UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report: April 19, 2006

 

Home Federal Bancorp, Inc.
(Exact name of registrant as specified in its charter)

Federal 000-50901 20-0945587
 (State or other jurisdiction (Commission File   (I.R.S. Employer
of incorporation)    Number)   Identification No.)

500 12th Avenue South
Nampa, Idaho 83651
(Address of principal executive offices and zip code)

(208) 466-4634
(Registrant's telephone number, including area code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions.

[ ]   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17
      CFR 240.14d-2(b))

[ ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17
      CFR 240.13e-4(c))

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Item 2.02 Results of Operations and Financial Condition

On April 19, 2006, Home Federal Bancorp, Inc. issued its earnings release for the second quarter of its fiscal year ending September 30, 2006. A copy of the press release is attached hereto as Exhibit 99.1 and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits

            (c)      Exhibits

            99.1    Press release of Home Federal Bancorp, Inc. dated April 19, 2006

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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, hereunto duly authorized.

                                                                                        HOME FEDERAL BANCORP, INC.

Date: April 19, 2006                                                         By: /s/ Robert A. Schoelkoph            
                                                                                              Robert A. Schoelkoph
                                                                                              Senior Vice President and
                                                                                              Chief Financial Officer

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Exhibit 99.1

<PAGE>

 

                                                                                          Contact:
                                                                                          Home Federal Bancorp, Inc.
                                                                                          Daniel L. Stevens, Chairman, President & CEO
                                                                                          Robert A. Schoelkoph, SVP, Treasurer & CFO
                                                                                          208-466-4634
                                                                                          www.myhomefed.com

PRESS RELEASE - For Immediate Release


HOME FEDERAL BANCORP, INC. ANNOUNCES SECOND QUARTER EARNINGS

Nampa, ID (April 19, 2006) - Home Federal Bancorp, Inc. (the "Company") (Nasdaq: HOME), the parent company of Home Federal Bank (the "Bank"), today reported net income of $1.2 million, or $0.09 per diluted share, for the quarter ended March 31, 2006, compared to $1.7 million, or $0.11 per diluted share, for the same period a year ago. Results for the quarter ended March 31, 2005 included a $386,000 pre-tax gain on the sale of a former branch. Excluding the gain on the sale of the branch, the Company had net income of $1.4 million, or $0.10 per share for the quarter ended March 31, 2005.

Net income for the six months ended March 31, 2006 was $3.0 million, or $0.21 per diluted share, compared to $1.7 million, or $0.12 per diluted share for the same six-month period a year ago. Results for the six months ended March 31, 2005 included the $386,000 pre-tax gain on the sale of a former branch and a $1.8 million pre-tax expense for establishing the Home Federal Foundation, Inc. (the "Foundation"). Excluding the gain on the sale of the branch and the expense for establishing the Foundation, the Company had net income of $2.6 million, or $0.18 per diluted share, for the six months ended March 31, 2005.

"We have continued to perform successfully despite a flattening yield curve," said Daniel L. Stevens, Chairman and CEO. "During the quarter ended March 31, 2006, we experienced a 14% increase in interest and dividend income, net loans increased 14% and deposits were up 16%, as compared to the same period a year ago."

The following table reconciles the Company's actual net income to pro forma net income for the three and six months ended March 31, 2006 and 2005 exclusive of the sale of the branch and the contribution to the Foundation, as adjusted for Federal and state taxes (in thousands, except per share data):

Three Months Ended
March 31,


Six Months Ended
March 31,


2006


2005


2006


2005


Pro forma disclosure

(unaudited)

    Net income, as reported

$  1,233

$  1,674  

$  2,993

$  1,748  

    Sale of branch

-

(386) 

-

(386) 

    Contribution to Foundation

-

-  

-

1,825  

    Federal and state income taxes

-


151  


-


(561) 


    Pro forma net income

$  1,233


$  1,439  


$  2,993


$  2,626  


Earnings per share

    Diluted as reported

$    0.09

$    0.11  

$    0.21

$   0.12  

    Pro forma diluted

$    0.09

$    0.10  

$    0.21

$   0.18  

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Home Federal Bancorp, Inc.
April 19, 2006
Page 2 of 7

Second Quarter Highlights (at or for the periods ended March 31, 2006 compared to March 31, 2005):

Operating Results

Revenues for the quarter ended March 31, 2006, which consisted of net interest income before the provision for loan losses plus noninterest income, were unchanged at $8.1 million as compared to the quarter ended March 31, 2005. Results for the quarter ended March 31, 2005 included a $386,000 pre-tax gain on the sale of a former branch. Net interest income before the provision for loan losses increased 3% to $5.6 million for the quarter ended March 31, 2006, compared to $5.5 million for the same quarter of the prior year.

