COLUMBUS, Ind., Jan. 22 /PRNewswire-FirstCall/ -- Home Federal
Bancorp (the "Company") (NASDAQ:HOMF), the holding company of
HomeFederal Bank of Columbus, Indiana (the "Bank"), today announced
2007 annual earnings of $6,123,000 or $1.72 diluted earnings per
common share compared to $6,441,000 or $1.70 diluted earnings per
common share a year earlier. Net income for 2007 included a pre-tax
charge of $788,000 related to a separation agreement with a former
executive vice president of the Bank and the Company, which was
recorded in the first quarter. Excluding the impact of the charge
related to the separation agreement, net income would have been
$6,599,000 or $1.85 diluted earnings per share, representing an
increase in net income for the year of $158,000 or 2.5% and an
increase in diluted earnings per share of $0.15 or 8.8%. The
Company had fourth quarter earnings of $1,642,000 or $0.47 diluted
earnings per common share compared to $3,036,000 or $.81 diluted
earnings per share a year earlier. The Company's net income for the
fourth quarter of 2006 included a pre-tax gain of $1,957,000
resulting from the sale of its mortgage servicing portfolio and the
related mortgage servicing rights. Excluding the impact of the gain
on the sale of the mortgage servicing portfolio, fourth quarter
earnings for 2006 would have been $1,674,000 or $0.45 diluted
earnings per common share. Total loans increased $25.2 million for
the quarter and $67.6 million for the year. The growth in the loan
portfolio was primarily the result of an increase in commercial and
commercial mortgage loans to new and existing customers in our
central Indiana markets which increased $31.8 million for the
quarter and $97.4 million for the year. Chairman and CEO John
Keach, Jr. stated, "We are pleased with the Company-wide sales and
service efforts as we continue to add value to new and existing
customer relationships throughout our central Indiana markets."
Executive Vice President and CFO Mark Gorski added, "Our
investments in the commercial lending business and the brokerage
business continue to add revenue and franchise value to the
Company." Balance Sheet Total assets were $908.8 million as of
December 31, 2007, an increase of $4.3 million from December 31,
2006. Total loans increased $25.2 million for the quarter and $67.6
million for the year. The growth in the loan portfolio was
primarily the result of an increase in commercial and commercial
mortgage loans. Commercial and commercial mortgage loan growth was
particularly strong in the fourth quarter with commercial loans
increasing $14.3 million for the quarter and commercial mortgage
loans increasing $17.5 million for the quarter resulting in total
commercial and commercial mortgage loan growth of $31.8 million for
the quarter. For 2007, commercial loans increased $55.8 million for
the year and commercial mortgage loans increased $41.6 million for
the year resulting in total commercial and commercial mortgage loan
growth of $97.4 million for the year. The increase in commercial
loans has been partially offset by a decrease in residential
mortgage loans and other consumer loans. Residential mortgage loans
have decreased $23.5 million for the year as substantially all new
mortgage loan originations are being sold in the secondary market.
Other consumer loans have decreased $7.1 million for the year due
primarily to a reduction in indirect automobile loans as the Bank
discontinued the origination of indirect automobile loans during
2006. Total premises and equipment decreased $1.6 million during
2007. In September, the Bank sold four retail branch buildings and
entered into operating leases with the buyer. The gain on sale of
these buildings, which totaled approximately $2.0 million, was
deferred and will be amortized over the life of the leases. The
proceeds from the sale will be used to fund commercial loan growth.
