SPENCER, Ind.--(BUSINESS WIRE)--Home Financial Bancorp (“Company”) (OTCPink: “HWEN”), an Indiana corporation which is the holding company for Our Community Bank, (“Bank”) based in Spencer, Indiana, announces results for the second quarter and six months ended December 31, 2017. The following comparisons are made to the same time period in the prior fiscal year.
Second Quarter Highlights:
- Non-interest income decreased $29,000 or 22%;
- Income tax expense increased $13,000 or 118%;
- Net income decreased $19,000 or 25%, to $58,000;
- Excluding the effect of recent tax legislation, net income improved $15,000 or 20%, to $92,000.
Six Month Highlights:
- Total loans increased $2.9 million or 6%;
- Non-performing loans fell $252,000 or 36%;
- Non-interest expense decreased $58,000 or 4%;
- Net income declined $12,000 to $147,000;
- Excluding the effect of tax legislation, net income improved $22,000 or 14%, to $181,000.
For the quarter ended December 31, 2017, the Company reported net income of $58,000, or $.05 basic and diluted earnings per share. Net income was $77,000 or $.07 basic and diluted earnings per share for the quarter ended December 31, 2016. Second quarter 2018 net income was impacted by lower non-interest income compared to the same quarter last year, and the effects of one-time charges related to recently enacted federal tax legislation. Excluding the effects of the “Tax Cuts and Jobs Act Bill of 2017”, net income for the quarter was $92,000, or $.08 basic and diluted earnings per share.
Net interest income increased $8,000 or 1%, and totaled $673,000. Total interest income improved $26,000 or 3%, but was partially offset by an $18,000 or 17% increase in interest expense. Net interest margin for the quarter was 4.12%, compared to 4.26% for the same period a year earlier.
Loan loss provisions decreased to $10,000 for the quarter-ended December 31, 2016, compared to $20,000 for the year-earlier period. A regular assessment of loan loss allowance adequacy indicated that these provisions were necessary to maintain an appropriate allowance level. Changes in volume, composition and quality of the loan portfolio, as well as actual loan loss experience, influences the need for future loan loss provisions. Net loan charge-offs during second quarter 2018 totaled $32,000, compared to $13,000 for second quarter 2017.
Total non-interest income decreased $29,000 or 22%, to $105,000 for the quarter. This change primarily resulted from $22,000 in lower service charges on deposit accounts compared to second quarter 2017. Total non-interest expense for second quarter 2018 decreased $5,000 or 1%.
Income tax expense was $24,000, compared to $11,000 for the same quarter a year earlier. This increase was caused by recently enacted federal tax legislation. As a result of the Tax Cuts and Jobs Act Bill of 2017, the Company’s net deferred tax asset (“net DTA”) was revalued as of December 31, 2017. The value of the net DTA was reduced by $34,000 with the amount of this reduction recognized as additional income tax expense in the second quarter of fiscal 2018.
Excluding this one-time event, the income tax benefit for second quarter 2018 was $10,000, compared to an income tax expense of $11,000 for the same period last year. However, it’s worth noting that during second quarter 2017, another non-recurring event, the adoption of Financial Accounting Standards Board (FASB) Accounting Standards update (ASU) 2014-01, contributed $19,000 to overall income tax expense and changed an $8,000 tax benefit to an $11,000 tax expense.
For the six-month period ended December 31, 2017, the Company reported net income of $147,000, or $.13 basic and diluted earnings per share. Net income was $159,000, or $.14 basic and diluted earnings per share for the six months ended December 31, 2016. Lower non-interest income and higher income tax expense contributed to reduced net income compared to the same period a year earlier. Excluding the effects of the Tax Cuts and Jobs Act Bill of 2017, net income for the six months ended December 31, 2017 was $181,000, or $16 basic and diluted earnings per share.
Net interest income increased $23,000, or 2%, to $1.3 million for the six-month period ending December 31, 2017. Total interest income increased $45,000 or 3%. Total interest expense increased $22,000 or 11%.
Loan loss provisions decreased to $25,000 for six-months ended December 31, 2017, compared to $40,000 for the same period ending December 31, 2016. Loan loss provisions reflect management’s assessment of various risk factors including, but not limited to, the level and trend of loan delinquencies and losses. Net loan charge-offs for the six months ended December 31, 2017 were $33,000, compared to $45,000 for the same period a year earlier.
Non-interest income decreased $103,000, or 33%, to $208,000 for the first half of fiscal 2018, compared to $312,000 for the year-earlier period. This change was largely due to a reduction in service charge income from deposit accounts and the absence of recognized gain on sale of investments. During the six-month period ended December 31, 2016, net gain on sale of investment securities totaled $39,000. In addition, courtesy fee waivers and other actions related to the bank’s first quarter 2018 core data conversion led to a $46,000, or 35%, decrease in service charges on deposit accounts.
