Branch Sale Generates $2.8 Million
Pre-tax Gain Declares Regular Quarterly Dividend
of $0.1125 per Share
HF Financial Corp. (Nasdaq:HFFC) today reported
fiscal first quarter 2016 earnings increased 113% to $3.9 million,
or $0.55 per diluted share, compared to $1.8 million, or $0.26 per
diluted share one year earlier and from $2.0 million, or $0.28 per
diluted share, one quarter earlier. The quarter's earnings reflect
a pre-tax gain of $2.8 million on the previously announced sale of
the Pierre branch with total deposits of approximately $21.4
million. Core earnings, a non-GAAP measure, were $2.1 million, or
$0.30 per diluted share for the first fiscal quarter of 2016, as
compared to core earnings of $1.7 million, or $0.24 per diluted
share, for the first fiscal quarter a year ago. Core earnings were
supported by a stronger tax equivalent net interest margin of 3.55%
for the first quarter compared to 2.84% one year earlier.
Total assets were $1.17 billion at September 30, 2015, compared
to $1.19 billion the previous quarter and tangible book value per
share increased to $14.61 from $14.07 the previous quarter. Loan
balances declined slightly reflecting $24.2 million in loan
balances sold associated with the Pierre branch. Excluding
loans sold in this branch sale, loans increased by $16.2 million
compared to the previous quarter. Asset quality remains strong
with nonperforming assets as a percentage of total assets at 1.04%
at September 30, 2015, compared to 1.21% one year earlier.
"Over the past two years, we have better positioned our banking
franchise to generate stronger returns on equity with healthier net
interest margins, a branching platform that delivers quality
service to our customers more efficiently, and a lending team with
better coordination for reaching our customers. We also continue to
improve workflows and examine our cost structure to maximize
efficiencies," said Stephen Bianchi, President and Chief Executive
Officer.
Fiscal 2016 First Quarter Financial Highlights:
(at or for the periods ended September 30, 2015, compared to June
30, 2015, and/or September 30, 2014.)
- Core earnings, a non-GAAP measure, were $2.1 million, or $0.30
per diluted share, for the first quarter of fiscal 2016. GAAP
earnings increased 113% to $3.9 million for the first quarter, or
$0.55 per diluted share, from earnings of $1.8 million, or $0.26
per diluted share in the prior year first quarter.
- The net interest margin expressed on a fully taxable equivalent
basis ("NIM, TE"), a non-GAAP measure, increased to 3.55% for the
fiscal first quarter 2016 compared to 3.53% the previous quarter
and 2.84% one year ago.
- Total loans decreased to $906.3 million at September 30, 2015,
from $914.4 million at June 30, 2015, and increased 10.9% from
$817.3 million a year ago. The quarterly decrease included the sale
of $24.2 million of loans associated with the Pierre
branch. Excluding the loans sold with the Pierre branch, the
loan balance expanded $16.2 million, or 1.8% in the quarter.
- Nonperforming assets declined to $12.1 million, or 1.04% of
total assets at quarter end compared to $13.3 million or 1.12% of
total assets one quarter earlier. One year earlier, nonperforming
assets totaled $15.2 million, or 1.21% of total
assets. Nonperforming assets at September 30, 2015, include
$9.9 million of non-accruing troubled debt restructured loans that
are compliant with their restructured terms.
- Net charge-offs were $152,000 for the fiscal first quarter or
just 0.07% annualized of the average total loans.
- Loan and lease losses allowance totaled 1.24% of total loans at
September 30, 2015, compared to 1.23% one quarter earlier. The
Company has no direct exposure to the oil & gas industry.
- As previously announced, the Bank sold its branch office in
Pierre, SD with $21.4 million in deposits on July 24, 2015, for a
$2.8 million net pre-tax gain.
- Bank capital ratios as of September 30, 2015, continued to
remain well above the newly implemented regulatory
"well-capitalized" minimum levels and include the newly implemented
common equity tier 1 capital to risk- weighted assets ratio:
- Total risk-based capital to risk-weighted assets was 13.64%
versus 13.29% at June 30, 2015.
