Home Federal Bancorp Inc. of Louisiana

09/25/2026 | Press release | Distributed by Public on 09/25/2026 13:15

Annual Report for Fiscal Year Ending June 30, 2026 (Form 10-K)

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 $6.174 million in fiscal 2026 compared to net income of $3.888 million in fiscal 2025.

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 the acquisition of deposits and it is our policy to require commercial customers to have a deposit relationship with us, which primarily consists of NOW accounts or non-interest checking 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. Because of an increase in the weighted-average yield on our interest-earning assets, together with a decrease in our rate on total interest bearing liabilities, our average interest rate spread increased from 2.55% to 3.07% during fiscal 2026 compared to 2025, and our net interest income increased $3.118 million to $21.789 million for fiscal 2026 as compared to $18.671 million for fiscal 2025, primarily due to a $9.218 million increase in average balance of interest earning assets. We expect to continue to emphasize 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.

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, 2026, our commercial real estate loans amounted to $141.002 million, or 29.3% of the total loan portfolio. Our commercial business loans amounted to $58.866 million, or 12.3% 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.


•
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 would consider / entertain (not pursue) opportunities to expand our market area through acquisitions of other financial institutions and banking related businesses. We expect to focus on contiguous areas to our current locations in Caddo, Bossier and Webster Parishes.


•
Maintain Our Asset Quality. At June 30, 2026, our non-performing assets totaled $3.649 million, or 0.57% of total assets. We had $613,000 in other real estate owned at June 30, 2026. 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 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 Credit Losses. We have identified the calculation of the allowance for credit losses as a critical accounting policy, due to the higher degree of judgment and complexity than our other significant accounting policies.

Business Combinations. Acquisition Accounting. Acquisitions are accounted for under the acquisition method of accounting. The acquisition method of accounting requires the Company as the acquirer to recognize the fair value of assets acquired and liabilities assumed at the acquisition date, as well as recognize goodwill. If the purchase price over the sum of the estimated fair values of the tangible and identifiable intangible assets acquired less the estimated fair value of the liabilities assumed in an acquisition, goodwill is recognized. The Company records provisional amounts of fair value at the time of acquisition. The provisional fair values are subject to modification for up to one year after the acquisition.

Acquired Loans. Subsequent to the adoption of ASU 2016-13, acquired loans are segregated between those purchased with credit deterioration ("PCD") and those that are not ("non-PCD"). Loans considered PCD include those individual loans (or groups of loans with similar risk characteristics) that as of the date of acquisition are assessed as having experienced a more-than-insignificant deterioration in credit quality since origination. The assessment of what is more-than-insignificant credit deterioration since origination considers information including, but not limited to, financial assets that are delinquent, on nonaccrual and/or otherwise adversely risk rated as of the acquisition date, those that have been downgraded since origination, and those for which, after origination, credit spreads have widened beyond the threshold specified in policy. The Company bifurcates the fair value discount between the credit and noncredit components and records an allowance for credit losses for PCD loans by adding the credit portion of the fair value discount to the initial amortized cost basis and increasing the allowance for credit losses at the date of acquisition. Any noncredit discount or premium resulting from acquiring loans with credit deterioration is allocated to each individual asset. All non-PCD loans acquired are recorded at the estimated fair value of the loan at acquisition, with the estimated allowance for credit loss recorded as a provision for credit losses through earnings in the period in which the acquisition has occurred. The noncredit discount or premium for PCD loans and full discount for non-PCD loans will be accreted to interest income using the interest method based on the effective interest rate at the acquisition date.

