Home Federal Bancorp Inc
Of Louisiana
2021 Annual Report
HFB SENIOR OFFICERS
James R. Barlow
Chairman of the
Board of Directors,
President and CEO
Glen W. Brown
SVP and CFO
Mary L. Jones
SVP and COO
David S. Barber
SVP and Manager Mortgage
Lending
K. Matthew Sawrie
SVP Commercial Lending
A. Cantu, Jr.
SVP and Sr. Credit Officer
DeNell W. Mitchell
SVP Loan Operations
Delayne C. Lewis
SVP Compliance and Risk
Dawn F. Williams
SVP Human Resources
Home Federal Bancorp Inc
Of Louisiana
DIRECTORS & EXECUTIVE OFFICERS
James R. Barlow
Chairman of the Board,
President and
Chief Executive Officer
DeNell W. Mitchell
Senior Vice President and
Corporate Secretary
Glen W. Brown
Senior Vice President and
Chief Financial Officer
Dawn F. Williams
Senior Vice President
and Assistant Corporate
Secretary
OUTSIDE DIRECTORS
Walter T. Colquitt, III
Director
Dentist, Shreveport, Louisiana
Mark M. Harrison
Director
Owner of House of Carpets and Lighting
Woodus K. Humphrey
Director
Retired, former Owner of Woodus Humphrey Insurance, Inc.
Scott D. Lawrence
Director
President of Southwestern Wholesale
Thomas Steen Trawick, Jr., M.D.
Director
Chief Executive Officer and Chief Medical Officer of
CHRISTUS Health Shreveport - Bossier
Timothy W. Wilhite, Esq.
Director
Chief Financial Officer and General Counsel of
Wilhite Electric Co., Inc.
Letter from the PRESIDENT
On behalf of the Board of Directors, management team, and staff of Home Federal Bancorp, Inc. of
Louisiana (Company) and its subsidiary, Home Federal Bank (HFB), I am pleased to provide this Annual
Report for the fiscal year ended June 30, 2021.
During the unprecedented times of the past year, the digital platforms that helped us navigate through
the onset of the COVID-19 crisis remain an imperative asset for HFB to meet customer expectations.
Our mortgage digital point of sale platform and ProSign Online continue to provide a digital platform for
customers that are unable to visit a physical location. As we look to the future, our key initiatives are
focusing on our de novo branch strategy and other growth opportunities. In June 2021, we announced
plans for a new banking center located in West Shreveport’s Huntington community. Additionally, in
September 2021, we announced plans to enter the Minden, LA market to establish a loan production
office which will be quickly converted to a full-service HFB banking center. Because of competitive
disruptions in both of these markets, we feel that these are timely decisions that will enhance organic
growth opportunities.
Our company reported strong financial results in fiscal 2021. Net income for the year was $5.4 million,
resulting in diluted earnings per share of $1.66. The Company reported total assets of $565.7 million.
Total deposits grew 9.9% to $506.6 million at June 30, 2021 compared to $460.8 million at June 30, 2020.
Fiscal 2021 has been a transformational year in changing the deposit make-up of HFB. While deposits
grew 9.9%, higher cost certificates of deposits declined $48.6 million and made up 21.5% of total deposits
at June 30, 2021.
We are committed to providing long-term value to our dedicated shareholders. On March 10, 2021 we
declared a two-for-one stock split in the form of a 100% stock dividend, to stockholders of record as of
March 22, 2021. Under the terms of the stock split, the Company’s stockholders received a dividend of
one share for every share held on the record date. Additionally, we continue to increase the amount of
dividend payments to our shareholders with a 21% increase in the quarterly dividend rate declared in July
2021, as compared to the previous year. This marks our 8th consecutive year that dividends have been
increased to our shareholders, and the 15th consecutive year that divdends have been paid to our
shareholders.
W hile we cannot predict what the next year holds, we remain
committed to providing value to our customers, shareholders, and
employees. As always, we thank you for your investment in and
continued support of Home Federal Bancorp, Inc. of Louisiana.
Very truly yours,
James R. Barlow
Chairman of the Board, President and Chief Executive Off icer
Of Home Federal Bancorp, Inc. of Louisiana
LOCATIONS
HOME O FFICE
222 FLORIDA ST
SHREVEPORT, LA
NORTHWOOD
5841 N. MARKET ST
SHREVEPORT, LA
YOUREE DRIVE
6363 YOUREE DR
SHREVEPORT, LA
VIKING DRIVE
2555 VIKING DR
BOSSIER CITY, LA
DOWNTOWN
624 MARKET ST
SHREVEPORT, LA
STOCKWELL
7964 E. TEX AS ST
BOSSIER CITY, LA
MANSFIELD ROAD
9445 MANSFIELD RD
SHREVEPORT, LA
PIERREMONT
925 PIERREMONT RD
SHREVEPORT, LA
A Better Way
LOCATIONS
HOME OFFICE
222 FLORIDA ST
SHREVEPORT, LA
NORTHWOOD
5841 N. MARKET ST
SHREVEP ORT, LA
YOUREE DRIVE
6363 YOUREE DR
SHREVEPORT, LA
VIKING DRIVE
2555 VIKING DR
BOSSIER CITY, LA
DOWNT OWN
624 MARKET ST
SHREVEPORT, LA
STOCKWELL
7964 E. TEXAS ST
BOSSIER CITY, LA
SOUTHERN HILLS
9449 MANSFIELD RD
SHREVEPORT, LA
PIERREMONT
925 PIERREMONT RD
SHREVEPORT, LA
We Define LOCAL
HFB supports The American Heart Association’s
Local Go Red for Women Campaign
HFB’s Commercial Division sponsors the
Shreveport Independence Bowl
Southfield School Golf Tournament Sponsors
Celebrating our wonderful HFB team with
Southern Maid Donuts
Grilling Down Home Sausages
at the HFB tent
Employee Appreciation Day
Loyola College Prep Golf Tournmant at
Stonebridge Country Club
Serving snocones at the Lion’s Club Football Jamboree
Airline High School
Annual Katy Build Tennis Tournament
Bossier City
$312,7726/30/2018$317,493$317,4936/30/2019$324,134$324,1346/30/2020$359,927$359,9276/30/2021$336,394$336,3946/30/2017$312,7726/30/20176/30/20186/30/20196/30/20206/30/2021Average Assets$400,358$418,998$433,043$466,570$545,079Loans Receivable, Net$312,772$317,493$324,134$359,927$336,394Total Deposits$329,045$360,260$388,164$460,810$506,596Average Yield on Earning Assets4.62%4.69%4.90%4.64%3.96%Average Cost of Interest Bearing Liabilities0.91%1.11%1.41%1.51%0.89%Net Income$3,652$3,568 $4,743$3,850$5,365ROAA0.91%0.85%1.10%0.83%0.98%Dollars in thousandsDollars in thousandsLOANS RECEIVABLE, NETTOTAL DEPOSITSLoans Rec., NetTotal Deposits$400,000$350,000$300,000$250,000$200,000$150,000$100,000$50,000$0$500,000$450,000$400,000$350,000$300,000$250,000$200,000$150,000$100,000$50,000$06/30/2017$329,0456/30/2019$388,1646/30/2020$460,8106/30/2018$360,260$360,260$329,045$388,164$460,8106/30/2021$506,596$506,596 Financial HIGHLIGHTS
Dollars in thousands
AVERAGE ASSETS & ROAA
0.91%
0.85%
0.83%
1.10%
0.98%
$450,000
$450,000
$400,000
$350,000
$300,000
$250,000
$200,000
$150,000
$100,000
$50,000
$0
Avg Assets
ROAA
6/30/2017
$400,358
0.91%
6/30/2018
$418,998
0.85%
6/30/2019
$433,043
1.10%
6/30/2020
$466,570
0.83%
6/30/2020
$545,079
0.98%
Dollars in thousands
NET INTEREST MARGIN & NET INCOME
$5,000
$4,500
$4,000
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$0
3.85%
3.80%
3.78%
3.46%
3.31%
Net Income
NIM
6/30/2017
$3,652
3.85%
6/30/2018
$3,568
3.80%
6/30/2019
$4,743
3.78%
6/30/2020
$3,850
3.46%
6/30/2021
$5,365
3.31%
1.60%
1.40%
1.20%
1.00%
0.80%
0.60%
0.40%
0.20%
0.00%
6.00%
5.50%
5.00%
4.50%
4.00%
3.50%
3.00%
2.50%
2.00%
Year of GIVING
Proud sponsors of Roy Griggs School of Business at
Southern University Shreveport Campus
Shreveport CEO Breakfast
America Saves Campaign
Junior Weather Watchers Coloring Contest Bike Giveaway
HFB supports
Bossier Dixie Baseball
Go Flyers! HFB is proud to support
Loyola College Prep Football
Shreveport Brew Festival Ticket Giveaway
Contest Winner
Financial
SECTION
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _________________.
For the fiscal year ended June 30, 2021
OR
Commission File Number 001-35019
HOME FEDERAL BANCORP, INC. OF LOUISIANA
(Exact name of registrant as specified in its charter)
Louisiana
(State or Other Jurisdiction of
Incorporation or Organization)
624 Market Street, Shreveport, Louisiana
(Address of Principal Executive Offices)
Registrant’s telephone number, including area code:
(318) 222-1145
Securities registered pursuant to Section 12(b) of the Act:
02-0815311
(I.R.S. Employer
Identification No.)
71101
(Zip Code)
Title of each Class
Common Stock (par value $.01 per share)
Trading Symbol(s)
HFBL
Name of each exchange on which registered
Nasdaq Stock Market, LLC
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 5(d) of the Securities and 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.
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).
No
No
Yes
Yes
Yes
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or 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
Non-accelerated filer
Accelerated filer
Smaller reporting company
Emerging growth company
Yes
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.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over
financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit
report.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
The aggregate value of the 2,381,428 shares of Common Stock of the Registrant issued and outstanding on December 31, 2020, which excludes an aggregate of
997,626 shares held by all directors and executive officers of the Registrant, the Registrant’s Employee Stock Ownership Plan (“ESOP”) and Employees’ Savings
and Profit Sharing Plan (“401(k) Plan”) as a group was $34.4 million. This figure is based on the closing sales price of $14.44 per share of the Registrant’s
Common Stock on December 31, 2020, the last business day of the Registrant’s second fiscal quarter. Although directors and executive officers, the ESOP and
401(k) Plan were assumed to be “affiliates” of the Registrant for purposes of this calculation, the classification is not to be interpreted as an admission of such
status.
Number of shares of Common Stock outstanding as of September 21, 2021: 3,350,966
No
Yes
Portions of the Definitive Proxy Statement for the 2021 Annual Meeting of Shareholders are incorporated into Part III, Items 10 through 14.
DOCUMENTS INCORPORATED BY REFERENCE
HOME FEDERAL BANCORP INC. OF LOUISIANA
Form 10-K
For the Year Ended June 30, 2021
PART I.
Item 1.
Business ................................................................................................................................
Item 1A.
Risk Factors ..........................................................................................................................
Item 1B.
Unresolved Staff Comments .................................................................................................
Item 2.
Item 3.
Item 4.
PART II.
Item 5.
Item 6.
Item 7.
Properties ..............................................................................................................................
Legal Proceedings .................................................................................................................
Mine Safety Disclosures .......................................................................................................
Market for Registrant’s Common Equity, Related Stockholder Matters and
Issuer Purchases of Equity Securities ...............................................................................
Selected Financial Data ........................................................................................................
Management’s Discussion and Analysis of Financial Condition and
Results of Operations ........................................................................................................
Item 7A.
Quantitative and Qualitative Disclosure About Market Risk ................................................
Item 8.
Item 9.
Financial Statements and Supplementary Data .....................................................................
Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure .........................................................................................................
Item 9A.
Controls and Procedures .......................................................................................................
Item 9B.
Other Information .................................................................................................................
PART III.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV.
Item 15.
Item 16.
SIGNATURES
Directors, Executive Officers and Corporate Governance ....................................................
Executive Compensation ......................................................................................................
Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters .............................................................................................
Certain Relationships and Related Transactions and Director Independence .......................
Principal Accounting Fees and Services ...............................................................................
Exhibits and Financial Statement Schedules ........................................................................
99
Form 10-K Summary ............................................................................................................
100
1
29
29
30
30
30
31
32
33
43
44
97
97
97
98
98
98
98
99
Item 1. Business
PART I
Home Federal Bancorp, Inc. of Louisiana, a Louisiana chartered corporation (“Home Federal Bancorp” or
the “Company”), is the holding company for Home Federal Bank (“Home Federal Bank” or the “Bank”). Home
Federal Bank is a federally chartered stock savings bank originally organized in 1924 as Home Building and Loan
Association. The Bank reorganized into the mutual holding company structure in January 2005 and changed its
name to “Home Federal Bank” in 2009 as part of its business strategy to be recognized as a community bank. Home
Federal Bank’s home office and seven full service branch offices are located in Shreveport and Bossier City,
Louisiana and serve the Shreveport-Bossier City metropolitan area. In September 2021, the Bank commenced
operations at a loan production office in Minden, Louisiana, which is intended to convert to a full service branch.
Home Federal Bank’s business primarily consists of attracting deposits from the general public and using those
funds to originate loans.
As of June 30, 2021, Home Federal Bancorp’s only business activities are to hold all of the outstanding
common stock of Home Federal Bank. Home Federal Bancorp is authorized to pursue other business activities
permitted by applicable laws and regulations for savings and loan holding companies, which may include the
issuance of additional shares of common stock to raise capital or to support mergers or acquisitions and borrowing
funds for reinvestment in Home Federal Bank.
Home Federal Bancorp does not own or lease any property but instead uses the premises, equipment, and
furniture of Home Federal Bank. At the present time, Home Federal Bancorp employs only persons who are officers
of Home Federal Bank to serve as officers of Home Federal Bancorp and may also use the support staff of Home
Federal Bank from time to time. These persons are not separately compensated by Home Federal Bancorp.
Pursuant to the regulations under Sections 23A and 23B of the Federal Reserve Act, Home Federal Bank
and Home Federal Bancorp have entered into an expense sharing agreement. Under this agreement, Home Federal
Bancorp will reimburse Home Federal Bank for the time that employees of Home Federal Bank devote to activities
of Home Federal Bancorp, the portion of the expense of the annual independent audit attributable to Home Federal
Bancorp, and all expenses attributable to Home Federal Bancorp’s public filing obligations under the Securities
Exchange Act of 1934.
Market Area
Our primary market area for loans and deposits is in northwest Louisiana, particularly Caddo Parish and
neighboring communities in Bossier Parish, which are located in the Shreveport-Bossier City metropolitan statistical
area. In September 2021, we expanded our presence in Webster Parish with a new loan production office.
Shreveport and Bossier City are located in northern Louisiana on Interstate 20, approximately fifteen miles
from the Texas state border and 185 miles east of Dallas, Texas. Our primary market area has a diversified
economy with employment in services, government, and wholesale/retail trade constituting the basis of the local
economy, with service jobs being the largest component. The majority of the services are health care related as
Shreveport has become a regional hub for health care. The casino gaming industry also supports a significant
number of the service jobs. The energy sector has a prominent role in the regional economy, resulting from oil and
gas exploration and drilling.
Competition. We face significant competition both in attracting deposits and in making loans. Our most
direct competition for deposits has come historically from commercial banks, credit unions, and other savings
institutions located in our primary market area, including many large financial institutions which have greater
financial and marketing resources available to them. In addition, we face significant competition for investors’ funds
from short-term money market securities, mutual funds, and other corporate and government securities. We do not
rely upon any individual group or entity for a material portion of our deposits. Our ability to attract and retain
deposits depends on our ability to generally provide a rate of return, liquidity, and risk comparable to that offered by
competing investment opportunities.
Our competition for real estate loans comes principally from mortgage banking companies, commercial
banks, other savings institutions, and credit unions. We compete for loan originations primarily through the interest
rates and loan fees we charge and the efficiency and quality of services we provide borrowers. Factors which affect
competition include general and local economic conditions, current interest rate levels, and volatility in the mortgage
1
markets. Competition may increase as a result of the continuing reduction of restrictions on the interstate operations
of financial institutions.
Lending Activities
General. At June 30, 2021, our net loan portfolio amounted to $336.4 million, representing approximately
59.5% of total assets at that date. Historically, our principal lending activity was the origination of one-to-four
family residential loans. At June 30, 2021, one-to-four family residential loans amounted to $97.6 million, or 28.6%
of the total loan portfolio. In recent periods, we have sold a substantial amount of our fixed-rate conforming one-to-
four family residential loans to correspondent banks. Commercial real estate loans amounted to $96.2 million, or
28.2% of the total loan portfolio, at June 30, 2021.
The types of loans that we may originate are subject to federal and state laws and regulations. Interest rates
charged on loans are affected principally by the demand for such loans, the supply of money available for lending
purposes, and the rates offered by our competitors. These factors are, in turn, affected by general and economic
conditions, the monetary policy of the federal government, including the Federal Reserve Board, legislative and tax
policies, and governmental budgetary matters.
A savings institution generally may not make loans to one borrower and related entities in an amount which
exceeds 15% of its unimpaired capital and surplus, although loans in an amount equal to an additional 10% of
unimpaired capital and surplus may be made to a borrower, if the loans are fully secured by readily marketable
securities. In addition, upon application, the Office of the Comptroller of the Currency permits a savings institution
to lend up to an additional 15% of unimpaired capital and surplus to one borrower to develop domestic residential
housing units. At June 30, 2021, our regulatory limit on loans to one borrower was $8.2 million, and the five largest
loans or groups of loans to one borrower, including related entities, aggregated $5.5 million, $5.4 million,
$4.8 million, $4.6 million, and $4.1 million. Each of our five largest loans or groups of loans was originated with
strong guarantor support to known borrowers in our market area and was performing in accordance with its terms at
June 30, 2021.
Loans to or guaranteed by general obligations of a state or political subdivision are not subject to the
foregoing lending limits.
2
Loan Portfolio Composition. The following table shows the composition of our loan portfolio by type of
loan at the dates indicated.
2021
2020
June 30,
2019
Percent
of Total
Loans
Amount
Amount
Percent
of Total
Loans
Percent
of Total
Loans
Amount
(Dollars in thousands)
2018
2017
Percent
of Total
Loans
Amount
Amount
Percent
of Total
Loans
$ 97,607
28.60% $108,146
29.59% $118,945 36.29%
$121,257
37.76%
$125,306
39.57%
61,502
34,678
18.02
10.16
60,045
27,043
96,180
31,015
16,260
15,337
28.18
9.09
4.77
4.49
87,088
47,432
18,068
8,159
16.43
7.40
23.83
12.98
4.95
2.23
83,397
46,171
16,106
9,502
25.44
14.09
4.91
2.90
74,416
38,079
20,474
11,921
23.17
11.86
6.37
3.71
60,558
22,839
18.47
6.97
52,823
21,593
16.45
6.72
51,749
26,196
16.34
8.27
1,267
12,788
270,454
69,891
0.37
3.75
79.25
20.48
1,410
12,252
282,555
81,909
0.39
3.35
77.32
22.41
1,262
15,619
291,002
35,990
0.39
4.77
88.79
10.98
1,541
17,387
285,075
35,458
0.48
5.41
88.76
11.04
430
485
70,806
341,260
0.13
0.14
20.75
364
615
82,888
100.00% 365,443
0.10
0.17
22.68
100.00%
439
329
36,758
327,760
0.13
0.10
11.21
100.00%
462
185
36,105
321,180
0.14
0.06
11.24
100.00%
(4,122)
(744)
$336,394
(4,081)
(1,435)
$359,927
(3,452)
(174)
$324,134
(3,425)
(262)
$317,493
(3,729)
(196)
$312,772
77,945
21,281
25,038
9,529
1,710
20,976
281,785
34,429
420
63
34,912
316,697
24.61
6.72
7.91
3.01
0.54
6.62
88.98
10.87
0.13
0.02
11.02
100.00%
Real estate loans:
One-to-four family residential(1) ............
Commercial – real estate secured:
Owner occupied ....................................
Non-owner occupied ............................
Total commercial-real estate
secured ...........................................
Multi-family residential ...........................
Land .........................................................
Construction ............................................
Home equity loans and second
mortgage loans ....................................
Equity lines of credit ...............................
Total real estate loans ...........................
Commercial business ..................................
Consumer non-real estate loans:
Savings accounts .....................................
Consumer loans .......................................
Total non-real estate loans....................
Total loans ............................................
Less:
Allowance for loan losses .......................
Deferred loan fees ...................................
Net loans receivable (1)........................
_______________
(1)
Does not include loans held-for-sale amounting to $14.4 million, $14.8 million, $8.6 million, $6.8 million and $13.6 million at June 30, 2021, 2020, 2019, 2018
and 2017, respectively.
Origination of Loans. Our lending activities are subject to written underwriting standards and loan
origination procedures established by the board of directors and management. When applicable, loans originated are
also subject to the underwriting standards of Fannie Mae, Freddie Mac, HUD, VA, USDA, and correspondent banks
that purchase loans we originate. Loan originations are obtained through a variety of sources, primarily from
existing customers, local realtors, and builders. Written loan applications are taken by one of our loan officers. The
loan officer also supervises the procurement of credit reports, income and asset documentation, and other
documentation involved with a loan. All appraisals are ordered through an approved appraisal management
company in compliance with the Dodd-Frank Consumer Protection Act. Under our lending policy, a title insurance
policy is required on most mortgage loans, with the exception of certain smaller loan amounts where our policy
requires a title opinion only. We also require fire and extended coverage casualty insurance in order to protect the
properties securing the real estate loans. Borrowers must also obtain flood insurance policies when the property is in
a flood hazard area.
Our loan approval process is intended to assess the borrower’s ability to repay the loan, the viability of the
loan, and the value of the property that will secure the loan. All residential loans originated for sale to FNMA or
other investor banks that receive an Approve-Eligible recommendation on the automated underwriting feedback
certificate that is applicable for each loan type must be approved by a Bank mortgage underwriter. Loans that do not
receive an Approve-Eligible recommendation must be approved by a Bank mortgage underwriter and the Senior
Vice President of Mortgage. In addition, all loans originated to be held on the Bank’s portfolio must be approved by
a Bank mortgage underwriter and the Senior Vice President of Mortgage for loans up to $500,000, and for loans up
to $1.0 million by the Senior Credit Officer. Commercial real estate secured loans and lines of credit and
commercial business loans up to $1.0 million must be approved by the Senior Credit Officer or the Chairman of the
Board, President and Chief Executive Officer, up to $2.0 million by the Senior Credit Officer and the Chairman of
the Board, President and Chief Executive Officer, and in excess of $2.0 million by the Executive Committee. In
accordance with past practice, all loans are ratified by our board of directors.
3
In recent periods, we have originated and sold a substantial amount of our fixed-rate conforming mortgages
to correspondent banks. For the year ended June 30, 2021, we originated $249.1 million of one-to-four family
residential loans and sold $198.8 million of such loans. Our residential loan originations primarily consist of
conventional, rural development, FHA, and VA loans.
The following table shows total loans originated, sold, and repaid during the periods indicated.
2021
Year Ended June 30,
2020
(In thousands)
2019
$ 93,104
$249,095 $147,965
Loan originations:
One-to-four family residential ..........................................................
Commercial — real estate secured:
Owner occupied ........................................................................... 17,180 20,046
Non-owner occupied .................................................................... 16,350 11,593
Multi-family residential ....................................................................
26,391 16,224
33,707 87,382
Commercial business ........................................................................
17,750 4,904
Land ..................................................................................................
16,976 13,768
Construction ......................................................................................
12,327 9,559
389,776 311,441
--
--
389,776 311,441
(111,752)
(198,797)
(162,750)
(212,577)
(411,374)
(274,502)
(1,935) (1,146)
$ (23,533) $ 35,793
Home equity loans and lines of credit and other consumer ...............
Total loan originations .................................................................
Loans purchased .....................................................................................
Total loan originations and loans purchased ..........................................
Loans Sold
Loan principal repayments
Total loans sold and principal repayments
Increase (decrease) due to other items, net(1)
Net (decrease) increase in loan portfolio ................................................
___________________
(1) Other items consist of deferred loan fees, the allowance for loan losses, and loans held-for-sale at year end.
21,895
7,038
31,854
50,167
2,553
16,869
9,380
232,860
--
232,860
(62,158)
(166,434)
(228,592)
2,373
$ 6,641
Although federal laws and regulations permit savings institutions to originate and purchase loans secured
by real estate located throughout the United States, we concentrate our lending activity in our primary market area in
Caddo and Bossier Parishes, Louisiana and the surrounding area. Subject to our loans-to-one borrower limitation,
we are permitted to invest without limitation in residential mortgage loans and up to 400% of our capital in loans
secured by non-residential or commercial real estate. We also may invest in secured and unsecured consumer loans
in an amount not exceeding 35% of total assets. This 35% limitation may be exceeded for certain types of consumer
loans, such as home equity and property improvement loans secured by residential real property. In addition, we
may invest up to 10% of our total assets in secured and unsecured loans for commercial, corporate, business, or
agricultural purposes. At June 30, 2021, we were within each of the above lending limits.
During fiscal 2021 and 2020, we sold $198.8 million and $111.8 million of loans, respectively. We
recognized gain on sale of loans of $4.3 million during fiscal 2021 and $2.5 million during fiscal 2020. Loans were
sold during these periods primarily to other financial institutions. Such loans were sold against forward sales
commitments with servicing released and without recourse after a certain period of time, typically 90 days. The
loans sold primarily consisted of long-term, fixed rate residential real estate loans. These loans were originated
during this period of historically low interest rates and were sold to reduce our interest rate risk. We will continue to
sell loans in the future to the extent we believe the interest rate environment is unfavorable and interest rate risk is
unacceptable.
4
Contractual Terms to Final Maturities. The following table shows the scheduled contractual maturities
of our loans as of June 30, 2021, before giving effect to net items. Demand loans, loans having no stated schedule of
repayments and no stated maturity, and overdrafts are reported as due in one year or less. The amounts shown below
do not take into account loan prepayments.
One-to-
Four
Family
Residential
Commercial
Real Estate
Secured
Multi
Family
Residential
Commercial
Business
Land
(In thousands)
Construction
Home
Equity
Loans
and Lines
of Credit
and Other
Consumer
Total
$ 5,820
$10,028
$ 6,837
$20,788
$ 4,732
$13,040
$ 2,766
$64,011
Amounts due after
June 30, 2021 in:
One year or less ...............
After one year through
two years....................
6,879
8,573
8,626
14,115
751
--
3,553
4,706
2,281
557
27,300
4,482
2,591
--
674
30,488
21,169
22,347
5,803
27,698
3,484
--
149
80,650
After two years through
three years ..................
After three years through
five years ...................
After five years through
ten years ....................
10,379
36,294
8,391
9,423
537
--
5,653
70,677
After ten years through
fifteen years ...............
7,944
After fifteen years ........... 36,790
4,823
--
1,773
7,460
3,947
--
--
210
16
--
5,067
104
23,570
44,564
Total ........................... $97,607
$96,180
$31,015
$69,891
$16,260
$15,337
$14,970
$341,260
The following table sets forth the dollar amount of all loans at June 30, 2021, before net items, due after
June 30, 2022, which have fixed interest rates or which have floating or adjustable interest rates.
Fixed-Rate
One-to-four family residential .................................................
Commercial — real estate secured ...........................................
Multi-family residential ............................................................
Commercial business ................................................................
Land .........................................................................................
Construction .............................................................................
Home equity loans and lines of credit and other consumer ......
$ 71,604
83,570
24,029
46,014
9,589
16
5,597
Floating or
Adjustable-Rate
(In thousands)
$ 20,184
2,582
149
3,090
1,939
2,280
6,607
Total
$ 91,788
86,152
24,178
49,104
11,528
2,296
12,204
Total ......................................................................................
$240,419
$ 36,831
$277,250
Scheduled contractual maturities of loans do not necessarily reflect the actual expected term of the loan
portfolio. The average life of mortgage loans is substantially less than their average contractual terms because of
prepayments. The average life of mortgage loans tends to increase when current mortgage loan rates are higher than
rates on existing mortgage loans and, conversely, decrease when rates on current mortgage loans are lower than
existing mortgage loan rates (due to refinancing of adjustable-rate and fixed-rate loans at lower rates). Under the
latter circumstance, the weighted average yield on loans decreases as higher yielding loans are repaid or refinanced
at lower rates.
5
One-to-Four Family Residential Real Estate Loans. At June 30, 2021, $97.6 million, or 28.6%, of the
total loan portfolio, before net items, consisted of one-to-four family residential loans.
The loan-to-value ratios, maturities, and other provisions of the loans made by us generally have reflected
the policy of making less than the maximum loan permissible under applicable regulations, in accordance with
sound lending practices, market conditions, and underwriting standards established by us. Our current lending policy
on one-to-four family residential loans generally limits the maximum loan-to-value ratio to 90% or less of the
appraised value of the property, although we will lend up to a 100% loan-to-value ratio with private mortgage
insurance. These loans are amortized on a monthly basis with principal and interest due each month, terms not in
excess of 30 years, and generally include “due-on-sale” clauses.
At June 30, 2021, $77.3 million, or 79.2%, of our one-to-four family residential mortgage loans were fixed-
rate loans. Fixed-rate loans generally have maturities ranging from 15 to 30 years and are fully amortizing with
monthly loan payments sufficient to repay the total amount of the loan with interest by the end of the loan term. Our
fixed-rate loans generally are originated under terms, conditions, and documentation which permit them to be sold to
U.S. Government-sponsored agencies, such as the Federal Home Loan Mortgage Corporation and other investors in
the secondary mortgage market. Consistent with our asset/liability management, we have sold a significant portion
of our long-term, fixed rate loans. Servicing is released on all loans sold except those loans sold to FNMA.
Although we offer adjustable rate loans, substantially all of the single-family loan originations over the last
few years have consisted of fixed-rate loans due to the low interest rate environment. The adjustable-rate loans held
in portfolio typically have interest rates which adjust on an annual basis. These loans generally have an annual cap
of 1% on any increase or decrease and a cap of 6% above or below the initial rate over the life of the loan. Such
loans are underwritten based on the initial rate plus 2%. At June 30, 2021, $20.3 million, or 20.8%, of our one-to-
four family residential mortgage loans were adjustable rate loans.
Commercial Real Estate Secured Loans. As of June 30, 2021, Home Federal Bank had outstanding
$96.2 million of loans secured by commercial real estate, $61.5 million, or 63.9%, of which were owner occupied. It
is the current policy of Home Federal Bank to lend in a first lien position on real property occupied as a commercial
business property. Home Federal Bank offers fixed and variable rate commercial real estate loans. Home Federal
Bank’s commercial real estate loans are limited to a maximum of 85% of the appraised value and have terms up to
15 years, however, the terms are generally no more than five years with amortization periods of 20 years or less. It is
our policy that commercial real estate secured lines of credit are limited to a maximum of 85% of the appraised
value of the property and shall not exceed three to five year amortizations.
Multi-Family Residential Loans. At June 30, 2021, we had outstanding approximately $31.0 million of
multi-family residential loans. Our multi-family residential loan portfolio includes income producing properties of 5
or more units and low income housing developments. We obtain personal guarantees on all properties other than
those of the public housing authority for which they are not permitted.
Commercial Business Loans. At June 30, 2021, we had outstanding approximately $69.9 million of non-
real estate secured commercial loans. The decrease in this category in fiscal 2021, compared to fiscal 2020, was due
to repayments on SBA PPP loans, offset somewhat by new SBA PPP loan originations. The business lending
products we offer include lines of credit, inventory financing, and equipment loans. Commercial business loans and
lines of credit carry more credit risk than other types of commercial loans. We attempt to limit such risk by making
loans predominantly to small- and mid-sized businesses located within our market area and having the loans
personally guaranteed by the principals involved. We have established underwriting standards in regard to business
loans which set forth the criteria for sources of repayment, borrower’s capacity to repay, specific financial and
collateral margins, and financial enhancements such as guarantees. The primary source of repayment is cash flow
from the business and the general financial strength of the borrower.
