Home Federal Bancorp, Inc. of Louisiana — FY2021 Form 10-K
Reporting period: Fiscal year ended June 30, 2021, compared primarily with fiscal 2020. Although the request metadata says “2020 Q4,” this filing reports the full fiscal year ended June 30, 2021; it does not provide a distinct Q4 results summary. Home Federal is a Louisiana community-bank holding company operating through Home Federal Bank in the Shreveport-Bossier City area.
Financial highlights
| Metric | FY2021 / June 30, 2021 | FY2020 / June 30, 2020 |
|---|---|---|
| Total assets | $565.7 million | $518.2 million |
| Net income | $5.4 million; diluted EPS $1.57 | $3.9 million; diluted EPS $1.07 |
| Net interest income | $16.9 million | $15.2 million |
| Net interest margin | 3.31% | 3.46% |
| Provision for loan losses | $1.8 million | $1.9 million |
| Net loans receivable | $336.4 million | $359.9 million |
| Deposits | $506.6 million | $460.8 million |
| Cash and cash equivalents | $104.4 million | $54.9 million |
| Stockholders’ equity | $52.7 million | $50.5 million |
- Earnings and margins: Net income rose 39.4%. Net interest income increased 11.6%, mainly because interest expense fell 35.9% to $3.3 million, despite interest income slipping to $20.2 million. Average yield on interest-earning assets declined to 3.96% from 4.64%; the efficiency ratio improved to 61.55% from 64.89%. Return on average assets was 0.98%, and return on average equity was 10.45%.
- Other income and expenses: Non-interest income increased 39.8% to $5.5 million, chiefly as loan-sale gains rose to $4.3 million from $2.5 million. Non-interest expense grew 11.3% to $13.8 million, including higher compensation, data processing, and a $200,000 real-estate-owned valuation adjustment. Income tax expense was $1.4 million; the effective rate was 21.2%.
- Cash flow: Operating activities provided $8.3 million, investing activities used $1.4 million, and financing activities provided $42.6 million. Cash and cash equivalents increased $49.5 million during the year. The large cash build was associated principally with deposit growth and PPP-related funding flows.
- Funding and liquidity: Deposits rose 9.9%; non-interest-bearing deposits increased to $131.0 million, while certificates of deposit fell to $109.0 million. The average cost of total deposits declined to 0.66% from 1.22%. The company reported a 38.83% average liquidity ratio for the June 2021 quarter, $173.5 million of available FHLB borrowing capacity, and $20.4 million of Federal Funds purchase capacity. FHLB advances were $867,000 and other borrowings were $2.4 million at year-end.
- Capital: Home Federal Bank was classified as well capitalized. At June 30, 2021, its tangible/core capital ratio was 9.57%, common equity Tier 1 ratio 16.63%, and total risk-based capital ratio 17.88%.
Changes and operating developments
- Assets increased 9.2%, led by higher cash and investment securities; net loans declined 6.5%. Total loan originations rose to $389.8 million, while $198.8 million of loans were sold, primarily long-term fixed-rate residential mortgages. The bank cited interest-rate risk management as a reason for selling those loans.
- The portfolio continued shifting toward commercial lending: commercial real-estate loans reached $96.2 million, up from $87.1 million; commercial business loans declined to $69.9 million from $81.9 million, partly because of SBA PPP repayments. Multifamily loans declined to $31.0 million from $47.4 million.
- Non-performing assets fell to $1.4 million, or 0.25% of assets, from $7.2 million, or 1.39%. The decline reflected payoffs, charge-offs/write-downs, and collateral paydowns. The allowance for loan losses was $4.1 million, or 1.21% of total loans, compared with 1.12% a year earlier. Net charge-offs were $1.8 million, or 0.48% of average loans.
- The Bank funded 597 SBA PPP loans totaling approximately $68.8 million; $38.6 million had been forgiven by June 30, 2021. The filing says commercial lenders and support staff worked to assist local businesses.
- The company repurchased $2.6 million of stock and paid $1.1 million in dividends. A two-for-one stock split was paid in March 2021; per-share data in the filing are split-adjusted.
Outlook, risks and notable items
- Management plans to emphasize commercial real-estate and business lending, sell a substantial portion of fixed-rate residential mortgage production, control expenses, and expand in nearby communities. A West Shreveport branch was expected to open in November 2021; a Minden loan production office opened in September 2021, with a possible future conversion to a full-service branch. These are plans disclosed in the filing, not financial guidance; no specific earnings or growth targets are provided.
- Management identifies interest-rate changes, local and broader economic conditions, competition, loan losses, COVID-19 effects, and regulatory changes as risks. Its June 2021 interest-rate model estimated net portfolio value would fall 23.14% under a 200-basis-point rate decline and rise 9.25% under a 300-basis-point increase, illustrating asymmetric modeled sensitivity.
- Liquidity commitments included $59.1 million of commitments to grant loans and $9.7 million of unused lines of credit. Certificates of deposit totaling $64.7 million, or 59.4% of CDs, were scheduled to mature within one year; renewal costs could rise if market rates increase. The company also disclosed $50.3 million in cash deposits above the FDIC insurance limit.
- Credit quality estimates remain judgment-sensitive. The allowance assessment includes a COVID-19 qualitative factor; the independent auditor identified the allowance for loan losses as a critical audit matter. The auditor issued an unqualified opinion on the financial statements but did not audit or opine on internal-control effectiveness. Management concluded internal controls were effective.
- The filing reports no material pending legal proceedings. It states there were no off-balance-sheet arrangements as defined by SEC rules, while separately disclosing ordinary-course lending commitments and letters of credit.
Investor verification priorities
- Reconcile the request’s “2020 Q4” label with the filing’s fiscal year ended June 30, 2021; obtain quarterly filings for period-specific Q4 results.
- Assess whether loan-sale gains and lower deposit funding costs are repeatable, and how the declining net interest margin may respond to changing rates.
- Review commercial real-estate and business credit concentrations, the remaining substandard exposures, charge-offs, and the adequacy and assumptions of the loan-loss allowance.
- Track PPP forgiveness and repayment effects on loan balances, fee income, deposits, and future earnings.
- Verify deposit retention and pricing as CDs mature, liquidity available after commitments, and the status and terms of the short-term parent-company credit line.
- Confirm execution, costs, and performance of the planned branch expansion and the sustainability of repurchases and dividends.