Under the transition provisions of ASU 2016-13, the Company classified all purchased credit impaired loans ("PCI") previously accounted for under Financial Accounting Standard Subtopic 310-30 to be classified as PCD, without reassessing whether the financial assets meet the criteria of PCD as of the date of adoption. The application of these provisions resulted in an adjustment to the amortized cost basis of the financial asset to reflect the addition of the allowance for credit losses at the date of adoption. The Company elected not to maintain pools of loans accounted for under Subtopic 310-30 at adoption. The Company was also not required to reassess whether modifications to individual acquired financial assets accounted for in pools were troubled debt restructurings as of the date of adoption. The noncredit discount, after the adjustment for the allowance for credit losses, is accreted to interest income using the interest method based on the effective interest rate determined at the adoption date.

Goodwill. Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired. Goodwill has an indefinite useful life and is evaluated for impairment annually, or more frequently if events and circumstances indicate that the asset might be impaired.

Core Deposit Intangible. Core deposit intangibles represent the estimated value of long-term deposit relationships acquired in business combinations. The Company's policy is to amortize these intangibles on an accelerated basis over their estimated useful life, which the estimated useful lives are periodically reviewed for reasonableness. Core deposit intangibles are tested for impairment if events and circumstances indicate the carrying amount of the asset may not be recoverable from future cash flows.


Selected Financial and Other 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, 2026 and 2025 is derived in part from the audited financial statements that appear in this Form 10-K.

At June 30,
2026
2025
(In thousands)
Selected Financial and Other Data:
Total assets
$
643,330
$
609,492
Cash and cash equivalents
34,304
17,347
Securities available for sale
43,624
34,246
Securities held to maturity
55,439
61,334
Loans held-for-sale
1,654
1,540
Loans receivable, net
475,491
461,004
Deposits
577,292
546,290
Other Borrowings
3,556
4,000
Total Stockholders' equity
58,757
55,205

As of or for the Year Ended
June 30,
2026
2025
(In thousands, except per share amounts)
Selected Operating Data:
Total interest income
$
32,498
$
30,462
Total interest expense
10,709
11,791
Net interest income
21,789
18,671
Provision for (recovery of) loan losses
594
(126
)
Net interest income after provision for loan losses
21,195
18,797
Total non-interest income
2,672
2,005
Total non-interest expense
16,082
16,148
Income before income tax expense
7,785
4,654
Income tax expense
1,611
766
Net income
$
6,174
$
3,888
Book value per share
$
19.31
$
17.90
Earnings per share of common stock:
Basic
$
2.05
$
1.27
Diluted
$
2.02
$
1.26

As of or for the Year Ended
June 30,
2026
2025
Selected Operating Ratios(1):
Average yield on interest-earning assets
5.54
%
5.28
%
Average rate on interest-bearing liabilities
2.47
2.73
Average interest rate spread(2)
3.07
2.55
Net interest margin(2)
3.72
3.23
Average interest-earning assets to average interest-bearing liabilities
135.13
133.86
Net interest income after provision for loan losses to non-interest expense
131.80
116.40
Total non-interest expense to average assets
2.57
2.62
Efficiency ratio(3)
65.74
78.11
Return on average assets
0.99
0.63
Return on average equity
10.70
7.31
Average equity to average assets
9.23
8.62
Dividend payout ratio(4)
26.94
41.90


Selected Financial and Other Data (Continued)
As of or for the Year Ended
June 30,
2026
2025
Selected Quality Ratios(5):
Non-performing loans as a percent of loans receivable, net
0.64
%
0.51
%
Non-performing assets as a percent of total assets
0.57
0.54
Allowance for credit losses as a percent of total loans receivable
1.03
0.96
Net charge-offs to average loans receivable
0.03
(0.01
)
Allowance for credit losses as a percent of non-performing loans
162.25
191.99
Bank Capital Ratios(5):
Common Equity Tier 1
13.11
%
13.59
%
Tier 1 Capital
13.11
13.59
Total Capital
14.20
14.67
Leverage
9.29
9.40
Tangible Capital
9.29
9.40
Other Data:
Offices (branch and home)
11
11
Employees (full-time)
74
67

(1)
With the exception of end of period ratios, all ratios are based on average monthly balances during the indicated periods.
(2)
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.
(3)
Non-GAAP: The efficiency ratio represents the ratio of non-interest expense divided by the sum of net interest income and non-interest income.
(4)
Reflects dividends paid during the fiscal year divided by net income.
(5)
Asset quality ratios and capital ratios are end of period ratios, except for net charge-offs to average loans receivable.

