Tangible Capital Ratio Expands to
8.67% Net Interest Margin Expansion
Continues Company Declares Regular Quarterly
Dividend of $0.1125 per Share
SIOUX FALLS, S.D., April 27, 2015 (GLOBE NEWSWIRE) -- HF
Financial Corp. (Nasdaq:HFFC) today reported third quarter
earnings of $719,000, or $0.10 per share compared to $2.0 million,
or $0.28 per share one year earlier. The quarter's earnings were
influenced by the completion of the strategy to reduce borrowings
through the use of liquid investments which began in the preceding
quarter and costs associated with previously announced branch
consolidations. For the nine months ended March 31, 2015, earnings
totaled $1.7 million compared to $5.1 million for the same period
ended March 31, 2014. Core earnings, a non-GAAP measure, were $1.6
million, or $0.23 per diluted share for the third fiscal quarter of
2015, as compared to core earnings of $1.8 million, or $0.26 per
diluted share, for the third fiscal quarter a year ago. For the
first nine months of fiscal 2015, core earnings were $5.3 million,
or $0.75 per diluted share compared to $4.8 million, or $0.67 per
diluted share for the first nine months of fiscal 2014.
Loan balances grew 15.5% to $871.6 million from a year ago,
while FHLB advances and other borrowings declined 72.1% to $41.2
million. Total assets declined to $1.14 billion at March 31, 2015,
from $1.26 billion one year earlier and tangible capital as a
percent of tangible assets increased 112 basis points to 8.67%.
Asset quality remains strong with nonperforming assets as a
percentage of total assets at 1.15% at March 31, 2015, compared to
1.50% one year earlier.
"We have substantially improved our tangible capital ratio and
net interest margin in the past two quarters by repaying a large
balance of higher-cost FHLB advances and reducing lower-yielding
investment securities. Further, upon completion of the recently
announced branch sale, we expect to further exceed all of our
capital requirement ratios providing more flexibility in our
capital management strategies. Our banking platform is well
positioned for continued loan and deposit growth, and the
communities we serve will continue to benefit from our enhanced
service," said Stephen Bianchi, President and Chief Executive
Officer.
Announces Branch Sale of Pierre, SD Loans, Deposits and
Facility Assets
On April 15, 2015, the Company issued a press release announcing
that it had entered into a definitive agreement to sell its Pierre,
SD branch location. Bianchi stated, "This agreement was done as
part of our ongoing strategy to increase our focus on customer
service and organic growth in our core banking markets of eastern
South Dakota, and our newer metropolitan markets in Fargo, ND and
the Twin Cities. Under the terms of this agreement we are selling
loans, deposits and branch facilities and equipment. We are
confident the buyer, First Dakota National Bank, will continue to
provide excellent service to our clients and contribute positively
to the Pierre community." A closing is expected in July, 2015,
subject to regulatory approval.
Fiscal 2015 Third Quarter Financial Highlights:
(at or for the periods ended March 31, 2015, compared to December
31, 2014, and/or March 31, 2014.)
- Core earnings, a non-GAAP measure, were $1.6 million, or $0.23
per share, for the third fiscal quarter of 2015. GAAP earnings were
$719,000, or $0.10 per diluted share for the third quarter. The
reported earnings were impacted by a $1.1 million loss on the sale
of securities, costs associated with branch closures of $695,000,
and offset partially by gains on the sale of property of
$313,000.
- FHLB advances totaling $122.9 million were repaid during the
third fiscal quarter and funded through the sale of investment
securities. These sale and repayment activities largely complete
the balance sheet restructuring initiated in the previous fiscal
quarter. Average borrowing costs decreased to 0.35% in the third
fiscal quarter compared to 1.68% the previous quarter.
- The net interest margin expressed on a fully taxable equivalent
basis ("NIM, TE"), a non-GAAP measure, increased to 3.33% for the
fiscal third quarter 2015 compared to 3.19% for the previous
quarter.
- Total loans increased to $871.6 million at March 31, 2015, from
$855.1 million at December 31, 2014, and from $754.8 million one
year earlier, or a 15.5% increase year over year.
- Nonperforming assets totaled $13.1 million, or 1.15% of total
assets at quarter end compared to $12.8 million or 1.01% of total
assets one quarter earlier. One year earlier, nonperforming assets
totaled $18.8 million, or 1.50% of total assets. Nonperforming
assets at March 31, 2015, include $8.7 million of non-accruing
troubled debt restructured loans that are compliant with their
restructured terms. Net charge-offs were $203,000 for the fiscal
third quarter, and $691,000 on a year-to-date basis or just 0.11%
annualized of the average total loans.
- Loan loss allowances totaled 1.26% of total loans at March 31,
2015, compared to 1.28% one quarter earlier. The Company has no
direct exposure to the Oil & Gas Industry.
- As previously announced, the Bank reached an agreement to sell
its branch office in Pierre, SD. The transaction is expected to
close in the first fiscal quarter of 2016.
- Bank capital ratios as of March 31, 2015, continued to remain
well above the newly implemented regulatory "well-capitalized"
minimum levels and includes the newly implemented common equity
tier 1 capital to risk-weighted assets ratio:
- Total risk-based capital to risk-weighted assets was 13.64%
versus 13.86% at December 31, 2014.
- Tier 1 capital to risk-weighted assets was 12.50% versus 12.70%
at December 31, 2014.
- Tier 1 capital to total adjusted assets was 10.23% versus 9.46%
at December 31, 2014.
- Common equity tier 1 capital to risk-weighted assets was 12.50%
at March 31, 2015.
- The most recent dividend of $0.1125 per share represents 3.05%
current yield at recent market prices.
- Tangible book value was $13.93 per share at March 31, 2015,
compared to $13.41 per share one year earlier. This increase in
tangible book value combined with a total dividend of $0.45 results
in an intrinsic return of 7.23% for the past twelve month
period.
