Company Quick10K Filing
Quick10K
Home Federal Bancorp of Louisiana
Market
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$31.68 2 $59
Financials
10-Q 2018-12-31 Quarter: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-K 2018-06-30 Annual: 2018-06-30
10-Q 2018-03-31 Quarter: 2018-03-31
10-Q 2017-12-31 Quarter: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-K 2017-06-30 Annual: 2017-06-30
10-Q 2017-03-31 Quarter: 2017-03-31
10-Q 2016-12-31 Quarter: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-K 2016-06-30 Annual: 2016-06-30
10-Q 2016-03-31 Quarter: 2016-03-31
10-Q 2015-12-31 Quarter: 2015-12-31
Current Reports
8-K 2019-01-24 Exhibits
8-K 2019-01-24 Exhibits
8-K 2019-01-09 Regulation FD, Exhibits
8-K 2018-12-12 Exhibits
8-K 2018-11-14 Shareholder Vote
8-K 2018-10-25 Earnings, Exhibits
8-K 2018-10-10 Regulation FD, Exhibits
8-K 2018-07-31 Earnings, Exhibits
8-K 2018-07-09 Regulation FD, Exhibits
8-K 2018-04-26 Earnings, Exhibits
8-K 2018-04-11 Regulation FD, Exhibits
8-K 2018-01-30 Earnings, Exhibits
8-K 2018-01-10 Regulation FD, Exhibits
Comparables
AX Axos Financial
KRNY Kearny Financial
BNCL Beneficial Bancorp
CASH Meta Financial Group
NRIM Northrim Bancorp
RVSB Riverview Bancorp
FCCY 1st Constitution Bancorp
CZWI Citizens Community Bancorp
PBBI PB Bancorp
CFBK Central Federal
HFBL 2018-12-31
Content
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
Exhibits
EX-31.1 exh311.htm
EX-31.2 exh312.htm
EX-32.0 exh320.htm

Home Federal Bancorp of Louisiana Earnings 2018-12-31

HFBL 10Q Quarterly Report

Balance SheetIncome StatementCash Flow
10-Q 1 form10q.htm FORM 10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC  20549
 
FORM 10-Q
(Mark One)
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the quarterly period ended:
  December 31, 2018
 
or
 
[   ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from
  
to
  
 
Commission file number:
  001-35019
 
HOME FEDERAL BANCORP, INC. OF LOUISIANA
(Exact name of registrant as specified in its charter)
 
Louisiana
  
02-0815311
(State or other jurisdiction of incorporation or organization)
  
(IRS Employer Identification No.)
 
624 Market Street, Shreveport, Louisiana
  
71101
(Address of principal executive offices)
  
(Zip Code)
 
(318) 222-1145
(Registrant's telephone number, including area code)
 
N/A
(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.

 [X]  Yes     [   ] No
 
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
   [X] Yes     [   ] No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer
  
[   ]
Accelerated filer
  
[   ]
Non-accelerated filer
  
[X]
Smaller reporting company
  
[X]

   
Emerging growth company
  
[   ]
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
[   ] Yes      [X] No
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  [   ]
 
Shares of common stock, par value $.01 per share, outstanding as of February 8, 2019: The registrant had 1,853,035 shares of common stock outstanding.
 
 
 
INDEX
 
   
            Page
PART I
FINANCIAL INFORMATION
  
     
Item 1:
Financial Statements (Unaudited)
  
     
 
Consolidated Statements of Financial Condition
  1
     
 
Consolidated Statements of Income
  2
     
 
Consolidated Statements of Comprehensive Income
  3
     
 
Consolidated Statements of Changes in Stockholders' Equity
  4
     
 
Consolidated Statements of Cash Flows
  5
     
 
Notes to Consolidated Financial Statements
  7
     
Item 2:
Management's Discussion and Analysis of Financial Condition and  Results of Operations
29
     
Item 3:
Quantitative and Qualitative Disclosures About Market Risk
36
     
Item 4:
Controls and Procedures
37
     
PART II
OTHER INFORMATION
  
     
Item 1:
Legal Proceedings
37
     
Item 1A:
Risk Factors
37
     
Item 2:
Unregistered Sales of Equity Securities and Use of Proceeds
37
     
Item 3:
Defaults Upon Senior Securities
38
     
Item 4:
Mine Safety Disclosures
38
     
Item 5:
Other Information
38
     
Item 6:
Exhibits
38
     
     
SIGNATURES  
 

HOME FEDERAL BANCORP, INC. OF LOUISIANA
 
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)

   
December 31, 2018
    
June 30, 2018
  
   
(In Thousands)
  
             
ASSETS
            
 Cash and Cash Equivalents (Includes Interest-Bearing Deposits with Other Banks of $7,817 and $11,974 for
     December 31, 2018 and June 30, 2018, Respectively)
  
$
10,874
    
$
15,867
  
Securities Available-for-Sale
    
38,638
      
29,324
  
Securities Held-to-Maturity (Fair Value of $25,751 and $27,818, Respectively)
    
26,510
      
28,888
  
Loans Held-for-Sale
    
3,858
      
6,762
  
 Loans Receivable, Net of Allowance for Loan Losses of $3,479 and $3,425, Respectively
    
