Loan Growth of 15% Year-Over-Year
Continues Contribution to Margin Expansion
Company Declares Regular
Quarterly Dividend of $0.1125 per Share
SIOUX FALLS, S.D., Jan. 26, 2015 (GLOBE NEWSWIRE) -- HF
Financial Corp. (Nasdaq:HFFC) today reported its financial
results for the three and six months ended December 31, 2014. A
GAAP loss of $868,000, or $0.12 per diluted share, was reported for
the second fiscal quarter which included the prepayment of Federal
Home Loan Bank ("FHLB") term borrowings resulting in pre-tax
charges of $4.1 million, or $2.5 million after tax. The Company
reported core earnings, a non-GAAP measure, of $1.7 million, or
$0.24 per diluted share for the second fiscal quarter ended
December 31, 2014, as compared to core earnings of $2.1 million, or
$0.30 per diluted share, for the quarter ended December 31, 2013.
For the previous quarter ended September 30, 2014, core earnings
were $1.9 million, or $0.27 per diluted share.
Loan balances grew 14.7% from a year ago to $855.1 million,
which is near the record levels set at the end of fiscal 2010. Loan
growth and recovery of non-accruing interest contributed to loan
interest income increasing $1.0 million in the second fiscal
quarter of 2015 compared to the prior quarter and $1.5 million
higher than the prior year quarterly period. Total loans increased
by $109.3 million over the past year and $37.8 million from the
previous quarter. Asset quality remains strong with nonperforming
assets as a percentage of total assets declining to 1.01% at
December 31, 2014 from 1.71% one year earlier and 1.21% the
previous quarter.
"Our strong capital position allowed us the opportunity to
reposition our balance sheet by prepayment of FHLB term advances.
We are pleased to report strong core earnings and continue to
maintain our strong capital position. Our staff is continuing to
explore opportunities to maximize our efficiencies while delivering
quality service to our customers. The decision to prepay several
longer-term FHLB advances will result in lowering our cost of funds
and improving our net interest margin going forward. An enhanced
net interest margin combined with lower operating costs derived
from streamlining our branch office network are part of our
strategy to generate stronger core earnings and to improve return
on equity. Meanwhile, we continue to convert lower yielding liquid
investments into loans with higher yields resulting in better net
interest margins," said Stephen Bianchi, President and Chief
Executive Officer.
Core diluted earnings per share, a non-GAAP measure, were $0.51
compared to $0.41 for the six months ended December 31, 2014 and
2013, respectively. For a reconciliation of core earnings and core
diluted earnings per share to accounting principles generally
accepted in the United States ("GAAP") net income and GAAP diluted
earnings per share, please refer to the tables in the section
titled "Reconciliation of GAAP Earnings and Core Earnings".
Fiscal 2015 Second Quarter Financial
Highlights: (at or for the periods ended December 31,
2014, compared to September 30, 2014, June 30, 2014 and/or December
31, 2013.)
- Core earnings, a non- GAAP measure, were $1.7 million, or $0.24
per share, for the second fiscal quarter of 2015. GAAP earnings
decreased to a loss of $868,000, or $0.12 per diluted share, from
earnings of $1.8 million, or $0.26 per diluted share in the
previous quarter.
- FHLB term advances totaling $84.9 million were prepaid during
the second fiscal quarter resulting in pre-tax charges of $4.1
million, or $2.5 million after tax. Average borrowing costs
decreased to 1.68% in the second fiscal quarter compared to 2.49%
the previous quarter. More reflective of the restructuring, the
FHLB borrowing costs were lowered to a weighted average rate of
0.27% at December 31, 2014, as the longer-term funds were replaced
with less expensive short-term funding.
- Total loans increased to $855.1 million at December 31, 2014,
from $817.3 million at September 30, 2014, and from $745.8 million
one year earlier, or a 14.7% increase year over year.
- The net interest margin expressed on a fully taxable equivalent
basis ("NIM, TE"), a non-GAAP measure, increased to 3.19% for the
fiscal second quarter 2015 compared to 2.84% for the previous
quarter. In the second quarter, a recovery of nonaccruing
interest of $771,000 was realized on a dairy loan that was
refinanced, which contributed nearly 26 basis points to the NIM, TE
for the quarter.
- Nonperforming assets continued to decline and totaled $12.8
million at December 31, 2014, or 1.01% of total assets compared to
$15.2 million at September 30, 2014, or 1.21% of total
assets. One year earlier, nonperforming assets totaled $21.4
million, or 1.71% of total assets. Nonperforming assets at
December 31, 2014, include $9.3 million of nonaccruing troubled
debt restructured loans that are compliant with their restructured
terms. Net charge-offs were $387,000 for the fiscal second quarter,
and total $488,000 on a fiscal year to date basis or just
0.12% annualized of total loans.
- Loan loss allowances totaled 1.28% of total loans at December
31, 2014 compared to 1.27% one quarter earlier. The Company
has no direct exposure to the Oil & Gas Industry.
- As previously announced, the Bank plans to close
three grocery store branches and relocate one grocery store
branch in Sioux Falls. The financial impact of the closures of
approximately $770,000 to $810,000 in one-time pre-tax charges will
be reflected in the third fiscal quarter. The Company believes
these branch efficiencies will lead to noninterest expense savings
of approximately $900,000 annually.
- Capital levels at December 31, 2014, continued to remain well
above the regulatory "well-capitalized" minimum levels:
- Total risk-based capital to risk-weighted assets was 13.86%
versus 14.50% at September 30, 2014.
- Tier 1 capital to risk-weighted assets was 12.70% versus 13.36%
at September 30, 2014.
- Tier 1 capital to total adjusted assets was 9.46% versus 9.70%
at September 30, 2014.
- The most recent dividend of $0.1125 per share represents 3.17%
current yield at recent market prices.