Total retail deposits increased $19.3 million for the quarter and
decreased $5.2 million for the year. The increase in deposits
during the quarter was due to an increase of $22.4 million in
public fund interest checking account balances. Historically,
public fund operating account balances have been inflated at
year-end when compared to average balances in the same accounts
during the year. During 2007, public fund interest checking account
balances decreased $25.2 million while all other retail deposit
categories in total increased $20.0 million including growth of
$7.2 million in certificates of deposit and growth of $20.2 million
in money market accounts. Total FHLB borrowings increased $15.7
million for the quarter and $30.7 million for the year. The
increase in FHLB borrowings during the quarter was used to fund
strong commercial loan growth during the quarter while a portion of
the year-to-date increase was used to offset a $13.2 million
decrease in brokered deposits. As of December 31, 2007,
shareholders' equity was $67.5 million. The decrease in
shareholders' equity of $3.8 million for the year was primarily the
result of stock repurchases of 309,519 shares for $8.7 million. The
return on average assets for the year was 0.70% while the return on
average equity for the year was 8.88%. Excluding the impact of the
charges associated with the separation agreement, the return on
average assets for the year would have been 0.75% while the return
on average equity would have been 9.57%. Asset Quality Provision
for loan losses increased $255,000 to $572,000 for the fourth
quarter and increased $511,000 to $1.4 million for the year. The
increase in provision for loan losses was primarily due to
increases in commercial loans as well as increases in
non-performing loans. Net charge offs were $356,000 for the fourth
quarter and $986,000 for the year. The net charge off ratio for
2007 was 0.14% compared to 0.15% for 2006. Non-performing assets to
total assets increased to 1.29% at December 31, 2007 from 0.46% at
December 31, 2006. Non-performing loans to total gross loans
increased to 1.51% at December 31, 2007 from 0.54% at December 31,
2006. The increases in the non- performing loan and non-performing
asset ratios during the year were primarily the result of two
commercial loan relationships totaling approximately $6.1 million
that were placed on non-accrual status during the year along with
an increase in consumer loan delinquencies. The ratio of the
allowance for loan losses to total loans was 0.93% at December 31,
2007 compared to 0.95% at December 31, 2006. In addition, the
allowance for loan losses to non- performing loans was 61% as of
December 31, 2007 compared to 176% at December 31, 2006. Net
Interest Income Net interest income increased $180,000 or 2.7% to
$6.9 million for the fourth quarter while annual net interest
income increased $1.8 million or 7.1% to $27.5 million. Net
interest margin for the fourth quarter of 2007 was 3.38%, which
represented a decrease of 13 basis points compared to the third
quarter of 2007. Net interest margin for 2007 was 3.45% compared to
3.29% for 2006 -- a 16 basis point increase. The increase in net
interest margin for the year was primarily the result of a shift in
composition of the balance sheet. Commercial and commercial real
estate loans continue to replace lower yielding residential
mortgage loans. Non Interest Income Non interest income decreased
$1.7 million for the fourth quarter as during the fourth quarter of
2006, the Company recorded a gain of $1,957,000 related to the sale
of mortgage servicing rights. Excluding this gain, non interest
income would have increased $253,000 or 8.1% for the fourth
quarter. For the year, non interest income increased $551,000 or
4.5%. Investment advisory services increased $161,000 or 48.8% for
the fourth quarter and increased $511,000 or 37.5% for the year.
During the third quarter, the Company acquired a book of business
from an existing broker in the Bank's current Indianapolis market
area. Service fees on deposits accounts increased $49,000 or 3.0%
for the fourth quarter and increased $450,000 or 7.4% for the year
as the Bank implemented an enhanced overdraft privilege product
during the second quarter of 2006. These increases were offset by
the decrease in loan servicing income, which decreased $76,000 for
the fourth quarter and $662,000 for the year. The Bank sold its
mortgage servicing portfolio during the fourth quarter of 2006. Non
Interest Expenses Non interest expenses increased $52,000 or 0.7%
to $7.3 million for the fourth quarter and increased $1.9 million
or 6.7% to $29.8 million for the year. Miscellaneous expenses for
2007 include expenses incurred pursuant to the separation agreement
and a $200,000 write-down of the Bank's former operations building,
which was classified as held for sale. The write-down represented
the entire remaining book value of the building. Excluding the
impact of the separation agreement and the write-down of the
building, non interest expenses increased $880,000 or 3.2% for the
year. Compensation and employee benefits expense increased $526,000
or 3.3% for the year due to additional salary and incentive
compensation expense for the new commercial lending and commercial
credit staff in Indianapolis, additional brokerage commission costs
resulting from increased revenue and normal annual salary
increases. Miscellaneous expenses, excluding the charges associated
with the building write-down and the separation agreement,
increased $172,000 compared to 2006. The increase was primarily due
to an increase of $143,000 in additional legal and accounting
expenses which were incurred to address new proxy disclosure
requirements and new accounting pronouncements. Stock Repurchase
Programs In April 2007, the Board of Directors approved the twelfth
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 175,628 such shares. Such purchases will be
made subject to market conditions in open market or block
transactions. Management believes that the purchase of these shares
will help increase long term shareholder value by increasing
earnings per share and return on equity. The Company repurchased
134,181 shares under the eleventh repurchase plan and 175,338
shares under the twelfth repurchase plan for a total of 309,519
shares repurchased year to date. The Company had no shares
remaining to be repurchased under this plan at December 31, 2007.
