Filed Pursuant to Rule 424(b)(3)

Registration File No. 333-169230

 

PROSPECTUS OF HOME FEDERAL BANCORP, INC. OF LOUISIANA
(A NEW LOUISIANA CORPORATION)
PROXY STATEMENT OF HOME FEDERAL BANCORP, INC. OF LOUISIANA
(A FEDERAL CORPORATION)

 

Home Federal Bancorp, Inc. of Louisiana, a federal corporation, Home Federal Bank and Home Federal Mutual Holding Company are converting from the mutual holding company structure to a fully public ownership structure. Currently, Home Federal Mutual Holding Company owns approximately 63.8% of the issued and outstanding shares of Home Federal Bancorp’s common stock. The remaining 36.2% of Home Federal Bancorp’s outstanding shares of common stock is owned by public shareholders. In connection with the conversion, Home Federal Bancorp, Inc. of Louisiana, a Louisiana corporation, which we refer to as the “new holding company”, was recently formed by Home Federal Bank, to become the parent holding company for Home Federal Bank.

 

Each share of Home Federal Bancorp common stock owned by the public shareholders will be exchanged for shares of common stock of the new holding company so that Home Federal Bancorp’s existing public shareholders will own approximately the same percentage of the common stock of the new holding company as they owned immediately prior to the conversion. The actual number of shares that you will receive will depend on the exchange ratio, which will depend on the percentage of Home Federal Bancorp’s common stock held by the public shareholders, the final independent appraisal of the new holding company, and the number of shares of the new holding company common stock sold in the offering described below. It will not depend on the market price of the common stock. See “The Conversion and Offering — Effect of the Conversion on Public Shareholders — Effect on Outstanding Shares of Home Federal Bancorp” for a discussion of the exchange ratio. Based on the $9.70 per share closing price of Home Federal Bancorp’s common stock as of the date of this proxy statement/prospectus, unless at least 2,071,314 shares of the new holding company are sold in the offering (between the midpoint and maximum of the offering range), the initial value of the new holding company common stock you receive in the share exchange would be less than the market value the Home Federal Bancorp common stock that you currently own. See “Risk Factors — The Market Value of the New Holding Company Common Stock Received in the Share Exchange May be Less than the Market Value of Home Federal Bancorp Common Stock Exchanged.”

 

Concurrently with the share exchange, we are offering shares of common stock of the new holding company, representing the 63.8% ownership interest of Home Federal Mutual Holding Company in Home Federal Bancorp, for sale to eligible depositors and borrowers and the public. The conversion of Home Federal Mutual Holding Company and the offering and exchange of common stock by the new holding company is referred to herein as the “conversion and offering.” After the conversion and offering are completed, Home Federal Bank will be a wholly-owned subsidiary of the new holding company, and both Home Federal Mutual Holding Company and Home Federal Bancorp will cease to exist.

 

Home Federal Bancorp’s common stock is currently listed on the OTC Bulletin Board under the symbol “HFBL.” We expect that the new holding company’s common stock will be listed for trading on the Nasdaq Capital Market under the symbol “HFBLD” for a period of 20 trading days after completion of the offering. Thereafter, the trading symbol will be “HFBL.”

 

The conversion and offering cannot be completed unless the shareholders of Home Federal Bancorp approve the Plan of Conversion and Reorganization. Home Federal Bancorp is holding an annual meeting of shareholders at Home Federal Bancorp’s main office, located at 624 Market Street, Shreveport, Louisiana, on Wednesday, December 15, 2010 at 10:00 a.m., Central time, to consider and vote upon the Plan of Conversion and Reorganization, as well as other proposals detailed in this proxy statement/prospectus. The Board of Directors of Home Federal Bancorp unanimously recommends that its shareholders vote “FOR” the Plan of Conversion and Reorganization and “FOR” each of the other proposals set forth in this proxy statement/prospectus.

 

This document serves as the proxy statement for the annual meeting of shareholders of Home Federal Bancorp and the prospectus for the shares of common stock of the new holding company to be issued in exchange for shares of Home Federal Bancorp’s common stock. We urge you to read this entire document carefully. You can also obtain information about our companies from documents that we have filed with the Securities and Exchange Commission and the Office of Thrift Supervision. This document does not serve as the prospectus relating to the offering of the new holding company’s common stock which will be made pursuant to a separate prospectus.

 

This investment involves a degree of risk, including the possible loss of principal. Please read “Risk Factors” beginning on page 14.

 

These securities are not deposits or savings accounts and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.

