EX-99.1 2 a04-12046_1ex99d1.htm EX-99.1

Exhibit 99.1

 

For Immediate Release – October 25, 2004

 

For Information Contact:

Curtis L. Hage, Chairman, President and CEO

Sioux Falls, South Dakota

Phone:  (605) 333-7556

 

HF Financial Corp. Announces Quarterly Earnings Per Share Increase and Declares an Increased Quarterly Cash Dividend

 

•                  HF Financial Corp. (the “Company”) (NASDAQ: HFFC), Sioux Falls, SD, reported diluted earnings per share (“EPS”) of $0.41 for the three months ended September 30, 2004 compared to $0.36 for the same period in the prior fiscal year, a 13.9% increase.  All EPS amounts have been adjusted to reflect the 10% stock dividend paid on December 31, 2003.

•                  The Company announced it will pay its quarterly cash dividend of 11 cents per share for the first quarter of the 2005 fiscal year.  This is an increase from the dividend of 10.75 cents from the prior three quarters.  The dividend will be paid on November 17, 2004 to shareholders of record on November 3, 2004.  This dividend payment represents an annualized dividend yield of 2.62% based on the closing stock price of $16.77 at September 30, 2004.

•                  Net outstanding loans and leases increased to $657,925 at September 30, 2004 from $640,946 at June 30, 2004.

•                  Provision for loan and lease losses was $179,000 for the three months ended September 30, 2004, down from $437,000 for the same period in the prior fiscal year, while the ratio of nonperforming assets to total assets also decreased to 0.27% at September 30, 2004 from 0.62% in the prior fiscal year.

•                  Net interest margin decreased to 3.30% for the three months ended September 30, 2004 from 3.50% for the same period in the prior fiscal year.

 

HF Financial Corp., the parent company for financial service companies, including Home Federal Bank, Mid America Capital Services, Inc. (“Mid America Leasing”), Hometown Insurors, Inc. and HF Financial Group, Inc., announced earnings today of $1.5 million for the three months ended September 30, 2004 compared to $1.3 million for the same period in the prior fiscal year.

 

Curtis L. Hage, Chairman, President and CEO stated, “We are pleased with the quality asset growth we have achieved over the past year.  Solid growth with sound underwriting has led to lower charges for loan losses while strengthening our earning asset capabilities.”

 

Mr. Hage stated, “The national prime rate has increased since our June 30, 2004 fiscal year end.  Although competition has been strong in pricing loans and deposits, we believe our balance sheet will perform better over the long term as interest rates increase compared to the low rate cycle we have experienced over the last few years.”

 

Mr. Hage continued, “Our dividend increase demonstrates our continued commitment to our shareholders while providing retained earnings to achieve needed growth in our Company.”

 

Net interest income increased $171,000, or 2.7%, for the three months ended September 30, 2004 as compared to the same period in the prior fiscal year.  The Company’s net interest margin was 3.30% for the three months ended September 30, 2004 as compared to 3.50% for the same period in the prior fiscal year.

 

The decrease in noninterest income of $612,000, or 21.8%, for the three months ended September 30, 2004 as compared to the same period in the prior fiscal year was primarily due to decreases in net gain on sale of loans of $420,000 due to fewer originations, loan servicing income of $47,000 and other noninterest income of $206,000 offset by an increase in fees on deposits of $48,000.

 

Noninterest expense decreased $403,000, or 6.0%, for the three months ended September 30, 2004 as compared to the same period in the prior fiscal year primarily due to decreases in compensation and employee benefits of $314,000, occupancy and equipment of $31,000 and other noninterest expense of $58,000.  The primary factor for the decrease in compensation and employee benefits was a decrease of $213,000 in net healthcare costs, inclusive of health claims and administration fees offset by stop loss and

 

1


 

employee reimbursement, to $381,000 for the three months ended September 30, 2004 compared to $594,000 for the three months ended September 30, 2003.

