SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: O-18847
HOME FEDERAL BANCORP
--------------------
(Exact name of registrant as specified in its charter)
Indiana 35-1807839
------- ----------
(State or other Jurisdiction (I.R.S. Employer
of Incorporation or Origination) Identification No.)
222 West Second Street, Seymour, Indiana 47274-0648
---------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number including area code: (812) 522-1592
--------------
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.
YES X NO
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of May 4, 1998:
Common Stock, no par value - 5,127,091 shares outstanding
<PAGE>
HOME FEDERAL BANCORP
FORM 10-Q
INDEX
Page No
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
(unaudited) ........................................ 3
Consolidated Statements of Income
(unaudited) ........................................ 4
Consolidated Statements of Cash Flows
(unaudited) ........................................ 5
Forward looking statements .............................. 6
Notes to Consolidated Financial
Statements ......................................... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations ......................................... 8
PART II. OTHER INFORMATION
Item 3. Quantitative and Qualitative Analysis of Financial
Condition and Results of Operations ..................... 13
Item 6. Exhibits and Reports on Form 8-K ............................ 13
Signatures ........................................................... 14
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<PAGE>
HOME FEDERAL BANCORP
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited) March 31, June 30,
1998 1997
----------- -----------
ASSETS:
Cash ............................................. $ 18,563 $ 16,274
Interest-bearing deposits ........................ 2,889 3,498
-------- --------
Total cash and cash equivalents ................ 21,452 19,772
-------- --------
Securities available for sale at fair value
(amortized cost $58,176 and $40,208) ............ 58,447 40,119
Securities held to maturity
(fair value $11,300 and $13,012) ................ 11,309 13,115
Loans held for sale (fair value
$13,903 and $4,688) ............................. 13,764 4,629
Loans receivable, net of allowance for loan
losses of $4,002 and $3,649 ..................... 568,786 575,624
Investments in joint ventures .................... 3,173 3,084
Federal Home Loan Bank stock ..................... 5,456 4,260
Accrued interest receivable, net ................. 4,589 4,272
Premises and equipment, net ...................... 8,394 8,171
Real estate owned ................................ 110 139
Prepaid expenses and other assets ................ 2,233 2,284
Cash surrender value of life insurance ........... 5,740 5,529
Goodwill ......................................... 1,722 1,798
-------- --------
TOTAL ASSETS .................................. $705,175 $682,796
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits ......................................... $528,127 $527,788
Advances from Federal Home Loan Bank ............. 98,070 79,945
Senior debt ...................................... 1,475 7,800
Other borrowings ................................. 6,543 4,648
Advance payments by borrowers for
taxes and insurance ............................. 782 296
Accrued expenses and other liabilities ........... 5,329 4,402
-------- --------
Total liabilities ............................. 640,326 624,879
-------- --------
Shareholders' equity:
No par common stock; Authorized: 9,500,000 shares
Issued and outstanding: ........................ 7,750 7,549
5,127,091 shares at March 31, 1998
5,094,493 shares at June 30, 1997
Retained earnings, restricted ................... 56,936 50,421
Unrealized gain (loss) on securities available
for sale, net of deferred taxes ................. 163 (53)
-------- --------
Total shareholders' equity .................... 64,849 57,917
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY .... $705,175 $682,796
======== ========
See notes to consolidated financial statements
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<PAGE>
<TABLE>
HOME FEDERAL BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share data)
(unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
-------------------- --------------------
Interest income: 1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Loans receivable .......................................... $12,627 $12,029 $38,433 $35,542
Securities available for sale and held to maturity ........ 1,015 832 2,766 2,454
Other interest income ..................................... 104 72 229 247
------- ------- ------- -------
Total interest income ...................................... 13,746 12,933 41,428 38,243
------- ------- ------- -------
Interest expense:
Deposits .................................................. 6,023 5,795 18,425 17,313
Advances and borrowings ................................... 1,640 1,306 4,788 3,974
------- ------- ------- -------
Total interest expense ..................................... 7,663 7,101 23,213 21,287
------- ------- ------- -------
Net interest income ........................................ 6,083 5,832 18,215 16,956
Provision for loan losses .................................. 197 379 831 813
------- ------- ------- -------
Net interest income after provision for loan losses ........ 5,886 5,453 17,384 16,143
------- ------- ------- -------
Other income:
Gain on sale of loans ..................................... 1,425 264 2,587 1,002
Gain on sale of securities ................................ 7 -- 7 20
Income from joint ventures ................................ 66 40 230 282
Insurance, annuity income, other fees ..................... 342 422 1,171 1,085
Service fees on NOW accounts .............................. 474 402 1,439 1,233
Net gain (loss) on real estate owned and repossessed assets 5 (7) 14 (23)
Loan servicing income ..................................... 83 267 575 772