- Tangible book value was $13.76 per share at December 31, 2014,
compared to $13.15 per share one year earlier. This increase
in tangible book value combined with a total dividend of $0.45
results in an intrinsic return of 8.06% for the past twelve month
period.
Balance Sheet and Asset Quality Review
HF Financial's total asset base remained flat relative to the
previous quarter at $1.26 billion. One year earlier, total
assets were $1.25 billion. Though the asset base
overall reflected minimal growth, HF Financial continues to
grow its loan portfolio and fund new loans, in part, with proceeds
from short-term, liquid investments. In the second fiscal
quarter of 2015, total loans increased 4.6% to $855.1 million from
$817.3 million at the end of the previous quarter and 14.7%
from $745.8 million a year ago. The increase in the loan
balance reflected an increased balance of commercial real estate
and agricultural loans. Commercial real estate loans continued
to represent the largest portion of the loan portfolio, which
totaled 53.0% of the loan portfolio at December 31, 2014, followed
by agricultural loans totaling 24.8%.
"Growing the loan portfolio, improving our delivery system to
our customers, expanding our net interest margin and maintaining
strong capital ratios are our primary focus. Our management
team continues to be energized by the improvement in our core
operations and the approach we have made in delivering our services
to our communities," stated Bianchi.
Total deposits decreased slightly to $946.8 million at December
31, 2014, from $964.2 million one year earlier and $954.3 million
one quarter earlier. Non-certificate accounts represented 67.5% of
total deposits while certificates of deposit represented 32.5% of
total deposits at December 31, 2014. Certificate deposits
increased slightly due to re-allocation of some public funds.
FHLB advances and other borrowings increased during the second
fiscal quarter of fiscal 2015 to $164.1 million compared to $142.9
million in the previous quarter to fund loan
growth. Management expects borrowing balances to decline in
the upcoming quarters as investment securities mature or are sold
and proceeds are used to repay the newly acquired short term
borrowings. At December 31, 2014, the weighted average cost of
FHLB borrowings has been reduced to 0.27%.
Nonperforming assets ("NPAs"), which included $9.3 million of
troubled debt restructurings that are in compliance with their
restructured terms, decreased to $12.8 million at December 31,
2014, from $15.2 million the preceding quarter and $21.4 million
one year earlier. At December 31, 2014, NPAs represented 1.01%
of total assets and included only $2,000 in foreclosed assets.
The allowance for loan and lease losses at December 31, 2014,
totaled $10.9 million and represented 1.28% of total loans and
leases. Total allowance relative to total nonperforming loans
was 85.3% at December 31, 2014, compared to 68.7% the previous
quarter and 50.2% one year earlier.
Tangible common stockholders' equity was to 7.72% of tangible
assets at December 31, 2014, compared to 7.62% at June 30,
2014. Tangible book value per common share was $13.76 at
December 31, 2014, up from $13.15 one year earlier.
Capital ratios continued to remain well above regulatory
requirements with Tier 1 capital to risk-weighted assets of 12.70%
at December 31, 2014, while the ratio of Tier 1 capital to total
adjusted assets was 9.46%. These regulatory ratios were higher
than the required minimum levels of 6.00% and 5.00%,
respectively.
Review of Operations
For the second fiscal quarter ending December 31, 2014, HF
Financial's operations reflected restructuring charges designed to
improve the net interest margin and a growing balance of loans
generating a larger stream of interest income. Net interest
income increased 13.0% to $9.4 million for the second fiscal
quarter of 2015 compared to $8.3 million the previous quarter and
$7.8 million one year earlier. The increase in net interest
income was primarily related to the recovery of $771,000 of
nonaccruing interest on a refinanced loan. The NIM, TE expanded to
3.19% for the fiscal second quarter compared to 2.84% the previous
quarter and 2.66% one year earlier.
"We expect approximately a 40 basis point improvement in our net
interest margin in coming quarters as a result of prepaying $84.9
million in FHLB term advances. Additionally, the continued
growth in our loan portfolio is providing a stronger stream of
interest income. Adding cost savings of approximately $900,000
from realigning our branch network will further enhance our drive
to maximize the efficiency of HF Financial. The combination of
enhanced interest income from loan growth, lowering funding costs
and cost savings from our branch network consolidation will provide
for a stronger core operation," stated Brent Olthoff, Chief
Financial Officer and Treasurer.
Provision for loan losses reflected reserves established for the
larger loan portfolio, environmental conditions and historical
charge-off activity. Provisions totaled $941,000 for the
second fiscal quarter of 2015, compared to benefits of $22,000 for
the first fiscal quarter of 2015 and $257,000 for the year ago
quarter.
Noninterest income totaled $3.1 million for the fiscal second
quarter of 2015 compared to $3.3 million in the previous
quarter. Mortgage activity produced $817,000 in servicing and
gains on loan sales in the second fiscal quarter of 2015 compared
to $917,000 in the previous quarter. Fees on deposits totaled
$1.6 million for each of the first and second quarters of fiscal
2015. A sale of land previously obtained for branch expansion
resulted in a one-time loss on sale of $64,000 and reduced other
noninterest income in the second quarter.
Total noninterest expenses were $13.1 million compared to $9.0
million in the previous quarter. Noninterest expense includes
one-time prepayment charges of $4.1 million associated with the
FHLB advances.
These financial results are preliminary until the Form 10-Q is
filed in February 2015.
Quarterly Dividend Declared
The board of directors declared a regular quarterly cash
dividend of $0.1125 per common share for the second fiscal quarter
2015. The dividend is payable February 13, 2015 to
stockholders of record February 6, 2015.
