FOR RELEASE: Thursday, January 26, 2017 at 4:30 PM (Eastern)

HOME FEDERAL BANCORP, INC. OF LOUISIANA REPORTS RESULTS OF OPERATIONS

FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 2016

Shreveport, Louisiana – January 26, 2017 – 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 December 31, 2016 of $763,000, an increase of $82,000, or 12.0%, compared to net income of $681,000 reported for the three months ended December 31, 2015. The Company's basic and diluted earnings per share were $0.42 and $0.40, respectively, for the three months ended December 31, 2016 compared to basic and diluted earnings per share of $0.36 and $0.35, respectively, for the quarter ended December 31, 2015.

The Company reported net income of $1.8 million for the six months ended December 31, 2016, an increase of $143,000, or 8.8%, compared to $1.6 million for the six months ended December 31, 2015. The Company's basic and diluted earnings per share were $0.97 and $0.94, respectively, for the six months ended December 31, 2016 compared to $0.85 and $0.83, respectively, for the six months ended December 31, 2015.

The increase in net income for the three months ended December 31, 2016 resulted primarily from an increase of $322,000, or 10.4%, in net interest income, a $201,000, or 32.4%, increase in non-interest income, and a decrease of $13,000, or 3.9%, in the provision for income tax expense, partially offset by a $180,000, or 6.8%, increase in non-interest expense, and a $274,000 increase in the provision for loan losses. The increase in net interest income for the three months ended December 31, 2016 was primarily due to a $310,000, or 8.3%, increase in total interest income and a decrease of $12,000, or 1.8%, in aggregate interest expense primarily due to a decrease in the average interest rate paid on deposits. The increase in the provision for loan losses was primarily due to the increased level of non-performing assets discussed below. The Company's average interest rate spread was 3.47% for the three months ended December 31, 2016 compared to 3.39% for the three months ended December 31, 2015. The Company's net interest margin was 3.65% for the three months ended December 31, 2016 compared to 3.58% for the three months ended December 31, 2015. The increase in the average interest rate spread on a comparative quarterly basis was primarily the result of a decrease of nine basis points in average rate on interest-bearing liabilities.  The increase in net interest margin was primarily the result of a higher average volume of interest-earning assets for the three months ended December 31, 2016 compared to the prior year quarterly period.

The increase in net income for the six months ended December 31, 2016 resulted primarily from an increase of $601,000, or 9.6%, in net interest income, and an increase of $407,000, or 26.6%, in non-interest income, partially offset by an increase of $322,000, or 6.1%, in non-interest expense, an increase of $34,000, or 4.4%, in income tax expense, and an increase of $509,000, or 559.3%, in the provision for loan losses. The increase in net interest income for the six month period was primarily due to a $560,000, or 7.4%, increase in total interest income, and a $41,000, or 3.1%, decrease in interest expense on borrowings and deposits due to a decrease in the average interest rate on interest bearing liabilities.  The Company's average interest rate spread was 3.53% for the six months ended December 31, 2016 compared to 3.43% for the six months ended December 31, 2015.  The Company's net interest margin was 3.71% for the six months ended December 31, 2016 compared to 3.62% for the six months ended December 31, 2015.  The increase in the average interest rate spread is attributable primarily to a decrease of eight basis points in average rate on interest bearing liabilities. The increase in net interest margin was primarily the result of a higher average volume of interest earning assets for the six months ended December 31, 2016 compared to the prior six month period.

 

 

		For the Three Months Ended December 31,
		2016								2015
		Average Balance				Average Yield/Rate				Average Balance				Average Yield/Rate
		(Dollars in thousands)
Interest-earning assets:
Loans receivable		$	306,598				4.95	%		$	276,657				5.12	%
Investment securities			60,512				1.72				41,236				1.85
Interest-earning deposits			6,463				0.46				26,337				0.31
Total interest-earning assets		$	373,573				4.35	%		$	344,230				4.36	%
Interest-bearing liabilities:
Savings accounts		$	33,230				0.45	%		$	22,143				0.38	%
NOW accounts			34,270				0.56				34,574				0.89
Money market accounts			46,055				0.32				46,635				0.30
Certificates of deposit			139,848				1.26				145,289				1.29
Total interest-bearing deposits			253,403				0.89				248,641				0.96
Other bank borrowings			550				3.25				742				3.58
FHLB advances			43,059				0.82				26,310				0.96
Total interest-bearing liabilities		$	297,012				0.88	%		$	275,693				0.97	%