- Tier 1 capital to risk-weighted assets was 12.50% versus 12.16%
at June 30, 2015.
- Tier 1 capital to total adjusted assets was 10.62% versus
10.39% at June 30, 2015.
- Common equity tier 1 capital to risk-weighted assets was 12.50%
versus 12.16% at June 30, 2015.
- The most recent dividend of $0.1125 per share represents a
2.74% current yield at recent market prices.
- Tangible book value was $14.61 per share at September 30, 2015,
compared to $13.86 per share a year ago. This increase in tangible
book value combined with a total dividend of $0.45 results in an
intrinsic return of 8.66% for the past twelve month period.
For a reconciliation of core earnings and core diluted earnings
per share to accounting principles generally accepted in the United
States ("GAAP") for net income and GAAP diluted earnings per share,
please refer to the tables in the section titled "Reconciliation of
GAAP Earnings and Core Earnings."
Balance Sheet and Asset Quality Review
HF Financial's total asset base was $1.17 billion at September
30, 2015, compared to $1.19 billion one quarter earlier. Assets
declined slightly related to the branch sale and seasonal outflow
of public funds. Total loans decreased to $906.3 million at
September 30, 2015, impacted by the $24.2 million in loans sold
with the Pierre branch sale. The loan composition after the first
fiscal quarter reflects slightly less agricultural and commercial
loans and a larger balance of commercial real estate loans when
compared to the prior quarter end. At September 30, 2015,
commercial real estate totaled 49.7%, agricultural loans totaled
21.4%, commercial business loans were 7.9%, consumer were 7.7% and
construction and residential loans totaled 7.2% and 6.1%,
respectively.
Total deposits decreased to $916.3 million at September 30,
2015, from $963.2 million one quarter earlier. The deposit decline
reflects both the sale of $21.4 million of deposits related to the
Pierre branch and a seasonal decline in public
funds. Non-certificate accounts represented 66.9% of total
deposits, while certificates of deposit represented 33.1% of total
deposits at September 30, 2015. Non-interest bearing deposits
represent 16.0% of total deposits.
FHLB advances and other borrowings increased during the first
fiscal quarter of 2016 to $92.6 million compared to $65.6 million
in the previous quarter, primarily consisting of shorter-term
borrowing. For the quarter ended September 30, 2015, the weighted
average cost of the FHLB borrowing portfolio was 0.39% compared to
0.40% the previous quarter.
Nonperforming assets ("NPAs"), which included $9.9 million of
nonaccruing troubled debt restructurings that are in compliance
with their restructured terms, totaled $12.1 million at September
30, 2015 compared to $15.2 million one year earlier. At September
30, 2015, NPAs represented 1.04% of total assets and included only
$272,000 in foreclosed assets.
The allowance for loan and lease losses at September 30, 2015,
totaled $11.3 million and represented 1.24% of total loans and
leases. Total allowance relative to total nonperforming loans was
95.0% at September 30, 2015, compared to 68.7% one year
earlier.
Tangible common stockholders' equity was 8.83% of tangible
assets at September 30, 2015 compared to 7.81% one year earlier.
Tangible book value per common share was $14.61 at September 30,
2015, up from $13.86 one year earlier.
Capital ratios continued to remain well above regulatory
requirements with Tier 1 capital to risk-weighted assets of 12.50%
at September 30, 2015, while the ratio of Tier 1 capital to total
adjusted assets was 10.62%. These regulatory ratios were higher
than the required minimum levels of 6.00% and 4.00%,
respectively.
Review of Operations
For the first fiscal quarter ending September 30, 2015, HF
Financial's operations reflected improved core earnings with
expanding net interest margin, growing noninterest income and
improving asset quality. Net interest income increased 1.5% to
$9.6 million for the first fiscal quarter of fiscal 2016 compared
to $9.5 million the previous quarter and 15.9% from $8.3 million
one year earlier. The NIM, TE expanded to 3.55% for the fiscal
first quarter compared to 3.53% the previous quarter and 2.84% one
year earlier.