Revenues for the six months ended March 31, 2006 increased 10% to $16.9 million, compared to $15.3 million for the same period of last year. Net interest income before the provision for loan losses increased 11% to $11.6 million, compared to $10.5 million for the same period of last year. On December 6, 2004, the Bank completed its mutual holding company reorganization, at which time the Bank converted to stock form and the Company was organized. In connection with the reorganization, the Company received $53.6 million in net proceeds from a minority stock offering. The majority of the proceeds were invested in mortgage-backed securities. Revenues from mortgage-backed securities increased $1.4 million to $4.8 million for the six months ended March 31, 2006, compared to $3.4 million for the same period of the prior year.

For the quarter ended March 31, 2006, net interest income after provision for loan losses increased 5% to $5.5 million, compared to $5.3 million for the same quarter a year ago. For the quarter ended March 31, 2006, a provision for loan losses of $90,000 was established by management in connection with its analysis of the loan portfolio, compared to a provision for loan losses of $236,000 established for the same quarter of the prior year. The decrease in the provision reflects the Company's current credit quality and decrease in classified assets, nonperforming loans and net charge-offs. Net interest income after provision for loan losses for the six months ended March 31, 2006 increased 13% to $11.5 million, compared to $10.2 million for the same period of the prior year.

The Company's net interest margin decreased 34 basis points to 3.33% for the quarter ended March 31, 2006, from 3.67% for the same quarter last year. The net interest margin for the six months ended March 31, 2006 decreased 9 basis points to 3.50% from 3.59% for the same period a year earlier. The cost of deposits was 2.04% for the six months ended March 31, 2006 compared to 1.65% for the same period of the prior year. During the current fiscal year, the Company revised its estimate of accrued interest on an escalator certificate of deposit product. The revision resulted in a one-time $310,000 reduction in interest expense for the six months ended March 31, 2006. Excluding the revision, the net interest margin and cost of deposits for the six months ended March 31, 2006 were 3.37% and 2.21%, respectively. The decline in net interest margin reflects the relatively flat yield curve that currently exists, as the cost of shorter-term deposits and borrowed funds increased more rapidly than the yield on

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Home Federal Bancorp, Inc.
April 19, 2006
Page 3 of 7

longer-term assets. Although the Company believes the repricing of existing and new loans over time will help counter the trend in net interest margin, pressure will likely continue in the near term as a result of the flat yield curve environment.

Noninterest income decreased 6% to $2.5 million for the quarter ended March 31, 2006, compared to $2.6 million for the same quarter a year ago. The decrease in noninterest income is primarily attributable to a $386,000 gain on the sale of a former branch in the prior quarter a year ago. The prior year gain is partially offset by an 8% increase in service charges and fees and a 171% increase in gains on loan sales in the quarter ended March 31, 2006. For the six months ended March 31, 2006, noninterest income increased 9% to $5.3 million, compared to $4.9 million for the same period of the prior year. Increases in service charges and gains on loans sales of $590,000 and $366,000 account for the increase, offset by the $386,000 gain on the sale of the former branch.

Noninterest expense for the quarter ended March 31, 2006 increased 17% to $6.1 million, from $5.2 million for the comparable period a year earlier. Compensation and benefits increased $674,000 to $3.8 million for the quarter ended March 31, 2006 as compared to $3.1 million for the same quarter a year ago. The majority of the increase is attributable to the establishment of the equity compensation plans during the prior fiscal year, annual merit increases, and an increase in employee commissions. The equity compensation plans include the Company's employee stock option plan, 2005 Recognition and Retention Plan ("RRP") and 2005 Stock Option and Incentive Plan. The efficiency ratio was 74.5% for the quarter ended March 31, 2006 compared to 63.8% for the same quarter a year ago. Excluding the non-recurring gain on sale of a former branch, the efficiency ratio was 67.0% for the same period of the prior year. The efficiency ratio indicates how much is spent on non-interest expenses as a percentage of total revenue.