 

The Company had total assets of $857.2 million and stockholders’ equity of $53.3 million at September 30, 2004.  The Company is the largest publicly traded financial institution based in South Dakota, with 34 offices, which includes a location in Marshall, Minnesota. Internet banking is also available at www.homefederal.com.

 

Forward-Looking Statements

 

This news release and other reports issued by HF Financial Corp. (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, tax benefit or other financial items.

•                  Descriptions of plans or objectives of management for future operations, products or services, transactions and use of subordinated debentures payable to trusts.

•                  Forecasts of future economic performance.

•                  Descriptions of assumptions underlying or relating to such matters.

 

Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts.  They often include words such as “optimism,” “look-forward,” “bright,” “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 developments (such as shrinking interest margins); 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 portfolios; unexpected 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; or other significant uncertainties.

 

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.

 

2


 

HF Financial Corp.

Selected Consolidated Operating Highlights

(Dollars in Thousands, Except per Share Data)

(Unaudited)

 

 

 

Three Months Ended
September 30,

 

 

 

2004

 

2003

 

Interest, dividend and loan fee income:

 

 

 

 

 

Loans and leases receivable

 

$

9,734

 

$

9,606

 

Investment securities and interest-earning deposits

 

956

 

678

 

 

 

10,690

 

10,284

 

Interest expense:

 

 

 

 

 

Deposits

 

2,771

 

2,596

 

Advances from Federal Home Loan Bank and other borrowings

 

1,379

 

1,319

 

 

 

4,150

 

3,915

 

 

 

 

 

 

 

Net interest income

 

6,540

 

6,369

 

Provision for losses on loans and leases

 

179

 

437

 

Net interest income after provision for losses on loans and leases

 

6,361

 

5,932

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

Fees on deposits

 

1,120

 

1,072

 

Loan servicing income

 

372

 

419

 

Gain on sale of loans, net

 

102

 

522

 

Gain on sale of securities, net

 

13

 

—

 

Other

 

591

 

797

 

 

 

2,198

 

2,810

 

Noninterest expense:

 

 

 

 

 

Compensation and employee benefits

 

3,998

 

4,312

 

Occupancy and equipment

 

783

 

814

 

Other

 

1,550

 

1,608

 

 

 

6,331

 

6,734

 

 

 

 

 

 

 

Income before income taxes

 

2,228

 

2,008

 

Income tax expense

 

768

 

686

 

Net income

 

$

1,460

 

$

1,322

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

Basic

 

$

0.41

 

$

0.37

 

Diluted

 

0.41

 

0.36

 

 

 

 

 

 

 

Weighted average shares:

 

 

 

 

 

Basic

 

3,533,847

 

3,559,971

 

Diluted

 

3,604,681

 

3,672,274

 

 

 

 

 

 

 

Outstanding shares: (end of period)

 

3,544,696

 

3,585,281

 

 

Share data for all periods presented has been adjusted for the 10% stock dividend paid on December 31, 2003.

 

3


 

HF Financial Corp.

Selected Consolidated Financial Condition Data

(Dollars in Thousands, Except per Share Data)

(Unaudited)

 

 

 

9/30/2004

 

6/30/2004

 

9/30/2003

 

 

 

 

 

 

 

 

 

Balance Sheet Data

 

 

 

 

 

 

 

Total assets

 

$

857,207

 

$

847,070

 

$

783,759

 

Cash and cash equivalents

 

17,072

 

20,474

 

32,172

 

Securities available for sale

 

112,180

 

122,715

 

77,753

 

Loans and leases receivable, net

 

657,925

 

640,946

 

604,868

 

Loans held for sale

 

15,993

 

10,351

 

14,542

 

Deposits

 

642,969

 

658,719

 

603,770

 

Advances from Federal Home Loan Bank and other borrowings

 

114,885

 

93,750

 

80,061

 

Subordinated debentures payable to trusts

 

27,837

 

27,837

 

27,000

 

Stockholders’ equity

 

53,260

 

51,649

 

50,471

 

 

 

 

 

 

 

 

 