Use of Non-GAAP Financial Measures
This press release contains financial measures that are not
calculated in accordance with U.S. generally accepted accounting
principles ("GAAP"). "Net Interest Margin, TE" and "Core Earnings"
are non-GAAP financial measures. Information regarding the
usefulness of Net Interest Margin, TE and Core Earnings appear in
the notes to the attached financial statements. The Company
believes that the presentation of non-GAAP financial measures will
permit investors to assess the Company's core operating results on
the same basis as management. Non-GAAP financial measures should be
considered supplemental to, not a substitute for or superior to,
financial measures calculated in accordance with GAAP. As other
companies may use different calculations for these measures, these
presentations may not be comparable to other similarly titled
measures reported by other companies. Reconciliation of the
non-GAAP measures to the most comparable GAAP measures are set
forth in the notes to the attached financial statements.
About HF Financial Corp.
HF Financial Corp., based in Sioux Falls, SD, is the parent
company for financial services companies, including Home Federal
Bank, Mid America Capital Services, Inc., dba Mid America Leasing
Company, Hometown Investment Services, Inc. and HF Financial Group,
Inc. As a publicly traded savings association headquartered in
South Dakota, HF Financial Corp. operates with 27 offices in 18
communities, throughout Eastern South Dakota, Minnesota, and North
Dakota. The Company operates a branch in the Twin Cities
market as Infinia Bank, a Division of Home Federal Bank of South
Dakota, and a loan production office in Fargo, North Dakota.
Internet banking is also available at www.homefederal.com and
www.infiniabank.com.
This news release and other reports issued by the Company,
including reports filed with the Securities and Exchange
Commission, contain "forward-looking statements" that deal with
future results, expectations, plans and performance. In
addition, the Company's management may make forward-looking
statements orally to the media, securities analysts, investors or
others. These forward-looking statements might include one or
more of the following:
- Projections of income, loss, revenues, earnings or losses per
share, dividends, capital expenditures, capital structure, adequacy
of loan loss reserves, tax benefit or other financial items.
- Descriptions of plans or objectives of management for future
operations, products or services, transactions, investments and use
of subordinated debentures payable to trusts.
- Forecasts of future economic performance.
- Use and descriptions of assumptions and estimates underlying or
relating to such matters.
Forward-looking statements can be identified by the fact they do
not relate strictly to historical or current facts. They often
include words such as "optimism," "look-forward," "bright,"
"pleased," "believe," "expect," "anticipate," "intend," "plan,"
"estimate" or words of similar meaning, or future or conditional
verbs such as "will," "would," "should," "could," or "may".
Forward-looking statements about the Company's expected
financial results and other plans are subject to certain risks,
uncertainties and assumptions. These include, but are not
limited to the following: possible legislative changes and adverse
economic, business and competitive conditions and developments
(such as shrinking interest margins and continued short-term
environments); deposit outflows, reduced demand for financial
services and loan products; changes in accounting policies or
guidelines, or in monetary and fiscal policies of the federal
government; changes in credit and other risks posed by the
Company's loan and lease portfolios; the ability or inability of
the Company to manage interest rate and other risks; unexpected or
continuing claims against the Company's self-insured health plan;
the ability or inability of the Company to successfully enter into
a definitive agreement for and close anticipated transactions;
technological, computer-related or operational difficulties;
adverse changes in securities markets; results of litigation; and
the other risks detailed from time to time in the Company's SEC
filings, including but not limited to, its annual report on Form
10-K for the fiscal year ending June 30, 2014, and its
subsequent quarterly reports on Form 10-Q.
Forward-looking statements speak only as of the date they are
made. The Company does not undertake to update forward-looking
statements to reflect circumstances or events that occur after the
date the forward-looking statements are made. Although the
Company believes its expectations are reasonable, it can give no
assurance that such expectations will prove to be
correct. Based upon changing conditions, should any one or
more of these risks or uncertainties materialize, or should any