 

None of the Securities and Exchange Commission, the Office of Thrift Supervision or any state securities regulator has approved or disapproved of these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

 

The date of this proxy statement/prospectus is November 5, 2010, and is first being mailed to
shareholders of Home Federal Bancorp, Inc. of Louisiana on or about November 15, 2010.

 

 

TABLE OF CONTENTS

 

 

HOME FEDERAL BANCORP, INC. OF LOUISIANA
624 Market Street
Shreveport, Louisiana 71101
(318) 222-1145

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held on December 15, 2010

 

NOTICE IS HEREBY GIVEN that a annual meeting of shareholders of Home Federal Bancorp, Inc. of Louisiana, a federal corporation (which we refer to as “Home Federal Bancorp”) will be held at Home Federal Bancorp’s main office, located at 624 Market Street, Shreveport, Louisiana on Wednesday, December 15, 2010 at 10:00 a.m., Central time, to consider and vote upon:

 

1. The approval of a Plan of Conversion and Reorganization and the transactions contemplated thereby pursuant to which, among other things, Home Federal Bancorp, Inc. of Louisiana, a newly formed Louisiana corporation (which we refer to as the “new holding company”), will offer for sale shares of its common stock, and shares of common stock of Home Federal Bancorp currently held by shareholders other than Home Federal Mutual Holding Company (which we refer to as the “public shareholders”) will be exchanged for shares of common stock of the new holding company upon the conversion of Home Federal Mutual Holding Company, Home Federal Bank and Home Federal Bancorp from the mutual holding company structure to the stock holding company structure;

 

2. The following informational proposals:

 

 

3. The election of three directors for a three-year term expiring in 2013 and one director for a two-year term expiring in 2012 and until their successors are elected and qualified;

 

4. The ratification of the appointment of LaPorte Sehrt Romig & Hand as our independent public accounting firm for the fiscal year ending June 30, 2011;

 

5. The adjournment of the annual meeting, if necessary, to solicit additional proxies in the event that there are not sufficient votes at the annual meeting to approve the Plan of Conversion and Reorganization; and

 

6. Any other matters that may properly come before the annual meeting or an adjournment or postponement thereof. Management is not aware of any such other business at this time.

 

The provisions of the articles of incorporation which are summarized as informational proposals 2A through 2C were approved as part of the process in which the board of directors of Home Federal Bancorp approved the Plan of Conversion and Reorganization. These proposals are informational in nature only, because the Office of Thrift Supervision regulations governing mutual to stock conversion do not provide for votes on matters other than the Plan of Conversion and Reorganization. While we are asking shareholders of Home Federal Bancorp to vote with respect to each of the informational proposals, shareholders are not being asked to approve the proposed provisions for which an informational vote is requested and the proposed provisions will become effective if shareholders approve the Plan of Conversion and Reorganization, regardless of whether shareholders vote to approve any or all of the informational proposals.

Appraisal rights will be available to shareholders who do not vote in favor of the Plan of Conversion and Reorganization and otherwise comply with the procedures set forth in 12 C.F.R. Section 552.14 (a copy of which is attached as Appendix A to proxy statement/prospectus).

 

The board of directors has fixed October 29, 2010, as the record date for the determination of shareholders entitled to notice of and to vote at the annual meeting and at an adjournment or postponement thereof.

 

BY ORDER OF THE BOARD OF DIRECTORS

 

DeNell W. Mitchell

Corporate Secretary

 

Shreveport, Louisiana

November 15, 2010

 

You should read this document and the Plan of Conversion and Reorganization for more information about the conversion and offering. The Plan of Conversion and Reorganization has been conditionally approved by our regulators.

 

Q. What are shareholders being asked to approve?

 

A. Home Federal Bancorp’s shareholders as of October 29, 2010 are being asked to vote on the Plan of Conversion and Reorganization. Under the Plan of Conversion and Reorganization, Home Federal Bank will convert from the mutual holding company form of ownership to the fully public stock holding company form of ownership, and as part of such conversion, a new Louisiana company, also named Home Federal Bancorp, Inc. of Louisiana, will offer for sale, in the form of shares of it common stock, Home Federal Mutual Holding Company’s 63.8% ownership interest in Home Federal Bancorp. In addition to the shares of common stock to be issued to those who purchase shares in the stock offering, public shareholders of Home Federal Bancorp as of the completion of the conversion, will receive shares of common stock of the new holding company in exchange for their existing shares.

