Home Financial Bancorp Announces Second Quarter Results

SPENCER, Ind.--()--Home Financial Bancorp (“Company”) (OTC Symbol “HWEN”), an Indiana corporation which is the holding company for Our Community Bank, (“Bank”) based in Spencer, Indiana, announces results for the second quarter and six months ended December 31, 2016. The following comparisons are made to the same time period in the prior fiscal year.

Second Quarter Highlights:

  • Non-interest expense decreased $75,000 or 10%;
  • Income tax expense increased $55,000;
  • Net income rose $24,000 or 45%, to $77,000.

Six Month Highlights:

  • Total loans increased $739,000 or 2%;
  • Non-performing loans fell $226,000 or 33%, to 1.0% of total loans;
  • Non-interest expense decreased $181,000 or 11%;
  • Net income improved $92,000 to $159,000.

For the quarter ended December 31, 2016, the Company reported net income of $77,000, or $.07 basic and diluted earnings per share. Net income was $53,000 or $.04 basic and diluted earnings per share for the quarter ended December 31, 2015. Second quarter 2017 net income was higher due to lower non-interest expense compared to the same quarter a year earlier; which was caused by several factors, including lower repossessed property expenses.

Net interest income decreased $5,000 or 1%, and totaled $665,000. Total interest income fell $10,000 or 1%, but was partially offset by a $5,000 or 5% decline in interest expense. Net interest margin for the quarter was 4.26%, compared to 4.35% for the same period a year earlier.

Loan loss provisions were $20,000 for both the quarter-ended December 31, 2016 and year-earlier period. A regular assessment of loan loss allowance adequacy indicated that these provisions were necessary to maintain an appropriate allowance level. Changes in volume, composition and quality of the loan portfolio, as well as actual loan loss experience, influences the need for future loan loss provisions. Net loan charge-offs during second quarter 2017 totaled $13,000, compared to $4,000 for second quarter 2016.

Total non-interest income increased $9,000 or 7%, to $134,000 for the quarter. This change resulted from $10,000 net gain on sale of loans during second quarter 2017. Total non-interest expense for second quarter 2017 decreased $75,000 or 10%. Repossessed property expense declined $29,000 or 65%, salaries and employee benefits decreased $25,000, or 8%, and advertising expense fell $10,000 or 12%.

The adoption of Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2014-01 contributed $19,000 to the decline in non-interest expense for the quarter. For the quarter ended December 31, 2015, losses totaling $19,000 related to low income housing partnership investments which produce income tax credits were included in non-interest expense. In accordance with ASU 2014-1, such losses in the amount of $19,000 are reported as a component of income tax expense for the quarter ended December 31, 2016. Income tax expense was $11,000 for the three month period ended December 31, 2016, compared to an income tax benefit of $44,000 for the same period last year. The adoption of ASU 2014-01 contributed $19,000 of the increase in income tax expense, while higher net income before taxes contributed the remaining $36,000 of the increase.

For the six-month period ended December 31, 2016, the Company reported net income of $159,000, or $.14 basic and diluted earnings per share. Net income was $67,000, or $.06 basic and diluted earnings per share for the six months ended December 31, 2015. Gain on the sale of securities and lower repossessed property expense contributed to improved net income compared to the same period a year earlier.

Net interest income decreased $29,000, or 2%, to $1.3 million for the six-month period ending December 31, 2016. Interest income on loans decreased $32,000 or 2%, while interest income from investments declined $13,000 or 9%. Total interest expense declined $18,000 or 8%.

Loan loss provisions were $40,000 for six-months ended December 31, 2016 and for the same period ending December 31, 2015. Loan loss provisions reflect management’s assessment of various risk factors including, but not limited to, the level and trend of loan delinquencies and losses. Net loan charge-offs for the six months ended December 31, 2016 were $45,000, compared to $34,000 for the same period a year earlier.

Non-interest income increased $46,000, or 17%, to $312,000 for the first half of fiscal 2017, compared to $266,000 for the year-earlier period. This change was largely due to a $39,000 net gain on sale of investment securities recorded during first quarter 2017. Non-interest expense decreased $181,000 or 11%. Repossessed property expense fell $95,000 or 88%, to $13,000. Salaries and employee benefits also declined by $25,000 or 4%.

