EX-99.1 2 hffc-20130331xex991xpressr.htm EXHIBIT HFFC-2013.03.31-Ex 99.1-Press Release



HF Financial Corp. Third Fiscal Quarter Earnings Increase 16% Over Prior Year

Strong Mortgage Originations and Expense Controls Contribute to Increased Profitability
Declares Regular Quarterly Dividend of $0.1125 per Share
SIOUX FALLS, SD, April 29, 2013 -- HF Financial Corp. (Nasdaq: HFFC) today reported earnings increased 16% to $1.4 million, or $0.20 per diluted share for the third fiscal quarter ended March 31, 2013, compared to $1.2 million, or $0.17 per diluted share for the third fiscal quarter one year ago, and relative to a 36% increase from $1.0 million, or $0.15 per diluted share for the preceding fiscal quarter. For the first nine months of fiscal 2013, earnings grew 34% to $4.5 million, or $0.64 per share compared to $3.4 million, or $0.48 per share one year earlier. Robust mortgage originations contributed to higher revenues and strong reserve levels reduced the need for loan loss provisions in the quarter. Classified assets continued to decline and capital levels continued to increase. Tangible book value per share was $13.47 at quarter end.
“Our local non-farm economy remains strong and the recent spring precipitation is improving drought conditions for agriculture throughout our South Dakota markets,” said Stephen Bianchi, President and Chief Executive Officer. “New loan customers are beginning to come to Home Federal as we have expanded our agricultural and business lending teams throughout our footprint to support our communities and the opportunities that exist. Also, the integration of workflow efficiencies and efforts to strengthen our brand is gaining traction.”
Fiscal Third Quarter Financial Highlights: (at or for the periods ended March 31, 2013, compared to December 31, 2012, and March 31, 2012.)
•
Earnings per diluted share for the fiscal third quarter increased 33% to $0.20 versus $0.15 in the second fiscal quarter. Relative to one year earlier, earnings per share improved 18%.
•
Mortgage banking related revenue totaled $1.6 million ($1.2 million in gains on sale and $406,000 for loan servicing income) for the third quarter ended March 31, 2013 versus $961,000 the previous quarter and $679,000 one year earlier.
•
No loan loss provisions were booked during the third fiscal quarter while loan reserves remained at similar levels relative to total loans. Loan loss reserves totaled 1.56% at March 31, 2013 compared to 1.59% at December 31, 2012 and 1.48% at March 31, 2012.
•
Classified assets totaled $39.7 million at March 31, 2013 compared to $43.4 million at December 31, 2012 and $48.8 million one year earlier. Following the deterioration from one performing but classified loan into nonaccrual status, nonperforming assets (“NPAs”) increased to $23.6 million, or 1.97%, of total assets compared to $17.1 million at December 31, 2012, or 1.40%, of total assets at the end of the preceding quarter. Troubled debt restructurings totaled $10.1 million at March 31, 2013 versus $10.2 million at the end of the previous quarter and $16.5 million one year earlier.
•
The net interest margin, expressed on a fully taxable equivalent basis (“NIM, TE”), was stable at 2.64% versus 2.68% for the preceding quarter.
•
Capital levels at March 31, 2013 continued to remain well above the regulatory “well-capitalized” minimum levels of 10.00%, 6.00% and 5.00%, respectively:




•
Total risk-based capital to risk-weighted assets was 16.42% versus 16.51% at December 31, 2012.
•
Tier 1 capital to risk-weighted assets was 15.18% versus 15.26% at December 31, 2012.
•
Tier 1 capital to adjusted total assets was 9.80% versus 9.54% at December 31, 2012.
•
The most recent dividend of $0.1125 per share represents the twentieth consecutive quarter at this level and provides a 3.26% current yield at recent market prices.
•
Tangible book value per share increased to $13.47 per share, compared to $13.10 per share at March 31, 2012.
Balance Sheet and Asset Quality Review
Total assets at March 31, 2013, decreased slightly to $1.20 billion from $1.22 billion at the end of the preceding quarter due primarily to decreased cash levels. Total loans increased to $682.6 million from $677.6 million during the most recent quarter. The Bank's loan portfolio remains well-diversified with commercial real estate loans accounting for 43.5% of the portfolio followed by agricultural loans totaling 24.6% of the portfolio. Consumer loans totaled 13.9%, commercial business totaled 10.4% and residential loans totaled 7.6%.
“New mortgage originations and refinancings continue to dominate our lending activities. Meanwhile, our team is working diligently to develop new relationships for commercial and agricultural lending,” added Bianchi.
Total deposits were $897.2 million at March 31, 2013, versus $933.1 million at December 31, 2012 and $892.8 one year earlier. Deposit balances decreased in the third fiscal quarter from the preceding quarter, due primarily to a decrease from typical seasonal public fund deposits.
Nonperforming assets, which include performing loans that have been restructured and are current, increased to $23.6 million at March 31, 2013 from $17.1 million the preceding quarter and decreased from $24.5 million a year ago. At March 31, 2013, NPAs represented 1.97% of total assets. The increase in nonperforming assets primarily related to some continued difficulty in the dairy sector, specifically related to one borrower relationship. Despite the increase in nonperforming assets, the Bank has less classified assets at March 31, 2013 compared to the preceding quarter and one year earlier. Classified assets totaled $39.7 million at March 31, 2013 compared to $43.4 million at December 31, 2012 and $48.8 million at March 31, 2012.
Charge-off activity continues to slow. For the third fiscal quarter, loan charge-offs totaled $189,000 compared to $1.3 million one year earlier. For the nine months ended March 31, 2013, charge-offs totaled $1.2 million versus $7.4 million for the nine months ended March 31, 2012.
The allowance for loan and lease losses at March 31, 2013, totaled $10.7 million, representing 1.56% of total loans outstanding. These levels are similar to the preceding quarter period at $10.8 million and 1.59% of total loans.
Tangible common shareholders' equity increased to 7.97% of tangible assets at March 31, 2013 compared to 7.79% at December 31, 2012. Tangible book value per common share was $13.47 at March 31, 2013 up from $13.13 per share at the end of fiscal 2012.
Capital ratios continued to remain well above regulatory requirements for a well capitalized institution with Tier 1 capital to risk-weighted assets of 15.18% at March 31, 2013, while its Tier 1 capital to adjusted total assets was 9.80%. These regulatory ratios were much higher than the well capitalized required minimum levels of 6.00% and 5.00%, respectively.