Miscellaneous ............................................. 375 292 1,159 969
------- ------- ------- -------
Total other income ......................................... 2,777 1,680 7,182 5,340
------- ------- ------- -------
Other expenses:
Compensation and employee benefits ........................ 2,466 2,106 6,474 5,806
Occupancy and equipment ................................... 576 538 1,743 1,526
Service bureau expense .................................... 212 207 600 586
Federal insurance premium ................................. 82 17 246 3,570
Marketing ................................................. 105 103 424 336
Goodwill amortization ..................................... 25 25 75 75
Miscellaneous ............................................. 706 596 2,011 1,825
------- ------- ------- -------
Total other expenses ....................................... 4,172 3,592 11,573 13,724
------- ------- ------- -------
Income before income taxes ................................. 4,491 3,541 12,993 7,759
Income tax provision ....................................... 1,739 1,370 5,093 2,991
------- ------- ------- -------
Net Income ................................................. $ 2,752 $ 2,171 $ 7,900 $ 4,768
======= ======= ======= =======
Basic earnings per common share $ 0.54 $ 0.43 $ 1.55 $ 0.95
Dilutive earnings per common share $ 0.50$ $ 0.41 $ 1.45 $ 0.91
Basic weighted average number of shares 5,120,661 5,054,634 5,107,926 5,028,210
Dilutive weighted average number of shares 5,514,449 5,313,818 5,449,282 5,226,693
Dividends per share $ 0.10 $ 0.67 $ 0.271 $ 0.189
See notes to consolidated financial statements
</TABLE>
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<PAGE>
HOME FEDERAL BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands) Nine Months Ended
(unaudited) March 31,
----------------------
1998 1997
----------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ........................................... $ 7,900 $ 4,768
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Accretion of discounts, amortization
and depreciation ............................... 545 880
Provision for loan losses ....................... 831 813
Net gain from sale of loans ..................... (2,587) (670)
Net (gain)/loss from sale of
investment securities .......................... (7) -
Net gain from joint ventures;
real estate owned .............................. (244) (238)
Loan fees deferred (recognized), net ............ 52 (288)
Proceeds from sale of loans held for sale ....... 164,002 62,216
Origination of loans held for sale .............. (150,396) (61,324)
Decrease in accrued interest and
other assets ................................... 9,339 4,207
Increase in other liabilities ................... 1,413 (184)
--------- ---------
Net cash provided by operating activities ............ 30,848 10,180
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net principal disbursed on loans ..................... (17,838) (44,272)
Proceeds from:
Maturities/Repayments of:
Securities held to maturity .................. 6,501 221
Securities available for sale ................ 7,853 7,562
Sales of:
Securities available for sale ................ 8,225 6,572
Real estate owned and other asset sales ...... 612 416
Purchases of:
Loans ........................................... (6,064) (756)
Securities available for sale ................... (33,165) (10,042)
Securities held to maturity ..................... (5,585) (5,633)
Federal Home Loan Bank stock .................... (1,196) (300)
Increase in cash surrender value of life insurance ... (211) (200)
Acquisition of property and equipment, net ........... (1,150) (682)
--------- ---------
Net cash used in investing activities ................ (42,018) (47,114)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in deposits, net ................. 339 25,600
Proceeds from borrowings ............................. 79,700 42,500
Repayment of borrowings .............................. (67,900) (38,030)
Net repayment of overnight borrowings ................ 1,895 (805)
Common stock options exercised ....................... 201 659
Payment of dividends on common stock ................. (1,385) (955)
--------- ---------
Net cash provided by (used in) financing activities .. 12,850 28,969
--------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS ............ 1,680 (7,965)
Cash and cash equivalents, beginning of period ....... 19,772 25,628
--------- ---------
Cash and cash equivalents, end of period ............. $ 21,452 $ 17,663
========= =========
Supplemental information:
Cash paid for interest ............................... $ 23,038 $ 21,141
Cash paid for income taxes ........................... $ 5,020 $ 2,613
Assets acquired through foreclosure .................. $ 518 $ 159
See notes to consolidated financial statements
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<PAGE>
Forward Looking Statements
This Quarterly Report on Form 10-Q ("Form 10-Q") contains statements
which constitute forward looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements appear in a number of
places in this Form 10-Q and include statements regarding the intent, belief,
outlook, estimate or expectations of the Company (as defined below), its
directors or its officers primarily with respect to future events and the future
financial performance of the Company. Readers of this Form 10-Q are cautioned
that any such forward looking statements are not guarantees of future events or
performance and involve risks and uncertainties, and that actual results may
differ materially from those in the forward looking statements as a result of
various factors. The accompanying information contained in this Form 10-Q
identifies important factors that could cause such differences. These factors
include changes in interest rates, loss of deposits and loan demand to other
savings and financial institutions, substantial changes in financial markets;
changes in real estate values and the real estate market; regulatory changes, or
unanticipated results in pending legal proceedings.