Changes in Financial Condition

Total assets increased $33.838 million, or 5.6%, from $609.492 million at June 30, 2025 to $643.330 million at June 30, 2026. The increase in assets resulted from increases in cash and cash equivalents of $16.957 million, or 97.8%, from $17.347 million at June 30, 2025 to $34.304 million at June 30, 2026, net loans receivable of $14.487 million, or 3.1%, from $461.004 million at June 30, 2025 to $475.491 million at June 30, 2026, investment securities of $3.787 million, or 3.9%, from $96.230 million at June 30, 2025 to $100.017 million at June 30, 2026, other assets of $115,000, or 8.8%, from $1.305 million at June 30, 2025 to $1.420 million at June 30, 2026, loans-held-for-sale of $114,000, or 7.4%, from $1.540 million at June 30, 2025 to $1.654 million at June 30, 2026, bank owned life insurance of $114,000, or 1.6%, from $6.926 million at June 30, 2025 to $7.040 million at June 30, 2026, and accrued interest receivable of $59,000, or 3.2%, from $1.836 million at June 30, 2025 to $1.895 million at June 30, 2026, partially offset by decreases in premises and equipment of $1.093 million, or 6.3%, from $17.266 million at June 30, 2025 to $16.173 million at June 30, 2026, real estate owned of $357,000, or 36.8%, from $970,000 at June 30, 2025 to $613,000 at June 30, 2026, core deposit intangible of $240,000, or 26.2%, from $915,000 at June 30, 2025 to $675,000 at June 30, 2026, and deferred tax asset of $105,000, or 9.0%, from $1.163 million at June 30, 2025 to $1.058 million at June 30, 2026.

Loans receivable, net increased $14.487 million, or 3.1%, from $461.004 million at June 30, 2025 to $475.491 million at June 30, 2026. 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, 2026, Home Federal Bank had $141.002 million of commercial real estate loans, 29.3% of the total loan portfolio, and $58.866 million of commercial business loans, 12.3% 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 increased $9.378 million, or 27.4%, from $34.246 million at June 30, 2025 to $43.624 million at June 30, 2026. This increase resulted primarily from purchases of $15.169 million in securities, partially offset by principal repayments of $6.292 million. Securities held-to-maturity decreased $5.895 million, or 9.6%, from $61.334 million at June 30, 2025 to $55.439 million at June 30, 2026. This decrease was primarily due to principal repayments of $5.865 million.


Total liabilities increased $30.286 million, or 5.5%, from $554.287 million at June 30, 2025 to $584.573 million at June 30, 2026. The increase in liabilities resulted from an increase in total deposits of $31.002 million, or 5.7%, from $546.290 million at June 30, 2025 to $577.292 million at June 30, 2026, partially offset by decreases in other borrowings of $444,000, or 11.1%, from $4.000 million at June 30, 2025 to $3.556 million at June 30, 2026, other accrued expenses and liabilities of $240,000, or 6.9%, from $3.454 million at June 30, 2025 to $3.214 million at June 30, 2026, and advances from borrowers for taxes and insurance of $32,000, or 5.9%, from $543,000 at June 30, 2025 to $511,000 at June 30, 2026. The increase in deposits resulted from increases in certificates of deposit of $34.756 million, or 18.6%, from $187.357 million at June 30, 2025 to $222.113 million at June 30, 2026, and non-interest bearing deposits of $15.643 million, or 12.8%, from $122.416 million at June 30, 2025 to $138.059 million at June 30, 2026, partially offset by decreases in money market deposits of $7.793 million, or 10.6%, from $73.771 million at June 30, 2025 to $65.978 million at June 30, 2026, NOW accounts of $7.182 million, or 10.7%, from $67.119 million at June 30, 2025 to $59.937 million at June 30, 2026, and savings deposits of $4.422 million, or 4.6%, from $95.627 million at June 30, 2025 to $91.205 million at June 30, 2026.