"The sale of our Pierre branch in the first quarter allowed us
to realize a net premium on a single office with deposits of $21.4
million. In addition, the net interest margin continues to
benefit from net loan growth against a lower cost of funding base,
while our banking teams remain focused on developing deeper client
relationships to drive fee income opportunities," stated Brent
Olthoff, Chief Financial Officer and Treasurer.
Provision for loan losses reflect reserves established for the
expanding loan portfolio, economic conditions and historical
charge-off activity. Provisions totaled $178,000 for the first
fiscal quarter of 2016 compared to $630,000 for the fourth fiscal
quarter of 2015. Gross charge-offs were $193,000 for the first
quarter versus $448,000 in the prior quarter.
Noninterest income totaled $6.4 million for the fiscal first
quarter of 2016 compared to $3.7 million in the previous quarter.
The first quarter was impacted by the sale of a bank branch for a
pre-tax gain of $2.8 million. Mortgage activity produced $1.1
million in servicing and gains on loan sales revenue in the first
fiscal quarter of 2016, a similar level to the prior quarter. Fees
on deposits totaled $1.5 million for the first quarter of fiscal
2016 which was similar to the previous quarter.
Total noninterest expense was $9.9 million compared to $9.7
million in the previous quarter. Compensation and employee benefits
increased to $6.1 million from $6.0 million the previous quarter
and $5.3 million one year earlier. The most recent quarters reflect
additional costs associated with health care costs, performance
incentives, and variable pay increases related to increased
mortgage activity and investment sales commissions, when compared
to the same quarter one year ago. One-time retention and
severance pay of $98,000 was also incurred due to the Pierre branch
sale and additional internal staffing restructuring completed
during the first quarter.
These financial results are preliminary until the Form 10-Q is
filed in November 2015.
Quarterly Dividend Declared
The board of directors declared a regular quarterly cash
dividend of $0.1125 per common share for the first fiscal quarter
2016. The dividend is payable November 13, 2015 to
stockholders of record November 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 23 offices in 17
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 full service branch 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, 2015, 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 |
|
September 30, |
June 30, |
September 30, |
|
2015 |
2015 |
2014 |
Interest, dividend and loan fee income: |
|
|
|
Loans and leases
receivable |
$10,085 |
$9,897 |
$9,160 |
Investment securities and
interest-earning deposits |
746 |
766 |
1,206 |
|
10,831 |
10,663 |
10,366 |
Interest expense: |
|
|
|
Deposits |
845 |
835 |
916 |
Advances from Federal Home Loan
Bank and other borrowings |
379 |
367 |
1,164 |
|
1,224 |
1,202 |
2,080 |
Net interest income |
9,607 |
9,461 |
8,286 |
Provision (benefit) for losses on loans and
leases |
178 |
630 |
(22) |
Net interest income after
provision for losses on loans and leases |
9,429 |
8,831 |
8,308 |
Noninterest income: |
|
|
|
Fees on deposits |
1,461 |
1,447 |
1,599 |