322,072
      
317,493
  
Accrued Interest Receivable
    
1,164
      
1,146
  
Premises and Equipment, Net
    
13,160
      
12,243
  
Bank Owned Life Insurance
    
6,878
      
6,808
  
Deferred Tax Asset
    
1,081
      
1,102
  
Foreclosed Assets
    
747
      
1,177
  
Other Assets
    
587
      
840
  
                 
Total Assets
  
$
425,569
    
$
421,650
  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
                 
LIABILITIES
                
Deposits
  
$
373,407
    
$
360,260
  
Advances from Borrowers for Taxes and Insurance
    
328
      
725
  
Short-term Federal Home Loan Bank advances
    
288
      
5,282
  
Long-term Federal Home Loan Bank advances
    
1,209
      
6,355
  
Other Borrowings
    
450
      
300
  
Other Accrued Expenses and Liabilities
    
1,249
      
1,691
  
                 
 Total Liabilities
    
376,931
      
374,613
  
                 
STOCKHOLDERS’ EQUITY
                
     Preferred Stock – $.01 Par Value; 10,000,000 Shares Authorized; None Issued and Outstanding
    
--
      
--
  
     Common Stock – $.01 Par Value; 40,000,000 Shares Authorized; 1,881,735 and 1,894,081 Shares Issued and
            Outstanding at December 31, 2018 and June 30, 2018, Respectively
    
23
      
23
  
Additional Paid-in Capital
    
35,586
      
35,057
  
Unearned ESOP Stock
    
(1,042
)
    
(1,100
)
Unearned RRP Trust Stock
    
2
      
(22
)
Retained Earnings
    
14,952
      
14,125
  
Accumulated Other Comprehensive Income
    
(883
)
    
(1,046
)
                 
Total Stockholders’ Equity
    
48,638
      
47,037
  
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  
$
425,569
    
$
421,650
  

See accompanying notes to unaudited consolidated financial statements.
1
HOME FEDERAL BANCORP, INC. OF LOUISIANA

CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

   
For the Three Months Ended
December 31,
    
For the Six Months Ended
December 31,
  
   
2018
    
2017
    
2018
    
2017
  
   
(In Thousands, Except per Share Data)
  
INTEREST INCOME
                        
Loans, Including Fees
  
$
4,569
    
$
4,280
    
$
9,063
    
$
8,564
  
Investment Securities
    
15
      
12
      
29
      
23
  
Mortgage-Backed Securities
    
318
      
268
      
616
      
528
  
Other Interest-Earning Assets
    
94
      
27
      
174
      
65
  
Total Interest Income
    
4,996
      
4,587
      
9,882
      
9,180
  
                                 
INTEREST EXPENSE
                                
Deposits
    
1,030
      
738
      
1,959
      
1,445
  
     Other Borrowings
    
3
      
1
      
4
      
1
  
Federal Home Loan Bank Borrowings
    
42
      
117
      
110
      
261
  
Total Interest Expense
    
1,075
      
856
      
2,073
      
1,707
  
Net Interest Income
    
3,921
      
3,731
      
7,809
      
7,473
  
                                 
PROVISION FOR LOAN LOSSES
    
100
      
200
      
350
      
500
  
Net Interest Income after Provision for Loan Losses
    
3,821
      
3,531
      
7,459
      
6,973
  
                                 
NON-INTEREST INCOME
                                
Gain on Sale of Loans
    
374
      
430
      
766
      
1,035
  
Loss on Sale of Real Estate and Fixed Assets
    
(230
)
    
(1
)
    
(228
)
    
(1
)
Gain on Sale of Securities
    
--
      
--
      
--
      
95
  
Income on Bank Owned Life Insurance
    
35
      
35
      
70
      
71
  
Service Charges on Deposit Accounts
    
238
      
221
      
465
      
437
  
Other Income
    
22
      
12
      
35
      
28
  
Total Non-Interest Income
    
439
      
697
      
1,108
      
1,665
  
                                 
NON-INTEREST EXPENSE
                                
Compensation and Benefits
    
1,547
      
1,581
      
3,163
      
3,296
  
Occupancy and Equipment
    
329
      
361
      
649
      
671
  
Data Processing
    
147
      
165
      
297
      
332
  
Audit and Examination Fees
    
73
      
77
      
127
      
126
  
Franchise and Bank Shares Tax
    
97
      
103
      
197
      
201
  
Advertising
    
84
      
30
      
142
      
70
  
Legal Fees
    
158
      
143
      
297
      
289
  
Loan and Collection
    
64
      
73
      
126
      
153
  
Deposit Insurance Premium
    
22
      
40
      
52
      
68
  
      Valuation Adjustment Real Estate Owned
    
--
      
--
      
75
      
--
  
Other Expense
    
201
      
182
      
372
      
380
  
Total Non-Interest Expense
    
2,722
      
2,755
      
5,497
      
5,586
  
Income Before Income Taxes
    
1,538
      
1,473
      
3,070
      
3,052
  
                                 
PROVISION FOR INCOME TAX EXPENSE
    
363
      
1,112
      
677
      
1,683
  
Net Income
  
$
1,175
    
$
361
    
$
2,393
    
$
1,369
  
EARNINGS PER COMMON SHARE:
                                