6
Land Loans. As of June 30, 2021, land loans were $16.3 million, or 4.8%, of the total loan portfolio,
before net items. Land loans include land which has been acquired for the purpose of development and unimproved
land. Our loan policy provides for loan-to-value ratios of 50% for unimproved land loans. Land loans are originated
with fixed rates and terms up to five years with longer amortizations. Although land loans generally are considered
to have greater credit risk than certain other types of loans, we expect to mitigate such risk by requiring personal
guarantees and identifying other secondary sources of repayment for the land loan other than the sale of the
collateral. It is our practice to only originate a limited amount of loans for speculative development to borrowers
with whom our lenders have a prior relationship.
Construction Loans. At June 30, 2021, we had outstanding approximately $15.3 million of construction
loans which included loans for the construction of residential and commercial property. Our residential construction
loans typically have terms of six to twelve months with a takeout letter from Home Federal for the permanent
mortgage. Our commercial construction loans include owner occupied commercial properties, pre-sold property, and
speculative office property. As of June 30, 2021, we held $784,000 of speculative construction loans.
Home Equity and Second Mortgage Loans. At June 30, 2021, we held $1.3 million of home equity and
second mortgage loans. These loans are secured by the underlying equity in the borrower’s residence. We do not
require that we hold the first mortgage on the properties that secure the second mortgage loans. The amount of our
second mortgage loans generally cannot exceed a loan-to-value ratio of 90% after taking into consideration the first
mortgage loan. These loans are typically three-to-five year balloon loans with fixed rates and terms that will not
exceed 10 years and contain an on-demand clause that allows us to call the loan in at any time.
Equity Lines of Credit. We offer lines of credit secured by a borrower’s equity in real estate. These loans
amounted to $12.8 million, or 3.8% of the total loan portfolio, before net items, at June 30, 2021. The unused
portion of equity lines was $9.7 million at June 30, 2021. The rates and terms of such lines of credit depend on the
history and income of the borrower, purpose of the loan, and collateral. Lines of credit will not exceed 90% of the
value of the equity in the collateral.
Consumer Non-Real Estate Loans. We are authorized to make loans for a wide variety of personal or
consumer purposes. We originate consumer loans primarily in order to accommodate our customers. The consumer
loans at June 30, 2021 consist of loans secured by deposit accounts with us, automobile loans, overdraft, and other
unsecured loans.
Consumer non-real estate loans generally have shorter terms and higher interest rates than residential
mortgage loans and generally entail greater credit risk than residential mortgage loans, particularly those loans
secured by assets that depreciate rapidly, such as automobiles, boats, and recreational vehicles. In such cases,
repossessed collateral for a defaulted consumer loan may not provide an adequate source of repayment for the
outstanding loan, and the remaining deficiency often does not warrant further substantial collection efforts against
the borrower. In particular, amounts realizable on the sale of repossessed automobiles may be significantly reduced
based upon the condition of the automobiles and the fluctuating demand for used automobiles.
We offer loans secured by deposit accounts held with us. These loans amounted to $430,000, or 0.13% of
the total loan portfolio, before net items, at June 30, 2021. Such loans are originated for up to 100% of the account
balance, with a hold placed on the account restricting the withdrawal of the account balance. The interest rate on the
loan is equal to the interest rate paid on the account plus 2%. These loans typically are payable on demand with a
maturity date of one year.
Loan Origination and Other Fees. In addition to interest earned on loans, we generally receive loan
origination fees or “points” for originating loans. Loan points are a percentage of the principal amount of the
mortgage loan and are charged to the borrower in connection with the origination of the loan. In accordance with
accounting guidance, loan origination fees and points are deferred and amortized into income as an adjustment of
yield over the life of the loan.
7
Asset Quality
General. During fiscal 2021, our annual review was completed in August 2020. The review was
scheduled in the spring of fiscal 2020, but was rescheduled due to COVID-19 related issues. The scope of the
services provided included credit underwriting, adherence to our loan policies, as well as regulatory policies, and
recommendations regarding reserve allocations. We expect these reviews will be done every eighteen months with
our next review in the early spring of 2022.
Our collection procedures provide that when a loan is 10 days past due personal contact efforts are
attempted, either in person or by telephone. At 15 days past due, a late charge notice is sent to the borrower
requesting payment. If the loan is still past due at 30 days, a formal letter is sent to the borrower stating that the loan
is past due and that legal action, including foreclosure proceedings, may be necessary. If a loan becomes 60 days
past due and no progress has been made in resolving the delinquency, a collection letter from legal counsel is sent
and personal contact is attempted. When a loan continues in a delinquent status for 90 days or more, and a
repayment schedule has not been made or kept by the borrower, generally a notice of intent to foreclose is sent to the
borrower. If the delinquency is not cured, foreclosure proceedings are initiated. In most cases, deficiencies are cured
promptly. While we generally prefer to work with borrowers to resolve such problems, we will institute foreclosure
or other collection proceedings, when necessary, to minimize any potential loss.
Loans are placed on non-accrual status when management believes the probability of collection of interest
is doubtful. When a loan is placed on non-accrual status, previously accrued but unpaid interest is deducted from
interest income. We generally discontinue the accrual of interest income when the loan becomes 90 days past due, as
to principal or interest, unless the credit is well secured and we believe we will fully collect.
Real estate and other assets we acquire as a result of foreclosure or by deed-in-lieu of foreclosure are
classified as real estate owned until sold. At June 30, 2021, we had $383,000 of other real estate owned consisting
of one commercial real estate property and one single family residence compared to two commercial real estate
properties at June 30, 2020.
Delinquent Loans. The following table shows the delinquencies in our loan portfolio as of the dates
indicated.
2021
2020
June 30,
30 – 89
Days Overdue
90 or More Days
Overdue
30 – 89
Days Overdue
90 or More Days
Overdue
Number
Principal
Balance
of Loans
(Dollars in thousands)
21
$ 176
--
837
--
--
--
--
--
--
--
--
--
21
--
$1,013
0.30%
0.30%
Principal
Balance
Number
of Loans
Principal
Balance
$1,869
--
--
--
--
--
--
8
3
--
2
2
--
--
$1,003
1,797
--
457
2,981
--
--
$1,869
15
$6,238
0.52%
0.51%
1.73%
1.71%
Number
of Loans
Principal
Balance
Number
of Loans
One-to-four family residential ..................
Commercial – real estate secured .............
Multi-family residential ............................
Commercial business ................................
Land ..........................................................
Construction .............................................
Home equity loans and lines of credit and
other consumer .......................................
Total delinquent loans ..............................
1
--
--
--
--
--
--
1
$ 30
--
--
--
--
--
--
$ 30
Delinquent loans to total net loans ...........
Delinquent loans to total loans .................
0.01%
0.01%
3
6
--
--
--
--
--
9
8
Non-Performing Assets. The following table shows the amounts of our non-performing assets (defined as
non-accruing loans, accruing loans 90 days or more past due, and real estate owned) at the dates indicated.
2021
2020
June 30,
2019
2018
2017
(Dollars in thousands)
Non-accruing loans:
One-to-four family residential .................................................... $ 143
Commercial — real estate secured .............................................. 837
Multi-family residential .............................................................. --
Commercial business .................................................................. --
Land ............................................................................................ --
Construction ................................................................................ --
Home equity loans and lines of credit and other consumer ......... --
Total non-accruing loans ................................................... 980
Accruing loans 90 days or more past due:
One-to-four family residential .................................................... 33
Commercial — real estate secured .............................................. --
Multi-family residential .............................................................. --
Commercial business .................................................................. --
Land ............................................................................................ --
Construction ................................................................................ --
Home equity loans and lines of credit and other consumer ......... --
Total non-performing loans(1) .......................................... 1,013
Real estate owned, net ............................................................ 383
Total non-performing assets .............................................. $1,396
$ 684
1,797
--
457
2,981
--
--
5,919
319
--
--
--
--
--
--
6,238
950
$7,188
$ 220
--
--
166
2,981
--
30
3,397
294
--
--
49
--
--
--
3,740
1,366
$5,106
$ 643
--
--
416
--
--
87
1,146
680
--
--
--
--
--
30
1,856
1,177
$3,033
$ 317
--
--
2,503
--
--
--
2,820
181
--
--
--
--
--
4
3,005
540
$3,545
Troubled debt restructurings (2) ...................................................... --
--
3,843
6,886
--
Total non-performing assets and troubled debt
restructurings ..................................................................... $1,396
$7,188
$8,949
$9,919
$3,545
Total non-performing loans as a percent of loans, net .....................
Total non-performing assets as a percent of total assets ..................
Total non-performing assets and troubled debt restructurings
as a percentage of total assets ......................................................
_________________
(1) Non-performing loans consist of non-accruing loans plus accruing loans 90 days or more past due.
(2) Troubled debt restructurings not included in non-accruing loans and accruing loans 90 days or more past due.
0.30% 1.73%
0.25% 1.39%
1.15%
1.15%
0.25% 1.39%
2.02%
0.58%
0.72%
2.35%
0.96%
0.83%
0.83%
At June 30, 2021, the Company had $1.4 million of non-performing assets (defined as non-accruing loans,
accruing loans 90 days or more past due, and other real estate owned) compared to $7.2 million of non-performing
assets at June 30, 2020, consisting of six commercial real estate loans to one borrower, three single family
residential loans, and one commercial real estate property and one single family residence in other real estate owned
at June 30, 2021, compared to five single-family residential loans, five commercial real estate loans to one borrower,
one lot loan, one land loan and two commercial real estate properties in other real estate owned at June 30, 2020.
The decrease in non-performing assets from $7.2 million at June 30, 2020 to $1.4 million at June 30, 2021 was
primarily due to a payoff of $2.0 million on one lot loan and one land loan to the same borrower, a write-down of
$907,000 on a lot loan, a write-down of $1.0 million on a commercial real estate loan, and the paydown of a portion
of the collateral on the same commercial real estate loan totaling $449,000 At June 30, 2021, the Company had one
single family residential loans, and eight commercial real estate loans with six of those to one borrower classified as
substandard compared to four single family residential loans, two commercial land and lot development loans, and
six commercial real estate loans to one borrower classified as substandard at June 30, 2020. There were no loans
classified as doubtful at June 30, 2021 or June 30, 2020.
9
Classified Assets. Federal regulations require that each insured savings institution classify its assets on a
regular basis and the amount of its valuation allowance is subject to review by Federal bank regulators. There are
three classifications for problem assets: “substandard”, “doubtful”, and “loss”. Substandard assets have one or more
defined weaknesses and are characterized by the distinct possibility that the insured institution will sustain some
loss, if the deficiencies are not corrected. Doubtful assets have the weaknesses of substandard assets with the
additional characteristic that the weaknesses make collection or liquidation in full on the basis of currently existing
facts, conditions, and values questionable, and there is a higher possibility of loss. An asset classified as loss is
considered uncollectible and of such little value that continuance as an asset of the institution is not warranted.
Another category designated “special mention” also must be established and maintained for assets which do not
currently expose an insured institution to a sufficient degree of risk to warrant classification as substandard,
doubtful, or loss. Assets classified as substandard or doubtful require the institution to establish general allowances
for loan losses. If an asset, or portion thereof, is classified as loss, the insured institution must either establish
specific allowances for loan losses in the amount of 100% of the portion of the asset classified loss, or charge-off
such amount. General loss allowances established to cover possible losses related to assets classified substandard or
doubtful may be included in determining an institution’s regulatory capital, while specific valuation allowances for
loan losses do not qualify as regulatory capital. Federal examiners may disagree with an insured institution’s
classifications and amounts reserved. At June 30, 2021, we had $2.8 million in classified assets. There were three
residential mortgage loans designated as special mention totaling $358,000 and one commercial loan designated as
special mention totaling $2.8 million. There was one residential loan for $167,000 and eight commercial real estate
loans totaling $2.7 million classified as substandard. There were no loans classified as doubtful or loss at June 30,
2021.
Allowance for Loan Losses. At June 30, 2021, our allowance for loan losses amounted to $4.1 million.
The allowance for loan losses is maintained at a level believed, to the best of our knowledge, to cover all known and
inherent losses in the portfolio, both probable and reasonable, to be estimated at each reporting date. The level of
allowance for loan losses is based on our 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 any underlying collateral, and prevailing conditions. We are primarily engaged in
originating single-family residential loans. Our management considers the deficiencies of all classified loans in
determining the amount of allowance for loan losses required at each reporting date. Our management analyzes the
probability of the correction of the substandard loans’ weaknesses and the extent of any known or inherent losses
that we might sustain on them. During the fiscal year 2021, we recorded a provision for loan losses of $1.8 million,
as compared to $1.9 million recorded for fiscal year 2020. The 2021 provision reflects our estimate to maintain the
allowance for loan losses at a level to cover probable losses inherent in the loan portfolio.
The provision for fiscal year 2021 reflects the risks associated with our commercial lending (both real
estate secured and non-real estate secured), as well as other risks in our portfolio. Total non-performing loans
decreased by approximately $5.2 million as of June 30, 2021 compared to June 30, 2020.
While management believes that it determines the size of the allowance based on the best information
available at the time, the allowance will need to be adjusted as circumstances change and assumptions are updated.
Future adjustments to the allowance could significantly affect net income.
CARES Act. Under the CARES Act, loans less than 30 days past due as of December 31, 2019 will be
considered current for COVID-19 modifications. Similarly, the Financial Accounting Standards Board has
confirmed that short-term modifications made on a good-faith basis in response to COVID-19 to loan customers
who were current prior to any relief will not be considered troubled debt restructurings.
10
The following table shows changes in our allowance for loan losses during the periods presented. We had
$2.0 million, $1.4 million, $586,000, $1.4 million and $30,000 of loan charge-offs during fiscal 2021, 2020, 2019,
2018 and 2017, respectively. Bad debt recoveries amounted to $202,000 during fiscal 2021.
2021
2020
June 30,
2019
2018
2017
(Dollars in thousands)
Total loans outstanding at end of period .............................. $341,260 $365,443
340,302
Average loans outstanding ...................................................
366,546
3,452
Allowance for loan losses, beginning of period ................... 4,081
1,891
Provision for loan losses ...................................................... 1,800
120
Recoveries ............................................................................
202
(1,382)
Charge-offs .......................................................................... (1,961)
Allowance for loan losses, end of period ..................... $ 4,122 $ 4,081
$327,760
326,994
3,425
600
13
(586)
$321,180
323,692
3,729
1,050
26
(1,380)
$316,697
312,132
2,845
900
14
(30)
$ 3,452
$ 3,425
$ 3,729
Allowance for loan losses as a percent of
non-performing loans ......................................................
Allowance for loan losses as a percent of
loans outstanding .............................................................
406.85%
65.42%
92.30%
183.57%
123.65%
1.21%
1.12%
1.05%
1.07%
1.18%
The following table shows how our allowance for loan losses is allocated by type of loan at each of the
dates indicated.
2021
2020
June 30,
2019
Loan
Category
as a %
of Total
Loans
Amount of
Allowance
Amount of
Allowance
Loan
Category
as a %
of Total
Loans
Loan
Category
as a %
of Total
Loans
Amount of
Allowance
(Dollars in thousands)
2018
2017
Loan
Category
as a %
of Total
Loans
Loan
Category
as a %
of Total
Loans
Amount of
Allowance
Amount of
Allowance
$894
28.60%
$966
29.59%
$1,017
36.29%
$1,166
37.76%
$1,822
39.57%
1,630
28.18
568
23.83
508
25.44
436
23.17
353
24.61
346
9.09
364
12.98
338
14.09
256
11.86
73
6.72
489
407
160
20.48
4.77
4.49
949
1,024
80
22.41
4.95
2.23
1,227
100
115
10.98
4.91
2.90
929
161
163
11.04
6.37
3.71
979
203
147
10.87
7.91
3.01
196
$4,122
4.39
100.00%
130
$4,081
4.01
100.00%
147
$3,452
5.39
100.00%
314
$3,425
6.09
100.00%
152
$3,729
7.31
100.00%
One-to-four
family residential ....
Commercial – real
estate secured .........
Multi-family
residential ..............
Commercial
business .................
Land ...........................
Construction ...............
Home equity loans
and lines of
credit and other
consumer ...............
Total ....................
11
Investment Securities
We have authority to invest in various types of securities, including mortgage-backed securities,
U.S. Treasury obligations, securities of various federal agencies and of state and municipal governments, certificates
of deposit at federally insured banks and savings institutions, certain bankers’ acceptances, and federal funds. Our
investment strategy is established by the board of directors.
The following table sets forth certain information relating to our investment securities portfolio at the dates
indicated.
Securities Held-to-Maturity:
Mortgage-backed securities…………..
Municipals ............................................
FNBB stock ..........................................
FHLB stock ..........................................
Total Securities Held-to-Maturity .....
Securities Available-for-Sale:
Mortgage-backed securities ..................
2021
June 30,
2020
2019
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
Amortized
Cost
Fair
Value
(In thousands)
$52,818
1,361
250
277
54,706
$52,699
1,382
250
277
54,608
$17,655
243
250
2,710
20,858
$18,672
247
250
2,710
21,879
$22,442
--
250
2,657
25,349
$22,625
--
250
2,657
25,532
29,201
29,550
40,902
42,060
41,629
41,655
Total Investment Securities ...........
$83,907
$84,158
$61,760
$63,939
$66,978
$67,187
The following table sets forth the amount of investment securities which contractually mature during each
of the periods indicated and the weighted average yields for each range of maturities at June 30, 2021. The amounts
reflect the fair value of our securities at June 30, 2021.
Amounts at June 30, 2021 which Mature in
One Year
or Less
Weighted
Average
Yield
Over One
Year
Through
Five Years
Bonds and other debt securities:
Mortgage-backed securities .....
Municipals ............................ …...
Equity securities(1):
FNBB stock ..............................
FHLB stock ..............................
$ --
--
--
--
--%
--
--
--
$ 5,371
240
--
--
Weighted
Average
Yield
Over Five
Through
Ten Years
Weighted
Average
Yield
Over
Ten Years
Weighted
Average
Yield
(Dollars in thousands)
1.91%
1.05%
$14,708
--
2.06%
--
$62,170
1,142
1.58%
2.97%
--
--
--
--
--
--
250
277
1.25%
1.12%
Total investment securities
and bank stock .........................
____________________
(1)
None of the listed equity securities has a stated maturity.
$ --
--%
$ 5,611
1.88%
$14,708
2.06%
$63,839
1.60%
Our investment in equity securities consists primarily of FHLB stock and shares of First National Bankers
Bankshares, Inc. (“FNBB”). Management monitors its investment portfolio to determine whether any investment
securities which have unrealized losses should be considered other than temporarily impaired.
Mortgage-backed securities represent a participation interest in a pool of one-to-four family or multi-family
mortgages. The mortgage originators use intermediaries (generally U.S. Government agencies and government-
sponsored enterprises) to pool and repackage the participation interests in the form of securities, with investors
receiving the principal and interest payments on the mortgages. Such U.S. Government agencies and government-
sponsored enterprises guarantee the payment of principal and interest to investors.
12
Mortgage-backed securities are typically issued with stated principal amounts, and the securities are backed
by pools of mortgages that have loans with interest rates that are within a range and have varying maturities. The
underlying pool of mortgages, i.e., fixed-rate or adjustable-rate, as well as prepayment risk, are passed on to the
certificate holder. The life of a mortgage-backed pass-through security approximates the life of the underlying
mortgages.
Our mortgage-backed securities consist of Ginnie Mae securities (“GNMA”), Freddie Mac securities
(“FHLMC”), and Fannie Mae securities (“FNMA”). Ginnie Mae is a government agency within the Department of
Housing and Urban Development, which is intended to help finance government-assisted housing programs. Ginnie
Mae securities are backed by loans insured by the Federal Housing Administration or guaranteed by the Veterans
Administration. The timely payment of principal and interest on Ginnie Mae securities is guaranteed by Ginnie Mae
and backed by the full faith and credit of the U.S. Government. Freddie Mac is a private corporation chartered by the
U.S. Government. Freddie Mac issues participation certificates backed principally by conventional mortgage loans.
Freddie Mac guarantees the timely payment of interest and the ultimate return of principal on participation
certificates. Fannie Mae is a private corporation chartered by the U.S. Congress with a mandate to establish a
secondary market for mortgage loans. Fannie Mae guarantees the timely payment of principal and interest on Fannie
Mae securities. Freddie Mac and Fannie Mae securities are not backed by the full faith and credit of the
U.S. Government. In September 2008, the Federal Housing Finance Agency was appointed as conservator of Fannie
Mae and Freddie Mac. The U.S. Department of the Treasury agreed to provide capital, as needed, to ensure that
Fannie Mae and Freddie Mac continue to provide liquidity to the housing and mortgage markets.
Mortgage-backed securities generally yield less than the loans which underlie such securities because of
their payment guarantees or credit enhancements, which offer nominal credit risk. In addition, mortgage-backed
securities are more liquid than individual mortgage loans and may be used to collateralize our borrowings or other
obligations.
The following table sets forth the composition of our mortgage-backed securities portfolio at fair value at
each of the dates indicated. The amounts reflect the fair value of our mortgage-backed securities at June 30, 2021,
2020 and 2019.
Fixed rate:
GNMA ...................................................................................................
FHLMC .................................................................................................
FNMA ...................................................................................................
Total fixed rate ...................................................................................
Adjustable rate:
GNMA ...................................................................................................
FHLMC .................................................................................................
FNMA ...................................................................................................
Total adjustable-rate ...........................................................................
Total mortgage-backed securities .......................................................
2021
$ 5,327
13,806
61,453
80,586
1,649
13
1
1,663
$82,249
June 30,
2020
(In thousands)
$ 3,338
5,139
49,395
57,872
2,840
19
1
2,860
$60,732
2019
$ 5,358
8,053
46,783
60,194
4,056
27
3
4,086
$64,280
13
Information regarding the contractual maturities and weighted average yield of our mortgage-backed
securities portfolio at June 30, 2021 is presented below. Due to repayments of the underlying loans, the actual
maturities of mortgage-backed securities generally are substantially less than the scheduled maturities. The amounts
reflect the fair value of our mortgage-backed securities at June 30, 2021.
Amounts at June 30, 2021 Which Mature in
One Year
or Less
Weighted
Average
Yield
Over One
through
Five Years
Weighted
Average
Yield
Over
Five Years
Weighted
Average
Yield
(In thousands)
$ --
--
--
--
--%
--
--
--%
$ 6
167
3,535
3,708
7.83%
1.72
2.55
2.52%
$ --
--
--
$ --
--%
--
--
--%
$ 1,649
13
1
1,663
0.55%
2.99
2.23
0.57%
$ 5,321
13,639
57,918
76,878
$ --
--
--
$ --
1.22%
1.31
1.73
1.62%
--%
--
--
--%
Fixed rate:
GNMA ...................................
FHLMC .................................
FNMA ...................................
Total fixed-rate ...................
Adjustable rate:
GNMA ...................................
FHLMC .................................
FNMA ...................................
Total adjustable rate ...........
Total ...................................
$ --
--%
$ 5,371
1.93%
$76,878
1.62%
The following table sets forth the purchases, sales, and principal repayments of our mortgage-backed
securities during the periods indicated.
Mortgage-backed securities at beginning of period .................................
Purchases .................................................................................................
Repayments .............................................................................................
Sales ........................................................................................................
Amortizations of premiums and discounts, net .......................................
$58,557
51,763
(28,157)
--
(144)
$64,070
21,253
(17,040)
(9,637)
(89)
2021
At or For the
Year Ended June 30,
2020
(Dollars in thousands)
2019
$56,689
18,496
(11,006)
--
(109)
Mortgage-backed securities at end of period ...........................................
$82,019
$58,557
$64,070
Weighted average yield at end of period .................................................
1.76%
2.24%
2.68%
Sources of Funds
General. Deposits are our primary source of funds for lending and other investment purposes. In addition
to deposits, principal and interest payments on loans and investment securities are a source of funds. Loan
repayments are a relatively stable source of funds, while deposit inflows and outflows are significantly influenced by
general interest rates and money market conditions. Borrowings may also be used on a short-term basis to
compensate for reductions in the availability of funds from other sources and on a longer-term basis for general
business purposes.
Deposits. We attract deposits principally from residents of Louisiana and particularly from Caddo and
Bossier Parishes. Deposit account terms vary, with the principal differences being the minimum balance required,
the time periods the funds must remain on deposit, and the interest rate. We utilize brokered certificates of deposit as
a component of our strategy for lowering the overall cost of funds. The brokered certificates of deposit are callable
by Home Federal Bank after twelve months. At June 30, 2021 and 2020, we had $10.7 million and $16.1 million,
respectively, in brokered certificates of deposit.
14
We establish interest rates paid, maturity terms, service fees, and withdrawal penalties on a periodic basis.
Management determines the rates and terms based on rates paid by competitors, the need for funds or liquidity,
growth goals, and federal regulations. We attempt to control the flow of deposits by pricing our accounts to remain
generally competitive with other financial institutions in the market area.
The following table shows the distribution of, and certain other information relating to, our deposits by type
of deposit, as of the dates indicated.
2021
Percent of
Total
Amount
Deposits Amount
June 30,
2020
Percent of
Total
Deposits
Amount
2019
Percent of
Total
Deposits
Certificate accounts:
0.00% - 0.99% ............................................ $ 37,756
1.00% - 1.99% ............................................ 30,588
2.00% - 2.99% ............................................ 39,037
3.00% - 3.99% ............................................ 1,628
7.45% $ 16,843
69,751
6.04
68,929
7.71
2,066
0.32
3.65%
15.14
14.96
0.45
$ 12,627
65,745
102,767
2,126
3.25%
16.93
26.48
0.55
(Dollars in thousands)
Total certificate accounts ....................... 109,009
21.52
157,589
34.20
183,265
47.21
Transaction accounts:
Passbook savings ........................................ 129,130
Non-interest-bearing demand accounts ........ 131,014
NOW accounts ............................................
49,262
Money market ............................................. 88,181
25.49
25.86
9.72
17.41
83,797
103,422
41,365
74,637
18.18
22.44
8.98
16.20
39,569
59,351
31,045
74,934
10.19
15.29
8.00
19.31
Total transaction accounts .....................
397,587
78.48
303,221
65.80
204,899
52.79
Total deposits ......................................... $506,596
100.00% $460,810
100.00%
$388,164
100.00%
The following table shows the average balance of each type of deposit and the average rate paid on each
type of deposit for the periods indicated.
2021
Year Ended June 30,
2020
2019
Average
Interest
Balance Expense
Average
Rate
Paid
Average Interest
Balance Expense
Average
Rate
Paid
Average
Interest
Balance Expense
Average
Rate
Paid
Passbook savings ..........
NOW accounts ..............
Money market ...............
Certificates of deposit ...
Total interest-bearing
deposits ....................
Non-Interest bearing
demand accounts.....
Total deposits ..........
(Dollars in thousands)
$108,592 $ 565
90
216
2,324
44,655
77,198
138,603
0.52%
0.20
0.28
1.68
$ 63,719 $ 700
176
727
3,442
33,206
74,190
167,666
1.10%
0.53
0.98
2.05
$ 35,449 $ 195
166
761
3,258
30,617
72,266
178,823
0.55%
0.54
1.05
1.82
369,048
3,195
0.87
338,781
5,045
1.49
317,155
4,380
1.38
$118,662 $ --
$487,710 $ 3,195
--% $ 73,562 $ --
0.66% $412,343 $ 5,045
--%
1.22%
$ 60,256 $ --
$377,411 $ 4,380
--%
1.16%
15
The following table shows our deposit flows during the periods indicated.
2021
Net deposits (withdrawals) ..................................................................................
Interest credited ...................................................................................................
Total increase in deposits ...............................................................................
$43,396
2,390
$45,786
Year Ended June 30,
2020
(In thousands)
$68,896
3,750
$72,646
2019
$24,473
3,431
$27,904
The following table presents, by various interest rate categories and maturities, the amount of certificates of
deposit at June 30, 2021.
Balance at June 30, 2021
Maturing in the 12 Months Ending June 30,
Certificates of Deposit
2022
2023
2024
Thereafter
Total
0.00% - 0.99% ...............................................
1.00% - 1.99% ...............................................
2.00% - 2.99% ...............................................
3.00% - 3.99% ...............................................
Total certificate accounts ...........................
$ 27,507
12,422
24,388
407
$ 64,723
$ 4,768
9,757
6,033
260
$ 20,818
(In thousands)
$ 1,332
4,443
8,125
961
$ 14,862
$ 4,149
3,966
491
--
$ 8,606
$ 37,756
30,588
39,037
1,628
$109,009
The following table shows the maturities of our certificates of deposit of $100,000 or more at June 30, 2021
by time remaining to maturity.
September 30, 2021 ..............................................................................................................
December 31, 2021 ................................................................................................................
March 31, 2022 ....................................................................................................................
June 30, 2022 ........................................................................................................................
After June 30, 2022 ..............................................................................................................
Total certificates of deposit with balances of $100,000 or more ...................................
Amount
Weighted
Average Rate
(Dollars in thousands)
$14,446
1.50%
15,288
7,204
10,401
30,168
$77,507
1.62
1.35
1.13
1.67
1.53%
The following table shows the maturities of our certificates of deposit in excess of the FDIC insurance limit
(generally, $250,000) at June 30, 2021 by time remaining to maturity.
September 30, 2021 ..............................................................................................................
December 31, 2021 ................................................................................................................
March 31, 2022 ....................................................................................................................
June 30, 2022 ........................................................................................................................
After June 30, 2022 ..............................................................................................................
Total certificates of deposit with balances of $250,000 or more ...................................
Amount
Weighted
Average Rate
(Dollars in thousands)
$ 7,232
1.23%
10,721
3,431
5,077
13,956
$40,417
1.88
1.42
1.16
1.60
1.54%
Borrowings. We may obtain advances from the Federal Home Loan Bank of Dallas upon the security of
the common stock we own in that bank and certain of our residential mortgage loans and mortgage-backed and other
investment securities, provided certain standards related to creditworthiness have been met. These advances are
made pursuant to several credit programs, each of which has its own interest rate and range of maturities. Federal
Home Loan Bank advances are generally available to meet seasonal and other withdrawals of deposit accounts and
to permit increased lending.
16
As of June 30, 2021, we were permitted to borrow up to an aggregate total of $173.5 million from the
Federal Home Loan Bank of Dallas. We had $867,000 and $1.1 million of Federal Home Loan Bank advances
outstanding at June 30, 2021 and 2020, respectively. Additionally, at June 30, 2021, Home Federal Bank was a
party to a Master Purchase Agreement with First National Bankers Bank whereby Home Federal Bank may
purchase Federal Funds from First National Bankers Bank in an amount not to exceed $20.4 million. There were no
amounts purchased under this agreement as of June 30, 2021. At June 30, 2021, Home Federal Bancorp had
available a $5.0 million line of credit agreement with First National Bankers Bank, maturing August 21, 2021. The
line is secured by Home Federal Bank’s common stock and bears interest at the Prime Rate, which is currently
3.25% per annum and subject to change when adjustments are made to Wall Street Journal Prime. At June 30, 2021,
the line had an outstanding balance of $2.4 million.
The following table shows certain information regarding our borrowings at or for the dates indicated:
At or For the Year
Ended June 30,
2021
2020
2019
(Dollars in thousands)
FHLB advances:
Average balance outstanding ................................................................... $ 923
1,060
Maximum amount outstanding at any month-end during the period ........
Balance outstanding at end of period .......................................................
867
Average interest rate during the period .................................................... 4.88%
Weighted average interest rate at end of period ....................................... 4.84%
$1,197
1,355
1,060
4.76%
4.78%
$ 4,697
11,614
1,355
3.04%
4.73%
At June 30, 2021, $35,000 of our borrowings were short-term (maturities of one year or less). Such short-
term borrowings had a weighted average interest rate of 4.84% at June 30, 2021.
