NEWS RELEASE
For Immediate Release July 20, 2000
Contacts: John K. Keach, Jr. Lawrence E. Welker
Chairman of Board Executive Vice President
President/CEO Chief Financial Officer
(812) 373-7816 (812) 523-7308
HOME FEDERAL BANCORP ANNOUNCES
ANNUAL EARNINGS AND STOCK REPURCHASE PROGRAM
(Seymour, In) -- Home Federal Bancorp (the "Company") (NASDAQ: HOMF), the
holding company of Home Federal Savings Bank of Seymour, Indiana (the "Bank"),
announced today that the Board of Directors has approved the third 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 236,729 such
shares. Such purchases will be made subject to market conditions in open market
or block transactions. Repurchases may begin July 31, 2000.
According to John K. Keach, Jr., Chairman of the Board of the Company, the Board
believes that the Company's shares are currently undervalued by the market and
that open market purchases will have the potential effect of enhancing the book
value per share and the potential to enhance growth in earnings per share of the
Company's remaining outstanding shares.
The Company also announced today quarterly earnings of $2,495,000, or $0.54
basic and $0.51 diluted earnings per common share, for its fourth quarter ended
June 30, 2000. This compared to earnings of $2,682,000, or $0.54 basic and $0.50
diluted earnings per common share a year earlier. Earnings per share on a
dilutive basis remained the same due to the stock repurchases made by the
Company during the past fiscal year. For the fiscal year ended June 30, 2000 net
income was $9,438,000, or $1.97 basic and $1.88 diluted earnings per common
share, compared to $10,477,000, or $2.06 basic and $1.95 diluted earnings per
common share, a year earlier. Basic and diluted earnings per common share
decreased 4.6% and 3.5% for the annual period, respectively. The decrease in net
income for both the quarter and year-to-date were attributed to decreases in
gain on sale of loans due to the higher rate environment and reduced loan
originations compared to the year ago periods. For the quarter ended June 30,
2000 the after tax reduction on gain on sale of loans of $229,000 more than
accounted for the $187,000 reduction in net income for the quarter ended June
30, 2000 compared to the quarter ended June 30, 1999. For the year ended June
30, 2000 compared to the year ended June 30, 1999 the after tax reduction in
gain on sale of loans of $1,606,000 more than accounted for the $1,039,000
reduction in annual net income. If it were not for the above average loan
activity in fiscal year 1999 the current fiscal year's income would have
exceeded last years. Both the three-month and twelve month periods saw increases
in net interest income, increases in non-interest income exclusive of gain on
sale of loans, and only a 3.8% increase in non-interest expenses for the year.
In fiscal year 2000, net interest income after provision for loan losses
increased by $1,247,000. This increase was due to growth in the loan portfolio
as well as a stable net interest margin.
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Home Federal Bancorp
Fourth Quarter Earnings
Page 2
Other income decreased $2,340,000 from $10,004,000 in fiscal year 1999 to
$7,664,000 in fiscal year 2000. This decrease was primarily due to the decreases
in gain on sale of loans of $2,660,000 and gain on sale of securities of
$118,000. The decrease in gain on sale of loans has been discussed in previous
releases but is primarily due to the higher rate environment in fiscal 2000
compared to fiscal 1999. The higher rate environment slowed new loan and
refinance activity as well as reducing the percentage of loans being originated
as fixed rate loans which the Bank normally sells. The current year loss on
sales of securities was due to a partial restructuring of the investment
portfolio where low rate securities were sold at a loss and replaced with higher
yielding investments. These losses will be recovered in less than one year from
the higher yielding investments they were replaced with.
Other expense increased slightly over the prior fiscal year to $16,446,000 from
$15,851,000, a $595,000 increase, or 3.8%. The increases came primarily from
compensation and employee benefits which were up due to normal salary increases.
Occupancy and equipment expense also contributed to the increase in other
expenses due primarily to increased technology spending and expenses associated
with the renovation of the downtown Columbus office.
Return on average assets for the year ended June 30, 2000, was 1.20%, while
return on average equity was 13.84%, down from the prior year of 1.42% and
15.13%, respectively. These ratios were down primarily due to the reduced income
from gain on sale of loans previously disclosed.
Non-performing assets as a percentage of total assets was 0.52% at June 30,
2000, compared to 0.75%, at June 30, 1999. Non-performing loans to total gross
loans was 0.46% for the current year-end compared to 0.60% at June 30, 1999.
These represent a 31% and 23% improvement, respectively, for these two key
measures of asset quality.
For the quarter ending June 30, 2000 net interest income after provision for
loan loss increased to $6,197,000 compared to $5,822,000 for the same period one
year ago.
