loss), Net of Tax
                               
   Unrealized Holding Gain (Loss) on Securities Available-for-Sale,
     Net of Tax of $0 and $15 in 2015, respectively, and $28 and $27 in 2014, respectively
   
(1
)
   
(55
)
   
(29
)
   
(53
)
 
   Reclassification Adjustment for Gain Included in Net Income,
   Net of Tax of $0 and $3 in 2015, respectively, and $0 and $5 in 2014, respectively
   
--
     
--
     
(7
)
   
(10
)
 
        Net Other Comprehensive Income (Loss)
   
(1
)
   
(55
)
   
(36
)
   
(63
)
 
        Total Comprehensive Income
 
$
842
   
$
583
   
$
2,465
   
$
1,933
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

See accompanying notes to unaudited consolidated financial statements.
3

HOME FEDERAL BANCORP, INC. OF LOUISIANA

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
NINE MONTHS ENDED MARCH 31, 2015 AND 2014
(Unaudited)

   
Common Stock
   
Additional
Paid-in
Capital
   
Unearned
ESOP
Stock
   
Unearned RRP
Trust
Stock
   
Retained
Earnings
   
Treasury Stock
   
Accumulated
Other
Comprehensive
Income (Loss)
   
Total
Stockholders'
Equity
 
               
(In Thousands)
             
BALANCE – June 30, 2013
 
$
32
   
$
32,218
   
$
(1,676
)
 
$
(863
)
 
$
25,395
   
$
(13,168
)
 
$
44
   
$
41,982
 
                                                                 
Net Income
   
--
     
--
     
--
     
--
     
1,996
     
--
     
--
     
1,996
 
                                                                 
Changes in Unrealized Gain
    on Securities Available-for-
    Sale, Net of Tax Effects
   
--
     
--
     
--
     
--
     
--
     
--
     
(63
)
   
(63
)
                                                                 
RRP Shares Earned
   
--
     
--
     
--
     
254
     
--
     
--
     
--
     
254
 
                                                                 
Stock Options Vested
   
--
     
122
     
--
     
--
     
--
     
--
     
--
     
122
 
                                                                 
Common Stock Issuance for Stock
    Option Exercises
   
2
     
270
     
--
     
--
     
--
     
--
     
--
     
272
 
                                                                 
ESOP Compensation Earned
   
--
     
65
     
86
     
--
     
--
     
--
     
--
     
151
 
                                                                 
Company Stock Purchased
   
--
     
--
     
--
     
--
     
--
     
(2,318
)
   
--
     
(2,318
)
                                                                 
Dividends Declared
   
--
     
--
     
--
     
--
     
(417
)
   
--
     
--
     
(417
)
                                                                 
BALANCE – March  31, 2014
 
$
34
   
$
32,675
   
$
(1,590
)
 
$
(609
)
 
$
26,974
   
$
(15,486
)
 
$
(19
)
 
$
41,979
 
                                                                 
BALANCE – June 30, 2014
 
$
34
   
$
32,853
   
$
(1,561
)
 
$
(609
)
 
$
27,588
   
$
(15,698
)
 
$
172
   
$
42,779
 
                                                                 
Net Income
   
--
     
--
     
--
     
--
     
2,501
     
--
     
--
     
2,501
 
                                                                 
Changes in Unrealized Gain
    on Securities Available-for-
    Sale, Net of Tax Effects
   
--
     
--
     
--
     
--
     
--
     
--
     
(36
)
   
(36
)
                                                                 
RRP Shares Earned
   
--
     
--
     
--
     
276
     
--
     
--
     
--
     
276
 
                                                                 
Stock Options Vested
   
--
     
134
     
--
     
--
     
--
     
--
     
--
     
134
 
                                                                 
Common Stock Issuance for Stock
    Option Exercises
   
--
     
96
     
--
     
--
     
--
     
--
     
--
     
96
 
                                                                 
ESOP Compensation Earned
   
--
     
81
     
86
     
--
     
--
     
--
     
--
     
167
 
                                                                 
Company Stock Purchased
   
--
     
--
     
--
     
--
     
--
     
(2,305
)
   
--
     
(2,305
)
                                                                 
Reclassification  of Treasury Stock
    per Louisiana Law
   
(9
)
   
--
     
--
     
--
     
(17,994
)
   
18,003
     
--
     
--
 
Dividends Declared
   
--
     
--
     
--
     
--
     
(463
)
   
--
     
---
     
(463
)
                                                                 
BALANCE – March 31, 2015
 
$
25
   
$
33,164
   
$
(1,475
)
 
$
(333
)
 
$
11,632
   
$
--
   
$
136
   
$
43,149
 
 
 
 
 
 
 
 
 
See accompanying notes to unaudited consolidated financial statements.
 