Basic
  
$
0.66
    
$
0.20
    
$
1.34
    
$
0.76
  
Diluted
  
$
0.62
    
$
0.19
    
$
1.25
    
$
0.72
  
DIVIDENDS DECLARED
  
$
0.14
    
$
0.12
    
$
0.28
    
$
0.24
  

See accompanying notes to unaudited consolidated financial statements.
2
HOME FEDERAL BANCORP, INC. OF LOUISIANA

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

   
For the Three Months Ended
December 31,
    
For the Six Months Ended
December 31,
  
   
2018
    
2017
    
2018
    
2017
  
   
(In Thousands)
    
(In Thousands)
  
                         
Net Income
  
$
1,175
    
$
361
    
$
2,393
    
$
1,369
  
                                 
Other Comprehensive Income (Loss), Net of Tax
                                
   Unrealized Holding Gain (Loss) on Securities Available-for-Sale, Net of Tax of $63 and $43 in 2018 and $78 and $124 in 2017
    
238
      
(153
)
    
163
      
(239
)
                                 
        Total Comprehensive Income
  
$
1,413
    
$
208
    
$
2,556
    
$
1,130
  


























See accompanying notes to unaudited consolidated financial statements.
3
HOME FEDERAL BANCORP, INC. OF LOUISIANA

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
THREE MONTHS ENDED DECEMBER 31, 2018 AND 2017
(Unaudited)

   
Common
Stock
    
Additional
Paid-in
Capital
    
Unearned
ESOP
Stock
    
Unearned
RRP
Trust
Stock
    
Retained
Earnings
    
Accumulated
Other
Comprehensive
Income (Loss)
    
Total
Stockholders’
Equity
  



 


 


(In Thousands)       



 


 
BALANCE – June 30, 2017
  
$
23
    
$
34,516
    
$
(1,215
)
  
$
(46
)
  
$
13,320
    
$
(352
)
  
$
46,246
  
                                                         
Net Income
    
--
      
--
      
--
      
--
      
1,369
      
--
      
1,369
  
                                                         
Changes in Unrealized Gain
    on Securities Available-for-
    Sale, Net of Tax Effects
    
--
      
--
      
--
      
--
      
--
      
(239
)
    
(239
)
                                                         
RRP Shares Earned
    
--
      
--
      
--
      
24
      
--
      
--
      
24
  
                                                         
Stock Options Vested
    
--
      
68
      
--
      
--
      
--
      
--
      
68
  
                                                         
Common Stock Issuance for Stock
    Option Exercises
    
--
      
191
      
--
      
--
      
--
      
--
      
191
  
                                                         
ESOP Compensation Earned
    
--
      
99
      
57
      
--
      
--
      
--
      
156
  
                                                         
Company Stock Purchased
    
--
      
--
      
--
      
--
      
(1,417
)
    
--
      
(1,417
)
                                                         
Dividends Declared
    
--
      
--
      
--
      
--
      
(466
)
    
--
      
(466
)
                                                         
BALANCE – December 31, 2017
  
$
23
    
$
34,874
    
$
(1,158
)
  
$
(22
)
  
$
12,806
    
$
(591
)
  
$
45,932
  
                                                         
BALANCE – June 30, 2018
  
$
23
    
$
35,057
    
$
(1,100
)
  
$
(22
)
  
$
14,125
    
$
(1,046
)
  
$
47,037
  
                                                         
Net Income
    
--
      
--
      
--
      
--
      
2,393
      
--
      
2,393
  
                                                         
Changes in Unrealized Gain
    on Securities Available-for-
    Sale, Net of Tax Effects
    
--
      
--
      
--
      
--
      
--
      
163
      
163
  
                                                         
Share Awards Earned
    
--
      
135
      
--
      
--
      
--
      
--
      
135
  
                                                         
RRP Shares Earned
    
--
      
--
      
--
      
24
      
--
      
--
      
24
  
                                                         
Stock Options Vested
    
--
      
68
      
--
      
--
      
--
      
--
      
68
  
                                                         
Common Stock Issuance for Stock
    Option Exercises
    
--
      
198
      
--
      
--
      
--
      
--
      
198
  
                                                         
ESOP Compensation Earned
    
--
      
128
      
58
      
--
      
--
      
--
      
186
  
                                                         
Company Stock Purchased
    
--
      
--
      
--
      
--
      
(1,037
)
    
--
      
(1,037
)
                                                         
Dividends Declared
    
--
      
--
      
--
      
--
      
(529
)
    
--
      
(529
)
                                                         
BALANCE – December 31, 2018
  
$
23
    
$
35,586
    
$
(1,042
)
  
$
2
    
$
14,952
    
$
(883
)
  
$
48,638
  




See accompanying notes to unaudited consolidated financial statements.
4

HOME FEDERAL BANCORP, INC. OF LOUISIANA

CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

        
Six Months Ended
  
        
December 31,
  
   
2018
    
2017
  
        
(In Thousands)
  
CASH FLOWS FROM OPERATING ACTIVITIES
            
Net Income
  
$
2,393
    
$
1,369
  
Adjustments to Reconcile Net Income to Net
                
Cash Provided by Operating Activities
                
Bad Debt Recovery
    
1
      
5
  
Net Amortization and Accretion on Securities
    
57
      
96
  
Loss on Sale of Real Estate
    
228
      
1
  
Gain on Sale of Loans
    
(766
)
    
