<PAGE>
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 September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-19772
HF FINANCIAL CORP.
--------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 46-0418532
--------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
225 South Main Avenue, Sioux Falls, SD 57104
--------------------------------------------------------------------------------
(Address of principal executive office) (ZIP Code)
(605) 333-7556
--------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
--------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
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 the latest practicable date.
As of November 8, 2000 there were 3,677,606 issued and outstanding shares
of the Registrant's Common Stock, with $.01 par value.
<PAGE>
HF FINANCIAL CORP.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Consolidated Statements of Financial Condition
As of September 30, 2000 and June 30, 2000 1
Consolidated Statements of Income for the Three
Months Ended September 30, 2000 and 1999 2
Consolidated Statement of Stockholders' Equity
for the Three Months Ended September 30, 2000 3
Consolidated Statements of Cash Flows for the Three
Months Ended September 30, 2000 and 1999 4-5
Notes to Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-18
Item 3. Quantitative and Qualitative Disclosures about
Market Risk 19
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 2. Changes in Securities 20
Item 3. Default upon Senior Securities 20
Item 4. Submission of Matters to a Vote
of Security Holders 20
Item 5. Other Information 20
Item 6. Exhibits and Reports on Form 8-K 20
Signatures 21
</TABLE>
<PAGE>
Item 1.
HF FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in Thousands)
<TABLE>
<CAPTION>
ASSETS
September 30, 2000 June 30, 2000
--------------------------------------------
(Unaudited)
<S> <C> <C>
Cash and cash equivalents $ 13,529 $ 26,417
Securities available for sale 60,629 60,445
Mortgage-backed securities available for sale 51,332 53,001
Loans receivable 555,610 542,494
Loans held for sale 6,996 8,257
Accrued interest receivable 5,897 5,346
Office properties and equipment, at cost, net of
accumulated depreciation 13,652 13,717
Foreclosed real estate and other properties 1,496 1,594
Prepaid expenses and other assets 2,384 2,290
Mortgage servicing rights 2,270 2,171
Deferred income taxes 3,941 4,235
Cost in excess of net assets acquired 5,657 5,030
--------------------------------------------
$ 723,393 $ 724,997
============================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits $ 522,306 $ 545,497
Advances from Federal Home Loan Bank
and other borrowings 129,082 113,020
Advances by borrowers for taxes and insurance 10,173 6,543
Accrued interest payable 6,814 6,844
Other liabilities 6,546 6,150
--------------------------------------------
Total liabilities 674,921 678,054
--------------------------------------------
Stockholders' Equity
Preferred stock, $.01 par value, 500,000 shares
authorized, none outstanding - - - -
Series A Junior Participating Preferred Stock,
$1.00 stated value, 50,000 shares authorized,
none outstanding - - - -
Common stock, $.01 par value, 10,000,000 shares
authorized, 4,782,815 and 4,769,314 shares
issued at September 30, 2000 and June 30, 2000 48 48
Additional paid-in capital 15,367 15,260
Retained earnings, substantially restricted 50,698 49,824
Unearned compensation (113) (113)
Accumulated other comprehensive income (loss) (1,403) (1,951)
Less cost of treasury stock, 1,105,209 shares (16,125) (16,125)
--------------------------------------------
48,472 46,943
--------------------------------------------
$ 723,393 $ 724,997
============================================
</TABLE>
See Notes to Consolidated Financial Statements
Page 1
<PAGE>
HF FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended September 30,
------------------------------------------------
2000 1999
----------------------- ---------------------
<S> <C> <C>
Interest and dividend income:
Loans receivable $ 12,923 $ 10,968
Mortgage-backed securities 903 648
Investment securities and interest-bearing deposits 934 846
----------------------- ---------------------
14,760 12,462
----------------------- ---------------------
Interest expense:
Deposits 6,867 5,325
Advances from Federal Home Loan Bank
and other borrowings 1,754 1,330
----------------------- ---------------------
8,621 6,655
----------------------- ---------------------
Net interest income 6,139 5,807
Provision for losses on loans
778 1,870
----------------------- ---------------------
Net interest income after provision
for losses on loans 5,361 3,937
----------------------- ---------------------
Noninterest income:
Credit card fee income 998 2,646
Fees on deposits 874 665
Commission and insurance income 364 263
Loan servicing income 362 326
Loan fees and service charges 208 235
Gain on sale of loans, net 151 203
Other 245 245
----------------------- ---------------------
3,202 4,583
----------------------- ---------------------
Noninterest expense:
Compensation and employee benefits 3,476 3,016
Other general and administrative expenses 1,239 1,167
Occupancy and equipment 847 750
Credit card processing expense 743 1,251
Amortization of intangible assets 97 84
Federal insurance premiums 65 97
Other 28 31
----------------------- ---------------------
6,495 6,396
----------------------- ---------------------
Income before income taxes 2,068 2,124
Income tax expense 808 736
----------------------- ---------------------
Net income $ 1,260 $ 1,388
======================= =====================
Earnings per share:
Basic $0.34 $0.34
======================= =====================
Diluted $0.34 $0.34
======================= =====================
</TABLE>
See Notes to Consolidated Financial Statements
Page 2
<PAGE>
HF FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Three Months Ended September 30, 2000
(Dollars In Thousands, Except Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Additional
Common Paid-In Retained Unearned
Stock Capital Earnings Compensation
--------- -------- -------- ------------
<S> <C> <C> <C> <C>
Balance, June 30, 2000 $ 48 $ 15,260 $ 49,824 $ (113)
Comprehensive income:
Net income - - - - 1,260 - -
Net change in unrealized loss on
securities available for sale, net
of deferred taxes - - - - - - - -
-------- -------- -------- ---------
