HFBL Home Federal Bancorp Inc of Louisiana

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, 2023, of $1.3 million compared to net income of $1.1 million reported for the three months ended June 30, 2022. The Company’s basic and diluted earnings per share were $0.42 and $0.40, respectively, for the three months ended June 30, 2023, compared to basic and diluted earnings per share of $0.33 and $0.31, respectively, for the three months ended June 30, 2022. The Company reported net income of $5.7 million for the year ended June 30, 2023, compared to $4.9 million for the year ended June 30, 2022. The Company’s basic and diluted earnings per share were $1.89 and $1.80, respectively, for the year ended June 30, 2023, compared to $1.50 and $1.41, respectively, for the year ended June 30, 2022.

The Company reported the following during the year ended June 30, 2023:

• On February 1, 2023, the Company completed the acquisition of Northwest Bancshares Corporation (“NWB”) and its wholly-owned subsidiary, First National Bank of Benton (“FNBB). As of February 1, 2023, FNBB reported $83.4 million in assets, $77.3 million in liabilities and $6.1 million in equity.
• Total loans receivable, net of allowance for loan losses for the year ended June 30, 2023, increased $101.6 million, or 26.2%, to $489.5 million at June 30, 2023, compared to $387.9 million at June 30, 2022. Loans acquired from FNBB amounted to $54.9 million.
• Total deposits for the year ended June 30, 2023, increased $65.4 million, or 12.3%, to $597.4 million at June 30, 2023, compared to $532.0 million at June 30, 2022. Deposits acquired from FNBB amounted to $77.4 million.
• Basic earnings per share increased $0.39, or 26.0%, from $1.50 for the year ended June 30, 2022, compared to $1.89 for the year ended June 30, 2023.  
• Diluted earnings per share increased $0.39 or 27.7%, from $1.41 for the year ended June 30, 2022, compared to $1.80 for the year ended June 30, 2023.   

The increase in net income for the three months ended June 30, 2023, as compared to the prior year quarter resulted primarily from an increase of $771,000, or 16.5%, in net interest income, and a decrease of $125,000, or 45.5%, in provision for loan losses, partially offset by an increase of $484,000, or 13.0%, in non-interest expense, a $138,000, or 67.3%, increase in provision for income taxes, and a decrease of $85,000, or 14.4%, in non-interest income.   The increase in net interest income for the three months ended June 30, 2023, was primarily due to a $2.7 million, or 52.5%, increase in total interest income, partially offset by an increase of $1.9 million, or 470.5% in total interest expense. The Company’s average interest rate spread was 2.84% for the three months ended June 30, 2023, compared to 3.36% for the three months ended June 30, 2022. The Company’s net interest margin was 3.35% for the three months ended June 30, 2023, compared to 3.53% for the three months ended June 30, 2022.

The increase in net income for the year ended June 30, 2023 resulted primarily from a $4.2 million, or 24.2%, increase in net interest income, and a decrease of $61,000, or 5.4%, in provision for income taxes, partially offset by an increase of $1.5 million, or 10.5% in non-interest expense, a decrease of $1.4 million, or 39.6%, in non-interest income, and an increase of $532,000, or 158.3%, in provision for loan losses. The increase in net interest income for the year was primarily due to a $7.4 million, or 38.5%, increase in total interest income, partially offset by a $3.2 million, or 170.6%, increase in total interest expense. The Company’s net interest margin was 3.73% for the year ended June 30, 2023, compared to 3.27% for the year ended June 30, 2022. The Company’s average interest rate spread was 3.37% for the year ended June 30, 2023, compared to 3.11% for the year ended June 30, 2022.