(1,035
)
Gain on Sale of Securities
    
--
      
(95
)
Amortization of Deferred Loan Fees
    
(97
)
    
(72
)
Depreciation of Premises and Equipment
    
241
      
254
  
ESOP Expense
    
186
      
156
  
Stock Option Expense
    
68
      
68
  
Recognition and Retention Plan Expense
    
14
      
14
  
Deferred Income Tax
    
(26
)
    
610
  
Valuation Adjustment Real Estate Owned
    
75
      
--
  
Provision for Loan Losses
    
350
      
500
  
Increase in Cash Surrender Value on Bank Owned Life Insurance
    
(70
)
    
(71
)
Share Awards Expense
    
68
      
68
  
Changes in Assets and Liabilities:
                
Loans Held-for-Sale – Originations and Purchases
    
(28,395
)
    
(44,573
)
Loans Held-for-Sale – Sale and Principal Repayments
    
32,065
      
56,531
  
Accrued Interest Receivable
    
(18
)
    
(79
)
Other Operating Assets
    
253
      
428
  
Other Operating Liabilities
    
(442
)
    
(471
)
                 
Net Cash Provided by Operating Activities
    
6,185
      
13,704
  
                 
CASH FLOWS FROM INVESTING ACTIVITIES
                
Loan Originations and Purchases, Net of Principal Collections
    
(4,646
)
    
(3,920
)
Deferred Loan Fees Collected
    
85
      
169
  
Acquisition of Premises and Equipment
    
(1,923
)
    
(114
)
Proceeds from Sale of Real Estate
    
536
      
--
  
Activity in Available-for-Sale Securities:
                
Principal Payments on Mortgage-Backed Securities
    
3,369
      
4,479
  
Purchases of Securities
    
(12,522
)
    
(4,947
)
Sale of Securities
    
--
      
3,555
  
Activity in Held-to-Maturity Securities:
                
Principal Payments on Mortgage-Backed Securities
    
2,396
      
1,466
  
Purchase of Securities
    
--
      
(1,174
)
                 
  Net Cash Used in Investing Activities
    
(12,705
)
    
(486
)
                 



See accompanying notes to unaudited consolidated financial statements.

5
HOME FEDERAL BANCORP, INC. OF LOUISIANA
  
   
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
  
(Unaudited)
  
   
   
Six Months Ended
  
   
December 31,
  
   
2018
    
2017
  
   
(In Thousands)
  
CASH FLOWS FROM FINANCING ACTIVITIES
      
Net Increase in Deposits
  
$
13,147
    
$
13,180
  
Proceeds from Federal Home Loan Bank Advances
    
--
      
61,675
  
Repayments of Advances from Federal Home Loan Bank
    
(10,140
)
    
(88,808
)
Repayments of Other Borrowings
    
(300
)
    
--
  
Net Decrease in Advances from Borrowers for Taxes and Insurance
    
(397
)
    
(384
)
Dividends Paid
    
(529
)
    
(466
)
Company Stock Purchased
    
(1,037
)
    
(1,417
)
Proceeds from Stock Options Exercised
    
198
      
191
  
Proceeds from Other Bank Borrowings
    
450
      
350
  
Plan Share Distributions
    
135
      
--
  
                 
Net Cash Provided by (Used in) Financing Activities
    
1,527
      
(15,679
)
                 
NET DECREASE IN CASH AND CASH EQUIVALENTS
    
(4,993
)
    
(2,461
)
                 
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD
    
15,867
      
11,905
  
                 
CASH AND CASH EQUIVALENTS - END OF PERIOD
  
$
10,874
    
$
9,444
  
                 
SUPPLEMENTARY CASH FLOW INFORMATION
                
Interest Paid on Deposits and Borrowed Funds
  
$
1,403
    
$
1,614
  
Income Taxes Paid
    
787
      
1,101
  
Market Value Adjustment for Gain (Loss) on Securities Available-for-Sale
    
206
      
(363
)
                 












See accompanying notes to unaudited consolidated financial statements.

6
HOME FEDERAL BANCORP, INC. OF LOUISIANA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.          Summary of Accounting Policies

Basis of Presentation

The consolidated financial statements include the accounts of Home Federal Bancorp, Inc. of Louisiana (the “Company”) and its subsidiary, Home Federal Bank (“Home Federal Bank” or the “Bank”).  These consolidated financial statements were prepared in accordance with instructions for Form 10-Q and Regulation S-X and do not include information or footnotes necessary for a complete presentation of financial condition, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States of America. However, in the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the financial statements have been included. The results of operations for the six month period ended December 31, 2018 are not necessarily indicative of the results which may be expected for the fiscal year ending June 30, 2019.

The Company follows accounting standards set by the Financial Accounting Standards Board (the “FASB”). The FASB sets generally accepted accounting principles (“GAAP”) that we follow to ensure we consistently report our financial condition, results of operations, and cash flows.  References to GAAP issued by the FASB in these footnotes are to the FASB Accounting Standards Codification (the “Codification” or the “ASC”).