4

 
HOME FEDERAL BANCORP, INC. OF LOUISIANA
 
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(Unaudited)
 
 
        
Nine Months Ended
 
        
March 31,
 
   
2015
   
2014
 
        
(In Thousands)
 
CASH FLOWS FROM OPERATING ACTIVITIES
       
Net Income
 
$
2,501
   
$
1,996
 
Adjustments to Reconcile Net Income to Net
               
Cash Used in Operating Activities
               
Net Amortization and Accretion on Securities
   
33
     
50
 
Gain on Sale of Securities
   
(10
)
   
(35
)
Gain on Sale of Loans
   
(1,668
)
   
(1,240
)
Amortization of Deferred Loan Fees
   
(120
)
   
(65
)
Depreciation of Premises and Equipment
   
278
     
223
 
ESOP Expense
   
167
     
151
 
Stock Option Expense
   
134
     
122
 
Recognition and Retention Plan Expense
   
176
     
157
 
Deferred Income Tax
   
(43
)
   
(5
)
Provision for Loan Losses
   
210
     
118
 
Increase in Cash Surrender Value on Bank Owned Life Insurance
   
(123
)
   
(131
)
Gain on Sale of Real Estate
   
--
     
(129
)
Changes in Assets and Liabilities:
               
Loans Held-for-Sale – Originations and Purchases
   
(64,344
)
   
(49,753
)
Loans Held-for-Sale – Sale and Principal Repayments
   
65,093
     
47,661
 
Accrued Interest Receivable
   
15
     
(140
)
Other Operating Assets
   
(339
)
   
(78
)
Other Operating Liabilities
   
(125
)
   
(93
)
                 
Net Cash Provided by (Used In) Operating Activities
   
1,835
     
(1,191
)
                 
CASH FLOWS FROM INVESTING ACTIVITIES
               
Loan Originations and Purchases, Net of Principal Collections
   
(26,041
)
   
(12,812
)
Deferred Loan Fees Collected
   
14
     
108
 
Acquisition of Premises and Equipment
   
(1,994
)
   
(1,914
)
Proceeds from Sale of Real Estate
   
--
     
566
 
Activity in Available-for-Sale Securities:
               
Proceeds from Sale of Securities
   
1,963
     
13,019
 
Principal Payments on Mortgage-Backed Securities
   
7,895
     
8,029
 
Purchases of Securities
   
(9,843
)
   
(13,292
)
Activity in Held-to-Maturity Securities:
               
Redemption Proceeds
   
462
     
488
 
Purchases of Securities
   
(941
)
   
(136
)
                 
Net Cash Used in Investing Activities
   
(28,485
)
   
(5,944
)
 
 
 
 
 
 
 
See accompanying notes to unaudited consolidated financial statements.
 
5

HOME FEDERAL BANCORP, INC. OF LOUISIANA
 
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
 
   
Nine Months Ended
March 31,
 
   
2015
   
2014
 
   
(In Thousands)
 
         
CASH FLOWS FROM FINANCING ACTIVITIES
       
Net Increase in Deposits
 
$
2,511
   
$
17,324
 
Proceeds from Federal Home Loan Bank Advances
   
809,800
     
401,850
 
Repayments of Advances from Federal Home Loan Bank
   
(784,226
)
   
(406,057
)
Net Increase in Advances from Borrowers for Taxes and Insurance
   
(26
)
   
(55
)
Dividends Paid
   
(463
)
   
(417
)
Company Stock Purchased
   
(2,284
)
   
(2,113
)
Proceeds from Stock Options Exercised
   
76
     
67
 
Proceeds from other Bank Borrowings
   
550
     
300
 
Repayment of other Bank Borrowings
   
(550
)
   
(800
)
Net Cash Provided by Financing Activities
   
25,388
     
10,099
 
                 
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
   
(1,262
)
   
2,964
 
                 
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD
   
13,633
     
3,685
 
                 
CASH AND CASH EQUIVALENTS - END OF PERIOD
 
$
12,371
   
$
6,649
 
                 
SUPPLEMENTARY CASH FLOW INFORMATION
               
Interest Paid on Deposits and Borrowed Funds
 
$
1,804
   
$
1,797
 
Income Taxes Paid
   
1,089
     
884
 
Market Value Adjustment for Loss on Securities Available-for-Sale
   
(55
)
   
(95
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes to unaudited consolidated financial statements.
 