The following table shows maturities of Federal Home Loan Bank advances at June 30, 2021 or the years
indicated:
Years Ending June 30,
2022 ......................................................................................................
2023 ......................................................................................................
2024 ......................................................................................................
2025 ......................................................................................................
2026 .......................................................................................................
Thereafter .............................................................................................
Total ...............................................................................................
Amount
(In thousands)
$ 35
832
--
--
--
--
$ 867
Subsidiaries
At June 30, 2021, the Company had one subsidiary, Home Federal Bank. The Bank’s only subsidiary at
such date was Metro Financial Services, Inc., which previously engaged in the sale of annuity contracts and does not
currently engage in a meaningful amount of business.
Employees
Home Federal Bank had 61 full-time employees and three part-time employees at June 30, 2021. None of
these employees are covered by a collective bargaining agreement, and we believe that we enjoy good relations with
our personnel.
17
REGULATION
Set forth below is a brief description of certain laws relating to the regulation of Home Federal Bancorp
and Home Federal Bank. This description does not purport to be complete and is qualified in its entirety by
reference to applicable laws and regulations.
General
Home Federal Bank, as a federally chartered savings bank, is subject to federal regulation and oversight by
the Office of the Comptroller of the Currency extending to all aspects of its operations. Home Federal Bank also is
subject to regulation and examination by the Federal Deposit Insurance Corporation, which insures the deposits of
Home Federal Bank to the maximum extent permitted by law, and requirements established by the Federal Reserve
Board. Federally chartered savings institutions are required to file periodic reports with the Office of the
Comptroller of the Currency and are subject to periodic examinations by the Office of the Comptroller of the
Currency and the Federal Deposit Insurance Corporation. The investment and lending authority of savings
institutions is prescribed by federal laws and regulations, and such institutions are prohibited from engaging in any
activities not permitted by such laws and regulations. Such regulation and supervision primarily are intended for the
protection of depositors and not for the purpose of protecting shareholders.
Federal law provides the federal banking regulators, including the Office of the Comptroller of the
Currency and Federal Deposit Insurance Corporation, with substantial enforcement powers. The Office of the
Comptroller of the Currency’s enforcement authority over all savings institutions includes, among other things, the
ability to assess civil money penalties, to issue cease and desist or removal orders, and to initiate injunctive actions.
In general, these enforcement actions may be initiated for violations of laws and regulations and unsafe or unsound
practices. Other actions or inactions may provide the basis for enforcement action, including misleading or untimely
reports filed with the Office of the Comptroller of the Currency. Any change in these laws and regulations, whether
by the Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, or Congress, could have a
material adverse impact on Home Federal Bancorp and Home Federal Bank and our operations.
Under the Dodd-Frank Wall Street Reform and Consumer Protection Act enacted in 2010 (the “Dodd-
Frank Act”), the powers of the Office of Thrift Supervision regarding Home Federal Bank and Home Federal
Bancorp transferred to other federal financial institution regulatory agencies on July 21, 2011. See “— 2010
Regulatory Reform.” As of the transfer date, all of the regulatory functions related to Home Federal Bank that were
under the jurisdiction of the Office of Thrift Supervision transferred to the Office of the Comptroller of the
Currency. In addition, as of that same date, all of the regulatory functions related to Home Federal Bancorp, as a
savings and loan holding company that were under the jurisdiction of the Office of Thrift Supervision, transferred to
the Federal Reserve Board.
2018 Regulatory Reform
In May 2018 the Economic Growth, Regulatory Relief and Consumer Protection Act (the “Act”), was
enacted to modify or remove certain financial reform rules and regulations, including some of those implemented
under the Dodd-Frank Act. While the Act maintains most of the regulatory structure established by the Dodd-Frank
Act, it amends certain aspects of the regulatory framework for small depository institutions with assets of less than
$10 billion and for large banks with assets of more than $50 billion. Many of these changes could result in
meaningful regulatory relief for community banks such as Home Federal Bank.
The Act, among other matters, expands the definition of qualified mortgages which may be held by a
financial institution and simplifies the regulatory capital rules for financial institutions and their holding companies
with total consolidated assets of less than $10 billion by instructing the federal banking regulators to establish a
single “Community Bank Leverage Ratio” of between 8 and 10 percent to replace the leverage and risk-based
regulatory capital ratios. The Act also expands the category of holding companies that may rely on the “Small Bank
Holding Company and Savings and Loan Holding Company Policy Statement” (the “SBHC Policy”) by raising the
maximum amount of assets a qualifying holding company may have from $1 billion to $3 billion. This expansion
also excludes such holding companies from the minimum capital requirements of the Dodd-Frank Act. In addition,
the Act includes regulatory relief for community banks regarding regulatory examination cycles, call reports, the
18
Volcker Rule (proprietary trading prohibitions), mortgage disclosures and risk weights for certain high-risk
commercial real estate loans.
It is difficult at this time to predict when or how any new standards under the Act will ultimately be applied
to us or what specific impact the Act and the implementing rules and regulations will have on community banks.
2010 Regulatory Reform
On July 21, 2010, the President signed into law the Dodd-Frank Act. The financial reform and consumer
protection act imposes restrictions and an expanded framework of regulatory oversight for financial institutions,
including depository institutions. In addition, the law changed the jurisdictions of existing bank regulatory agencies
and in particular transferred the regulation of federal savings associations from the Office of Thrift Supervision to
the Office of Comptroller of the Currency, effective July 21, 2011. Savings and loan holding companies are now
regulated by the Federal Reserve Board. The law also established an independent federal consumer protection
bureau within the Federal Reserve Board. The following discussion summarizes significant aspects of the law that
may affect Home Federal Bank and Home Federal Bancorp. Some of the regulations implementing these changes
and modifications made by the Act have not been promulgated, so we cannot determine the full impact on our
business and operations at this time.
The following aspects of the financial reform and consumer protection act are related to the operations of
Home Federal Bank:
The Office of Thrift Supervision merged into the Office of the Comptroller of the Currency, and the
authority of the other remaining bank regulatory agencies were restructured. The federal thrift charter
is preserved under the jurisdiction of the Office of the Comptroller of the Currency.
A new independent consumer financial protection bureau was established within the Federal Reserve
Board empowered to exercise broad regulatory, supervisory, and enforcement authority with respect to
both new and existing consumer financial protection laws. However, smaller financial institutions, like
Home Federal Bank, are subject to the supervision and enforcement of their primary federal banking
regulator with respect to the federal consumer financial protection laws.
Tier 1 capital treatment for “hybrid” capital items like trust preferred securities was eliminated subject
to various grandfathering and transition rules.
The prohibition on payment of interest on demand deposits was repealed.
State law is preempted only if it would have a discriminatory effect on a federal savings association or
is preempted by any other federal law. The Office of the Comptroller of the Currency must make a
preemption determination on a case-by-case basis with respect to a particular state law or other state
law with substantively equivalent terms.
Deposit insurance is permanently increased to $250,000.
Deposit insurance assessment base calculation equals the depository institution’s total assets minus the
sum of its average tangible equity during the assessment period.
The minimum reserve ratio of the Deposit Insurance Fund increased to 1.35 percent of estimated
annual insured deposits or assessment base; however, the Federal Deposit Insurance Corporation is
directed to “offset the effect” of the increased reserve ratio for insured depository institutions with total
consolidated assets of less than $10 billion.
19
The following aspects of the financial reform and consumer protection act are related to the operations of
Home Federal Bancorp:
Authority over savings and loan holding companies transferred to the Federal Reserve Board.
Leverage capital requirements and risk-based capital requirements applicable to depository institutions
and bank holding companies were extended to thrift holding companies. However, certain smaller
savings and loan holding companies, such as Home Federal Bancorp, are exempt from those capital
requirements.
The Federal Deposit Insurance Act was amended to direct federal regulators to require depository
institution holding companies to serve as a source of strength for their depository institution
subsidiaries.
The Securities and Exchange Commission is authorized to adopt rules requiring public companies to
make their proxy materials available to shareholders for nomination of their own candidates for
election to the board of directors.
Public companies are now required to provide their shareholders with a non-binding vote: (i) at least
once every three years on the compensation paid to executive officers and (ii) at least once every six
years on whether they should have a “say on pay” vote every one, two, or three years.
A separate, non-binding shareholder vote is now required regarding golden parachutes for named
executive officers when a shareholder vote takes place on mergers, acquisitions, dispositions, or other
transactions that would trigger the parachute payments.
Securities exchanges are now required to prohibit brokers from using their own discretion to vote
shares not beneficially owned by them for certain “significant” matters, which include votes on the
election of directors, executive compensation matters, and any other matter determined to be
significant.
Stock exchanges, which do not include the OTC Bulletin Board, will be prohibited from listing the
securities of any issuer that does not have a policy providing for (i) disclosure of its policy on incentive
compensation payable on the basis of financial information reportable under the securities laws and (ii)
the recovery from current or former executive officers following an accounting restatement triggered
by material noncompliance with securities law reporting requirements of any incentive compensation
paid erroneously during the three-year period preceding the date on which the restatement was required
that exceeds the amount that would have been paid on the basis of the restated financial information.
Disclosure in annual proxy materials will be required concerning the relationship between the
executive compensation paid and the financial performance of the issuer.
Item 402 of Regulation S-K will be amended to require companies to disclose the ratio of the Chief
Executive Officer’s annual total compensation to the median annual total compensation of all other
employees.
Smaller reporting companies are exempt from complying with the internal control auditor attestation
requirements of Section 404(b) of the Sarbanes-Oxley Act.
Regulation of Home Federal Bancorp
Home Federal Bancorp, a Louisiana corporation, is a registered savings and loan holding company within
the meaning of Section 10 of the Home Owners’ Loan Act and is subject to examination and supervision by the
Federal Reserve Board, as well as certain reporting requirements. While new capital requirements began to phase in
for savings and loan holding companies on January 1, 2015, Home Federal Bancorp is currently exempt from those
20
requirements. In addition, because Home Federal Bank is a subsidiary of a savings and loan holding company, it is
subject to certain restrictions in dealing with us and with other persons affiliated with the Bank.
Holding Company Acquisitions. Home Federal Bancorp is a savings and loan holding company under
the Home Owners’ Loan Act, as amended. Federal law generally prohibits a savings and loan holding company,
without prior approval of the Federal Reserve Board, from acquiring the ownership or control of any other savings
institution or savings and loan holding company, or all, or substantially all, of the assets, or more than 5% of the
voting shares of the savings institution or savings and loan holding company. These provisions also prohibit, among
other things, any director or officer of a savings and loan holding company, or any individual who owns or controls
more than 25% of the voting shares of such holding company, from acquiring control of any savings institution not a
subsidiary of such savings and loan holding company, unless the acquisition is approved by the Federal Reserve
Board.
The Federal Reserve Board may not approve any acquisition that would result in a multiple savings and
loan holding company controlling savings institutions in more than one state, subject to two exceptions: (i) the
approval of interstate supervisory acquisitions by savings and loan holding companies and (ii) the acquisition of a
savings institution in another state, if the laws of the state of the target savings institution specifically permit such
acquisitions. The states vary in the extent to which they permit interstate savings and loan holding company
acquisitions.
Holding Company Activities. Home Federal Bancorp operates as a unitary savings and loan holding
company and is permitted to engage only in the activities permitted for financial institution holding companies or for
multiple savings and loan holding companies. Multiple savings and loan holding companies are permitted to engage
in the following activities: (i) activities permitted for a bank holding company under section 4(c) of the Bank
Holding Company Act (unless the Federal Reserve Board prohibits or limits such 4(c) activities); (ii) furnishing or
performing management services for a subsidiary savings association; (iii) conducting any insurance agency or
escrow business; (iv) holding, managing, or liquidating assets owned by or acquired from a subsidiary savings
association; (v) holding or managing properties used or occupied by a subsidiary savings association; (vi) acting as
trustee under deeds of trust; or (vii) activities authorized by regulation as of March 5, 1987 to be engaged in by
multiple savings and loan holding companies. Under the 2010 legislation, savings and loan holding companies
became subject to statutory capital requirements. However, in May 2015, amendments to the SBHC Policy became
effective. The amendments made the SBHC Policy applicable to savings and loan holding companies, such as
Home Federal Bancorp, and increased the asset threshold to qualify to be subject to the provisions of the SBHC
Policy from $500 million to $1.0 billion. The 2018 regulatory reform increased the asset threshold to $3.0 billion.
Savings and loan holding companies that have total assets of $3.0 billion or less are subject to the SBHC Policy and
are not required to comply with the regulatory capital requirements set forth in the table below. Such treatment
continues until Home Federal Bancorp’s total assets exceed $3.0 billion or the Federal Reserve Board deems it to no
longer be a small savings and loan holding company.
While there are no specific restrictions on the payment of dividends or other capital distributions for
savings and loan holding companies, federal regulations do prescribe such restrictions on subsidiary savings
institutions, as described below. Home Federal Bank is required to notify the Federal Reserve Board 30 days before
declaring any dividend. In addition, the financial impact of a holding company on its subsidiary institution is a
matter that is evaluated by the Federal Reserve Board, and the agency has authority to order cessation of activities or
divestiture of subsidiaries deemed to pose a threat to the safety and soundness of the institution.
All savings associations’ subsidiaries of savings and loan holding companies are required to meet a
qualified thrift lender, or QTL, test to avoid certain restrictions on their operations. If the subsidiary savings
institution fails to meet the QTL, as discussed below, then the savings and loan holding company must register with
the Federal Reserve Board as a bank holding company, unless the savings institution requalifies as a QTL within one
year thereafter.
Federal Securities Laws. Home Federal Bancorp registered its common stock with the Securities and
Exchange Commission under Section 12(b) of the Securities Exchange Act of 1934. Home Federal Bancorp is
subject to the proxy and tender offer rules, insider trading reporting requirements and restrictions, and certain other
requirements under the Securities Exchange Act of 1934.
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The Sarbanes-Oxley Act. As a public company, Home Federal Bancorp is subject to the Sarbanes-Oxley
Act of 2002 which addresses, among other issues, corporate governance, auditing and accounting, executive
compensation, and enhanced and timely disclosure of corporate information. As directed by the Sarbanes-Oxley Act,
our principal executive officer and principal financial officer are required to certify that our quarterly and annual
reports do not contain any untrue statement of a material fact. The rules adopted by the Securities and Exchange
Commission under the Sarbanes-Oxley Act have several requirements, including having these officers certify that:
they are responsible for establishing, maintaining, and regularly evaluating the effectiveness of our internal control
over financial reporting; they have made certain disclosures to our auditors and the audit committee of the Board of
Directors about our internal control over financial reporting; and they have included information in our quarterly and
annual reports about their evaluation and whether there have been changes in our internal control over financial
reporting or in other factors that could materially affect internal control over financial reporting.
Volcker Rule Regulations
Regulations have been adopted by the federal banking agencies to implement the provisions of the Dodd-
Frank Act, commonly referred to as the Volcker Rule. The regulations contain prohibitions and restrictions on the
ability of financial institutions holding companies and their affiliates to engage in proprietary trading and to hold
certain interests in, or to have certain relationships with, various types of investment funds, including hedge funds
and private equity funds. However, federal regulations exclude from the Volcker Rule restrictions community banks
with $10 billion or less in total consolidated assets and total trading assets and liabilities of five percent or less of
total consolidated assets. Home Federal Bancorp qualifies for the exclusion from the Volcker Rule restrictions.
Regulation of Home Federal Bank
General. Home Federal Bank is subject to the regulation of the Office of the Comptroller of the Currency,
as its primary federal regulator, the Federal Deposit Insurance Corporation, as the insurer of its deposit accounts,
and, to a limited extent, the Federal Reserve Board.
Insurance of Accounts. The deposits of Home Federal Bank are insured to the maximum extent permitted
by the Deposit Insurance Fund and are backed by the full faith and credit of the U.S. Government. The 2010
financial institution reform legislation permanently increased deposit insurance on most accounts to $250,000. As
insurer, the Federal Deposit Insurance Corporation is authorized to conduct examinations of and to require reporting
by insured institutions. It also may prohibit any insured institution from engaging in any activity determined by
regulation or order to pose a serious threat to the Federal Deposit Insurance Corporation. The Federal Deposit
Insurance Corporation also has the authority to initiate enforcement actions against savings institutions after giving
the Office of the Comptroller of the Currency an opportunity to take such action.
The Dodd-Frank Act raises the minimum reserve ratio of the Deposit Insurance Fund from 1.15% to 1.35%
and requires the Federal Deposit Insurance Corporation to offset the effect of this increase on insured institutions
with assets of less than $10 billion (small institutions). In March 2016, the Federal Deposit Insurance Corporation
adopted a rule to accomplish this by imposing a surcharge on larger institutions commencing when the reserve ratio
reaches 1.15% and ending when it reaches 1.35%. The reserve ratio reached 1.15% effective as of June 30, 2016.
This surcharge period began effective July 1, 2016 and ended on September 30, 2018 when the reserve ratio reached
1.36%. Small institutions will receive credits for the portion of their regular assessments by 2.0 basis points that
contributed to growth in the reserve ratio between 1.15% and 1.35%. The credits applied to reduce regular
assessments by 2.0 basis points for quarters when the reserve ratio is at least 1.35. In 2020, the Federal Deposit
Insurance Corporation announced that all credits had been remitted and that the credit program had ended.
Effective July 1, 2016, the Federal Deposit Insurance Corporation adopted changes that eliminated its risk-
based premium system. Under the new premium system, the Federal Deposit Insurance Corporation assesses
deposit insurance premiums on the assessment base of a depository institution, which is its average total assets
reduced by the amount of its average tangible equity. For a small institution (one with assets of less than $10 billion)
that has been federally insured for at least five years, effective July 1, 2016, the initial base assessment rate ranges
from 3 to 30 basis points, based on the institution’s CAMELS composite and component ratings and certain
financial ratios; its leverage ratio; its ratio of net income before taxes to total assets; its ratio of nonperforming loans
and leases to gross assets; its ratio of other real estate owned to gross assets; its brokered deposits ratio (excluding
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reciprocal deposits if the institution is well capitalized and has a CAMELS composite rating of 1 or 2); its one year
asset growth ratio (which penalizes growth adjusted for mergers in excess of 10%); and its loan mix index (which
penalizes higher risk loans based on historical industry charge off rates). The initial base assessment rate is subject
to downward adjustment (not below 1.5%) based on the ratio of unsecured debt the institution has issued to its
assessment base and to upward adjustment (which can cause the rate to exceed 30 basis points) based on its holdings
of unsecured debt issued by other insured institutions. Institutions with assets of $10 billion or more are assessed
using a scorecard method.
In addition, through March 29, 2019, all institutions with deposits insured by the Federal Deposit Insurance
Corporation were required to pay assessments to fund interest payments on bonds issued by the Financing
Corporation, a mixed-ownership government corporation established to recapitalize the predecessor to the Deposit
Insurance Fund. The Financing Corporation bonds matured in 2019.
The Federal Deposit Insurance Corporation may terminate the deposit insurance of any insured depository
institution, including Home Federal Bank, if it determines after a hearing that the institution has engaged or is
engaging in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations, or has violated
any applicable law, regulation, order, or any condition imposed by an agreement with the Federal Deposit Insurance
Corporation. It also may suspend deposit insurance temporarily during the hearing process for the permanent
termination of insurance, if the institution has no tangible capital. If insurance of accounts is terminated, the
accounts at the institution at the time of the termination, less subsequent withdrawals, shall continue to be insured
for a period of six months to two years, as determined by the Federal Deposit Insurance Corporation. Management is
aware of no existing circumstances which would result in termination of Home Federal Bank’s deposit insurance.
Regulatory Capital Regulations
In July of 2013, the respective U.S. federal banking agencies issued final rules implementing Basel III and
the Dodd-Frank Act capital requirements to be fully-phased in on a global basis on January 1, 2019. The 2013
regulations establish a tangible common equity capital requirement, increase the minimum requirement for the
current Tier 1 risk-weighted asset (“RWA”) ratio, phase out certain kinds of intangibles treated as capital and certain
types of instruments, and change the risk weightings of certain assets used to determine required capital ratios.
Provisions of the Dodd-Frank Act generally require these capital rules to apply to savings and loan holding
companies and their savings association subsidiaries. The common equity Tier 1 capital component requires capital
of the highest quality – predominantly composed of retained earnings and common stock instruments. For
community banks, such as Home Federal Bank, the new capital rules require a common equity Tier 1 capital ratio of
4.5% and also increased the minimum Tier 1 capital ratio from 4.0% to 6.0%. In addition, in order to make capital
distributions and pay discretionary bonuses to executive officers without restriction, an institution must also
maintain greater than 2.5% in common equity attributable to a capital conservation buffer. The rules also increase
the risk weights for several categories of assets, including an increase from 100% to 150% for certain acquisition,
development, and construction loans and more than 90-day past due exposures. The capital rules maintain the
general structure of the prompt corrective action rules but incorporate the new common equity Tier 1 capital
requirement and the increase Tier 1 RWA requirement into the prompt corrective action framework.
Effective January 1, 2020, qualifying community banking organizations may elect to comply with a greater
than 9% community bank leverage ratio (the “CBLR”) requirement in lieu of the currently applicable requirements
for calculating and reporting risk-based capital ratios. The CBLR is equal to Tier 1 capital divided by average total
consolidated assets. In order to qualify for the CBLR election, a community bank must (i) have a leverage capital
ratio greater than 9 percent, (2) have less than $10 billion in average total consolidated assets, (3) not exceed certain
levels of off-balance sheet exposure and trading assets plus trading liabilities and (4) not be an advanced approaches
banking organization. A community bank that meets the above qualifications and elects to utilize the CBLR is
considered to have satisfied the risk-based and leverage capital requirements in the generally applicable capital rules
and is also considered to be “well capitalized” under the prompt corrective action rules.
Unless a community bank qualifies for and elects to comply with the CBLR beginning on January 1, 2020,
federally insured savings institutions are required to maintain the minimum levels of regulatory capital described
below. Current Office of the Comptroller of the Currency capital standards require savings institutions to satisfy a
tangible capital requirement, a common equity Tier 1 capital requirement, a leverage capital requirement and a risk-
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based capital requirement. The tangible capital must equal at least 1.5% of adjusted total assets. The common equity
Tier 1 capital component generally consists of retained earnings and common stock instruments and must equal at
least 4.5% of risk-weighted assets. Leverage capital, also known as “core” capital, must equal at least 3.0% of
adjusted total assets for the most highly rated savings associations. An additional cushion of at least 100 basis points
is required for all other savings associations, which effectively increases their minimum Tier 1 leverage ratio to
4.0% or more. Under the Office of the Comptroller of the Currency’s regulation, the most highly-rated banks are
those that the Office of the Comptroller of the Currency determines are strong associations that are not anticipating
or experiencing significant growth and have well-diversified risk, including no undue interest rate risk exposure,
excellent asset quality, high liquidity, and good earnings. Under the risk-based capital requested, “Total” capital (a
combination of core and “supplementary” capital) must equal at least 8.0% of “risk-weighted” assets. The Office of
the Comptroller of the Currency also is authorized to impose capital requirements in excess of these standards on
individual institutions on a case-by-case basis.
Core capital generally consists of common stockholders’ equity (including retained earnings). Tangible
capital generally equals core capital minus intangible assets, with only a limited exception for purchased mortgage
servicing rights. Home Federal Bank had no intangible assets at June 30, 2021. Both core and tangible capital are
further reduced by an amount equal to a savings institution’s debt and equity investments in subsidiaries engaged in
activities not permissible to national banks (other than subsidiaries engaged in activities undertaken as agent for
customers or in mortgage banking activities and subsidiary depository institutions or their holding companies).
These adjustments do not affect Home Federal Bank’s regulatory capital.
In determining compliance with the risk-based capital requirement, a savings institution is allowed to
include both core capital and supplementary capital in its total capital, provided that the amount of supplementary
capital included does not exceed the savings institution’s core capital. Supplementary capital generally consists of
general allowances for loan losses up to a maximum of 1.25% of risk-weighted assets together with certain other
items. In determining the required amount of risk-based capital, total assets, including certain off-balance sheet
items, are multiplied by a risk weight based on the risks inherent in the type of assets. The risk weights range from
0% for cash and securities issued by the U.S. Government, or unconditionally backed by the full faith and credit of
the U.S. Government, to 100% for loans (other than qualifying residential loans weighted at 80%) and repossessed
assets.
Savings institutions must value securities available for sale at amortized cost for regulatory capital
purposes. This means that in computing regulatory capital, savings institutions should add back any unrealized
losses and deduct any unrealized gains, net of income taxes, on debt securities reported as a separate component of
capital as defined by generally accepted accounting principles.
At June 30, 2021, Home Federal Bank exceeded all of its regulatory capital requirements with tangible,
common equity Tier 1, core, and risk-based capital ratios of 9.57%, 16.63%, 9.57% and 17.88%, respectively.
Any savings institution that fails any of the capital requirements is subject to possible enforcement actions
by the Office of the Comptroller of the Currency or the Federal Deposit Insurance Corporation. Such actions could
include a capital directive, a cease and desist order, civil money penalties, establishment of restrictions on the
institution’s operations, termination of federal deposit insurance, and the appointment of a conservator or receiver.
The Office of the Comptroller of the Currency’s capital regulation provides that such actions, through enforcement
proceedings or otherwise, could require one or more of a variety of corrective actions.
Prompt Corrective Action. The following table shows the amount of capital associated with the different
capital categories set forth in the prompt corrective action regulations.
Capital Category
Well capitalized
Adequately capitalized
Undercapitalized
Significantly undercapitalized
Total Risk-
Based
Capital
10% or more
8% or more
Less than 8%
Less than 6%
Tier 1 Risk-
Based
Capital
8% or more
6% or more
Less than 6%
Less than 4%
Common
Equity Tier 1
Capital
6.5% or more
4.5% or more
Less than 4.5%
Less than 3%
Tier 1
Leverage
Capital
5% or more
4% or more
Less than 4%
Less than 3%
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In addition, an institution is “critically undercapitalized” if it has a ratio of tangible equity to total assets
that is equal to or less than 2.0%. Under specified circumstances, a federal banking agency may reclassify a well-
capitalized institution as adequately capitalized and may require an adequately capitalized institution or an
undercapitalized institution to comply with supervisory actions as if it were in the next lower category (except that
the Office of the Comptroller of the Currency may not reclassify a significantly undercapitalized institution as
critically undercapitalized).
An institution, generally, must file a written capital restoration plan which meets specified requirements
within 45 days of the date that the institution receives notice or is deemed to have notice that it is undercapitalized,
significantly undercapitalized, or critically undercapitalized. A federal banking agency must provide the institution
with written notice of approval or disapproval within 60 days after receiving a capital restoration plan, subject to
extensions by the agency. An institution which is required to submit a capital restoration plan must concurrently
submit a performance guaranty by each company that controls the institution. In addition, undercapitalized
institutions are subject to various regulatory restrictions, and the appropriate federal banking agency also may take
any number of discretionary supervisory actions.
At June 30, 2021, Home Federal Bank was deemed a well-capitalized institution for purposes of the prompt
corrective action regulations and as such is not subject to the above mentioned restrictions.
Capital Distributions. Office of the Comptroller of the Currency regulations govern capital distributions
by savings institutions, which include cash dividends, stock repurchases, and other transactions charged to the
capital account of a savings institution to make capital distributions. A savings institution must file an application
for Office of the Comptroller of the Currency approval of the capital distribution if either (i) the total capital
distributions for the applicable calendar year exceed the sum of the institution’s net income for that year to date plus
the institution’s retained net income for the preceding two years, (ii) the institution would not be at least adequately
capitalized following the distribution, (iii) the distribution would violate any applicable statute, regulation,
agreement, or Office of the Comptroller of the Currency-imposed condition, or (iv) the institution is not eligible for
expedited treatment of its filings. If an application is not required to be filed, savings institutions must still file a
notice with the Office of the Comptroller of the Currency at least 30 days before the board of directors declares a
dividend or approves a capital distribution if either (i) the institution would not be well-capitalized following the
distribution; (ii) the proposed distribution would reduce the amount or retire any part of our common or preferred
stock or retire any part of a debt instrument included in our regulatory capital, or (iii) the savings institution is a
subsidiary of a savings and loan holding company, and the proposed capital distribution is not a cash dividend. If a
savings institution, such as Home Federal Bank, that is the subsidiary of a savings and loan holding company has
filed a notice with the Federal Reserve Board for a cash dividend and is not required to file an application or notice
with the Office of the Comptroller of the Currency for any of the reasons described above, then the savings
institution is only required to provide an informational copy to the Office of the Comptroller of the Currency of the
notice filed with the Federal Reserve Board at the same time that it is filed with the Federal Reserve Board.
An institution that either before or after a proposed capital distribution fails to meet its then applicable
minimum capital requirement or that has been notified that it needs more than normal supervision may not make any
capital distributions without the prior written approval of the Office of the Comptroller of the Currency. In addition,
the Office of the Comptroller of the Currency may prohibit a proposed capital distribution, which would otherwise
be permitted by Office of the Comptroller of the Currency regulations, if the Office of the Comptroller of the
Currency determines that such distribution would constitute an unsafe or unsound practice.
Under federal rules, an insured depository institution may not pay any dividend, if payment would cause it
to become undercapitalized, or if it is already undercapitalized. In addition, federal regulators have the authority to
restrict or prohibit the payment of dividends for safety and soundness reasons. The Federal Deposit Insurance
Corporation also prohibits an insured depository institution from paying dividends on its capital stock or interest on
its capital notes or debentures (if such interest is required to be paid only out of net profits) or distributing any of its
capital assets while it remains in default in the payment of any assessment due the Federal Deposit Insurance
Corporation. Home Federal Bank is currently not in default in any assessment payment to the Federal Deposit
Insurance Corporation.
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Qualified Thrift Lender Test. All savings institution subsidiaries of savings and loan holding companies
are required to meet a qualified thrift lender, or QTL, test to avoid certain restrictions on their operations. A savings
institution can comply with the QTL test by either qualifying as a domestic building and loan association as defined
in the Internal Revenue Code or meeting the Office of the Comptroller of the Currency QTL test. Currently, the
Office of the Comptroller of the Currency QTL test requires that 65% of an institution’s “portfolio assets” (as
defined) consist of certain housing and consumer-related assets on a monthly average basis in nine out of every
12 months. To be a qualified thrift lender under the IRS test, the savings institution must meet a “business operations
test” and a “60 percent assets test,” each defined in the Internal Revenue Code.
If a savings association fails to remain a QTL, it is immediately prohibited from the following:
Making any new investments or engaging in any new activity not allowed for both a national bank and
a savings association;
Establishing any new branch office unless allowable for a national bank; and
Paying dividends unless allowable for a national bank and necessary to meet the obligations of its
holding company.
Any company that controls a savings institution that is not a qualified thrift lender must register as a bank
holding company within one year of the savings institution’s failure to meet the QTL test. Three years from the date
a savings association should have become or ceases to be a QTL, the institution must dispose of any investment or
not engage in any activity unless the investment or activity is allowed for both a national bank and a savings
association. A savings institution not in compliance with the QTL test is also subject to an enforcement action for
violation of the Home Owners’ Loan Act, as amended.
At June 30, 2021, Home Federal Bank believes that it meets the requirements of the QTL test.
Community Reinvestment Act. All federal savings associations have a responsibility under the
Community Reinvestment Act and related regulations to help meet the credit needs of their communities, including
low- and moderate-income neighborhoods. An institution’s failure to comply with the provisions of the Community
Reinvestment Act could result in restrictions on its activities. Home Federal Bank received a “satisfactory”
Community Reinvestment Act rating in its most recently completed examination.