Stockholders' equity increased $3.552 million, or 6.4%, from $55.205 million at June 30, 2025 to $58.757 million at June 30, 2026. The increase in stockholders' equity resulted from net income for the year ended June 30, 2026 of $6.174 million, proceeds from the issuance of common stock from the exercise of stock options of $1.838 million, a decrease in the Company's accumulated other comprehensive loss of $72,000, and the vesting of restricted stock awards, stock options, and the release of employee stock ownership plan shares totaling $464,000, partially offset by stock repurchases of $3.333 million and dividends paid totaling $1.663 million.


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,
2026
2025
Average
Balance
Interest
Average
Yield/
Rate
Average
Balance
Interest
Average
Yield/
Rate
(Dollars in thousands)
Interest-earning assets:
Loans receivable(1)
$
472,273
$
29,510
6.25
%
$
460,356
$
27,346
5.94
%
Investment securities
97,900
2,322
2.37
96,178
2,266
2.36
Interest-earning deposits
16,226
666
4.10
20,647
850
4.12
Total interest-earning assets
586,399
32,498
5.54
%
577,181
30,462
5.28
%
Non-interest-earning assets
38,823
40,105
Total assets
$
625,222
$
617,286
Interest-bearing liabilities:
Savings accounts
92,442
1,422
1.54
%
90,458
1,544
1.71
%
NOW accounts
64,807
734
1.13
70,375
821
1.17
Money market accounts
69,522
1,370
1.97
76,494
1,656
2.16
Certificates of deposit accounts
202,987
6,898
3.40
189,204
7,420
3.92
Total interest-bearing deposits
429,758
10,424
2.43
426,531
11,441
2.68
FHLB advances
350
13
3.71
14
-
4.65
Other bank borrowings
3,852
272
7.06
4,650
350
7.53
Total interest-bearing liabilities
433,960
10,709
2.47
%
431,195
11,791
2.73
%
Non-interest-bearing liabilities:
Non-interest-bearing demand accounts
129,344
128,336
Other liabilities
4,218
4,538
Total liabilities
567,522
564,069
Total stockholders' equity(2)
57,700
53,217
Total liabilities and equity
$
625,222
$
617,286
Net interest-earning assets
$
152,439
$
145,986
Net interest income; average interest rate spread(3)
$
21,789
3.07
%
$
18,671
2.55
%
Net interest margin(4)
3.72
%
3.23
%
Average interest-earning assets to average interest-bearing liabilities
135.13
%
133.86
%

(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-average rate on interest-bearing liabilities.
(4)
Net interest margin is net interest income divided by net average interest-earning assets.


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.

2026 vs. 2025
2025 vs. 2024
Increase (Decrease)
Due to
Total
Increase
Increase (Decrease)
Due to
Total
Increase
Rate
Volume
(Decrease)
Rate
Volume
(Decrease)
(In thousands)
Interest income:
Investment securities
$
15
$
41
$
56
$
30
$
(241
)
$
(211
)
Loans receivable, net
1,456
708
2,164
590
(2,260
)
(1,670
)
Interest-earning deposits
(2
)
(182
)
(184
)
(46
)
525
479
Total interest-earning assets
1,469
567
2,036
574
(1,976
)
(1,402
)
Interest expense:
Savings accounts
(156
)
34
(122
)
960
105
1,065
NOW accounts
(22
)
(65
)
(87
)
449
17
466
Money market accounts
(135
)
(151
)
(286
)
(229
)
(411
)
(640
)
Certificate accounts
(1,063
)
541
(522
)
(433
)
(1,015
)
(1,448
)
Total deposits
(1,376
)
359
(1,017
)
747
(1,304
)
(557
)
FHLB advances and other borrowings
(5
)
(60
)
(65
)
(44
)
(521
)
(565
)
Total interest-bearing liabilities
(1,381
)
299
(1,082
)
703
(1,825
)
(1,122
)
Increase (Decrease) in net interest income
$
2,850
$
268
$
3,118
$
(129
)
$
(151
)
$
(280
)