Total other income decreased $72,000 to $2,149,000 for the fourth quarter ended
June 30, 2000 compared to $2,221,000 for the quarter ended June 30, 1999. The
decrease was due primarily to the reduction in mortgage loan originations and
the resultant reduction in gain on sale of loans as discussed previously.
Non-interest expenses in the quarter ended June 30, 2000 increased to
$4,311,000, compared to the quarter ended June 30, 1999 of $3,807,000. The
increase in non-interest expense was the result of increases in compensation and
employee benefits expense, comprised of increased compensation expense,
retirement benefits and health insurance costs. In addition, miscellaneous
expenses were up $129,000 due in part to $79,000 increases in REO expenses
incurred in the quarter as well as other miscellaneous expenses.
The Company's assets totaled $832,154,000 as of June 30, 2000, an increase of
$87,645,000 or 11.8%, from June 30, 1999. Loans receivable grew by $65,089,000.
As of June 30, 2000, shareholders' equity was $69,486,000, a decrease of 0.21%
from $69,635,000 at June 30, 1999. The decrease was the result of shareholder
dividends and stock repurchases during the year. Based on June 30, 2000, book
value of $14.68 per share, Home Federal Bancorp stock was trading at 112% of
book value on that date. The stock price at June 30, 2000 was $16.50 per share
or 8.8 times fiscal year 2000 diluted earnings per share.
Home Federal Bancorp is a unitary holding company, with Home Federal Savings
Bank as its principal subsidiary. Home Federal Savings Bank, a FDIC insured
savings bank founded in 1908, offers a wide range of consumer and commercial
financial services through 16 offices in southeastern Indiana.
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<TABLE>
<CAPTION>
HOME FEDERAL BANCORP
CONSOLIDATED BALANCE SHEETS
(in thousands)
(audited) June 30, June 30,
2000 1999
--------- ---------
ASSETS:
<S> <C> <C>
Cash .................................................................. $ 21,184 $ 21,377
Interest-bearing deposits ............................................. 12 11,529
--------- ---------
Total cash and cash equivalents ..................................... 21,196 32,906
--------- ---------
Securities available for sale at fair value (amortized cost $101,918
and $74,482) ..................................................... 99,364 73,521
Securities held to maturity (fair value $7,622 and $4,960) ............ 7,776 4,987
Loans held for sale (fair value $2,343 and $5,136) .................... 2,376 5,102
Loans receivable, net of allowance for loan losses of $4,949 and $4,349 652,007 586,918
Investments in joint ventures ......................................... 10,333 7,090
Federal Home Loan Bank stock .......................................... 9,037 5,814
Accrued interest receivable, net ...................................... 5,750 4,897
Premises and equipment, net ........................................... 9,084 9,129
Real estate owned ..................................................... 1,235 2,050
Prepaid expenses and other assets ..................................... 6,114 4,404
Cash surrender value of life insurance ................................ 6,387 6,095
Goodwill .............................................................. 1,495 1,596
--------- ---------
TOTAL ASSETS ....................................................... $ 832,154 $ 744,509
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Deposits .............................................................. $ 572,893 $ 579,882
Advances from Federal Home Loan Bank .................................. 175,486 87,895
Senior debt ........................................................... 6,205 1,000
Other borrowings ...................................................... 2,742 1,515
Advance payments by borrowers for taxes and insurance ................. 406 270
Accrued expenses and other liabilities ................................ 4,936 4,312
--------- ---------
Total liabilities .................................................. 762,668 674,874
--------- ---------
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: ............................................. 8,335 8,512
4,734,585 shares at June 30, 2000
4,984,814 shares at June 30, 1999
Retained earnings, restricted ........................................ 62,251 61,699
Accumulated other comprehensive loss, net of taxes .................... (1,100) (576)
--------- ---------
Total shareholders' equity ......................................... 69,486 69,635
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY ......................... $ 832,154 $ 744,509
========= =========
</TABLE>
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<TABLE>
<CAPTION>
HOME FEDERAL BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share data)
(unaudited) Three Months Ended Twelve Months Ended
June 30, June 30,
-------------------- -------------------
Interest income: 2000 1999 2000 1999
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Loans receivable .......................................... $ 13,647 $ 12,158 $ 51,056 $ 49,602
Securities available for sale and held to maturity ........ 1,770 1,112 6,316 4,005
Other interest income ..................................... 52 187 437 604