The adoption of FASB ASU 2014-01 contributed $39,000 to the decline in non-interest expense for the six month period ended December 31, 2016. For the six months ended December 31, 2015, losses totaling $39,000 related to low income housing partnership investments which produce income tax credits were included in non-interest expense. In accordance with ASU 2014-1, such losses in the amount of $39,000 are reported as a component of income tax expense for the quarter ended December 31, 2016. Income tax expense was $27,000 for the six month period ended December 31, 2016, compared to an income tax benefit of $79,000 for the same period last year. The adoption of ASU 2014-01 contributed $39,000 of the increase in income tax expense, while higher net income before taxes contributed the remaining $67,000 of the increase.

At December 31, 2016, total assets were $65.1 million, compared to $64.5 million at June 30, 2016. Cash and cash equivalents increased $547,000 or 33%, to $2.2 million. Investments available for sale declined 8% to $10.8 million. Total loans increased $739,000 or 2%, to $45.0 million.

Loans delinquent 90 days or more were $466,000 or 1.0% of total loans at December 31, 2016, compared to $692,000 or 1.6% of total loans at June 30, 2016. At December 31, 2016, non-performing assets were $713,000 or 1.1% of total assets, compared to $947,000 or 1.5% of total assets at June 30, 2016. Non-performing assets included $247,000 in Other Real Estate Owned (“OREO”) and other repossessed properties at December 31, 2016, compared to $255,000 six months earlier.

Loan loss allowances were $448,000 or 0.99% of total loans at December 31, 2016, compared to $454,000 or 1.02% of total loans at June 30, 2016. Management considered the level of loan loss allowances at December 31, 2016 to be adequate to cover estimated losses inherent in the loan portfolio at that date.

Deposits decreased $1.1 million or 2%, to $45.6 million as of December 31, 2016. Total borrowings increased $1.9 million or 22% to $10.4 million, from $8.5 million at June 30, 2016.

Shareholders’ equity was $8.7 million or 13.3% of total assets at December 31, 2016. Factors impacting shareholder equity during the first half of fiscal 2017 included net income, two quarterly cash dividends totaling $.075 per share, a $196,000 decline in accumulated other comprehensive income related to securities available for sale, and repurchase of 9,701 shares of its common stock at a total cost of $56,751. At December 31, 2016, the Company’s book value per share was $7.42 based on 1,166,002 shares outstanding.

Home Financial Bancorp and Our Community Bank, an FDIC-insured, Indiana stock commercial bank, operate from headquarters in Spencer, Indiana, and a branch office in Cloverdale, Indiana. Additional information concerning Home Financial Bancorp and its subsidiaries is available at www.hfbancorp.com or www.ocbconnect.com.

     
HOME FINANCIAL BANCORP
Consolidated Financial Highlights

(Unaudited)

(Dollars in thousands, except per share and book value amounts)

 

FOR THREE MONTHS ENDED DECEMBER 31:

2016

2015

Net Interest Income $665 $670
Provision for Loan Losses 20 20
Non-interest Income 134 125
Non-interest Expense 691 766
Income Tax 11 (44 )
Net Income 77 53
 
Basic Earnings Per Share: $ .07 $ .04
Diluted Earnings Per Share: $ .07 $ .04
Average Shares Outstanding - Basic 1,165,654 1,191,050
Average Shares Outstanding - Diluted 1,165,741 1,191,672
 

FOR SIX MONTHS ENDED DECEMBER 31:

2016

2015

Net Interest Income $1,317 $1,346
Provision for Loan Losses 40 40
Non-interest Income 312 266
Non-interest Expense 1,403 1,584
Income Tax 27 (79 )
Net Income 159 67
 
Basic Earnings Per Share: $ .14 $ .06
Diluted Earnings Per Share: $ .14 $ .06
Average Shares Outstanding - Basic 1,170,399 1,190,071
Average Shares Outstanding - Diluted 1,170,747 1,190,695
 

December 31,

June 30,

2016

2016

Total Assets $65,130 $64,548
Total Loans 45,050 44,311
Allowance for Loan Losses 448 454
Total Deposits 45,630 46,738
Borrowings 10,400 8,500
Shareholders’ Equity 8,655 8,836
 
Non-Performing Assets 713 947
Non-Performing Loans 466 692
 
Non-Performing Assets to Total Assets 1.09 % 1.47 %
Non-Performing Loans to Total Loans 1.03 1.56
 
Book Value Per Share* $7.42 $7.52

*Based on 1,166,002 shares at December 31, 2016 and 1,175,703 shares at June 30, 2016.

Contacts

Home Financial Bancorp
Kurt D. Rosenberger, 812-829-2095

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