		For the Six Months Ended December 31,
		2016								2015
		Average Balance				Average Yield/Rate				Average Balance				Average Yield/Rate
		(Dollars in thousands)
Interest-earning assets:
Loans receivable		$	306,572				5.02	%		$	280,407				5.12	%
Investment securities			58,782				1.56				42,603				1.82
Interest-earning deposits			4,563				0.52				23,342				0.28
Total interest-earning assets		$	369,917				4.41	%		$	346,352				4.39	%
Interest-bearing liabilities:
Savings accounts		$	31,389				0.44	%		$	21,156				0.37	%
NOW accounts			35,226				0.56				34,873				0.88
Money market accounts			46,982				0.32				47,168				0.31
Certificates of deposit			137,094				1.26				145,523				1.29
Total interest-bearing deposits			250,691				0.88				248,720				0.97
Other bank borrowings			475				3.25				371				3.58
FHLB advances			44,457				0.83				28,340				0.88
Total interest-bearing liabilities		$	295,623				0.88	%		$	277,431				0.96	%

 

 

		Six Months Ended December 31,
		2016				2015				% Change
		(In thousands)
Loan originations:
One- to four-family residential		$	65,992			$	57,458				14.9	%
Commercial — real estate secured:
Owner occupied			38,663				23,461				64.8	%
Non-owner occupied			4,537				1,070				324.0	%
Multi-family residential			986				15				6,473.3	%
Commercial business			22,239				16,439				35.3	%
Land			5,779				3,143				83.9	%
Construction			10,410				9,901				5.1	%
Home equity loans and lines of credit and other consumer			5,030				4,015				25.3	%
Total loan originations		$	153,636			$	115,502				33.0	%
Loans sold		$	(59,017	)		$	(54,089	)			9.1	%

 

 

Total liabilities increased $27.9 million, or 8.2%, from $338.3 million at June 30, 2016 to $366.2 million at December 31, 2016, primarily due to an increase in total deposits of $22.8 million, or 7.9%, to $310.7 million at December 31, 2016 compared to $287.8 million at June 30, 2016, and an increase in advances from the Federal Home Loan Bank of $5.4 million, or 11.3%, to $53.0 million at December 31, 2016 compared to $47.7 million at June 30, 2016.  The increase in deposits was primarily due to a $17.8 million, or 45.3%, increase in non-interest bearing demand deposits from $39.3 million at June 30, 2016 to $57.1 million at December 31, 2016, an $8.7 million, or 6.6%, increase in certificates of deposit from $132.5 million at June 30, 2016 to $141.2 million at December 31, 2016, and a $5.6 million, or 19.3%, increase in savings deposits from $29.0 million at June 30, 2016 to $34.6 million at December 31, 2016, partially offset by a decrease of $4.7 million, or 12.4%, in NOW accounts from $37.8 million at June 30, 2016 to $33.1 million at December 31, 2016 and a decrease of $4.5 million, or 9.1%, in money market deposits from $49.3 million at June 30, 2016 to $44.8 million at December 31, 2016. At December 31, 2016, the Company had $14.4 million in brokered deposits compared to $8.2 million at June 30, 2016. The increase in brokered deposits is due to purchases of $10.0 million in brokered deposits during the six months ended December 31, 2016, partially offset by $3.8 million of brokered deposits that had matured during the period. 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.

At December 31, 2016, the Company had $4.2 million of non-performing assets compared to $114,000 of non-performing assets at June 30, 2016 consisting of five single-family residential loans, one land loan, and fifteen commercial business loans at December 31, 2016 compared to two single family residential loans at June 30, 2016. At December 31, 2016, the Company had four single family residential loans, one commercial real estate loan, one land loan, and fifteen commercial business loans to two borrowers classified as substandard compared to two single family residential loans, one commercial real estate loan and nine commercial business loans to one borrower at June 30, 2016. There were no loans classified as doubtful at December 31, 2016 or June 30, 2016.  During the quarter ended December 31, 2016, we became aware that two borrowers related to the fifteen commercial business loans in the aggregate amount of $2.8 million that are classified as substandard filed for Chapter 11 (reorganization) bankruptcy protection during this period.  We are continuing to monitor these credits and presently believe that our allowance for loan losses at December 31, 2016 is adequate.  No additional losses are currently anticipated with respect to these loans.

Shareholders' equity increased $746,000, or 1.7%, to $44.1 million at December 31, 2016 from $43.4 million at June 30, 2016.  The primary reasons for the increase in shareholders' equity from June 30, 2016 were net income of $1.8 million, the vesting of restricted stock awards, stock options and the release of employee stock ownership plan shares totaling $307,000, and proceeds from the issuance of common stock from the exercise of stock options and release of share awards of $177,000.  These increases in shareholders' equity were partially offset by dividends paid totaling $353,000, acquisition of Company stock of $525,000, and a decrease in the Company's accumulated other comprehensive income of $625,000.

The Company repurchased 21,278 shares of its common stock under its stock repurchase program during the six months ended December 31, 2016 at an average price per share of $23.70. On October 12, 2016, the Company announced that its Board of Directors approved a seventh stock repurchase program for the repurchase of up to 97,000 shares to commence after the completion of the sixth stock repurchase program.  As of December 31, 2016, there were an aggregate total of 107,533 shares remaining for repurchase under the sixth and seventh stock repurchase programs.

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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.

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