Comparison of Operating Results for the Years Ended June 30, 2026 and 2025

General. The increase in net income for the year ended June 30, 2026, as compared to the same period in 2025 resulted primarily from an increase of $3.118 million, or 16.7%, in net interest income, an increase of $667,000, or 33.3%, in non-interest income, and a decrease of $66,000, or 0.4%, in non-interest expense, partially offset by an increase of $845,000, or 110.3%, in provision for income taxes and an increase of $720,000, or 571.4%, in the provision for credit losses. The increase in net interest income for the year ended June 30, 2026, as compared to the same period in 2025, was primarily due to an increase of $2.036 million, or 6.7%, in total interest income, and a decrease of $1.082 million, or 9.2%, in total interest expense. The Company's average interest rate spread was 3.07% for the year ended June 30, 2026, compared to 2.55% for the year ended June 30, 2025. The Company's net interest margin was 3.72% for the year ended June 30, 2026, compared to 3.23% for the year ended June 30, 2025. The increase in the provision for credit losses was primarily attributable to growth in the loan portfolio and additional reserve allocations on certain existing problem loans based on updated valuation reports.

Net Interest Income. Net interest income amounted to $21.789 million for fiscal year 2026, an increase of $3.118 million, or 16.7%, compared to $18.671 million for fiscal year 2025. The increase primarily resulted from an increase in total interest income of $2.036 million and a decrease in total interest expense of $1.082 million.

The average interest rate spread increased from 2.55% for fiscal 2025 to 3.07% for fiscal 2026, while the average balance of interest-earning assets increased from $577.181 million to $586.399 million during the same periods. The percentage of average interest-earning assets to average interest-bearing liabilities increased to 135.13% for fiscal 2026 compared to 133.86% for fiscal 2025. The average rate paid on certificates of deposit decreased from 3.92% for fiscal 2025 to 3.40% for fiscal 2026. Net interest margin increased to 3.72% for fiscal 2026 compared to 3.23% for fiscal 2025.


Interest income increased $2.036 million, or 6.7%, to $32.498 million for fiscal 2026 compared to $30.462 million for fiscal 2025, primarily due to an increase in interest income from loans of $2.164 million, and an increase of $325,000 in interest income from mortgage-backed securities. The average yield of the loan portfolio increased by 31 basis points during fiscal 2026 mainly due to a higher interest rate environment.

Interest expense decreased $1.082 million, or 9.2%, to $10.709 million for fiscal 2026 compared to $11.791 million for fiscal 2025, primarily as a result of decreases in the average rate paid on money market accounts and certificates of deposit.

Provision for Credit Losses. As of June 30, 2026, the allowance for credit losses was $4.926 million, and the ratio of allowance for credit losses to gross loans was 1.03%. As of June 30, 2025, the allowance for credit losses was $4.484 million, and the ratio of allowance for credit losses to gross loans was 0.96%.

At June 30, 2026, the Company had $3.649 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 $3.305 million of non-performing assets at June 30, 2025, consisting of sixteen one-to-four family residential loans, two home equity loans, one commercial non-real estate loan, one commercial real estate loan, one commercial real estate property in other real estate owned, and two residential lots in other real estate owned at June 30, 2026, compared to six one-to-four family residential loans, two home equity loans, three commercial non-real estate loans, two commercial real estate loans and one single-family residence in other real estate owned at June 30, 2025. At June 30, 2026 the Company had sixteen one-to-four family residential loans, two home equity loans, one commercial non-real estate loan, one consumer loan, and one commercial real estate loan classified as substandard, compared to eight one-to-four family residential loans, five commercial non-real estate loans, two home equity loans, two commercial real estate loans and one consumer loan classified as substandard at June 30, 2025. There were no loans classified as doubtful at June 30, 2026, or June 30, 2025.