Comprehensive income - - - - 1,260 - -
11,249 shares issued under Director
Restricted Stock Plan - - 100 - - - -
Exercise of stock options for 2,252 shares - - 7 - - - -
Cash dividends paid ($0.105 per share)
on common stock - - - - (386) - -
-------- -------- -------- ---------
Balance, September 30, 2000 $ 48 $ 15,367 $ 50,698 $ (113)
======== ======== ======== =========
<CAPTION>
Accumulated
Other
Comprehensive Treasury
Income (Loss) Stock Total
------------ ---------- ----------
<S> <C> <C> <C>
Balance, June 30, 2000 $ (1,951) $ (16,125) $ 46,943
Comprehensive income:
Net income - - - - 1,260
Net change in unrealized loss on
securities available for sale, net
of deferred taxes 548 - - 548
-------- --------- --------
Comprehensive income 548 - - 1,808
11,249 shares issued under Director
Restricted Stock Plan - - - - 100
Exercise of stock options for 2,252 shares - - - - 7
Cash dividends paid ($0.105 per share)
on common stock - - - - (386)
-------- --------- --------
Balance, September 30, 2000 $ (1,403) $ (16,125) $ 48,472
======== ========= ========
</TABLE>
See Notes to Consolidated Financial Statements
Page 3
<PAGE>
HF FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended September 30,
----------------------------------------
2000 1999
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,260 $ 1,388
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for losses on loans 778 1,870
Depreciation 457 389
Amortization of premiums and discounts on
securities available for sale, net (9) (2)
Amortization of intangible assets 97 84
Amortization of mortgage servicing rights 69 75
Noncash issuance of common stock 100 98
(Decrease) in deferred loan fees (36) (512)
Loans originated for resale (15,880) (19,866)
Proceeds from the sale of loans 17,292 25,084
(Gain) on sale of loans, net (151) (203)
Mortgage servicing rights capitalized (30) (41)
(Gains) losses and provision for losses on sales of
foreclosed real estate and other properties, net (1) 4
(Gain) on disposal of office properties
and equipment, net (11) (1)
(Increase) in accrued interest receivable (551) (275)
(Increase) decrease in prepaid expenses and other assets (94) 561
(Increase) in deferred income taxes (41) - -
Increase (decrease) in accrued interest payable and other
liabilities 366 (352)
---------------- ----------------
Net cash provided by operating activities $ 3,615 $ 8,301
---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Loans purchased (11,037) (8,539)
Loans originated and held (48,798) (49,253)
Principal collected on loans 45,781 48,932
Mortgage-backed securities available for sale:
Purchases - - (9,994)
Repayments 2,102 3,121
Securities available for sale:
Sales and maturities 275 7,941
Purchases - - (4,511)
Proceeds from sale of office properties and equipment 17 1
Purchase of office properties and equipment (398) (128)
Purchase of mortgage servicing rights (138) (211)
Purchase of intangible assets (724) - -
Proceeds from sale of foreclosed real estate
and other properties, net 295 153
---------------- ----------------
Net cash (used in) investing activities $ (12,625) $ (12,488)
---------------- ----------------
</TABLE>
See Notes to Consolidated Financial Statements
Page 4
<PAGE>
HF FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Dollars in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended September 30,
----------------------------------------
2000 1999
---------------- ----------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) in deposit accounts $ (23,191) $ (28,931)
Proceeds of advances from Federal Home Loan
Bank and other borrowings 179,581 51,500
Payments on advances from Federal Home Loan
Bank and other borrowings (163,519) (22,792)
Increase in advances by borrowers for
taxes and insurance 3,630 3,073
Purchase of treasury stock - - (1,467)
Proceeds from issuance of common stock 7 - -
Cash dividends paid (386) (408)
---------------- ----------------
Net cash provided by (used in) financing activities $ (3,878) $ 975
---------------- ----------------
(Decrease) in cash and cash equivalents $ (12,888) $ (3,212)
Cash and Cash Equivalents
Beginning 26,417 16,671
---------------- ----------------
Ending $ 13,529 $ 13,459
================ ================
</TABLE>
See Notes to Consolidated Financial Statements
Page 5
<PAGE>
HF FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For The Three Months Ended September 30, 2000 and 1999
(Dollars in Thousands)
(Unaudited)
NOTE 1. SELECTED ACCOUNTING POLICIES
BASIS OF PRESENTATION:
The foregoing consolidated financial statements are unaudited. However, in
the opinion of management, all adjustments (which consist of normal recurring
accruals) necessary for a fair presentation of the consolidated financial
statements have been included. Results for any interim period are not
necessarily indicative of results to be expected for the year. The interim
consolidated financial statements include the accounts of HF Financial Corp.
(the "Company"), its subsidiaries, HomeFirst Mortgage Corp. (the "Mortgage
Corp." formerly known as HF Mortgage Corp.) and the Mortgage Corp.'s
subsidiaries, HF Card Services L.L.C. (HF Card Services) and Home Federal
Savings Bank, (the "Bank") and the Bank's subsidiaries.
NOTE 2. REGULATORY CAPITAL
The following table sets forth the Bank's compliance with its capital
requirements at September 30, 2000:
<TABLE>
<CAPTION>
Amount Percent
------ -------
<S> <C> <C>
Tier I (core) capital:
Required . . . . . . . . . . . . . . . . . . . . . . . . $21,217 3.00%
Actual . . . . . . . . . . . . . . . . . . . . . . . . . 42,546 6.02
Excess . . . . . . . . . . . . . . . . . . . . . . . . . 21,329 3.02
Risk-based capital:
Required. . . . . . . . . . . . . . . . . . . . . . . . . $40,956 8.00%
Actual . . . . . . . . . . . . . . . . . . . . . . . . . 48,964 9.56
Excess . . . . . . . . . . . . . . . . . . . . . . . . . 8,008 1.56
</TABLE>
NOTE 3. EARNINGS PER SHARE
Basic earnings per share is computed by dividing income available to common
stockholders (the numerator) by the weighted-average number of common shares
outstanding (the denominator) during the period. Shares issued during the period
and shares reacquired during the period are weighted for the portion of the
period that they were outstanding. The weighted average number of common shares
outstanding for the three month period ended September 30, 2000 and 1999 as
adjusted was 3,676,139 and 4,044,038, respectively.