 

In addition, informational proposals relating to the articles of incorporation of the new holding company are also described in this proxy statement/prospectus. Due to Office of Thrift Supervision regulations, the proposed provisions of the articles of incorporation described in the informational proposals will become effective if shareholders approve the Plan of Conversion and Reorganization, regardless of whether shareholders vote to approve any or all of the informational proposals.

 

In addition, shareholders will vote on the election of directors, ratification of the appointment of our independent registered public accounting firm and a proposal to solicit additional proxies in the event that there are not sufficient votes at the annual meeting to approve the Plan of Conversion and Reorganization.

 

Q. What is the conversion?

 

A. Home Federal Bank, Home Federal Bancorp and Home Federal Mutual Holding Company are converting from a mutual holding company structure to a fully-public ownership structure. Currently, Home Federal Mutual Holding Company owns approximately 63.8% of Home Federal Bancorp’s common stock. The remaining 36.2% of common stock is owned by public shareholders. As a result of the conversion, our newly formed Louisiana company, also called Home Federal Bancorp, Inc. of Louisiana, will become the parent of Home Federal Bank.

 

Shares of common stock of the new holding company, representing the 63.8% ownership interest of Home Federal Mutual Holding Company in Home Federal Bancorp, are being offered for sale to eligible depositors and borrowers of Home Federal Bank, and if shares remain, to the public, with a preference given to natural persons, or trusts of natural persons, who reside in Caddo or Bossier Parishes, Louisiana, followed by shareholders of Home Federal Bancorp as of October 29, 2010. At the completion of the conversion and offering, current public shareholders of Home Federal Bancorp will exchange their shares of Home Federal Bancorp common stock for shares of common stock of the new holding company.

 

After the conversion and offering are completed, Home Federal Bank will become a wholly-owned subsidiary of the new holding company. Upon consummation of the conversion and offering, the outstanding shares of the new holding company will be owned by the public shareholders, who will exchange their shares for shares of the new holding company, as well as those persons who purchase shares in the offering for the purchase price of $10.00 per share. As a result of the conversion and offering, Home Federal Mutual Holding Company and Home Federal Bancorp will cease to exist.

 

See “The Conversion and Offering” beginning on page 103 of this proxy statement/prospectus, for more information about the conversion.

Q. What will shareholders receive for their existing Home Federal Bancorp shares?

 

A. As more fully described in the section entitled “The Conversion and Offering,” depending on the number of shares sold in the stock offering, each share of common stock that you own upon completion of the conversion and stock offering will be exchanged for between 0.7464 new shares at the minimum and 1.0098 new shares at the maximum of the offering range (cash will be paid in lieu of fractional shares). For example, if you own 100 shares of Home Federal Bancorp common stock and the exchange ratio is 0.8781, after the conversion you will receive 87 shares of common stock of the new holding company and $8.10 in cash, the value of the fractional share, based on the $10.00 per share offering price. Shareholders who hold shares in street-name at a brokerage firm will receive these funds in their brokerage account. Shareholders who have stock certificates will receive checks. The number of shares you will get will depend on the number of shares sold in the offering and will be based on an exchange ratio determined as of the closing of the conversion. The actual number of shares you receive will depend upon the number of shares we sell in our offering, which in turn will depend upon the final appraised value of the new holding company. The exchange ratio will adjust based on the number of shares sold in the offering. It will not depend on the market price of the common stock Home Federal Bancorp.

 

Q. What are the reasons for the conversion and offering?

 

A. As more fully described in this proxy statement/prospectus, the primary reasons for the conversion and offering are to increase capital to support the growth of our interest-earning assets, add shares to our employee stock ownership plan and adopt new stock benefit plans to provide competitive compensation for our senior officers, structure our business in a form that will provide improved access to capital markets, eliminate some of the uncertainties associated with the financial regulatory reforms and their impact on mutual to stock conversions, and create a more liquid and active market than currently exists for Home Federal Bancorp common stock.

 

Q. Why should I vote?

 

A. You are not required to vote, but your vote is very important. In order for us to implement the Plan of Conversion and Reorganization, we must receive the affirmative vote of the holders of a majority of the outstanding shares of Home Federal Bancorp common stock, other than shares held by Home Federal Mutual Holding Company, in addition to the approval of two-thirds of all the outstanding shares. The board of directors of Home Federal Bancorp recommends that you vote ‘‘FOR” approval of the Plan of Conversion and Reorganization.

 

Q. What happens if I don’t vote?

 

A. Your prompt vote is very important. Not voting will have the same effect as voting ‘‘Against” the Plan of Conversion and Reorganization.  Without sufficient favorable votes “FOR the Plan of Conversion and Reorganization, we will not proceed with the conversion and offering.