Review of Operations
For the quarter ended March 31, 2013, HF Financial's earnings reflect continued strong gains on the sale of mortgage loans from refinancing activities and expense controls. "Our efforts to control expenses are supporting our improved profitability. Despite paying higher mortgage commissions and incentives, our total non-interest expense levels have trended down,” said Brent Olthoff, Chief Financial Officer and Treasurer.
Net interest income totaled $7.1 million for the third fiscal quarter 2013 compared to $7.2 million for the previous fiscal quarter, and $7.7 million in the year ago quarter. The NIM, TE was 2.64% for the third quarter compared to 2.68% the preceding quarter.
Gains on the sale of loans contributed to a strong level of noninterest income complemented by fees on deposits and loan servicing income. Continued high levels of mortgage activity produced $1.2 million in gains during the third fiscal quarter compared to $1.4 million the preceding quarter. Fees on deposits totaled $1.4 million for the quarter ended March 31, 2013 versus $1.5 million the previous quarter and $1.4 million one year earlier. Loan servicing income totaled $406,000 for the quarter compared to a net expense of $450,000 the preceding quarter due to an impairment allowance, as a reduction in prepayment speeds occurred. During the third fiscal quarter, a sale of land originally purchased for branch expansion resulted in a one-time charge to other noninterest income for approximately $83,000. Total noninterest income was $3.7 million for the quarter ended March 31, 2013 compared to $3.1 million the preceding quarter and $3.0 million a year ago.
Noninterest expenses remained stable at $8.5 million in the third fiscal quarter, a level similar to the preceding quarter. In the fiscal third quarter a year ago, noninterest expenses totaled $8.7 million. For the nine months ended March 31, 2013, noninterest expenses decreased 6.2% to $25.8 million compared to $27.5 million for the same period one year earlier. Reflecting the higher mortgage commissions and incentive compensation programs relative to prior quarters, total compensation and employee benefit expenses increased to $5.3 million for the quarter ended March 31, 2013 compared to $4.8 million one quarter earlier.
These financial results are preliminary until the Form 10-Q is filed in May 2013.
Quarterly Dividend Declared
The board of directors declared a regular quarterly cash dividend of $0.1125 per common share for the third fiscal quarter 2013. The dividend is payable May 17, 2013 to stockholders of record May 10, 2013.
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” is a non-GAAP financial measure. Information regarding the usefulness of Net Interest Margin, TE appears 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, this presentation 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 the largest publicly traded savings association headquartered in South Dakota, HF Financial Corp. operates with 28 offices in 19 communities, throughout Eastern South Dakota and one location in Marshall, Minnesota. The Company operates a branch in the Twin Cities market as Infinia Bank, a Division of Home Federal Bank of South 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, 2012, 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.
CONTACT: HF Financial Corp.
Stephen Bianchi, President and Chief Executive Officer (605) 333-7556



HF Financial Corp.
Selected Consolidated Operating Highlight
(Dollars in Thousands, except share data)
(Unaudited)
 
 
Three Months Ended
 
Nine Months Ended
 
 
March 31,
 
December 31,
 
March 31,
 
March 31,
 
 
2013
 
2012
 
2012
 
2013
 
2012
Interest, dividend and loan fee income:
 
 

 
 

 
 

 
 

 
 

Loans and leases receivable
 
$
8,082

 
$
8,804

 
$
9,833

 
$
25,892

 
$
32,513

Investment securities and interest-earning deposits
 
1,561

 
1,028

 
1,184

 
3,826

 
3,591

 
 
9,643

 
9,832

 
11,017

 
29,718

 
36,104

Interest expense:
 
 

 
 

 
 

 
 
 
 
Deposits
 
1,111

 
1,199

 
1,664

 
3,716

 
5,692

Advances from Federal Home Loan Bank and other borrowings
 
1,432

 
1,463

 
1,608

 
4,384

 
4,824

 
 
2,543

 
2,662

 
3,272

 
8,100

 
10,516

Net interest income
 
7,100

 
7,170

 
7,745

 
21,618

 
25,588

Provision for losses on loans and leases
 
—

 
128

 
264

 
(172
)
 
2,906

Net interest income after provision for losses on loans and leases
 
7,100

 
7,042

 
7,481

 
21,790

 
22,682

Noninterest income:
 
 

 
 

 
 

 
 
 
 
Fees on deposits
 
1,361

 
1,464

 
1,360

 
4,921

 
4,528

Loan servicing income, net
 
406

 
(450
)
 
8

 
(84
)
 
873

Gain on sale of loans
 
1,151

 
1,411

 
671

 
3,584

 
1,884

Earnings on cash value of life insurance
 
200

 
206

 
168

 
611

 
512

Trust income
 
209

 
190

 
206

 
593

 
560

Commission and insurance income
 
177

 
125

 
173

 
496

 
492

Gain on sale of securities, net
 
146

 
—

 
539

 
1,968

 
874

Loss on disposal of closed-branch fixed assets
 
—

 
—

 
(233
)
 
—

 
(245
)
Other
 
5

 
106

 
115

 
(1,256
)
 
326

 
 
3,655

 
3,052

 
3,007

 
10,833

 
9,804

Noninterest expense:
 