For a reconciliation of core earnings and core diluted earnings
per share to accounting principles generally accepted in the United
States ("GAAP") for net income and GAAP diluted earnings per share,
please refer to the tables in the section titled "Reconciliation of
GAAP Earnings and Core Earnings."
Balance Sheet and Asset Quality Review
HF Financial's total asset base was $1.14 billion at March 31,
2015, compared to $1.26 billion one quarter earlier. HF Financial
continues to grow its loan portfolio and fund new loans, in part,
with proceeds from short-term, liquid investments. In the third
fiscal quarter of 2015, total loans increased $16.5 million to
$871.6 million from the end of the previous quarter and $116.8
million, or 15.5% from a year ago. The increase in the loan balance
reflected an increased balance of commercial real estate and
agricultural loans. Commercial real estate loans were the largest
portion of the portfolio, which totaled 53.0% of total loans at
March 31, 2015, followed by agricultural loans totaling 24.6%.
"Our loan portfolio remains well diversified. Within our
commercial and agricultural portfolios we have minimized
concentrations with commercial real estate spread amongst
multi-family, hotels, shopping centers and more, while the
agriculture portfolio varies within dairy, grain, beef, corn and
farmland," stated Bianchi.
Total deposits decreased slightly to $934.3 million at March 31,
2015, from $952.4 million one year earlier and $946.8 million one
quarter earlier. Non-certificate accounts represented 68.6% of
total deposits while certificates of deposit represented 31.4% of
total deposits at March 31, 2015.
FHLB advances and other borrowings decreased during the third
fiscal quarter of 2015 to $41.2 million compared to $164.1 million
in the previous quarter. At period end March 31, 2015, the weighted
average cost of FHLB borrowings is 0.37%.
Nonperforming assets ("NPAs"), which included $8.7 million of
troubled debt restructurings that are in compliance with their
restructured terms, totaled $13.1 million at March 31, 2015
compared to $18.8 million one year earlier. At March 31, 2015, NPAs
represented 1.15% of total assets and included only $27,000 in
foreclosed assets.
The allowance for loan and lease losses at March 31, 2015,
totaled $11.0 million and represented 1.26% of total loans and
leases. Total allowance relative to total nonperforming loans was
84.4% at March 31, 2015, compared to 55.8% one year earlier.
Tangible common stockholders' equity increased to 8.67% of
tangible assets at March 31, 2015 from 7.72% at December 31, 2014.
Tangible book value per common share was $13.93 at March 31, 2015,
up from $13.41 one year earlier.
Capital ratios continued to remain well above regulatory
requirements with Tier 1 capital to risk-weighted assets of 12.50%
at March 31, 2015, while the ratio of Tier 1 capital to total
adjusted assets was 10.23%. These regulatory ratios were higher
than the required minimum levels of 6.00% and 4.00%,
respectively.
Review of Operations
For the third fiscal quarter ending March 31, 2015, HF
Financial's operations reflected the completion of balance sheet
restructuring activities designed to improve the net interest
margin, while the growing loan portfolio has improved yields on
interest earning assets. Net interest income totaled $8.8 million
for the third fiscal quarter of fiscal 2015 compared to $9.4
million the previous quarter and $8.3 million one year earlier. The
prior quarter included the recovery of $771,000 of non-accruing
interest on a refinanced loan. The NIM, TE expanded to 3.33% for
the fiscal third quarter compared to 3.19% the previous quarter and
2.95% one year earlier.
"We have reset our funding and branch structure to facilitate
lower cost core operations. Our net interest margin has increased
significantly, and we are getting more efficient use of our branch
office network," stated Brent Olthoff, Chief Financial Officer and
Treasurer.
Provision for loan losses reflect reserves established for the
larger loan portfolio, environmental conditions and historical
charge-off activity. Provisions totaled $282,000 for the third
fiscal quarter of 2015, compared to $941,000 for the second fiscal
quarter of 2015 and $260,000 for the year ago quarter.
Noninterest income totaled $2.1 million for the fiscal third
quarter of 2015 compared to $3.1 million in the previous quarter.
The sale of securities to fund the repayment of FHLB advances
resulted in a loss of $1.1million, while the loss on disposal of
closed branch fixed assets was $298,000. Mortgage activity produced
$776,000 in servicing and gains on loan sales revenue in the third
fiscal quarter of 2015 compared to $817,000 in the previous
quarter. Fees on deposits totaled $1.4 million for the third
quarter of fiscal 2015 compared to $1.6 million the previous
quarter. Other noninterest income for the fiscal third quarter
included a $313,000 net gain on sale of a branch property
subsequently leased back by the Company.
Total noninterest expenses were $9.8 million compared to $13.1
million in the previous quarter. The previous quarter included
costs associated with the prepayment of FHLB advances totaling $4.1
million. The current quarter reflected numerous one-time costs
associated with the branch closures totaling approximately
$397,000.
These financial results are preliminary until the Form 10-Q is
filed in May 2015.
Quarterly Dividend Declared
The board of directors declared a regular quarterly cash
dividend of $0.1125 per common share for the second fiscal quarter
2015. The dividend is payable May 15, 2015 to stockholders of
record May 8, 2015.
Use of Non-GAAP Financial Measures
This press release contains financial measures that are not
calculated in accordance with U.S. generally accepted accounting
principles ("GAAP"). "Net Interest Margin, TE" and "Core Earnings"
are non-GAAP financial measures. Information regarding the
usefulness of Net Interest Margin, TE and Core Earnings appear in
the notes to the attached financial statements. The Company
believes that the presentation of non-GAAP financial measures will
permit investors to assess the Company's core operating results on
the same basis as management. Non-GAAP financial measures should be
considered supplemental to, not a substitute for or superior to,
financial measures calculated in accordance with GAAP. As other
companies may use different calculations for these measures, these
presentations may not be comparable to other similarly titled
measures reported by other companies. Reconciliation of the
non-GAAP measures to the most comparable GAAP measures are set
forth in the notes to the attached financial statements.