Dilutive earnings per share is similar to the computation of basic earnings
per share except that the denominator is increased to include the number of
additional common shares that would have been outstanding if the dilutive
options outstanding had been exercised. The weighted average number of common
and dilutive potential common shares outstanding for the three month period
ended September 30, 2000 and 1999 as adjusted was 3,723,082 and 4,119,384,
respectively.
Page 6
<PAGE>
NOTE 4. SEGMENT INFORMATION
The management approach is used as the conceptual basis for identifying
reportable segments and is based on the way that management organizes the
segments within the enterprise for making operating decisions, allocating
resources and monitoring performance.
The Company's reportable segments are banking, credit card and other. The
"banking" segment is conducted through the subsidiary, Home Federal Savings
Bank, and the "credit card" segment is conducted through the subsidiary, HF Card
Services, L.L.C. The "other" segment is composed of smaller nonreportable
segments, the parent company and inter-segment eliminations. For expense
allocation purposes, income tax expense is allocated only to the Company and the
Bank.
<TABLE>
<CAPTION>
Three Months Ended September 30, 2000
----------------------------------------------------------------------------------------------------------
Credit
Banking Card Other Total
------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Net interest income $ 5,826 $ 62 $ 251 $ 6,139
Provision for losses on loans (412) (349) (17) (778)
Noninterest income 1,890 967 345 3,202
Noninterest expense (5,179) (799) (517) (6,495)
------------- ------------ ------------- -------------
Income (loss) before income taxes $ 2,125 $ (119) $ 62 $ 2,068
============= ============ ============= =============
------------- ------------ ------------- -------------
Total assets $ 703,808 $ 7,176 $12,409 $ 723,393
============= ============ ============= =============
<CAPTION>
Three Months Ended September 30, 1999
----------------------------------------------------------------------------------------------------------
Credit
Banking Card Other Total
------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Net interest income $ 5,554 $ 124 $ 129 $ 5,807
Provision for losses on loans (300) (1,570) - - - (1,870)
Noninterest income 1,719 2,642 222 4,583
Noninterest expense (4,716) (1,341) (339) (6,396)
------------- ------------ ------------- -------------
Income (loss) before income taxes $ 2,257 $ (145) $ 12 $ 2,124
============= ============ ============= =============
------------- ------------ ------------- -------------
Total assets $ 648,506 $ 9,489 $ 2,491 $ 660,486
============= ============ ============= =============
</TABLE>
Page 7
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
HF Financial Corp. (the "Company") was incorporated under the laws of the
State of Delaware in November 1991 for the purpose of owning all of the
outstanding stock of Home Federal Savings Bank (the "Bank") issued in the mutual
to stock conversion of the Bank. The Company acquired all of the outstanding
stock of the Bank on April 8, 1992. In May 1996, the Company formed a Limited
Liability Company named HF Card Services L.L.C. ("HF Card Services") and became
the owner of 51% of this entity. The Company became the owner of 100% of HF Card
Services effective as of July 1998. The activities of the Company itself have no
significant impact on the results of operations on a consolidated basis. Unless
otherwise indicated, all activities discussed herein relate to the Company, and
its direct and indirect subsidiaries, including without limitation, the Bank, HF
Card Services and HomeFirst Mortgage Corp. (the "Mortgage Corp.").
HF Card Services was established to provide secured, partially-secured and
unsecured credit cards nationwide. The target market for HF Card Services was
subprime credit customers who have either an insufficient credit history or a
negative credit history and are unable to obtain a credit card from more
traditional card issuers.
The Company's net income is primarily dependent upon the difference (or
"spread") between the average yield earned on loans, mortgage-backed securities
and investments and the average rate paid on deposits and borrowings, as well as
the relative amounts of such assets and liabilities. The interest rate spread is
affected by regulatory, economic and competitive factors that influence interest
rates, loan demand and deposit flows. The Company, like other financial
institutions, is subject to interest rate risk to the degree that its
interest-bearing liabilities mature or reprice at different times, or on a
different basis, than its interest-earning assets. To better insulate itself
from such risk, the Company has, over the last few years, attempted to increase
both numerically and on a percentage basis its holding of consumer and
commercial loans. The Company has also decreased its ratio of fixed-rate to
adjustable-rate loans. The Company's net income is also affected by, among other
things, gains and losses on sales of foreclosed property, loans, mortgage-backed
securities and securities available for sale, provisions for losses on loans,
service charge fees, subsidiary activities, operating expenses and income taxes.
FORWARD-LOOKING STATEMENTS
This Form 10-Q and other reports issued by the Company, including reports
filed with the Securities and Exchange Commission, may contain "forward-looking"
statements that deal with future results, expectations, plans or performance. In
addition, the Company's management may make such statements orally to the media,
securities analysts, investors or others. Forward-looking statements deal with
matters that do not relate strictly to historical facts. These forward-looking
statements might include one or more of the following:
o Projections of income, revenues, earnings per share, dividends, capital
expenditures, capital structure or other financial items.
o Descriptions of plans or objectives of management for future operations,
products or services.
o Forecasts of future economic performance.
o Descriptions of assumptions underlying or relating to such matters.
Forward-looking statements can be identified by the fact that they do not
relate strictly to historical or current facts. They often include words such as
"believe," "expect," "anticipate," "intend," "plan," "estimate," or words of
similar meaning, or future or conditional verbs such as "will," "would,"
"should," "could" or "may."