Limitations on Transactions with Affiliates. Transactions between a savings association and any affiliate
are governed by Sections 23A and 23B of the Federal Reserve Act as made applicable to savings associations by
Section 11 of the Home Owners’ Loan Act. An affiliate of a savings association is any company or entity which
controls the savings association or that is controlled by a company that controls the savings association. In a holding
company context, the holding company of a savings association (such as Home Federal Bancorp) and any
companies which are controlled by such holding company are affiliates of the savings association. Generally,
Section 23A limits the extent to which the savings association or its subsidiaries may engage in “covered
transactions” with any one affiliate to an amount equal to 10% of such association’s capital stock and surplus and
contains an aggregate limit on all such transactions with all affiliates to an amount equal to 20% of such capital
stock and surplus. Section 23B applies to “covered transactions” as well as certain other transactions and requires
that all transactions be on terms substantially the same, or at least as favorable, to the savings association as those
provided to a non-affiliate. The term “covered transaction” includes the making of loans to, purchase of assets from,
and issuance of a guarantee to an affiliate and similar transactions. Section 23B transactions also include the
provision of services and the sale of assets by a savings association to an affiliate. In addition to the restrictions
imposed by Sections 23A and 23B, a savings association is prohibited from (i) making a loan or other extension of
credit to an affiliate, except for any affiliate which engages only in certain activities which are permissible for bank
holding companies, or (ii) purchasing or investing in any stocks, bonds, debentures, notes, or similar obligations of
any affiliate, except for affiliates which are subsidiaries of the savings association.
In addition, Sections 22(g) and (h) of the Federal Reserve Act as made applicable to savings associations
by Section 11 of the Home Owners’ Loan Act place restrictions on loans to executive officers, directors, and
principal shareholders of the savings association and its affiliates. Under Section 22(h), loans to a director, an
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executive officer, and to a greater than 10% shareholder of a savings association, and certain affiliated interests of
either, may not exceed, together with all other outstanding loans to such person and affiliated interests, the savings
association’s loans to one borrower limit (generally equal to 15% of the association’s unimpaired capital and
surplus). Section 22(h) also requires that loans to directors, executive officers, and principal shareholders be made
on terms substantially the same as offered in comparable transactions to other persons unless the loans are made
pursuant to a benefit or compensation program that (i) is widely available to employees of the savings association
and (ii) does not give preference to any director, executive officer, or principal shareholder, or certain affiliated
interests of either, over other employees of the savings association. Section 22(h) also requires prior board approval
for certain loans. In addition, the aggregate amount of extensions of credit by a savings association to all insiders
cannot exceed the savings association’s unimpaired capital and surplus. Furthermore, Section 22(g) places additional
restrictions on loans to executive officers. Home Federal Bank currently is subject to Section 22(g) and (h) of the
Federal Reserve Act and at June 30, 2021, was in compliance with the above restrictions.
Incentive Compensation. Guidelines adopted by the federal banking agencies pursuant to the FDIA
prohibit excessive compensation as an unsafe and unsound practice and describe compensation as excessive when
the amounts paid are unreasonable or disproportionate to the services performed by an executive officer, employee,
director, or principal stockholder.
In June 2010, the federal banking agencies issued comprehensive guidance on incentive compensation
policies (the “Incentive Compensation Guidance”) intended to ensure that the incentive compensation policies of
banking organizations do not undermine the safety and soundness of such organizations by encouraging excessive
risk-taking. The Incentive Compensation Guidance, which covers all employees that have the ability to materially
affect the risk profile of an organization, either individually or as part of a group, is based upon the key principles
that a banking organization’s incentive compensation arrangements should (i) provide incentives that do not
encourage risk-taking beyond the organization’s ability to effectively identify and manage risks, (ii) be compatible
with effective internal controls and risk management, and (iii) be supported by strong corporate governance,
including active and effective oversight by the organization’s board of directors. Any deficiencies in compensation
practices that are identified may be incorporated into the organization’s supervisory ratings, which can affect its
ability to make acquisitions or perform other actions. The Incentive Compensation Guidance provides that
enforcement actions may be taken against a banking organization if its incentive compensation arrangements or
related risk-management control or governance processes pose a risk to the organization’s safety and soundness and
the organization is not taking prompt and effective measures to correct the deficiencies.
In April 2011, the federal banking agencies and the Securities and Exchange Commission jointly published
proposed rulemaking designed to implement provisions of the Dodd-Frank Act prohibiting incentive compensation
arrangements that would encourage inappropriate risk-taking. Those proposed regulations apply only to a financial
institution or its holding company with $1 billion or more of assets. In June 2016, the federal banking agencies and
the Securities Exchange Commission published a new proposed rule to revise the 2011 proposal and to implement
those provisions.
The scope and content of the U.S. banking regulators’ policies on incentive compensation are continuing to
develop. It cannot be determined at this time whether a final rule will be adopted, and whether compliance with such
a final rule will adversely affect the ability of Home Federal Bancorp and Home Federal Bank to hire, retain, and
motivate their key employees.
Regulation of Residential Mortgage Loan Originators. Under the final rule adopted by the federal bank
regulatory authorities pursuant to the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, residential
mortgage loan originators employed by financial institutions, such as Home Federal Bank, must register with the
Nationwide Mortgage Licensing System and Registry, obtain a unique identifier from the registry, and maintain
their registration. Any residential mortgage loan originator who fails to satisfy these requirements will not be
permitted to originate residential mortgage loans.
Anti-Money Laundering. All financial institutions, including savings associations, are subject to federal
laws that are designed to prevent the use of the U.S. financial system to fund terrorist activities. Financial
institutions operating in the United States must develop anti-money laundering compliance programs, due diligence
policies, and controls to ensure the detection and reporting of money laundering. Such compliance programs are
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intended to supplement compliance requirements, also applicable to financial institutions, under the Bank Secrecy
Act and the Office of Foreign Assets Control Regulations. Home Federal Bank has established policies and
procedures to ensure compliance with these provisions.
Federal Home Loan Bank System. Home Federal Bank is a member of the Federal Home Loan Bank of
Dallas, which is one of 11 regional Federal Home Loan Banks that administer a home financing credit function
primarily for its members. Each Federal Home Loan Bank serves as a reserve or central bank for its members within
its assigned region. The Federal Home Loan Bank of Dallas is funded primarily from proceeds derived from the sale
of consolidated obligations of the Federal Home Loan Bank System. It makes loans to members (i.e., advances) in
accordance with policies and procedures established by the board of directors of the Federal Home Loan Bank. At
June 30, 2021, Home Federal Bank had $867,000 of Federal Home Loan Bank advances and $173.5 million
available on its credit line with the Federal Home Loan Bank.
As a member, Home Federal Bank is required to purchase and maintain stock in the Federal Home Loan
Bank of Dallas in an amount equal to 0.038% of its total assets. At June 30, 2021, Home Federal Bank had
$276,600 in Federal Home Loan Bank stock, which was in compliance with the applicable requirement.
The Federal Home Loan Banks are required to provide funds for the resolution of troubled savings
institutions and to contribute to affordable housing programs through direct loans or interest subsidies on advances
targeted for community investment and low- and moderate-income housing projects. These contributions have
adversely affected the level of Federal Home Loan Bank dividends paid in the past and could do so in the future.
These contributions also could have an adverse effect on the value of Federal Home Loan Bank stock in the future.
Federal Reserve System. The Federal Reserve Board requires all depository institutions to maintain
reserves against their transaction accounts (primarily NOW and Super NOW checking accounts) and non-personal
time deposits. The required reserves must be maintained in the form of vault cash or an account at a Federal Reserve
Bank. At June 30, 2021, Home Federal Bank had met its reserve requirement.
Federal Taxation
TAXATION
General. Home Federal Bancorp and Home Federal Bank are subject to federal income taxation in the
same general manner as other corporations with some exceptions listed below. The following discussion of federal
and state income taxation is only intended to summarize certain pertinent income tax matters and is not a
comprehensive description of the applicable tax rules. Home Federal Bank’s tax returns have not been audited
during the past five years.
Method of Accounting. For federal income tax purposes, Home Federal Bank reports income and
expenses on the accrual method of accounting and used a June 30 tax year in 2021 for filing its federal income tax
return.
Bad Debt Reserves. The Small Business Job Protection Act of 1996 eliminated the use of the reserve
method of accounting for bad debt reserves by savings associations, effective for taxable years beginning after 1995.
Prior to that time, Home Federal Bank was permitted to establish a reserve for bad debts and to make additions to
the reserve. These additions could, within specified formula limits, be deducted in arriving at taxable income. As a
result of the Small Business Job Protection Act of 1996, savings associations must use the experience method in
computing their bad debt deduction beginning with their 1996 federal tax return. In addition, federal legislation
required the recapture over a six year period of the excess of tax bad debt reserves at December 31, 1995 over those
established as of December 31, 1987.
Taxable Distributions and Recapture. Prior to the Small Business Job Protection Act of 1996, bad debt
reserves created prior to January 1, 1988 were subject to recapture into taxable income if Home Federal Bank failed
to meet certain thrift asset and definitional tests. New federal legislation eliminated these savings association related
recapture rules. However, under current law, pre-1988 reserves remain subject to recapture should Home Federal
Bank make certain non-dividend distributions or cease to maintain a bank charter.
28
At June 30, 2021, the total federal pre-1988 reserve was approximately $3.3 million. The reserve reflects
the cumulative effects of federal tax deductions by Home Federal Bank for which no federal income tax provisions
have been made.
Alternative Minimum Tax. The Internal Revenue Code imposes an alternative minimum tax at a rate of
20% on a base of regular taxable income plus certain tax preferences. The alternative minimum tax is payable to the
extent such alternative minimum tax income is in excess of the regular income tax. Net operating losses, of which
Home Federal Bank has none, can offset no more than 90% of alternative minimum taxable income. Certain
payments of alternative minimum tax may be used as credits against regular tax liabilities in future years. Home
Federal Bank has not been subject to the alternative minimum tax or any such amounts available as credits for
carryover.
Corporate Dividends-Received Deduction. Home Federal Bancorp may exclude from its income 100%
of dividends received from Home Federal Bank as a member of the same affiliated group of corporations. The
corporate dividends received deduction is 80% in the case of dividends received from corporations which a
corporate recipient owns less than 80% but at least 20% of the distribution corporation. Corporations which own less
than 20% of the stock of a corporation distributing a dividend may deduct only 70% of dividends received.
State and Local Taxation
Home Federal Bancorp is subject to the Louisiana Corporation Income Tax based on our Louisiana taxable
income. The Corporation Income Tax applies at graduated rates from 4% upon the first $25,000 of Louisiana taxable
income to 8% on all Louisiana taxable income in excess of $200,000. For these purposes, “Louisiana taxable
income” means net income which is earned by us within or derived from sources within the State of Louisiana, after
adjustments permitted under Louisiana law, including a federal income tax deduction. In addition, Home Federal
Bank is subject to the Louisiana Shares Tax which is imposed on the assessed value of a company’s stock. The
formula for deriving the assessed value is to calculate 15% of the sum of:
(a) 20% of our capitalized earnings, plus
(b) 80% of our taxable stockholders’ equity, minus
(c) 50% of our real and personal property assessment.
Various items may also be subtracted in calculating a company’s capitalized earnings.
Item 1A. Risk Factors
Not applicable.
Item 1B. Unresolved Staff Comments
Not applicable.
29
Item 2. Properties
We currently conduct business from five full-service banking offices located in Shreveport, Louisiana and
two full-service banking offices located in Bossier City, Louisiana. The following table sets forth certain
information, as of June 30, 2021, relating to Home Federal Bank’s offices, one property acquired for a future branch
office and one property acquired for potential future administrative offices which is presently vacant.
Description/Address
Building (Home Office)
Leased/Owned
Net Book
Value
of Property
Amount of
Deposits
222 Florida Street, Shreveport, LA .....................................
Owned
$1,516
$ --
Building/ATM (Market Street Branch)
624 Market Street, Shreveport, LA ....................................
Owned
782
99,095
Building/ATM (Youree Drive Branch)
6363 Youree Drive, Shreveport, LA ..................................
Owned (1)
695
155,617
Building/ATM (Southern Hills Branch)
9449 Mansfield Road, Shreveport, LA ..............................
Owned
1,991
74,863
Building/ATM (Viking Drive Branch)
2555 Viking Drive, Bossier City, LA ................................
Owned
2,317
58,061
Building/ATM (Stockwell Branch)
7964 E. Texas Street, Bossier City, LA ..............................
Owned
1,601
41,664
Building/ATM (Northwood Branch)
5841 North Market Street, Shreveport, LA ........................
Owned
1,573
36,853
Building/ATM (Pierremont Road Branch)
925 Pierremont Road, Shreveport, LA ...............................
Owned
2,235
40,443
Building (2)
614 Market Street, Shreveport, LA .....................................
Owned
353
--
Huntington Branch (Expected Opening in November 2021)
6903 Pines Road, Shreveport, LA ...................................
Owned
$ 626
$ --
____________________
(1) The building is owned but the land is subject to an operating lease which was renewed effective March 15, 2018 for a ten-
year period.
(2) The building is vacant and available to serve as potential future administrative offices and storage.
Item 3. Legal Proceedings
Home Federal Bancorp and Home Federal Bank are not involved in any pending legal proceedings other
than nonmaterial legal proceedings occurring in the ordinary course of business.
Item 4. Mine Safety Disclosures
Not applicable.
30
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
(a)
Home Federal Bancorp’s common stock is traded on the Nasdaq Capital Market under the symbol
“HFBL.” At September 21, 2021, Home Federal Bancorp had 191 shareholders of record. The number of
shareholders does not reflect the number of persons or entities who may hold stock in nominee or “street” name
through brokerage firms or others.
(b)
(c)
Not applicable.
Purchases of Equity Securities.
The Company’s repurchases of its common stock made during the quarter ended June 30, 2021 are set forth
in the table below, including stock-for-stock option exercises:
Average
Price
Paid per
Share
$16.00
16.50
17.50
$16.60
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
6,000
8,400
5,000
19,400
Maximum
Number of Shares
that May Yet Be
Purchased Under
the Plans or
Programs (a)
148,000
139,600
134,600
134,000
Total Number
of Shares
Purchased
6,000
8,400
5,000
19,400
Period
April 1, 2021 – April 30, 2021
May 1, 2021 – May 31, 2021
June 1, 2021 – June 30, 2021
Total
____________________________
Notes to this table:
(a) On November 18, 2020, the Company announced that its Board of Directors approved a tenth stock repurchase program for
the repurchase of up to 170,000 shares (split adjusted), or approximately 5.0% of its then outstanding shares of common
stock. The repurchase program does not have an expiration date.
31
Item 6. Selected Financial Data
Set forth below is selected consolidated financial and other data of Home Federal Bancorp. The
information at or for the years ended June 30, 2021 and 2020 is derived in part from the audited financial statements
that appear in this Form 10-K. The information at or for the years ended June 30, 2019, 2018 and 2017 is also
derived from audited financial statements that do not appear in this Form 10-K.
Selected Financial and Other Data:
Total assets ..........................................................................
Cash and cash equivalents ...................................................
Securities available for sale .................................................
Securities held to maturity ...................................................
Loans held-for-sale ..............................................................
Loans receivable, net ...........................................................
Deposits ...............................................................................
Federal Home Loan Bank advances ....................................
Total Stockholders’ equity ..................................................
At June 30,
2021
2020
2019
2018
2017
(In thousands)
$565,731
104,405
29,550
54,706
14,427
336,394
506,596
867
52,725
$518,220
54,871
42,060
20,858
14,798
359,927
460,810
1,060
50,535
$442,453
18,108
41,655
25,349
8,608
324,134
388,164
1,355
50,342
$421,650
15,867
29,324
28,888
6,762
317,493
360,260
11,637
47,037
$426,606
11,905
36,935
28,357
13,631
312,722
329,045
48,907
46,246
2021
As of or for the Year Ended June 30,
2019
(Dollars in thousands, except per share amounts)
2018
2020
$20,336
5,154
15,182
1,891
13,291
3,899
12,383
4,807
957
$ 3,850
$19,846
4,532
15,314
600
14,714
2,385
11,073
6,026
1,283
$ 4,743
$18,423
3,495
14,928
1,050
13,878
2,988
11,046
5,820
2,252
$ 3,568
2017
$16,892
2,803
14,089
900
13,189
3,893
11,672
5,410
1,758
$ 3,652
$ 1.15
$ 1.07
$ 1.34
$ 1.25
$ 0.99
$ 0.94
$ 1.01
$ 0.96
4.64%
4.90% 4.69%
4.62%
1.51
3.13
3.46
1.41
3.49
3.78
1.11
3.58
3.80
0.91
3.71
3.85
128.57
125.65
124.67
119.41
107.33
2.65
64.89
0.83
7.74
10.66
29.67
132.88
2.56
62.56
1.10
9.82
11.15
22.18
125.64
2.64
61.65
0.85
7.61
11.18
25.90
113.00
2.92
64.91
0.91
8.14
11.16
19.31
(Footnotes on following page)
Selected Operating Data:
Total interest income ...........................................................
Total interest expense ..........................................................
Net interest income ..............................................................
Provision for loan losses ......................................................
Net interest income after provision for loan losses ..............
Total non-interest income ....................................................
Total non-interest expense ...................................................
Income before income tax expense .....................................
Income tax expense .............................................................
Net income ..........................................................................
Earnings per share of common stock:
Basic(5) ..........................................................................
$ 1.66
Diluted(5) ....................................................................... $ 1.57
$20,245
3,304
16,941
1,800
15,141
5,452
13,783
6,810
1,445
$ 5,365
3.96%
Selected Operating Ratios(1):
Average yield on interest-earning assets ..............................
Average rate on interest-bearing liabilities ...........................
Average interest rate spread(2) .............................................
Net interest margin(2) ..........................................................
Average interest-earning assets to average
interest-bearing liabilities ................................................
Net interest income after provision for loan losses
to non-interest expense ....................................................
Total non-interest expense to average assets ........................ 2.53
61.55
Efficiency ratio(3) ................................................................
0.98
Return on average assets ......................................................
10.45
Return on average equity ......................................................
9.42
Average equity to average assets ..........................................
20.91
Dividend payout ratio ...........................................................
0.89
3.07
3.31
137.46
109.85
32
Selected Quality Ratios(4):
Non-performing loans as a percent of
loans receivable, net ...................................................
Non-performing assets as a percent of total assets ...........
Allowance for loan losses as a percent of total
loans receivable ..........................................................
Net charge-offs to average loans receivable .....................
Allowance for loan losses as a percent of
2021
0.30%
0.25
1.21
0.48
As of or for the Year Ended June 30,
2018
2019
2020
2017
1.73%
1.39
1.12
0.37
1.15%
1.15
1.05
0.13
0.58%
0.72
0.96%
0.83
1.07
0.43
1.18
0.01
non-performing loans .................................................
406.85
65.42
92.30
183.57
123.65
Bank Capital Ratios(4):
Tangible capital ratio ........................................................
Core capital ratio ..............................................................
Total capital ratio ..............................................................
Other Data:
Offices (branch and home) ...............................................
Employees (full-time) .......................................................
9.57%
9.57
17.88
8
61
10.21%
10.21
17.63
11.37%
11.37
17.64
11.36%
11.06%
11.36
17.84
11.06
17.39
8
59
8
54
7
54
7
60
__________________
(1)
With the exception of end of period ratios, all ratios are based on average monthly balances during the indicated
periods.
Average interest rate spread represents the difference between the average yield on interest-earning assets and the
average rate paid on interest-bearing liabilities, and net interest margin represents net interest income as a percentage
of average interest-earning assets.
The efficiency ratio represents the ratio of non-interest expense divided by the sum of net interest income and non-
interest income.
Asset quality ratios and capital ratios are end of period ratios, except for net charge-offs to average loans receivable.
Share and per share amounts have been restated for the 2-for-1 stock split in March 2021.
(2)
(3)
(4)
(5)
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
General
Our profitability depends primarily on our net interest income, which is the difference between interest and
dividend income on interest-earning assets, principally loans, investment securities, and interest-earning deposits in
other institutions, and interest expense on interest-bearing deposits and borrowings from the Federal Home Loan
Bank of Dallas. Net interest income is dependent upon the level of interest rates and the extent to which such rates
are changing. Our profitability also depends, to a lesser extent, on non-interest income, provision for loan losses,
non-interest expenses, and federal income taxes. Home Federal Bancorp, Inc. of Louisiana had net income of $5.4
million in fiscal 2021 compared to net income of $3.9 million in fiscal 2020.
Our business consists primarily of originating single-family real estate loans secured by property in our
market area and to a lesser extent, commercial real estate loans, commercial business loans, and real estate secured
lines of credit which typically have higher rates and shorter terms than single-family loans. Although our loans are
primarily funded by certificates of deposit, which typically have a higher interest rate than passbook accounts, it is
our policy to require commercial customers to have a deposit relationship with us, which primarily consist of NOW
accounts. Due to the continued low interest rate environment, we have sold a substantial amount of our fixed rate
single-family residential loan originations in recent periods. We have also sold investment securities available-for-
sale to realize gains in the portfolio. Because of an increase in our average cost of funds on our interest bearing
liabilities, our net interest margin decreased from 3.46% to 3.31% during fiscal 2021 compared to 2020, and our net
interest income increased $1.8 million to $16.9 million for fiscal 2021 as compared to $15.2 million for fiscal 2020.
We expect to continue to emphasize consumer and commercial lending in the future in order to improve the yield on
our portfolio.
Home Federal Bancorp’s operations and profitability are subject to changes in interest rates, applicable
statutes and regulations, and general economic conditions, as well as other factors beyond our control.
33
Business Strategy
Our business strategy is focused on operating a growing and profitable community-oriented financial
institution. Our current business strategy includes:
Continuing to Grow and Diversify Our Loan Portfolio. We intend to grow and continue to diversify
our loan portfolio by, among other things, emphasizing the origination of commercial real estate and
business loans. At June 30, 2021, our commercial real estate loans amounted to $96.2 million, or
28.18% of the total loan portfolio. Our commercial business loans amounted to $69.9 million, or
20.48% of the total loan portfolio. Commercial real estate, commercial business, construction and
development, and consumer loans all typically have higher yields and are more interest sensitive than
long-term single-family residential mortgage loans.
Diversify Our Products and Services. We intend to continue to emphasize our commercial business
products to provide a full-service banking relationship to our commercial customers. We have
introduced mobile and Internet banking and remote deposit capture, to better serve our commercial
clients. Additionally, we have developed new deposit products focused on expanding our deposit base
to new types of customers.
Managing Our Expenses. We have incurred significant additional expenses related to personnel and
infrastructure in recent periods as we implemented our business strategy. Our efficiency ratio, net
interest income plus non-interest income divided by non-interest expense, for 2021 was 61.55%
compared to 64.9% for fiscal 2020.
Enhancing Core Earnings. We expect to continue to emphasize commercial real estate and business
loans, which generally bear interest rates higher than residential real estate loans, and sell a substantial
part of our fixed rate residential mortgage loan originations.
Expanding Our Franchise in our Market Area and Contiguous Communities. We intend to
continue to pursue opportunities to expand our market area by opening additional de novo banking
offices and possibly through acquisitions of other financial institutions and banking related businesses.
We expect to focus on contiguous areas to our current locations in Caddo and Bossier Parishes. In June
2021, we announced breaking ground on a new eighth full-service branch location in West Shreveport
which is expected to open in November 2021. We announced our expansion into Webster Parish with
a new loan production office in September 2021 which we expect to convert to a full-service branch in
the near future.
Maintain Our Asset Quality. At June 30, 2021, our non-performing assets totaled $1.4 million, or
0.25% of total assets. We had other real estate owned consisting of one commercial real property and
one one-four family residence with a carrying value of $383,000 at June 30, 2021. We intend to
continue to stress maintaining high asset quality, even as we continue to grow our institution and
diversify our loan portfolio.
Cross-Selling Products and Services and Emphasizing Local Decision Making. We have
promoted cross-selling products and services in our branch offices and emphasized our local decision
making and streamlined loan approval process.
Critical Accounting Policies
In reviewing and understanding financial information for Home Federal Bancorp, you are encouraged to
read and understand the significant accounting policies used in preparing our consolidated financial statements.
These policies are described in Note 1 of the notes to our consolidated financial statements included in Item 8 of this
document. Our accounting and financial reporting policies conform to accounting principles generally accepted in
the United States of America and to general practices within the banking industry. Accordingly, the consolidated
34
financial statements require certain estimates, judgments, and assumptions, which are believed to be reasonable
based upon the information available. These estimates and assumptions affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of income and expenses during the periods
presented. The following accounting policies comprise those that management believes are the most critical to aid in
fully understanding and evaluating our reported financial results. These policies require numerous estimates or
economic assumptions that may prove inaccurate or may be subject to variations which may significantly affect our
reported results and financial condition for the period or in future periods.
Allowance for Loan Losses. We have identified the evaluation of the allowance for loan losses as a
critical accounting policy where amounts are sensitive to material variation. The allowance for loan losses represents
management’s estimate for probable losses that are inherent in our loan portfolio but which have not yet been
realized as of the date of our consolidated balance sheet. It is established through a provision for loan losses charged
to earnings. Loans are charged against the allowance for loan losses when management believes that the
collectibility of the principal is unlikely. Subsequent recoveries are added to the allowance. The allowance is an
amount that management believes will cover known and inherent losses in the loan portfolio based on evaluations of
the collectibility of loans. The evaluations take into consideration such factors as changes in the types and amount of
loans in the loan portfolio, historical loss experience, adverse situations that may affect the borrower’s ability to
repay, estimated value of any underlying collateral, estimated losses relating to specifically identified loans, and
current economic conditions. This evaluation is inherently subjective as it requires material estimates including,
among others, exposure at default, the amount and timing of expected future cash flows on impacted loans, value of
collateral, estimated losses on our commercial and residential loan portfolios, and general amounts for historical loss
experience. All of these estimates may be susceptible to significant changes as more information becomes available.
While management uses the best information available to make loan loss allowance evaluations,
adjustments to the allowance may be necessary based on changes in economic and other conditions or changes in
accounting guidance. Historically, our estimates of the allowance for loan loss have not required significant
adjustments from management’s initial estimates. In addition, the Office of the Comptroller of the Currency as an
integral part of their examination processes periodically reviews our allowance for loan losses. The Office of the
Comptroller of the Currency may require the recognition of adjustments to the allowance for loan losses based on
their judgment of information available to them at the time of their examinations. To the extent that actual outcomes
differ from management’s estimates, additional provisions to the allowance for loan losses may be required that
would adversely impact earnings in future periods.
Income Taxes. Deferred income tax assets and liabilities are determined using the liability (or balance
sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the
temporary differences between the book and tax bases of the various assets and liabilities and gives current
recognition to changes in tax rates and laws. Realizing our deferred tax assets principally depends upon our
achieving projected future taxable income. We may change our judgments regarding future profitability due to
future market conditions and other factors. We may adjust our deferred tax asset balances if our judgments change.
COVID-19
In light of the events surrounding the COVID-19 epidemic, the Company is continually assessing the
effects of the pandemic on its employees, customers and communities. In March 2020, the Coronavirus Aid, Relief,
and Economic Security Act (the “CARES Act”) was enacted. The CARES Act contains many provisions related to
banking, lending, mortgage forbearance and taxation. The Company has worked diligently to help support its
customers through the SBA Paycheck Protection Program (“SBA PPP”), loan modifications and loan deferrals. On
December 27, 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the “Economic
Aid Act”) became law. The Economic Aid Act extended the authority to make SBA PPP loans through May 31,
2021. As of June 30, 2021, Home Federal Bank has funded 597 SBA PPP loans totaling approximately $68.8
million to existing customers and key prospects located primarily in our trade area of NW Louisiana. Our
commercial lenders and operational support staff have worked diligently to accomplish what seemed to be an
insurmountable task in providing a lifeline to our small community businesses. We believe the customer interaction
during this time provides a real opportunity to broaden and deepen our customer relationships while benefiting our
community. We have had $38.6 million of SBA PPP loans that have been forgiven which represents 56.1% of the
35
total amount of loans funded. The provision for loan losses for the year ended June 30, 2021 was $1.8 million
compared to $1.9 million for the year ended June 30, 2020.
Changes in Financial Condition
At June 30, 2021, the Company reported total assets of $565.7 million, an increase of $47.5 million, or
9.2%, compared to total assets of $518.2 million at June 30, 2020. The increase in assets was comprised primarily of
increases in cash and cash equivalents of $49.5 million, or 90.3%, from $54.9 million at June 30, 2020 to $104.4
million at June 30, 2021, investment securities of $21.3 million, or 33.9%, from $62.9 million at June 30, 2020 to
$84.3 million at June 30, 2021, premises and equipment of $1.7 million, or 12.7%, from $13.2 million at June 30,
2020 to $14.9 million at June 30, 2021, and deferred tax assets of $62,000, or 8.2%, from $757,000 at June 30, 2020
to $819,000 at June 30, 2021. These increases were partially offset by decreases in loans receivable, net of $23.5
million, or 6.5%, from $359.9 million at June 30, 2020 to $336.4 million at June 30, 2021, accrued interest
receivable of $697,000, or 37.5%, from $1.9 million at June 30, 2020 to $1.2 million at June 30, 2021, real estate
owned of $567,000, or 59.7%, from $950,000 at June 30, 2020 to $383,000 at June 30, 2021, and loans held-for-sale
of $371,000, or 2.5%, from $14.8 million at June 30, 2020 to $14.4 million at June 30, 2021. The increase in
investment securities was primarily due to security purchases of $52.9 million offset by principal repayments on
mortgage backed securities of $28.2 million and a redemption of FHLB stock for $2.4 million.
Loans receivable, net decreased $23.5 million, or 6.5%, from $359.9 million at June 30, 2020 to $336.4
million at June 30, 2021. The decrease in loans receivable, net was attributable primarily to decreases in multi-
family residential loans of $16.4 million, commercial business loans of $12.0 million, one-to-four family residential
loans of $10.5 million, land loans of $1.8 million, equity and second mortgage loans of $143,000, and consumer
loans of $64,000, partially offset by increases in commercial real estate loans of $9.1 million, construction loans of
$7.2 million, and equity lines of credit of $536,000. With interest rates continuing at historical lows, management is
reluctant to invest in long-term, fixed rate mortgage loans for the portfolio and instead sells the majority of the long-
term, fixed rate mortgage loan production.
In recent periods we diversified the loan products we offer and increased our efforts to originate higher
yielding commercial real estate loans and lines of credit and commercial business loans which were deemed
attractive due to their generally higher yields and shorter anticipated lives compared to single-family residential
mortgage loans. As of June 30, 2021, Home Federal Bank had $96.2 million of commercial real estate loans, 28.2%
of the total loan portfolio, and $69.9 million of commercial business loans, 20.5% of the total loan portfolio.
Although commercial loans are generally considered to have greater credit risk than other certain types of loans, we
attempt to mitigate such risk by originating such loans in our market area to known borrowers.
Securities available-for-sale decreased $12.5 million, or 29.7%, from $42.1 million at June 30, 2020 to
$29.6 million at June 30, 2021. This decrease resulted primarily from principal repayments of $21.7 million and a
decrease in market values of securities of $810,000, partially offset by purchases of $10.1 million in mortgage-
backed securities.
Securities held-to-maturity increased $33.8 million, from $20.9 million at June 30, 2020 to $54.7 million at
June 30, 2021. This increase was primarily due to purchases of $41.7 million of mortgage backed securities and
purchases of municipal securities of $1.1 million, partially offset by principal repayments of $6.4 million and a
redemption of FHLB Stock of $2.4 million. We chose to place these securities in held-to-maturity as part of our
interest rate risk management strategy.
Cash and cash equivalents increased $49.5 million, or 90.3%, from $54.9 million at June 30, 2020 to
$104.4 million at June 30, 2021. The net increase in cash and cash equivalents was primarily attributable to
increases in total deposits related to SBA PPP loans funded.