Non-Interest Income. The $667,000 increase in non-interest income for the year ended June 30, 2026, compared to the same period in 2025, resulted from an increase of $258,000 in gain on sale of loans, a decrease of $247,000 in loss on sale of real estate, an increase of $144,000 in service charges on deposit accounts, an increase of $14,000 in other non-interest income, and a decrease of $6,000 in loss on sale of securities, partially offset by a decrease of $2,000 in income on bank owned life insurance.

Non-Interest Expense. The $66,000 decrease in non-interest expense for the year ended June 30, 2026, compared to the same period in 2025, resulted from decreases of $186,000 in audit and examination fees, $89,000 in compensation and benefits, $89,000 in data processing, $44,000 in amortization of core deposit intangible, $22,000 in advertising, $18,000 in professional fees, and $10,000 in franchise and bank shares tax, partially offset by increases of $200,000 in other real estate owned write-down expense, $105,000 in other expenses, $33,000 in deposit insurance premium, $30,000 in occupancy and equipment, and $24,000 in loan and collection. The $200,000 increase in other real estate owned write-down expense for the three months and year ended June 30, 2026, compared to the same period in 2025, related to the value of one large commercial property which was adjusted to reflect current market sentiment. No further adjustments are expected at this time.

Provision for Income Tax Expense. The provision for income taxes amounted to $1.611 million and $766,000 for the fiscal years ended June 30, 2026 and 2025, respectively. Our effective tax rate was 20.7% for fiscal 2026 and 16.5% for fiscal 2025.

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.

We have 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, 2026 and 2025, securities available-for-sale amounted to $43.624 million and $34.246 million, respectively, or 6.78% and 5.62%, 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, 2026:

Change in Interest Rates in
Net Portfolio Value
NPV as % of Portfolio
Value of Assets
Basis Points (Rate Shock)
Amount
$ Change
% Change
NPV Ratio
Change
(Dollars in thousands)
300
$
88,339
$
(2,094
)
(2.32
)%
15.40
%
0.62
%
200
90,341
(92
)
(0.10
)
15.40
0.62
100
91,378
945
1.04
15.25
0.47
Static
90,433
-
-
14.78
-
(100)

89,848
(585
)
(0.65
)
14.38
(0.39
)
(200)

89,090
(1,343
)
(1.49
)
13.97
(0.81
)

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 $193.386 million for fiscal 2026 and $156.430 million for fiscal 2025, while loans sold amounted to $30.046 million and $18.312 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 22.6% for the quarter ended June 30, 2026. 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 $25.394 million and $9.124 million at June 30, 2026 and 2025, 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, 2026, we had no advances from the Federal Home Loan Bank of Dallas and had $136.376 million in additional borrowing capacity. Additionally, at June 30, 2026, 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 $19.9 million. There were no amounts purchased under this agreement as of June 30, 2026. At June 30, 2026, Home Federal Bancorp had a $3.556 million outstanding loan with First National Bankers Bank, which matures on February 5, 2034.

At June 30, 2026, the Company had outstanding loan commitments of $55.880 million to originate loans and commitments under unused lines of credit of $14.911 million. At June 30, 2026, certificates of deposit scheduled to mature in one year or less totaled $174.383 million, or 78.51% 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, 2026, Home Federal Bank exceeded each of its capital requirements with common equity tier 1, tier 1 capital, total capital, leverage, and tangible capital ratios of 13.11%, 13.11%, 14.20%, 9.29%, and 9.29%, respectively.

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, 2026. 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; or (7) 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.

Home Federal Bancorp Inc. of Louisiana published this content on September 25, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on September 25, 2026 at 19:15 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]