Business Context and Reporting Period
Home Federal Bancorp, Inc. of Louisiana is the holding company for Home Federal Bank, a community-oriented federally chartered savings bank serving northwest Louisiana, primarily the Shreveport-Bossier City-Minden area. The Bank operates 10 full-service branches plus a home office and generates earnings principally from deposits, residential and commercial lending, securities investments, and related banking fees. This Form 10-K covers the fiscal year ended June 30, 2026, compared with fiscal 2025. The financial statements received an unqualified audit opinion from Carr, Riggs & Ingram, LLC.
Key Financial Metrics
| Metric | FY 2026 | FY 2025 |
|---|---|---|
| Total assets | $643.330 million | $609.492 million |
| Net loans receivable | $475.491 million | $461.004 million |
| Deposits | $577.292 million | $546.290 million |
| Stockholders’ equity | $58.757 million | $55.205 million |
| Total interest income | $32.498 million | $30.462 million |
| Net interest income | $21.789 million | $18.671 million |
| Net income | $6.174 million | $3.888 million |
| Basic/diluted EPS | $2.05/$2.02 | $1.27/$1.26 |
| Net interest margin | 3.72% | 3.23% |
| Return on average assets | 0.99% | 0.63% |
| Return on average equity | 10.70% | 7.31% |
Profitability and Margins
- Net income increased $2.286 million, or 58.8%, to $6.174 million.
- Net interest income increased $3.118 million, or 16.7%, primarily from higher yields on interest-earning assets, a $9.218 million increase in average interest-earning assets, and lower funding costs.
- The average interest-rate spread improved to 3.07% from 2.55%. The average yield on interest-earning assets rose to 5.54% from 5.28%, while the average rate on interest-bearing liabilities declined to 2.47% from 2.73%.
- Provision for credit losses was $594,000, compared with a $126,000 recovery in the prior year. Non-interest income increased to $2.672 million from $2.005 million, while non-interest expense declined modestly to $16.082 million from $16.148 million.
- The effective tax rate increased to 20.7% from 16.5%, partially offsetting pretax earnings growth.
Balance Sheet, Liquidity, and Capital
- Total assets grew 5.6%, supported by a 97.8% increase in cash and cash equivalents to $34.304 million, a 3.1% increase in net loans, and a 3.9% increase in investment securities.
- Deposits increased 5.7%, led by a $34.756 million increase in certificates of deposit and a $15.643 million increase in non-interest-bearing deposits. Certificates of deposit totaled $222.113 million, of which $174.383 million matures within one year.
- The Bank had no Federal Home Loan Bank advances at year-end and reported $136.376 million of available FHLB borrowing capacity. The parent company had $3.556 million of other borrowings outstanding, maturing February 5, 2034, at a variable Prime-based rate.
- Liquidity averaged 22.6% during the quarter ended June 30, 2026. The Bank held $25.394 million in FHLB deposits and had $34.304 million in cash and cash equivalents.
- Outstanding loan commitments were $55.880 million and unused equity-line commitments were $14.911 million. Commitments to extend credit and standby letters of credit totaled $72.618 million in the financial statement disclosures.
- The Bank was categorized as well capitalized. At June 30, 2026, common equity Tier 1, Tier 1, total capital, leverage, and tangible capital ratios were 13.11%, 13.11%, 14.20%, 9.29%, and 9.29%, respectively.
Cash Flow and Capital Allocation
- Operating activities provided $7.620 million of cash, compared with $5.472 million in 2025.
- Investing activities used $18.031 million, primarily reflecting net loan originations and purchases and purchases of available-for-sale securities.
- Financing activities provided $27.368 million, principally from a $31.002 million increase in deposits.
- Cash and cash equivalents increased $16.957 million to $34.304 million.
- The Company paid $1.663 million in dividends and repurchased $3.333 million of common stock. During the fourth quarter, it repurchased 23,238 shares at an average price of $18.98, leaving 24,694 shares authorized for repurchase under the program.
