Home Financial Bancorp Announces Third Quarter Results
Home Financial Bancorp ("Company") (OTCPink: "HWEN"), an Indiana corporation which is the holding company for Our Community Bank, ("Bank") based in Spencer, Indiana, announces results for the third quarter and nine months ended March 31, 2021.
Third Quarter Highlights:
Nine Month Highlights:
For the quarter ended March 31, 2021, the Company reported net income of $34,000 or $.03 basic and diluted earnings per share. For the same period last year, the Company reported net income of $52,000 or $.04 per share. Net income fell, compared to third quarter 2020 results, due to an increase in professional fees incurred by the company related to the acquisition of its Bank subsidiary by Crane Credit Union (CCU), which was announced on August 19, 2020. Eliminating the impact of these professional fees associated with the acquisition transaction, net income from normal operations for the quarter was $117,000, or $.10 basic and diluted earnings per share.
Total interest income decreased $99,000, or 12%, to $730,000, while interest expense decreased $71,000 or 41%, to $102,000 during the quarter ended March 31, 2021, compared to the quarter ended March 31, 2020. As a result, net interest income decreased $28,000, or 4%, for the three months ended March 31, 2021.
Loan loss provisions for third quarter 2021 were $10,000, compared to $15,000 for the same period a year earlier. A regular assessment of loan loss allowance adequacy indicated that these provisions were necessary to maintain an appropriate allowance level. Changes in volume, composition, and quality of the loan portfolio, as well as actual loan loss experience, will influence the need for future loss provisions.
Third quarter 2021 non-interest income totaled $154,000 compared to $124,000 a year earlier. Contributing to this increase, $17,000 gain on sale of investment securities and $11,000 gain on sale of ownership units in the Title Center of Indiana was recognized during the quarter. Non-interest expense for the quarter ended March 31, 2021 rose $24,000, or 4% to $748,000, compared to $724,000 for the same period a year earlier. This change primarily resulted from a sharp increase in legal and professional fees. Legal and professional fees incurred during the quarter as part of preparation for the acquisition transaction mentioned above totaled $100,000. A $31,000, or 9% decrease in salaries and employee benefits, plus decreased expenses in assorted other areas, combined to reduce the overall rise in non-interest expense compared the same period a year earlier.
For the nine-month period ended March 31, 2021, the Company reported net loss of $712,000 or ($.62) earnings per share. Net income was $267,000 or $.23 earnings per share for the year-earlier period. Operations for the nine months ended March 31, 2021 resulted in a net loss due to extraordinary expenses incurred in connection with the announced sale of Our Community Bank to CCU. During the quarter-ended December 31, 2020, the Bank made a one-time payment of $1.1 million to withdrawal from a defined employee benefit plan and transfer the plan to an insurance company to provide annuity contracts for individual plan participants. Excluding the impact of the pension plan withdrawal expense and professional fees related to the Bank sale transaction, net income was $293,000 or $.25 basic and diluted earnings per share for the nine-month period ended March 31, 2021.
Total interest income decreased $278,000, or 11%. Interest expense decreased $191,000 or 36%. Consequently, net interest income before provisions for loan losses decreased $87,000 or 4%, compared to the same period in 2020.
For the nine-month period ended March 31, 2021, loan loss provisions were $35,000, compared to $45,000 recorded for the nine-month period ended March 31, 2020. Loan loss provisions reflect management's assessment of various risk factors including, but not limited to, the level and trend of loan delinquencies and losses.
Total non-interest income increased $51,000, or 13%. Gain on sale of available for sale securities totaled $42,000, compared to $4,000 for the same period a year earlier. Also contributing to higher non-interest income, sale of low-income tax credits and ownership units in the Title Center of Indiana generated gain of $17,000. Offsetting some of this change, service charges on deposit accounts decreased $37,000, or 20%, compared to the year-earlier period.
Total non-interest expense increased $1.3 million, or 61%, compared to the same nine-month period during the prior year. This increase was the result of a withdrawal payment of $1.1 million during the December 31, 2020 quarter to transfer a defined benefit plan obligation from the Bank to individual annuity contracts provided by a selected insurance company. Contributing to the overall increase in non-interest expense, legal and professional fees increased to $473,000, compared to $226,000 for the same period last year. During the first nine months of fiscal 2021, $289,000 was expensed for legal and consulting services specifically tied to a definitive purchase and assumption agreement by and between the Bank, the Company, and CCU.
As of March 31, 2021, total assets were $75.0 million, compared to $73.9 million at June 30, 2020; the end of the prior fiscal year. Cash and interest-bearing deposits totaled $16.4 million at March 31, 2021. Investment securities available for sale decreased $500,000, or 8%, to $5.5 million at March 31, 2021. Total loans decreased $4.0 million, or 8%, to $48.4 million, from $52.4 million at June 30, 2020.
Non-performing loans decreased 41% and totaled $232,000, or 0.5% of total loans at March 31, 2021. At June 30, 2020, non-performing loans were $396,000, or 0.8% of total loans. Total non-performing assets were $247,000, or 0.3% of total assets at March 31, 2021, compared to $410,000, or 0.6% of total assets at June 30, 2020. Non-performing assets included $14,000 in Other Real Estate Owned ("OREO") and other repossessed properties at both March 31, 2021 and June 30, 2020.
The balance of the loan loss allowance increased 4% to $542,000, or 1.12% of total loans at March 31, 2021, compared to $522,000, or 1.00% of total loans at June 30, 2020. Management considered the level of loan loss allowances at March 31, 2021 to be adequate to cover estimated losses inherent in the loan portfolio at that date.
Total deposits increased 6% to $59.1 million as of March 31, 2021, from $55.8 million nine months earlier. Total borrowings decreased $1.0 million, or 12%, to $7.5 million.
Shareholders' equity was $8.2 million, or 10.9% of total assets at March 31, 2021, and $9.1 million, or 12.3% of total assets at June 30, 2020. Factors impacting shareholder equity during the first three quarters of fiscal 2021 included net income, three quarterly cash dividends totaling $.12 per share, and a change in unrealized gain on available for sale securities at June 30, 2020 of $43,000, to $8,000 at March 31, 2021. At March 31, 2020, the Company's book value per share was $7.07 based on 1,155,594 shares outstanding. The last reported price per share as of March 31, 2021 was $10.50.
Home Financial Bancorp and Our Community Bank, an FDIC-insured, Indiana stock commercial bank, operate from headquarters in Spencer, Indiana, and a branch office in Cloverdale, Indiana. Additional information concerning Home Financial Bancorp and its subsidiaries is available at www.hfbancorp.com or www.ocbconnect.com.
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