Notes to Consolidated Financial Statements
1. Basis of Presentation
The consolidated financial statements include the accounts of Home Federal
Bancorp (the "Company") and its wholly-owned subsidiary, Home Federal Savings
Bank (the "Bank"). These consolidated interim financial statements at March 31,
1998, and for the three and nine month periods ended March 31, 1998, have not
been examined by independent auditors, but reflect, in the opinion of the
Company's management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position and results of
operations for such periods, including elimination of all significant
intercompany balances and transactions.
These statements should be read in conjunction with the consolidated financial
statements and related notes which are incorporated by reference in the
Company's Annual Report on Form 10-K for the year ended June 30, 1997.
2. Reclassifications
Some items in the financial statements of previous periods have been
reclassified to conform to the current period presentation.
3. Adoption of Statement of Financial Accounting Standards No. 128
The Company adopted SFAS No. 128, "Earnings per Share," effective December 31,
1997. This statement established new accounting standards for the calculation of
basic earnings per share as well as diluted earnings per share. The adoption of
the statement did not have a material effect on the Company's calculation of
earnings per share. The following is a reconciliation of the weighted average
common shares for the basic and diluted earnings per share computations:
<TABLE>
<CAPTION>
Three months ended Nine months ended
March 31, March 31,
1998 1997 1998 1997
---- ---- ---- ----
Basic EPS:
<S> <C> <C> <C> <C>
Weighted average common shares . 5,120,661 5,054,634 5,107,926 5,028,210
========= ========= ========= =========
Diluted EPS:
Weighted average common shares . 5,120,661 5,054,634 5,107,926 5,028,210
Dilutive effect of stock options 393,788 259,184 341,356 198,483
Weighted average common and _________ _________ _________ _________
incremental shares............. 5,514,449 5,313,818 5,449,282 5,226,693
========= ========= ========= =========
</TABLE>
-6-
<PAGE>
4. Recent Accounting Pronouncements
Statement of Financial Accounting Standards No. 130 ("SFAS 130"), "Comprehensive
Income", was issued in June 1997 and becomes effective for fiscal periods
beginning after December 15, 1997. SFAS 130 requires reclassification of earlier
financial statements for comparative purposes. SFAS No. 130 requires that
changes in the amounts of certain items, including foreign currency translation
adjustments and gains and losses on certain securities be shown in the financial
statements. SFAS No. 130 does not require a specific format for the financial
statement in which comprehensive income is reported, but does require that an
amount representing total comprehensive income be reported in that statement.
Management has not yet quantified the effect of the new standard on the
consolidated financial statements.
Statement of Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosures
about Segments of an Enterprise and Related Information," was issued in June
1997 and is effective for fiscal periods beginning after December 15, 1997. This
statement will change the way public companies report information about segments
of their business in their annual financial statements and requires them to
report selected segment information in their quarterly reports issued to
shareholders. It also requires entity-wide disclosures about the products and
services an entity provides, the material countries in which it holds assets and
reports revenues, and its major customers. Management has not yet quantified the
effect of this new standard on the consolidated financial statements.
5. Stock split
On October 28, 1997 Home Federal Bancorp declared a three for two stock split,
under which every two shares of its common stock outstanding at the close of
business on November 10, 1997 were converted into three shares of common stock.