The following tables set 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,
	2023						2022
	Average			Average			Average			Average
	Balance			Yield/Rate			Balance			Yield/Rate
	(Dollars in thousands)
Interest-earning assets:
Loans receivable	$	511,045		5.39	%		$	375,957		4.82	%
Investment securities		121,911		2.07				107,530		1.63
Interest-earning deposits		19,282		5.28				54,022		0.85
Total interest-earning assets	$	652,238		4.77	%		$	537,509		3.79	%
Interest-bearing liabilities:
Savings accounts	$	88,790		0.33	%		$	136,248		0.26	%
NOW accounts		71,102		0.34				55,746		0.11
Money market accounts		128,377		1.78				98,598		0.12
Certificates of deposit		181,439		3.13				78,840		1.21
Total interest-bearing deposits		469,708		1.81				369,432		0.40
Other bank borrowings		8,319		8.29				2,007		3.99
FHLB advances		583		5.51				835		4.85
Total interest-bearing liabilities	$	478,610		1.93	%		$	372,274		0.43	%

	For the Year Ended June 30,
	2023						2022
	Average			Average			Average			Average
	Balance			Yield/Rate			Balance			Yield/Rate
	(Dollars in thousands)
Interest-earning assets:
Loans receivable	$	442,469		5.30	%		$	360,774		4.85	%
Investment securities		113,332		1.95				98,229		1.53
Interest-earning deposits		22,001		4.43				72,189		0.32
Total interest-earning assets	$	577,802		4.61	%		$	531,192		3.62	%
Interest-bearing liabilities:
Savings account	$	105,850		0.29	%		$	136,139		0.29	%
NOW accounts		63,074		0.26				51,412		0.11
Money market accounts		106,146		1.02				91,862		0.12
Certificates of deposit		126,156		2.34				88,450		1.37
Total interest-bearing deposits		401,226		1.12				367,863		0.48
Other bank borrowings		6,784		7.28				1,921		3.44
FHLB advances		1,623		4.87				848		4.83
Total interest-bearing liabilities	$	409,633		1.24	%		$	370,632		0.51	%

The $85,000 decrease in non-interest income for the three months ended June 30, 2023, compared to the prior year quarterly period, was primarily due to a decrease of $174,000 in gain on sale of loans, and a $6,000 decrease in income from bank owned life insurance, partially offset by a $92,000 increase in service charges on deposit accounts, and an increase of $3,000 in other non-interest income. The $1.4 million decrease in non-interest income for the year ended June 30, 2023, compared to the prior year was primarily due to a decrease of $1.5 million in gain on sale of loans, a decrease of $232,000 in other non-interest income, and a $10,000 decrease in income from bank owned life insurance, partially offset by a $329,000 increase in service charges on deposit accounts and a $52,000 decrease in loss on sale of fixed assets and real estate owned. The decreases in gain on sale of loans for both the quarter and year ended June 30, 2023, were primarily due to a decrease in refinance activity causing a decrease in mortgage loan originations.

The $484,000 increase in non-interest expense for the three months ended June 30, 2023, compared to the same period in 2022, is primarily attributable to increases of $109,000 in deposit insurance premium expense, $103,000 in amortization of core deposit intangible expense, $85,000 in compensation and benefits expense, $76,000 in professional fees, $46,000 in occupancy and equipment expense, $36,000 in audit and examination fees, $14,000 in loan and collection expense, $13,000 in franchise and bank shares tax expense, $6,000 in other non-interest expense and $4,000 in advertising expense. The increases were partially offset by a decrease of $8,000 data processing expense. The $1.5 million increase in non-interest expense for the year ended June 30, 2023, compared to the year ended June 30, 2022, is primarily attributable to increases of $875,000 in professional fees which were primarily due to FNBB acquisition costs, $267,000 in occupancy and equipment expense, $174,000 in amortization of core deposit intangible expense, $143,000 in deposit insurance premium expense, $69,000 in compensation and benefits expense, $22,000 in data processing expense, and $11,000 in advertising expense. The increases were partially offset by decreases of $22,000 in loan and collection expense, $14,000 in audit and examination fees, $5,000 in other non-interest expense, and $4,000 in franchise and bank shares tax expense. The increase in professional fees for both the three months and year ended June 30, 2023 was due to the acquisition of First National Bank of Benton in February 2023.