The Company's future results may differ materially from historical
performance, and forward-looking statements about the Company's expected
financial results or other plans are subject to a number of risks and
uncertainties. These include but are not limited to possible legislative changes
and adverse economic, business and competitive developments such as shrinking
interest margins; deposit outflows; reduced demand for financial services and
loan products; changes in accounting policies or guidelines, or in monetary and
fiscal policies of the federal government; changes in credit and other risks
posed by the Company's loan portfolios; technological, computer-related or
operational difficulties; adverse changes in securities markets; results of
litigation; or other significant uncertainties.
Page 8
<PAGE>
Forward-looking statements speak only as of the date they are made. The
Company does not undertake to update forward-looking statements to reflect
circumstances or events that occur after the date the forward-looking statements
are made.
FINANCIAL CONDITION DATA
At September 30, 2000, the Company had total assets of $723.4 million, a
decrease of $1.6 million from the level at June 30, 2000. The decrease in assets
was due primarily to a decrease in cash and cash equivalents of $12.9 million,
mortgage-backed securities of $1.7 million and loans held for sale of $1.3
million, offset by an increase in loans receivable of $13.1 million. The
increase in advances from Federal Home Loan Bank ("FHLB") and other borrowings
of $16.1 million and advances by borrowers for taxes and insurance escrows of
$3.6 million was offset by the decrease in deposits of $23.2 million from the
levels at June 30, 2000. In addition, stockholders' equity increased from $46.9
million at June 30, 2000 to $48.5 million at September 30, 2000, primarily due
to net income of $1.3 million which was partially offset by the payment of cash
dividends of $386,000.
The decrease in mortgage-backed securities of $1.7 million was primarily
the result of amortization and prepayments of principal. Mortgage-backed
securities were allowed to paydown without reinvestment during the first quarter
of fiscal 2001.
The decrease in loans held for sale of $1.3 million was due to a decline in
loans originated for sale into the secondary market at September 30, 2000.
Advances from the FHLB and other borrowings increased $16.1 million for the
three month period ended September 30, 2000 primarily due to the Company
obtaining new advances and additional borrowings in the amount of $179.6 million
which were partially offset by payments of $163.5 million on advances and other
borrowings during the three month period ended September 30, 2000.
The increase in loans receivable of $13.1 million was due primarily to
purchases and originations of principal exceeding amortization and prepayments
of principal.
The $23.2 million decrease in deposits was primarily due to a decrease in
demand accounts of $3.3 million, savings accounts of $20.9 million and
certificates of deposit of $358,000 offset by an increase in money market
accounts of $1.4 million. As of September 30, 2000, the Bank had total deposits
from one local governmental entity of $23.6 million compared to $45.2 million at
June 30, 2000. This decrease is seasonal and is comparable to the last two
years.
The $3.6 million increase in advances by borrowers for taxes and insurance
was due primarily to the receipt of escrow payments in excess of amounts paid
out. The major escrow payments are primarily paid semiannually in April and
October.
Page 9
<PAGE>
ANALYSIS OF NET INTEREST INCOME
Net interest income represents the difference between income on
interest-earning assets and expense on interest-bearing liabilities. Net
interest income depends upon the volume of interest-earning assets and
interest-bearing liabilities and the interest rates earned or paid on them.
AVERAGE BALANCES, INTEREST RATES AND YIELDS. The following table presents
for the periods indicated the total dollar amount of interest income from
average interest-earning assets and the resulting yields, as well as the
interest expense on average interest-bearing liabilities, expressed both in
dollars and rates, and the net interest margin. The table does not reflect any
effect of income taxes. All average balances are monthly average balances and
include the balances of nonaccruing loans. The yields and costs for the three
months ended September 30, 2000 and 1999 include fees which are considered
adjustments to yield.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
------------------------------------------------------------------------
2000 1999
------------------------------------ ----------------------------------
Average Interest Average Interest
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Balance Paid Rate Balance Paid Rate
------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable (1) $562,119 $12,923 9.12% $515,029 $10,968 8.47%
Mortgage-backed securities 53,859 903 6.65% 42,275 648 6.10%
Other investment securities (2) 55,817 825 5.86% 54,314 761 5.57%
FHLB stock 6,130 109 7.05% 5,290 85 6.39%
----------- ---------- ---------- ---------- ---------- --------
Total interest-earning assets $677,925 $14,760 8.64% $616,908 $12,462 8.04%
---------- ---------- ---------- ---------
Noninterest-earning assets 36,849 35,561
----------- ----------
Total assets $714,774 $652,469
=========== ==========
Interest-bearing liabilities:
Deposits:
Checking and money market $183,914 $ 1,824 3.93% $148,058 $ 1,053 2.83%
Savings 44,719 457 4.05% 46,754 351 2.99%
Certificates of deposit 301,750 4,586 6.03% 291,014 3,921 5.36%
----------- ---------- ---------- ------------ ---------- --------
Total deposits $530,383 6,867 5.14% $485,826 $ 5,325 4.36%
FHLB advances and other borrowings 114,633 1,754 6.07% 97,156 1,330 5.45%
----------- ---------- ---------- ------------ ---------- --------
Total interest-bearing liabilities $645,016 $ 8,621 5.30% $582,982 $ 6,655 4.54%
---------- ---------- ---------- --------
Other liabilities 21,776 21,014
----------- ---------
Total liabilities $666,792 $603,996
Equity 47,982 48,473
----------- --------
Total liabilities and equity $714,774 $652,469
============ ===========
Net interest income; interest rate
spread $ 6,139 3.34% $ 5,807 3.50%
========== ========== ========== ========
Net interest margin (3) 3.59% 3.74%
========== ========
</TABLE>
-------------------------------------------------------------------------------
(1) Includes interest on accruing loans past due 90 days or more.
(2) Includes primarily U.S. Government and agency securities.
(3) Net interest margin is net interest income divided by average
interest-earning assets.