Loan servicing income, net |
335 |
318 |
370 |
Gain on sale of loans |
773 |
751 |
547 |
Earnings on cash value of life
insurance |
210 |
208 |
207 |
Trust income |
214 |
171 |
223 |
Commission and insurance
income |
491 |
534 |
419 |
Gain on sale of securities,
net |
5 |
18 |
34 |
Gain on sale of bank
branch |
2,847 |
— |
— |
Loss on disposal of
closed-branch fixed assets |
— |
— |
(163) |
Other |
109 |
289 |
105 |
|
6,445 |
3,736 |
3,341 |
Noninterest expense: |
|
|
|
Compensation and employee
benefits |
6,059 |
5,952 |
5,251 |
Occupancy and equipment |
1,046 |
996 |
1,043 |
FDIC insurance |
190 |
194 |
215 |
Check and data processing
expense |
865 |
767 |
833 |
Professional fees |
675 |
609 |
640 |
Marketing and community
investment |
274 |
316 |
372 |
Other |
823 |
857 |
667 |
|
9,932 |
9,691 |
9,021 |
Income before income taxes |
5,942 |
2,876 |
2,628 |
Income tax expense |
2,090 |
913 |
816 |
Net income |
$3,852 |
$1,963 |
$1,812 |
|
|
|
|
Basic earnings per common
share: |
$0.55 |
$0.28 |
$0.26 |
Diluted earnings per common
share: |
$0.55 |
$0.28 |
$0.26 |
Basic weighted average
shares: |
7,054,451 |
7,054,451 |
7,055,440 |
Diluted weighted average
shares: |
7,064,924 |
7,061,927 |
7,060,042 |
Outstanding shares (end of
period): |
7,054,451 |
7,054,451 |
7,055,440 |
Number of full-service offices |
23 |
23 |
26 |
HF Financial
Corp. |
Consolidated Statements
of Financial Condition |
(Dollars in Thousands,
except share data) |
|
|
|
|
September 30,
2015 |
June 30, 2015 |
|
(Unaudited) |
(Audited) |
ASSETS |
|
|
Cash and cash equivalents |
$18,941 |
$21,476 |
Investment securities available for sale |
154,170 |
158,806 |
Investment securities held to maturity |
20,042 |
20,156 |
Correspondent bank stock |
5,261 |
4,177 |
Loans held for sale |
9,027 |
9,038 |
|
|
|
Loans and leases receivable |
906,280 |
914,419 |
Allowance for loan and lease losses |
(11,256) |
(11,230) |
Loans and leases receivable,
net |
895,024 |
903,189 |
|
|
|
Accrued interest receivable |
6,486 |
5,414 |
Office properties and equipment, net of
accumulated depreciation |
16,306 |
15,493 |
Foreclosed real estate and other
properties |
272 |
157 |
Cash value of life insurance |
21,491 |
21,320 |
Servicing rights, net |
10,457 |
10,584 |
Goodwill and intangible assets, net |
4,725 |
4,737 |
Other assets |
9,358 |
10,648 |
Total assets |
$1,171,560 |
$1,185,195 |
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Liabilities |
|
|
Deposits |
$916,328 |
$963,229 |
Advances from Federal Home Loan
Bank and other borrowings |
92,647 |
65,558 |
Subordinated debentures payable
to trusts, net of unamortized debt issuance costs |
24,657 |
24,655 |
Advances by borrowers for taxes
and insurance |
16,576 |
14,197 |
Accrued expenses and other
liabilities |
13,548 |
13,579 |
Total liabilities |
1,063,756 |
1,081,218 |
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, 9,137,906 and 9,137,906 shares issued
at September 30, 2015 and June 30, 2015, respectively |
91 |
91 |
Additional paid-in capital |
46,373 |
46,320 |
Retained earnings,
substantially restricted |
93,204 |
90,145 |
Accumulated other comprehensive
(loss), net of related deferred tax effect |
(967) |
(1,682) |
Less cost of treasury stock,
2,083,455 shares at September 30, 2015 and June 30, 2015 |