About HF Financial Corp.
HF Financial Corp., based in Sioux Falls, SD, is the parent
company for financial services companies, including Home Federal
Bank, Mid America Capital Services, Inc., dba Mid America Leasing
Company, Hometown Investment Services, Inc. and HF Financial Group,
Inc. As a publicly traded savings association headquartered in
South Dakota, HF Financial Corp. operates with 24 offices in 18
communities, throughout Eastern South Dakota, Minnesota, and North
Dakota. The Company operates a branch in the Twin Cities market as
Infinia Bank, a Division of Home Federal Bank of South Dakota, and
a loan production office in Fargo, North Dakota. Internet banking
is also available at www.homefederal.com and
www.infiniabank.com.
This news release and other reports issued by the Company,
including reports filed with the Securities and Exchange
Commission, contain "forward-looking statements" that deal with
future results, expectations, plans and performance. In addition,
the Company's management may make forward-looking statements orally
to the media, securities analysts, investors or others. These
forward-looking statements might include one or more of the
following:
- Projections of income, loss, revenues, earnings or losses per
share, dividends, capital expenditures, capital structure, adequacy
of loan loss reserves, tax benefit or other financial items.
- Descriptions of plans or objectives of management for future
operations, products or services, transactions, investments and use
of subordinated debentures payable to trusts.
- Forecasts of future economic performance.
- Use and descriptions of assumptions and estimates underlying or
relating to such matters.
Forward-looking statements can be identified by the fact they do
not relate strictly to historical or current facts. They often
include words such as "optimism," "look-forward," "bright,"
"pleased," "believe," "expect," "anticipate," "intend," "plan,"
"estimate" or words of similar meaning, or future or conditional
verbs such as "will," "would," "should," "could," or "may".
Forward-looking statements about the Company's expected
financial results and other plans are subject to certain risks,
uncertainties and assumptions. These include, but are not limited
to the following: possible legislative changes and adverse
economic, business and competitive conditions and developments
(such as shrinking interest margins and continued short-term
environments); deposit outflows, reduced demand for financial
services and loan products; changes in accounting policies or
guidelines, or in monetary and fiscal policies of the federal
government; changes in credit and other risks posed by the
Company's loan and lease portfolios; the ability or inability of
the Company to manage interest rate and other risks; unexpected or
continuing claims against the Company's self-insured health plan;
the ability or inability of the Company to successfully enter into
a definitive agreement for and close anticipated transactions;
technological, computer-related or operational difficulties;
adverse changes in securities markets; results of litigation; and
the other risks detailed from time to time in the Company's SEC
filings, including but not limited to, its annual report on Form
10-K for the fiscal year ending June 30, 2014, and its subsequent
quarterly reports on Form 10-Q.
Forward-looking statements speak only as of the date they are
made. The Company does not undertake to update forward-looking
statements to reflect circumstances or events that occur after the
date the forward-looking statements are made. Although the Company
believes its expectations are reasonable, it can give no assurance
that such expectations will prove to be correct. Based upon
changing conditions, should any one or more of these risks or
uncertainties materialize, or should any underlying assumptions
prove incorrect, actual results may vary materially from those
described in any forward-looking statements.
HF Financial
Corp. |
Selected Consolidated
Operating Highlights |
(Dollars in Thousands,
except share data) |
(Unaudited) |
|
|
Three Months Ended |
Nine Months
Ended |
|
March 31, |
December 31, |
March 31, |
March
31, |
|
2015 |
2014 |
2014 |
2015 |
2014 |
Interest, dividend and loan fee income: |
|
|
|
|
|
Loans and leases
receivable |
$ 9,197 |
$ 10,192 |
$ 8,781 |
$ 28,549 |
$ 25,740 |
Investment securities and
interest-earning deposits |
863 |
1,059 |
1,716 |
3,128 |
4,099 |
|
10,060 |
11,251 |
10,497 |
31,677 |
29,839 |
Interest expense: |
|
|
|
|
|
Deposits |
846 |
899 |
960 |
2,661 |
2,996 |
Advances from Federal Home Loan
Bank and other borrowings |
365 |
988 |
1,212 |
2,517 |
3,955 |
|
1,211 |
1,887 |
2,172 |
5,178 |
6,951 |
Net interest income |
8,849 |
9,364 |
8,325 |
26,499 |
22,888 |
Provision for losses on loans and leases |
282 |
941 |
260 |
1,201 |
279 |
Net interest income after
provision for losses on loans and leases |
8,567 |
8,423 |
8,065 |
25,298 |
22,609 |
Noninterest income: |
|
|
|
|
|
Fees on deposits |
1,375 |
1,550 |
1,472 |
4,524 |
4,727 |
Loan servicing income, net |
319 |
345 |
703 |
1,034 |
2,132 |
Gain on sale of loans |
457 |
472 |
344 |
1,476 |
1,759 |
Earnings on cash value of life
insurance |
204 |
208 |
201 |
619 |
613 |
Trust income |
234 |
225 |
229 |
682 |
642 |
Commission and insurance
income |
438 |
367 |
404 |
1,224 |
1,035 |
Gain (loss) on sale of
securities, net |
(1,076) |
(75) |
233 |
(1,117) |
591 |
Loss on disposal of
closed-branch fixed assets |
(298) |
— |
— |
(461) |
— |
Other |
402 |
33 |
98 |
540 |
295 |
|
2,055 |
3,125 |
3,684 |
8,521 |
11,794 |
Noninterest expense: |
|
|
|
|
|
Compensation and employee