Total liabilities increased $45.3 million, or 9.7%, from $467.7 million at June 30, 2020 to $513.0 million at
June 30, 2021 primarily due to increases in total deposits of $45.8 million, or 9.9%, to $506.6 million at June 30,
2021 compared to $460.8 million at June 30, 2020, and in other borrowings of $100,000, or 4.3%, from $2.3 million
at June 30, 2020 to $2.4 million at June 30, 2021, partially offset by a decrease of $276,000, or 9.2% in other
liabilities from $3.0 million at June 30, 2020 to $2.7 million at June 30, 2021, and a decrease of $193,000, or 18.2%,
36
in advances from the Federal Home Loan Bank from $1.1 million at June 30, 2020 to $867,000 at June 30, 2021.
The increase in deposits was primarily due to a $45.3 million, or 54.1%, increase in savings deposits from $83.8
million at June 30, 2020 to $129.1 million at June 30, 2021, a $27.6 million, or 26.7%, increase in non-interest
bearing deposits from $103.4 million at June 30, 2020 to $131.0 million at June 30, 2021, a $13.5 million, or 18.1%,
increase in money market deposits from $74.6 million at June 30, 2020 to $88.2 million at June 30, 2021, and an
increase in NOW accounts of $7.9 million, or 19.1%, from $41.4 million at June 30, 2020 to $49.3 million at June
30, 2021, partially offset by a decrease of $48.6 million, or 30.8%, in certificates of deposit from $157.6 million at
June 30, 2020 to $109.0 million at June 30, 2021. The Company had $10.7 million in brokered deposits at June 30,
2021 compared to $16.1 million at June 30, 2020. The decrease in advances from the Federal Home Loan Bank was
primarily due to principal paydowns on amortizing advances.
Shareholders’ equity increased $2.2 million, or 4.3%, to $52.7 million at June 30, 2021 from $50.5 million
at June 30, 2020. The primary reasons for the changes in shareholders’ equity from June 30, 2020 were net income
of $5.4 million, the vesting of restricted stock awards, stock options, and the release of employee stock ownership
plan shares totaling $593,000, and proceeds from the issuance of common stock from the exercise of stock options
of $587,000, partially offset by the acquisition of Company stock of $2.6 million, dividends paid totaling $1.1
million, and a decrease in the Company’s accumulated other comprehensive income of $640,000.
37
Average Balances, Net Interest Income Yields Earned and Rates Paid. The following table shows for
the periods indicated the total dollar amount of interest from average interest-earning assets and the resulting yields,
as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates, and the net
interest margin. Tax-exempt income and yields have not been adjusted to a tax-equivalent basis. All average
balances are based on monthly balances. Management does not believe that the monthly averages differ significantly
from what the daily averages would be.
June 30,
2021
2020
Average
Average
Yield/
Balance Interest Rate
Average
Average
Yield/
Balance Interest Rate
(Dollars in thousands)
Interest-earning assets:
Investment securities ........................................................
Loans receivable(1) .........................................................
Interest-earning deposits ...................................................
Total interest-earning assets .........................................
Non-interest-earning assets ...................................................
Total assets .................................................................
Interest-bearing liabilities:
Savings accounts ..............................................................
NOW accounts .................................................................
Money market accounts ...................................................
Certificate accounts .........................................................
Total deposits ..............................................................
FHLB advances ...............................................................
Other borrowings .............................................................
Total interest-bearing liabilities ..................................
Non-interest-bearing liabilities:
Non-interest-bearing demand accounts .............................
Other liabilities .................................................................
Total liabilities ............................................................
Total stockholders’ equity(2) ................................................
$
$
65,721
366,546
79,028
511,295
33,784
1,228
18,913
104
20,245
1.87% $
5.16
0.13
3.96%
69,073
340,302
29,326
438,701
27,869
$ 1,559
18,435
342
20,336
2.26%
5.42
1.17
4.64%
$ 545,079
$ 466,570
108,592
44,655
77,198
138,603
369,048
923
1,991
371,962
565
90
216
2,324
3,195
45
64
3,304
0.52%
0.20
0.28
1.68
0.87
4.88
3.21
0.89%
63,719
33,206
74,190
167,666
338,781
1,197
1,228
341,206
700
176
727
3,442
5,045
57
52
5,154
1.10%
0.53
0.98
2.05
1.49
4.76
4.23
1.51%
118,662
3,092
493,716
51,363
73,562
2,065
416,833
49,737
Total liabilities and equity ..........................................
$ 545,079
$ 466,570
Net interest-earning assets ....................................................
$ 139,333
$ 97,495
Net interest income; average interest rate spread(3) .............
$ 16,941
3.07%
$ 15,182
3.13%
Net interest margin(4) ...........................................................
3.31%
3.46%
Average interest-earning assets to average
interest-bearing liabilities ...................................................
__________________
(1) Includes loans held for sale.
(2) Includes retained earnings and accumulated other comprehensive loss.
(3) Interest rate spread represents the difference between the weighted-average yield on interest-earning assets and the weighted-
137.46%
128.57%
average rate on interest-bearing liabilities.
(4) Net interest margin is net interest income divided by net average interest-earning assets.
38
Rate/Volume Analysis. The following table describes the extent to which changes in interest rates and
changes in volume of interest-related assets and liabilities have affected Home Federal Bancorp’s interest income
and interest expense during the periods indicated. For each category of interest-earning assets and interest-bearing
liabilities, information is provided on changes attributable to (i) changes in volume (change in volume multiplied by
prior year rate), (ii) changes in rate (change in rate multiplied by current year volume), and (iii) total change in rate
and volume. The combined effect of changes in both rate and volume has been allocated proportionately to the
change due to rate and the change due to volume.
2021 vs. 2020
2020 vs. 2019
Increase (Decrease)
Due to
Rate
Volume
Total
Increase
(Decrease)
Increase (Decrease)
Due to
Volume
Total
Increase
(Decrease)
Rate
(In thousands)
Interest income:
Investment securities .................................
Loans receivable, net ................................
Interest-earning deposits ...........................
$ (255)
(944)
(818)
$ (76)
1,422
580
$ (331)
478
(238)
$ (41)
(358)
(316)
$ 140
735
330
$ 99
377
14
Total interest-earning assets ..........................
(2,017)
1,926
91
(715)
1,205
490
Interest expense:
Savings accounts .......................................
NOW accounts ..........................................
Money market accounts ............................
Certificate accounts ...................................
Total deposits ................................................
FHLB advances and other borrowings ..........
Total interest-bearing liabilities ....................
(628)
(147)
(540)
(521)
(1,836)
(22)
(1,858)
493
61
29
(597)
(14)
22
8
(135)
(86)
(511)
(1,118)
(1,850)
--
(1,850)
349
(4)
(54)
387
678
33
711
156
14
20
(203)
(13)
(76)
(89)
505
10
(34)
184
665
(43)
622
Increase (Decrease) in net interest income ....
$(159)
$1,918
$1,759
$(1,426)
$1,294
$(132)
Comparison of Operating Results for the Years Ended June 30, 2021 and 2020
General. The increase in net income for the year ended June 30, 2021 resulted primarily from a $1.8
million, or 11.6%, increase in net interest income, an increase of $1.6 million, or 39.8%, in non-interest income, a
$91,000, or 4.8%, decrease in provision for loan losses, partially offset by an increase of $1.4 million, or 11.3%, in
non-interest expense, and an increase of $488,000, or 51.0%, in provision for income taxes. The increase in net
interest income for the year was primarily due to a $1.9 million, or 35.9%, decrease in total interest expense,
partially offset by $91,000, or 0.4%, decrease in total interest income. The Company’s average interest rate spread
was 3.07% for the year ended June 30, 2021 compared to 3.13% for the year ended June 30, 2020.
Net Interest Income. Net interest income amounted to $16.9 million for fiscal year 2021, an increase of
$1.8 million, or 11.6%, compared to $15.2 million for fiscal year 2020. The increase was due primarily to a decrease
of $1.9 million in interest expense, partially offset by a $91,000 decrease in both total interest income and provision
for loan losses.
The average interest rate spread decreased from 3.13% for fiscal 2020 to 3.07% for fiscal 2021, while the
average balance of interest-earning assets increased from $438.7 million to $511.3 million during the same periods.
The percentage of average interest-earning assets to average interest-bearing liabilities increased to 137.46% for
fiscal 2021 compared to 128.57% for fiscal 2020. The decrease in the average interest rate spread and net interest
margin was attributable primarily to a decrease of 68 basis points in average rate on interest earning assets for the
year, from 4.64% at June 30, 2020 to 3.96% at June 30, 2021. The average rate paid on certificates of deposit
decreased from 2.05% for fiscal 2020 to 1.68% for fiscal 2021. Net interest margin decreased to 3.31% for fiscal
2021 compared to 3.46% for fiscal 2020.
Interest income decreased $91,000, or 0.4%, to $20.2 million for fiscal 2021 compared to $20.3 million for
fiscal 2020, primarily due to an aggregate decrease in interest income from investment and mortgage-backed
39
securities of $383,000 and a decrease in interest income on other earning assets of $186,000, partially offset by an
increase in interest income from loans of $478,000 for fiscal 2021 compared to 2020. The increase in the average
balance of loans receivable was primarily due to new loans originated by our commercial lending division. The
average yield of the loan portfolio decreased by 26 basis points during fiscal 2021 mainly due to a lower interest rate
environment.
Interest expense decreased $1.9 million, or 35.9%, to $3.3 million for fiscal 2021 compared to $5.2 million
for fiscal 2020, primarily as a result of decreases in the average rate paid on interest-bearing deposits.
Provision for Loan Losses. The allowance for loan losses is established through a provision for loan
losses charged to earnings as losses are estimated to have occurred in our loan portfolio. Loan losses are charged
against the allowance when management believes the collectability 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.
A loan is considered impaired when, based on current information or events, it is probable that we 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, we will
recognize the impairment by creating a valuation allowance with a corresponding charge against earnings.
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 interest and principal payments is back to normal, the loan is returned to accrual status.
A provision of $1.8 million was made to the allowance during fiscal 2021, compared to a provision of $1.9
million in fiscal 2020. At June 30, 2021, the Company had $1.4 million of non-performing assets (defined as non-
accruing loans, accruing loans 90 days or more past due, and other real estate owned) compared to $7.2 million of
non-performing assets at June 30, 2020, consisting of six commercial real estate loans to one borrower, three single-
family residential loans, and one commercial real estate property and one single family residence in other real estate
owned at June 30, 2021, compared to five single-family residential loans, five commercial real estate loans to one
borrower, one lot loan, one land loan and two commercial real estate properties in other real estate owned at June 30,
2020. The decrease in non-performing assets from $7.2 million at June 30, 2020 to $1.4 million at June 30, 2021
was primarily due to a payoff of $2.0 million on one lot loan and one land loan to the same borrower, a write-down
of $907,000 on a lot loan, a write-down of $1.0 million on a commercial real estate loan, and the paydown of a
portion of the collateral on the same commercial real estate loan totaling $449,000. At June 30, 2021, the Company
had one single family residential loans and eight commercial real estate loans to one borrower classified as
substandard compared to four single family residential loans, two commercial land and lot development loans, and
six commercial real estate loans to one borrower classified as substandard at June 30, 2020. There were no loans
classified as doubtful at June 30, 2021 or June 30, 2020.
Non-Interest Income. Non-interest income amounted to $5.5 million for the year ended June 30, 2021, an
increase of $1.6 million, or 39.8%, compared to non-interest income of $3.9 million for the year ended June 30,
2020. The $1.6 million increase in non-interest income for the year ended June 30, 2021 compared to the prior year
was primarily due to an increase of $1.8 million in gain on sale of loans, and an increase of $15,000 in other non-
interest income, partially offset by a $219,000 decrease in gain on sale of securities, a $42,000 loss on sale of real
estate, a $28,000 decrease in service charges on deposit accounts, and a $12,000 decrease in income from bank
owned life insurance. The Company sells most of its long-term fixed rate residential mortgage loan originations
primarily in order to manage interest rate risk.
40
Non-Interest Expense. Non-interest expense increased $1.4 million, or 11.3%, in fiscal 2021 compared to
the prior year period. The $1.4 million increase in non-interest expense for the year ended June 30, 2021, compared
to the prior year, is primarily attributable to increases of $978,000 in compensation and benefits expense, $200,000
in real estate owned valuation adjustment expense, $176,000 in data processing expense, $88,000 in deposit
insurance premium expense, $69,000 in other non-interest expenses, $49,000 in loan and collection expense, and
$48,000 in audit and examination fees expense, partially offset by decreases of $100,000 in advertising expense,
$52,000 in franchise and bank shares tax expense, $43,000 in legal fees, and $13,000 in occupancy and equipment
expense.
Provision for Income Tax Expense. The provision for income taxes amounted to $1.4 million and
$957,000 for the fiscal years ended June 30, 2021 and 2020, respectively. Our effective tax rate was 21.2% for fiscal
2021 and 19.9% for fiscal 2020.
Exposure to Changes in Interest Rates
Our ability to maintain net interest income depends upon our ability to earn a higher yield on interest-
earning assets than the rates we pay on deposits and borrowings. Our interest-earning assets consist primarily of
securities available-for-sale and long-term residential and commercial mortgage loans, which have fixed rates of
interest. Consequently, our ability to maintain a positive spread between the interest earned on assets and the interest
paid on deposits and borrowings can be adversely affected when market rates of interest rise.
Although long-term, fixed-rate mortgage loans made up a significant portion of our interest-earning assets
at June 30, 2021, we sold a substantial amount of our one-to-four family residential loans we originated and
maintained a significant portfolio of available-for-sale securities during the past few years in order to better position
the Company for a rising interest rate environment in the long term. At June 30, 2021 and 2020, securities
available-for-sale amounted to $29.6 million and $42.1 million, respectively, or 5.2% and 8.1%, respectively, of
total assets at such dates.
Quantitative Analysis. The Office of the Comptroller of the Currency provides a quarterly report on the
potential impact of interest rate changes upon the market value of portfolio equity. Management reviews the
quarterly reports from the Office of the Comptroller of the Currency, which show the impact of changing interest
rates on net portfolio value. Net portfolio value is the difference between incoming and outgoing discounted cash
flows from assets, liabilities, and off-balance sheet contracts.
Net Portfolio Value. Our interest rate sensitivity is monitored by management through the use of a model
which internally generates estimates of the change in our net portfolio value (“NPV”) over a range of interest rate
scenarios. NPV is the present value of expected cash flows from assets, liabilities, and off-balance sheet contracts.
The NPV ratio, under any interest rate scenario, is defined as the NPV in that scenario divided by the market value
of assets in the same scenario. The following table sets forth our NPV as of June 30, 2021:
Change in Interest Rates in
Basis Points (Rate Shock)
Net Portfolio Value
NPV as % of Portfolio
Value of Assets
Amount
$ Change
% Change
NPV Ratio
Change
300 ..........................................
200 ..........................................
100 ..........................................
Static .......................................
(100) ........................................
(200) ........................................
$68,231
62,551
66,348
62,450
55,969
47,996
(Dollars in thousands)
$5,781
101
3,898
--
(6,481)
(14,454)
9.25%
12.98%
0.16
6.24
--
(10.38)
(23.14)
11.57
12.03
11.12
9.82
8.34
1.86%
0.45
0.91
--
(1.30)
(2.78)
Qualitative Analysis. Our ability to maintain a positive “spread” between the interest earned on assets and
the interest paid on deposits and borrowings is affected by changes in interest rates. Our fixed-rate loans generally
are profitable, if interest rates are stable or declining since these loans have yields that exceed our cost of funds. If
interest rates increase, however, we would have to pay more on our deposits and new borrowings, which would
adversely affect our interest rate spread. In order to counter the potential effects of dramatic increases in market rates
of interest, we have underwritten our mortgage loans to allow for their sale in the secondary market. Total loan
originations amounted to $389.8 million for fiscal 2021 and $311.4 million for fiscal 2020, while loans sold
41
amounted to $198.8 million and $111.8 million during the same respective periods. We have invested excess funds
from loan payments and prepayments and loan sales in investment securities classified as available-for-sale. As a
result, Home Federal Bancorp is not as susceptible to rising interest rates as it would be if its interest-earning assets
were primarily comprised of long-term fixed rate mortgage loans. With respect to its floating or adjustable rate
loans, Home Federal Bancorp writes interest rate floors and caps into such loan documents. Interest rate floors limit
our interest rate risk by limiting potential decreases in the interest yield on an adjustable rate loan to a certain level.
As a result, we receive a minimum yield even if rates decline farther, and the interest rate on the particular loan
would otherwise adjust to a lower amount. Conversely, interest rate ceilings limit the amount by which the yield on
an adjustable rate loan may increase to no more than six percentage points over the rate at the time of origination.
Finally, we intend to place a greater emphasis on shorter-term consumer loans and commercial business loans in the
future.
Liquidity and Capital Resources
Home Federal Bancorp maintains levels of liquid assets deemed adequate by management. Our liquidity
ratio averaged 38.83% for the quarter ended June 30, 2021. We adjust our liquidity levels to fund deposit outflows,
repay our borrowings, and to fund loan commitments. We also adjust liquidity, as appropriate, to meet asset and
liability management objectives.
Our primary sources of funds are deposits, amortization and prepayment of loans and mortgage-backed
securities, maturities of investment securities and other short-term investments, loan sales and earnings, and funds
provided from operations. While scheduled principal repayments on loans and mortgage-backed securities are a
relatively predictable source of funds, deposit flows and loan prepayments are greatly influenced by general interest
rates, economic conditions, and competition. We set the interest rates on our deposits to maintain a desired level of
total deposits. In addition, we invest excess funds in short-term interest-earning accounts and other assets, which
provide liquidity to meet lending requirements. Our deposit accounts with the Federal Home Loan Bank of Dallas
amounted to $42.0 million and $19.1 million at June 30, 2021 and 2020, respectively.
A significant portion of our liquidity consists of securities classified as available-for-sale and cash and cash
equivalents. Our primary sources of cash are net income, principal repayments on loans and mortgage-backed
securities, and increases in deposit accounts. If we require funds beyond our ability to generate them internally, we
have borrowing agreements with the Federal Home Loan Bank of Dallas, which provide an additional source of
funds. At June 30, 2021, we had $867,000 in advances from the Federal Home Loan Bank of Dallas and had $173.5
million in additional borrowing capacity. Additionally, at June 30, 2021, Home Federal Bank was a party to a
Master Purchase Agreement with First National Bankers Bank, whereby Home Federal Bank may purchase Federal
Funds from First National Bankers Bank in an amount not to exceed $20.4 million. There were no amounts
purchased under this agreement as of June 30, 2021. In addition, Home Federal Bancorp had available a $5.0
million line of credit agreement at June 30, 2021 with First National Bankers Bank. At June 30, 2021 there was a
$2.4 million balance in the credit line.
At June 30, 2021, the Company had outstanding loan commitments of $59.1 million to originate loans and
commitments under unused lines of credit of $9.7 million. At June 30, 2021, certificates of deposit scheduled to
mature in one year or less totaled $64.7 million, or 59.4% of total certificates of deposit. Based on prior experience,
management believes that a significant portion of such deposits will remain with us, although there can be no
assurance that this will be the case. In addition, the cost of such deposits could be significantly higher upon renewal
in a rising interest rate environment. We intend to utilize our high levels of liquidity to fund our lending activities. If
additional funds are required to fund lending activities, we intend to sell our securities classified as available-for-
sale, as needed.
At June 30, 2021, Home Federal Bank exceeded each of its capital requirements with tangible equity,
common equity Tier 1, core, and total risk-based capital ratios of 9.57%, 16.63%, 9.57%, and 17.88%, respectively.
42
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, as defined by Securities and Exchange Commission
rules, and have not had any such arrangements during the two years ended June 30, 2021. See Notes 9 and 14 to the
Notes to Consolidated Financial Statements contained in Item 8 of this Form 10-K.
Impact of Inflation and Changing Prices
The consolidated financial statements and related financial data presented herein regarding Home Federal
Bancorp have been prepared in accordance with accounting principles generally accepted in the United States of
America, which generally require the measurement of financial position and operating results in terms of historical
dollars, without considering changes in relative purchasing power over time due to inflation. Unlike most industrial
companies, virtually all of our assets and liabilities are monetary in nature. As a result, interest rates generally have a
more significant impact on Home Federal Bancorp’s performance than does the effect of inflation. Interest rates do
not necessarily move in the same direction or in the same magnitude as the prices of goods and services, since such
prices are affected by inflation to a larger extent than interest rates.
Forward-Looking Statements
This Annual Report on Form 10-K contains certain forward-looking statements (as defined in the Securities
Exchange Act of 1934 and the regulations thereunder). Forward-looking statements are not historical facts but
instead represent only the beliefs, expectations or opinions of Home Federal Bancorp and its management regarding
future events, many of which, by their nature, are inherently uncertain. Forward-looking statements may be
identified by the use of such words as: “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, or words of
similar meaning, or future or conditional terms such as “will”, “would”, “should”, “could”, “may”, “likely”,
“probably”, or “possibly.” Forward-looking statements include, but are not limited to, financial projections and
estimates and their underlying assumptions; statements regarding plans, objectives and expectations with respect to
future operations, products and services; and statements regarding future performance. Such statements are subject
to certain risks, uncertainties and assumption, many of which are difficult to predict and generally are beyond the
control of Home Federal Bancorp and its management, that could cause actual results to differ materially from those
expressed in, or implied or projected by, forward-looking statements. The following factors, among others, could
cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-
looking statements: (1) economic and competitive conditions which could affect the volume of loan originations,
deposit flows and real estate values; (2) the levels of non-interest income and expense and the amount of loan losses;
(3) competitive pressure among depository institutions increasing significantly; (4) changes in the interest rate
environment causing reduced interest margins; (5) general economic conditions, either nationally or in the markets
in which Home Federal Bancorp is or will be doing business, being less favorable than expected (6) political and
social unrest including acts of war or terrorism; (7) the impact of the current outbreak of the novel coronavirus
(COVID-19) or (8) legislation or changes in regulatory requirements adversely affecting the business in which
Home Federal Bancorp will be engaged. Home Federal Bancorp undertakes no obligation to update these forward-
looking statements to reflect events or circumstances that occur after the date on which such statements were made.
Item 7A. Quantitative and Qualitative Disclosure About Market Risk
Not applicable.
43
Item 8. Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
To the Stockholders and
Board of Directors
Home Federal Bancorp, Inc.
of Louisiana and Subsidiary
Shreveport, Louisiana
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Home Federal Bancorp, Inc. of Louisiana, and its
subsidiary (the Company) as of June 30, 2021 and 2020, the related consolidated statements of operations,
comprehensive income, changes in stockholders’ equity and cash flows for the years then ended, and the related notes
to the consolidated financial statements (collectively referred to as the “financial statements”). In our opinion, the
financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2021
and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting
principles generally accepted in the United States of America.
Basis of Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with
the Public Company Accounting Oversite Board (United States) (PCAOB) and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform,
an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding
of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included
examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also
included evaluating the accounting principles used and significant estimates made by management, as well as
evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis
for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial
statements that was communicated or required to be communicated to the audit committee and that : (1) related to
accounts or disclosures that are material to the financial statements and (2) involved especially challenging, subjective,
or complex judgement. The communication of the critical audit matter does not alter in any way our opinion on the
consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
44
Allowance for Loan Losses
Description of the Matter
The Company’s loan portfolio totaled $341.3 million as of June 30, 2021, and the associated allowance for loan losses
(ALL) was $4.1 million. As discussed in notes 1 and 3 to the consolidated financial statements, the ALL is established
to absorb probable credit losses inherent to the Company’s loan portfolio. Management’s estimate for the probable
credit losses is established through quantitative, as well as qualitative, factors. The Company attributes portions of
the allowance to loans that it evaluates individually and determines to be impaired. For non-impaired loans, the
allowance for loan losses is estimated based on historical default and/or loss information for pools of loans with similar
risk characteristics and product types. The Company’s methodology for determining the appropriate ALL also
considers the imprecision inherent in the estimation process. As a result, management adjusts the ALL for
consideration of the potential impact of qualitative factors, which include: 1) changes in lending policies, procedures,
and practices; 2) changes in national and local economic trends and conditions; 3) changes in the nature and volume
of the portfolio; 4) changes in the experience, ability, and depth of lending management and staff; 5) changes in the
volume and loss severity of past due loans, the volume of non-accrual loans, and the volume and loss severity of
adversely classified or graded loans; 6) changes in the quality of the Company’s loan review system; 7) changes in
the value of underlying collateral for collateral-dependent loans; 8) the existence and effect of any concentrations of
credit, and changes in the level of such concentrations. In addition and as a response to the COVID-19 pandemic, the
Company also applied a qualitative factor related to this event, which is designed to absorb probable incurred loan
losses that are negatively affected by the COVID-19 pandemic
Auditing management’s estimate of the ALL involved a high degree of subjectivity in evaluating the qualitative factors
that management assessed and the measurement of each qualitative factor. Management’s assessment and
measurement of the qualitative factors is highly judgmental and has a significant effect on the ALL.
How We Addressed the Matter in Our Audit
Our audit procedures related to the qualitative factors of the ALL included the following procedures, among others.
We gained an understanding of the Company’s process for establishing the ALL, including the identification and
measurement of qualitative factors. We evaluated the design and documented the controls in place that are relevant
to that process.
We evaluated the accuracy of management's inputs into the qualitative factor adjustments by comparing the inputs to
the Company's historical loan performance data, third-party macroeconomic data and peer bank data
With respect to the identification of qualitative factors, we evaluated 1) changes, assumptions and adjustments to the
models; 2) sufficiency, availability and relevance of historical loss data used in the models; and 3) the risk factors
used in the models. Further, we assessed whether the total amount of the qualitative estimate was consistent with the
Bank's historical loss information, credit quality statistics, and publicly observable indicators of macroeconomic
financial conditions and whether the total ALL amount was reflective of losses incurred in the loan portfolio as of the
consolidated balance sheet date
A Professional Accounting Corporation
We have served as the Company’s auditor since 2004
Covington, Louisiana
September 28, 2021
45
2021
June 30,
(In Thousands)
2020
$104,405
29,550
54,706
$ 54,871
42,060
20,858
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Consolidated Balance Sheets
June 30, 2021 and 2020
ASSETS
Cash and Cash Equivalents (Includes Interest-Bearing
Deposits with Other Banks of $94,325 and $50,417
for 2021 and 2020, Respectively)
Debt Securities Available-for-Sale
Securities Held-to-Maturity (fair value of $54,608 and
$21,879, For 2021 and 2020, Respectively)
Loans Held-for-Sale
Loans Receivable, Net of Allowance for Loan Losses
of $4,122 and $4,081 for 2021 and 2020, Respectively
Accrued Interest Receivable
Premises and Equipment, Net
Bank Owned Life Insurance
Deferred Tax Asset
Other Real Estate Owned
Other Assets
Total Assets
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Deposits:
Non-interest bearing
Interest-bearing
Total Deposits
Advances from Borrowers for Taxes and Insurance
Short-term Federal Home Loan Bank Advances
Long-term Federal Home Loan Bank Advances
Other Borrowings
Other Accrued Expenses and Liabilities
Total Liabilities
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; 3,350,966 and 3,449,024 Shares Issued
and Outstanding (split adjusted) at June 30, 2021
and 2020, Respectively
Additional Paid-in Capital
Unearned ESOP Stock
Retained Earnings
Accumulated Other Comprehensive Income
14,427
336,394
1,163
14,915
7,214
819
383
1,755
$565,731
$131,014
375,582
506,596
426
35
832
2,400
2,717
513,006
34
37,583
(754)
15,587
275
Total Stockholders’ Equity
52,725
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
$565,731
The accompanying notes are an integral part of these consolidated financial statements.
46
14,798
359,927
1,860
13,235
7,087
757
950
1,817
$518,220
$103,422
357,388
460,810
522
193
867
2,300
2,993
467,685
22
36,531
(870)
13,937
915
50,535
$518,220
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Consolidated Statements of Operations
For the Years Ended June 30, 2021 and 2020
For the Years Ended June 30,
2020
2021
(In Thousands, Except Per Share Data)
INTEREST INCOME
Loans, Including Fees
Investment Securities
Mortgage-Backed Securities
Other Interest-Earning Assets
Total Interest Income
INTEREST EXPENSE
Deposits
Federal Home Loan Bank Borrowings
Other Bank Borrowings
Total Interest Expense
Net Interest Income
PROVISION FOR LOAN LOSSES
Net Interest Income after Provision for Loan Losses
NON-INTEREST INCOME
Gain on Sale of Loans
Loss on Sale of Real Estate and Fixed Assets
Realized Gain on Sale of Securities
Income on Bank Owned Life Insurance
Service Charges on Deposit Accounts
Other Income
Total Non-Interest Income
NON-INTEREST EXPENSE
Compensation and Benefits
Occupancy and Equipment
Data Processing
Audit and Examination Fees
Franchise and Bank Shares Tax
Advertising
Legal Fees
Loan and Collection Expense
Real Estate Owned Valuation Adjustment
Deposit Insurance Premiums
Other Expenses
$18,913
5
1,223
104
20,245
3,195
45
64
3,304
16,941
1,800
15,141
4,319
(42)
--
127
991
57
5,452
8,665
1,514
750
233
407
190
452
366
200
137
869
$18,435
52
1,559
290
20,336
5,045
57
52
5,154
15,182
1,891
13,291
2,480
--
219
139
1,019
42
3,899
7,687
1,527
574
185
459
290
495
317
--
49
800
Total Non-Interest Expense
13,783
12,383
Income Before Income Taxes
PROVISION FOR INCOME TAX EXPENSE
6,810
1,445
4,807
957
Net Income
$ 5,365
$ 3,850
EARNINGS PER SHARE:
Basic
Diluted
$ 1.66
$ 1.57
$ 1.15
$ 1.07
* All per share amounts have been restated to reflect the effect of the 2-for-1 stock split during March 2021.
The accompanying notes are an integral part of these consolidated financial statements.
47
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Consolidated Statements of Comprehensive Income
For the Years Ended June 30, 2021 and 2020
For the Years Ended June 30,
2021
2020
(In Thousands)
Net Income
$5,365
$3,850
Other Comprehensive (Loss) Income, Net of Tax
Investment securities available-for-sale:
Net unrealized (losses) gains
Income Tax Effect
Reclassification adjustments for net (gains) losses realized in net income
Income tax effect
Other Comprehensive (Loss) Income
Total Comprehensive Income
(810)
170
--
--
(640)
$4,725
1,352
(284)
(219)
46
895
$4,745
The accompanying notes are an integral part of these consolidated financial statements.
48
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders’ Equity
For the Years Ended June 30, 2021 and 2020
Common
Stock
Additional
Paid-In
Capital
Unearned
ESOP
Stock
Retained
Earnings
(In Thousands)
Accumulated
Other
Comprehensive
Income (Loss)
Total
Stockholders’
Equity
BALANCE - June 30, 2019
$ 23
$35,914
$ (985)
$ 15,370
$ 20
$ 50,342
Share Awards Earned
--
153
--
--
--
ESOP Compensation Earned
--
238
115
--
Stock Options Exercised
--
65
--
Distribution of RRP Trust Stock
--
Dividends Paid
--
24
--
--
--
(1,142)
--
--
--
--
--
--
Stock Options Vested
--
137
--
Company Stock Purchased
(1)
--
--
Net Income
--
--
--
--
(4,141)
3,850
--
--
--
153
353
65
24
(1,142)
137
(4,142)
3,850
Other Comprehensive Income,
Unrealized Gain on Debt
Securities, Net of Tax
--
--
--
--
BALANCE – June 30, 2020
$ 22
$36,531
$ (870)
$ 13,937
895
$ 915
895
$ 50,535
Share Awards Earned
ESOP Compensation Earned
Stock Options Exercised
Distribution of RRP Trust
Stock
Dividends Paid
Stock Split
Stock Options Vested
Company Stock Purchased
Net Income
Other Comprehensive Loss,
Unrealized Loss on Debt
Securities, Net of Tax
153
--
--
217
116
--
587
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
--
(1,122)
--
12
(12)
--
--
--
--
--
107
--
--
--
--
(2,593)
--
--
5,365
--
--
--
--
153
333
587
--
(1,122)
--
107
(2,593)
5,365
BALANCE - June 30, 2021
$ 34
$37,583
$ (754)
$15,587
--
--
--
--
(640)
$ 275
(640)
$ 52,725
The accompanying notes are an integral part of these consolidated financial statements.