 

 
 

 
 

 
 
 
 
Compensation and employee benefits
 
5,258

 
4,784

 
4,910

 
14,973

 
15,532

Occupancy and equipment
 
1,096

 
1,002

 
1,076

 
3,167

 
3,269

FDIC insurance
 
195

 
201

 
261

 
606

 
796

Check and data processing expense
 
677

 
762

 
728

 
2,256

 
2,169

Professional fees
 
484

 
536

 
560

 
1,663

 
2,464

Marketing and community investment
 
106

 
304

 
323

 
778

 
1,087

Foreclosed real estate and other properties, net
 
16

 
206

 
137

 
325

 
222

Other
 
716

 
661

 
701

 
2,057

 
1,989

 
 
8,548

 
8,456

 
8,696

 
25,825

 
27,528

Income before income taxes
 
2,207

 
1,638

 
1,792

 
6,798

 
4,958

Income tax expense
 
802

 
605

 
580

 
2,283

 
1,590

Net income
 
$
1,405

 
$
1,033

 
$
1,212

 
$
4,515

 
$
3,368

 
 
 
 
 
 
 
 
 
 
 
Basic earnings per common share:
 
$
0.20

 
$
0.15

 
$
0.17

 
$
0.64

 
$
0.48

Diluted earnings per common share:
 
$
0.20

 
$
0.15

 
$
0.17

 
$
0.64

 
$
0.48

Basic weighted average shares:
 
7,054,902

 
7,055,591

 
6,992,886

 
7,053,880

 
6,979,858

Diluted weighted average shares:
 
7,056,986

 
7,057,261

 
6,996,215

 
7,056,367

 
6,980,280

Outstanding shares (end of period):
 
7,055,020

 
7,054,875

 
7,038,537

 
7,055,020

 
7,038,537

Number of full-service offices
 
28

 
28

 
32

 
 

 
 


HF Financial Corp.
Consolidated Statements of Financial Condition
(Dollars in Thousands, except share data)
 
March 31, 2013
 
June 30, 2012
 
(Unaudited)
 
(Audited)
ASSETS
 
 
 
Cash and cash equivalents
$
22,974

 
$
50,334

Securities available for sale
419,195

 
373,246

Correspondent bank stock
7,519

 
7,843

Loans held for sale
8,510

 
16,207

 
 
 
 
Loans and leases receivable
682,614

 
683,704

Allowance for loan and lease losses
(10,664
)
 
(10,566
)
Loans and leases receivable, net
671,950

 
673,138

 
 
 
 
Accrued interest receivable
4,906

 
5,431

Office properties and equipment, net of accumulated depreciation
14,062

 
14,760

Foreclosed real estate and other properties
901

 
1,627

Cash value of life insurance
19,794

 
19,276

Servicing rights, net
10,799

 
11,932

Goodwill, net
4,366

 
4,366

Other assets
12,196

 
14,431

Total assets
$
1,197,172

 
$
1,192,591

LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 
Liabilities
 
 
 
Deposits
$
897,215

 
$
893,859

Advances from Federal Home Loan Bank and other borrowings
135,125

 
142,394

Subordinated debentures payable to trusts
27,837

 
27,837

Advances by borrowers for taxes and insurance
18,269

 
12,708

Accrued expenses and other liabilities
19,308

 
18,977

Total liabilities
1,097,754

 
1,095,775

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, 9,138,475 and 9,125,751 shares issued at March 31, 2013 and June 30, 2012, respectively
91

 
91

Additional paid-in capital
46,028

 
45,673

Retained earnings, substantially restricted
85,705

 
83,571

Accumulated other comprehensive (loss), net of related deferred tax effect
(1,509
)
 
(1,622
)
Less cost of treasury stock, 2,083,455 shares at March 31, 2013 and June 30, 2012
(30,897
)
 
