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HF Financial Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 16, 2009 04:20PM

HF Financial Corp. (HFFC) filed Quarterly Report for the period ended 2009-09-30. HF Financial is the bank holding company for Home Federal Savings Bank. Thebank accepts deposits from the public and invests in one- to 4-familyresidential, consumer, multifamily, commercial real estate, construction,and commercial loans. The Company offers mobile home loans, automobile loans, home equity loans, secured loans, and student loans. The bank provides services to customers in eastern South Dakota, including Sioux Falls, Brando, Pierre, Winner, Freeman, and Dell Rapids. Hf Financial Corp. has a market cap of $41.45 million; its shares were traded at around $10.25 with a P/E ratio of 6.7 and P/S ratio of 0.57. The dividend yield of Hf Financial Corp. stocks is 4.39%. Hf Financial Corp. had an annual average earning growth of 7.8% over the past 10 years.

Highlight of Business Operations:

Total deposits at September 30, 2009 were $830.2 million, a decrease of $7.6 million, or 0.9%, from June 30, 2009. During the three month period, public fund account balances decreased $33.3 million which are categorized in multiple categories of deposits. In-market certificates of deposit increased a total of $23.4 million from $401.3 million to $424.7 million for the three month period, due in part to customer preference for higher yielding term deposit products. The primary factors affecting interest expense was the decrease in the average rates paid on total deposits for the three month period ended September 30, 2009 of 1.92% compared to 2.67% for the three month period ended September 30, 2008.

Noninterest income was $1.7 million for the quarter ended September 30, 2009 compared to $3.0 million for the quarter ended September 30, 2008, a decrease of $1.4 million or 44.3%. This decrease is due primarily to net impairment credit losses recognized in earnings of $1.9 million for the quarter ended September 30, 2009. Net gain on sale of loans and net gain on sale of securities increased $245,000 and $453,000, respectively, to partially offset the decrease for the comparable quarter.

Noninterest expense was $8.9 million for the three months ended September 30, 2009 as compared to $8.4 million for the three months ended September 30, 2008, an increase of $546,000, or 6.5%. The increase was primarily due to increases in healthcare costs included in compensation and employee benefits of $390,000, and from increased FDIC insurance premiums of $184,000.

At September 30, 2009, the Company had total assets of $1.2 billion, and exhibited a decrease of $8.3 million from the level at June 30, 2009. The decrease in assets in the first quarter of fiscal 2010 was due primarily to a net decrease in net loans and leases receivable of $17.5 million, and partially offset by an increase in loans held for sale of $7.9 million. Total liabilities decreased $10.1 million at September 30, 2009 as compared to June 30, 2009. This decrease was primarily due to decreases in deposits of $7.6 million and advances from the FHLB and other borrowings of $5.6 million. The decrease in liabilities was partially offset by an increase in stockholders’ equity of $1.8 million to $70.5 million at September 30, 2009 from $68.7 million at June 30, 2009. This increase was due primarily to the net income available to common shareholders for the three months ended September 30, 2009 of $855,000 and the net increase in accumulated other comprehensive (loss), net of related deferred tax effect, of $1.2 million.

Deposits decreased $7.6 million at September 30, 2009 as compared to June 30, 2009 primarily due to a decrease in public funds of $33.3 million in multiple categories of deposits. Public funds decreased from $182.5 million at June 30, 2009 to $149.2 million at September 30, 2009, as a result of seasonal fluctuations typical with these types of municipal deposits. For the same period, in-market and out-of-market certificates of deposit increased $23.4 million and $4.8 million, respectively. These increases were offset by decreases in money market accounts and savings accounts of $15.8 million and $20.0 million, respectively, when compared to the totals at June 30, 2009.

Advances from the FHLB and other borrowings decreased $5.6 million at September 30, 2009 as compared to June 30, 2009. This decrease was primarily the result of a net decrease in net loans and leases receivable of $9.6 million combined with an increase in advances by borrowers for taxes and insurance of $4.1 million. These changes increased the cash position by $13.7 million and were partially offset by a decrease in deposits of $7.6 million, reducing the need for advances.

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