Material Changes Versus the Prior Comparable Period
- The loan portfolio expanded to $480.500 million before the allowance, up from $465.593 million. Commercial real estate loans increased to $141.002 million, commercial business loans to $58.866 million, and construction loans to $25.435 million. One-to-four-family residential loans declined to $164.214 million from $174.978 million.
- Loan originations increased to $193.386 million from $156.430 million, while loan sales increased to $30.046 million from $18.312 million. Gain on loan sales increased to $642,000 from $384,000.
- The allowance for credit losses increased to $4.926 million from $4.484 million, or 1.03% of gross loans versus 0.96%. Net charge-offs were $152,000, compared with net recoveries of $36,000 in 2025.
- Non-performing assets increased to $3.649 million from $3.305 million, or 0.57% of total assets versus 0.54%. Non-performing loans increased to 0.64% of net loans from 0.51%.
- Available-for-sale securities increased to $43.624 million, while held-to-maturity securities declined to $55.439 million. The securities portfolio carried substantial unrealized losses, which management attributed to interest-rate changes rather than credit deterioration.
- Stockholders’ equity increased 6.4%, despite $3.333 million of stock repurchases and $1.663 million of dividends, due primarily to net income and proceeds from stock-option exercises.
Guidance, Outlook, Risks, and Unusual Items
- Management expects to continue emphasizing commercial real estate and commercial business lending to improve portfolio yields, while selling a substantial portion of fixed-rate residential mortgage originations to manage interest-rate risk.
- Management may consider, but does not currently intend to pursue, acquisitions in contiguous markets or banking-related businesses.
- Interest-rate risk remains material because a significant portion of assets consists of fixed-rate loans and securities, while deposit costs can reprice more quickly. The filing’s modeled net portfolio value declines 2.32% under a 300-basis-point rate increase and 1.49% under a 200-basis-point rate decrease.
- Credit risk is concentrated geographically in northwest Louisiana and surrounding areas and is increasing as the Bank expands commercial, construction, land, and commercial business lending. Management identified the allowance for credit losses as a critical accounting estimate, and additional changes could materially affect earnings.
- The Company recorded a $200,000 write-down of other real estate owned related to a large commercial property; management stated that no further adjustment was expected at that time.
- At June 30, 2026, the Bank had $613,000 of other real estate owned and $225,000 of residential loans in foreclosure. There were no doubtful or loss-rated loans, but classified assets totaled $6.013 million.
- The Company reported no material cybersecurity incident, pending material legal proceeding, or SEC-defined off-balance-sheet arrangement. It disclosed continuing exposure to cybersecurity, regulatory, deposit-retention, uninsured-deposit, and economic risks.
- The Bank intends to elect the Community Bank Leverage Ratio framework in its September 30, 2026 Call Report. The applicable Tier 1 leverage threshold is greater than 8% effective July 1, 2026.
Investor Verification Priorities
- Verify whether the improved net interest margin and lower deposit funding costs are sustainable as certificates of deposit mature and reprice.
- Monitor commercial real estate, construction, land, and commercial business credit quality, including the increase in non-performing assets and the adequacy of the $4.926 million allowance.
- Review the maturity and retention risk of the $174.383 million of certificates of deposit due within one year and the $129.253 million of uninsured deposits.
- Assess the fair-value sensitivity of securities, including $8.781 million of unrealized losses on held-to-maturity securities and $2.378 million of unrealized losses on available-for-sale securities.
- Confirm continued well-capitalized status and the effect of the planned Community Bank Leverage Ratio election.
- Evaluate the parent company’s dependence on dividends from Home Federal Bank, regulatory limits on capital distributions, and the impact of ongoing repurchases and dividends.
- Review the critical audit matter concerning allowance-for-credit-loss assumptions, collateral values, forecasts, prepayment rates, and qualitative adjustments.