In accordance with the subsequent events topic of the ASC, the Company evaluates events and transactions that occur after the balance sheet date for potential recognition in the financial statements.  The effect of all subsequent events that provide additional evidence of conditions that existed at the balance sheet date are recognized in the financial statements as of December 31, 2018.  In preparing these financial statements, the Company evaluated the events and transactions that occurred through the date these financial statements were issued.

Use of Estimates

In preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the Consolidated Statements of Financial Condition and reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  Material estimates that are particularly susceptible to significant change in the near term relate to the allowance for loan losses.

Nature of Operations

Home Federal Bancorp, Inc. of Louisiana, a Louisiana corporation, is the fully public stock holding company for Home Federal Bank located in Shreveport, Louisiana.  The Bank is a federally chartered stock savings and loan association and is subject to federal regulation by the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency.  The Company is a savings and loan holding company regulated by the Board of Governors of the Federal Reserve System. Services are provided to the Bank’s customers by six full-service banking offices and home office, located in Caddo and Bossier Parishes, Louisiana.  The Bank expects to open its seventh full-service banking office during the quarter ended March 31, 2019.  The area served by the Bank is primarily the Shreveport-Bossier City metropolitan area; however, loan and deposit customers are found dispersed in a wider geographical area covering much of northwest Louisiana. As of December 31, 2018, the Bank had one wholly-owned subsidiary, Metro Financial Services, Inc., which previously engaged in the sale of annuity contracts and does not currently engage in a meaningful amount of business.

Cash and Cash Equivalents

For purposes of the Consolidated Statements of Cash Flows, cash and cash equivalents include cash on hand, balances due from banks, and federal funds sold, all of which mature within ninety days.








7
HOME FEDERAL BANCORP, INC. OF LOUISIANA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1.          Summary of Accounting Policies (continued)

Securities

The Company classifies its debt and equity investment securities into one of three categories:  held-to-maturity, available-for-sale, or trading.  Investments in nonmarketable equity securities and debt securities, in which the Company has the positive intent and ability to hold to maturity, are classified as held-to-maturity and carried at amortized cost.  Investments in debt securities that are not classified as held-to-maturity and marketable equity securities that have readily determinable fair values are classified as either trading or available-for-sale securities.  Securities that are acquired and held principally for the purpose of selling in the near term are classified as trading securities.  Investments in securities not classified as trading or held-to-maturity are classified as available-for-sale.

Trading account and available-for-sale securities are carried at fair value.  Unrealized holding gains and losses on trading securities are included in earnings, while net unrealized holding gains and losses on available-for-sale securities are excluded from earnings and reported in other comprehensive income.  Purchase premiums and discounts are recognized in interest income using the interest method over the term of the securities.  Declines in the fair value of held-to-maturity and available-for-sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses.  In estimating other-than-temporary impairment losses, management considers (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Bank to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.  Gains and losses on the sale of securities are recorded on the trade date and are determined using the specific identification method.

Loans Held-for-Sale

Loans originated and intended for sale in the secondary market are carried at the lower of cost or estimated fair value in the aggregate.  Net unrealized losses, if any, are recognized through a valuation allowance by charges to income.

Loans

Loans receivable are stated as unpaid principal balances less allowances for loan losses and unamortized deferred loan fees.  Net nonrefundable fees (loan origination fees, commitment fees, discount points) and costs associated with lending activities are being deferred and subsequently amortized into income as an adjustment of yield on the related interest earning assets using the interest method.  Interest income on contractual loans receivable is recognized on the accrual method.  Unearned discount on property improvement and automobile loans is deferred and amortized on the interest method over the life of the loan.

Allowance for Loan Losses

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings.  Loan losses are charged against the allowance when management believes the uncollectability of a loan balance is confirmed.  Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of the underlying collateral, and prevailing economic conditions.  The evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.









8

HOME FEDERAL BANCORP, INC. OF LOUISIANA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1.          Summary of Accounting Policies (continued)

Allowance for Loan Losses (continued)

A loan is considered impaired when, based on current information or events, it is probable that the Bank will be unable to collect the scheduled payments of principal and interest when due according to the contractual terms of the loan agreement.  When a loan is impaired, the measurement of such impairment is based upon the fair value of the collateral of the loan.  If the fair value of the collateral is less than the recorded investment in the loan, the Bank will recognize the impairment by creating a valuation allowance with a corresponding charge against earnings.  A loan is considered a troubled debt restructuring (“TDR”) if the Company, for economic or legal reasons related to a debtor’s financial difficulties, grants a concession to the debtor that it would not otherwise consider.  Concessions granted under a TDR typically involve a temporary or permanent reduction in payments or interest rate or an extension of a loan’s stated maturity date at less than a current market rate of interest.  Loans identified as TDRs are designated as impaired.

An allowance is also established for uncollectible interest on loans classified as substandard.  The allowance is established by a charge to interest income equal to all interest previously accrued and income is subsequently recognized only to the extent that cash payments are received.  When, in management’s judgment, the borrower’s ability to make periodic interest and principal payments is back to normal, the loan is returned to accrual status.