(30,897) |
(30,897) |
Total stockholders' equity |
107,804 |
103,977 |
Total liabilities and
stockholders' equity |
$1,171,560 |
$1,185,195 |
HF Financial
Corp. |
Selected Consolidated
Financial Condition Data |
(Dollars in
Thousands) |
(Unaudited) |
|
|
|
Three Months
Ended |
|
September 30, |
June 30, |
September 30, |
Allowance for Loan and Lease Loss Activity |
2015 |
2015 |
2014 |
Balance, beginning |
$11,230 |
$11,012 |
$10,502 |
Provision charged to
income |
178 |
630 |
(22) |
Charge-offs |
(193) |
(448) |
(141) |
Recoveries |
41 |
36 |
40 |
Balance, ending |
$11,256 |
$11,230 |
$10,379 |
Asset Quality |
September 30,
2015 |
June 30, 2015 |
September 30,
2014 |
Nonaccruing loans and leases |
$11,854 |
$13,107 |
$15,098 |
Accruing loans and leases delinquent more
than 90 days |
— |
— |
— |
Foreclosed assets |
272 |
157 |
124 |
Total nonperforming assets (1) |
$12,126 |
$13,264 |
$15,222 |
|
|
|
|
General allowance for loan and lease
losses |
$11,007 |
$10,951 |
$9,941 |
Specific impaired loan valuation
allowance |
249 |
279 |
438 |
Total allowance for loans and lease
losses |
$11,256 |
$11,230 |
$10,379 |
|
|
|
|
Ratio of nonperforming assets to total assets
at end of period (1) |
1.04% |
1.12% |
1.21% |
Ratio of nonperforming loans and leases to
total loans and leases at end of period (2) |
1.31% |
1.43% |
1.85% |
Ratio of net charge-offs to average loans and
leases for the year-to-date period (3) |
0.07% |
0.13% |
0.05% |
Ratio of allowance for loan and lease losses
to total loans and leases at end of period |
1.24% |
1.23% |
1.27% |
Ratio of allowance for loan and lease losses
to nonperforming loans and leases at end of period (2) |
95.0% |
85.7% |
68.7% |
_____________________________________________ |
(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 $9.9 million, $9.5 million, and $13.5
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
three months ended September 30, 2015 and September 30,
2014 have been annualized. |
Troubled Debt Restructuring
Summary |
September 30,
2015 |
June 30, 2015 |
September 30,
2014 |
Nonaccruing troubled debt
restructurings-non-compliant (1)(2) |
$113 |
$— |
$5 |
Nonaccruing troubled debt
restructurings-compliant (1)(2)(3) |
9,905 |
9,499 |
13,491 |
Accruing troubled debt restructurings
(4) |
2,545 |
2,767 |
1,861 |
Total troubled debt restructurings |
$12,563 |
$12,266 |
$15,357 |
______________________________________________ |
(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 $136, $156, and $250, 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) |
|
|
September 30,
2015 |
June 30, 2015 |
September 30,
2014 |
Common stockholder's equity before OCI (1) to
consolidated assets |
9.31% |
8.95% |
8.47% |
OCI components to
consolidated assets: |
|
|
|
Net changes in unrealized gains
and losses: |
|
|
|
Investment securities available
for sale |
0.04 |
(0.02) |
(0.13) |
Defined benefit plan |
(0.09) |
(0.09) |
(0.11) |
Derivatives and hedging
activities |
(0.03) |
(0.03) |
(0.04) |
Goodwill and
intangible assets, net to consolidated assets |
(0.40) |
(0.40) |
(0.38) |
Tangible common equity to
tangible assets |
8.83% |
8.41% |
7.81% |
|
|
|
|
Tangible book value per common
share (2) |
$14.61 |
$14.07 |
$13.86 |
Tier I capital (to adjusted