benefits |
5,675 |
5,508 |
5,298 |
16,434 |
16,025 |
Occupancy and equipment |
1,330 |
1,008 |
1,058 |
3,381 |
3,140 |
FDIC insurance |
221 |
191 |
220 |
627 |
661 |
Check and data processing
expense |
815 |
815 |
784 |
2,463 |
2,297 |
Professional fees |
447 |
425 |
502 |
1,512 |
1,633 |
Marketing and community
investment |
444 |
376 |
315 |
1,192 |
935 |
Foreclosed real estate and
other properties, net |
24 |
9 |
50 |
61 |
306 |
Loss on early extinguishment of
debt |
— |
4,065 |
— |
4,065 |
— |
Other |
824 |
752 |
691 |
2,215 |
2,027 |
|
9,780 |
13,149 |
8,918 |
31,950 |
27,024 |
Income (loss) before income
taxes |
842 |
(1,601) |
2,831 |
1,869 |
7,379 |
Income tax expense (benefit) |
123 |
(733) |
858 |
206 |
2,257 |
Net income (loss) |
$ 719 |
$ (868) |
$ 1,973 |
$ 1,663 |
$ 5,122 |
|
|
|
|
|
|
Basic earnings (loss) per
common share: |
$ 0.10 |
$ (0.12) |
$ 0.28 |
$ 0.24 |
$ 0.73 |
Diluted earnings (loss) per
common share: |
$ 0.10 |
$ (0.12) |
$ 0.28 |
$ 0.24 |
$ 0.73 |
Basic weighted average
shares: |
7,054,197 |
7,054,340 |
7,055,440 |
7,054,662 |
7,055,256 |
Diluted weighted average
shares: |
7,061,035 |
7,059,032 |
7,057,953 |
7,059,805 |
7,057,896 |
Outstanding shares (end of
period): |
7,054,451 |
7,054,352 |
7,055,440 |
7,054,451 |
7,055,440 |
Number of full-service offices |
23 |
26 |
27 |
|
|
|
HF Financial
Corp. |
Consolidated Statements
of Financial Condition |
(Dollars in Thousands,
except share data) |
|
|
March 31, 2015 |
June 30, 2014 |
|
(Unaudited) |
(Audited) |
ASSETS |
|
|
Cash and cash equivalents |
$ 19,933 |
$ 24,256 |
Investment securities available for sale |
160,951 |
348,878 |
Investment securities held to maturity |
20,234 |
19,507 |
Correspondent bank stock |
3,203 |
6,367 |
Loans held for sale |
4,460 |
6,173 |
|
|
|
Loans and leases receivable |
871,613 |
811,946 |
Allowance for loan and lease losses |
(11,012) |
(10,502) |
Loans and leases receivable,
net |
860,601 |
801,444 |
|
|
|
Accrued interest receivable |
4,970 |
5,407 |
Office properties and equipment, net of
accumulated depreciation |
14,882 |
13,805 |
Foreclosed real estate and other
properties |
27 |
180 |
Cash value of life insurance |
21,150 |
20,644 |
Servicing rights, net |
10,671 |
11,218 |
Goodwill and intangible assets, net |
4,749 |
4,830 |
Other assets |
12,535 |
12,020 |
Total assets |
$ 1,138,366 |
$ 1,274,729 |
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Liabilities |
|
|
Deposits |
$ 934,318 |
$ 999,174 |
Advances from Federal Home Loan
Bank and other borrowings |
41,201 |
120,643 |
Subordinated debentures payable
to trusts |
24,837 |
24,837 |
Advances by borrowers for taxes
and insurance |
20,418 |
13,683 |
Accrued expenses and other
liabilities |
14,548 |
14,740 |
Total liabilities |
1,035,322 |
1,173,077 |
Stockholders' equity |
|
|
Preferred stock, $.01 par
value, 500,000 shares authorized, none outstanding |
— |
— |
Series A Junior
Participating Preferred Stock, $1.00 stated value, 50,000 shares
authorized, none outstanding |
— |
— |
Common stock, $.01 par value,
10,000,000 shares authorized, 9,137,906 and 9,138,895 shares issued
at March 31, 2015 and June 30, 2014, respectively |
91 |
91 |
Additional paid-in capital |
46,320 |
46,218 |
Retained earnings,
substantially restricted |
88,976 |
89,694 |
Accumulated other comprehensive
(loss), net of related deferred tax effect |
(1,446) |
(3,454) |
Less cost of treasury stock,
2,083,455 shares at March 31, 2015 and June 30, 2014 |
(30,897) |
(30,897) |
Total stockholders' equity |
103,044 |
101,652 |
Total liabilities and
stockholders' equity |
$ 1,138,366 |
$ 1,274,729 |
|
HF Financial
Corp. |
Selected Consolidated
Financial Condition Data |
(Dollars in
Thousands) |
(Unaudited) |
|
|
Three Months
Ended |
Nine Months
Ended |
|
March 31, |
December 31, |
March 31, |
March
31, |
Allowance for Loan and Lease Loss Activity |
2015 |
2014 |
2014 |
2015 |
2014 |
Balance, beginning |
$ 10,933 |
$ 10,379 |
$ 10,605 |
$ 10,502 |
$ 10,743 |
Provision charged to
income |
282 |
941 |
260 |
1,201 |
279 |
Charge-offs |
(268) |
(433) |
(563) |
(842) |
(1,094) |
Recoveries |
65 |
46 |
44 |
151 |
418 |
Balance, ending |
$ 11,012 |
$ 10,933 |
$ 10,346 |
$ 11,012 |
$ 10,346 |
|
|
|
|
Asset Quality |
March 31, 2015 |
December 31,
2014 |
March 31, 2014 |
Nonaccruing loans and leases |
$ 13,043 |
$ 12,811 |
$ 18,553 |
Accruing loans and leases delinquent more
than 90 days |
— |
— |
— |
Foreclosed assets |
27 |
2 |
266 |
Total nonperforming assets (1) |
$ 13,070 |
$ 12,813 |
$ 18,819 |
|
|
|
|
General allowance for loan and lease
losses |
$ 10,491 |
$ 10,473 |
$ 9,628 |
Specific impaired loan valuation
allowance |
521 |
460 |
718 |
Total allowance for loans and lease
losses |
$ 11,012 |
$ 10,933 |
$ 10,346 |
|
|
|
|
Ratio of nonperforming assets to total assets
at end of period (1) |
1.15% |
1.01% |
1.50% |
Ratio of nonperforming loans and leases to
total loans and leases at end of period (2) |
1.50% |
1.50% |
2.46% |
Ratio of net charge-offs to average loans and
leases for the year-to-date period (3) |
0.11% |
0.12% |
0.12% |
Ratio of allowance for loan and lease losses
to total loans and leases at end of period |
1.26% |
1.28% |
1.37% |
Ratio of allowance for loan and lease losses
to nonperforming loans and leases at end of period (2) |
84.4% |
85.3% |
55.8% |
_____________________________________________
(1) Nonperforming assets include nonaccruing loans and leases,
accruing loans and leases delinquent more than 90 days and
foreclosed assets. Includes nonaccruing troubled debt restructured
loans compliant with their restructured terms of $8.7 million, $9.3
million, and $15.2 million, for the respective quarters.