It should be understood that estimates of future loan losses involve an exercise of judgment.  While it is possible that in particular periods the Company may sustain losses which are substantial relative to the allowance for loan losses, it is the judgment of management that the allowance for loan losses reflected in the accompanying statements of condition is adequate to absorb known and inherent losses in the existing loan portfolio both probable and reasonable to estimate.

Off-Balance Sheet Credit Related Financial Instruments

In the ordinary course of business, the Bank has entered into commitments to extend credit.  Such financial instruments are recorded when they are funded.

Foreclosed Assets

Assets acquired through, or in lieu of, loan foreclosure are held-for-sale and are transferred to other real estate owned at the lower of cost or current fair value minus estimated cost to sell as of the date of foreclosure.  Cost is defined as the lower of the fair value of the property or the recorded investment in the loan.  Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell.

Premises and Equipment

Land is carried at cost.  Buildings and equipment are carried at cost less accumulated depreciation computed on the straight-line method over the estimated useful lives of the assets. Estimated useful lives are as follows:

 
Buildings and Improvements
10 - 40 Years
 
Furniture and Equipment
  3 - 10 Years
 
 
 

Bank-Owned Life Insurance

The Company has purchased life insurance contracts on the lives of certain key employees.  The Bank is the beneficiary of these policies.  These contracts are reported at their cash surrender value, and changes in the cash surrender value are included in non-interest income.

9

HOME FEDERAL BANCORP, INC. OF LOUISIANA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

 1.          Summary of Accounting Policies (continued)

Allowance for Loan Losses (continued)

Income Taxes

The Company and its wholly-owned subsidiary file a consolidated Federal income tax return on a fiscal year basis.  Each entity pays its pro-rata share of income taxes in accordance with a written tax-sharing agreement.

The Company accounts for income taxes on the asset and liability method.  Deferred tax assets and liabilities are recorded based on the difference between the tax basis of assets and liabilities and their carrying amounts for financial reporting purposes, computed using enacted tax rates.  A valuation allowance, if needed, reduces deferred tax assets to the expected amount most likely to be realized. Realization of deferred tax assets is dependent upon the generation of a sufficient level of future taxable income and recoverable taxes paid in prior years.  Although realization is not assured, management believes it is more likely than not that all of the deferred tax assets will be realized.  Current taxes are measured by applying the provisions of enacted tax laws to taxable income to determine the amount of taxes receivable or payable.

The Company follows the provisions of the Income Taxes Topic of the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 740.  ASC 740 prescribes a recognition threshold and measurement attribute for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return and also provides guidance on various related matters such as derecognition, interest, penalties, and disclosures required.  The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in income tax expense.

While the Bank is exempt from Louisiana income tax, it is subject to the Louisiana Ad Valorem Tax, commonly referred to as the Louisiana Shares Tax, which is based on stockholders’ equity and net income.

Earnings per Share

Earnings per share are computed based upon the weighted average number of common shares outstanding during the period.

Non-Direct Response Advertising

The Company expenses all advertising costs, except for direct-response advertising, as incurred.  Non-direct response advertising costs were $142,000 and $70,000 for the six months ended December 31, 2018 and 2017, respectively.

In the event the Company incurs expense for material direct-response advertising, it will be amortized over the estimated benefit period.  Direct-response advertising consists of advertising whose primary purpose is to elicit sales to customers who could be shown to have responded specifically to the advertising and results in probable future benefits.  For the six months ended December 31, 2018 and 2017, the Company did not incur any amount of direct-response advertising.

Stock-Based Compensation

GAAP requires all share-based payments to employees, including grants of employee stock options and recognition and retention share awards, to be recognized as expense in the statement of operations based on their fair values.  The amount of compensation is measured at the fair value of the options or recognition and retention share awards when granted, and this cost is expensed over the required service period, which is normally the vesting period of the options or recognition and retention awards.





10

HOME FEDERAL BANCORP, INC. OF LOUISIANA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1.          Summary of Accounting Policies (continued)

Reclassification

Certain financial statement balances included in the prior year consolidated financial statements have been reclassified to conform to the current period presentation.

Comprehensive Income

Accounting principles generally accepted in the United States of America require that recognized revenue, expenses, gains, and losses be included in net income.  Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the consolidated balance sheets along with net income, they are components of comprehensive income (loss).

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606).  The amendments in ASU 2014-09 supersede the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-specific guidance.  The general principle of ASU 2014-09 requires an entity to recognize revenue upon the transfer of promised goods or services to customers in an amount that reflects the consideration of which the entity expects to be entitled in exchange for those goods or services.  The guidance sets forth a five step approach to be utilized for revenue recognition.  In August 2015, the FASB issued ASU 2015-14 which deferred the effective date of ASU 2014-09 making it effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period.  In April 2016, the FASB issued ASU 2016-10 which does not change the core principle of the guidance in Topic 606.  The amendments in this Update clarify the following two aspects of Topic 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas.  In May 2016, the FASB issued ASU 2016-12 which does not change the core principle of the guidance in Topic 606.  The amendments in this Update affect only certain narrow aspects of Topic 606.  The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments.  The amendments in this Update supersede the guidance to classify equity securities with readily determinable fair values into different categories and require equity securities to be measured at fair value with changes in the fair value recognized through net income.  The amendments allow equity investments that do not have readily determinable fair values to be remeasured at fair value either upon the occurrence of an observable price change or upon identification of impairment.  The amendments in this Update also simplify the impairment assessment of equity investments without readily determinable fair values by requiring assessment for impairment qualitatively at each reporting period.  In addition, the amendments in this Update exempt all entities that are not public business entities from disclosing fair value information for financial instruments measured at amortized cost.  In addition, for public business entities, the amendments supersede the requirement to disclose the methods and significant assumptions used in calculating the fair value of financial instruments required to be disclosed for financial instruments measured at amortized cost on the balance sheet.  The amendments in this Update require public business entities that are required to disclose fair value of financial instruments measured at amortized cost on the balance sheet to measure that fair value using the exit price notion consistent with Topic 820, Fair Value Measurement.