total assets) (3) |
10.62% |
10.39% |
9.70% |
Tier I capital (to
risk-weighted assets) (3) |
12.50 |
12.16 |
13.36 |
Common equity tier I capital
(to risk-weighted assets) (3)(4) |
12.50 |
12.16 |
NA |
Total risk-based capital (to
risk-weighted assets) (3) |
13.64 |
13.29 |
14.50 |
______________________________________________ |
(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. |
(4) Common equity tier I
capital ratio is a regulatory ratio reporting requirement effective
beginning March 31, 2015. |
HF Financial
Corp. |
Selected Consolidated
Financial Condition Data |
(Dollars in
Thousands) |
(Unaudited) |
|
|
|
|
|
Loan and Lease Portfolio
Composition |
|
|
|
|
|
September 30,
2015 |
June 30,
2015 |
|
Amount |
Percent |
Amount |
Percent |
Residential: |
|
|
|
|
One-to four-family |
$55,125 |
6.1% |
$55,572 |
6.1% |
Construction |
9,194 |
1.0 |
6,308 |
0.7 |
Commercial: |
|
|
|
|
Commercial business (1) |
71,466 |
7.9 |
78,493 |
8.6 |
Equipment finance leases |
130 |
— |
158 |
— |
Commercial real estate: |
|
|
|
|
Commercial real estate |
335,685 |
37.0 |
325,453 |
35.6 |
Multi-family real estate |
115,268 |
12.7 |
111,354 |
12.2 |
Construction |
56,527 |
6.2 |
48,224 |
5.3 |
Agricultural: |
|
|
|
|
Agricultural real estate |
88,024 |
9.7 |
96,952 |
10.6 |
Agricultural business |
106,550 |
11.7 |
123,988 |
13.5 |
Consumer: |
|
|
|
|
Consumer direct |
14,983 |
1.7 |
14,837 |
1.6 |
Consumer home equity |
50,786 |
5.7 |
50,377 |
5.5 |
Consumer overdraft &
reserve |
2,542 |
0.3 |
2,703 |
0.3 |
Total (2) |
$906,280 |
100.0% |
$914,419 |
100.0% |
_________________________________________________
|
(1) Includes $1,376 and $1,377
tax exempt leases at September 30, 2015 and June 30,
2015, respectively. |
(2) Exclusive of undisbursed
portion of loans in process and net of deferred loan fees and
discounts. |
|
|
|
|
|
Deposit Composition |
|
|
|
|
|
September 30,
2015 |
June 30,
2015 |
|
Amount |
Percent |
Amount |
Percent |
Noninterest-bearing checking accounts |
$146,799 |
16.0% |
$171,064 |
17.8% |
Interest-bearing checking accounts |
178,475 |
19.5 |
185,075 |
19.2 |
Money market accounts |
194,249 |
21.2 |
198,000 |
20.5 |
Savings accounts |
93,317 |
10.2 |
93,053 |
9.7 |
In-market certificates of deposit |
219,594 |
24.0 |
242,036 |
25.1 |
Out-of-market certificates of deposit |
83,894 |
9.1 |
74,001 |
7.7 |
Total deposits |
$916,328 |
100.0% |
$963,229 |
100.0% |
HF Financial
Corp. |
Selected Consolidated
Financial Condition Data |
(Dollars in
Thousands) |
(Unaudited) |
|
|
Average Balance, Interest Yields and
Rates |
Three Months
Ended |
|
September 30,
2015 |
June 30,
2015 |
|
Average
Outstanding Balance |
Yield/
Rate |
Average
Outstanding Balance |
Yield/
Rate |
Interest-earning assets: |
|
|
|
|
Loans and leases
receivable(1)(3) |
$913,277 |
4.39% |
$910,757 |
4.36% |
Investment
securities(2)(3) |
183,346 |
1.62 |
185,571 |
1.66 |
Total interest-earning assets |
1,096,623 |
3.93% |
1,096,328 |
3.90% |
Noninterest-earning assets |
74,964 |
|
75,668 |
|
Total assets |
$1,171,587 |
|
$1,171,996 |
|
Interest-bearing liabilities: |
|
|
|
|
Deposits: |
|
|
|
|
Checking and money market |
$374,980 |
0.24% |
$380,230 |
0.23% |
Savings |
95,996 |
0.25 |
116,390 |
0.20 |
Certificates of deposit |
299,554 |