6

HOME FEDERAL BANCORP, INC. OF LOUISIANA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1.            Summary of Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of Home Federal Bancorp, Inc. of Louisiana (the "Company") and its subsidiary, Home Federal Bank ("Home Federal Bank" or the "Bank").  These consolidated financial statements were prepared in accordance with instructions for Form 10-Q and Regulation S-X and do not include information or footnotes necessary for a complete presentation of financial condition, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America. However, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial statements have been included. The results of operations for the nine month period ended March 31, 2015, is not necessarily indicative of the results which may be expected for the fiscal year ending June 30, 2015.

The Company follows accounting standards set by the Financial Accounting Standards Board (the "FASB"). The FASB sets generally accepted accounting principles ("GAAP") that we follow to ensure we consistently report our financial condition, results of operations and cash flows.  References to GAAP issued by the FASB in these footnotes are to the FASB Accounting Standards Codification (the "Codification" or the "ASC").

In accordance with the subsequent events topic of the ASC, the Company evaluates events and transactions that occur after the balance sheet date for potential recognition in the financial statements.  The effect of all subsequent events that provide additional evidence of conditions that existed at the balance sheet date are recognized in the financial statements as of March 31, 2015.  In preparing these financial statements, the Company evaluated the events and transactions that occurred through the date these financial statements were issued.

Use of Estimates

In preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the Consolidated Statements of Financial Condition and reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  Material estimates that are particularly susceptible to significant change in the near term relate to the allowance for loan losses.

Nature of Operations

Home Federal Bancorp, Inc. of Louisiana, a Louisiana corporation, is the fully public stock holding company for Home Federal Bank located in Shreveport, Louisiana.  The Bank is a federally chartered, stock savings and loan association and is subject to federal regulation by the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency.  The Company is a savings and loan holding company regulated by the Board of Governors of the Federal Reserve System. Services are provided to the Bank's customers by five full-service banking offices and one agency office, located in Caddo and Bossier Parishes, Louisiana.  The area served by the Bank is primarily the Shreveport-Bossier City metropolitan area; however, loan and deposit customers are found dispersed in a wider geographical area covering much of northwest Louisiana. As of March 31, 2015, the Bank had one wholly-owned subsidiary, Metro Financial Services, Inc., which previously engaged in the sale of annuity contracts and does not currently engage in a meaningful amount of business.

Cash and Cash Equivalents

For purposes of the Consolidated Statements of Cash Flows, cash and cash equivalents include cash on hand, balances due from banks, and federal funds sold, all of which mature within ninety days.
 
 
 
 
 
 
7

HOME FEDERAL BANCORP, INC. OF LOUISIANA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 
1.            Summary of Accounting Policies (continued)

Securities

The Company classifies its debt and equity investment securities into one of three categories:  held-to-maturity, available-for-sale, or trading.  Investments in nonmarketable equity securities and debt securities, in which the Company has the positive intent and ability to hold to maturity, are classified as held-to-maturity and carried at amortized cost.  Investments in debt securities that are not classified as held-to-maturity and marketable equity securities that have readily determinable fair values are classified as either trading or available-for-sale securities.  Securities that are acquired and held principally for the purpose of selling in the near term are classified as trading securities.  Investments in securities not classified as trading or held-to-maturity are classified as available-for-sale.

Trading account and available-for-sale securities are carried at fair value.  Unrealized holding gains and losses on trading securities are included in earnings while net unrealized holding gains and losses on available-for-sale securities are excluded from earnings and reported in other comprehensive income.  Purchase premiums and discounts are recognized in interest income using the interest method over the term of the securities.  Declines in the fair value of held-to-maturity and available-for-sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses.  In estimating other-than-temporary impairment losses, management considers (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Bank to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.  Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

Loans Held-for-Sale

Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate.  Net unrealized losses, if any, are recognized through a valuation allowance by charges to income.