In January 2008, the Board of Directors approved the thirteenth
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 168,498 such shares. Home Federal Bancorp is a
bank holding company registered with the Board of Governors of the
Federal Reserve System (the "Federal Reserve"), which has been
authorized by the Federal Reserve to engage in activities
permissible for a financial holding company. HomeFederal Bank, its
principal subsidiary, is an FDIC insured state chartered commercial
bank. HomeFederal Bank was founded in 1908 and offers a wide range
of consumer and commercial financial services through 19 branch
offices in central and southeastern Indiana. Forward-Looking
Statement 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 (unaudited) (in thousands, except share data)
December 31, December 31, 2007 2006 Assets: Cash and due from banks
$40,552 $106,063 Securities available for sale at fair value
(amortized cost $62,551 and $57,421) 62,306 56,887 Securities held
to maturity at amortized cost (fair value $1,558 and $1,628) 1,557
1,635 Loans held for sale (fair value $7,250 and $7,055) 7,112
6,925 Portfolio loans: Commercial loans 207,590 151,781 Commercial
mortgage loans 269,035 227,433 Residential mortgage loans 142,481
166,003 Second & home equity loans 103,560 102,713 Other
consumer loans 27,345 34,483 Unearned income (165) (153) Total
portfolio loans 749,846 682,260 Allowance for loan losses (6,972)
(6,598) Portfolio loans, net 742,874 675,662 Premises and equipment
15,599 17,232 Accrued interest receivable 4,670 4,679 Goodwill
1,875 1,695 Other assets 32,261 33,689 TOTAL ASSETS $908,806
$904,467 Liabilities: Deposits: Demand $69,728 $72,804 Interest
checking 103,624 129,025 Savings 37,513 41,710 Money market 185,803
165,605 Certificates of deposit 301,146 293,914 Retail deposits
697,814 703,058 Brokered deposits 9,174 22,357 Public fund
certificates 563 1,744 Wholesale deposits 9,737 24,101 Total
deposits 707,551 727,159 FHLB Borrowings 99,349 68,667 Short term
borrowings 20 - Junior subordinated debt 15,464 15,464 Accrued
taxes, interest and expense 2,981 4,462 Other liabilities 15,987
17,434 Total liabilities 841,352 833,186 Commitments and
Contingencies 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:
3,369,965 and 3,610,218 20,305 17,081 Retained earnings, restricted
48,089 55,137 Accumulated other comprehensive loss, net (940) (937)
Total shareholders' equity 67,454 71,281 TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $908,806 $904,467 HOME FEDERAL BANCORP
CONSOLIDATED STATEMENTS OF INCOME (unaudited) (in thousands, except
share data) Three Months Ended Year to Date December 31, December
31, Interest income: 2007 2006 2007 2006 Short term investments
$199 $656 $1,116 $1,163 Securities 693 718 2,688 4,246 Commercial
loans 3,791 3,066 14,538 10,015 Commercial mortgage loans 4,503
3,924 16,766 14,312 Residential mortgage loans 2,478 2,754 10,471
10,939 Second and home equity loans 1,836 1,907 7,342 7,021 Other
consumer loans 544 690 2,280 2,659 Total interest income 14,044
13,715 55,201 50,355 Interest expense: Checking and savings
accounts 463 710 1,761 1,592 Money market accounts 1,611 1,454
5,869 4,982 Certificates of deposit 3,592 3,260 14,317 11,343 Total
interest on retail deposits 5,666 5,424 21,947 17,917 Brokered
deposits 113 282 665 1,118 Public funds 6 58 47 344 Total interest