Noninterest expense for the six months ended March 31, 2006 decreased 3% to $11.9 million, compared to $12.2 million for the six months ended March 31, 2005. The decrease was primarily a result of the $1.8 million contribution to the Foundation during the quarter ended December 31, 2004. Compensation and benefits increased $1.4 million to $7.6 million for the six months ended March 31, 2006 as compared to $6.1 million for the same period a year ago. The majority of the increase is attributable to the establishment of the equity compensation plans during the prior fiscal year, annual merit increases, and increases in employee commissions and incentive plans. The efficiency ratio was 70.6% for the six months ended March 31, 2006 compared to 79.9% for the same period of the prior year. Excluding the non-recurring contribution to the Foundation and the gain on sale of the former branch, the efficiency ratio was 69.7% for the six months ended March 31, 2005.

Balance Sheet Growth

Total assets increased 16% to $747.3 million at March 31, 2006 compared to $643.4 million a year earlier. Net loans (excluding loans held for sale) at March 31, 2006 increased 14% to $476.2 million, compared to $419.1 million at March 31, 2005. Single family loans represented 64% of the Bank's loan portfolio at March 31, 2006, compared to 62% at March 31, 2005. Commercial real estate loans accounted for 27% of the Bank's loan portfolio at March 31, 2006, compared to 28% at March 31, 2005.

Credit quality remains exceptional, as non-performing assets were $10,000, or 0.001% of total assets, at March 31, 2006, compared to $803,000, or 0.125% of total assets, at March 31, 2005. The allowance

<PAGE>

Home Federal Bancorp, Inc.
April 19, 2006
Page 4 of 7

for loan losses was $3.0 million, or 0.62% of gross loans, including loans held for sale, at March 31, 2006 compared to $2.8 million, or 0.67% of gross loans, at March 31, 2005.

Deposits increased 16% to $431.6 million at March 31, 2006 compared to $373.1 million at March 31, 2005. Noninterest-bearing demand deposits increased $14.7 million, or 43%, to $49.1 million at March 31, 2006, compared to $34.4 million at March 31, 2005. Interest-bearing demand deposits were unchanged at $132.3 million at March 31, 2006 and 2005. Certificates of deposit increased $44.0 million to $224.6 million at March 31, 2006, compared to $180.6 million at March 31, 2005. The majority of the increase in certificates of deposits was in 12 to 23 month terms. Advances from the Federal Home Loan Bank ("FHLB") increased 27% to $196.5 million at March 31, 2006 compared to $154.7 million at March 31, 2005. The Company utilizes advances from the FHLB as an alternative funding source to retail deposits in order to manage funding costs, reduce interest rate risk and to leverage the Balance Sheet.

Stockholders' equity increased $2.5 million to $104.4 million at March 31, 2006, compared to $101.9 million at March 31, 2005. The increase was primarily the result of $6.5 million in net income for the period, $678,000 in earned ESOP shares and $412,000 equity compensation, offset by $1.2 million of cash dividends paid to stockholders and $3.9 million for the repurchase of 298,092 shares of common stock for the RRP plan. The Company's book value per share as of March 31, 2006 was $6.89 per share based upon 15,154,114 outstanding shares of common stock.

About the Company

Home Federal Bancorp, Inc. is a savings and loan holding company headquartered in Nampa, Idaho. It is the subsidiary of Home Federal MHC, a federally chartered mutual holding company, and the parent company of Home Federal Bank, a federal savings bank that was originally organized as a building and loan association in 1920. The Company serves the Treasure Valley region of southwestern Idaho, that includes Ada, Canyon, Elmore and Gem Counties, through 14 full-service banking offices and two mortgage loan centers. The Company's common stock is traded on the NASDAQ National Market System under the symbol "HOME." The Company's stock is also included in the America's Community Bankers NASDAQ Index. For more information, visit the Company's web site at www.myhomefed.com.

 

Forward-Looking Statements:

Statements in this report regarding future events, performance or results are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 ("PSLRA") and are made pursuant to the safe harbors of the PSLRA. Actual results could be materially different from those expressed or implied by the forward-looking statements. Factors that could cause results to differ include but are not limited to: general economic and banking business conditions, competitive conditions between banks and non-bank financial service providers, interest rate fluctuations, regulatory and accounting changes, the value of mortgage servicing rights, risks related to construction and development, commercial real estate and consumer lending and other risks. Additional factors that could cause actual results to differ materially are disclosed in Home Federal Bancorp, Inc.'s recent filings with the Securities and Exchange Commission, including but not limited to its Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Forward-looking statements are accurate only as of the date released, and we do not undertake any responsibility to update or revise any forward-looking statements to reflect subsequent events or circumstances.