-------- -------- -------- --------
Total interest income ...................................... 15,469 13,457 57,809 54,211
-------- -------- -------- --------
Interest expense:
Deposits .................................................. 6,212 5,888 23,911 24,037
Advances and borrowings ................................... 2,656 1,398 8,258 6,098
-------- -------- -------- --------
Total interest expense ..................................... 8,868 7,286 32,169 30,135
-------- -------- -------- --------
Net interest income ........................................ 6,601 6,171 25,640 24,076
Provision for loan losses .................................. 404 349 1,441 1,124
-------- -------- -------- --------
Net interest income after provision for loan losses ........ 6,197 5,822 24,199 22,952
-------- -------- -------- --------
Other income:
Gain on sale of loans ..................................... 165 544 720 3,380
Gain (loss) on sale of securities ........................ - - (116) 2
Income from joint ventures ................................ 298 144 789 412
Insurance, annuity income, other fees ..................... 344 268 1,192 1,243
Service fees on NOW accounts .............................. 555 533 2,174 2,054
Net gain (loss) on real estate owned and repossessed assets 81 (36) 173 (34)
Loan servicing income ..................................... 243 321 1,064 1,103
Miscellaneous ............................................. 463 447 1,668 1,844
-------- -------- -------- --------
Total other income ......................................... 2,149 2,221 7,664 10,004
-------- -------- -------- --------
Other expenses:
Compensation and employee benefits ........................ 2,390 2,035 8,927 8,417
Occupancy and equipment ................................... 632 612 2,502 2,359
Service bureau expense .................................... 216 197 853 784
Federal insurance premium ................................. 29 81 224 320
Marketing ................................................. 158 125 479 514
Goodwill amortization ..................................... 25 25 101 101
Miscellaneous ............................................. 861 732 3,360 3,356
-------- -------- -------- --------
Total other expenses ....................................... 4,311 3,807 16,446 15,851
-------- -------- -------- --------
Income before income taxes ................................. 4,035 4,236 15,417 17,105
Income tax provision ....................................... 1,540 1,554 5,979 6.628
-------- -------- -------- --------
Net Income ................................................. $ 2,495 $ 2,682 $ 9,438 $ 10,477
======== ======== ======== ========
Basic earnings per common share $ 0.54 $ 0.54 $ 1.97 $ 2.06
Dilutive earnings per common share $ 0.51 $ 0.50 $ 1.88 $ 1.95
Basic weighted average number of shares 4,732,589 5,026,322 4,802,240 5,087,398
Dilutive weighted average number of shares 4,872,031 5,296,375 5,022,453 5,382,329
Dividends per share $ 0.138 $ 0.125 $ 0.538 $ 0.445
</TABLE>
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<TABLE>
<CAPTION>
Supplemental Data: Three Months Ended Year to Date
June 30, June 30,
------------------- --------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average interest rate earned
on total interest-earning assets ........... 8.21% 7.80% 8.01% 7.94%
Weighted average cost of total
interest-bearing liabilities ............... 4.83% 4.40% 4.56% 4.60%
Interest rate spread during period ............. 3.38% 3.40% 3.45% 3.34%
Net yield on interest-earning assets
(net interest income divided by average
interest-earning assets on annualized basis) 3.50% 3.58% 3.55% 3.53%
Total interest income divided by average
total assets (on annualized basis) ......... 7.55% 7.25% 7.37% 7.37%
Total interest expense divided by
average total assets (on annualized basis) . 4.35% 3.94% 4.10% 4.10%
Net interest income divided by average
total assets (on annualized basis) ......... 3.22% 3.32% 3.27% 3.27%
Return on assets (net income divided by
average total assets on annualized basis) .. 1.22% 1.45% 1.20% 1.42%
Return on equity (net income divided by
average total equity on annualized basis) .. 14.56% 15.31% 13.84% 15.13%
Net interest margin to average
earning Assets .......................... 3.50% 3.58% 3.55% 3.53%
Net interest margin to average assets .......... 3.22% 3.32% 3.27% 3.27%
Efficiency Ratio................................ 50.30% 50.60%
At June 30,
----------------
2000 1999
---- ----
Book value per share outstanding .................. $14.68 $13.97
Interest rate spread .............................. 3.29% 3.58%
Nonperforming Assets:
Loans: Non-accrual ...................... $2,422 $3,509
Past due 90 days or more ......... - -
Restructured ..................... 632 61
------ ------
Total nonperforming loans .................. 3,054 3,570
Real estate owned, net ..................... 1,210 1,936
Other repossessed assets, net .............. 25 114
------ ------
Total Nonperforming Assets ................. $4,289 $5,620
====== ======
Nonperforming assets divided by total assets....... 0.52% 0.75%
Nonperforming loans divided by total loans ........ 0.46% 0.60%
Balance in Allowance for Loan Losses $4,949 $4,349
</TABLE>
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