(2) Nonperforming loans and leases include both nonaccruing and
accruing loans and leases delinquent more than 90 days.
(3) Percentages for the nine months ended March 31, 2015 and
March 31, 2014 and the six months ended December 31, 2014 have been
annualized.
Troubled Debt Restructuring
Summary |
March 31, 2015 |
December 31,
2014 |
March 31, 2014 |
Nonaccruing troubled debt
restructurings-non-compliant (1)(2) |
$ 52 |
$ 182 |
$ 47 |
Nonaccruing troubled debt
restructurings-compliant (1)(2)(3) |
8,664 |
9,339 |
15,200 |
Accruing troubled debt restructurings
(4) |
2,788 |
1,633 |
1,384 |
Total troubled debt restructurings |
$ 11,504 |
$ 11,154 |
$ 16,631 |
______________________________________________
(1) Non-compliant and compliant refer to the terms of the
restructuring agreement.
(2) Balances are included in nonaccruing loans as part of
nonperforming loans.
(3) Interest received but applied to the principal balance was
$189, $196, and $258, for the respective quarters.
(4) None of the loans included are 90 days past due and are not
included in the nonperforming loans.
HF Financial
Corp. |
Selected Capital
Composition Highlights |
(Unaudited) |
|
|
March 31, 2015 |
December 31,
2014 |
June 30, 2014 |
Common stockholder's equity before OCI (1) to
consolidated assets |
9.22% |
8.31% |
8.27% |
OCI components to consolidated
assets: |
|
|
|
Net changes in unrealized gains
and losses: |
|
|
|
Investment securities available
for sale |
0.03 |
(0.06) |
(0.11) |
Defined benefit plan |
(0.12) |
(0.11) |
(0.11) |
Derivatives and hedging
activities |
(0.04) |
(0.04) |
(0.05) |
Goodwill and intangible assets,
net to consolidated assets |
(0.42) |
(0.38) |
(0.38) |
Tangible common equity to tangible
assets |
8.67% |
7.72% |
7.62% |
|
|
|
|
|
|
|
|
Tangible book value per common share (2) |
$ 13.93 |
$ 13.76 |
$ 13.72 |
|
|
|
|
|
|
|
|
Tier I capital (to adjusted total assets)
(3) |
10.23 % |
9.46% |
9.49% |
Tier I capital (to risk-weighted assets)
(3) |
12.50 |
12.70 |
13.38 |
Common equity tier I capital (to
risk-weighted assets) (3)(4) |
12.50 |
NA |
NA |
Total risk-based capital (to risk-weighted
assets) (3) |
13.64 |
13.86 |
14.54 |
______________________________________________
(1) Accumulated other comprehensive income (loss).
(2) Common equity reduced by goodwill and intangible assets, net
and divided by number of shares of outstanding common stock.
(3) Capital ratios for Home Federal Bank.
(4) Common equity tier I capital ratio is a regulatory ratio
reporting requirement effective beginning March 31, 2015.
HF Financial
Corp. |
Selected Consolidated
Financial Condition Data |
(Dollars in
Thousands) |
(Unaudited) |
|
Loan and Lease Portfolio
Composition |
|
|
March 31,
2015 |
June 30,
2014 |
|
Amount |
Percent |
Amount |
Percent |
Residential: |
|
|
|
|
One-to four-family |
$ 50,681 |
5.8% |
47,886 |
5.9% |
Construction |
5,880 |
0.7 |
3,838 |
0.5 |
Commercial: |
|
|
|
|
Commercial business (1) |
71,648 |
8.2 |
82,459 |
10.2 |
Equipment finance leases |
224 |
— |
847 |
0.1 |
Commercial real estate: |
|
|
|
|
Commercial real estate |
309,204 |
35.5 |
294,388 |
36.3 |
Multi-family real estate |
103,345 |
11.9 |
87,364 |
10.7 |
Construction |
49,226 |
5.6 |
22,946 |
2.8 |
Agricultural: |
|
|
|
|
Agricultural real estate |
93,265 |
10.7 |
79,805 |
9.8 |
Agricultural business |
121,493 |
13.9 |
115,397 |
14.2 |
Consumer: |
|
|
|
|
Consumer direct |
14,869 |
1.7 |
17,449 |
2.1 |
Consumer home equity |
49,171 |
5.7 |
56,666 |
7.0 |
Consumer overdraft &
reserve |
2,607 |
0.3 |
2,901 |
0.4 |
Total (2) |
$ 871,613 |
100.0% |
$ 811,946 |
100.0% |
_________________________________________________
(1) Includes $1,512 and $1,645 tax exempt leases at March 31,
2015 and June 30, 2014, respectively.