49
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Consolidated Statements of Cash Flows
For the Years Ended June 30, 2021 and 2020
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income
Adjustments to Reconcile Net Income to Net
Cash Provided By Operating Activities
For the Years Ended June 30,
2021
2020
(In Thousands)
$ 5,365
$ 3,850
Gain on Sale of Loans
Realized Gain on Sale of Securities
Net Amortization and Accretion on Securities
Amortization of Deferred Loan Fees
Provision for Loan Losses
Real Estate Owned Valuation Adjustment
Depreciation of Premises and Equipment
Net Loss on Sale of Real Estate
ESOP Compensation Expense
Stock Options Expense
Deferred Income Tax (Benefit) Expense
Federal Home Loan Bank Stock Certificate
Recognition and Retention Plan and Share Awards Expense
Increase in Cash Surrender Value on Bank Owned Life Insurance
Bad Debt Recovery
Changes in Assets and Liabilities:
Origination and Purchase of Loans Held-for-Sale
Sale and Principal Repayments on Loans Held-for-Sale
Accrued Interest Receivable
Other Operating Assets
Other Operating Liabilities
(4,319)
--
157
(1,326)
1,800
200
665
42
333
107
(61)
(5)
126
(127)
202
(194,574)
199,264
697
62
(276)
(2,480)
(219)
89
(175)
1,891
--
653
--
353
137
92
(53)
151
(139)
120
(111,824)
108,114
(688)
(1,107)
1,435
Net Cash Provided By Operating Activities
8,332
200
CASH FLOWS FROM INVESTING ACTIVITIES
Loan Originations and Principal Collections, Net
Deferred Loan Fees Collected
Acquisition of Premises and Equipment
Proceeds from Sale of Real Estate
Improvements to Real Estate Owned Prior to Disposition
Activity in Available-for-Sale Securities:
Principal Payments on Mortgage-Backed Securities
Sale of Securities
Purchases of Securities
Activity in Held-to-Maturity Securities:
Purchases of Municipal Bonds
Principal Payments on Mortgage-Backed Securities
Sale/Redemptions of Securities
Purchases of Securities
21,841
634
(2,354)
883
(124)
21,712
--
(10,086)
(1,130)
6,445
2,437
(41,678)
(40,813)
1,438
(970)
2,470
(36)
12,269
9,856
(21,250)
(245)
4,771
--
--
Net Cash Used in Investing Activities
(1,420)
(32,510)
The accompanying notes are an integral part of these consolidated financial statements.
50
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Consolidated Statements of Cash Flows (Continued)
For the Years Ended June 30, 2021 and 2020
For the Years Ended June 30,
2021
2020
(In Thousands)
CASH FLOWS FROM FINANCING ACTIVITIES
Net Increase in Deposits
Repayments of Advances from Federal Home Loan Bank
Dividends Paid
Company Stock Purchased
Net Decrease in Advances from Borrowers for Taxes and Insurance
Proceeds from Other Bank Borrowings
Repayment of Other Bank Borrowings
Proceeds from Stock Options Exercised
Recognition and Retention Plan Share Distributions
$ 45,786
(193)
(1,122)
(2,593)
(96)
2,400
(2,300)
587
153
Net Cash Provided by Financing Activities
42,622
NET INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
49,534
54,871
$ 72,646
(295)
(1,142)
(4,142)
(62)
2,300
(450)
65
153
69,073
36,763
18,108
CASH AND CASH EQUIVALENTS, END OF YEAR
$ 104,405
$ 54,871
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest Paid on Deposits and Borrowed Funds
Income Taxes Paid
Market Value Adjustment for Unrealized Gain on Debt Securities Available For Sale
Transfer from Loans to Other Real Estate
Initial recognition of operating leases right of use assets
Initial recognition of operating leases right of use liabilities
3,331
1,475
(810)
434
--
--
5,161
760
1,132
950
877
887
The accompanying notes are an integral part of these consolidated financial statements.
51
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 1.
Summary of Significant Accounting Policies
Nature of Operations
The consolidated financial statements include the accounts of Home Federal Bancorp, Inc. of Louisiana, a
Louisiana chartered corporation (the “Company” or “Home Federal Bancorp”) and its wholly owned
subsidiary, Home Federal Bank, a federally chartered stock savings bank (the “Bank”), along with its wholly
owned subsidiary, Metro Financial Services, Inc.
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 OCC).
The Bank provides financial services to individuals, corporate entities, and other organizations through the
origination of loans and the acceptance of deposits in the form of passbook savings, certificates of deposit,
and demand deposit accounts. Services are provided by seven branch offices, five of which are located in
Shreveport, Louisiana and two in Bossier City, Louisiana. The Bank’s home office is located in Shreveport,
Louisiana.
The Bank is subject to competition from other financial institutions and to the regulations of certain federal
and state agencies and undergoes periodic examinations by those regulatory authorities.
Basis of Presentation and Consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary,
Home Federal Bank. All significant intercompany balances and transactions have been eliminated.
Use of Estimates
In preparing consolidated financial statements in conformity with accounting principles generally accepted
in the United States of America (GAAP), management is required to make estimates and assumptions that
affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheets and
reported amounts of revenues and expenses during the reporting periods. 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 and deferred taxes.
Significant Group Concentrations of Credit Risk
Most of the Company’s activities are provided to customers of the Bank by seven branch offices, five of
which are located in the city of Shreveport, Louisiana and two in Bossier City, Louisiana. 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.
52
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 1.
Summary of Significant Accounting Policies (Continued)
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 have an original maturity date of ninety days
or less.
At June 30, 2021 and 2020, cash and cash equivalents consisted of the following:
Cash on Hand
Demand Deposits at Other Institutions
Federal Funds Sold
2021
2020
(In Thousands)
$ 1,189
59,591
43,625
$ 1,205
35,591
18,075
Total
$104,405
$54,871
Securities
Securities are being accounted for in accordance with Financial Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) 320’s, Investments which requires the classification of securities
into one of three categories: Trading, Available-for-Sale, or Held-to-Maturity. Management determines the
appropriate classification of debt securities at the time of purchase and re-evaluates this classification
periodically.
Investments in non-marketable 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 cost, adjusted for
amortization of the related premiums, and accretion of discounts, using the interest method. 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 debt securities are excluded from earnings and reported in other
comprehensive income.
The Company held no trading securities as of June 30, 2021 and 2020.
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 Company 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.
53
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 1.
Summary of Significant Accounting Policies (Continued)
Loans Receivable
Loans receivable are stated at unpaid principal balances, less allowances for loan losses and unamortized
deferred loan fees. Net non-refundable 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 discounts are 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 uncollectibility 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.
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.
54
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 1.
Summary of Significant Accounting Policies (Continued)
Other Real Estate Owned
Assets acquired through, or in lieu of, loan foreclosure are held-for-sale and are carried 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
Furniture and Equipment
10 - 40 Years
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.
Income Taxes
The Company and its wholly-owned subsidiary file a consolidated federal income tax return on a fiscal year
basis. Each entity will pay 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 bases 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. 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 year.
55
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 1.
Summary of Significant Accounting Policies (Continued)
Non-Direct Response Advertising
The Company expenses all advertising costs, except for direct-response advertising, as incurred. Non-direct
response advertising costs were $190,000 and $290,000 for the years ended June 30, 2021 and 2020,
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 years ended June 30, 2021 and 2020, 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. This guidance applies to
awards granted or modified after January 1, 2006, or any unvested awards outstanding prior to that date.
Reclassification
Certain financial statement balances included in the prior year consolidated financial statements have been
reclassified to conform to the current year presentation.
Comprehensive Income
Accounting principles generally 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 debt securities, are reported as a separate component of the equity section of the
consolidated balance sheets, such items, along with net income, are components of comprehensive income
(loss).
The components of accumulated other comprehensive income, included in stockholders’ equity, are as
follows:
Net Unrealized Gain on Debt Securities Available-for-Sale
Tax Effect
Net-of-Tax Amount
2021
2020
(In Thousands)
$348
(73)
$1,158
(243)
$275
$ 915
56
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 1.
Summary of Significant Accounting Policies (Continued)
Recent Accounting Pronouncements
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. In February 2018, the FASB issued ASU 2018-03, Technical
Corrections and Improvements to Financial Instruments – Overall (Subtopic 825-10): Recognition and
Measurement of Financial Assets and Financial Liabilities. The amendments in this Update include items
brought to the FASB Board’s attention regarding ASU 2016-01.
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.
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 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 did not 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, 2022, including interim periods with those fiscal years. The extent
of the impact upon adoption is not known and will depend on the characteristics of the Company’s loan
portfolio and economic conditions on that date as well as forecasted conditions thereafter.
57
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 1.
Summary of Significant Accounting Policies (Continued)
Recent Accounting Pronouncements (Continued)
In March 2017, the FASB issued ASU 2017-08, Receivables - Nonrefundable Fees and Other Costs (Subtopic
310-20), for fiscal years beginning after December 15, 2018. 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 adoption of this guidance did not have a material effect on the Company’s
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 adoption of this guidance did not have a material effect on the Company’s
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 was effective upon issuance.
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 was effective upon issuance. Adoption of this ASU did not have a material effect on our
consolidated financial statements.
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. Adoption of
this ASU did not have a material effect on our consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-13, “Disclosure Framework – Changes to the Disclosure
Requirements for Fair Value Measurement.” The ASU removes, modifies, and adds certain disclosure
requirements for fair value measurements. ASU No. 2018-13 is effective for interim and annual reporting
periods beginning after December 15, 2019. In addition, entities may early adopt the modified or eliminated
disclosure requirements and delay adoption of the additional disclosure requirements until effective date.
ASU No. 2018-13 did not impact our consolidated financial statements, as the update only revises disclosure
requirements.
In December 2019, the FASB issued ASU No. 2019-12, "Simplifying the Accounting for Income Taxes (Topic
740)." The amendments in this ASU simplified the accounting for income taxes by removing certain
exceptions to the general principles in Topic 740. The amendments also improved the consistent application
of and simplified GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The
amendments in the ASU are effective for fiscal years and interim periods beginning after December 15, 2020.
The Company does not expect the adoption of this ASU to impact the consolidated financial statements.
58
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 1.
Summary of Significant Accounting Policies (Continued)
Recent Accounting Pronouncements (Continued)
Accounting Standards Adopted in 2020
A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified
property, plant or equipment for a period of time in exchange for consideration. On January 1, 2019, the
Company adopted ASU No. 2016-02 “Leases” (Topic 842) and all subsequent ASUs that modified Topic
842. For the Company, Topic 842 primarily affected the accounting treatment for operating lease agreements
in which the Company is the lessee. Substantially all of the leases in which the Company is the lessee are
comprised of real estate property for branches with terms extending through 2058. Substantially all of the
Company’s leases are classified as operating leases, and therefore, were previously not recognized on the
Company’s consolidated statements of condition. With the adoption of Topic 842, operating lease agreements
are required to be recognized on the consolidated statements of condition as right-of-use (“ROU”) assets and
corresponding lease liabilities.
The following table represents the consolidated statements of condition classification of the Company’s ROU
assets and lease liabilities. The Company elected not to include short-term leases (i.e., leases with initial
terms of twelve months or less) on the consolidated statements of condition.
(In Thousands) June 30, 2021 June 30, 2020
Lease Right-of-Use Assets
Operating lease right-of-use assets
Total Lease Right-of-Use Assets
Classification
Other Assets
$ 858
$ 858
$ 877
$ 877
Lease Liabilities
Operating lease liabilities
Total Lease Liabilities
Other Accrued Expenses and Liabilities
$ 876
$ 876
$ 887
$ 887
The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length
of the lease term and the discount rate used to present value the minimum lease payments. The Company’s
lease agreements often include one or more options to renew at the Company’s discretion. If at lease
inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company
will include the extended term in the calculation of the ROU asset and lease liability. Regarding the
discount rate, Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily
determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at
lease inception, on a collateralized basis, over a similar term. For operating leases existing prior to January
1, 2019, the rate for the remaining lease term as of January 1, 2019, was used. For the Company’s only
finance lease, the Company utilized its incremental borrowing rate at lease inception.
Weighted-average remaining lease term
Operating lease
Weighted-average discount rate
Operating leases
June 30, 2021 June 30, 2020
37.4 years
38.4 years
3.00%
3.00%
59
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 2.
Securities
The amortized cost and fair value of securities, with gross unrealized gains and losses, follows:
Amortized
Cost
June 30, 2021
Gross
Unrealized
Gains
Gross
Unrealized
Losses
(In Thousands)
$ 4,188
18,666
6,347
29,201
$29,201
$ 782
9,876
42,160
52,818
$ 33
486
1
520
$ 520
$ 17
--
641
658
21
Fair
Value
$ 4,221
19,152
6,177
29,550
$29,550
$ 799
9,599
42,301
52,699
1,382
277
250
527
$54,608
$ --
--
171
171
$171
$ --
277
500
777
--
--
--
--
$777
Securities Available-for-Sale
Debt Securities
FHLMC Mortgage-Backed Certificates
FNMA Mortgage-Backed Certificates
GNMA Mortgage-Backed Certificates
Total Debt Securities
Total Securities Available-for-Sale
Securities Held-to-Maturity
Debt Securities
GNMA Mortgage-Backed Certificates
FHLMC Mortgage-Backed Certificates
FNMA Mortgage-Backed Certificates
Total Debt Securities
Municipals
1,361
Equity Securities (Non-Marketable)
2,766 Shares – Federal Home Loan Bank
630 Shares – First National Bankers Bankshares, Inc.
Total Equity Securities
Total Securities Held-to-Maturity
277
250
527
$54,706
--
--
--
$ 679
60
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 2.
Securities (Continued)
The amortized cost and fair value of securities by contractual maturity at June 30, 2021, follows:
Debt Securities
Within One Year or Less
One through Five Years
After Five through Ten Years
Over Ten Years
Municipals
Within One Year or Less
One through Five Years
After Five through Ten Years
Over Ten Years
Other Equity Securities
Total
Available-for-Sale
Held-to-Maturity
Amortized
Cost
Fair
Value
Amortized
Cost
(In Thousands)
Fair
Value
$ --
5,262
14,345
9,594
$ --
5,371
14,708
9,471
$ --
--
--
52,818
$ --
--
--
52,699
29,201
29,550
52,818
52,699
$ --
--
--
--
--
--
$ --
--
--
--
$ --
236
--
1,125
$ --
240
--
1,142
--
1,361
1,382
--
527
527
$29,201
$29,550
$54,706
$54,608
61
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 2.
Securities (Continued)
Securities Available-for-Sale
Debt Securities
FHLMC Mortgage-Backed Certificates
FNMA Mortgage-Backed Certificates
GNMA Mortgage-Backed Certificates
Total Debt Securities
Total Securities Available-for-Sale
Securities Held-to-Maturity
Debt Securities
GNMA Mortgage-Backed Securities
FNMA Mortgage-Backed Securities
Total Debt Securities
Municipals
Equity Securities (Non-Marketable)
27,094 Shares – Federal Home Loan Bank
630 Shares – First National Bankers Bankshares, Inc.
Total Equity Securities
Amortized
Cost
June 30, 2020
Gross
Unrealized
Gains
Gross
Unrealized
Losses
(In Thousands)
$ 5,018
30,820
5,064
40,902
$40,902
$ 1,109
16,546
17,655
243
2,710
250
2,960
$ 141
1,032
23
1,196
$1,196
$ 20
997
1,017
4
--
--
--
$ --
--
38
38
$38
$ --
--
--
--
--
--
--
Fair
Value
$ 5,159
31,852
5,049
42,060
$42,060
$ 1,129
17,543
18,672
247
2,710
250
2,960
Total Securities Held-to-Maturity
$20,858
$1,021
$ --
$21,879
The amortized cost and fair value of securities by contractual maturity at June 30, 2020, follows:
Debt Securities
Within One Year or Less
One through Five Years
After Five through Ten Years
Over Ten Years
Municipals
Other Equity Securities
Available-for-Sale
Held-to-Maturity
Amortized
Cost
Fair
Value
Amortized
Cost
(In Thousands)
Fair
Value
$ 13
13,770
27,119
--
40,902
--
--
$ 13
14,130
27,917
--
42,060
--
--
$ --
--
--
17,655
$ --
--
--
18,672
17,655
18,672
243
247
2,960
2,960
Total
$40,902
$42,060
$20,858
$21,879
62
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 2.
Securities (Continued)
Information pertaining to securities with gross unrealized losses at June 30, 2021 and 2020, aggregated by
investment category and length of time that individual securities have been in a continuous loss position,
follows:
June 30, 2021
Less Than Twelve Months
Gross
Unrealized
Losses
Fair
Value
Over Twelve Months
Gross
Unrealized
Losses
Fair
Value
(In Thousands)
Securities Available-for-Sale
Mortgage-Backed Securities
$ 139
$ 4,522
$ 32
$ 1,633
Total Securities Available-for-Sale
$ 139
$ 4,522
$ 32
$ 1,633
June 30, 2021
Less Than Twelve Months
Gross
Unrealized
Losses
Fair
Value
Over Twelve Months
Gross
Unrealized
Losses
Fair
Value
(In Thousands)
Securities Held-to-Maturity
Mortgage-Backed Securities
$ 777
Total Securities Held-to-Maturity
$ 777
$41,154
$41,154
$ --
$ --
$ --
$ --
June 30, 2020
Less Than Twelve Months
Gross
Unrealized
Losses
Fair
Value
Over Twelve Months
Gross
Unrealized
Losses
Fair
Value
(In Thousands)
Securities Available-for-Sale
Mortgage-Backed Securities
$ --
$ --
$ 38
$ 2,816
Total Securities Available-for-Sale
$ --
$ --
$ 38
$ 2,816
The unrealized losses on the Company’s investment in mortgage-backed securities at June 30, 2021 and 2020
were caused by interest rate changes. The contractual cash flows of these investments are guaranteed by
agencies of the U.S. government. Accordingly, it is expected that these securities would not be settled at a
price less than the amortized cost of the Company’s investment. Because the decline in market value is
attributable to changes in interest rates and not credit quality and because the Company has the ability and
intent to hold these investments until a recovery of fair value, which may be maturity, the Company does not
consider these investments to be other-than-temporarily impaired at June 30, 2021.
At June 30, 2021 and 2020, securities with a carrying value of $940,000 and $1.7 million, respectively, were
pledged to secure public deposits, and securities and mortgage loans with a carrying value of $189.7 million
and $162.1 million, respectively, were pledged to secure FHLB advances.
63
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 3.
Loans Receivable
Loans receivable at June 30, 2021 and 2020, are summarized as follows:
Loans Secured by Mortgages on Real Estate
One-to-Four Family Residential
Commercial
Multi-Family Residential
Land
Construction
Equity and Second Mortgage
Equity Lines of Credit
Total Mortgage Loans
Commercial Loans
Consumer Loans
Loans on Savings Accounts
Other Consumer Loans
Total Consumer Other Loans
Total Loans
Less: Allowance for Loan Losses
Unamortized Loan Fees
2021
2020
(In Thousands)
$ 97,607
96,180
31,015
16,260
15,337
1,267
12,788
270,454
$108,146
87,088
47,432
18,068
8,159
1,410
12,252
282,555
69,891
81,909
430
485
915
341,260
(4,122)
(744)
364
615
979
365,443
(4,081)
(1,435)
Net Loans Receivable
$336,394
$359,927
An analysis of the allowance for loan losses follows:
Balance - Beginning of Year
Provision for Loan Losses
Recoveries
Loan Charge-Offs
2021
2020
(In Thousands)
$4,081
1,800
202
(1,961)
$3,452
1,891
120
(1,382)
Balance – End of Year
$4,122
$4,081
64
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 3.
Loans Receivable (Continued)
Fixed rate loans receivable, as of June 30, 2021, are scheduled to mature and adjustable rate loans are scheduled
to re-price as follows (in thousands):
Loans Secured by One-to-Four
Family Residential
Fixed Rate
Adjustable Rate
Other Loans Secured by Real Estate
Fixed Rate
Adjustable Rate
All Other Loans
Fixed Rate
Adjustable Rate
Under
One
Year
Over One
to Five
Years
Over Five
to Ten
Years
(In Thousands)
Over
Ten
Years
Total
$ 5,709
111
$ 36,424
250
$ 10,379
--
$24,800
19,934
$ 77,312
20,295
22,847
27,869
57,754
--
48,984
--
15,393
--
144,978
27,869
12,167
11,955
33,277
--
9,459
--
3,948
--
58,851
11,955
Total
$ 80,658
$127,705
$ 68,822
$64,075
$341,260
Credit Quality Indicators
The Company segregates loans into risk categories based on the pertinent information about the ability of
borrowers to service their debt such as: current financial information, historical payment experience, credit
documentation, public information, and current economic trends, among other factors. The Company
analyzes loans individually by classifying the loans according to credit risk. Loans classified as substandard
or identified as special mention are reviewed quarterly by management to evaluate the level of deterioration,
improvement, and impairment, if any, as well as assign the appropriate risk category.
Loans excluded from the scope of the quarterly review process above are generally identified as pass credits
until: (a) they become past due; (b) management becomes aware of a deterioration in the credit worthiness
of the borrower; or (c) the customer contacts the Company for a modification. In these circumstances, the
loan is specifically evaluated for potential classification and the need to allocate reserves or charge-off.
The Company uses the following definitions for risk ratings:
Pass - Loans classified as pass are well protected by the current net worth or paying capacity of the obligor
or by the fair value, less cost to acquire and sell the underlying collateral in a timely manner.
Pass Watch – Loans are considered marginal, meaning some weakness has been identified which could cause
future impairment of repayment. However, these relationships are currently protected from any apparent loss
by collateral.
Special Mention - Loans identified as special mention have a potential weakness that deserves management’s
close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment
prospects for the loan or of the institution’s credit position at some future date.
Substandard - Loans classified as substandard are inadequately protected by the current net worth and
payment capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined
weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct
possibility that the institution will sustain some loss if the deficiencies are not corrected.
Doubtful - Loans classified as doubtful have all the weaknesses inherent in those classified as substandard,
with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of
currently existing facts, conditions, and values, highly questionable and improbable.
65
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 3.
Loans Receivable (Continued)
Credit Quality Indicators (Continued)
Loss - This classification includes those loans which are considered uncollectible and of such little value that
their continuance as loans is not warranted. Even though partial recovery may be possible in the future, it is
not practical or desirable to defer writing off these basically worthless loans. Accordingly, these loans are
charged-off before period end.
The following tables present the grading of loans, segregated by class of loans, as of June 30, 2021 and 2020:
June 30, 2021
Pass and
Pass Watch
Special
Mention
Substandard
(In Thousands)
Doubtful
Total
Real Estate Loans:
One-to-Four Family Residential
Commercial
Multi-Family Residential
Land
Construction
Equity and Second Mortgage
Equity Lines of Credit
Commercial Loans
Consumer Loans
$ 97,115
93,468
31,015
16,260
15,337
1,267
12,788
67,087
915
$ 358
--
--
--
--
--
--
2,804
--
$ 134
2,712
--
--
--
--
--
--
--
$ --
--
--
--
--
--
--
--
--
$ 97,607
96,180
31,015
16,260
15,337
1,267
12,788
69,891
915
Total
$335,252
$3,162
$2,846
$ --
$341,260
June 30, 2020
Pass and
Pass Watch
Special
Mention
Substandard Doubtful
Total
(In Thousands)
Real Estate Loans:
One-to-Four Family Residential
Commercial
Multi-Family Residential
Land
Construction
Equity and Second Mortgage
Equity Lines of Credit
Commercial Loans
Consumer Loans
$106,886
83,376
47,432
15,087
8,159
1,410
12,235
81,452
979
$ 475
1,915
--
--
--
--
17
--
--
$ 785
1,797
--
2,981
--
--
--
457
--
$ --
--
--
--
--
--
--
--
--
$108,146
87,088
47,432
18,068
8,159
1,410
12,252
81,909
979
Total
$357,016
$2,407
$6,020
$ --
$365,443
Factors considered by management in determining impairment include payment status, collateral value, and
the probability of collecting scheduled principal and interest payments when contractually due. Loans that
experience insignificant payment delays or payment shortfalls are generally not classified as impaired. On a
case-by-case basis, management determines the significance of payment delays and payment shortfalls,
taking into consideration all of the circumstances related to the loan, including: the length of the payment
delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in
relation to the principal and interest owed.
66
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 3.
Loans Receivable (Continued)
Credit Quality Indicators (Continued)
An aging analysis of past due loans, segregated by class of loans, as of June 30, 2021 and 2020, is as follows:
30-59 Days
Past Due
60-89 Days
Past Due
90 Days or
More
Total
Past Due
(In Thousands)
Current
Recorded
Investment
> 90 Days
and
Accruing
Total
Loans
Receivable
$ --
--
--
--
--
--
--
--
--
$ 30
--
--
--
--
--
--
--
--
$ 176
837
--
--
--
--
--
--
--
$ 206
837
--
--
--
--
--
--
--
$97,401
95,343
31,015
16,260
15,337
1,267
12,788
69,891
915
$97,607
96,180
31,015
16,260
15,337
1,267
12,788
69,891
915
$ 33
--
--
--
--
--
--
--
--
June 30, 2021
Real Estate Loans:
One-to-Four Family
Residential
Commercial
Multi-Family Residential
Land
Construction
Equity and Second Mortgage
Equity Lines of Credit
Commercial Loans
Consumer Loans
Total
$ --
$ 30
$ 1,013
$ 1,043
$340,217
$341,260
$ 33
30-59 Days
Past Due
60-89 Days
Past Due
90 Days or
More
Total
Past Due
(In Thousands)
Current
Total Loans
Receivable
Recorded
Investment
> 90 Days
and
Accruing
$ 1,312
--
--
--
--
--
--
--
--
$ 557
--
--
--
--
--
--
--
--
$ 1,003
1,797
--
2,981
--
--
--
457
--
$ 2,872
1,797
--
2,981
--
--
--
457
--
$105,274
85,291
47,432
15,087
8,159
1,410
12,252
81,452
979
$108,146
87,088
47,432
18,068
8,159
1,410
12,252
81,909
979
$ 319
--
--
--
--
--
--
--
--
June 30, 2020
Real Estate Loans:
One-to-Four Family
Residential
Commercial
Multi-Family Residential
Land
Construction
Equity and Second Mortgage
Equity Lines of Credit
Commercial Loans
Consumer Loans
Total
$ 1,312
$ 557
$ 6,238
$ 8,107
$357,336
$365,443
$ 319
67
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 3.
Loans Receivable (Continued)
Credit Quality Indicators (Continued)
The allowance for loan losses and recorded investment in loans for the year ended June 30, 2021 and 2020
was as follows:
June 30, 2021
Residential
Commercial
Real Estate Loans
Multi-
Family
Land
Construction
(In Thousands)
Other
Commercial
Loans
Consumer
Loans
Total
Allowance for loan losses:
Beginning Balances
Charge-Offs
Recoveries
Current Provision
Ending Balances
Evaluated for Impairment:
Individually
Collectively
Loans Receivable:
Ending Balances – Total
Ending Balances:
Evaluated for Impairment:
Individually
Collectively
$ 966
(40)
3
(35)
$ 894
$ 568
--
--
1,062
$ 1,630
$ 364
--
--
(18)
$ 346
$ 1,024
(907)
120
170
$ 407
$ 80
--
--
80
$ 160
$ 126
--
5
62
$ 193
$ 949
(1,014)
74
480
$ 489
$ 4
--
--
(1)
$ 3
$ 4,081
(1,961)
202
1,800
$ 4,122
--
894
317
1,313
--
346
--
407
--
160
--
193
251
238
--
3
568
3,554
$97,607
$96,180
$ 31,015
$16,260
$ 15,337
$14,055
$69,891
$ 915
$341,260
492
$97,115
2,712
$93,468
--
$ 31,015
--
$16,260
--
$ 15,337
--
$14,055
2,804
$67,087
--
$ 915
6,008
$335,252
June 30, 2020
Residential
Commercial
Real Estate Loans
Multi-
Family
Land
Construction
(In Thousands)
Other
Commercial
Loans
Consumer
Loans
Total
Allowance for loan losses:
Beginning Balances
Charge-Offs
Recoveries
Current Provision
Ending Balances
$ 1,017
(40)
2
(13)
$ 966
$ 508
(100)
--
160
$ 568
$ 338
--
--
26
$ 364
$ 100
--
--
924
$ 1,024
$ 115
--
--
(35)
$ 80
$ 144
(107)
9
80
$ 126
$ 1,227
(1,135)
109
748
$ 949
$ 3
--
--
1
$ 4
$ 3,452
(1,382)
120
1,891
$ 4,081
Evaluated for Impairment:
Individually
Collectively
Loans Receivable:
Ending Balances - Total
Ending Balances:
Evaluated for Impairment:
Individually
Collectively
34
932
23
545
--
364
907
117
--
80
--
126
--
949
--
4
964
3,117
$108,146
$ 87,088
$ 47,432
$ 18,068
$ 8,159
$ 13,662
$ 81,909
$ 979
$365,443
1,260
$106,886
3,712
$ 83,376
--
$ 47,432
2,981
$ 15,087
--
$ 8,159
17
$ 13,645
457
$ 81,452
--
$ 979
8,427
$357,016
68
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 3.
Loans Receivable (Continued)
Credit Quality Indicators (Continued)
The following table’s present loans individually evaluated for impairment, segregated by class of loans, as
of June 30, 2021 and 2020:
Unpaid
Principal
Balance
Recorded
Investment
With No
Allowance
Recorded
Investment
With
Allowance
Total
Recorded
Investment
Related
Allowance
Average
Recorded
Investment
June 30, 2021
Real Estate Loans:
One-to-Four Family Residential
Commercial
Multi-Family Residential
Land
Construction
Equity and Second Mortgage
Equity Lines of Credit
Commercial Loans
Consumer Loans
$ 492
2,712
--
--
--
--
--
2,804
--
$ 492
1,596
--
--
--
--
--
--
--
(In Thousands)
$ --
1,116
--
--
--
--
--
2,804
--
$ 492
2,712
--
--
--
--
--
2,804
--
$ --
317
--
--
--
--
--
251
--
Total
$6,008
$2,088
$3,920
$6,008
$ 568
$ 530
3,384
--
--
--
--
--
2,836
--
$6,750
June 30, 2020
Real Estate Loans:
One-to-Four Family Residential
Commercial
Multi-Family Residential
Land
Construction
Equity and Second Mortgage
Equity Lines of Credit
Commercial Loans
Consumer Loans
Unpaid
Principal
Balance
Recorded
Investment
With No
Allowance
Recorded
Investment
With
Allowance
Total
Recorded
Investment
Related
Allowance
Average
Recorded
Investment
(In Thousands)
$1,260
3,712
--
2,981
--
--
17
457
--
$1,260
3,712
--
--
--
--
17
457
--
$ --
--
--
2,981
--
--
--
--
--
$1,260
3,712
--
2,981
--
--
17
457
--
$ --
--
--
907
--
--
--
--
--
$ 1,271
5,108
--
2,981
--
--
17
457
--
Total
$8,427
$5,446
$2,981
$8,427
$ 907
$9,834
69
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 3.
Loans Receivable (Continued)
Credit Quality Indicators (Continued)
A troubled debt restructuring (“TDR”) is a restructuring of a debt made by the Company to a debtor for
economic or legal reasons related to the debtor’s financial difficulties that it would not otherwise
consider. The Company grants the concession in an attempt to protect as much of its investment as possible.