 

Q. How do I vote?

 

A. You should sign your proxy card and return it in the enclosed proxy reply envelope or vote using the Internet or by telephone. Please vote promptly. Not voting has the same effect as voting ‘‘Against” the Plan of Conversion and Reorganization.

 

Q. If my shares are held in street name, will my broker automatically vote on my behalf?

 

A. No. Your broker will not be able to vote your shares without instructions from you. You should instruct your broker to vote your shares, using the directions that your broker provides to you.

 

Q. What if I do not give voting instructions to my broker?

 

A. Your vote is important. If you do not instruct your broker to vote your shares by proxy, each unvoted share will have the same effect as a vote against the Plan of Conversion and Reorganization.

Q: If the offering range is changed and all subscribers are given the opportunity to place a new stock order, will I have an opportunity to vote on the new pro forma market value?

 

A: No. We do not intend to seek any additional approvals from shareholders in connection with setting a new offering range.

 

Q. How will my existing Home Federal Bancorp shares be exchanged?

 

A. The conversion of your shares of common stock Home Federal Bancorp into the right to receive shares of common stock of the new holding company will occur automatically on the effective date of the conversion, although you will need to exchange your stock certificate(s) if you hold shares in certificate form. As soon as practicable after the effective date of the conversion and reorganization, our exchange agent will send a transmittal form to you. The transmittal forms are expected to be mailed shortly after the effective date and will contain instructions on how to submit the stock certificate(s) representing existing shares of Home Federal Bancorp common stock. No fractional shares of common stock of the new holding company will be issued to you when the conversion is completed. For each fractional share that would otherwise be issued to a shareholder who holds a certificate, you will be paid by check an amount equal to the product obtained by multiplying the fractional share interest to which you would otherwise be entitled by $10.00. If your shares are held in street name, you will not receive a transmittal form. You will automatically receive the new shares and cash in lieu of fractional shares within your brokerage account.

 

Q. Should I submit my stock certificates now?

 

A. No. If you hold your certificate(s), instructions for exchanging the shares will be sent to you after completion of the conversion and offering. If your shares are held in “street name,” rather than in certificate form, the share exchange will occur within your brokerage account automatically upon completion of the conversion and offering.

 

Q. Do I have dissenters’ and appraisal rights?

 

A. Yes. Under federal law, dissenters’ rights of appraisal are available to Home Federal Bancorp shareholders in connection with the conversion and reorganization. To exercise your right to dissent, you must file with Home Federal Bancorp a written notice of your intention to dissent prior to the annual meeting. A failure to vote on the Plan of Conversion and Reorganization will not constitute a waiver of your appraisal rights; however, if you vote in favor of the plan, you will be deemed to have waived your dissenters’ rights. Additionally, if you return a signed proxy but do not specify on the proxy a vote against the plan or an abstention from the vote, then you will be deemed to have waived your dissenters’ rights. Within 60 days of the completion of the conversion and stock offering, you must file a petition with the Office of Thrift Supervision to demand a determination of the fair market value of the stock if you have not reached an agreement with the new holding company as to the fair value of such shares. Please refer to the summary under “Rights of Dissenting Shareholders” at page 127 of this proxy statement/prospectus and Appendix A to this proxy statement/prospectus which contains the full text of the section of the Office of Thrift Supervision regulations that governs dissenters’ rights.

 

Q. May I place an order to purchase shares in the offering, in addition to the shares that I will receive in the exchange?

 

A. Yes. If you would like to receive a prospectus and stock order form, you may call our Stock Information Center, toll-free, at 1-(877) 643-8196, Monday through Friday between 10:00 a.m. and 4:00 p.m., Central time. The Stock Information Center will be closed weekends and bank holidays.

 

Please note that properly completed and signed stock order forms with full payment, must be received, not postmarked, by no later than 2:00 p.m., Central time, on December 7, 2010, unless extended.

 

Further Questions?

 

For answers to questions about the conversion or voting, please read this proxy statement/prospectus.

 

Questions about the Plan of Conversion and Reorganization or voting may be directed to our Proxy Information Agent, Phoenix Advisory Partners, LLC, by calling toll-free 1-(800) 576-4314, Monday through Friday from 8:00 a.m. to 4:00 p.m., Central time.

 

Questions about the stock offering may be directed to the Stock Information Center by calling 1-(877) 643-8196, Monday to Friday, from 9:00 a.m. to 4:00 p.m., Central time. The Stock Information Center will be closed weekends and bank holidays.