Loans

Loans receivable are stated at unpaid principal balances, less allowances for loan losses and unamortized deferred loan fees.  Net nonrefundable fees (loan origination fees, commitment fees, discount points) and costs associated with lending activities are being deferred and subsequently amortized into income as an adjustment of yield on the related interest earning assets using the interest method.  Interest income on contractual loans receivable is recognized on the accrual method.  Unearned discount on property improvement and automobile loans is deferred and amortized on the interest method over the life of the loan.

Allowance for Loan Losses

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings.  Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed.  Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management's periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower's ability to repay, estimated value of the underlying collateral and prevailing economic conditions.  The evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.
 
 
 
 
 
 
 
 
 
8

HOME FEDERAL BANCORP, INC. OF LOUISIANA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 
1.            Summary of Accounting Policies (continued)

Allowance for Loan Losses (continued)

A loan is considered impaired when, based on current information or events, it is probable that the Bank will be unable to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan agreement.  When a loan is impaired, the measurement of such impairment is based upon the present value of expected future cash flows or the fair value of the collateral of the loan.  If the present value of expected future cash flows or fair value of the collateral is less than the recorded investment in the loan, the Bank will recognize the impairment by creating a valuation allowance with a corresponding charge against earnings.

An allowance is also established for uncollectible interest on loans classified as substandard.  The allowance is established by a charge to interest income equal to all interest previously accrued and income is subsequently recognized only to the extent that cash payments are received.  When, in management's judgment, the borrower's ability to make periodic interest and principal payments is back to normal, the loan is returned to accrual status.

It should be understood that estimates of future loan losses involve an exercise of judgment.  While it is possible that in particular periods the Company may sustain losses which are substantial relative to the allowance for loan losses, it is the judgment of management that the allowance for loan losses reflected in the accompanying statements of condition is adequate to absorb possible losses in the existing loan portfolio.

Off-Balance Sheet Credit Related Financial Instruments

In the ordinary course of business, the Bank has entered into commitments to extend credit.  Such financial instruments are recorded when they are funded.

Foreclosed Assets

Assets acquired through, or in lieu of, loan foreclosure are held-for-sale and are transferred to other real estate owned at the lower of cost or current fair value minus estimated cost to sell as of the date of foreclosure.  Cost is defined as the lower of the fair value of the property or the recorded investment in the loan.  Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell.

Premises and Equipment

Land is carried at cost.  Buildings and equipment are carried at cost less accumulated depreciation computed on the straight-line method over the estimated useful lives of the assets.

Income Taxes

The Company and its wholly-owned subsidiary file a consolidated Federal income tax return on a fiscal year basis.  Each entity pays its pro-rata share of income taxes in accordance with a written tax-sharing agreement.

The Company accounts for income taxes on the asset and liability method.  Deferred tax assets and liabilities are recorded based on the difference between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, computed using enacted tax rates.  A valuation allowance, if needed, reduces deferred tax assets to the expected amount most likely to be realized. Realization of deferred tax assets is dependent upon the generation of a sufficient level of future taxable income and recoverable taxes paid in prior years.  Although realization is not assured, management believes it is more likely than not that all of the deferred tax assets will be realized.  Current taxes are measured by applying the provisions of enacted tax laws to taxable income to determine the amount of taxes receivable or payable.



9

HOME FEDERAL BANCORP, INC. OF LOUISIANA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 
1.            Summary of Accounting Policies (continued)

Income Taxes (continued)

While the Bank is exempt from Louisiana income tax, it is subject to the Louisiana Ad Valorem Tax, commonly referred to as the Louisiana Shares Tax, which is based on stockholders' equity and net income.

Comprehensive Income

Accounting principles generally accepted in the United States of America require that recognized revenue, expenses, gains and losses be included in net income.  Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the Consolidated Statements of Financial Condition, such items, along with net income, are components of comprehensive income.

Recent Accounting Pronouncements

In January 2014, the FASB issued ASU 2014-04, Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure. The amendments in this Update clarify that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, the amendments require interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. The amendments in this Update are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. An entity can elect to adopt the amendments in this Update using either a modified retrospective transition method or a prospective transition method.  This ASU did not have a significant impact on the Company's financial statements.