At June 30, 2023, the Company reported total assets of $660.9 million, an increase of $70.4 million, or 11.9%, compared to total assets of $590.5 million at June 30, 2022. The increase in assets was comprised primarily of increases in loans receivable, net of $101.6 million, or 26.2%, from $387.9 million at June 30, 2022 to $489.5 million at June 30, 2023, investment securities of $5.9 million, or 5.5%, from $108.0 million at June 30, 2022 to $114.0 million at June 30, 2023, goodwill of $3.0 million from none at June 30, 2022 to $3.0 million at June 30, 2023, core deposit intangible of $1.5 million, from none at June 30, 2022 to $1.5 million at June 30, 2023, accrued interest receivable of $665,000 , or 59.2%, from $1.1 million at June 30, 2022 to $1.8 million at June 30, 2023, real estate owned of $368,000 from none at June 30, 2022 to $368,000 at June 30, 2023, premises and equipment of $313,000, or 1.9%, from $16.2 million at June 30, 2022 to $16.6 million at June 30, 2023, deferred tax asset of $170,000, or 14.9 %, from $1.1 million at June 30, 2022 to $1.3 million at June 30, 2023, bank owned life insurance of $103,000, or 1.6%, from $6.6 million at June 30, 2022 to $6.7 million at June 30, 2023 and other assets of $34,000, or 2.5%, from $1.3 million at June 30, 2022 to $1.4 million at June 30 , 2023. These increases were partially offset by decreases in cash and cash equivalents of $39.3 million, or 61.4%, from $64.1 million at June 30, 2022 to $24.8 million at June 30, 2023, and loans-held-for-sale of $4.0 million, or 99.7%, from $4.0 million at June 30, 2022 to $4,000 at June 30, 2023. The decrease in cash and cash equivalents was primarily due to the funding of additional loan growth. The increase in loans receivable, net, was primarily due to an increase of $54.9 million in loans acquired from the acquisition of First National Bank of Benton. The increase in investment securities was primarily due to an increase of $13.5 million in US Treasury securities acquired in the acquisition of First National Bank of Benton. The decrease in held to maturity securities was due to $6.5 million in principal payments.   The decrease in loans held-for-sale primarily reflected a reduction in loans originated for sale during the year ended June 30, 2023 due mainly to a decrease in mortgage refinance activity likely attributable to the increase in interest rates.

Total liabilities increased $72.2 million, or 13.4%, from $538.1 million at June 30, 2022 to $610.4 million at June 30, 2023 primarily due to increases in total deposits of $65.4 million (deposits acquired in the acquisition of FNBB totaled $77.4 million), or 12.3%, to $597.4 million at June 30, 2023 compared to $532.0 million at June 30, 2022, other borrowings of $6.2 million, or 263.8%, to $8.6 million at June 30, 2023 compared to $2.4 million at June 30, 2022, other accrued expenses and liabilities of $1.3 million, or 49.9%, to $3.9 million at June 30, 2023 compared to $2.6 million at June 30, 2022, and an increase in advances from borrowers for taxes and insurance of $200,000, or 56.5%, to $554,000 at June 30, 2023 compared to $354,000 at June 30, 2022, partially offset by decreases in advances from FHLB $832,000, or 100.0%, to none at June 30, 2023 compared to $832,000 at June 30, 2022. The increase in deposits was primarily due to a $110.1 million, or 137.1 %, increase in certificates of deposit from $80.3 million at June 30, 2022 to $190.4 million at June 30, 2023, a $15.6 million, or 15.8%, increase in money market deposits from $98.6 million at June 30, 2022 to $114.2 million at June 30, 2023, and a $6.4 million, or 10.8 %, increase in NOW accounts from $59.0 million at June 30, 2022 to $65.3 million at June 30, 2023, partially offset by a decrease of $51.1 million, or 38.4%, in savings deposits from $133.0 million at June 30, 2022 to $81.9 million at June 30, 2023, and a decrease of $15.6 million, or 9.7%, in non-interest deposits from $161.4 million at June 30, 2022 to $145.6 million at June 30, 2023. The Company had $3.0 million in brokered deposits at June 30, 2023 compared to $6.0 million at June 30, 2022.