Page 10
<PAGE>
RATE/VOLUME ANALYSIS OF NET INTEREST INCOME
The following schedule presents the dollar amount of changes in
interest income and interest expense for major components of interest-earning
assets and interest-bearing liabilities. It distinguishes between the increases
and decreases due to fluctuating outstanding balances that are due to the levels
and volatility of interest rates. For each category of interest-earning assets
and interest-bearing liabilities, information is provided on changes
attributable to (i) changes in volume (i.e., changes in volume multiplied by old
rate) and (ii) changes in rate (i.e., changes in rate multiplied by old volume).
For purposes of this table, changes attributable to both rate and volume, which
cannot be segregated, have been allocated proportionately to the change due to
volume and the change due to rate.
<TABLE>
<CAPTION> Three Months Ended September 30,
--------------------------------------------
2000 vs 1999
--------------------------------------------
Increase
(Decrease) Increase
Due to Due to Total
Volume Rate Increase
------------ ------------- -------------
(Dollars in Thousands)
<S> <C> <C> <C>
Interest-earning assets:
Loans receivable (1) $ 1,059 $ 896 $ 1,955
Mortgage-backed securities 187 68 255
Other investment securities (2) 23 41 64
FHLB stock 14 10 24
------------ ------------- -------------
Total interest-earning assets $ 1,283 $ 1,015 $ 2,298
============ ============= =============
Interest-bearing liabilities:
Deposits:
Checking and money market $ 307 $ 464 $ 771
Savings (18) 124 106
Certificates of deposit 160 505 665
------------ ------------- -------------
Total deposits 449 1,093 1,542
FHLB advances and other borrowings
255 169 424
------------ ------------- -------------
Total interest-bearing liabilities $ 704 $ 1,262 $ 1,966
============ ============= =============
Net interest income increase $ 332
=============
</TABLE>
-------------------------------------------------------------------------------
(1) Includes interest on accruing loans past due 90 days or more.
(2) Includes primarily U. S. Government and agency securities.
Page 11
<PAGE>
ASSET QUALITY
In accordance with the Company's internal classification of assets
policy, management evaluates the loan portfolio on a monthly basis to identify
loss potential and determine the adequacy of the allowance for loan losses. The
following table sets forth the amounts and categories of the Company's
nonperforming assets for the periods indicated.
<TABLE>
<CAPTION>
Nonperforming Assets As Of
-------------------------------------------
September 30, June 30,
2000 2000
------------------ ------------------
(Dollars in Thousands)
<S> <C> <C>
Nonaccruing loans:
One- to+four-family $ 486 $ 551
Commercial 39 165
Multi-family ---- ----
Commercial business 1,182 971
Consumer 493 317
Agriculture 16 31
Credit cards ---- ----
Mobile homes 13 43
------------------ ------------------
Total $ 2,229 $ 2,078
------------------ ------------------
Accruing loans delinquent more than 90 days:
One- to four-family $ ---- $ ----
Commercial ---- ----
Multi-family ---- ----
Commercial business ---- ----
Consumer ---- ----
Agriculture 25 ----
Credit cards 539 514
Mobile homes ---- ----
------------------ ------------------
Total $ 564 $ 514
------------------ ------------------
Foreclosed assets: (2)
One- to four-family $ 103 $ 214
Commercial ---- ----
Multi-family ---- ----
Commercial business ---- ----
Consumer 78 67
Agriculture ---- ----
Credit cards ---- ----
Mobile homes 17 15
------------------ ------------------
Total $ 198 $ 296
------------------ ------------------
Total nonperforming assets $ 2,991 $ 2,888
================== ==================
Ratio of nonperforming assets to total assets 0.41% 0.40%
================== ==================
Ratio of nonperforming loans to total loans (1) 0.49% 0.46%
================== ==================
</TABLE>
-------------------------------------------------------------------------------
(1) Nonperforming loans include nonaccruing loans and loans delinquent more than
90 days.
(2) Total foreclosed assets does not include land held for development.
Page 12
<PAGE>
When a loan becomes 90 days delinquent, except for credit card loans,
the Bank places the loan on a nonaccrual status and, as a result, accrued
interest income on the loan is taken out of income. Income is subsequently
recognized only to the extent cash payments are received until, in management's
judgment, the borrower's ability to make periodic interest and principal
payments is no longer in doubt, in which case the loan is returned to accrual
status. Credit card loans remain in accrual status until 120 days, when accrued
interest income on the loan is taken out of income.
Nonperforming assets increased to $3.0 million at September 30, 2000
from $2.9 million at June 30, 2000, an increase of $103,000. In addition, the
ratio of nonperforming assets to total assets, which is one indicator of credit
risk exposure, remained relatively stable at 0.41% at September 30, 2000 as
compared to 0.40% at June 30, 2000.
Nonaccruing loans increased to $2.2 million at September 30, 2000 from
$2.1 million at June 30, 2000, an increase of $150,000. Included in nonaccruing
loans at September 30, 2000 were seven loans totaling $486,000 secured by one-
to four-family real estate, two loans in the amount of $39,000 secured by
commercial real estate, eight loans totaling $1.2 million secured by commercial
business, three mobile home loans totaling $13,000, twenty-one consumer loans
totaling $493,000 and two agriculture loans totaling $16,000. At September 30,
2000, gross interest income of $626,000 would have been recognized on loans
accounted for on a nonaccrual basis had such loans been current in accordance
with their original terms. Gross interest income of $439,000 was recognized as
income on loans accounted for on a nonaccrual basis.
Accruing credit card loans delinquent more than 90 days increased to
$539,000 at September 30, 2000 from $514,000 at June 30, 2000. A total of $1.6
million of credit card loans were delinquent 30 days at September 30, 2000 as
compared to $1.7 million at June 30, 2000. Net credit card loan charge-offs for
the three months ended September 30, 2000 were $1.1 million as compared to $3.8
million for the same period in fiscal 2000. Using historical stratification data
on the current product, management expects credit card loan write-offs not to
exceed $2.5 million in the next six months. Of this amount about 76% will be a
charge-off against allowance for credit card loan losses, of which the Company
currently maintains an allowance for credit card loan losses equal to 26% of the
outstanding credit card loan balance, or about $2.2 million. The remaining 24%
will be charged against deferred credit card fee income, interest income and
credit card fee income in future periods.