No fractional shares were issued. Cash in lieu of fractional shares, based on
the market price of a share of Home Federal Bancorp's common stock on November
10, 1997, was paid to shareholders. All per share information has been restated
to give effect to the stock split. Concurrently with the stock split the Company
increased the number of authorized shares of no par common stock to 9,500,000.
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<PAGE>
Part I, Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations
Home Federal Bancorp (the "Company") is organized as a unitary savings and loan
holding company and owns all the outstanding capital stock of Home Federal
Savings Bank (the "Bank"). The business of the Bank and therefore, the Company,
is to provide consumer and business banking services to certain markets in the
south-central portions of the State of Indiana. The Bank does business through
16 full service banking branches.
RESULTS OF OPERATIONS:
Quarter Ended March 31, 1998 Compared to Quarter Ended March 31, 1997
General
The Company reported net income of $2,752,000 for the quarter ended March 31,
1998, compared to $2,171,000 for the quarter ended March 31, 1997, an increase
of $581,000 or 26.8%. Basic earnings per common share for the current quarter
were $0.54 compared to $0.43 for the quarter ended March 31, 1997. Dilutive
earnings per common share increased $.09 to $.50 from $.41 for the quarter ended
March 31, 1998 compared to the quarter ended March 31, 1997.
Net Interest Income
Net interest income before provision for loan losses increased by $251,000 for
the quarter ended March 31, 1998, compared to the quarter ended March 31, 1997.
The increase is primarily due to the total interest sensitive assets growing
faster than interest bearing liabilities. The increase in net interest income
due to volume growth was offset by a slight decline in the interest rate spread.
Net interest income after provision for loan losses increased by $433,000 or
7.9% for the quarter ended March 31, 1998, compared to the quarter ended March
31, 1997. The provision for loan losses decreased $182,000 due to a
corresponding decrease in loans receivable net of $10.4 million over the three
month period ended March 31, 1998 as opposed to a $16.0 million increase in the
balance of loans receivable, net over the three month period ended March 31,
1997. At March 31, 1998, the loan loss allowance covered 108% of non-performing
loans, real estate owned and other repossessed assets. To the best of
management's knowledge, and in its opinion, classified assets do not represent
material credits which would cause management to have serious doubts as to the
ability of such borrowers to comply with their loan repayment terms. Based on
management's analysis of classified assets, loss histories and current future
projections, the allowance balance appears adequate at March 31, 1998.
Quarter ending March 31: 1998 1997
------------------------ ---- ----
(in thousands)
Allowance beginning balance ..... $ 3,958 $ 3,251
Provision for loan losses ....... 197 379
Charge-offs ..................... (186) (184)
Recoveries ...................... 33 12
Loan Loss Allowance ............. $ 4,002 $ 3,458
Allowance to Total Loans ........ .68% .62%
Allowance to Nonperforming Assets 108% 119%
Interest Income
Total interest income for the three-month period ended March 31, 1998, increased
$813,000, or 6.3%, over the same period of the prior year. The increase is due
primarily to a corresponding increase in the average balances of loans
receivable, net and investment securities for the quarter ended March 31, 1998
as compared to the quarter ended March 31, 1997.
Interest Expense
Total interest expense for the three-month period ended March 31, 1998 increased
$562,000, or 7.9%, as compared to the same period a year ago. The increase in
interest expense for the three month period ended March 31, 1998, compared to
the same period ended March 31, 1997, was due to increased deposit and FHLB
advances average balances for the same two comparative quarters.
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<PAGE>
Other Income
Total other income for the three-month period ended March 31, 1998, increased
$1,097,000 or 65.3% over the same period a year ago. This increase was primarily
due to the gain on sale of loans increasing $1,161,000 for the three month
period ended March 31, 1998, compared to the same period ended March 31, 1997.
The $1,425,000 gain on sale for the quarter ended March 31, 1998 reflects an
increase in refinancing activity as well as the gain from the sale of $8,747,000
seasoned adjustable and fixed rate mortgages. These increases in other income
were offset by a decrease in loan servicing income of $184,000 for the three
month period ended March 31, 1998 as compared to the three month period ended
March 31, 1997. This decrease was due an impairment charge of $202,000 for the
three month period ended March 31, 1998 on originated mortgage servicing rights
resulting from the lower rate environment of fiscal third quarter of 1998 as
compared to the fiscal third quarter of 1997.