(30,897
)
Total stockholders' equity
99,418

 
96,816

Total liabilities and stockholders' equity
$
1,197,172

 
$
1,192,591





HF Financial Corp.
Selected Consolidated Financial Condition Data
(Dollars in Thousands)
(Unaudited)
Allowance for Loan and Lease Loss Activity
 
Three Months Ended
 
Nine Months Ended
3/31/2013
 
3/31/2012
 
3/31/2013
 
3/31/2012
Balance, beginning
 
$
10,780

 
$
11,021

 
$
10,566

 
$
14,315

Provision charged to income
 
—

 
264

 
(172
)
 
2,906

Charge-offs
 
(189
)
 
(1,291
)
 
(1,219
)
 
(7,421
)
Recoveries
 
73

 
546

 
1,489

 
740

Balance, ending
 
$
10,664

 
$
10,540

 
$
10,664

 
$
10,540


Asset Quality
 
3/31/2013
 
12/31/2012
 
3/31/2012
Nonaccruing loans and leases
 
$
22,541

 
$
15,980

 
$
20,770

Accruing loans and leases delinquent more than 90 days
 
166

 
209

 
1,136

Foreclosed assets
 
901

 
890

 
2,611

Total nonperforming assets
 
$
23,608

 
$
17,079

 
$
24,517

 
 
 
 
 
 
 
General allowance for loan and lease losses
 
$
7,957

 
$
8,064

 
$
8,213

Specific impaired loan valuation allowance
 
2,707

 
2,716

 
2,327

Total allowance for loans and lease losses
 
$
10,664

 
$
10,780

 
$
10,540

 
 
 
 
 
 
 
Ratio of nonperforming assets to total assets at end of period (1)
 
1.97
 %
 
1.40
 %
 
2.05
%
Ratio of nonperforming loans and leases to total loans and leases at end of period (2)
 
3.33
 %
 
2.39
 %
 
3.08
%
Ratio of net charge-offs to average loans and leases for the year-to-date period (3)
 
(0.05
)%
 
(0.11
)%
 
1.12
%
Ratio of allowance for loan and lease losses to total loans and leases at end of period
 
1.56
 %
 
1.59
 %
 
1.48
%
Ratio of allowance for loan and lease losses to nonperforming loans and leases at end of period (2)
 
46.96
 %
 
66.59
 %
 
48.11
%
_____________________________________________
(1) Nonperforming assets include nonaccruing loans and leases, accruing loans and leases delinquent more than 90 days and foreclosed assets.
(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, 2013 and March 31, 2012, and the six months ended December 31, 2012 have been annualized.
Troubled Debt Restructuring Summary
 
3/31/2013

 
12/31/2012

 
3/31/2012

Nonaccruing troubled debt restructurings-non-compliant (1)(2)
 
$
287

 
$
223

 
$
4,758

Nonaccruing troubled debt restructurings-compliant (1)(2)
 
8,728

 
8,643

 
10,295

Accruing troubled debt restructurings (3)
 
1,037

 
1,300

 
1,458

Total troubled debt restucturings
 
$
10,052

 
$
10,166

 
$
16,511

______________________________________________
(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) 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)
 
3/31/2013

 
12/31/2012

 
6/30/2012

Common stockholder's equity before OCI (1) to consolidated assets
8.45
 %
 
8.25
 %
 
8.29
 %
OCI components to consolidated assets:
 
 
 
 
 
Net changes in unrealized gain on securities available for sale
0.13

 
0.16

 
0.22

Net unrealized losses on defined benefit plan
(0.11
)
 
(0.11
)
 
(0.11
)
Net unrealized losses on derivatives and hedging activities
(0.14
)
 
(0.15
)
 
(0.25
)
Goodwill to consolidated assets
(0.36
)
 
(0.36
)
 
(0.37
)
Tangible common equity to tangible assets
7.97
 %
 
7.79
 %
 
7.78
 %

Tangible book value per common share (2)
$
13.47

 
$
13.42

 
$
13.13


Tier I capital (to adjusted total assets) (3)
9.80
%
 
9.54
%
 
9.66
%
Tier I capital (to risk-weighted assets) (3)
15.18

 
15.26

 
14.62

Total risk-based capital (to risk-weighted assets) (3)
16.42

 
16.51

 
15.87

______________________________________________
(1) Accumulated other comprehensive income (loss).
(2) Common equity reduced by goodwill and divided by number of shares of outstanding common stock.
(3) Capital ratios for Home Federal Bank.