The provisions within this Update require an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance with the fair value option.  This amendment excludes from net income gains or losses that the entity may not realize because those financial liabilities are not usually transferred or settled at their fair values before maturity.  The amendments in this Update require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or in the accompanying notes to the financial statements.





11
HOME FEDERAL BANCORP, INC. OF LOUISIANA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1.          Summary of Accounting Policies (continued)

Recent Accounting Pronouncements (continued)

For public business entities, the amendments in ASU 2016-01 are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

In February 2016, the FASB issued ASU 2016-02, Leases.  From the lessee’s perspective, the new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months.  Leases will be classified as either finance or operating, with classification affecting pattern of expense recognition in the income statement for a lessee.

The new standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years.  A modified retrospective transition approach is required for lessees for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative period presented in the consolidated financial statements, with certain practical expedients available.  The adoption of this guidance is not expected to have a material effect on the Company’s consolidated financial statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this Update replace the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates.  For public business entities that are SEC filers, the amendments in this Update are effective for fiscal years beginning after December 15, 2019, including interim periods with those fiscal years.  The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

In March 2017, the FASB issued ASU 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20).  This Update was issued in response to diversity in practice in the amortization period for premiums of callable debt securities and in how the potential for exercise of a call is factored into current impairment assessments.  As such, these amendments reduce the amortization period for certain callable debt securities carried at a premium and require the premium to be amortized over the period not to exceed the earliest call date.  These amendments do not apply to securities carried at a discount.  The effective date of this Update is for fiscal years beginning on or after December 15, 2018. The Company does not expect ASU 2017-08 to have a material impact on its consolidated financial statements.

In May 2017, the FASB issued ASU 2017-09, Compensation – Stock Compensation (Topic 718).  The amendments in this ASU provide guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in FASB ASC 718.  The effective date of this Update is for fiscal years beginning after December 15, 2018.  Early adoption is permitted, including adoption in an interim period.  The Company does not expect ASU 2017-09 to have a material impact on its consolidated financial statements.

In November 2017, the FASB issued ASU 2017-14, Income Statement – Reporting Comprehensive Income (Topic 220), Revenue Recognition (Topic 605), and Revenue from Contracts with Customers (Topic 606) (SEC Update).  This Update adds, amends, and supersedes SEC paragraphs of the ASC pursuant to Staff Accounting Bulletin No. 116 and SEC Release 33-10403.  This ASU is effective upon issuance.





12

HOME FEDERAL BANCORP, INC. OF LOUISIANA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

1.          Summary of Accounting Policies (continued)

Recent Accounting Pronouncements (continued)

In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220):  Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.  On December 22, 2017, the U.S. Federal Government enacted a tax bill, H.R.1, An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018 (Tax Cuts and Jobs Act). The amendments in this Update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act.  Consequently, the amendments in this Update eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act and will improve the usefulness of information reported to financial statement users.  However, because the amendments in this Update only relate to the reclassification of the income tax effects of the Tax Cuts and Jobs Act, the underlying guidance that requires that the effect of a change in tax laws or rates be included in income from continuing operations is not affected.  The amendments in this Update are affective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years.  Early adoption of this Update is permitted, including adoption in any interim period (1) for public business entities for reporting periods for which financial statements have not yet been issued and (2) for all other entities for reporting periods for which financial statements have not yet been made available for issuance.  The amendments in this Update should be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized.  The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In May 2018, the FASB issued ASU 2018-06, Codification Improvements to Topic 942, Financial Services – Depository and Lending.  The amendments in this Update supersede the guidance in Subtopic 942-740, Financial Services – Depository and Lending – Income Taxes, that is related to Circular 202 because that guidance has been rescinded by the Office of the Comptroller of the Currency (OCC) and is no longer relevant.  This ASU is effective upon issuance.

In June 2018, the FASB issued ASU 2018-07, Compensation – Stock Compensation (Topic 718):  Improvements to Nonemployee Share-Based Payment Accounting.  Topic 718 improves several areas of nonemployee share-based payment accounting.  The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year.  Early adoption is permitted, but no earlier than an entity’s adoption on Topic 606.  The Company does expect ASU 2018-07 to have a material impact on its consolidated financial statements.