underlying assumptions prove incorrect, actual results may vary
materially from those described in any forward-looking
statements.
|
HF Financial
Corp. |
Selected Consolidated
Operating Highlights |
(Dollars in Thousands,
except share data) |
(Unaudited) |
|
|
|
|
|
|
|
Three Months Ended |
Six Months
Ended |
|
December 31, |
September 30, |
December 31, |
December
31, |
|
2014 |
2014 |
2013 |
2014 |
2013 |
Interest, dividend and loan fee income: |
|
|
|
|
|
Loans and leases receivable |
$ 10,192 |
$ 9,160 |
$ 8,657 |
$ 19,352 |
$ 16,959 |
Investment securities and
interest-earning deposits |
1,059 |
1,206 |
1,486 |
2,265 |
2,383 |
|
11,251 |
10,366 |
10,143 |
21,617 |
19,342 |
Interest expense: |
|
|
|
|
|
Deposits |
899 |
916 |
1,020 |
1,815 |
2,036 |
Advances from Federal Home Loan Bank and
other borrowings |
988 |
1,164 |
1,336 |
2,152 |
2,743 |
|
1,887 |
2,080 |
2,356 |
3,967 |
4,779 |
Net interest income |
9,364 |
8,286 |
7,787 |
17,650 |
14,563 |
Provision (benefit) for losses on loans and
leases |
941 |
(22) |
(257) |
919 |
19 |
Net interest income after provision for
losses on loans and leases |
8,423 |
8,308 |
8,044 |
16,731 |
14,544 |
Noninterest income: |
|
|
|
|
|
Fees on deposits |
1,550 |
1,599 |
1,587 |
3,149 |
3,255 |
Loan servicing income, net |
345 |
370 |
809 |
715 |
1,429 |
Gain on sale of loans |
472 |
547 |
621 |
1,019 |
1,415 |
Earnings on cash value of life
insurance |
208 |
207 |
207 |
415 |
412 |
Trust income |
225 |
223 |
210 |
448 |
413 |
Commission and insurance income |
367 |
419 |
308 |
786 |
631 |
Gain (loss) on sale of securities,
net |
(75) |
34 |
85 |
(41) |
358 |
Loss on disposal of closed-branch fixed
assets |
— |
(163) |
— |
(163) |
— |
Other |
33 |
105 |
102 |
138 |
197 |
|
3,125 |
3,341 |
3,929 |
6,466 |
8,110 |
Noninterest expense: |
|
|
|
|
|
Compensation and employee benefits |
5,508 |
5,251 |
5,237 |
10,759 |
10,727 |
Occupancy and equipment |
1,008 |
1,043 |
1,040 |
2,051 |
2,082 |
FDIC insurance |
191 |
215 |
234 |
406 |
441 |
Check and data processing expense |
815 |
833 |
778 |
1,648 |
1,513 |
Professional fees |
425 |
640 |
405 |
1,065 |
1,131 |
Marketing and community investment |
376 |
372 |
306 |
748 |
620 |
Foreclosed real estate and other
properties, net |
9 |
28 |
121 |
37 |
256 |
Other |
4,817 |
639 |
657 |
5,456 |
1,336 |
|
13,149 |
9,021 |
8,778 |
22,170 |
18,106 |
Income (loss) before income taxes |
(1,601) |
2,628 |
3,195 |
1,027 |
4,548 |
Income tax expense (benefit) |
(733) |
816 |
1,025 |
83 |
1,399 |
Net income (loss) |
$ (868) |
$ 1,812 |
$ 2,170 |
$ 944 |
$ 3,149 |
|
|
|
|
|
|
Basic earnings (loss) per common
share: |
$ (0.12) |
$ 0.26 |
$ 0.31 |
$ 0.13 |
$ 0.45 |
Diluted earnings (loss) per common
share: |
$ (0.12) |
$ 0.26 |
$ 0.31 |
$ 0.13 |
$ 0.45 |
Basic weighted average shares: |
7,054,340 |
7,055,440 |
7,055,312 |
7,054,890 |
7,055,166 |
Diluted weighted average shares: |
7,059,032 |
7,060,042 |
7,057,233 |
7,059,538 |
7,057,211 |
Outstanding shares (end of period): |
7,054,352 |
7,055,440 |
7,055,440 |
7,054,352 |
7,055,440 |
Number of full-service offices |
26 |
26 |
27 |
|
|
|
HF Financial
Corp. |
Consolidated Statements
of Financial Condition |
(Dollars in Thousands,
except share data) |
|
|
|
|
December 31,
2014 |
June 30, 2014 |
|
(Unaudited) |
(Audited) |
ASSETS |
|
|
Cash and cash equivalents |
$ 21,634 |
$ 24,256 |
Investment securities available for sale |
289,686 |
348,878 |
Investment securities held to maturity |
20,318 |
19,507 |
Correspondent bank stock |
8,108 |
6,367 |
Loans held for sale |
9,026 |
6,173 |
|
|
|
Loans and leases receivable |
855,130 |
811,946 |
Allowance for loan and lease losses |
(10,933) |
(10,502) |
Loans and leases receivable, net |
844,197 |
801,444 |
|
|
|
Accrued interest receivable |
6,976 |
5,407 |
Office properties and equipment, net of
accumulated depreciation |
13,878 |
13,805 |
Foreclosed real estate and other
properties |
2 |
180 |
Cash value of life insurance |
20,984 |
20,644 |
Servicing rights, net |
10,876 |
11,218 |
Goodwill and intangible assets, net |
4,776 |
4,830 |
Other assets |
12,552 |
12,020 |
Total assets |
$ 1,263,013 |
$ 1,274,729 |
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Liabilities |
|
|
Deposits |
$ 946,787 |
$ 999,174 |
Advances from Federal Home Loan Bank and
other borrowings |
164,129 |
120,643 |
Subordinated debentures payable to
trusts |
24,837 |
24,837 |
Advances by borrowers for taxes and
insurance |
12,435 |
13,683 |
Accrued expenses and other
liabilities |
12,963 |
14,740 |
Total liabilities |
1,161,151 |
1,173,077 |
Stockholders' equity |
|
|
Preferred stock, $.01 par value, 500,000
shares authorized, none outstanding |
— |
— |
Series A Junior Participating
Preferred Stock, $1.00 stated value, 50,000 shares authorized, none
outstanding |
— |
— |
Common stock, $.01 par value, 10,000,000
shares authorized, 9,137,807 and 9,138,895 shares issued at