<PAGE>

Home Federal Bancorp, Inc.
April 19, 2006
Page 5 of 7

HOME FEDERAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data) (Unaudited)

March 31,
2006


September 30,
2005


March 31,
2005


ASSETS

   Cash and amounts due from depository institutions

$         19,326  

$           19,033  

$        11,875  

   Mortgage-backed securities available for sale, at fair value

13,600  

14,830  

19,120  

   Mortgage-backed securities held to maturity, at cost

193,402  

180,974  

155,030  

   Federal Home Loan Bank stock, at cost

9,591  

9,591  

8,112  

   Loan receivable, net of allowance for loan losses of
      $2,984, $2,882 and $2,827

476,227  

430,944  

419,146  

   Loans held for sale

5,139  

5,549  

1,566  

   Accrued interest receivable

2,777  

2,458  

2,261  

   Property and equipment, net

13,296  

11,995  

10,992  

   Mortgage servicing rights, net

2,511  

2,671  

2,998  

   Bank owned life insurance

10,289  

10,099  

10,214  

   Real estate and other property owned

-  

534  

567  

   Other assets

1,138  


899  


1,549  


      TOTAL ASSETS

$       747,296  


$         689,577  


$      643,430  


LIABILITIES AND STOCKHOLDERS' EQUITY

 

LIABILITIES

   Deposit accounts

      Noninterest-bearing demand deposits

$         49,068  

$           46,311  

$        34,351  

      Interest-bearing demand deposits

132,342  

127,330  

132,288  

      Savings deposits

25,583  

25,219  

25,917  

      Certificates of deposit

224,642  


197,465  


180,594  


         Total deposit accounts

431,635  

396,325  

373,150  

      Advances by borrowers for taxes and insurance

1,951  

3,898  

3,710  

      Interest payable

1,170  

1,670  

1,607  

      Deferred compensation

3,452  

3,049  

2,796  

      Federal Home Loan Bank advances

196,542  

175,932  

154,717  

      Deferred income tax liability

913  

1,205  

1,317  

      Other liabilities

7,245  


6,131  


4,191  


         Total liabilities

642,908  

588,210  

541,488  

STOCKHOLDERS' EQUITY

      Serial preferred stock, $.01 par value; 5,000,000
         authorized issued and outstanding, none

-  

-  

-  

      Common stock, $.01 par value; 50,000,000 authorized,

         issued and outstanding:

           Mar. 31, 2006 - 15,208,750 issued, 15,154,114
               outstanding

152  

149  

152  

           Sept. 30, 2005 - 15,208,750 issued, 14,910,658
               outstanding

           Mar. 31, 2005 - 15,208,750 issued, 15,208,750
               outstanding

      Additional paid-in capital

56,632  

56,115  

59,884  

      Retained earnings

52,216  

49,818  

46,847  

      Unearned shares issued to employee stock ownership
         plan

(4,344) 

(4,550) 

(4,784) 

      Accumulated other comprehensive loss

(268) 


(165) 


(157) 


         Total stockholders' equity

104,388  


101,367  


101,942  


         TOTAL LIABILITIES AND STOCKHOLDERS'
                 EQUITY


$       747,296  



$        689,577  



$     643,430  


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Home Federal Bancorp, Inc.
April 19, 2006
Page 6 of 7

HOME FEDERAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data) (Unaudited)

Three Months Ended
March 31,


Six Months Ended
March 31,


2006


 

2005


2006


2005


Interest and dividend income:

     Loan interest

$      7,129  

$        6,315  

$       14,063  

$         12,384  

     Investment interest

60  

17  

71  

260  

     Mortgage-backed security interest

2,386  

2,045  

4,772  

3,408  

     Federal Home Loan Bank dividends

-  


30  


-  


30  


         Total interest and dividend income

9,575  


8,407  


18,906  


16,082  


Interest expense:

     Deposits

2,097  

1,465  

3,694  

2,890  

     Federal Home Loan Bank advances

1,844  


1,448  


3,596  


2,709  


         Total interest expense

3,941  


2,913  


7,290  


5,599  


         Net interest income

5,634  

5,494  

11,616  

10,483  

Provision for loan losses

90  


236  


145  


295  


         Net interest income after provision for loan losses

5,544  


5,258  


11,471  


10,188  


Noninterest income:

 

     Service charges and fees

2,115  

1,952  

4,501  

3,911  

     Gain on sale of loans

195  

72  

506  

140  

     Increase in cash surrender value of bank owned life
       insurance

108  

87  

190  

162  

     Loan servicing fees

159  

168  

319  

340  

     Mortgage servicing rights, net

(64) 