13
HOME FEDERAL BANCORP, INC. OF LOUISIANA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.          Securities

The amortized cost and fair value of securities with gross unrealized gains and losses follows:

   
December 31, 2018
  
         
Gross
    
Gross
        
   
Amortized
    
Unrealized
    
Unrealized
    
Fair
  

 
Cost
    
Gains
    
Losses
    
Value
  

   (In Thousands)  
Securities Available-for-Sale      
   
 
Debt Securities
                        
  FHLMC Mortgage-Backed Certificates
  
$
8,775
    
$
1
    
$
389
    
$
8,387
  
  FNMA Mortgage-Backed Certificates
    
21,469
      
1
      
474
      
20,996
  
  GNMA Mortgage-Backed Certificates
    
9,512
      
1
      
258
      
9,255
  
                                 
          Total Debt Securities
    
39,756
      
3
      
1,121
      
38,638
  
                                 
          Total Securities Available-for-Sale
  
$
39,756
    
$
3
    
$
1,121
    
$
38,638
  
                                 
Securities Held-to-Maturity
                                
                                 
Debt Securities
                                
  GNMA Mortgage-Backed Certificates
  
$
1,147
    
$
--
    
$
50
    
$
1,097
  
  FNMA Mortgage-Backed Certificates
    
22,488
      
--
      
709
      
21,779
  
                                 
          Total Debt Securities
    
23,635
      
--
      
759
      
22,876
  
                                 
Equity Securities (Non-Marketable)
                                
  26,249 Shares – Federal Home Loan Bank
    
2,625
      
--
      
--
      
2,625
  
  630 Shares – First National Bankers Bankshares, Inc.
    
250
      
--
      
--
      
250
  
                                 
          Total Equity Securities
    
2,875
      
--
      
--
      
2,875
  
                                 
          Total Securities Held-to-Maturity
  
$
26,510
    
$
--
    
$
759
    
$
25,751
  

   
June 30, 2018
  
         
Gross
    
Gross
        
   
Amortized
    
Unrealized
    
Unrealized
    
Fair
  

 
Cost
    
Gains
    
Losses
    
Value
  
     (In Thousands)  
Securities Available-for-Sale                        
                         
Debt Securities
                        
  FHLMC Mortgage-Backed Certificates
  
$
7,601
    
$
2
    
$
518
    
$
7,085
  
  FNMA Mortgage-Backed Certificates
    
12,465
      
1
      
554
      
11,912
  
  GNMA Mortgage-Backed Certificates
    
10,581
      
2
      
256
      
10,327
  
                                 
          Total Debt Securities
    
30,647
      
5
      
1,328
      
29,324
  
                                 
          Total Securities Available-for-Sale
  
$
30,647
    
$
5
    
$
1,328
    
$
29,324
  
                                 
Securities Held-to-Maturity
                                
                                 
Debt Securities
                                
  GNMA Mortgage-Backed Securities
  
$
1,160
    
$
--
    
$
45
    
$
1,115
  
  FNMA Mortgage-Backed Securities
    
24,882
      
--
      
1,025
      
23,857
  
                                 
          Total Debt Securities
    
26,042
      
--
      
1,070
      
24,972
  
                                 
Equity Securities (Non-Marketable)
                                
  25,959 Shares – Federal Home Loan Bank
    
2,596
      
--
      
--
      
2,596
  
  630 Shares – First National Bankers Bankshares, Inc.
    
250
      
--
      
--
      
250
  
                                 
          Total Equity Securities
    
2,846
      
--
      
--
      
2,846
  
                                 
          Total Securities Held-to-Maturity
  
$
28,888
    
$
--
    
$
1,070
    
$
27,818
  


14
HOME FEDERAL BANCORP, INC. OF LOUISIANA

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

2.          Securities (continued)

The amortized cost and fair value of securities by contractual maturity at December 31, 2018 follows:

   
Available-for-Sale
    
Held-to-Maturity
  
   
Amortized
    
Fair
    
Amortized
    
Fair
  
   
Cost
    
Value
    
Cost
    
Value
  
   
(In Thousands)
  
                         
Debt Securities
                        
    Within One Year or Less
  
$
4
    
$
4
    
$
--
    
$
--
  
    One through Five Years
    
16,497
      
16,078
      
--
      
--
  
    After Five through Ten Years
    
7,859
      
7,572
      
--
      
--
  
    Over Ten Years
    
15,396
      
14,984
      
23,635
      
22,876
  
     
39,756
      
38,638
      
23,635
      
22,876
  
                                 
Other Equity Securities
    
--
      
--
      
2,875
      
2,875
  
                                 
   Total
  
$
39,756
    
$
38,638
    
$
26,510
    
$
25,751
  

Securities available-for-sale totaling $12.5 million were purchased during the six months ended December 31, 2018.

The following tables show information pertaining to gross unrealized losses on securities available-for-sale at December 31, 2018 and June 30, 2018 aggregated by investment category and length of time that individual securities have been in a continuous loss position.

   
December 31, 2018
  
   
Less Than Twelve Months
    
Over Twelve Months
  
   
Gross
          
Gross
        
   
Unrealized
    
Fair
    
Unrealized
    
Fair
  
   
Losses
    
Value
    
Losses
    
Value
  
   
(In Thousands)
  
Securities Available-for-Sale
                        
                         
Mortgage-Backed Securities
  
$
184
    
$
16,737
    
$
937
    
$
21,792