Other Expenses
Total other expenses for the three-month period ended March 31, 1998, increased
$580,000 over the same period ended March 31, 1997. Compensation and employee
benefits increased $360,000. Increases in compensation were due to normal salary
increases and increased loan activity and related compensation costs. Occupancy
and equipment expenses increased $38,000 primarily due to increased depreciation
charges associated with the purchases of a new building, software and computers.
FDIC insurance premiums increased $65,000 due to a $62,000 credit being applied
to the insurance premium for the quarter ended March 31, 1997. Miscellaneous
expenses increased $110,000 due to a variety of expense categories.
Nine-months Ended March 31, 1998 Compared to Nine-months Ended March 31, 1997:
General
The Company reported net income of $7,900,000, or $1.55 per basic common share,
for the nine-months ended March 31, 1998, compared to $4,768,000, or $.95 per
basic common share, for the same period a year ago, an increase of $3,132,000,
or $0.60 per basic common share. The nine month period ended March 31, 1997
included an after tax charge of $1,726,000 to help recapitalize the Federal
Deposit Insurance Corporation's Savings Association Insurance Fund (SAIF).
Comparing the current nine month period to the same period last year, without
the SAIF charge, net income increased $1,406,000 or 21.7%.
Net Interest Income
Net interest income before provision for loan losses increased $1,259,000 for
the nine-month period ended March 31, 1998, compared to the same period ended
March 31, 1997. The reasons for this increase were primarily the same as for the
three-month period ended March 31, 1998.
Net interest income after provision for loan losses increased by $1,241,000 for
the nine-month period ended March 31, 1998. The increase is primarily due to
interest sensitive assets growing faster than interest bearing liabilities for
the two comparative nine month periods.
The change to the loan loss allowance for the nine-month period ended March 31,
1998 is as follows:
Nine months ending March 31: 1998 1997
---------------------------- ---- ----
(in thousands)
Allowance beginning balance $ 3,649 $ 3,061
Provision for loan losses . 831 813
Charge-offs ............... (553) (471)
Recoveries ................ 75 55
Loan Loss Allowance ....... $ 4,002 $ 3,458
Interest Income
Total interest income for the nine-month period ended March 31, 1998 increased
$3,185,000 or 8.3%, compared to the nine-month period ended March 31, 1997. The
increase was due primarily to the same reasons as discussed in the three-month
period ended March 31, 1998. These reasons include a changing mix of loan
products and an increase in average loans outstanding for the two nine month
periods ended March 31, 1998 and 1997.
Interest Expense
Total interest expense for the nine-months ended March 31, 1998 increased
$1,926,000 or 9.1%, compared to the nine-month period ended March 31, 1997. The
increase was due primarily to the same reasons as discussed in the three-month
period ended March 31, 1998. These reasons include increased deposits and FHLB
advances outstanding.
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<PAGE>
Other Income
Total other income for the nine-month period ended March 31, 1998 increased
$1,842,000 as compared to the same period one year ago. The increase in gain on
sale of loans is reflective of the third quarter increase detailed above.
Insurance, annuity income and other fees increased $86,000 primarily due to an
increase in annuity commissions of $122,000, for the nine month period ended
March 31, 1998, versus the same period ended March 31, 1997. Service fees on NOW
accounts increased $206,000 or 16.7% due primarily to two factors: 1) the
introduction of an ATM surcharge fee in fiscal 1998; and 2) an increase in the
number of checking accounts. Miscellaneous income increased in the nine month
period ended March 31, 1998 compared to the same period ended March 31, 1997,
$190,000. This increase was due primarily to three factors: 1) the $107,000 gain
on sale of the Salem branch building which was relocated; 2) an increase of
$48,000 in net appraisal fees; and 3) a $67,000 increase in the dividends
received on FHLB stock. These increases in other income were offset by a
decrease in loan servicing income of $197,000 for the nine month period ended
March 31, 1998 as compared to the nine month period ended March 31, 1997. This
decrease reflects the impairment charge on originated mortgage servicing rights
discussed in the quarterly results.