Equity to total assets (end of period)

 

6.21

%

6.10

%

6.44

%

Book value per share (1)

 

$

15.02

 

$

14.62

 

$

14.08

 

 

 

 

 

 

 

 

 

Tier I (core) capital (2)

 

8.32

%

8.28

%

8.62

%

Risk-based capital (2)

 

10.47

%

10.54

%

10.40

%

 

 

 

 

 

 

 

 

Number of full-service offices

 

34

 

34

 

34

 

 

 

 

 

 

 

 

 

Asset Quality

 

 

 

 

 

 

 

Nonaccruing loans and leases

 

$

1,515

 

$

1,561

 

$

3,472

 

Accruing loans and leases delinquent more than 90 days

 

789

 

502

 

1,112

 

Foreclosed assets (3)

 

53

 

212

 

261

 

Total nonperforming assets

 

$

2,357

 

$

2,275

 

$

4,845

 

 

 

 

 

 

 

 

 

FASB Statement No. 5 Allowance for loan and lease losses

 

$

3,586

 

$

3,601

 

$

3,159

 

FASB Statement No. 114 Impaired loan valuation allowance

 

3

 

4

 

839

 

Total allowance for loans and lease losses

 

$

3,589

 

$

3,605

 

$

3,998

 

 

 

 

 

 

 

 

 

Ratio of nonperforming assets to total assets (end of period)

 

0.27

%

0.27

%

0.62

%

Ratio of allowance for loan and lease losses to total loans and leases (end of period)

 

0.53

%

0.55

%

0.64

%

Ratio of allowance for loan and lease losses to nonperforming loans and leases (end of period) (4)

 

155.77

%

174.75

%

87.22

%

 

(1)          Equity divided by number of shares of outstanding common stock.

(2)          Capital ratios for Home Federal Bank.

(3)          Total foreclosed assets do not include land or other real estate owned held for sale.

(4)          Nonperforming loans and leases include both nonaccruing and accruing loans and leases delinquent more than 90 days.

 

4


 

HF Financial Corp.

Selected Consolidated Financial Condition Data

(Dollars in Thousands)

(Unaudited)

 

Loan and Lease Portfolio Composition

 

 

 

At September 30, 2004

 

At June 30, 2004

 

 

 

Amount

 

Percent of
Loans in
Each Category

 

Amount

 

Percent of
Loans in
Each Category

 

 

 

(Dollars in Thousands)

 

 

 

 

 

 

 

 

 

 

 

One-to four-family (1)

 

$

95,114

 

14.38

%

$

93,721

 

14.54

%

Commercial real estate

 

91,361

 

13.81

%

89,356

 

13.86

%

Multi-family real estate

 

43,392

 

6.56

%

42,572

 

6.61

%

Commercial business

 

121,832

 

18.42

%

124,033

 

19.24

%

Equipment finance leases

 

27,902

 

4.22

%

27,019

 

4.19

%

Consumer (2) (3)

 

203,461

 

30.75

%

196,594

 

30.50

%

Agricultural

 

66,142

 

10.00

%

63,370

 

9.83

%

Construction and development

 

12,310

 

1.86

%

7,886

 

1.23

%

Total Loans and Leases Receivable (4)

 

$

661,514

 

100.00

%

$

644,551

 

100.00

%

 

(1)          Excludes $13,943 and $10,027 loans held for sale at September 30, 2004 and June 30, 2004, respectively.

(2)          Includes mobile home loans.

(3)          Excludes $2,050 and $324 student loans held for sale at September 30, 2004 and June 30, 2004, respectively. During the second quarter of fiscal 2004, the Company began classifying its student loan portfolio as held for sale.

(4)          Includes deferred loan fees and discounts and undisbursed portion of loans in process.