(58) 

(160) 

(154) 

     Other

(24) 


420  


(66) 


459  


         Total noninterest income

2,489  


2,641  


5,290  


4,858  


Noninterest expense:

     Compensation and benefits

3,770  

3,096  

7,576  

6,149  

     Occupancy and equipment

694  

682  

1,422  

1,401  

     Data processing

520  

376  

861  

819  

     Advertising

257  

310  

471  

650  

     Postage and supplies

189  

188  

420  

398  

     Professional services

176  

203  

363  

422  

     Insurance and taxes

111  

84  

214  

150  

     Charitable contribution to Foundation

-  

-  

-  

1,825  

     Other

334  


254  


604  


436  


         Total noninterest expense

6,051  


5,193  


11,931  


12,250  


Income before income taxes

1,982  

2,706  

4,830  

2,796  

Income tax expense

749  


1,032  


1,837  


1,048  


         NET INCOME

$      1,233  


$        1,674  


$         2,993  


$          1,748  


Earnings per common share:

     Basic

$        0.09  

$          0.11  

$           0.21  

$            0.12  

     Diluted

$        0.09  

$          0.11  

$           0.21  

$            0.12  

Weighted average number of shares outstanding:

     Basic

14,478,746  

14,720,524  

14,472,449  

14,718,364  

     Diluted

14,497,350  

14,720,524  

14,483,991  

14,718,364  

 

<PAGE>

Home Federal Bancorp, Inc.
April 19, 2006
Page 7 of 7

HOME FEDERAL BANCORP, INC. AND SUBSIDIARY
ADDITIONAL FINANCIAL INFORMATION
(Dollars in thousands, except share data) (Unaudited)

At Or For The
Six Months
Ended
March 31, 2006


 

At Or For The
Year Ended
Sept. 30, 2005


FINANCIAL CONDITION DATA

     Average interest-earning assets

   $ 664,390     

$ 606,690     

     Average interest-bearing liabilities

539,513     

501,124     

     Net average earning assets

124,877     

105,566     

     Average interest-earning assets to average
         interest-bearing liabilities

123.15% 

121.07% 

     Stockholders' equity to assets

13.97% 

14.70% 

ASSET QUALITY

     Allowance for loan losses

$ 2,984     

$ 2,882     

     Non-performing loans

10     

478     

     Non-performing assets

10     

1,012     

     Allowance for loan losses to non-performing loans

29,840.00% 

602.93% 

     Allowance for loan losses to gross loans
        and loans held for sale

0.62% 

0.66% 

     Non-performing loans to gross loans
        and loans held for sale

0.00% 

0.11% 

     Non-performing assets to total assets

0.00% 

0.15% 

 

At Or For The Three Months Ended March 31,


At Or For The Six Months Ended March 31,


2006


2005


2006


2005


SELECTED PERFORMANCE RATIOS

     Return on average assets (1)

0.69%

1.05%

0.85%

0.56%

     Return on average equity (1)

4.72%

6.56%

5.77%

4.28%

     Net interest margin (1)

3.33%

3.67%

3.50%

3.59%

     Efficiency ratio

74.49%

63.83%

70.57%

79.85%

     Efficiency ratio, excluding non-recurring items (2)

74.49%

67.01%

70.57%

69.71%

PER SHARE DATA

     Basic earnings per share

$ 0.09    

$ 0.11    

$ 0.21    

$ 0.12    

     Diluted earnings per share

0.09    

0.11    

0.21    

0.12    

     Book value per share

6.89    

6.70    

6.89    

6.70    

     Cash dividends declared per share

0.055    

-    

0.105    

-    

     Average number of shares outstanding:

          Basic (3)

14,478,746    

14,720,524    

14,472,449    

14,718,364    

          Diluted (3)

14,497,350    

14,720,524    

14,483,991    

14,718,364    

(1)   Amounts are annualized.
(2)   Noninterest expense divided by net interest income plus noninterest income. The pro forma efficiency ratio for the
             three months ended March 31, 2005 excludes the effect of the $386,000 gain on sale of a former branch. The pro
             forma efficiency ratio for the six months ended March 31, 2005 excludes the effect of the $386,000 gain on sale of a
             former branch and the $1.8 million contribution to the Foundation.
(3)   Amounts calculated exclude ESOP shares not committed to be released and unvested restricted shares granted under
             the RRP.

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