Home Financial Bancorp Announces First Quarter Results

First Quarter Highlights:

• Non-interest income fell $53,000 or 22%;
• Non-interest expense decreased $47,000 or 6%;
• Income tax expense more than doubled to $44,000;
• Net income decreased from $98,000 to $73,000.

For the quarter ended September 30, 2009, the Company reported net income of $73,000 or $.06 basic and diluted earnings per share. Net income totaled $98,000 or $.07 basic and diluted earnings per share for the quarter ended September 30, 2008. Net income decreased due to lower non-interest income and higher income tax expense.

Net interest income increased 4% to $696,000 for the three months ended September 30, 2009, compared to $671,000 for the same period in 2008. Offsetting a $90,000 or 8% drop in interest income, interest expense declined $114,000 or 22%.

Loan loss provisions were $80,000 for the quarter ended September 30, 2009 and $60,000 for the year-earlier period. A regular assessment of loan loss allowance adequacy indicated that these provisions were required 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 loan loss provisions.

Non-interest income decreased $53,000 or 22% compared to the same period a year earlier. Accounting for this difference, a $56,000 gain on sale of real estate acquired for development was recorded during first quarter 2009. No real estate development sales were reported in first quarter 2010.

Non-interest expense declined $47,000 or 6% compared to the quarter ended September 30, 2008. Legal and professional fees decreased $35,000 or 43%. Salaries and employee benefits fell by $9,000 or 3%. Moderating the overall drop in non-interest expense, deposit insurance expense more than doubled to $21,000 for the quarter, and repossessed property expense increased 23% to $32,000.

Tax expense escalated to $44,000 on pre-tax earnings of $117,000 for the quarter ended September 30, 2009. For the year-earlier period, tax expense was $20,000 on $117,000 in pre-tax earnings. This change in tax expense reflects the June 2009 expiration of tax credits totaling nearly $27,000 per quarter. The tax credits provided benefits for a ten-year period and were associated with the Bank’s low-income housing investment.

At September 30, 2009, total assets were $72.0 million. Assets were $69.9 million at June 30, 2009. During fiscal first quarter 2010, cash and interest-bearing deposits increased 10% to $6.9 million. Outstanding loans increased less than 1% to $57.5 million as of September 30, 2009.

Loans delinquent 90 days or more totaled $2.6 million or 4.5% of total loans at September 30, 2009. Three months earlier, non-performing loans amounted to $2.6 million or 4.6% of total loans. Non-performing assets were $3.4 million or 4.8% of total assets at September 30, 2009 and June 30, 2009. Non-performing assets included $815,000 in Real Estate Owned (“REO”) and other repossessed properties at September 30, 2009, compared to $733,000 three months earlier.

Net loans charged off during the quarter ended September 30, 2009 totaled $87,000 compared to $12,000 for the first quarter of fiscal 2009. Periodic provisions to loan loss allowances reflect management’s view of risk in the Bank’s entire portfolio due to a number of dynamic factors, which include, but are not limited to, current economic conditions and loan delinquency trends. Allowances maintained for loan losses were $605,000 or 1.05% of total loans at September 30, 2009 compared to $613,000 or 1.07% of total loans at June 30, 2009. Management considered the level of loan loss allowances at September 30, 2009 to be adequate to cover probable incurred losses inherent in the loan portfolio at that date.

Total deposits were $44.4 million as of September 30, 2009, compared to $43.3 million three months earlier. Total borrowings increased 5% to $19.5 million. Borrowings were $18.5 million at June 30, 2009.

Shareholders’ equity was $7.8 million or 10.8% of total assets at September 30, 2009. Factors affecting shareholders’ equity during the quarter included net income, quarterly cash dividends of $.03 per share, a $41,000 net increase in the market value of securities available for sale, and a $6,000 decrease in costs associated with a stock-based employee benefit plan. Based on 1,351,926 shares outstanding, the Company’s book value per share was $5.75 at September 30, 2009.

Home Financial Bancorp and Owen Community Bank, s.b., an FDIC-insured, federal stock savings 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.owencom.com.

Home Financial Bancorp
Kurt D. Rosenberger, 812-829-2095