 

Deposit Composition

 

 

 

At September 30, 2004

 

At June 30, 2004

 

 

 

Amount

 

Percent of
Deposits in
Each Category

 

Amount

 

Percent of
Deposits in
Each Category

 

 

 

(Dollars in Thousands)

 

 

 

 

 

 

 

 

 

 

 

Noninterest bearing checking accounts

 

$

67,553

 

10.51

%

$

75,251

 

11.42

%

Interest bearing accounts

 

50,089

 

7.79

%

45,738

 

6.94

%

Money market accounts

 

209,613

 

32.60

%

211,928

 

32.17

%

Savings accounts

 

44,972

 

6.99

%

63,670

 

9.67

%

Certificates of deposit

 

270,742

 

42.12

%

262,132

 

39.80

%

Total Deposits

 

$

642,969

 

100.00

%

$

658,719

 

100.00

%

 

5


 

HF Financial Corp.

Selected Consolidated Financial Condition Data

(Dollars in Thousands)

(Unaudited)

 

Allowance for Loan and Lease Loss Activity

 

 

 

Three Months Ended

 

 

 

 

 

 

 

9/30/2004

 

9/30/2003

 

 

 

 

 

Balance, beginning

 

$

3,605

 

$

3,842

 

 

 

 

 

Provision charged to income

 

179

 

437

 

 

 

 

 

Charge-offs

 

(318

)

(343

)

 

 

 

 

Recoveries

 

123

 

62

 

 

 

 

 

Balance, ending

 

$

3,589

 

$

3,998

 

 

 

 

 

 

Average Balances, Interest Yields and Rates

 

 

 

Three Months Ended

 

 

 

9/30/2004

 

9/30/2003

 

 

 

Average

 

Yield/Rate

 

Average

 

Yield/Rate

 

Interest-earning assets:

 

 

 

 

 

 

 

 

 

Loans and leases receivable (1)

 

$

663,500

 

5.82

%

$

623,533

 

6.11

%

Investment securities (2) (3)

 

122,534

 

3.10

%

99,166

 

2.71

%

Total interest-earning assets

 

786,034

 

5.40

%

722,699

 

5.65

%

Noninterest-earning assets

 

64,867

 

 

 

61,676

 

 

 

Total assets

 

$

850,901

 

 

 

$

784,375

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

Checking and money market

 

$

260,029

 

1.37

%

$

224,138

 

1.12

%

Savings

 

50,912

 

0.83

%

47,183

 

0.59

%

Certificates of deposit

 

263,435

 

2.67

%

264,447

 

2.84

%

Total interest-bearing deposits

 

574,376

 

1.91

%

535,768

 

1.92

%

FHLB advances and other borrowings

 

106,367

 

3.75

%

85,774

 

4.69

%

Subordinated debentures payable to trusts

 

27,837

 

5.32

%

22,333

 

5.42

%

 

 

 

 

 

 

 

 

 

 

Total interest-bearing liabilities

 

708,580

 

2.32

%

643,875

 

2.41

%

Noninterest-bearing deposits

 

70,806

 

 

 

69,924

 

 

 

Other liabilities

 

19,166

 

 

 

20,813

 

 

 

Total liabilities

 

798,552

 

 

 

734,612

 

 

 

Equity

 

52,349

 

 

 

49,763

 

 

 

Total liabilities and equity

 

$

850,901

 

 

 

$

784,375

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest spread (4)

 

 

 

3.08

%

 

 

3.24

%

Net interest margin (4) (5)

 

 

 

3.30

%

 

 

3.50

%

Return on average assets (6)

 

 

 

0.69

%

 

 

0.67

%

Return on average equity (7)

 

 

 

11.16

%

 

 

10.63

%

 

(1)          Includes loan fees and interest on accruing loans and leases past due 90 days or more.

(2)          Includes federal funds sold and Federal Home Loan Bank stock.

(3)          Yields do not reflect the tax exempt nature of municipal securities.

(4)          Percentages for the three months ended September 30, 2004 and September 30, 2003 have been annualized.

(5)          Net interest margin is net interest income divided by average interest-earning assets.

(6)          Ratio of net income to average total assets.

(7)          Ratio of net income to average equity.

 

6