December 31, 2014 and June 30, 2014, respectively |
91 |
91 |
Additional paid-in capital |
46,287 |
46,218 |
Retained earnings, substantially
restricted |
89,051 |
89,694 |
Accumulated other comprehensive (loss),
net of related deferred tax effect |
(2,670) |
(3,454) |
Less cost of treasury stock, 2,083,455
shares at December 31, 2014 and June 30, 2014 |
(30,897) |
(30,897) |
Total stockholders' equity |
101,862 |
101,652 |
Total liabilities and stockholders'
equity |
$ 1,263,013 |
$ 1,274,729 |
|
HF Financial
Corp. |
Selected Consolidated
Financial Condition Data |
(Dollars in
Thousands) |
(Unaudited) |
|
|
|
|
|
|
|
Three Months
Ended |
Six Months
Ended |
|
Dec 31, |
Sep 30, |
Dec 31, |
December
31, |
Allowance for Loan and Lease Loss Activity |
2014 |
2014 |
2013 |
2014 |
2013 |
Balance, beginning |
$ 10,379 |
$ 10,502 |
$ 10,763 |
$ 10,502 |
$ 10,743 |
Provision (benefit) charged to
income |
941 |
(22) |
(257) |
919 |
19 |
Charge-offs |
(433) |
(141) |
(212) |
(574) |
(531) |
Recoveries |
46 |
40 |
311 |
86 |
374 |
Balance, ending |
$ 10,933 |
$ 10,379 |
$ 10,605 |
$ 10,933 |
$ 10,605 |
|
|
|
|
|
|
Asset Quality |
December 31,
2014 |
September 30,
2014 |
December 31,
2013 |
|
|
Nonaccruing loans and leases |
$ 12,811 |
$ 15,098 |
$ 21,110 |
|
|
Accruing loans and leases delinquent more
than 90 days |
— |
— |
— |
|
|
Foreclosed assets |
2 |
124 |
320 |
|
|
Total nonperforming assets (1) |
$ 12,813 |
$ 15,222 |
$ 21,430 |
|
|
|
|
|
|
|
|
General allowance for loan and lease
losses |
$ 10,473 |
$ 9,941 |
$ 9,112 |
|
|
Specific impaired loan valuation
allowance |
460 |
438 |
1,493 |
|
|
Total allowance for loans and lease
losses |
$ 10,933 |
$ 10,379 |
$ 10,605 |
|
|
|
|
|
|
|
|
Ratio of nonperforming assets to total assets
at end of period (1) |
1.01% |
1.21% |
1.71% |
|
|
Ratio of nonperforming loans and leases to
total loans and leases at end of period (2) |
1.50% |
1.85% |
2.83% |
|
|
Ratio of net charge-offs to average loans and
leases for the year-to-date period (3) |
0.12% |
0.05% |
0.04% |
|
|
Ratio of allowance for loan and lease losses
to total loans and leases at end of period |
1.28% |
1.27% |
1.42% |
|
|
Ratio of allowance for loan and lease losses
to nonperforming loans and leases at end of period (2) |
85.34% |
68.74% |
50.24% |
|
|
|
|
|
|
|
|
(1) Nonperforming assets
include nonaccruing loans and leases, accruing loans and leases
delinquent more than 90 days and foreclosed assets. Includes
nonaccruing troubled debt restructured loans compliant with their
restructured terms of $9.3 million, $13.5 million, and $18.5
million, for the respective quarters. |
(2) Nonperforming loans and
leases include both nonaccruing and accruing loans and leases
delinquent more than 90 days. |
(3) Percentages for the six
months ended December 31, 2014 and December 31, 2013 have
been annualized. |
|
|
|
|
|
|
Troubled Debt Restructuring
Summary |
December 31,
2014 |
September 30,
2014 |
December 31,
2013 |
|
|
Nonaccruing troubled debt
restructurings-non-compliant (1)(2) |
$ 182 |
$ 5 |
$ 4 |
|
|
Nonaccruing troubled debt
restructurings-compliant (1)(2)(3) |
9,339 |
13,491 |
18,481 |
|
|
Accruing troubled debt restructurings
(4) |
1,633 |
1,861 |
1,245 |
|
|
Total troubled debt restructurings |
$ 11,154 |
$ 15,357 |
$ 19,730 |
|
|
|
|
|
|
|
|
(1) Non-compliant and
compliant refer to the terms of the restructuring agreement. |
(2) Balances are included in
nonaccruing loans as part of nonperforming loans. |
(3) Interest received but
applied to the principal balance was $196, $250, and $349, for the
respective quarters. |
(4) None of the loans
included are 90 days past due and are not included in the
nonperforming loans. |
|
HF Financial
Corp. |
Selected Capital
Composition Highlights |
(Unaudited) |
|
|
|
|
|
December 31,
2014 |
September 30,
2014 |
June 30, 2014 |
Common stockholder's equity before OCI (1) to
consolidated assets |
8.31 % |
8.47% |
8.27% |
OCI components to consolidated
assets: |
|
|
|
Net changes in unrealized gains and
losses: |
|
|
|
Investment securities available for
sale |
(0.06) |
(0.13) |
(0.11) |
Defined benefit plan |
(0.11) |
(0.11) |
(0.11) |
Derivatives and hedging activities |
(0.04) |
(0.04) |
(0.05) |
Goodwill and intangible assets, net to
consolidated assets |
(0.38) |
(0.38) |
(0.38) |
Tangible common equity to tangible
assets |
7.72% |
7.81% |
7.62% |
|
|
|
|
Tangible book value per common share (2) |
$ 13.76 |
$ 13.86 |
$ 13.72 |
|
|
|
|
Tier I capital (to adjusted total assets)
(3) |
9.46% |
9.70% |
9.49% |
Tier I capital (to risk-weighted assets)
(3) |
12.70 |
13.36 |
13.38 |
Total risk-based capital (to risk-weighted
assets) (3) |
13.86 |
14.50 |
14.54 |
|
|
|
|
(1) Accumulated other
comprehensive income (loss). |
(2) Common equity reduced by
goodwill and intangible assets, net and divided by number of shares
of outstanding common stock. |
(3) Capital ratios for Home