on wholesale deposits 119 340 712 1,462 Total interest on deposits
5,785 5,764 22,659 19,379 FHLB borrowings 1,054 933 3,884 4,284
Other borrowings 0 0 8 5 Long term debt 0 0 0 650 Junior
subordinated debt 286 279 1,110 326 Total interest expense 7,125
6,976 27,661 24,644 Net interest income 6,919 6,739 27,540 25,711
Provision for loan losses 572 317 1,361 850 Net interest income
after provision for loan losses 6,347 6,422 26,179 24,861 Non
interest income: Gain on sale of loans 390 365 1,497 1,430 Gain
(loss) on sale of securities 0 0 0 (1,956) Gain on sale of mortgage
servicing rights 0 1,957 0 1,957 Investment advisory services 491
330 1,874 1,363 Service fees on deposit accounts 1,692 1,643 6,574
6,124 Loan servicing income, net of impairments 145 221 571 1,233
Miscellaneous 669 575 2,338 2,152 Total non interest income 3,387
5,091 12,854 12,303 Non interest expenses: Compensation and
employee benefits 4,129 4,170 16,426 15,900 Occupancy and equipment
1,070 1,001 4,086 3,908 Service bureau expense 414 375 1,637 1,506
Marketing 268 178 1,141 1,268 Miscellaneous 1,435 1,540 6,484 5,324
Total non interest expenses 7,316 7,264 29,774 27,906 Income before
income taxes 2,418 4,249 9,259 9,258 Income tax provision 776 1,213
3,136 2,817 Net Income $1,642 $3,036 $6,123 $6,441 Basic earnings
per common share $0.48 $0.83 $1.75 $1.74 Diluted earnings per
common share $0.47 $0.81 $1.72 $1.70 Basic weighted average number
of shares 3,433,670 3,642,868 3,492,615 3,707,325 Dilutive weighted
average number of shares 3,473,101 3,728,933 3,560,603 3,788,556
Dividends per share $0.200 $0.200 $0.800 $0.788 Supplemental Data:
Three Months Ended Year to Date (unaudited) December 31, December
31, 2007 2006 2007 2006 Weighted average interest rate earned on
total interest-earning assets 6.86% 6.80% 6.91% 6.45% Weighted
average cost of total interest-bearing liabilities 3.52% 3.51%
3.53% 3.21% Interest rate spread during period 3.34% 3.29% 3.38%
3.24% Net interest margin (net interest income divided by average
interest-earning assets on annualized basis) 3.38% 3.34% 3.45%
3.29% Total interest income divided by average total assets (on
annualized basis) 6.33% 6.20% 6.31% 5.84% Total interest expense
divided by average total assets (on annualized basis) 3.18% 3.13%
3.16% 2.86% Net interest income divided by average total assets (on
annualized basis) 3.12% 3.04% 3.15% 2.98% Return on assets (net
income divided by average total assets on annualized basis) 0.74%
1.37% 0.70% 0.75% Return on equity (net income divided by average
total equity on annualized basis) 9.58% 17.03% 8.88% 9.00% December
31, December 31, 2007 2006 Book value per share outstanding $20.02
$19.74 Nonperforming Assets: Loans: Non-accrual $ 10,516 $2,852
Past due 90 days or more 64 459 Restructured 874 440 Total
nonperforming loans 11,454 3,751 Real estate owned, net 286 416
Other repossessed assets, net 25 20 Total Nonperforming Assets $
11,765 $4,187 Nonperforming assets divided by total assets 1.29%
0.46% Nonperforming loans divided by total loans 1.51% 0.54%
Balance in Allowance for Loan Losses $6,972 $6,598 DATASOURCE: Home
Federal Bancorp CONTACT: John K. Keach, Jr., Chairman, Chief
Executive Officer, +1-812-373-7816, or Mark T. Gorski, Executive
Vice President, Chief Financial Officer, +1-812-373-7379, both of
Home Federal Bancorp Web site: http://www.homf.com/
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