Other Expenses
Total other expenses for the nine-month period ended March 31, 1998 decreased
$2,151,000. This decrease reflects the SAIF insurance charge of $3,001,000
assessed in the nine month period ended March 31, 1997. Without the SAIF
assessment in 1996 other expenses would have increased $850,000 or 7.9%.
Compensation and occupancy expense accounted for the majority of the increase.
The increased compensation and occupancy expense were the results of the same
factors discussed in the three month period.
FINANCIAL CONDITION:
Total assets increased by $22,379,000 from June 30, 1997, to March 31, 1998. Net
loans receivable decreased by $6,838,000 with loans held for sale increasing
$9,135,000. Securities available for sale (including mortgage-backed securities)
increased $18,328,000.
Total liabilities increased $15,447,000 from June 30, 1997, to March 31, 1998.
Senior debt decreased $6,325,000, while advances from the Federal Home Loan Bank
increased $18,125,000.
Shareholders' equity increased $6,932,000 during the same period. Retained
earnings increased $7,900,000 million from net income and decreased $1,385,000
for dividends paid. Common stock increased $205,000 for stock options exercised
during the period and decreased $4,000 for fractional shares redeemed resulting
from the 3 for 2 stock split. In accordance with Statement of Accounting
Standards 115, "Accounting for Certain Investments in Debt and Equity
Securities", the Company had unrealized gains in its available for sale
portfolio of $163,000, or a $216,000 increase in shareholders' equity from the
June 30, 1997 loss position of $53,000.
At March 31, 1998, the Bank exceeded all current OTS regulatory capital
requirements as follows (in thousands):
<TABLE>
<CAPTION>
To Be
Categorized
As "Well Capitalized"
Under Prompt
For Capital Corrective Action
Actual Adequacy Purposes Provisions
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
As of March 31, 1998
<S> <C> <C> <C> <C> <C> <C>
Core capital (to total assets) $57,339 8.19% $28,008 4.00% N/A N/A
Total risk-based capital
(to risk-weighted assets) . $60,924 11.98% $40,686 8.00% $50,857 10.00%
Tier 1 risk-based capital
(to risk-weighted assets) . $57,339 11.27% N/A N/A $30,514 6.00%
Tier 1 leverage capital
(to average assets) ....... $57,339 8.28% N/A N/A $34,618 5.00%
</TABLE>
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<PAGE>
Liquidity and Capital Resources
The OTS amended the regulatory liquidity requirements in the second quarter of
fiscal 1998. The minimum liquidity level was reduced to 4%, the lowest amount
allowed by law, from 5%. In addition to reducing the percentage of liquidity
required, the OTS eliminated the 1% short term liquidity requirement, as well as
changing the definition of liquid assets to include all maturities of Fannie
Mae, Freddie Mac and Ginnie Mae obligations which were formally limited to
obligations with maturities of five years or less. Institutions were also given
the option of excluding all deposits with unexpired maturities exceeding one
year from the liquidity base or continuing the previous liquidity base
calculations. At March 31, 1998, the Bank's average liquidity ratio was 15.24%.
Historically, the Bank has maintained its liquid assets which qualify for
purposes of the OTS liquidity regulations above the minimum requirements imposed
by such regulations and at a level believed adequate to meet requirements of
normal daily activities, repayment of maturing debt and potential deposit
outflows. Cash flow projections are regularly reviewed and updated to assure
that adequate liquidity is maintained. Cash for these purposes is generated
through the sale or maturity of investment securities and loan sales and
repayments, and may be generated through increases in deposits. Loan payments
are a relatively stable source of funds, while deposit flows are influenced
significantly by the level of interest rates and general money market
conditions. Borrowings may be used to compensate for reductions in other sources
of funds such as deposits. As a member of the FHLB system, the Bank may borrow
from the FHLB of Indianapolis. At March 31, 1998, the Bank had $98.1 million in
such borrowings. As of that date, the Bank had commitments to fund loan
originations and purchases of approximately $34.0 million and commitments to
sell loans of $26.5 million. In the opinion of management, the Bank has
sufficient cash flow and borrowing capacity to meet current and anticipated
funding commitments.