At June 30, 2023, the Company had $1.7 million of non-performing assets (defined as non-accruing loans, accruing loans 90 days or more past due, and other real estate owned) compared to $2.2 million on non-performing assets at June 30, 2022, consisting of seven single-family residential loans, two commercial non-real estate loans, one consumer loan and two single-family residences in other real estate owned at June 30, 2023, compared to nine single-family residential loans and one line of credit loan at June 30, 2022.   At June 30, 2023 the Company had 10 single family residential loans, three commercial non-real-estate loans, two commercial real estate loans, and three home equity line-of-credit loans compared to five single family residential loans and two commercial real estate loans classified as substandard at June 30, 2022. There were no loans classified as doubtful at June 30, 2023 or 2022.

Shareholders’ equity decreased $1.8 million, or 3.4%, to $50.5 million at June 30, 2023 from $52.3 million at June 30, 2022. The primary reasons for the changes in shareholders’ equity from June 30, 2022 were the repurchase of Company stock of $6.0 million, dividends paid totaling $1.5 million, and a decrease in the Company’s accumulated other comprehensive income of $1.0, partially offset by net income of $5.7 million, the vesting of restricted stock awards, stock options, and the release of employee stock ownership plan shares totaling $620,000, and proceeds from the issuance of common stock from the exercise of stock options of $328,000.

The Company repurchased 291,000 shares of its common stock during the year ended June 30, 2023 at an average price per share of $19.99. On February 16, 2022, the Company announced that its Board of Directors approved an eleventh stock repurchase program for the repurchase of up to 170,000 shares. The eleventh stock repurchase program was completed on August 2, 2022.

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

In addition to factors previously disclosed in the reports filed by the Company with the Securities and Exchange Commission and those identified elsewhere in this press release, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the strength of the United States economy in general and the strength of the local economies in which the Company conducts its operations; general economic conditions; legislative and regulatory changes; monetary and fiscal policies of the federal government; changes in tax policies, rates and regulations of federal, state and local tax authorities including the effects of the Tax Reform Act; changes in interest rates, deposit flows, the cost of funds, demand for loan products and the demand for financial services, competition, changes in the quality or composition of the Company’s loans, investment and mortgage-backed securities portfolios; geographic concentration of the Company’s business; fluctuations in real estate values; the adequacy of loan loss reserves; the risk that goodwill and intangibles recorded in the Company’s financial statements will become impaired; changes in accounting principles, policies or guidelines and other economic, competitive, governmental and technological factors affecting the Company’s operations, markets, products, services and fees.

Home Federal Bancorp, Inc. of Louisiana
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION(In thousands)
	June 30,
	2023				2022
	(Unaudited)				(Audited)
ASSETS
Cash and Cash Equivalents (Includes Interest-Bearing     Deposits with Other Banks of $22,215 and $42,531     June 30, 2023 and 2022, Respectively)	$	24,765			$	64,078
Securities Available-for-Sale		39,551				28,099
Securities Held-to-Maturity (fair value June 30, 2023: $61,222;      June 30, 2022: $69,513, Respectively)		74,423				79,950
Loans Held-for-Sale		4				3,978
Loans Receivable, Net of Allowance for Loan Losses (June 30, 2023:     $5,174; June 30, 2022: $4,451, Respectively)		489,493				387,873
Accrued Interest Receivable		1,790				1,124
Premises and Equipment, Net		16,561				16,249
Bank Owned Life Insurance		6,700				6,597
Goodwill		2,990				--
Core Deposit Intangible		1,533				--
Deferred Tax Asset		1,313				1,143
Real Estate Owned		368				--
Other Assets		1,424				1,389
Total Assets	$	660,915			$	590,480
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Deposits:
Non-interest bearing	$	145,553			$	161,142
Interest-bearing		451,808				370,849
Total Deposits		597,361				531,991
Advances from Borrowers for Taxes and Insurance		554				354
Short-term Federal Home Loan Bank Advances		--				832
Other Borrowings		8,550				2,350
Other Accrued Expenses and Liabilities		3,908				2,606
Total Liabilities		610,373				538,133
SHAREHOLDERS’ EQUITY
Preferred Stock - $0.01 Par Value; 10,000,000 Shares Authorized; None Issued and Outstanding		--				--
Common Stock - $0.01 Par Value; 40,000,000 Shares
Authorized: 3,133,351 and 3,387,839 Shares Issued and
Outstanding at June 30, 2023 and 2022, Respectively		31				34
Additional Paid-in Capital		40,981				40,145
Unearned ESOP Stock		(523	)			(639	)
Retained Earnings		12,707				14,506
Accumulated Other Comprehensive Loss		(2,654	)			(1,699	)
Total Shareholders’ Equity		50,542				52,347
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	660,915			$	590,480