HF Financial Corp.
Selected Consolidated Financial Condition Data
(Dollars in Thousands)
(Unaudited)
Loan and Lease Portfolio Composition
 
 
 
 
 
 
 
 
March 31, 2013
 
June 30, 2012
 
Amount
 
Percent
 
Amount
 
Percent
Residential:
 
 
 
 
 
 
 
One-to four-family
$
49,669

 
7.3
%
 
52,626

 
7.7
%
Construction
1,981

 
0.3

 
2,808

 
0.4

Commercial:
 
 
 
 
 
 
 
Commercial business (1)
68,669

 
10.1

 
79,069

 
11.6

Equipment finance leases
2,105

 
0.3

 
3,297

 
0.5

Commercial real estate:
 
 
 
 
 
 
 
Commercial real estate
240,101

 
35.2

 
225,341

 
33.0

Multi-family real estate
47,313

 
6.9

 
47,121

 
6.9

Construction
9,804

 
1.4

 
12,172

 
1.8

Agricultural:
 
 
 
 
 
 
 
Agricultural real estate
76,528

 
11.2

 
70,796

 
10.4

Agricultural business
91,275

 
13.4

 
84,314

 
12.3

Consumer:
 
 
 
 
 
 
 
Consumer direct
21,002

 
3.1

 
21,345

 
3.1

Consumer home equity
71,307

 
10.4

 
81,545

 
11.9

Consumer overdraft & reserve
2,831

 
0.4

 
3,038

 
0.4

Consumer indirect
29

 
—

 
232

 
—

Total (2)
$
682,614

 
100.0
%
 
$
683,704

 
100.0
%
_________________________________________________
(1) Includes $2,024 and $2,262 tax exempt leases at March 31, 2013 and June 30, 2012, respectively.
(2) Exclusive of undisbursed portion of loans in process and net of deferred loan fees and discounts.


Deposit Composition
 
 
 
 
 
 
 
 
March 31, 2013
 
June 30, 2012
 
Amount
 
Percent
 
Amount
 
Percent
Noninterest-bearing checking accounts
$
137,293

 
15.3
%
 
146,963

 
16.4
%
Interest-bearing checking accounts
166,999

 
18.6

 
138,075

 
15.5

Money market accounts
217,560

 
24.3

 
210,298

 
23.5

Savings accounts
111,180

 
12.4

 
121,092

 
13.6

In-market certificates of deposit
252,418

 
28.1

 
265,009

 
29.6

Out-of-market certificates of deposit
11,765

 
1.3

 
12,422

 
1.4

Total deposits
$
897,215

 
100.0
%
 
$
893,859

 
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, 2013
 
December 31, 2012
 
Average
Outstanding
Balance
 
Yield/
Rate
 
Average
Outstanding
Balance
 
Yield/
Rate
Interest-earning assets:
 
 
 
 
 
 
 
Loans and leases receivable(1)(3)
$
687,223

 
4.77
%
 
$
699,105

 
5.00
%
Investment securities(2)(3)
423,353

 
1.50

 
379,790

 
1.07

Total interest-earning assets
1,110,576

 
3.52
%
 
1,078,895

 
3.62
%
Noninterest-earning assets
79,912

 
 

 
81,910

 
 

Total assets
$
1,190,488

 
 

 
$
1,160,805

 
 