0.75 |
289,084 |
0.77 |
Total interest-bearing
deposits |
770,530 |
0.44 |
785,704 |
0.43 |
FHLB advances and other
borrowings |
81,852 |
0.41 |
80,220 |
0.38 |
Subordinated debentures payable
to trusts |
24,656 |
4.74 |
24,837 |
4.68 |
Total interest-bearing liabilities |
877,038 |
0.56% |
890,761 |
0.54% |
Noninterest-bearing
deposits |
155,703 |
|
146,183 |
|
Other liabilities |
32,706 |
|
31,777 |
|
Total liabilities |
1,065,447 |
|
1,068,721 |
|
Equity |
106,140 |
|
103,275 |
|
Total liabilities and equity |
$1,171,587 |
|
$1,171,996 |
|
Net interest spread(4) |
|
3.37% |
|
3.36% |
Net interest margin(4)(5) |
|
3.49% |
|
3.46% |
Net interest margin, TE(6) |
|
3.55% |
|
3.53% |
Return on average assets(7) |
|
1.31% |
|
0.67% |
Return on average equity(8) |
|
14.44% |
|
7.62% |
_____________________________________ |
(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 September 30, 2015 and June 30, 2015
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 |
Three
Months Ended |
|
|
|
|
September 30, 2015 |
September 30, 2014 |
|
|
|
Average
Outstanding Balance |
Yield/
Rate |
Average
Outstanding Balance |
Yield/
Rate |
Interest-earning assets: |
|
|
|
|
Loans and leases
receivable(1)(3) |
$913,277 |
4.39% |
$818,100 |
4.44% |
Investment
securities(2)(3) |
183,346 |
1.62 |
365,880 |
1.31 |
Total interest-earning assets |
1,096,623 |
3.93% |
1,183,980 |
3.47% |
Noninterest-earning assets |
74,964 |
|
73,181 |
|
Total assets |
$1,171,587 |
|
$1,257,161 |
|
Interest-bearing liabilities: |
|
|
|
|
Deposits: |
|
|
|
|
Checking and money market |
$374,980 |
0.24% |
$400,864 |
0.25% |
Savings |
95,996 |
0.25 |
147,952 |
0.21 |
Certificates of deposit |
299,554 |
0.75 |
256,168 |
0.91 |
Total interest-bearing
deposits |
770,530 |
0.44 |
804,984 |
0.45 |
FHLB advances and other
borrowings |
81,852 |
0.41 |
136,731 |
2.49 |
Subordinated debentures payable
to trusts |
24,656 |
4.74 |
24,837 |
4.90 |
Total interest-bearing liabilities |
877,038 |
0.56% |
966,552 |
0.85% |
Noninterest-bearing
deposits |
155,703 |
|
156,070 |
|
Other liabilities |
32,706 |
|
32,534 |
|
Total liabilities |
1,065,447 |
|
1,155,156 |
|
Equity |
106,140 |
|
102,005 |
|
Total liabilities and equity |
$1,171,587 |
|
$1,257,161 |
|
Net interest spread(4) |
|
3.37% |
|
2.62% |
Net interest margin(4)(5) |
|
3.49% |
|
2.78% |
Net interest margin, TE(6) |
|
3.55% |
|
2.84% |
Return on average assets(7) |
|
1.31% |
|
0.57% |
Return on average equity(8) |
|
14.44% |
|
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 September 30, 2015 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. |
Age Analysis of Past
Due Loans and Leases Receivables |
(Dollars in
Thousands) |
(Unaudited) |
|
|
|
September 30, 2015 |
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 |
$— |
$144 |
$113 |
$257 |
$54,868 |
$— |
$113 |
$113 |
Construction |
— |
— |
— |
— |
9,194 |
— |
— |
— |
Commercial: |
|
|
|
|
|
|
|
|
Commercial business |
— |
— |
123 |
123 |
71,343 |
— |
1,590 |
1,590 |
Equipment finance leases |
— |
— |
— |
— |
130 |
— |
— |
— |
Commercial real estate: |
|
|
|
|
|
|
|
|
Commercial real estate |
— |
159 |
— |
159 |
335,526 |
— |
476 |
476 |
Multi-family real estate |
— |
— |
— |
— |
115,268 |
— |
— |
— |
Construction |
— |
— |
— |
— |