In June 2014, the FASB issued ASU No. 2014-12, Compensation-Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period.  The new guidance requires that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition.   ASU 2014-12 is effective for annual and interim periods beginning after December 15, 2015, with early adoption permitted.  The Company's current accounting treatment of performance conditions for employees who are or become eligible prior to the achievement of the performance target are consistent with ASU 2014-12, and as such does not expect the new guidance to have a material effect on the Corporation's financial condition and results of operations.  The Company adopted ASU 2014-12 in the first quarter of 2015.

In August 2014, the FASB issued ASU 2014-14, Receivables – Troubled Debt Restructurings by Creditors (Subtopic 310-40).  The amendments in this Update require that a mortgage loan be derecognized and that a separate other receivable be recognized upon foreclosure if the following conditions are met:  (1) the loan has a government guarantee that is not separable from the loan before foreclosure, (2) at the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim on the guarantee, and the creditor has the ability to recover under that claim, and (3) at the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed.  Upon foreclosure, the separate other receivable should be measured based on the amount of the loan balance (principal and interest) expected to be recovered from the guarantor.  The amendments in this Update are effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2014.  This Update did not have a significant impact on the Company's financial statements.


10

HOME FEDERAL BANCORP, INC. OF LOUISIANA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1.            Summary of Accounting Policies (continued)

On January 1, 2015 the Louisiana Business Corporation Act (the Act) became effective.  Under the provisions of the Act, there is no concept of "Treasury Shares".  Rather, shares purchased by the Company constitute authorized but unissued shares.  Under Accounting Standards Codification (ASC) 505-30, Treasury Stock, accounting for treasury stock shall conform to state law.  Accordingly, the Company's Consolidated Statement of Financial Condition as of March 31, 2015 reflects this change.  The cost of shares purchased by the Company has been allocated to Common Stock and Retained Earnings balances.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11

HOME FEDERAL BANCORP, INC. OF LOUISIANA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 
2.            Securities

The amortized cost and fair value of securities, with gross unrealized gains and losses, follows:

   
March 31, 2015
 
       
Gross
   
Gross
     
   
Amortized
   
Unrealized
   
Unrealized
   
Fair
 
   
Cost
   
Gains
   
Losses
   
Value
 
   
(In Thousands)
 
Securities Available-for-Sale
               
                 
Debt Securities
               
  FHLMC Mortgage-Backed Certificates
 
$
279
   
$
18
   
$
--
   
$
297
 
  FNMA Mortgage-Backed Certificates
   
29,123
     
795
     
169
     
29,749
 
  GNMA Mortgage-Backed Certificates
   
18,732
     
5
     
443
     
18,294
 
                                 
          Total Debt Securities
   
48,134
     
818
     
612
     
48,340
 
                                 
    Total Securities Available-for-Sale
 
$
48,134
   
$
818
   
$
612
   
$
48,340
 
                                 
Securities Held-to-Maturity
                               
                                 
Equity Securities (Non-Marketable)
                               
  19,938 Shares – Federal Home Loan Bank
 
$
1,994
   
$
--
   
$
--
   
$
1,994
 
  630 Shares – First National Bankers Bankshares, Inc.
   
250
     
--
     
--
     
250
 
                                 
          Total Equity Securities
   
2,244
     
--
     
--
     
2,244
 
                                 
    Total Securities Held-to-Maturity
 
$
2,244
   
$
--
   
$
--
   
$
2,244
 

   
June 30, 2014
 
       
Gross
   
Gross
     
   
Amortized
   
Unrealized
   
Unrealized
   
Fair
 
   
Cost
   
Gains
   
Losses
   
Value
 
   
(In Thousands)
 
Securities Available-for-Sale
   
                 
Debt Securities
               
  FHLMC Mortgage-Backed Certificates
 
$
311
   
$
12
   
$
--
   
$
323
 
  FNMA Mortgage-Backed Certificates
   
24,947
     
857
     
24
     
25,780
 
  GNMA Mortgage-Backed Certificates
   
22,915
     
6
     
590
     
22,331
 
                                 
          Total Debt Securities
   
48,173
     
875
     
614
     
48,434
 
                                 
          Total Securities Available-for-Sale
 
$
48,173
   
$
875
   
$
614
   
$
48,434
 
                                 
Securities Held-to-Maturity
                               
                                 
Equity Securities (Non-Marketable)
                               