Federal Bank. |
|
HF Financial
Corp. |
Selected Consolidated
Financial Condition Data |
(Dollars in
Thousands) |
(Unaudited) |
|
|
|
|
|
Loan and Lease Portfolio
Composition |
|
|
|
|
|
December 31,
2014 |
June 30,
2014 |
|
Amount |
Percent |
Amount |
Percent |
Residential: |
|
|
|
|
One-to four-family |
$ 44,740 |
5.2% |
$ 47,886 |
5.9% |
Construction |
5,890 |
0.7 |
3,838 |
0.5 |
Commercial: |
|
|
|
|
Commercial business (1) |
70,144 |
8.2 |
82,459 |
10.2 |
Equipment finance leases |
344 |
— |
847 |
0.1 |
Commercial real estate: |
|
|
|
|
Commercial real estate |
314,240 |
36.7 |
294,388 |
36.3 |
Multi-family real estate |
99,722 |
11.7 |
87,364 |
10.7 |
Construction |
39,112 |
4.6 |
22,946 |
2.8 |
Agricultural: |
|
|
|
|
Agricultural real estate |
92,123 |
10.8 |
79,805 |
9.8 |
Agricultural business |
119,471 |
14.0 |
115,397 |
14.2 |
Consumer: |
|
|
|
|
Consumer direct |
15,530 |
1.8 |
17,449 |
2.1 |
Consumer home equity |
50,853 |
6.0 |
56,666 |
7.0 |
Consumer overdraft &
reserve |
2,961 |
0.3 |
2,901 |
0.4 |
Total (2) |
$ 855,130 |
100.0% |
$ 811,946 |
100.0% |
|
|
|
|
|
(1) Includes $1,512 and $1,645
tax exempt leases at December 31, 2014 and June 30, 2014,
respectively. |
(2) Exclusive of undisbursed
portion of loans in process and net of deferred loan fees and
discounts. |
|
|
|
|
|
Deposit Composition |
|
|
|
|
|
December 31,
2014 |
June 30,
2014 |
|
Amount |
Percent |
Amount |
Percent |
Noninterest-bearing checking accounts |
$ 147,830 |
15.6% |
164,918 |
16.5% |
Interest-bearing checking accounts |
169,113 |
17.8 |
173,879 |
17.4 |
Money market accounts |
224,082 |
23.7 |
238,507 |
23.9 |
Savings accounts |
98,565 |
10.4 |
160,277 |
16.0 |
In-market certificates of deposit |
281,898 |
29.8 |
236,026 |
23.6 |
Out-of-market certificates of deposit |
25,299 |
2.7 |
25,567 |
2.6 |
Total deposits |
$ 946,787 |
100.0% |
$ 999,174 |
100.0% |
|
HF Financial
Corp. |
Selected Consolidated
Financial Condition Data |
(Dollars in
Thousands) |
(Unaudited) |
|
|
|
|
|
Average Balance, Interest Yields and
Rates |
Three Months
Ended |
|
December 31,
2014 |
September 30,
2014 |
|
Average Outstanding
Balance |
Yield/ Rate |
Average Outstanding
Balance |
Yield/ Rate |
Interest-earning assets: |
|
|
|
|
Loans and leases receivable(1)(3) |
$ 846,772 |
4.78% |
$ 818,100 |
4.44% |
Investment securities(2)(3) |
342,251 |
1.23 |
365,880 |
1.31 |
Total interest-earning assets |
1,189,023 |
3.75% |
1,183,980 |
3.47% |
Noninterest-earning assets |
76,821 |
|
73,181 |
|
Total assets |
$ 1,265,844 |
|
$ 1,257,161 |
|
Interest-bearing liabilities: |
|
|
|
|
Deposits: |
|
|
|
|
Checking and money market |
$ 393,683 |
0.23% |
$ 400,864 |
0.25% |
Savings |
108,277 |
0.19 |
147,952 |
0.21 |
Certificates of deposit |
290,981 |
0.85 |
256,168 |
0.91 |
Total interest-bearing deposits |
792,941 |
0.45 |
804,984 |
0.45 |
FHLB advances and other borrowings |
164,800 |
1.68 |
136,731 |
2.49 |
Subordinated debentures payable to
trusts |
24,837 |
4.66 |
24,837 |
4.90 |
Total interest-bearing liabilities |
982,578 |
0.76% |
966,552 |
0.85% |
Noninterest-bearing deposits |
149,505 |
|
156,070 |
|
Other liabilities |
30,593 |
|
32,534 |
|
Total liabilities |
1,162,676 |
|
1,155,156 |
|
Equity |
103,168 |
|
102,005 |
|
Total liabilities and equity |
$ 1,265,844 |
|
$ 1,257,161 |
|
Net interest spread(4) |
|
2.99% |
|
2.62% |
Net interest margin(4)(5) |
|
3.12% |
|
2.78% |
Net interest margin, TE(6) |
|
3.19% |
|
2.84% |
Return on average assets(7) |
|
(0.27)% |
|
0.57% |
Return on average equity(8) |
|
(3.34)% |
|
7.05% |
|
|
|
|
|
(1) Includes loan fees and
interest on accruing loans and leases past due 90 days or
more. |
(2) Includes federal funds
sold and interest earning reserve balances at the Federal Reserve
Bank. |
(3) Yields do not reflect
the tax-exempt nature of loans, equipment leases and municipal
securities. |
(4) Percentages for the
three months ended December 31, 2014 and September 30,
2014 have been annualized. |
(5) Net interest income
divided by average interest-earning assets. |
(6) Net interest margin
expressed on a fully taxable equivalent basis ("Net Interest
Margin, TE") is a non-GAAP financial measure. See the following
Non-GAAP Disclosure Reconciliation of Net Interest Income (GAAP) to
Net Interest Margin, TE (Non-GAAP). The tax-equivalent adjustment
to net interest income recognizes the income tax savings when
comparing taxable and tax-exempt assets and adjusting for federal
and state exemption of interest income and certain other permanent
income tax differences. We believe that it is a standard practice
in the banking industry to present net interest margin expressed on
a fully taxable equivalent basis, and accordingly believe the
presentation of this non-GAAP financial measure may be useful for
peer comparison purposes. As a non-GAAP financial measure, Net
Interest Margin, TE should be considered supplemental to and not a