Interest-bearing liabilities:
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
Checking and money market
$
380,004

 
0.26
%
 
$
357,509

 
0.28
%
Savings
118,408

 
0.24

 
110,363

 
0.26

Certificates of deposit
268,814

 
1.21

 
273,635

 
1.27

Total interest-bearing deposits
767,226

 
0.59

 
741,507

 
0.64

FHLB advances and other borrowings
132,781

 
3.14

 
131,414

 
3.13

Subordinated debentures payable to trusts
27,837

 
5.87

 
27,837

 
6.06

Total interest-bearing liabilities
927,844

 
1.11
%
 
900,758

 
1.17
%
Noninterest-bearing deposits
130,687

 
 

 
132,231

 
 

Other liabilities
32,987

 
 

 
28,897

 
 

Total liabilities
1,091,518

 
 

 
1,061,886

 
 

Equity
98,970

 
 

 
98,919

 
 

Total liabilities and equity
$
1,190,488

 
 

 
$
1,160,805

 
 

Net interest spread(4)
 

 
2.41
%
 
 

 
2.45
%
Net interest margin(4)(5)
 

 
2.59
%
 
 

 
2.64
%
Net interest margin, TE(6)
 

 
2.64
%
 
 

 
2.68
%
Return on average assets(7)
 
 
0.48
%
 
 
 
0.35
%
Return on average equity(8)
 
 
5.76
%
 
 
 
4.14
%
_____________________________________
(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, 2013 and December 31, 2012 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, 2013
 
March 31, 2012
 
Average
Outstanding
Balance
 
Yield/
Rate
 
Average
Outstanding
Balance
 
Yield/
Rate
Interest-earning assets:
 
 
 
 
 
 
 
Loans and leases receivable(1)(3)
$
696,667

 
4.95
%
 
$
792,551

 
5.46
%
Investment securities(2)(3)
394,111

 
1.29

 
321,360

 
1.49

Total interest-earning assets
1,090,778

 
3.63
%
 
1,113,911

 
4.31
%
Noninterest-earning assets
81,219

 
 

 
83,472

 
 

Total assets
$
1,171,997

 
 

 
$
1,197,383

 
 

Interest-bearing liabilities:
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
Checking and money market
$
357,910

 
0.33
%
 
$
323,823

 
0.63
%
Savings
113,678

 
0.25

 
125,585

 
0.26

Certificates of deposit
273,610

 
1.27

 
323,466

 
1.61

Total interest-bearing deposits
745,198

 
0.66

 
772,874

 
0.98

FHLB advances and other borrowings
137,177

 
3.04

 
147,918

 
3.05

Subordinated debentures payable to trusts
27,837

 
6.01

 
27,837

 
6.86

Total interest-bearing liabilities
910,212

 
1.19
%
 
948,629

 
1.48
%
Noninterest-bearing deposits
131,603

 
 

 
122,153

 
 

Other liabilities
31,677

 
 

 
31,644

 
 

Total liabilities
1,073,492

 
 

 
1,102,426

 
 

Equity
98,505

 
 

 
94,957

 
 

Total liabilities and equity
$
1,171,997

 
 

 
$
1,197,383

 
 

Net interest spread(4)
 

 
2.44
%
 
 

 
2.83
%
Net interest margin(4)(5)
 

 
2.64
%
 
 

 
3.06
%
Net interest margin, TE(6)
 

 
2.68
%
 
 

 
3.09
%
Return on average assets(7)
 
 
0.51
%
 
 
 
0.37
%
Return on average equity(8)
 
 
6.11
%
 
 
 
4.72
%
_____________________________________
(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, 2013 and March 31, 2012 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, 2013
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
$
—