Foreclosed assets decreased from $296,000 at June 30, 2000 to $198,000
at September 30, 2000, a decrease of $98,000.
At September 30, 2000, the Bank had approximately $25.2 million of
other loans of concern that management has determined need to be closely
monitored because of possible credit problems of the borrowers or the cash flows
of the secured properties. These loans were considered in determining the
adequacy of the allowance for possible loan losses. The allowance for possible
loan losses is established based on management's evaluation of the risks
inherent in the loan portfolio and changes in the nature and volume of loan
activity. Such evaluation, which includes a review of all loans for which full
collectability may not be reasonably assured, considers the estimated fair
market value of the underlying collateral, economic conditions, historical loan
loss experience and other factors that warrant recognition in providing for an
adequate loan loss allowance. Although the Company's management believes that
the September 30, 2000 recorded allowance for loan losses was adequate to
provide for potential losses on the related loans, there can be no assurance
that the allowance existing at September 30, 2000 will be adequate in the
future.
Page 13
<PAGE>
The following table sets forth information with respect to activity in
the Company's allowance for loan losses during the periods indicated.
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------------
9/30/2000 9/30/1999
---------------- ---------------
(Dollars in Thousands)
<S> <C> <C>
Balance at beginning of period $ 8,475 $ 11,991
CHARGE-OFFS:
One- to four-family (5) (6)
Commercial business (5) ----
Consumer (282) (197)
Agriculture ---- (11)
Credit cards (1,150) (3,944)
Mobile homes (19) (6)
---------------- ---------------
Total charge-offs $ (1,461) $ (4,164)
---------------- ---------------
RECOVERIES:
One- to four-family $ ---- $ 11
Consumer 63 57
Agriculture ---- 1
Credit cards 45 154
Mobile homes 1 14
---------------- ---------------
Total recoveries $ 109 $ 237
---------------- ---------------
Net (charge-offs) $ (1,352) $ (3,927)
Additions charged to operations 778 1,870
Additions from acquisition 97 ----
---------------- ---------------
Balance at end of period $ 7,998 $ 9,934
================ ===============
Ratio of net (charge-offs) during the period to
average loans outstanding during the period (0.24)% (0.76)%
================ ===============
Ratio of allowance for loan losses to total loans at end
of period 1.40% 1.92%
================ ===============
Ratio of allowance for loan losses to nonperforming
loans at end of period (1) 286.36% 450.93%
================ ===============
</TABLE>
-------------------------------------------------------------------------------
(1) Nonperforming loans include nonaccruing loans and accruing loans delinquent
more than 90 days.
Page 14
<PAGE>
The distribution of the Company's allowance for loan losses at the dates
indicated is summarized as follows:
<TABLE>
<CAPTION>
At September 30, 2000 At June 30, 2000
------------------------------ ----------------------------
Percent of Percent of
Loans in Loans in
Each Each
Category to Category to
Amount Total Loans Amount Total Loans
-------------- ------------------------------ ------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
One- to four-family $1,314 22.40% $ 1,299 23.23%
Commercial and multi-family real estate (1) 1,408 24.00% 1,442 25.79%
Commercial business 992 16.91% 844 15.10%
Consumer (2) 1,664 28.36% 1,536 27.47%
Agricultural 346 5.89% 323 5.77%
Credit cards 2,220 1.52% 2,976 1.66%
Mobile homes 54 0.92% 55 0.98%
-------------- ------------- ------------ ------------
Total $7,998 100.00% $ 8,475 100.00%
============== ============= ============ ============
</TABLE>
-------------------------------------------------------------------------------
(1) Includes construction loans.
(2) Excludes allowance for loan losses relating to mobile home loans and credit
card loans.
The allowance for loan losses was $8.0 million at September 30, 2000 as
compared to $8.5 million at June 30, 2000. The ratio of the allowance for loan
losses to total loans was 1.40% at September 30, 2000 and 1.52% at June 30,
2000. The Company's management has considered nonperforming assets and other
assets of concern in establishing the allowance for loan losses. The Company
continues to monitor its allowance for possible loan losses and make future
additions or reductions in light of the level of loans in its portfolio and as
economic conditions dictate.
The current level of the allowance for loan losses is a result of
management's assessment of the risks within the portfolio based on the
information revealed in credit reporting processes. The Company utilizes a
risk-rating system on all commercial business, agricultural, construction and
multi-family and commercial real estate loans, including purchased loans, that
exceed $250,000. A monthly credit review is performed on all types of loans to
establish the necessary reserve based on the estimated risk within the
portfolio. This assessment of risk takes into account the composition of the
loan portfolio, historical loss experience for each loan category, previous loan
experience, concentrations of credit, current economic conditions and other
factors that in management's judgment deserve recognition. As of September 30,
2000, $2.2 million of the $8.0 million allowance for loan losses was reserved
for the credit card loan portfolio. Regulators have reviewed the Company's
methodology for determining allowance requirements on the Company's loan
portfolio and have made no recommendations for increases in the allowances
during the three month period ended September 30, 2000 and year ended June 30,
2000.
Page 15
<PAGE>
COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999
GENERAL. The Company's net income decreased $128,000 to $1.3 million for
the three months ended September 30, 2000 as compared to $1.4 million for the
three months ended September 30, 1999. As discussed in more detail below, this
decrease was due primarily to a decrease in noninterest income of $1.4 million,
an increase in noninterest expense of $99,000 and an increase in income tax
expense of $72,000 which were partially offset by an increase in net interest
income of $332,000 and a decrease in provision for losses on loans of $1.1
million.
