Home Financial Bancorp Announces Fourth Quarter and Year-End Results

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SPENCER, Ind.--(BUSINESS WIRE)-- Home Financial Bancorp (“Company”) (OTCBB:HWEN), an Indiana corporation which is the holding company for Owen Community Bank, (“Bank”) based in Spencer, Indiana, announces unaudited results for the fourth quarter and twelve months ended June 30, 2011.

Fourth Quarter Highlights:

Provisions for loan losses decreased $121,000;
Non-interest income increased 47%, or $97,000;
Net income improved 64% to $176,000.

Twelve Month Highlights:

Net interest income rose 10%, or $298,000;
Non-performing loans fell 52%, or $1.2 million;
Provisions for loan losses decreased 53%, or $201,000;
Net income improved 19%, from $430,000 to $510,000.

For the quarter ended June 30, 2011, the Company reported $176,000, or $.13 basic and diluted earnings per common share. For the same period last year, the Company reported $107,000, or $.08 basic and diluted earnings per common share. Lower loan loss provisions and gain on sale of non-performing commercial real estate loans improved fourth quarter results, compared to a year earlier.

Net interest income before provisions for loan losses grew $7,000 or 1% for the three months ended June 30, 2011, compared to the same period in 2010. Interest income for the quarter was down $38,000, but was more than offset by a $46,000, or 14% drop in interest expense due to continued low market interest rates.

No provisions for loan losses were reported for fourth quarter 2011, compared to $121,000 in fourth quarter 2010. Net loan losses totaled $110,000, compared to $133,000 for the same period a year earlier. A regular analysis of the allowance for loan losses indicated the reserve was adequate at June 30, 2011. This analysis included reviewing changes in volume, composition and quality of the loan portfolio, as well as actual loan loss experience.

Non-interest income increased 47% to $304,000, compared to $207,000 for the year-earlier period. This improvement primarily resulted from recognized gain on sale of four commercial real estate loans delinquent in excess of 90 days. Non-interest expense increased $105,000 or 15%. Contributing to the overall increase, repossessed property expense was $38,000 higher and salaries and employee benefits grew $37,000.

For the twelve-month period ended June 30, 2011, net income increased to $510,000, or $.39 basic and diluted earnings per common share, compared to $430,000 or $.33 basic and diluted earnings per common share for fiscal 2010. Lower interest expense and reduced provisions for loan losses significantly contributed to improved earnings.

Net interest income before the provision for loan losses rose $298,000 or 10%, to $3.3 million for the year. Interest income increased $30,000 or 1%, but was overshadowed by a $269,000 or 18% decline in interest expense for the year. Loan loss provisions decreased to $180,000, compared to $381,000 the prior year. Net charge-offs decreased 39%, to $193,000 for fiscal year 2011, compared to $317,000 for 2010.

Non-interest income fell $139,000 or 16%, to $715,000 for fiscal 2011. Most of this change is tied to a $144,000 decrease in service charge revenue from deposit accounts. Non-interest expense increased $224,000 or 8%. Repossessed property expense, including net loss on sale of foreclosed property, grew $122,000 or 63%, to $316,000 for the year. Also contributing to the overall rise in non-interest expense, legal and professional fees increased $40,000, or 42% compared to 2010. Legal and professional expenses were elevated in connection with the Bank’s conversion to an Indiana commercial bank charter effective July 1, 2011.

At June 30, 2011, total assets were $74.8 million compared to $72.2 million at June 30, 2010. During the twelve months ended June 30, 2011, loans outstanding increased $259,000. Accounting for most of the growth in assets, investment securities available for sale increased to $6.1 million, from $3.7 million a year earlier.

Loans delinquent 90 days or more decreased 52%, to $1.1 million, or 1.9% of total loans at June 30, 2011. A year earlier, non-performing loans amounted to $2.4 million or 4.1% of total loans. Total non-performing assets fell 48%, to $1.7 million or 2.3% of total assets. Twelve months earlier, non-performing assets totaled $3.3 million or 4.5% of total assets. Non-performing assets included $584,000 in real estate owned (“REO”) and other repossessed properties at June 30, 2011, compared to $896,000 at June 30, 2010; a 35% decline.

The allowance for loan losses decreased 2% to $663,000, compared to $677,000 at June 30, 2010. Loan loss allowances were 1.14% of total loans at June 30, 2011 and 1.17% of total loans a year earlier. Periodic provisions to allowances for loan losses reflect management’s view of risk in the Company’s entire loan portfolio due to a number of dynamic factors, including current economic conditions, quantity of outstanding loans, and loan delinquency trends. Management considered the level of allowances for loan losses at June 30, 2011 to be adequate to cover probable incurred losses inherent in the loan portfolio at that date.

At June 30, 2011, deposits grew 8% to $50.8 million, from $47.2 million twelve months earlier. Total borrowings decreased to $15.0 million at June 30, 2011, compared to $16.5 million a year earlier.

Shareholders’ equity was $8.3 million or 11.1% of total assets at June 30, 2011. The Company’s book value per share was $6.20 based on 1,345,605 shares outstanding. Factors impacting shareholder equity during fiscal 2011 included net income, four quarterly cash dividends totaling $.12 per share, $26,000 net decrease in unrealized gain on securities available for sale, and a $34,000 decrease in costs associated with a stock-based employee benefit plan. During the twelve months ended June 30, 2011, the Company repurchased 5,000 shares of its stock in open market transactions.

Home Financial Bancorp and Owen Community Bank an FDIC-insured, Indiana stock commercial bank, operate from headquarters in Spencer, Indiana, and a branch office in Cloverdale, Indiana. In addition to the conversion to a state commercial bank charter effective July 1, 2011, the Company’s Board of Directors approved action to change the Bank’s name to Our Community Bank, effective July 15, 2011. Further information concerning Home Financial Bancorp and its subsidiaries is available at www.hfbancorp.com or www.owencom.com.


HOME FINANCIAL BANCORP
(Unaudited)
Consolidated Financial Highlights
(Dollars in thousands, except per share and book value amounts)

FOR THREE MONTHS ENDED JUNE 30:	2011		2010
Net Interest Income	$782		$775
Provision for Loan Losses	0		121
Non-interest Income	304		207
Non-interest Expense	809		704
Income Tax	101		50
Net Income	176		107

Basic and Diluted (Loss) Earnings Per Share:	$ .13		$ .08
Average Shares Outstanding - Basic	1,319,148		1,316,438
Average Shares Outstanding - Diluted	1,319,148		1,316,438

FOR TWELVE MONTHS ENDED JUNE 30:	2011		2010
Net Interest Income	$3,259		$2,961
Provision for Loan Losses	180		381
Non-interest Income	715		854
Non-interest Expense	3,008		2,784
Income Tax	276		219
Net Income	510		430

Basic and Diluted Earnings Per Share:	$ .39		$ .33
Average Shares Outstanding - Basic	1,318,153		1,313,788
Average Shares Outstanding - Diluted	1,318,153		1,313,902

	June 30,		June 30,
	2011		2010
Total Assets	$74,832		$72,232
Total Loans	58,042		57,783
Allowance for Loan Losses	663		677
Total Deposits	50,791		47,218
Borrowings	15,000		16,500
Shareholders’ Equity	8,341		8,001

Non-Performing Assets	1,707		3,259
Non-Performing Loans	1,123		2,363

Non-Performing Assets to Total Assets	2.28	%	4.51	%
Non-Performing Loans to Total Loans	1.93	%	4.09	%

Book Value Per Share*	$6.20		$5.92