  15,145 Shares – Federal Home Loan Bank
 
$
1,515
   
$
--
   
$
--
   
$
1,515
 
  630 Shares – First National Bankers Bankshares, Inc.
   
250
     
--
     
--
     
250
 
                                 
          Total Equity Securities
   
1,765
     
--
     
--
     
1,765
 
                                 
          Total Securities Held-to-Maturity
 
$
1,765
   
$
--
   
$
--
   
$
1,765
 

 
 
 
12

HOME FEDERAL BANCORP, INC. OF LOUISIANA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 
2.            Securities (continued)

The amortized cost and fair value of securities by contractual maturity at March 31, 2015, follows:

 
Available-for-Sale
   
Held-to-Maturity
 
 
 
Amortized
   
Fair
   
Amortized
   
Fair
 
 
 
 Cost
   
Value
   
Cost
   
Value
 
 
(In Thousands)
 
                 
Debt Securities
               
    Within One Year or Less
 
$
1
   
$
1
   
$
--
   
$
--
 
    One through Five Years
   
211
     
215
     
--
     
--
 
    After Five through Ten Years
   
118
     
122
     
--
     
--
 
    Over Ten Years
   
47,804
     
48,002
     
--
     
--
 
     
48,134
     
48,340
     
--
     
--
 
                                 
Other Equity Securities
   
--
     
--
     
2,244
     
2,244
 
                                 
   Total
 
$
48,134
   
$
48,340
   
$
2,244
   
$
2,244
 

For the nine months ended March 31, 2015, proceeds from the sale of securities available-for-sale amounted to $2.0 million and gross realized gains amounted to $10,000 for the nine months ended March 31, 2015.

The following tables show information pertaining to gross unrealized losses on securities available-for-sale at March 31, 2015 and at June 30, 2014 aggregated by investment category and length of time that individual securities have been in a continuous loss position.

   
March 31, 2015
 
   
Less Than Twelve Months
   
Over Twelve Months
 
   
Gross
       
Gross
     
   
Unrealized
   
Fair
   
Unrealized
   
Fair
 
   
Losses
   
Value
   
Losses
   
Value
 
   
(In Thousands)
 
Securities Available-for-Sale
               
                 
Debt Securities
               
    Mortgage-Backed Securities
 
$
168
   
$
14,765
   
$
444
   
$
18,178
 
Marketable Equity Securities
   
--
     
--
     
--
     
--
 
                                 
        Total Securities Available-for-Sale
 
$
168
   
$
14,765
   
$
444
   
$
18,178
 

   
June 30, 2014
 
   
Less Than Twelve Months
   
Over Twelve Months
 
   
Gross
       
Gross
     
   
Unrealized
   
Fair
   
Unrealized
   
Fair
 
   
Losses
   
Value
   
Losses
   
Value
 
   
(In Thousands)
 
Securities Available-for-Sale
               
                 
Debt Securities
               
    Mortgage-Backed Securities
 
$
24
   
$
1,947
   
$
590
   
$
22,193
 
Marketable Equity Securities
   
--
     
--
     
--
     
--
 
                                 
        Total Securities Available-for-Sale
 
$
24
   
$
1,947
   
$
590
   
$
22,193
 
                                 


 
 

 
13

HOME FEDERAL BANCORP, INC. OF LOUISIANA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 
2.            Securities (continued)

The Company's investment in equity securities consists primarily of FHLB stock, and shares of First National Bankers Bankshares, Inc. ("FNBB").  Management monitors its investment portfolio to determine whether any investment securities which have unrealized losses should be considered other than temporarily impaired.

At March 31, 2015, securities with a carrying value of $777,000 were pledged to secure public deposits, and securities and mortgage loans with a carrying value of $167.1 million were pledged to secure FHLB advances.