(2) Exclusive of undisbursed portion of loans in process and net
of deferred loan fees and discounts.
Deposit Composition |
|
|
March 31,
2015 |
June 30,
2014 |
|
Amount |
Percent |
Amount |
Percent |
Noninterest-bearing checking accounts |
$ 151,211 |
16.2% |
164,918 |
16.5% |
Interest-bearing checking accounts |
178,745 |
19.1 |
173,879 |
17.4 |
Money market accounts |
217,507 |
23.3 |
238,507 |
23.9 |
Savings accounts |
93,571 |
10.0 |
160,277 |
16.0 |
In-market certificates of deposit |
253,861 |
27.2 |
236,026 |
23.6 |
Out-of-market certificates of deposit |
39,423 |
4.2 |
25,567 |
2.6 |
Total deposits |
$ 934,318 |
100.0% |
$ 999,174 |
100.0% |
|
HF Financial
Corp. |
Selected Consolidated
Financial Condition Data |
(Dollars in
Thousands) |
(Unaudited) |
|
Average Balance, Interest Yields and
Rates |
Three Months
Ended |
|
March 31,
2015 |
December 31,
2014 |
|
Average Outstanding
Balance |
Yield/ Rate |
Average Outstanding
Balance |
Yield/ Rate |
Interest-earning assets: |
|
|
|
|
Loans and leases
receivable(1)(3) |
$ 861,736 |
4.33% |
$ 846,772 |
4.78% |
Investment
securities(2)(3) |
239,105 |
1.46 |
342,251 |
1.23 |
Total interest-earning assets |
1,100,841 |
3.71% |
1,189,023 |
3.75% |
Noninterest-earning assets |
78,432 |
|
76,821 |
|
Total assets |
$ 1,179,273 |
|
$ 1,265,844 |
|
Interest-bearing liabilities: |
|
|
|
|
Deposits: |
|
|
|
|
Checking and money market |
$ 391,645 |
0.23% |
$ 393,683 |
0.23% |
Savings |
99,196 |
0.20 |
108,277 |
0.19 |
Certificates of deposit |
294,573 |
0.79 |
290,981 |
0.85 |
Total interest-bearing
deposits |
785,414 |
0.44 |
792,941 |
0.45 |
FHLB advances and other
borrowings |
90,707 |
0.35 |
164,800 |
1.68 |
Subordinated debentures payable
to trusts |
24,837 |
4.67 |
24,837 |
4.66 |
Total interest-bearing liabilities |
900,958 |
0.55% |
982,578 |
0.76% |
Noninterest-bearing
deposits |
141,370 |
|
149,505 |
|
Other liabilities |
34,495 |
|
30,593 |
|
Total liabilities |
1,076,823 |
|
1,162,676 |
|
Equity |
102,450 |
|
103,168 |
|
Total liabilities and equity |
$ 1,179,273 |
|
$ 1,265,844 |
|
Net interest spread(4) |
|
3.16% |
|
2.99% |
Net interest margin(4)(5) |
|
3.26% |
|
3.12% |
Net interest margin, TE(6) |
|
3.33% |
|
3.19% |
Return on average assets(7) |
|
0.25% |
|
(0.27)% |
Return on average equity(8) |
|
2.85% |
|
(3.34)% |
_____________________________________
(1) Includes loan fees and interest on accruing loans and leases
past due 90 days or more.
(2) Includes federal funds sold and interest earning
reserve balances at the Federal Reserve Bank.
(3) Yields do not reflect the tax-exempt nature of loans,
equipment leases and municipal securities.
(4) Percentages for the three months ended March 31,
2015 and December 31, 2014 have been annualized.
(5) Net interest income divided by average interest-earning
assets.
(6) Net interest margin expressed on a fully taxable
equivalent basis ("Net Interest Margin, TE") is a non-GAAP
financial measure. See the following Non-GAAP Disclosure
Reconciliation of Net Interest Income (GAAP) to Net Interest
Margin, TE (Non-GAAP). The tax-equivalent adjustment to net
interest income recognizes the income tax savings when comparing
taxable and tax-exempt assets and adjusting for federal and state
exemption of interest income and certain other permanent income tax
differences. We believe that it is a standard practice in the
banking industry to present net interest margin expressed on a
fully taxable equivalent basis, and accordingly believe the
presentation of this non-GAAP financial measure may be useful for
peer comparison purposes. As a non-GAAP financial measure, Net
Interest Margin, TE should be considered supplemental to and not a
substitute for or superior to, financial measures calculated in
accordance with GAAP. As other companies may use different
calculations for Net Interest Margin, TE, this presentation may not
be comparable to similarly titled measures reported by other
companies.
(7) Ratio of net income to average total assets.
(8) Ratio of net income to average equity.