Information about the Company’s TDRs is as follows (in thousands):
Commercial real estate
$
-- $
837
$ 837
$
837
Current
Past Due Greater Than 30 Days
Nonaccrual TDRs
Total TDRs
June 30, 2021
Current
Past Due Greater Than 30 Days
Nonaccrual TDRs
Total TDRs
Commercial business
1-4 Family Residential
Commercial real estate
$ -- $
--
--
$
457
76
1,797
457 $
76
457
76
1,797
1,797
June 30, 2020
During the year ended June 30, 2020 there was one loan relationship with a customer consisting of six loans
comprised of three commercial real estate loans, two non-real estate loans, and one single family residential
loan with pre-modification balance of $2.3 million identified as TDRs after conversion of the loans’ interest
rates and payment term modifications. For purposes of the determination of an allowance for loan losses on
these TDRs, as an identified TDR, the Company considers a loss probable on the loan and, as a result, the
loan is reviewed for specific impairment in accordance with the Company’s allowance for loan loss
methodology. If it is determined losses are probable on such TDRs, either because of delinquency or other
credit quality indicator, the Company establishes specific reserves for these loans. As of June 30, 2021, there
were no commitments to lend additional funds to debtors owing sums to the Company whose terms have
been modified in TDRs.
70
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 3.
Loans Receivable (Continued)
Credit Quality Indicators (Continued)
For each of the years ended June 30, 2021 and 2020, approximately $63,000 and $464,000, respectively, of
interest was foregone on non-accrual loans. Impaired loans consisted of non-accruing loans at June 30, 2021
and 2020, and TDRs at June 30, 2021 and 2020. Impaired loans, segregated by class of loans, were as
follows:
Real Estate Loans:
One-to-Four Family Residential
Commercial
Multi-Family Residential
Land
Construction
Equity and Second Mortgage
Equity Lines of Credit
Commercial Loans
Consumer Loans
Total
2021
2020
(In Thousands)
$ 134
2,712
--
--
--
--
--
--
--
$2,846
$ 785
1,797
--
2,981
--
--
--
457
--
$6,020
Loan Modifications/Troubled Debt Restructurings. Under the CARES Act, loans less than 30 days
past due as of December 31, 2019 will be considered current for COVID-19 modifications. A financial institution
can then suspend the requirements under GAAP for loan modifications related to COVID-19 that would
otherwise be categorized as a troubled debt restructuring (“TDR”), and suspend any determination of a loan
modified as a result of COVID-19 as being a TDR, including the requirement to determine impairment for
accounting purposes. Financial institutions wishing to utilize this authority must make a policy election, which
applies to any COVID-19 modification made between March 1, 2020 and the earlier of either December 31, 2020
or the 60th day after the end of the COVID-19 national emergency. Home Federal Bank has made that election.
Similarly, the Financial Accounting Standards Board has confirmed that short-term modifications made on a
good-faith basis in response to COVID-19 to loan customers who were current prior to any relief will not be
considered TDRs.
Prior to the enactment of the CARES Act, the banking regulatory agencies provided guidance as to how
certain short-term modifications would not be considered TDRs, and have subsequently confirmed that such
guidance could be applicable for loans that do not qualify for favorable accounting treatment under Section 4013
of the CARES Act.
71
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 4.
Accrued Interest Receivable
Accrued interest receivable at June 30, 2021 and 2020 consisted of the following:
Accrued Interest on:
Mortgage Loans
Other Loans
Investments
Municipals
Mortgage-Backed Securities
2021
2020
(In Thousands)
$ 203
826
2
16
116
$ 364
1,382
3
3
108
Total
$1,163
$1,860
Note 5.
Premises and Equipment
A summary of the cost and accumulated depreciation of premises and equipment follows:
Land
Buildings
Equipment
Construction in Progress
Accumulated Depreciation
2021
2020
(In Thousands)
$ 4,659
12,571
2,481
285
19,996
(5,081)
$ 4,029
11,248
2,169
243
17,689
(4,454)
Total
$14,915
$13,235
Depreciation expense charged against operations for the years ended June 30, 2021 and 2020 was $665,000
and $653,000, respectively.
72
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 6.
Deposits
Deposits at June 30, 2021 and 2020 are summarized as follows:
Weighted
Average
Rate at
6/30/2021
Weighted
Average
Rate at
6/30/2020
Non-Interest Bearing
NOW Accounts
Money Market
Passbook Savings
0.00%
0.11%
0.12%
0.00%
0.00%
0.32%
0.41%
0.77%
2021
Amount
Percent
(Dollars in Thousands)
Amount
2020
Percent
$131,014
49,262
88,181
129,130
397,587
25.86%
9.72
17.41
25.49
78.48
$103,422
41,365
74,637
83,797
303,221
22.44%
8.98
16.20
18.18
65.80
Certificates of Deposit
1.51%
1.87%
109,009
21.52
157,589
34.20
Total Deposits
$506,596
100.00%
$460,810
100.00%
The composition of certificates of deposit accounts by interest rate is as follows:
2021
2020
Amount
Percent
Amount
Percent
(Dollars in Thousands)
0.00% to 0.99%
1.00% to 1.99%
2.00% to 2.99%
3.00% to 3.99%
$ 37,756
30,588
39,037
1,628
34.63%
28.07%
35.81%
1.49%
$ 16,843
69,751
68,929
2,066
10.69%
44.26
43.74
1.31
Total Deposits
$109,009
100.00%
$157,589
100.00%
73
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 6.
Deposits (Continued)
Maturities of certificates of deposit accounts at June 30, 2021 are scheduled as follows:
Year Ending
June 30,
2022
2023
2024
2025
2026
2027
Total
Amount
Percent
(Dollars in Thousands)
$ 64,724
20,818
14,862
5,322
3,283
--
$109,009
59.38%
19.10
13.63
4.88
3.01
--
100.00%
Weighted
Average
Rate
1.38%
1.49
2.34
1.32
0.74
--
1.51%
Interest expense on deposits for the years ended June 30, 2021 and 2020 was as follows:
NOW and Money Market
Passbook Savings
Certificates of Deposit
2021
2020
(In Thousands)
$ 306
565
2,324
$ 903
700
3,442
Total
$ 3,195
$ 5,045
The aggregate amount of time deposits in denominations of $100,000 or more at June 30, 2021 and 2020 was
$77.5 million and $115.5 million, respectively.
At June 30, 2021 and 2020, the Bank had brokered certificates of deposit totaling $10.7 million and $16.0
million, respectively.
Note 7.
Advances from Federal Home Loan Bank of Dallas
Pursuant to collateral agreements with the Federal Home Loan Bank of Dallas (FHLB), advances are secured
by a blanket floating lien on first mortgage loans. Total interest expense recognized amounted to $45,000
and $57,000 for fiscal years 2021 and 2020, respectively.
Advances at June 30, 2021 and 2020 consisted of the following:
Contract Rate
0.00% to 0.99%
1.00% to 1.99%
2.00% to 2.99%
3.00% to 3.99%
4.00% to 4.99%
Total
Advance Total
2021
2020
(In Thousands)
$ --
$ --
--
--
--
1,060
$1,060
--
--
--
867
$ 867
74
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 7.
Advances from Federal Home Loan Bank of Dallas (Continued)
Maturities of advances at June 30, 2021 are as follows (in thousands):
Year Ending
June 30,
2022
2023
2024
2025
2026
Thereafter
Amount
$ 35
832
--
--
--
--
Total
$ 867
Note 8.
Other Borrowings
At June 30, 2021 and 2020, the Company had available a $5.0 million line of credit agreement with First
National Bankers Bank with the latest line maturing August 21, 2021. The line will be renewed in September
2021 for another thirty day period. The line is secured by shares of the subsidiary Bank’s common stock and
bears interest at an initial rate of 4.75%, subject to change when adjustments are made to Wall Street Journal
Prime. At June 30, 2021, the line had an outstanding balance of $2.4 million. Interest expense amounted to
$64,000 and $52,000 for the years ended June 30, 2021 and 2020, respectively.
Note 9.
Commitments
Lease Commitments
The Bank leases property for one branch facility expiring in May 2028.
Future minimum rental payments resulting from the non-cancelable term of these leases are as follows (in
thousands):
Year Ending
June 30,
2022
2023
2024
2025
2026
Thereafter
Total
Amount
$ 31
31
31
31
31
62
$217
Total rent expense paid under the terms of these leases for the years ended June 30, 2021 and 2020
amounted to $82,000 and $91,000, respectively.
Contractual Commitment
The Bank has an agreement with a third-party to provide on-line data processing services. The agreement,
which expires May 31, 2024, contains minimum monthly service charges of $28,821. At the end of this term,
the agreement will automatically continue for successive periods of five years unless terminated upon written
notice given at least six months prior to the end of the present term.
75
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 9.
Commitments (Continued)
The future minimum commitments for the on-line processing services are as follows (in thousands):
Year Ending
June 30,
2022
2023
2024
Total
Amount
(In Thousands)
$ 346
346
317
$1,009
Employment Contracts
The Company and the Bank have employment contracts with a certain key employee. These contracts
provide for compensation and termination benefits. The future minimum commitments for the employment
contracts are as follows (in thousands):
Year Ending
June 30,
2022
2023
2024
Amount
(In Thousands)
$194
194
194
Total
$582
Letters of Credit
At June 30, 2021, the Company had secured letters of credit in the aggregate amount of $31.7 million
outstanding with the Federal Home Loan Bank, and $31.7 million expiring within one year. These letters of
credit were issued to secure public body deposits. There were no outstanding borrowings associated with
these letters of credit at June 30, 2021.
Note 10.
Income Taxes
The Company and its subsidiary file consolidated federal income tax returns. The current provision for
federal and state income taxes is calculated on pretax accounting income adjusted by items considered to be
permanent differences between book and taxable income. Income tax expense for the years ended June 30,
2021 and 2020 is summarized as follows:
Current
Deferred
Total
2021
2020
(In Thousands)
$1,506
(61)
$865
92
$1,445
$957
76
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 10.
Income Taxes (Continued)
The effective federal income tax rate for the years ended June 30, 2021 and 2020 was 21.2% and 19.9%,
respectively. Reconciliations of income tax expense at the statutory rate to the Company’s effective rates are
as follows:
2021
2020
(In Thousands)
Computed at Expected Statutory Rate
Non-Taxable Income
Other
$1,430
--
15
$1,009
--
(52)
Provision for Income Tax Expense
$1,445
$ 957
At June 30, 2021 and 2020, temporary differences between the financial statement carrying amount and tax
bases of assets that gave rise to deferred tax recognition were related to the effect of loan bad debt deduction
differences for tax and book purposes, deferred stock option compensation, and supplemental employee
retirement benefits. The deferred tax expense or benefit related to securities available-for-sale has no effect
on the Company’s income tax provision since it is charged or credited to the Company’s other comprehensive
income or loss equity component. A valuation allowance has been established to eliminate the deferred tax
benefit of capital losses due to the uncertainty as to whether the tax benefits would be realized in future
periods.
The net deferred income tax asset and liability consisted of the following components at June 30, 2021 and
2020:
2021
(In Thousands)
2020
Deferred Tax Assets
Stock Option and SERP Compensation
Loans Receivable – Bad Debt Loss Allowance
Capital Losses
Valuation Allowance
$ 225
800
--
1,025
--
$ 237
791
59
1,087
(86)
Deferred Tax Liabilities
Total Deferred Tax Assets
$ 1,025
$ 1,001
Market Value Adjustment to Available-for-Sale
Securities
Tax over Book Accumulated Depreciation
Total Deferred Tax Liabilities
(73)
(133)
(206)
(243)
--
(243)
Net Deferred Tax Asset
$ 819
$ 758
Included in retained earnings at June 30, 2021 and 2020 is approximately $3.3 million for which no deferred
Federal income tax liability has been recorded. This amount consists of the total amount of bad debt reserves
deducted for income tax reporting purposes prior to January 1, 1988. Under current tax law, these pre-1988
bad debt reserves are subject to recapture into taxable income if the Bank were to (a) make certain “non-
dividend distributions,” which include distributions in excess of the Bank’s current and accumulated earnings
and profits, distributions in redemption of stock, and distributions in partial or complete liquidation or (b)
cease to maintain a bank or thrift charter. The unrecorded deferred tax liability was approximately $693,000
at June 30, 2021 and 2020.
77
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 10.
Income Taxes (Continued)
Accounting principles generally accepted in the United States of America provide accounting and disclosure
guidance about positions taken by an entity in its tax returns that might be uncertain. The Company believes
that it has appropriate support for any tax positions taken, and as such, does not have any uncertain tax
positions that are material to the consolidated financial statements.
Penalties and interest assessed by income taxing authorities, if any, would be included in income tax expense.
Note 11.
Employee Benefit Plans
Effective November 15, 2004, the Bank adopted the Home Federal Bank Employees’ Savings and Profit
Sharing Plan and Trust. This plan complies with the requirements of Section 401(k) of the Internal Revenue
Code. Those eligible for this defined contribution plan must have completed twelve months of full time
service and attained age 21. For 2021, participating employees may make elective salary reduction
contributions of up to $19,500 of their eligible compensation. The Bank will contribute a basic “safe harbor”
contribution of 3% of participant plan salary and will match 100% of the first 6% of plan salary elective
deferrals. The Bank is also permitted to make discretionary contributions to be allocated to participant
accounts. Pension costs, including administrative fees, attributable to the Bank’s 401(k) safe harbor plan for
the years ended June 30, 2021 and 2020 were $237,000 and $222,000 respectively.
During fiscal year 2011, the Company established a Survivor Benefit Plan for the benefit of selected
executives. The purpose of the plan is to provide benefits to designated beneficiaries, if a participant dies
while employed by the Company. The plan is considered an unfunded plan for tax and ERISA purposes, and
all obligations arising under the plan are payable from the general assets of the Company. At June 30, 2021
and 2020, there were no obligations requiring accrual for this plan.
The Bank adopted a Supplemental Executive Retirement Agreement on December 27, 2012 (Effective Date)
for its then Chief Executive Officer, Daniel R. Herndon. The agreement provides for retirement benefits
payable in equal annual installments of $75,000 for eight consecutive years after Mr. Herndon’s retirement.
Mr. Herndon was 100% vested after December 31, 2017. In the event of his death after a separation from
service on or after December 31, 2017, and prior to receipt of eight years of Supplemental Retirement
Benefits, the remainder will be payable each year to his designated beneficiary. In the event of his death
while in active service, the designated beneficiary shall receive the full Supplemental Retirement Benefit in
a single lump sum payment within thirty days following the date of death. Mr. Herndon retired effective
March 31, 2020.
The Bank adopted a Supplemental Executive Retirement Agreement on December 13, 2017 for the benefit
of Mr. James R. Barlow as President and Chief Executive Officer of the Company and the Bank effective as
of January 1, 2018 (Effective Date). Under the terms of the agreement, after the target retirement date of
December 31, 2033, Mr. Barlow will receive annual retirement benefits of $120,000, payable in equal annual
installments over ten years. In the event of a separation from service prior to December 31, 2033, other than
as a result of death and without cause, Mr. Barlow would receive his accrued benefits through such date
payable in a lump sum. If Mr. Barlow has a separation from service either concurrently with or within two
years following a change in control, he will be credited with five additional years of service following the
date of his separation from service for purposes of calculating his accrued amount. In the event of death
while in active service, his designated beneficiaries would receive a lump sum payment of the full retirement
benefit. In the event of death after retirement, but before all payments have been made, any remaining
benefits will be paid to the designated beneficiaries until all the annual installments have been paid. The
retirement benefits are vesting ratably at 6.25% per year for sixteen years beginning with the calendar year
ending December 31, 2018.
For the years ended June 30, 2021 and 2020, the Company recorded compensation expense totaling $41,329
and $39,893, respectively, to accrue the benefits required by the Supplemental Executive Retirement
78
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 11.
Employee Benefit Plans (Continued)
Agreements. The Bank’s compensation expense under the agreement with Mr. Herndon was fully accrued
as of December 31, 2017.
Note 12.
Employee Stock Ownership Plan
During fiscal 2009, the Company instituted an employee stock ownership plan. The Home Federal Bank
Employee Stock Ownership Plan (ESOP) enables all eligible employees of the Bank to share in the growth
of the Company through the acquisition of stock. Employees are generally eligible to participate in the ESOP
after completion of one year of service and attaining the age of 21.
The ESOP purchased the statutory limit of eight percent of the shares sold in our initial public offering
completed on January 18, 2005, excluding shares issued to Home Federal Mutual Holding Company of
Louisiana. This purchase was facilitated by a loan from the Company to the ESOP in the amount of $1.1
million. The corresponding note is being repaid in 80 quarterly debt service payments of $23,000 on the last
business day of each quarter, beginning March 31, 2005, at the rate of 5.25%.
As part of our second step conversion completed on December 22, 2010, the ESOP purchased six percent of
the shares sold in the offering. This purchase was facilitated by a loan from the Company to the ESOP in the
amount of $1.2 million. The corresponding note is being repaid in 80 quarterly debt service payments of
$20,000 on the last business day of each quarter, beginning March 31, 2011, at the rate of 3.2%.
The loans are secured by a pledge of the ESOP shares. The shares pledged as collateral are reported as
unearned ESOP shares in the consolidated balance sheets. The notes payable and the corresponding notes
receivable have been eliminated in consolidation.
The Company may contribute to the ESOP, in the form of debt service, at the discretion of its board of
directors. Cash dividends on the Company’s unallocated stock shall be used to either repay the loan or be
distributed to the participants in the ESOP. If dividends are used to repay the loan, additional shares will be
released from the suspense account and allocated to participants. Shares are released for allocation to ESOP
participants based on principal and interest payments of the note. Compensation expense is recognized based
on the number of shares allocated to ESOP participants each year and the average market price of the stock
for the current year. Released ESOP shares become outstanding for earnings per share computations.
As compensation expense is incurred, the unearned ESOP shares account is reduced based on the original
cost of the stock. The difference between the cost and the average market price of shares released for
allocation is applied to additional paid-in capital. ESOP compensation expense for the years ended June 30,
2021 and 2020, was approximately $333,000 and $353,000, respectively.
The ESOP shares as of June 30, 2021 and 2020, were as follows (split adjusted):
Allocated and Committed to be Released
Shares, Beginning of Year
Shares Allocated and Committed to be Released
During the Year
Shares Distributed During the Year
Unallocated and Unreleased Shares, as of Year End
Total ESOP Shares
2021
2020
264,548
22,046
(36,028)
147,191
397,757
242,502
22,046
--
169,238
433,786
Fair Value of Unreleased Shares (In Thousands)
$2,870
$2,099
Stock Price
$19.50
$12.41
79
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 13.
Stock-Based Compensation
Recognition and Retention Plans
On December 23, 2011, the shareholders of the Company approved the establishment of the Home Federal
Bancorp, Inc. of Louisiana 2011 Recognition and Retention Plan and Trust Agreement as an incentive to
retain personnel of experience and ability in key positions. The aggregate number of shares of the Company’s
common stock available under the 2011 Recognition Plan totaled 155,616 shares, all of which have been
awarded.
The cost associated with the 2011 Recognition Plan is based on a share price of $9.46 on July 31, 2014,
which represents the fair market price of the Company’s stock on the date on which the 2011 Recognition
Plan shares were granted. The cost of the 2011 Recognition Plan was recognized over the five year vesting
period. The final vesting occurred on July 31, 2019, and the 2011 Recognition Plan terminated effective on
that date.
Stock Option Plans
On August 10, 2005, the shareholders of the Company approved the establishment of the Home Federal
Bancorp, Inc. of Louisiana 2005 Stock Option Plan (the 2005 Option Plan) for the benefit of directors,
officers, and other employees. The aggregate number of shares of common stock reserved for issuance under
the Option Plan totaled 317,736 (as adjusted). Both incentive stock options and non-qualified stock options
may be granted under the plan. The 2005 Stock Option Plan terminated on June 8, 2015, however the 4,266
outstanding stock options as of June 30, 2021 will remain in effect for the remainder of their original ten year
terms.
On December 23, 2011, the shareholders of the Company approved the establishment of the Home Federal
Bancorp, Inc. of Louisiana 2011 Stock Option Plan (the 2011 Option Plan, together with the 2005 Option
Plan, the Option Plan) for the benefit of directors, officers, and other employees. The aggregate number of
shares of common stock reserved for issuance under the 2011 Option Plan totaled 389,044 (as adjusted). Both
incentive stock options and non-qualified stock options may be granted under the Option Plan. As of June
30, 2021, there were 778 stock options available for future grant under the 2011 Option Plan.
Incentive stock options and non-qualified stock options granted under the Option Plan become vested and
exercisable at a rate of 20% per year over five years commencing one year from the date of the grant with an
additional 20% vesting on each successive anniversary of the date the option was granted. No vesting shall
occur after an employee’s employment or service as a director is terminated. In the event of death or disability
of an employee or director or change in control of the Company, the unvested options shall become vested
and exercisable. The Company recognizes compensation expense during the vesting period based on the fair
value of the option on the date of the grant.
Stock Incentive Plans
On November 12, 2014, the shareholders of the Company approved the adoption of the Company’s 2014
Stock Incentive Plan (the 2014 Stock Incentive Plan) for the benefit of employees and non-employee directors
as an incentive to contribute to the success of the Company and to reward employees for outstanding
performance and the attainment of targeted goals. The 2014 Stock Incentive Plan covers a total of 300,000
shares (as adjusted), of which no more than 75,000 shares (as adjusted), or 25% of the plan, may be share
awards. The balance of the plan is reserved for stock option awards which would total 225,000 (as adjusted)
stock options assuming all the share awards are issued. All incentive stock options granted under the 2014
Stock Incentive Plan are intended to comply with the requirements of Section 422 of the Internal Revenue
Code. On October 26, 2015, the Company granted a total of 69,000 (as adjusted) plan share awards and
207,000 (as adjusted) stock options to directors, officers, and other key employees vesting ratably over five
years. On February 5, 2019, the Company granted a total of 6,000 (as adjusted) plan share awards and
80
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 13.
Stock-Based Compensation (Continued)
27,000 (as adjusted) stock options to key employees vesting ratably over five years. The 2014 Stock Incentive
Plan cost is recognized over the five year vesting period.
On November 13, 2019, the shareholders of the Company approved the adoption of the Company’s 2019
Stock Incentive Plan which provides for a total of 250,000 shares (as adjusted) reserved for future issuance
as stock awards or stock options. No more than 62,500 (as adjusted) shares, or 25%, may be granted as stock
awards. The balance of the plan is reserved for stock option awards. On November 11, 2020, the Company
granted a total of 62,500 (as adjusted) plan share awards and 187,500 (as adjusted) stock options to directors,
officers and other key employees vesting ratably over five years. The Stock Incentive Plans costs are
recognized over the five year vesting period. As of June 30, 2021, there are no plan share awards or stock
options available for future grants under the Stock Incentive Plans.
Share Awards
Following is a summary of the status of the share awards outstanding under the 2011 Recognition Plan, 2014
Stock Incentive Plan, and 2020 Stock Incentive Plan during the fiscal years ended June 30, 2021 and 2020
(split adjusted):
Balance - Beginning of Year
Granted
Forfeited
Earned and Issued
Balance - End of Year
Awarded Shares
2021
2020
18,200
62,500
--
(14,600)
36,234
--
--
(18,034)
66,100
18,200
Compensation expense pertaining to the 2011 Recognition Plan and the share awards under the Stock
Incentive Plan was approximately $153,000 and $153,000 for the years ended June 30, 2021 and 2020,
respectively.
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HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 13.
Stock-Based Compensation (Continued)
Stock Options
Following is a summary of the status of the options outstanding under the Option Plan and Stock Incentive
Plan during the fiscal years ended June 30, 2021 and 2020 (split adjusted):
Outstanding at June 30, 2020
Granted
Exercised
Forfeited
Outstanding at June 30, 2021
Number of
Shares
562,864
187,500
(82,342)
(13,000)
655,022
Options Exercisable at June 30, 2021
451,322
Outstanding at June 30, 2019
Granted
Exercised
Forfeited
Outstanding at June 30, 2020
569,264
--
(6,400)
--
562,864
Options Exercisable at June 30, 2020
501,664
Weighted
Average
Exercise
Price
$ 9.31
11.86
8.42
11.50
$10.11
$ 9.18
$ 9.33
--
9.57
--
$ 9.31
$ 8.86
Weighted
Average
Remaining
Contract
Term
3.39
Aggregate
Intrinsic
Value
$1,744,623
4.45
2.29
$6,153,690
$4,658,496
4.40
$4,138,129
3.39
3.02
$1,744,623
$1,778,377
Stock Options (Continued)
The fair value of each option granted is estimated on the grant date using the Black-Scholes model. The
following assumptions were made in estimating fair value.
2019 Stock
Incentive Plan
November 11, 2020
2.78%
10 years
0.98%
10 years
25.56%
2014 Stock
Incentive Plan
February 5, 2019
1.79%
10 years
2.71%
10 years
16.17%
2014 Stock
Incentive Plan
October 26, 2015
1.39%
10 years
2.07%
10 years
20.38%
2011 Option Plan
July 31, 2014
1.50%
10 years
2.58%
10 years
9.56%
Dividend Yield
Expected Term
Risk-Free Interest Rate
Expected Life
Expected Volatility (1)
(1)
Weekly volatility is annualized by multiplying by the square root of 52.
82
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 13.
Stock-Based Compensation (Continued)
A summary of the status of the Company’s nonvested options as of June 30, 2021 and changes during the
year ended June 30, 2021 is as follows (split adjusted):
Nonvested at June 30, 2020
Granted
Vested
Forfeited
Nonvested at June 30, 2021
Number of
Shares
60,400
187,500
(44,200)
--
203,700
Weighted
Average
Exercise Price
$12.96
11.86
12.00
--
$12.16
For the years ended June 30, 2021 and 2020, compensation expense charged to operations for stock options
granted under the Option Plan and the Stock Incentive Plan was $107,000 and $137,000, respectively.
Note 14.
Off-Balance Sheet Activities
Credit Related Financial Instruments
The Bank is a party to credit related financial instruments with off-balance sheet risk in the normal course of
business to meet the financing needs of its customers. These financial instruments consist primarily of
commitments to extend credit. Such commitments involve, to varying degrees, elements of credit and
interest rate risk in excess of the amount recognized in the consolidated balance sheets.
The Bank’s exposure to credit loss in the event of non-performance by the other party to loan commitments
is represented by the contractual amount of the commitment. The Bank follows the same credit policies in
making commitments as it does for on-balance sheet instruments.
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any
condition established in the contract. Commitments generally have fixed expiration dates or other
termination clauses and may require a payment of a fee. The commitments for equity lines of credit may
expire without being drawn upon. Therefore, the total commitment amounts do not necessarily represent
future cash requirements. The amount and type of collateral obtained, if deemed necessary by the Bank upon
extension of credit, varies and is based on management’s credit evaluation of the counterparty.
No material gains or losses are anticipated as a result of these transactions.
At June 30, 2021 and 2020, the following financial instruments were outstanding:
Commitments to Grant Loans
Unfunded Commitments Under Lines of Credit
Fixed Rate Loans (2.375% - 3.375% in 2021; 2.625% - 3.50 % in 2020)
Variable Rate Loans (--% in 2021 and 2020)
Contract Amount
2021
2020
(In Thousands)
$59,118
9,677
$68,795
$68,795
--
$68,795
$53,070
8,536
$61,606
$61,606
--
$61,606
83
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 14.
Off-Balance Sheet Activities (Continued)
Cash Deposits
The Company periodically maintains cash balances in financial institutions that are in excess of insured
amounts. The Company has not experienced any losses and does not believe that significant credit risk exists
as a result of this practice. At June 30, 2021, we had $50.3 million in cash deposits over the insured limit of
$250,000.
Regional Credit Concentration
A substantial portion of the Bank’s lending activity is with customers located within a 100 mile radius of the
Shreveport, Louisiana metropolitan area, which includes areas of northwest Louisiana, northeast Texas and
southwest Arkansas. Although concentrated within the region, the Bank has a diversified loan portfolio,
which should preclude the Bank from being dependent upon the well-being of any particular economic sector
to ensure collectibility of any significant portion of its debtors’ loan contracts.
Other Credit Concentrations
The Bank has purchased, with recourse from the seller, loans from third-party mortgage originators. These
loans are serviced by these entities. At June 30, 2021 and 2020, the balance of the loans outstanding being
serviced by these entities was $9,000 and $2.9 million, respectively.
Interest Rate Floors and Caps
The Bank writes interest rate floors and caps into its variable rate mortgage loan contracts and loan servicing
agreements in an attempt to manage its interest rate exposure. Such floors and caps enable customers to
transfer, modify, or reduce their interest rate risk, which, in turn, creates an off-balance sheet market risk to
the Bank. At June 30, 2021, the Bank’s loan portfolio contained approximately $25.6 million of loans in
which the loan contracts or servicing agreements possessed interest rate floors and caps. Of this amount,
$9,000 consisted of purchased loans, which were originated by third-party mortgage originators.
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HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 15.
Related Party Events
In the ordinary course of business, the Bank makes loans to its directors and officers. These loans are made
on substantially the same terms and conditions, including interest rates and collateral, as those prevailing at
the same time for comparable transactions with other customers and do not involve more than normal credit
risk or present other unfavorable features.
An analysis of the activity in loans made to such borrowers (both direct and indirect), including lines of
credit, is summarized as follows for the years ended June 30, 2021 and 2020:
Balance – Beginning of Year
Additions
Principal Payments
Balance – End of Year
2021
2020
(In Thousands)
$ 3,782
781
(1,157)
$ 3,406
$ 2,827
1,460
(505)
$ 3,782
Deposits from related parties held by the Bank at June 30, 2021 and 2020 amounted to $3.7 million and $3.4
million, respectively.
Note 16.
Regulatory Matters
The Bank is subject to various regulatory capital requirements administered by federal banking agencies.
Failure to meet minimum capital requirements can initiate certain mandatory and possibly other discretionary
actions by regulators that, if undertaken, could have a direct material effect on the Bank’s financial
statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action,
the Bank must meet specific capital requirements that involve quantitative measures of the Bank’s assets,
liabilities, and certain off-balance-sheet items, as calculated under regulatory accounting practices. The
Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about
components, risk weightings, and other factors.
The Bank is required to maintain minimum capital ratios under OCC regulatory guidelines in order to ensure
capital adequacy. Management believes, as of June 30, 2021 and 2020, that the Bank met all OCC capital
adequacy requirements to which it is subject.
As of June 30, 2021, the most recent notification from the OCC categorized the Bank as well capitalized
under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank
must maintain minimum capital ratios, which are different than those required to meet OCC capital adequacy
requirements.
There are no conditions or events since that notification that management believes may have changed the
Bank’s category. The Bank was also classified as well capitalized at June 30, 2020.
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HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 16.
Regulatory Matters (Continued)
The Bank’s actual and required capital amounts and ratios for OCC regulatory capital adequacy purposes are
presented below as of June 30, 2021 and 2020:
Actual
Amount
June 30, 2021
Core Capital
Common Equity Tier 1
Tangible Capital
Total Risk-Based Capital
June 30, 2020
Core Capital
Common Equity Tier 1
Tangible Capital
Total Risk-Based Capital
(1)
(2)
(1)
(2)
(1)
(2)
(1)
(2)
$54,277
54,277
54,277
58,358
$51,562
51,562
51,562
55,502
__________________________
(1) Amounts and Ratios to Adjusted Total Assets
(2) Amounts and Ratios to Total Risk-Weighted Assets
Required for Capital
Adequacy Purposes
Ratio
(Dollars in Thousands)
Amount
9.57%
16.63
9.57
17.88
10.21%
16.37
10.21
17.63
$17,019
14,685
8,509
26,106
$15,153
14,171
7,576
25,192
Ratio
3.00%
4.50
1.50
8.00
3.00%
4.50
1.50
8.00
The Bank’s actual and required capital amounts and ratios to be well capitalized under prompt corrective
action provisions are presented below as of June 30, 2021 and 2020:
Actual
Amount
Required to be
Well Capitalized
Ratio
(Dollars in Thousands)
Amount
Ratio
June 30, 2021
Tier 1 Leverage Capital
Common Equity Tier 1
Tier 1 Risk-Based Capital
Total Risk-Based Capital
(1)
(2)
(2)
(2)
$54,277
54,277
54,277
58,358
9.57%
16.63
16.63
17.88
$28,364
21,211
26,106
32,633
June 30, 2020
Tier 1 Leverage Capital
Common Equity Tier 1
Tier 1 Risk-Based Capital
Total Risk-Based Capital
(1) $51,562
51,562
(2)
51,562
(2)
55,502
(2)
__________________________
(1) Amounts and Ratios to Adjusted Total Assets
(2) Amounts and Ratios to Total Risk-Weighted Assets
10.21%
16.37
16.37
17.63
$25,365
20,469
25,192
31,490
5.00%
6.50
8.00
10.00
5.00%
6.50
8.00
10.00
86
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 16.