3.            Loans Receivable

Loans receivable are summarized as follows:

   
 
March 31, 2015
   
June 30, 2014
 
     
(In Thousands)
 
Loans Secured by Mortgages on Real Estate
       
One- to Four-Family Residential
 
$
98,923
   
$
89,545
 
Commercial
   
55,011
     
56,266
 
Multi-Family Residential
   
15,845
     
20,368
 
 Land
   
23,666
     
19,945
 
Construction
   
18,179
     
12,505
 
Equity and Second Mortgage
   
2,599
     
2,563
 
Equity Lines of Credit
   
23,996
     
14,950
 
     
238,219
     
216,142
 
                 
Commercial Loans
   
29,587
     
25,749
 
Consumer Loans
               
Loans on Savings Accounts
   
226
     
255
 
Automobile and Other Consumer Loans
   
115
     
111
 
Total Consumer and Other Loans
   
341
     
366
 
Total Loans
   
268,147
     
242,257
 
                 
                 
Less:   Allowance for Loan Losses
   
(2,455
)
    (2.396 )
     Unamortized Loan Fees
   
( 192
)
    (298 )
Net Loans Receivable
 
$
265,500
   
$
239,563
 

Following is a summary of changes in the allowance for loan losses:

   
Nine Months Ended March 31,
 
 
 
2015
   
2014
 
   
(In Thousands)
 
         
Balance - Beginning of Period
 
$
2,396
   
$
2,240
 
Provision for Loan Losses
   
210
     
118
 
Loan Charge-Offs
   
(151
)
   
(12
)
                 
Balance - End of Period
 
$
2,455
   
$
2,346
 

Credit Quality Indicators

The Company segregates loans into risk categories based on the pertinent information about the ability of borrowers to service their debt such as:  current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors.  The Company analyzes loans individually by classifying the loans according to credit risk.  Loans classified as substandard or identified as special mention are reviewed quarterly by management to evaluate the level of deterioration, improvement, and impairment, if any, as well as assign the appropriate risk category.
 
 
14

HOME FEDERAL BANCORP, INC. OF LOUISIANA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 
3.            Loans Receivable (continued)

Credit Quality Indicators (continued)

Loans excluded from the scope of the quarterly review process above are generally identified as pass credits until:  (a) they become past due; (b) management becomes aware of deterioration in the credit worthiness of the borrower; or (c) the customer contacts the Company for a modification.  In these circumstances, the loan is specifically evaluated for potential classification and the need to allocate reserves or charge-off.  The Company uses the following definitions for risk ratings:

Special Mention - Loans identified as special mention have a potential weakness that deserves management's close attention.  If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution's credit position at some future date.

Substandard - Loans classified as substandard are inadequately protected by the current net worth and payment capacity of the obligor or of the collateral pledged, if any.  Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt.  They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

Loss - This classification includes those loans which are considered uncollectible and of such little value that their continuance as loans is not warranted.  Even though partial recovery may be possible in the future, it is not practical or desirable to defer writing off these basically worthless loans.  Accordingly, these loans are charged-off before period end.

The following tables present the grading of loans, segregated by class of loans, as of March 31, 2015 and June 30, 2014:
 
 
  Special
March 31, 2015 Pass Mention Substandard Doubtful Total
  (In Thousands)
Real Estate Loans:
                   
  One- to Four-Family Residential
 
$
98,797
   
$
113
   
$
13
   
$
-
   
$
98,923
 
  Commercial
   
54,406
     
541
     
-
     
64
     
55,011
 
  Multi-Family Residential
   
15,845
     
-
     
-
     
-
     
15,845
 
  Land
   
23,666
     
-
     
-
     
-
     
23,666
 
  Construction
   
18,179
     
-
     
-
     
-
     
18,179
 
  Equity and Second Mortgage
   
2,599
     
-
     
-
     
-
     
2,599
 
  Equity Lines of Credit
   
23,972
     
-
     
24
     
-
     
23,996
 
Commercial Loans
   
29,587
     
-
     
-
     
-
     
29,587
 
Consumer Loans
   
341
     
-
     
-
     
-
     
341
 
     Total
 
$
267,392
   
$
654
   
$
37
   
$
64
   
$
268,147
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
15

HOME FEDERAL BANCORP, INC. OF LOUISIANA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 
3. Loans Receivable (continued)
 
Credit Quality Indicators (continued)
     
             
June 30, 2014
 
Pass
   
Special
Mention
   
Substandard
   
Doubtful
   
Total
 
   
(In Thousands)
 