HF Financial
Corp. |
Selected Consolidated
Financial Condition Data |
(Dollars in
Thousands) |
(Unaudited) |
|
Average Balance, Interest Yields and
Rates |
Nine Months
Ended |
|
March 31,
2015 |
March 31,
2014 |
|
Average Outstanding
Balance |
Yield/ Rate |
Average Outstanding
Balance |
Yield/ Rate |
Interest-earning assets: |
|
|
|
|
Loans and leases
receivable(1)(3) |
$ 842,062 |
4.52% |
$ 742,320 |
4.62% |
Investment
securities(2)(3) |
316,305 |
1.32 |
427,220 |
1.28 |
Total interest-earning assets |
1,158,367 |
3.64% |
1,169,540 |
3.40% |
Noninterest-earning assets |
76,064 |
|
73,184 |
|
Total assets |
$ 1,234,431 |
|
$ 1,242,724 |
|
Interest-bearing liabilities: |
|
|
|
|
Deposits: |
|
|
|
|
Checking and money market |
$ 395,476 |
0.24% |
$ 362,809 |
0.26% |
Savings |
118,616 |
0.20 |
143,448 |
0.24 |
Certificates of deposit |
280,474 |
0.85 |
264,470 |
1.02 |
Total interest-bearing
deposits |
794,566 |
0.45 |
770,727 |
0.52 |
FHLB advances and other
borrowings |
131,175 |
1.66 |
157,187 |
2.49 |
Subordinated debentures payable
to trusts |
24,837 |
4.75 |
24,837 |
5.42 |
Total interest-bearing liabilities |
950,578 |
0.73% |
952,751 |
0.97% |
Noninterest-bearing
deposits |
148,988 |
|
162,141 |
|
Other liabilities |
32,262 |
|
30,642 |
|
Total liabilities |
1,131,828 |
|
1,145,534 |
|
Equity |
102,603 |
|
97,190 |
|
Total liabilities and equity |
$ 1,234,431 |
|
$ 1,242,724 |
|
Net interest spread(4) |
|
2.91% |
|
2.43% |
Net interest margin(4)(5) |
|
3.05% |
|
2.61% |
Net interest margin, TE(6) |
|
3.11% |
|
2.66% |
Return on average assets(7) |
|
0.18% |
|
0.55% |
Return on average equity(8) |
|
2.16% |
|
7.02% |
_____________________________________
(1) Includes loan fees and interest on accruing loans and
leases past due 90 days or more.
(2) Includes federal funds sold and interest earning
reserve balances at the Federal Reserve Bank.
(3) Yields do not reflect the tax-exempt nature of loans,
equipment leases and municipal securities.
(4) Percentages for the nine months ended March 31,
2015 and March 31, 2014 have been annualized.
(5) Net interest income divided by average interest-earning
assets.
(6) Net interest margin expressed on a fully taxable
equivalent basis ("Net Interest Margin, TE") is a non-GAAP
financial measure. See the following Non-GAAP Disclosure
Reconciliation of Net Interest Income (GAAP) to Net Interest
Margin, TE (Non-GAAP). The tax-equivalent adjustment to net
interest income recognizes the income tax savings when comparing
taxable and tax-exempt assets and adjusting for federal and state
exemption of interest income and certain other permanent income tax
differences. We believe that it is a standard practice in the
banking industry to present net interest margin expressed on a
fully taxable equivalent basis, and accordingly believe the
presentation of this non-GAAP financial measure may be useful for
peer comparison purposes. As a non-GAAP financial measure, Net
Interest Margin, TE should be considered supplemental to and not a
substitute for or superior to, financial measures calculated in
accordance with GAAP. As other companies may use different
calculations for Net Interest Margin, TE, this presentation may not
be comparable to similarly titled measures reported by other
companies.
(7) Ratio of net income to average total assets.
(8) Ratio of net income to average equity.
HF Financial
Corp. |
Age Analysis of Past
Due Loans and Leases Receivables |
(Dollars in
Thousands) |
(Unaudited) |
|
March 31, 2015 |
Accruing and
Nonaccruing Loans |
Nonperforming
Loans |
|
30 - 59 Days Past
Due |
60 - 89 Days Past
Due |
Greater Than 89
Days |
Total Past Due |
Current |
Recorded Investment > 90
Days and Accruing (1) |
Nonaccrual
Balance |
Total |
Residential: |
|
|
|
|
|
|
|
|
One-to four-family |
$ 178 |
$ — |
$ 111 |
$ 289 |
$ 50,392 |
$ — |
$ 225 |
$ 225 |
Construction |
— |
— |
— |
— |
5,880 |
— |
— |
— |
Commercial: |
|
|
|
|
|
|
|
|
Commercial business |
18 |
250 |
235 |
503 |
71,145 |
— |
2,443 |
2,443 |
Equipment finance leases |
— |
— |
— |
— |
224 |
— |
— |
— |
Commercial real estate: |
|
|
|
|
|
|
|
|
Commercial real estate |
— |
— |
66 |
66 |
309,138 |
— |
531 |
531 |
Multi-family real estate |
— |
— |
— |
— |
103,345 |
— |
— |
— |
Construction |
— |
— |
— |
— |
49,226 |
— |
— |
— |
Agricultural: |
|
|
|
|
|
|
|
|
Agricultural real estate |
— |
87 |
— |
87 |
93,178 |
— |
3,356 |
3,356 |
Agricultural business |
1,333 |
17 |
124 |
1,474 |
120,019 |
— |
6,156 |
6,156 |
Consumer: |
|
|
|
|
|
|
|
|
Consumer direct |
— |
— |
4 |
4 |
14,865 |
— |
44 |
44 |
Consumer home equity |
170 |
46 |
204 |
420 |
48,751 |
— |
288 |
288 |
Consumer OD &
reserve |
— |
— |
— |
— |
2,607 |
— |
— |
— |
Total |
$ 1,699 |
$ 400 |
$ 744 |
$ 2,843 |
$ 868,770 |
$ — |
$ 13,043 |
$ 13,043 |
|
|
|
December 31, 2014 |
Accruing and
Nonaccruing Loans |
Nonperforming
Loans |
|
30 - 59 Days Past
Due |
60 - 89 Days Past
Due |
Greater Than 89
Days |
Total Past Due |
Current |
Recorded Investment > 90
Days and Accruing (1) |
Nonaccrual
Balance |
Total |
Residential: |
|
|
|
|
|
|
|
|
One-to four-family |
$ — |
$ — |
$ 111 |
$ 111 |
$ 44,629 |
$ — |
$ 227 |
$ 227 |
Construction |
— |
— |
— |
— |
5,890 |
— |
— |
— |
Commercial: |
|
|
|
|
|
|
|
|
Commercial business |
32 |
— |
195 |
227 |
69,917 |
— |
2,722 |
2,722 |
Equipment finance leases |
— |
— |
— |
— |
344 |
— |
— |
— |
Commercial real estate: |
|
|
|
|
|
|
|
|
Commercial real estate |
— |
— |
66 |
66 |
314,174 |
— |
563 |
563 |
Multi-family real estate |
— |
— |
— |
— |
99,722 |
— |
— |
— |
Construction |
— |
— |
— |
— |
39,112 |
— |
— |
— |
Agricultural: |
|
|
|
|
|
|
|
|
Agricultural real estate |
— |
— |
— |
— |
92,123 |
— |
3,134 |
3,134 |
Agricultural business |
25 |
— |
178 |
203 |
119,268 |
— |
5,613 |
5,613 |
Consumer: |
|
|
|
|
|
|
|
|
Consumer direct |
12 |
— |
4 |
16 |
15,514 |
— |
66 |
66 |
Consumer home equity |
151 |
— |
315 |
466 |
50,387 |
— |
486 |
486 |
Consumer OD &
reserve |
7 |
— |
— |
7 |
2,954 |
— |
— |
— |
Total |
$ 227 |
$ — |
$ 869 |
$ 1,096 |
$ 854,034 |
$ — |
$ 12,811 |
$ 12,811 |
____________________________________
(1) Loans accruing and delinquent greater than 90 days have
government guarantees or acceptable loan-to-value ratios.