substitute for or superior to, financial measures calculated in
accordance with GAAP. As other companies may use different
calculations for Net Interest Margin, TE, this presentation may not
be comparable to similarly titled measures reported by other
companies. |
(7) Ratio of net income to
average total assets. |
(8) Ratio of net income to
average equity. |
|
HF Financial
Corp. |
Selected Consolidated
Financial Condition Data |
(Dollars in
Thousands) |
(Unaudited) |
|
|
|
|
|
Average Balance, Interest Yields and
Rates |
Six Months
Ended |
|
December 31,
2014 |
December 31,
2013 |
|
Average Outstanding
Balance |
Yield/ Rate |
Average Outstanding
Balance |
Yield/ Rate |
Interest-earning assets: |
|
|
|
|
Loans and leases receivable(1)(3) |
$ 832,438 |
4.61% |
$ 743,919 |
4.52% |
Investment securities(2)(3) |
354,066 |
1.27 |
426,852 |
1.11 |
Total interest-earning assets |
1,186,504 |
3.61% |
1,170,771 |
3.28% |
Noninterest-earning assets |
75,495 |
|
73,331 |
|
Total assets |
$ 1,261,999 |
|
$ 1,244,102 |
|
Interest-bearing liabilities: |
|
|
|
|
Deposits: |
|
|
|
|
Checking and money market |
$ 397,257 |
0.24% |
$ 355,357 |
0.26% |
Savings |
128,115 |
0.20 |
132,209 |
0.23 |
Certificates of deposit |
273,574 |
0.88 |
270,665 |
1.03 |
Total interest-bearing deposits |
798,946 |
0.45 |
758,231 |
0.53 |
FHLB advances and other borrowings |
150,968 |
2.04 |
171,706 |
2.35 |
Subordinated debentures payable to
trusts |
24,837 |
4.78 |
24,837 |
5.64 |
Total interest-bearing liabilities |
974,751 |
0.81% |
954,774 |
0.99% |
Noninterest-bearing deposits |
153,725 |
|
163,989 |
|
Other liabilities |
30,939 |
|
28,948 |
|
Total liabilities |
1,159,415 |
|
1,147,711 |
|
Equity |
102,584 |
|
96,391 |
|
Total liabilities and equity |
$ 1,261,999 |
|
$ 1,244,102 |
|
Net interest spread(4) |
|
2.80% |
|
2.29% |
Net interest margin(4)(5) |
|
2.95% |
|
2.47% |
Net interest margin, TE(6) |
|
3.01% |
|
2.51% |
Return on average assets(7) |
|
0.15% |
|
0.50% |
Return on average equity(8) |
|
1.83% |
|
6.48% |
|
|
|
|
|
(1) Includes loan fees and
interest on accruing loans and leases past due 90 days or
more. |
(2) Includes federal funds
sold and interest earning reserve balances at the Federal Reserve
Bank. |
(3) Yields do not reflect
the tax-exempt nature of loans, equipment leases and municipal
securities. |
(4) Percentages for the six
months ended December 31, 2014 and December 31, 2013 have
been annualized. |
(5) Net interest income
divided by average interest-earning assets. |
(6) Net interest margin
expressed on a fully taxable equivalent basis ("Net Interest
Margin, TE") is a non-GAAP financial measure. See the following
Non-GAAP Disclosure Reconciliation of Net Interest Income (GAAP) to
Net Interest Margin, TE (Non-GAAP). The tax-equivalent adjustment
to net interest income recognizes the income tax savings when
comparing taxable and tax-exempt assets and adjusting for federal
and state exemption of interest income and certain other permanent
income tax differences. We believe that it is a standard practice
in the banking industry to present net interest margin expressed on
a fully taxable equivalent basis, and accordingly believe the
presentation of this non-GAAP financial measure may be useful for
peer comparison purposes. As a non-GAAP financial measure, Net
Interest Margin, TE should be considered supplemental to and not a
substitute for or superior to, financial measures calculated in
accordance with GAAP. As other companies may use different
calculations for Net Interest Margin, TE, this presentation may not
be comparable to similarly titled measures reported by other
companies. |
(7) Ratio of net income to
average total assets. |
(8) Ratio of net income to
average equity. |
|
HF Financial
Corp. |
Age Analysis of Past
Due Loans and Leases Receivables |
(Dollars in
Thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
December 31, 2014 |
Accruing and
Nonaccruing Loans |
Nonperforming
Loans |
|
30 - 59 Days Past
Due |
60 - 89 Days Past
Due |
Greater Than 89
Days |
Total Past Due |
Current |
Recorded Investment > 90
Days and Accruing (1) |
Nonaccrual
Balance |
Total |
Residential: |
|
|
|
|
|
|
|
|
One-to four-family |
$ — |
$ — |
$ 111 |
$ 111 |
$ 44,629 |
$ — |
$ 227 |
$ 227 |
Construction |
— |
— |
— |
— |
5,890 |
— |
— |
— |
Commercial: |
|
|
|
|
|
|
|
|
Commercial business |
32 |
— |
195 |
227 |
69,917 |
— |
2,722 |
2,722 |
Equipment finance leases |
— |
— |
— |
— |
344 |
— |
— |
— |
Commercial real estate: |
|
|
|
|
|
|
|
|
Commercial real estate |
— |
— |
66 |
66 |
314,174 |
— |
563 |
563 |
Multi-family real estate |
— |
— |
— |
— |
99,722 |
— |
— |
— |
Construction |
— |
— |
— |
— |
39,112 |
— |
— |
— |
Agricultural: |
|
|
|
|
|
|
|
|
Agricultural real estate |
— |
— |
— |
— |
92,123 |
— |
3,134 |
3,134 |
Agricultural business |
25 |
— |
178 |
203 |
119,268 |
— |
5,613 |
5,613 |
Consumer: |
|
|
|
|
|
|