56,527 |
— |
— |
— |
Agricultural: |
|
|
|
|
|
|
|
|
Agricultural real estate |
— |
— |
1,342 |
1,342 |
86,682 |
— |
4,396 |
4,396 |
Agricultural business |
— |
27 |
1,959 |
1,986 |
104,564 |
— |
5,036 |
5,036 |
Consumer: |
|
|
|
|
|
|
|
|
Consumer direct |
— |
— |
2 |
2 |
14,981 |
— |
33 |
33 |
Consumer home equity |
145 |
8 |
166 |
319 |
50,467 |
— |
210 |
210 |
Consumer OD &
reserve |
— |
— |
— |
— |
2,542 |
— |
— |
— |
Total |
$145 |
$338 |
$3,705 |
$4,188 |
$902,092 |
$— |
$11,854 |
$11,854 |
|
|
|
June 30, 2015 |
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 |
$— |
$— |
$— |
$— |
$55,572 |
$— |
$112 |
$112 |
Construction |
4 |
— |
— |
4 |
6,304 |
— |
— |
— |
Commercial: |
|
|
|
|
|
|
|
|
Commercial business |
26 |
— |
485 |
511 |
77,982 |
— |
2,398 |
2,398 |
Equipment finance leases |
— |
— |
— |
— |
158 |
— |
— |
— |
Commercial real estate: |
|
|
|
|
|
|
|
|
Commercial real estate |
23 |
— |
— |
23 |
325,430 |
— |
359 |
359 |
Multi-family real estate |
— |
— |
— |
— |
111,354 |
— |
— |
— |
Construction |
— |
— |
— |
— |
48,224 |
— |
— |
— |
Agricultural: |
|
|
|
|
|
|
|
|
Agricultural real estate |
375 |
139 |
1,203 |
1,717 |
95,235 |
— |
4,482 |
4,482 |
Agricultural business |
720 |
521 |
1,206 |
2,447 |
121,541 |
— |
5,474 |
5,474 |
Consumer: |
|
|
|
|
|
|
|
|
Consumer direct |
18 |
3 |
3 |
24 |
14,813 |
— |
45 |
45 |
Consumer home equity |
190 |
— |
135 |
325 |
50,052 |
— |
237 |
237 |
Consumer OD &
reserve |
5 |
— |
— |
5 |
2,698 |
— |
— |
— |
Total |
$1,361 |
$663 |
$3,032 |
$5,056 |
$909,363 |
$— |
$13,107 |
$13,107 |
____________________________________ |
(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 |
|
September 30, |
June 30, |
September 30, |
|
2015 |
2015 |
2014 |
Net interest income |
$9,607 |
$9,461 |
$8,286 |
Taxable equivalent
adjustment |
170 |
174 |
187 |
Adjusted net interest
income |
9,777 |
9,635 |
8,473 |
Average interest-earning
assets |
1,096,623 |
1,096,328 |
1,183,980 |
Net interest margin, TE |
3.55% |
3.53% |
2.84% |
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, the net gain or loss recorded on the sale
of property, and costs incurred for branch closures.
|
Three Months
Ended |
|
September 30, |
June 30, |
September 30, |
|
2015 |
2015 |
2014 |
GAAP earnings before income
taxes |
$5,942 |
$2,876 |
$2,628 |
Net (gain) on sale of
securities |
(5) |
(18) |
(34) |
Net (gain) on sale of bank
branch |
(2,847) |
— |
— |
Net (gain) on sale of
property |
— |
(195) |
— |
Costs incurred for branch closures
(1) |
— |
1 |
(201) |
Core earnings before income
taxes |
3,090 |
2,664 |
2,393 |
Provision for income taxes for core
earnings |
1,006 |
832 |
727 |
Core earnings |
$2,084 |
$1,832 |
$1,666 |
|
|
|
|
GAAP diluted earnings per
share |
$0.55 |
$0.28 |
$0.26 |
Net (gain) on sale of securities, net
of tax |
— |
— |
— |
Net (gain) on sale of bank branch,
net of tax |
(0.25) |
— |
— |
Net (gain) on sale of property, net
of tax |
— |
(0.02) |
— |
Costs incurred for branch closures,
net of tax |
— |
— |
(0.02) |
Core diluted earnings per
share |
$0.30 |
$0.26 |
$0.24 |
|
|
|
|
(1) Branch closure costs include
loss on disposal 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
HF Financial Corp. (NASDAQ:HFFC)
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