HF Financial
Corp. |
Non-GAAP Disclosure
Reconciliations |
(Dollars in Thousands,
except share data) |
(Unaudited) |
|
Reconciliation of Net
Interest Margin to Net Interest Margin-Tax Equivalent
Yield |
|
|
Three Months
Ended |
Nine Months
Ended |
|
March 31, |
December 31, |
March 31, |
March
31, |
|
2015 |
2014 |
2014 |
2015 |
2014 |
Net interest income |
$ 8,849 |
$ 9,364 |
$ 8,325 |
$ 26,499 |
$ 22,888 |
Taxable equivalent
adjustment |
183 |
191 |
176 |
561 |
486 |
Adjusted net interest
income |
9,032 |
9,555 |
8,501 |
27,060 |
23,374 |
Average interest-earning
assets |
1,100,841 |
1,189,023 |
1,167,017 |
1,158,367 |
1,169,540 |
Net interest margin, TE |
3.33% |
3.19% |
2.95% |
3.11% |
2.66% |
Reconciliation of GAAP Earnings and Core
Earnings
Although core earnings are not a measure of performance
calculated in accordance with GAAP, the Company believes that its
core earnings are an important indication of performance through
ongoing operations. The Company believes that core earnings are
useful to management and investors in evaluating its ongoing
operating performance, and in comparing its performance with other
companies in the banking industry. Core earnings should not be
considered in isolation or as a substitute for GAAP earnings.
During the periods presented, the Company calculated core earnings
by adding back or subtracting, net of tax, net gain or loss
recorded on the sale of securities, the charges incurred from the
prepayment of borrowings, the net gain or loss recorded on the sale
of property, and costs incurred for branch closures.
|
Three Months
Ended |
Nine Months
Ended |
|
March 31, |
December 31, |
March 31, |
March
31, |
|
2015 |
2014 |
2014 |
2015 |
2014 |
GAAP earnings before income
taxes |
$ 842 |
$ (1,601) |
$ 2,831 |
$ 1,869 |
$ 7,379 |
Net loss (gain) on sale of
securities |
1,076 |
75 |
(233) |
1,117 |
(591) |
Charges incurred from prepayment of
borrowings(1) |
— |
4,065 |
— |
4,065 |
— |
Net (gain) loss on sale of
property |
(313) |
64 |
— |
(249) |
— |
Costs incurred for branch
closures(2) |
695 |
2 |
— |
896 |
— |
Core earnings before income
taxes |
2,300 |
2,605 |
2,598 |
7,698 |
6,788 |
Provision for income taxes for core
earnings |
677 |
865 |
769 |
2,421 |
2,032 |
Core earnings |
$ 1,623 |
$ 1,740 |
$ 1,829 |
$ 5,277 |
$ 4,756 |
|
HF Financial
Corp. |
Non-GAAP Disclosure
Reconciliations |
(Dollars in Thousands,
except share data) |
(Unaudited) |
|
|
Three Months
Ended |
Nine Months
Ended |
|
March 31, |
December 31, |
March 31, |
March
31, |
|
2015 |
2014 |
2014 |
2015 |
2014 |
GAAP diluted earnings per
share |
$ 0.10 |
$ (0.12) |
$ 0.28 |
$ 0.24 |
$ 0.73 |
Net loss (gain) on sale of
securities, net of tax |
0.10 |
— |
(0.02) |
0.10 |
(0.06) |
Charges incurred from prepayment of
borrowings, net of tax |
— |
0.36 |
— |
0.36 |
— |
Net (gain) loss on sale of property,
net of tax |
(0.03) |
0.01 |
— |
(0.02) |
— |
Costs incurred for branch closures,
net of tax |
0.06 |
— |
— |
0.07 |
— |
Core diluted earnings per
share |
$ 0.23 |
$ 0.25 |
$ 0.26 |
$ 0.75 |
$ 0.67 |
(1) Charges incurred from prepayment of borrowings is
included as Other noninterest expense on the income statement.
(2) Branch closure costs include loss on disposal of
closed branch fixed assets in noninterest income and other costs
associated with the closure and are included in the respective
categories within noninterest expenses.
CONTACT: HF Financial Corp.
Stephen Bianchi, President and Chief Executive Officer
(605) 333-7556
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