|
|
Consumer direct |
12 |
— |
4 |
16 |
15,514 |
— |
66 |
66 |
Consumer home equity |
151 |
— |
315 |
466 |
50,387 |
— |
486 |
486 |
Consumer OD & reserve |
7 |
— |
— |
7 |
2,954 |
— |
— |
— |
Total |
$ 227 |
$ — |
$ 869 |
$ 1,096 |
$ 854,034 |
$ — |
$ 12,811 |
$ 12,811 |
|
|
|
|
|
|
|
|
|
September 30, 2014 |
Accruing and
Nonaccruing Loans |
Nonperforming
Loans |
|
30 - 59 Days Past
Due |
60 - 89 Days Past
Due |
Greater Than 89
Days |
Total Past Due |
Current |
Recorded Investment > 90
Days and Accruing (1) |
Nonaccrual
Balance |
Total |
Residential: |
|
|
|
|
|
|
|
|
One-to four-family |
$ 150 |
$ — |
$ 111 |
$ 261 |
$ 43,705 |
$ — |
$ 229 |
$ 229 |
Construction |
— |
— |
204 |
204 |
5,620 |
— |
204 |
204 |
Commercial: |
|
|
|
|
|
|
|
|
Commercial business |
86 |
— |
328 |
414 |
72,052 |
— |
2,914 |
2,914 |
Equipment finance leases |
— |
— |
— |
— |
490 |
— |
— |
— |
Commercial real estate: |
|
|
|
|
|
|
|
|
Commercial real estate |
138 |
— |
— |
138 |
302,758 |
— |
622 |
622 |
Multi-family real estate |
— |
— |
7 |
7 |
90,098 |
— |
7 |
7 |
Construction |
— |
— |
— |
— |
30,700 |
— |
— |
— |
Agricultural: |
|
|
|
|
|
|
|
|
Agricultural real estate |
— |
— |
— |
— |
81,591 |
— |
6,812 |
6,812 |
Agricultural business |
— |
33 |
188 |
221 |
116,220 |
— |
3,366 |
3,366 |
Consumer: |
|
|
|
|
|
|
|
|
Consumer direct |
37 |
1 |
5 |
43 |
16,433 |
— |
71 |
71 |
Consumer home equity |
159 |
123 |
251 |
533 |
52,858 |
— |
873 |
873 |
Consumer OD & reserve |
6 |
1 |
— |
7 |
2,917 |
— |
— |
— |
Total |
$ 576 |
$ 158 |
$ 1,094 |
$ 1,828 |
$ 815,442 |
$ — |
$ 15,098 |
$ 15,098 |
|
|
|
|
|
|
|
|
|
(1) Loans accruing and
delinquent greater than 90 days have government guarantees or
acceptable loan-to-value ratios. |
|
HF Financial
Corp. |
Non-GAAP Disclosure
Reconciliations |
(Dollars in Thousands,
except share data) |
(Unaudited) |
|
|
|
|
|
|
Reconciliation of Net
Interest Margin to Net Interest Margin-Tax Equivalent
Yield |
|
|
|
|
|
|
|
Three Months
Ended |
Six Months
Ended |
|
December 31, |
September 30, |
December 31, |
December
31, |
|
2014 |
2014 |
2013 |
2014 |
2013 |
Net interest income |
$ 9,364 |
$ 8,286 |
$ 7,787 |
$ 17,650 |
$ 14,563 |
Taxable equivalent
adjustment |
191 |
187 |
142 |
378 |
259 |
Adjusted net interest
income |
9,555 |
8,473 |
7,929 |
18,028 |
14,822 |
Average interest-earning
assets |
1,189,023 |
1,183,980 |
1,180,826 |
1,186,504 |
1,170,771 |
Net interest margin, TE |
3.19% |
2.84% |
2.66% |
3.01% |
2.51% |
|
|
|
|
|
|
Reconciliation of GAAP
Earnings and Core Earnings |
Although core earnings are not a
measure of performance calculated in accordance with GAAP, the
Company believes that its core earnings are an important indication
of performance through ongoing operations. The Company believes
that core earnings are useful to management and investors in
evaluating its ongoing operating performance, and in comparing its
performance with other companies in the banking industry. Core
earnings should not be considered in isolation or as a substitute
for GAAP earnings. During the periods presented, the Company
calculated core earnings by adding back or subtracting, net of tax,
net gain or loss recorded on the sale of securities, the charges
incurred from the prepayment of borrowings, and costs incurred for
branch closures. |
|
|
|
|
|
|
|
Three Months
Ended |
Six Months
Ended |
|
December 31, |
September 30, |
December 31, |
December
31, |
|
2014 |
2014 |
2013 |
2014 |
2013 |
GAAP earnings before income
taxes |
$ (1,601) |
$ 2,628 |
$ 3,195 |
$ 1,027 |
$ 4,548 |
Net loss (gain) on sale of
securities |
75 |
(34) |
(85) |
41 |
(358) |
Charges incurred from prepayment of
borrowings(1) |
4,065 |
— |
— |
4,065 |
— |
Costs incurred for branch
closures(2) |
2 |
199 |
— |
201 |
— |
Core earnings before income
taxes |
2,541 |
2,793 |
3,110 |
5,334 |
4,190 |
Provision for income taxes for core
earnings |
841 |
879 |
993 |
1,720 |
1,263 |
Core earnings |
$ 1,700 |
$ 1,914 |
$ 2,117 |
$ 3,614 |
$ 2,927 |
|
|
|
|
|
|
GAAP diluted earnings per
share |
$ (0.12) |
$ 0.26 |
$ 0.31 |
$ 0.13 |
$ 0.45 |
Net loss (gain) on sale of
securities, net of tax |
— |
(0.01) |
(0.01) |
— |
(0.04) |
Charges incurred from prepayment of
borrowings, net of tax |
0.36 |
— |
— |
0.36 |
— |
Costs incurred for branch closures,
net of tax |
— |
0.02 |
— |
0.02 |
— |
Core diluted earnings per
share |
$ 0.24 |
$ 0.27 |
$ 0.30 |
$ 0.51 |
$ 0.41 |
|
|
|
|
|
|
(1) Charges incurred from
prepayment of borrowings is included as Other noninterest expense
on the income statement. |
(2) Branch closure costs
include loss on sale of closed branch fixed assets in noninterest
income and other costs associated with the closure and are included
in the respective categories within noninterest expenses. |
CONTACT: HF Financial Corp.
Stephen Bianchi, President and Chief Executive Officer
(605) 333-7556
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