 
$
—

 
$
401

 
$
401

 
$
49,268

 
$
165

 
$
448

 
$
613

Construction
—

 
—

 
—

 
—

 
1,981

 
—

 
—

 
—

Commercial:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial business
407

 
3,109

 
—

 
3,516

 
65,153

 
—

 
4,225

 
4,225

Equipment finance leases
—

 
—

 
—

 
—

 
2,105

 
—

 
—

 
—

Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate
76

 
—

 
—

 
76

 
240,025

 
—

 
1,202

 
1,202

Multi-family real estate
—

 
—

 
27

 
27

 
47,286

 
—

 
27

 
27

Construction
—

 
—

 
—

 
—

 
9,804

 
—

 
—

 
—

Agricultural:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agricultural real estate
—

 
—

 
—

 
—

 
76,528

 
—

 
11,193

 
11,193

Agricultural business
40

 
—

 
—

 
40

 
91,235

 
—

 
4,648

 
4,648

Consumer:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer direct
21

 
—

 
—

 
21

 
20,981

 
—

 
10

 
10

Consumer home equity
328

 
—

 
—

 
328

 
70,979

 
—

 
788

 
788

Consumer OD & reserve
4

 
—

 
1

 
5

 
2,826

 
1

 
—

 
1

Consumer indirect
—

 
—

 
—

 
—

 
29

 
—

 
—

 
—

Total
$
876

 
$
3,109

 
$
429

 
$
4,414

 
$
678,200

 
$
166

 
$
22,541

 
$
22,707

December 31, 2012
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
$
24

 
$
152

 
$
291

 
$
467

 
$
49,592

 
$
201

 
$
242

 
$
443

Construction
—

 
—

 
—

 
—

 
2,588

 
—

 
—

 
—

Commercial:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial business
—

 
—

 
80

 
80

 
80,054

 
—

 
4,482

 
4,482

Equipment finance leases
—

 
—

 
8

 
8

 
2,449

 
8

 
—

 
8

Commercial real estate:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Commercial real estate
539

 
173

 
—

 
712

 
234,370

 
—

 
1,221

 
1,221

Multi-family real estate
—

 
—

 
27

 
27

 
42,614

 
—

 
27

 
27

Construction
—

 
—

 
—

 
—

 
13,365

 
—

 
—

 
—

Agricultural:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Agricultural real estate
40

 
—

 
—

 
40

 
68,984

 
—

 
8,481

 
8,481

Agricultural business
330

 
—

 
119

 
449

 
81,998

 
—

 
670

 
670

Consumer:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer direct
33

 
3

 
—

 
36

 
21,292

 
—

 
15

 
15

Consumer home equity
250

 
220

 
—

 
470

 
74,764

 
—

 
842

 
842

Consumer OD & reserve
2

 
—

 
—

 
2

 
3,150

 
—

 
—

 
—

Consumer indirect
5

 
—

 
—

 
5

 
77

 
—

 
—

 
—

Total
$
1,223

 
$
548

 
$
525

 
$
2,296

 
$
675,297

 
$
209

 
$
15,980

 
$
16,189

____________________________________
(1) 
Loans accruing and delinquent greater than 90 days have government guarantees or acceptable loan-to-value ratios.




HF Financial Corp.
Non-GAAP Disclosure Reconciliation
Net Interest Margin to Net Interest Margin-Tax Equivalent Yield
(Dollars in Thousands)
(Unaudited)

 
Three Months Ended
 
Nine Months Ended
 
March 31,
 
December 31,
 
March 31,
 
March 31,
 
2013
 
2012
 
2012
 
2013
 
2012
Net interest income
$
7,100

 
$
7,170

 
$
7,745

 
$
21,618

 
$
25,588

Taxable equivalent adjustment
118

 
109

 
83

 
312

 
285

Adjusted net interest income
7,218

 
7,279

 
7,828

 
21,930

 
25,873

Average interest-earning assets
1,110,576

 
1,078,895

 
1,108,481

 
1,090,778

 
1,113,911

Net interest margin, TE
2.64
%
 
2.68
%
 
2.84
%
 
2.68
%
 
3.09
%