INTEREST INCOME. Interest income increased $2.3 million from $12.5 million
for the three months ended September 30, 1999 to $14.8 million for the three
months ended September 30, 2000. The $61.0 million increase of average earning
assets resulted in a $1.3 million increase in interest income. The average yield
on interest-earning assets increased from 8.04% to 8.64% for the three months
ended September 30, 1999 and September 30, 2000, respectively.
INTEREST EXPENSE. Interest expense increased $2.0 million from $6.7 million
for the three months ended September 30, 1999 to $8.6 million for the three
months ended September 30, 2000. A $1.3 million increase in interest expense was
the result of the increase in the average rate paid on interest-bearing
liabilities from 4.54% to 5.30% for the three months ended September 30, 1999
and September 30, 2000, respectively. In addition, the average balance of
interest-bearing liabilities increased $62.0 million at September 30, 2000 as
compared to the same period in the prior fiscal year.
NET INTEREST INCOME. The Company's net interest income for the three months
ended September 30, 2000 increased $332,000, or 5.72%, to $6.1 million compared
to $5.8 million for the same period in fiscal 2000. The increase in net interest
income reflects an overall increase in net earning assets offset by a reduction
in the net interest spread on average earning assets to 3.34% for the three
months ended September 30, 2000 from 3.50% for the same period in fiscal 2000.
During the three months ended September 30, 2000, the Company increased its
average balances of commercial and consumer loans. The Company anticipates
activity in this type of lending to continue in future years, subject to market
demand. In addition, the Company sells the majority of conventional
single-family residential real estate loan originations into the secondary
market. Net interest income is expected to trend upward as a result of this
lending activity as interest rate yields are generally higher on these types of
loans compared to the yield provided by conventional single-family residential
real estate loans. This lending activity is considered to carry a higher level
of risk due to the nature of the collateral and the size of the individual
loans. As such, the Company anticipates continued increases in its allowance for
loan losses.
PROVISION FOR LOSSES ON LOANS. During the three months ended September 30,
2000, the Company recorded a provision for losses on loans of $778,000 as
compared to $1.9 million for the three months ended September 30, 1999, a
decrease of $1.1 million. A majority of the decrease is related to reduction of
the subprime credit card loan portfolio from $15.0 million at September 30, 1999
to $8.7 million at September 30, 2000. See "Asset Quality" for further
discussion.
NONINTEREST INCOME. Noninterest income was $3.2 million for the three
months ended September 30, 2000 as compared to $4.6 million for the three months
ended September 30, 1999, a decrease of $1.4 million.
The decrease in credit card fee income of $1.6 million for the three months
ended September 30, 2000 as compared to the same period in fiscal 2000 is
primarily due to a decrease in fees received on unsecured credit cards. This is
a result of the credit card portfolio decreasing from to $15.0 million at
September 30, 1999 as compared to $8.7 million at September 30, 2000. The fee
income represents interchange fees, annual/monthly fees, late fees and other
miscellaneous fees. This credit card program was initiated in fiscal 1997. The
Company ceased credit card applications in March 1999. This decreased the level
of these fees. Interest income on credit card loans is included in interest
income on loans.
Fees on deposits increased $209,000 due to an increase in volume from
deposits acquired in new branch acquisitions/openings during the last half of
fiscal 2000.
Commission and insurance income from the sale of financial and insurance
products increased $101,000 primarily due to a greater emphasis on the
production of noninterest income revenue.
NONINTEREST EXPENSE. Noninterest expense increased $99,000 as compared to
the same period in the prior fiscal year primarily due to increases in
compensation and employee benefits of $460,000, other general and administrative
expenses of $72,000 and occupancy and equipment of $97,000 (increases primarily
related to three new bank branches opened and two nonbank operations acquired
since September 1999) offset by a decrease in credit card processing expense of
$508,000.
Page 16
<PAGE>
This expense represents costs for processing of applications, collecting loans
and marketing costs for the acquisition of credit cards for the unsecured credit
card program.
INCOME TAX EXPENSE. The Company's income tax expense for the three months
ended September 30, 2000 was $808,000 as compared to $736,000 for the three
months ended September 30, 1999, an increase of $72,000. This increase was
primarily due to the increase in the Company's effective tax rate from 34.65%
for the three months ended September 30, 1999 to 39.07% for the three months
ended September 30, 2000.
LIQUIDITY AND CAPITAL RESOURCES
The Bank's primary sources of funds are deposits, FHLB advances,
amortization and prepayments of loan principal (including mortgage-backed
securities) and, to a lesser extent, sales of mortgage loans, sales and/or
maturities of securities, mortgage-backed securities, and short-term
investments. While scheduled loan payments and maturing securities are
relatively predictable, deposit flows and loan prepayments are more influenced
by interest rates, general economic conditions, and competition. The Bank
attempts to price its deposits to meet its asset/liability objectives consistent
with local market conditions. Excess balances are invested in overnight funds.
Federal regulations have historically required the Bank to maintain minimum
levels of liquid assets. The required percentage has varied from time to time
based upon economic conditions and savings flows and is currently 4% of net
withdrawable savings deposits and current borrowings. Liquid assets for purposes
of this ratio include cash, certain time deposits, U.S. government and corporate
securities and other obligations generally having remaining maturities of less
than five years. The Bank has historically maintained its liquidity ratio at a
level in excess of that required by these regulations. At September 30, 2000,
the Bank's liquidity ratio was 5.88%.
Liquidity management is both a daily and long-term responsibility of
management. The Bank adjusts its investments in liquid assets based upon
management's assessment of (i) expected loan demand, (ii) projected loan sales,
(iii) expected deposit flows, (iv) yields available on interest-bearing
deposits, and (v) the objectives of its asset/liability management program.
Excess liquidity is invested generally in interest-bearing overnight deposits
and other short-term government and agency obligations. During the three months
ended September 30, 2000, the Bank required funds beyond its ability to generate
funds internally. Thus it used its borrowing capacity with the FHLB by obtaining
advances, which increased its borrowings with the FHLB by $7.1 million. See
"Financial Condition Data" for further discussion.