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<PAGE>
<TABLE>
Supplemental Data:
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
------------------ -------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Weighted average interest rate earned
on total interest-earning assets................ 8.22% 8.40% 8.37% 8.46%
Weighted average cost of total
interest-bearing liabilities.................... 4.90% 4.87% 4.91% 4.89%
Interest rate spread during period.................. 3.32% 3.53% 3.46% 3.57%
Net yield on interest-earning assets
(net interest income divided by average
interest-earning assets on annualized basis).... 3.64% 3.79% 3.68% 3.75%
Total interest income divided by average
total assets (on annualized basis).............. 7.72% 7.90% 7.86% 7.93%
Total interest expense divided by
average total assets (on annualized basis)...... 4.36% 4.40% 4.40% 4.41%
Net interest income divided by average
total assets (on annualized basis).............. 3.42% 3.56% 3.46% 3.52%
Return on assets (net income divided by
average total assets on annualized basis)....... 1.51% 1.33% 1.50% 0.99%
Return on equity (net income divided by
average total equity on annualized basis)....... 16.88% 15.80% 17.19% 11.91%
</TABLE>
At March 31,
------------------
1998 1997
Book value per share outstanding ........... $ 12.65 $ 11.03
Interest rate spread ....................... 3.46% 3.57%
Nonperforming Assets:
Loans: Non-accrual ................... $ 3,604 $ 2,824
Past due 90 days or more ...... 6 0
Restructured .................. 1 1
----- -----
Total nonperforming loans ............. 3,611 2,825
Real estate owned, net ................ 41 62
Other repossessed assets, net ......... 69 31
----- -----
Total Nonperforming Assets ............ $ 3,721 $ 2,918
Nonperforming assets divided by total assets 0.53% 0.44%
Nonperforming loans divided by total loans . 0.61% 0.50%
Balance in Provision for Loan Losses ....... $ 4,002 $ 3,458
-12-
<PAGE>
PART II. OTHER INFORMATION
Item 3. Quantitative and Qualitative Analysis of Financial Condition
and Results of Operations.
In the opinion of management the results for the quarter ended March 31, 1998
will not be materially different from the results presented on page 11 of the
annual report for fiscal year 1997.
Item 4. Submission of Matters to a Vote of Security Holders.
N/A
Item 5. Other information
N/A
Item 6. Exhibits and Reports on Form 8-K
(a) N/A
(b) Reports on Form 8-K.
Registrant filed no reports on Form 8-K during the fiscal
quarter ended March 31, 1998.
-13-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on behalf of
the undersigned thereto duly authorized.
Home Federal Bancorp
DATE: May 14, 1998 /S/ Lawrence E. Welker
- -------------------- ----------------------
Lawrence E. Welker, Executive Vice President,
Treasurer, and Chief Financial Officer
-14-
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from
the registrant's unaudited consolidated financial statements and is
qualified in its entirety by reference to such finanacial statements.
</LEGEND>
<CIK> 0000867493
<NAME> Home Federal Bankcorp
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> MAR-31-1998
<CASH> 18,563
<INT-BEARING-DEPOSITS> 2,889
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 58,447
<INVESTMENTS-CARRYING> 11,309
<INVESTMENTS-MARKET> 11,300
<LOANS> 568,786
<ALLOWANCE> 4,002
<TOTAL-ASSETS> 705,175
<DEPOSITS> 528,127
<SHORT-TERM> 39,818
<LIABILITIES-OTHER> 5,329
<LONG-TERM> 66,270
0
0
<COMMON> 7,750
<OTHER-SE> 56,936
<TOTAL-LIABILITIES-AND-EQUITY> 64,849
<INTEREST-LOAN> 38,433
<INTEREST-INVEST> 2,766
<INTEREST-OTHER> 299
<INTEREST-TOTAL> 41,428
<INTEREST-DEPOSIT> 18,425
<INTEREST-EXPENSE> 23,213
<INTEREST-INCOME-NET> 18,215
<LOAN-LOSSES> 831
<SECURITIES-GAINS> 7
<EXPENSE-OTHER> 11,573
<INCOME-PRETAX> 12,993
<INCOME-PRE-EXTRAORDINARY> 12,993
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,900
<EPS-PRIMARY> 1.55
<EPS-DILUTED> 1.45
<YIELD-ACTUAL> 0
<LOANS-NON> 3,604
<LOANS-PAST> 6
<LOANS-TROUBLED> 1
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,649
<CHARGE-OFFS> 553
<RECOVERIES> 75
<ALLOWANCE-CLOSE> 4,002
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