Regulatory Matters (Continued)
The actual and required capital amounts and ratios applicable to the Bank for the years ended June 30, 2021
and 2020 are presented in the following tables, including a reconciliation of capital under generally accepted
accounting principles (GAAP) to such amounts reported for regulatory purposes:
June 30, 2021
Total Equity, and Ratio to Average Total Assets
Investments in and Advances to
Nonincludable Subsidiaries
Unrealized Gains on Securities Available-for-Sale
Non-significant investments Capital Stock
Tangible Capital, and Ratio to Adjusted Total Assets
Tier 1 (Core) Capital,
and Ratio to Adjusted Total Assets
Tier 1 (Core) Capital,
and Ratio to Risk-Weighted Assets
Allowance for Loan Losses
Excess Allowance for Loan Losses
Total Risk-Based Capital, and
Ratio to Risk-Weighted Assets
Average Total Assets
Adjusted Total Assets
Risk-Weighted Assets
June 30, 2020
Total Equity, and Ratio to Average Total Assets
Investments in and Advances to
Nonincludable Subsidiaries
Unrealized Gains on Securities Available-for-Sale
Tangible Capital, and Ratio to Adjusted Total Assets
Tier 1 (Core) Capital,
and Ratio to Adjusted Total Assets
Tier 1 (Core) Capital,
and Ratio to Risk-Weighted Assets
Allowance for Loan Losses
Excess Allowance for Loan Losses
Total Risk-Based Capital, and
Ratio to Risk-Weighted Assets
Average Total Assets
Adjusted Total Assets
Risk-Weighted Assets
Actual
Ratio
Minimum for Capital
Adequacy Purposes
Amount
(Dollars in Thousands)
Ratio
Amount
9.63%
$ 54,670
(118)
(275)
--
$ 54,277.
9.57%
1.50% $ 8,509
9.57%
$ 54,277
3.00% 17,019
16.63%
17.88%
54,277
4,081
--
$ 58,358
$567,351
$567,292
$326,329
4.50% 14,685
8.00%
$26,106
Actual
Ratio
Minimum for Capital
Adequacy Purposes
Amount
(Dollars in Thousands)
Ratio
Amount
10.41%
$ 52,595
(118)
(915)
$ 51,562
10.21%
1.50%
$ 7,576
10.21%
$ 51,562
3.00%
15,153
16.37%
17.63%
51,562
3,940
--
$ 55,502
$505,216
$505,098
$314,903
4.50%
14,171
8.00%
$25,192
87
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 17.
Restrictions on Dividends
Banking regulations place certain restrictions on dividends paid by the Bank to the Company. The Company
is dependent upon dividends from the Bank to provide funds for the payment of dividends to the Company’s
shareholders, interest payments on the subordinated debt and other general corporate purposes. The Bank’s
ability to pay cash dividends directly or indirectly to the Company is governed by federal law, regulations
and related guidance. These include the requirement that the Bank must receive approval to declare a
dividend if the total amount of all dividends, including the proposed dividend, declared by the Bank in any
current year exceeds the total of the Bank’s net income for the current year to date, combined with its retained
net income for the previous two years. The term “retained net income” as defined by federal regulations
means the Bank’s net income for a specified period less the total amount of all dividends declared in that
period.
The Bank may not pay dividends to the Company if, after paying those dividends, it would fail to meet the
required minimum levels under risk-based capital guidelines or if the bank regulators have notified the Bank
that it is in need of more than normal supervision. Under the Federal Deposit Insurance Act, an insured
depository institution such as the Bank is prohibited from making capital distributions, including the payment
of dividends, if, after making such distribution, the institution would become “undercapitalized” (as such
term is used in the Federal Deposit Insurance Act). Payment of dividends by the Bank also may be restricted
at any time at the discretion of the appropriate regulator if it deems the payment to constitute an unsafe and
unsound banking practice.
For the years ended June 30, 2021 and 2020, the Bank paid a total of $3.0 million and $3.0 million,
respectively, in cash dividends to the Company. At June 30, 2021, the Bank’s retained net income for the
calendar years ended December 31, 2020 and 2019 and six months ended June 30, 2021, less the dividends
declared and paid during those periods, totaled $4.8 million.
Note 18.
Fair Value Disclosures
The following disclosure is made in accordance with the requirements of ASC 825, Financial Instruments.
Financial instruments are defined as cash and contractual rights and obligations that require settlement, directly
or indirectly, in cash. In cases where quoted market prices are not available, fair values have been estimated
using the present value of future cash flows or other valuation techniques. The results of these techniques are
highly sensitive to the assumptions used, such as those concerning appropriate discount rates and estimates of
future cash flows, which require considerable judgment. Accordingly, estimates presented herein are not
necessarily indicative of the amounts the Company could realize in a current settlement of the underlying
financial instruments.
ASC 825 excludes certain financial instruments and all nonfinancial instruments from its disclosure
requirements. These disclosures should not be interpreted as representing an aggregate measure of the
underlying value of the Company.
The following methods and assumptions were used by the Company in estimating fair values of financial
instruments:
Cash and Cash Equivalents
The carrying amount approximates the fair value of cash and cash equivalents.
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HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 18.
Fair Value Disclosures (Continued)
Investment Securities
Fair values for investment securities, including mortgage-backed securities, are based on quoted market
prices, where available. If quoted market prices are not available, fair values are based on quoted market
prices of comparable instruments. The carrying values of restricted or non-marketable equity securities
approximate their fair values. The carrying amount of accrued investment income approximates its fair value.
Mortgage Loans Held-for-Sale
Because these loans are normally disposed of within ninety days of origination, their carrying value closely
approximates the fair value of such loans.
Loans Receivable
For variable-rate loans that re-price frequently and with no significant changes in credit risk, fair value
approximates the carrying value. Fair values for other loans are estimated using the discounted value of
expected future cash flows. Interest rates used are those being offered currently for loans with similar terms
to borrowers of similar credit quality. The carrying amount of accrued interest receivable approximates its
fair value.
Deposit Liabilities
The fair values for demand deposit accounts are, by definition, equal to the amount payable on demand at the
reporting date, that is, their carrying amounts. Fair values for other deposit accounts are estimated using the
discounted value of expected future cash flows. The discount rate is estimated using the rates currently
offered for deposits of similar maturities.
Advances from Federal Home Loan Bank
The carrying amount of short-term borrowings approximates their fair value. The fair value of long-term
debt is estimated using discounted cash flow analyses based on current incremental borrowing rates for
similar borrowing arrangements.
Off-Balance Sheet Credit-Related Instruments
Fair values for outstanding mortgage loan commitments to lend are based on fees currently charged to enter
into similar agreements, taking into account the remaining term of the agreements, customer credit quality,
and changes in lending rates.
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HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 18.
Fair Value Disclosures (Continued)
At June 30, 2021 and 2020, the carrying amount and estimated fair values of the Company’s financial
instruments were as follows:
Financial Assets
Cash and Cash Equivalents
Debt Securities Available-for-Sale
Securities Held-to-Maturity
Loans Held-for-Sale
Loans Receivable, Net
Financial Liabilities
Deposits
Advances from FHLB
Off-Balance Sheet Items
Mortgage Loan Commitments
2021
2020
Carrying
Value
Estimated
Fair Value
Carrying
Value
Estimated
Fair Value
(In Thousands)
$ 104,405
29,550
54,706
14,427
336,394
$ 104,405
29,550
54,608
14,427
336,865
$ 54,871
42,060
20,858
14,798
359,927
$ 54,871
42,060
21,879
14,798
359,581
$506,596
867
$ 492,492
924
$460,810
1,060
$ 458,994
1,150
$ 9,677
$ 9,677
$ 8,536
$ 8,536
The estimated fair values presented above could be materially different than net realizable value and are only
indicative of the individual financial instrument’s fair value. Accordingly, these estimates should not be
considered an indication of the fair value of the Company taken as a whole.
The Company follows the guidance of ASC 820, Fair Value Measurements. ASC 820 establishes a
framework for measuring fair value and expands disclosures about fair value measurements. This standard
was issued to establish a uniform definition of fair value. The definition of fair value under ASC 820 is
market-based, as opposed to company-specific, and includes the following:
Defines fair value as the price that would be received to sell an asset or paid to transfer a liability,
in either case, through an orderly transaction between market participants at a measurement date
and establishes a framework for measuring fair value;
Establishes a three-level hierarchy for fair value measurements based upon the transparency of
inputs to the valuation of an asset or liability as of the measurement date;
Nullifies the guidance in EITF 02-3, which required the deferral of profit at inception of a transaction
involving a derivative financial instrument in the absence of observable data supporting the
valuation technique;
Eliminates large position discounts for financial instruments quoted in active markets and requires
consideration of the company’s creditworthiness when valuing liabilities; and
Expands disclosures about instruments that are measured at fair value.
The standard establishes a three-level valuation hierarchy for disclosure of fair value measurements. The
valuation hierarchy favors the transparency of inputs to the valuation of an asset or liability as of the
measurement date. The three levels are defined as follows:
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HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 18.
Fair Value Disclosures (Continued)
Level 1 - Fair value is based upon quoted prices (unadjusted) for identical assets or liabilities in
active markets in which the Company can participate.
Level 2 - Fair value is based upon (a) quoted prices for similar assets or liabilities in active markets;
(b) quoted prices for identical or similar assets or liabilities in markets that are not active, that is,
markets in which there are few transactions for the asset or liability, the prices are not current, or
price quotations vary substantially either over time or among market makers, or in which little
information is released publicly; (c) inputs other than quoted prices that are observable for the asset
or liability; or (d) inputs that are derived principally from or corroborated by observable market data
by correlation or other means.
Level 3 - Fair value is based upon inputs that are unobservable for the asset or liability. These inputs
reflect the Company’s own assumptions about the assumptions that market participants would use
in pricing the asset or liability (including assumptions about risk). These inputs are developed based
on the best information available in the circumstances, which include the Company’s own data. The
Company’s own data used to develop unobservable inputs are adjusted, if information indicates that
market participants would use different assumptions.
A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input
that is significant to the fair value measurement.
The preceding methods described may produce a fair value calculation that may not be indicative of the net
realizable value or reflective of future fair values. Furthermore, although the Company believes its valuation
methods are appropriate and consistent with other market participants, the use of different methodologies or
assumptions to determine the fair value of certain financial instruments could result in a different fair value
measurement at the reporting date. There have been no changes in the methodologies used during the year
ended June 30, 2021.
Fair values of assets and liabilities measured on a recurring basis at June 30, 2021 and 2020 are as follows:
June 30, 2021
Available-for-Sale
Debt Securities
FHLMC
FNMA
GNMA
(Level 1)
Fair Value Measurements
(Level 2)
(Level 3)
(In Thousands)
Total
$ --
--
--
$ 4,221
19,152
6,177
$ --
--
--
$ 4,221
19,152
6,177
Total
$ --
$29,550
$ --
$29,550
June 30, 2020
Available-for-Sale
Debt Securities
FHLMC
FNMA
GNMA
(Level 1)
Fair Value Measurements
(Level 3)
(Level 2)
(In Thousands)
Total
$ --
--
--
$ 5,159
31,852
5,049
$ --
--
--
$ 5,159
31,852
5,049
Total
$ --
$42,060
$ --
$42,060
91
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 18.
Fair Value Disclosures (Continued)
The Company did not record any liabilities at fair market value for which measurement of the fair value was
made on a recurring basis at June 30, 2021 or 2020.
The following tables present the Company’s assets and liabilities measured at fair value on a non-recurring
basis at June 30, 2021 and 2020.
June 30, 2021
Assets:
Impaired Loans,
Net of Allowance
Other Real Estate Owned
(Level 1)
Fair Value Measurements
(Level 2)
(Level 3)
(In Thousands)
Total
$ --
--
$ --
--
$ 4,948
383
$ 4,948
383
Total
$ --
$ --
$ 5,331
$ 5,331
June 30, 2020
Assets:
Impaired Loans,
Net of Allowance
Other Real Estate Owned
(Level 1)
Fair Value Measurements
(Level 2)
(Level 3)
(In Thousands)
Total
$ --
--
$ --
--
$ 4,404
950
$ 4,404
950
Total
$ --
$ --
$ 5,354
$ 5,354
92
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 19.
Earnings Per Common Share
Home Federal Bank announced that its Board of Directors declared a two-for-one stock split in the form of
a 100% stock dividend, payable March 31, 2021, to stockholders of record as of March 22, 2021. Under the
terms of the stock split, the Company’s stockholders received a dividend of one share for every share held
on the record date. The dividend was paid in authorized but unissued shares of common stock of the
Company. The par value of the Company's stock was not affected by the split and remained at $0.01 per
share. The outstanding shares of stock after the split increased from approximately 1.7 million shares to 3.4
million shares.
The following table presents the components of average outstanding common shares for the years ended June
30, 2021 and 2020 (Restated to reflect the effect of the 2-for-1 split in March 2021):
Average Common Shares Issued
Average Unearned ESOP Shares
Average Unearned RRP Trust Shares
Weighted Average Number of Common
Shares Used in Basic EPS
Effect of Dilutive Securities
Stock Options
Weighted Average Number of Common
Shares and Dilutive Potential Common
Shares Used in Dilutive EPS
2021
2020
3,392,774
(162,275)
--
3,549,650
(185,332)
( 686)
3,230,499
3,363,632
195,704
231,138
3,426,203
3,594,770
Earnings per share are computed using the weighted average number of shares outstanding as prescribed in
GAAP. For the years ended June 30, 2021 and 2020, there were outstanding options to purchase 641,022
and 547,492 shares, respectively, at a weighted average share price of $9.90 per share for 2021 and $9.03 per
share for 2020.
Note 20.
Subsequent Events
In accordance with FASB ASC 855, Subsequent Events, the Company has evaluated subsequent events
through the date that the financial statements were available to be issued.
Note 21.
Revenue Recognition
In accordance with Topic 606, revenues are recognized when control of promised goods or services is
transferred to customers in an amount that reflects the consideration the Company expects to be entitled to
in exchange for those goods or services. To determine revenue recognition for arrangements that an entity
determines are within the scope of Topic 606, the Company performs the following five steps: (i) identify
the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the
transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v)
recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies
the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled
to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract
is determined to be within the scope of Topic 606, the Company assesses the goods or services that are
promised within each contract and identifies those that contain performance obligations, and assesses whether
each promised good or service is distinct. The Company then recognizes as revenue the amount of the
transaction price that is allocated to the respective performance obligation when (or as) the performance
obligation is satisfied.
93
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 21.
Revenue Recognition (Continued)
All of the Company’s revenue from contracts with customers in-scope of ASC 606 is recognized in
noninterest income and included in our commercial and consumer banking segment. The following table
presents noninterest income, segregated by revenue streams in-scope and out-of-scope of Topic 606, for the
years ended June 30, 2021 and 2020:
Noninterest Income
In-scope of Topic 606:
Debit card interchange fees
ATM surcharge income
Fees from non-sufficient funds
Noninterest Income (in-scope of Topic 606)
Noninterest Income (out-of-scope of Topic 606)
Total Noninterest Income
At or For the Year Ended
June 30,
2021
2020
(In Thousands)
$ 397
75
519
991
4,461
$ 5,452
$ 304
59
657
1,020
2,879
$ 3,899
Deposit Fees
The Bank earns fees from its deposit customers for account maintenance, transaction-based services and
overdraft charges. Account maintenance fees consist primarily of account fees and analyzed account fees
charged on deposit accounts on a monthly basis. The performance obligation is satisfied and the fees are
recognized on a monthly basis as the service period is completed. Transaction-based fees on deposits
accounts are charged to deposit customers for specific services provided to the customer, such as wire fees,
as well as charges against the account, such as fees for non-sufficient funds and overdrafts. The performance
obligation is completed as the transaction occurs and the fees are recognized at the time each specific service
is provided to the customer.
interchange
Debit Interchange Income
Debit and ATM interchange income represent fees earned when a debit card issued by the Bank is used. The
Bank earns
the Visa payment
network. Interchange fees from cardholder transactions represent a percentage of the underlying transaction
value and are recognized daily, concurrently with the transaction processing services provided to the
cardholder. The performance obligation is satisfied and the fees are earned when the cost of the transaction
is charged to the cardholders’ debit card.
from debit cardholder
transactions
through
fees
94
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 22.
Parent Company Financial Statements
Financial information pertaining only to Home Federal Bancorp, Inc. of Louisiana as of June 30, 2021 and
2020 is as follows:
HOME FEDERAL BANCORP, INC. OF LOUISIANA
Condensed Balance Sheets
June 30, 2021 and 2020
Assets
Cash and Cash Equivalents
Investment in Subsidiary
Other Assets
June 30,
2021
2020
(In Thousands)
$ 278
54,670
234
$ 91
52,595
198
Total Assets
$ 55,182
$ 52,884
Liabilities and Stockholders’ Equity
Borrowings
Other Liabilities
Stockholders’ Equity
$ 2,400
57
52,725
$ 2,300
49
50,535
Total Liabilities and Stockholders’ Equity
$ 55,182
$ 52,884
HOME FEDERAL BANCORP, INC. OF LOUISIANA
Condensed Statements of Operations
For the Years Ended June 30, 2021 and 2020
Equity in Undistributed Earnings of Subsidiary
Interest Income
Total Income
Operating Expenses
Interest Expense
Total Expense
For the Years Ended June 30,
2020
2021
(In Thousands)
$ 5,715
56
5,771
435
64
499
$ 4,141
62
4,203
378
52
430
Income Before Income Tax Benefit
Income Tax Benefit
Net Income
5,272
(93)
3,773
(77)
$ 5,365
$ 3,850
95
HOME FEDERAL BANCORP, INC. OF LOUISIANA AND SUBSIDIARY
Notes to Consolidated Financial Statements
Note 22.
Parent Company Financial Statements (Continued)
HOME FEDERAL BANCORP, INC. OF LOUISIANA
Condensed Statements of Cash Flows
For the Years Ended June 30, 2021 and 2020
Operating Activities
Net Income
Adjustments to Reconcile Net Income to Net
Cash Used in Operating Activities
Equity in Undistributed Earnings of Subsidiary
(Decrease) Increase in Other Assets
Increase in Other Liabilities
For the Years Ended June 30,
2021
2020
(In Thousands)
$ 5,365
$ 3,850
(5,715)
(36)
8
(4,141)
11
9
Net Cash Used in Op
erating Activities
(378)
(271)
Financing Activities
Distribution from Subsidiary
Proceeds from Stock Options Exercised
Proceeds of Borrowings
Repayment of Borrowings
Proceeds Received from Subsidiary on Stock Compensation
Programs
Company Stock Purchased
Dividends Paid
Net Cash Provided b
y Financing Activities
Increase in Cash and Cash Equivalents
Cash and Cash Equivalents, Beginning of Year
3,000
587
2,400
(2,300)
593
(2,593)
(1,122)
565
187
91
3,000
65
2,300
(450)
667
(4,142)
(1,142)
298
27
64
Cash and Cash Equivalents, End of Year
$ 278
$ 91
96
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Not applicable.
Item 9A. Controls and Procedures
(a)
Our management evaluated, with the participation of our principal executive officer and principal financial
officer, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-
15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based
on such evaluation, our principal executive officer and principal financial officer have concluded that our
disclosure controls and procedures are designed to ensure that information required to be disclosed by us in
the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed,
summarized, and reported within the time periods specified in the SEC’s rules and regulations and are
operating in an effective manner.
(b)
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial
reporting, as such term is defined in Exchange Act Rule 13a-15(f). The Company’s internal control over
financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that,
in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles and that
receipts and expenditures of the Company are being made only in accordance with authorizations of
management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a
material effect on the financial statements.
Internal control over financial reporting is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements prepared for external purposes
in accordance with generally accepted accounting principles. Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
Under the supervision and with the participation of management, including our principal executive officer
and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over
financial reporting based on the framework in Internal Control — Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the
framework in Internal Control — Integrated Framework, management concluded that our internal control
over financial reporting was effective as of June 30, 2021.
(c)
No change in the Company’s internal control over financial reporting (as defined in rules 13a-15(f) and
15d-15(f) under the Securities Exchange Act of 1934) occurred during the most recent fiscal quarter that
has materially affected, or is reasonably likely to materially affect, its internal control over financial
reporting.
Item 9B. Other Information
Not applicable.
97
Item 10. Directors, Executive Officers, and Corporate Governance
PART III
The information required herein is incorporated by reference from the sections captioned “Information with
Respect to Nominees for Director, Continuing Directors, and Executive Officers” and “Beneficial Ownership of
Common Stock by Certain Beneficial Owners and Management -Section 16(a) Beneficial Ownership Reporting
Compliance” in the Registrant’s Proxy Statement to be filed with the Securities and Exchange Commission within
120 days of June 30, 2020 (“Proxy Statement”).
Code of Ethics. Home Federal Bancorp has adopted a Code of Ethics that applies to its principal executive
officer and principal financial officer, as well as directors, other officers, and employees of Home Federal Bancorp
and Home Federal Bank. A copy of the Code of Ethics may be obtained without charge upon request made to Glen
W. Brown, Home Federal Bank, 222 Florida Street, Shreveport, Louisiana 71105.
Item 11. Executive Compensation
The information required herein is incorporated by reference from the section captioned “Management
Compensation” in the Proxy Statement to be filed with the Securities and Exchange Commission within 120 days of
June 30, 2021.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Security Ownership of Certain Beneficial Owners and Management. The information required herein is
incorporated by reference from the section captioned “Beneficial Ownership of Common Stock by Certain
Beneficial Owners and Management” in the Proxy Statement to be filed with the Securities and Exchange
Commission within 120 days of June 30, 2021.
Equity Compensation Plan Information. The following table provides information as of June 30, 2021 with
respect to shares of common stock that may be issued under our existing equity compensation plans, which consist
of the 2005 and 2011 Stock Option Plans, and 2014 and 2019 Stock Incentive Plans, all of which were approved by
our shareholders.
Number of Securities to be
Issued Upon Exercise of
Outstanding Options,
Warrants
and Rights
(a)
Weighted-Average
Exercise Price of
Outstanding
Options, Warrants
and Rights
(b)
Number of Securities
Remaining Available for
Future Issuance Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column (a))
(c)
721,122
$ 10.11
13,778
--
--
--
Plan Category
Equity compensation plans
approved by security holders ......................
Equity compensation plans
not approved by security holders ...............
Total .....................................................
721,122
$ 10.11
13,788
Item 13. Certain Relationships and Related Transactions and Director Independence
The information required herein is incorporated by reference from the section captioned “Indebtedness of
Management and Related Party Transactions” in the Proxy Statement to be filed with the Securities and Exchange
Commission within 120 days of June 30, 2021.
98
Item 14. Principal Accounting Fees and Services
The information required herein is incorporated by reference from the section captioned “Ratification of
Appointment of Independent Registered Public Accounting Firm — Audit Fees” in the Proxy Statement to be filed
with the Securities and Exchange Commission within 120 days of June 30, 2021.
Item 15. Exhibits and Financial Statement Schedules
PART IV
(a) The following documents are filed as part of this report and are incorporated herein by reference from
Item 8 hereof:
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of June 30, 2021 and 2020
Consolidated Statements of Operations for the Years Ended June 30, 2021 and 2020
Consolidated Statements of Comprehensive Income for the Years Ended June 30, 2021 and 2020
Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended June 30, 2021 and 2020
Consolidated Statements of Cash Flows for the Years Ended June 30, 2021 and 2020
Notes to Consolidated Financial Statements
The following exhibits are filed as part of the Form 10-K, and this list includes the Exhibit Index:
No.
3.1
3.2
4.1
4.2
10.1
10.2
10.3
Description
Articles of Incorporation of Home Federal Bancorp, Inc. of Louisiana
Bylaws of Home Federal Bancorp, Inc. of Louisiana
Form of Stock Certificate of Home Federal Bancorp, Inc. of Louisiana
Description of Securities
Home Federal Bancorp, Inc. of Louisiana 2005 Stock Option Plan*
Home Federal Bancorp, Inc. of Louisiana 2011 Stock Option Plan*
Home Federal Bancorp, Inc. of Louisiana 2011 Recognition and Retention Plan and Trust
Location
(1)
(1)
(1)
(2)
(3)
(4)
Agreement*
10.4
Amended and Restated Employment Agreement between Home Federal Bank and James R.
Barlow, dated as of December 27, 2012*
10.5
Employment Agreement between Home Federal Bancorp, Inc. of Louisiana and James R.
Barlow, dated as of December 27, 2012*
10.6
Supplemental Executive Retirement Agreement between Home Federal Bank and Daniel R.
Herndon, dated as of December 27, 2012*
10.7
Letter Agreement between Home Federal Bank and Adalberto Cantu, Jr., dated as of
February 6, 2013*
10.8
Letter Agreement by and among Home Federal Bank, Home Federal Bancorp, Inc. of
10.9
10.10
10.11
10.12
10.13
23.0
31.1
31.2
32.0
Louisiana and Glen W. Brown accepted as of April 9, 2014*
Home Federal Bancorp. Inc. of Louisiana 2014 Stock Incentive Plan*
Home Federal Bank 2016 Loan Officer Incentive Compensation Plan*
Supplemental Executive Retirement Agreement between Home Federal Bank and James R.
Barlow, dated as of December 13, 2017*
Separation Agreement by and among Home Federal Bancorp, Inc. of Louisiana, Home
Federal Bank and Daniel R. Herndon*
Home Federal Bancorp, Inc. of Louisiana 2019 Stock Incentive Plan*
Consent of LaPorte, A Professional Accounting Corporation
Rule 13a-14(a)/15d-14(a) Certification of the Principal Executive Officer
Rule 13a-14(a)/15d-14(a) Certification of the Chief Financial Officer
Section 1350 Certifications
(4)
(5)
(5)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
Filed Herewith
Filed Herewith
Filed Herewith
Filed Herewith
__________________
(Table continued and footnotes on following page)
99
Description
No.
101.INS XBRL Instance Document.
101.SCH XBRL Taxonomy Extension Schema Document.
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB XBRL Taxonomy Extension Label Linkbase Document.
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF XBRL Taxonomy Extension Definitions Linkbase Document.
__________________
*
Denotes a management contract or compensatory plan or arrangement.
Location
Filed Herewith
Filed Herewith
Filed Herewith
Filed Herewith
Filed Herewith
Filed Herewith
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)
(11)
(12)
Incorporated herein by reference from the Company’s Registration Statement on Form S-1, as amended, filed with the SEC on
September 3, 2010 (File No. 333-169230).
Incorporated herein by reference from the Company’s Annual Report on Form 10-K filed with the SEC on September 29, 2020 (File
No. 001-35019).
Incorporated herein by reference from the Company’s Definitive Schedule 14A filed with the SEC on June 29, 2005 (File No. 000-
51117).
Incorporated by reference from the Company’s definitive proxy statement for the Annual Meeting of Shareholders held on December
23, 2011 filed with the SEC on October 28, 2011 (File No. 001-35019).
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on December 28, 2012 (File No. 001-
35019).
Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed with the SEC on May 10, 2013 (File No. 001-
35019).
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on July 9, 2014 (File No. 001-35019).
Incorporated by reference from the Company’s definitive proxy statement for the Annual Meeting of Shareholders held on November
12, 2014 (File No. 001-35019).
Incorporated by reference from the Company’s Current Report on Form 8-K filed with the SEC on February 11, 2016 (File No. 001-
35019).
Incorporated herein by reference from the Company’s Current Report on Form 8-K filed with the SEC on December 18, 2017 (File
No. 001-35019).
Incorporated herein by reference from the Company’s Current Report on Form 8-K filed with the SEC on November 22, 2019 (File
No. 001-35019).
Incorporated herein by reference from the Company’s definitive proxy statement for the Annual Meeting of Shareholders held on
November 13, 2019 filed with the SEC on October 9, 2019 (File No. 001-35019).
Item 16. Form 10-K Summary
None.
100
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant
had duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
HOME FEDERAL BANCORP, INC. OF LOUISIANA
Date: September 28, 2021
By: /s/James R. Barlow
James R. Barlow
Chairman of the Board, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Name
Title
Date
/s/James R. Barlow
James R. Barlow
/s/Glen W. Brown
Glen W. Brown
Chairman of the Board, President and
Chief Executive Officer
(Principal Executive Officer)
September 28, 2021
Senior Vice President and Chief
Financial Officer
(Principal Financial and Accounting
Officer)
September 28, 2021
/s/Walter T. Colquitt, III
Walter T. Colquitt, III
/s/Scott D. Lawrence
Scott D. Lawrence
/s/Mark M. Harrison
Mark M. Harrison
Director
Director
Director
/s/Thomas Steen Trawick, Jr.
Thomas Steen Trawick, Jr.
Director
/s/Timothy W. Wilhite, Esq.
Timothy W. Wilhite, Esq.
Director
September 28, 2021
September 28, 2021
September 28, 2021
September 28, 2021
September 28, 2021
101
[This page intentionally left blank]
CERTIFICATIONS
EXHIBIT 31.1
I, James R. Barlow, Chairman of the Board, President and Chief Executive Officer, certify that:
1.
2.
3.
4.
5.
I have reviewed this annual report on Form 10-K of Home Federal Bancorp, Inc. of Louisiana;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in
the case of an annual report) that has materially affected, or is reasonably likely to materially affect,
the registrant’s internal control over financial reporting; and
b)
c)
d)
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of
directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant’s ability to
record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
b)
Date: September 28, 2021
/s/James R. Barlow
James R. Barlow
Chairman of the Board, President and Chief Executive Officer
(Principal Executive Officer)
CERTIFICATIONS
EXHIBIT 31.2
I, Glen W. Brown, Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer),
certify that:
1.
2.
3.
4.
5.
I have reviewed this annual report on Form 10-K of Home Federal Bancorp, Inc. of Louisiana;
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this report;
Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;
Designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes
in accordance with generally accepted accounting principles;
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures, as of
the end of the period covered by this report based on such evaluation; and
Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in
the case of an annual report) that has materially affected, or is reasonably likely to materially affect,
the registrant’s internal control over financial reporting; and
b)
c)
d)
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of
directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control
over financial reporting which are reasonably likely to adversely affect the registrant’s ability to
record, process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
b)
Date: September 28, 2021
/s/Glen W. Brown
Glen W. Brown
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
SECTION 1350 CERTIFICATIONS
EXHIBIT 32.0
The undersigned executive officers of Home Federal Bancorp, Inc. of Louisiana (the “Registrant”) hereby
certify that the Registrant’s Form 10-K for the year ended June 30, 2021 fully complies with the requirements of
Section 13(a) of the Securities Exchange Act of 1934 and that the information contained therein fairly presents, in
all material respects, the financial condition and results of operations of the Registrant.
Date:
September 28, 2021
/s/James R. Barlow
James R. Barlow
Chairman of the Board, President and Chief Executive Officer
(Principal Executive Officer)
Date:
September 28, 2021
/s/Glen W. Brown
Glen W. Brown
Senior Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act has been provided to
Home Federal Bancorp, Inc. of Louisiana and will be retained by Home Federal Bancorp, Inc. of Louisiana and
furnished to the Securities and Exchange Commission or its staff upon request.
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Defining Local Since 1924Home Federal Bank532 Market Street March 1944 HFB.BANK