The Bank anticipates that it will have sufficient funds available to meet
current loan commitments. At September 30, 2000, the Bank had outstanding
commitments to originate or purchase loans of $29.2 million and to sell loans of
$10.7 million. At September 30, 2000, the Bank had no commitments to purchase or
sell securities.
Although deposits are the Bank's primary source of funds, the Bank's policy
has been to utilize borrowings where the funds can be invested in either loans
or securities at a positive rate of return or to use the funds for short term
liquidity purposes. See "Financial Condition Data" for further analysis.
Page 17
<PAGE>
The Company currently has in effect a stock buy back program in which up to
10% of the common stock of the Company outstanding on March 26, 2000 may be
acquired through March 31, 2001. No shares of common stock have been purchased
pursuant to this current program. Pursuant to a series of stock buy back
programs initiated by the Company since 1996 the Company has purchased an
aggregate of 1,105,209 shares of common stock through September 30, 2000. No
purchases occurred during the first quarter of fiscal 2001.
Savings institutions insured by the Federal Deposit Insurance Corporation
are required by the Financial Institutions Reform, Recovery and Enforcement Act
of 1989 ("FIRREA") to meet three regulatory capital requirements. If a
requirement is not met, regulatory authorities may take legal or administrative
actions, including restrictions on growth or operations or, in extreme cases,
seizure. Institutions not in compliance may apply for an exemption from the
requirements and submit a recapitalization plan. Under these capital
requirements, at September 30, 2000, the Bank met all current capital
requirements.
The Office of Thrift Supervision ("OTS") has adopted a core capital
requirement for savings institutions comparable to the requirement for national
banks. The OTS core capital requirement is 3% of total adjusted assets for
thrifts that receive the highest supervisory rating for safety and soundness.
The Bank had core capital of 6.02% at September 30, 2000.
Pursuant to the Federal Deposit Insurance Corporation Insurance Act
("FDICIA"), the federal banking agencies, including the OTS, have also proposed
regulations authorizing the agencies to require a depository institution to
maintain additional total capital to account for concentration of credit risk
and the risk of non-traditional activities. No assurance can be given as to the
final form of any such regulation.
IMPACT OF INFLATION AND CHANGING PRICES
The Consolidated Financial Statements and Notes thereto presented herein
have been prepared in accordance with generally accepted accounting principles,
which require the measurement of financial position and operating results in
terms of historical dollars without considering the change in the relative
purchasing power of money over time due to inflation. The impact of inflation is
reflected in the increased cost of the Bank's operations. Unlike most industrial
companies, nearly all the assets and liabilities of the Bank are monetary in
nature. As a result, interest rates have a greater impact on the Bank's
performance than do the effects of general levels of inflation. Interest rates
do not necessarily move in the same direction or to the same extent as the
prices of goods and services.
Page 18
<PAGE>
Item 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest rate risk is the most significant market risk affecting the
Company. Other types of market risk, such as foreign exchange rate risk and
commodity price risk, do not arise in the normal course of the Company's
business activities.
The composition of the Bank's balance sheet results in maturity mismatches
between interest-earning assets and interest-bearing liabilities. The scheduled
maturities of the Bank's fixed rate interest-earning assets are longer than the
scheduled maturities of its fixed rate interest-bearing liabilities. This
mismatch exposes the Bank to interest rate risk. In a rising rate scenario, as
measured by the OTS interest rate risk exposure simulation model, the estimated
market or portfolio value ("PV") of the Bank's assets would decline in value to
a greater degree than the change in the PV of the Bank's liabilities, thereby
reducing net portfolio value ("NPV"), the estimated market value of its
shareholders' equity.
As of March 31, 2000, under a rate shock scenario of plus 200 basis points
("bp"), the Bank's pre-shock NPV ratio (NPV as a % of PV of assets) was
estimated in the OTS model to be 9.94%. The post-shock NPV ratio was estimated
to be 9.47%, a decline of 47bp. As of June 30, 2000, the most recent report
available, the Bank's sensitivity to interest rate changes remained comparative.
The post-shock ratio for a 200 bp decrease in market interest rates as of June
30, 2000 was estimated to be 9.33%, a decrease of 45bp from the pre-shock NPV
ratio estimate of 9.78%.
In managing market risk and the asset/liability mix, the Bank has placed
its emphasis on developing a portfolio in which, to the extent practicable,
assets and liabilities reprice within similar periods. The effect of this policy
will generally be to reduce the Bank's sensitivity to interest rate changes. The
goal of this policy is to provide a relatively consistent level of net interest
income in varying interest rate cycles and to minimize the potential for
significant fluctuations from period to period.
Page 19
<PAGE>
HF FINANCIAL CORP.
FORM 10-Q
<TABLE>
<CAPTION>
PART II. OTHER INFORMATION
<S> <C>
Item 1. LEGAL PROCEEDINGS
None
Item 2. CHANGES IN SECURITIES
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits 27.1 and 27.2 are attached.
b. Form 8-K is not required to be filed at this time.
</TABLE>
--------------------------------------------------------------------------------
No other information is required to be filed under Part II of the form.
Page 20
<PAGE>
HF FINANCIAL CORP.
FORM 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
HF Financial Corp.
----------------------------------
(Registrant)
Date: NOVEMBER 13, 2000 by /s/ Curtis L. Hage
-------------------------- ----------------------------------
Curtis L. Hage, Chairman,
President And Chief Executive
Officer
(Duly Authorized Officer)
Date: NOVEMBER 13, 2000 by /s/ Brent E. Johnson
-------------------------- ----------------------------------
Brent E.Johnson,
Senior Vice President,
Chief Financial Officer
And Treasurer
(Principal Financial and
Accounting Officer)
Page 21