Non-interest expense decreased $58,000 or 4%. Contributing to the reduction in non-interest expense, legal and professional fees decreased $78,000 or 51%, and computer processing fees decreased $74,000 or 38%. Partially offsetting these reductions, printing and supplies expenses increased to $89,000 from $24,000 during the same period a year earlier. Salaries and employee benefits also increased $49,000 or 8%.
As noted above, due to the recent enactment of the Tax Cuts and Jobs Act Bill of 2017, the company’s net DTA was revalued as of December 31, 2017. The value of the net DTA was reduced by $34,000 with the amount of this reduction recognized as additional income tax expense in the second quarter of fiscal 2018. Consequently, this revaluation changed an income tax benefit of $3,000 to a $31,000 income tax expense for the first half of fiscal 2018. Income tax expense for the same period last year was $27,000.
At December 31, 2017, total assets were $70.2 million, compared to $69.7 million at June 30, 2017. Cash and cash equivalents decreased $1.6 million or 54% to $1.3 million. Investments available for sale declined 5% to $11.6 million. Total loans increased $2.9 million or 6%, to $50.6 million.
Loans delinquent 90 days or more decreased 36% and were $443,000 or 0.9% of total loans at December 31, 2017, compared to $695,000 or 1.5% of total loans at June 30, 2017. Non-performing assets decreased 33% to $536,000 or 0.8% of total assets at December 31, 2017. This compares to non-performing assets of $797,000 or 1.1% of total assets at June 30, 2017. Non-performing assets included $93,000 in Other Real Estate Owned (“OREO”) and repossessed properties at December 31, 2017, compared to $102,000 six months earlier.
Loan loss allowances were $461,000 or 0.91% of total loans at December 31, 2017, compared to $469,000 or 0.98% of total loans at June 30, 2017. Management considered the level of loan loss allowances at December 31, 2017 to be adequate to cover estimated losses inherent in the loan portfolio at that date.
Total deposits increased $830,000 or 2%, to $51.0 million as of December 31, 2017. Total borrowings were $10.0 million at both December 31, 2017 and June 30, 2017.
Shareholders’ equity was $8.9 million or 12.6% of total assets at December 31, 2017. Factors impacting shareholder equity during the first half of fiscal 2018 included net income, two quarterly cash dividends totaling $.08 per share, and a $45,000 decline in accumulated other comprehensive income related to securities available for sale. At December 31, 2017, the Company’s book value per share was $7.60 based on 1,166,002 shares outstanding.
Effective February 1, 2018, the Company reports a change in its Board leadership. Chairman Tad Wilson and Vice Chairman Stephen Parrish informed the Company’s Board of Directors at its regularly scheduled January 23, 2018 board meeting of their intent to continue serving on the board of directors, while stepping down from their respective leadership roles on the board. The Board of Directors has unanimously voted for Kurt Rosenberger to succeed Mr. Wilson as Chairman of the Board, and Charles Hardesty as Vice Chairman of the Board. Aside from these leadership changes, there are no other changes in the composition of the Board of Directors.
Home Financial Bancorp and Our Community Bank, an FDIC-insured, Indiana stock commercial bank, operate from headquarters in Spencer, Indiana, and a branch office in Cloverdale, Indiana. Additional information concerning Home Financial Bancorp and its subsidiaries is available at www.hfbancorp.com or www.ocbconnect.com.
|HOME FINANCIAL BANCORP|
|Consolidated Financial Highlights|
(Dollars in thousands, except per share and book value amounts)
FOR THREE MONTHS ENDED DECEMBER 31:
|Net Interest Income||$673||$665|
|Provision for Loan Losses||10||20|
|Basic Earnings Per Share:||$ .05||$ .07|
|Diluted Earnings Per Share:||$ .05||$ .07|
|Average Shares Outstanding - Basic||1,165,458||1,165,654|
|Average Shares Outstanding - Diluted||1,165,618||1,165,741|
FOR SIX MONTHS ENDED DECEMBER 31:
|Net Interest Income||$1,340||$1,317|
|Provision for Loan Losses||25||40|
|Basic Earnings Per Share:||$ .13||$ .14|
|Diluted Earnings Per Share:||$ .13||$ .14|
|Average Shares Outstanding - Basic||1,165,458||1,170,399|
|Average Shares Outstanding - Diluted||1,165,621||1,170,747|
|Allowance for Loan Losses||461||469|
|Non-Performing Assets to Total Assets||0.76||%||1.14||%|
|Non-Performing Loans to Total Loans||0.88||1.46|
|Book Value Per Share*||$7.60||$7.59|
*Based on 1,166,002 shares at December 31, 2017 and June 30, 2017.