Real Estate Loans:
                   
  One- to Four-Family Residential
 
$
89,345
   
$
49
   
$
--
   
$
151
   
$
89,545
 
  Commercial
   
53,621
     
2,645
     
--
     
--
     
56,266
 
  Multi-Family Residential
   
20,368
     
--
     
--
     
--
     
20,368
 
  Land
   
19,945
     
--
     
--
     
--
     
19,945
 
  Construction
   
12,505
     
--
     
--
     
--
     
12,505
 
  Equity and Second Mortgage
   
2,563
     
--
     
--
     
--
     
2,563
 
  Equity Lines of Credit
   
14,923
     
--
     
--
     
27
     
14,950
 
Commercial Loans
   
25,749
     
--
     
--
     
--
     
25,749
 
Consumer Loans
   
366
     
--
     
--
     
--
     
366
 
                                         
     Total
 
$
239,385
   
$
2,694
   
$
--
   
$
178
   
$
242,257
 


Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when contractually due.  Loans that experience insignificant payment delays or payment shortfalls are generally not classified as impaired.  On a case-by-case basis, management determines the significance of payment delays and payment shortfalls, taking into consideration all of the circumstances related to the loan, including:  the length of the payment delay, the reasons for the delay, the borrower's prior payment record, and the amount of the shortfall in relation to the principal and interest owed.

The following tables present an aging analysis of past due loans, segregated by class of loans, as of March 31, 2015 and June 30, 2014:

 March 31, 2015
 
30-59 Days
Past Due
   
60-89
Days Past Due
   
Greater
Than 90 Days
   
Total
Past Due
   
Current
   
Total
 Loans
Receivable
   
Recorded
Investment
> 90 Days
and Accruing
 
   
(In Thousands)
 
Real Estate Loans:
                           
One- to Four-Family
    Residential
 
$
1,451
   
$
626
   
$
80
   
$
2,157
   
$
96,766
   
$
98,923
   
$
67
 
  Commercial
   
--
     
--
     
64
     
64
     
54,947
     
55,011
     
--
 
  Multi-Family Residential
   
--
     
--
     
--
     
--
     
15,845
     
15,845
     
--
 
  Land
   
--
     
--
     
--
     
--
     
23,666
     
23,666
     
--
 
  Construction
   
--
     
--
     
--
     
--
     
18,179
     
18,179
     
--
 
  Equity and Second Mortgage
   
--
     
--
     
--
     
--
     
2,599
     
2,599
     
--
 
  Equity Lines of Credit
   
--
     
--
     
--
     
--
     
23,996
     
23,996
     
--
 
Commercial Loans
   
--
     
--
     
--
     
--
     
29,587
     
29,587
     
--
 
Consumer Loans
   
--
     
--
     
--
     
--
     
341
     
341
     
--
 
   
$
1,451
   
$
626
   
$
144
   
$
2,221
   
$
265,926
   
$
268,147
   
$
67
 

 
 
 
 
 
 
 
 
 
16

HOME FEDERAL BANCORP, INC. OF LOUISIANA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 
3.            Loans Receivable (continued)

Credit Quality Indicators (continued)

 June 30, 2014
 
30-59 Days
Past Due
   
60-89
Days Past
Due
   
Greater
Than 90
Days
   
Total
Past Due
   
Current
   
Total
Loans
Receivable
   
Recorded
Investment
> 90 Days
and
Accruing
 
   
(In Thousands)
 
Real Estate Loans:
                           
One- to Four-Family
    Residential
 
$
1,326
   
$
435
   
$
164
   
$
1,925
   
$
87,620
   
$
89,545
   
$
13
 
  Commercial
   
--
     
--
     
--
     
--
     
56,266
     
56,266
     
--
 
  Multi-Family Residential
   
--
     
--
     
--
     
--
     
20,368
     
20,368
     
--
 
  Land
   
--
     
--
     
--
     
--
     
19,945
     
19,945
     
--
 
  Construction
   
--
     
--
     
--
     
--
     
12,505
     
12,505
     
--
 
  Equity and Second Mortgage
   
--
     
--
     
--
     
--
     
2,563
     
2,563
     
--
 
  Equity Lines of Credit
   
--
     
--
     
27
     
27
     
14,923