Home Federal Bancorp, Inc. of LouisianaCONSOLIDATED STATEMENTS OF INCOME(In thousands, except per share data)
	Three Months Ended						Year Ended
	June 30,						June 30,
	2023			2022			2023			2022
	(Unaudited)			(Unaudited)			(Unaudited)			(Audited)
Interest income
Loans, including fees	$	6,866		$	4,516		$	23,452		$	17,501
Investment securities		146			4			251			4
Mortgage-backed securities		483			438			1,954			1,505
Other interest-earning assets		254			124			974			224
Total interest income		7,749			5,082			26,631			19,234
Interest expense
Deposits		2,119			373			4,506			1,770
Federal Home Loan Bank borrowings		8			10			79			41
Other bank borrowings		172			20			494			66
Total interest expense		2,299			403			5,079			1,877
Net interest income		5,450			4,679			21,552			17,357
Provision for loan losses		150			275			868			336
Net interest income after provision for loan losses		5,300			4,404			20,684			17,021
Non-interest income
Gain on sale of loans		62			236			466			1,982
Gain/(Loss) on sale of real estate and fixed assets		--			--			4			(48	)
Income on Bank-Owned Life Insurance		25			31			103			113
Service charges on deposit accounts		402			310			1,476			1,147
Other income		15			12			50			282
Total non-interest income		504			589			2,099			3,476
Non-interest expense
Compensation and benefits		2,394			2,309			9,088			9,019
Occupancy and equipment		540			494			2,080			1,813
Data processing		278			286			842			820
Audit and examination fees		71			35			314			328
Franchise and bank shares tax		145			132			531			535
Advertising		101			97			340			329
Professional fees		147			71			1,233			358
Loan and collection		50			36			198			220
Amortization Core Deposit Intangible		103			--			174			--
Deposit insurance premium		148			39			297			154
Other expenses		227			221			916			921
Total non-interest expense		4,204			3,720			16,013			14,497
Income before income taxes		1,600			1,273			6,770			6,000
Provision for income tax expense		343			205			1,066			1,127
NET INCOME	$	1,257		$	1,068		$	5,704		$	4,873
EARNINGS PER SHARE
Basic	$	0.42		$	0.33		$	1.89		$	1.50
Diluted	$	0.40		$	0.31		$	1.80		$	1.41

		Three Months Ended						Twelve Months Ended
		June 30,						June 30,
		2023			2022			2023			2022
Selected Operating Ratios(1):
Average interest rate spread		2.84	%		3.36	%		3.37	%		3.11	%
Net interest margin		3.35	%		3.53	%		3.73	%		3.27	%
Return on average assets		0.73	%		0.74	%		0.92	%		0.85	%
Return on average equity		9.24	%		8.13	%		11.57	%		9.24	%
Asset Quality Ratios(2):
Non-performing assets as a percent of total assets		0.26	%		0.37	%		0.26	%		0.37	%
Allowance for loan losses as a percent of non-performing loans		374.57	%		202.91	%		374.57	%		202.91	%
Allowance for loan losses as a percent of total loans receivable		1.05	%		1.05	%		1.13	%		1.13	%
Per Share Data:
Shares outstanding at period end		3,133,351			3,387,839			3,133,351			3,387,839
Weighted average shares outstanding:
Basic		3,015,858			3,263,324			3,020,748			3,250,320
Diluted		3,113,769			3,440,244			3,163,007			3,465,299
_________________________
(1)        Ratios for the three month period are annualized.
(2)        Asset quality ratios are end of period ratios.

James R. Barlow
Chairman of the Board, President and Chief Executive Officer
(318) 222-1145