 

SUMMARY

	•	2A — Approval of a provision in the articles of incorporation of the new holding company providing for the authorized capital stock of 40,000,000 shares of common stock and 10,000,000 shares of serial preferred stock compared to 8,000,000 shares of common stock and 2,000,000 shares of preferred stock in the charter of Home Federal Bancorp;
	•	2B — Approval of a provision in the articles of incorporation of the new holding company requiring a super-majority shareholder approval of amendments to certain provisions in the articles of incorporation and bylaws of the new holding company; and
	•	2C — Approval of a provision in the articles of incorporation of the new holding company to limit the voting rights of shares beneficially owned in excess of 10% of the outstanding voting securities of the new holding company;

										Price to				Price Performance from Initial Offering Price
		Closing				Net				Tangible Book																Through
Issuer (Market/Symbol)		Date				Proceeds				Value Ratio				1 Day				1 Week				1 Month				August 27, 2010
						(In millions)
Jacksonville Bancorp, Inc. (Nasdaq/JXSB)			07/15/10			$	8.7				59.9	%			6.5	%			5.8	%			3.0	%			(0.1	)%
Colonial Financial Services, Inc. (Nasdaq/COBK)			07/13/10				19.0				64.7				0.5				(1.6	)			(2.6	)			(1.5	)
Oneida Financial Corp. (Nasdaq/ONFC)			07/07/10				26.5				97.8				(6.3	)			(3.1	)			(1.3	)			(2.8	)
ViewPoint Financial Group, Inc. (Nasdaq/VPFG)			07/07/10				166.8				93.9				(5.0	)			(2.9	)			(3.0	)			(8.3	)
Fox Chase Bancorp, Inc. (Nasdaq/FXCB)			06/29/10				76.6				72.6				(4.1	)			(3.7	)			(1.8	)			(3.2	)
Oritani Financial Corp. (Nasdaq/ORIT)			06/24/10				364.7				90.6				3.1				—				(0.9	)			(3.9	)
Eagle Bancorp Montana, Inc. (Nasdaq/EBMT)			04/05/10				19.9				81.2				5.5				5.0				4.0				(8.5	)
Ocean Shore Holding Co. (Nasdaq/OSHC)			12/21/09				26.9				63.0				7.5				11.9				13.1				33.8
Northwest Bancshares, Inc. (Nasdaq/NWBI)			12/18/09				603.0				103.8				13.5				13.0				14.0				10.3
Average			N/A				145.8				80.8				2.4				2.7				2.7				1.8
Median			N/A				26.9				81.2				3.1				—				(0.9	)			(2.8	)

																														New
																		Total												Shares
																		Shares of												that
										New Shares to be								Common												Would be
		New Shares to be								Exchanged for								Stock to be												Received
		Sold in this								Existing								Outstanding								Equivalent				for 100
		Offering								Common Stock								After the				Exchange				per Share				Existing
		Amount				Percent				Amount				Percent				Offering				Ratio				Value(1)				Shares(2)
Minimum			1,593,750				63.8	%			904,481				36.2	%			2,498,231				0.7464			$	7.46				74
Midpoint			1,875,000				63.8				1,064,095				36.2				2,939,095				0.8781				8.78				87
Maximum			2,156,250				63.8				1,223,709				36.2				3,379,959				1.0098				10.10				100
15% above the maximum			2,479,688				63.8				1,407,266				36.2				3,886,954				1.1612				11.61				116

(1)		Represents the value of shares of the new holding company’s common stock received in the conversion by a holder of one share of Home Federal Bancorp’s common stock at the exchange ratio, assuming a value of $10.00 per share.
(2)		Cash will be paid instead of issuing fractional shares. For each fractional share that you would otherwise be issued, we will pay an amount equal to the product obtained by multiplying the fractional share interest by the $10.00 per share purchase price.

	•	While Home Federal Bank currently exceeds all regulatory capital requirements, the additional funds resulting from the offering will support continued growth and expansion, including opening new branch offices, particularly in Bossier Parish, hiring and retaining personnel, diversifying into other financial services-related activities and providing enhanced lending capability. Our board of directors considered current market conditions, the amount of capital needed for continued lending and operational growth, the

		fact that the offering will not raise excessive capital, and the interests of existing shareholders in deciding to conduct the conversion and offering at this time.

	•	The additional shares in our employee stock ownership plan and the proposed new stock benefit plans will assist us with retaining and strengthening our management team by providing competitive compensation for our senior officers. Although we have not to date lost the services of any members of senior management without the additional stock benefit plans, being able to offer such stock benefits in the future has been an important part of the structure of compensation packages in seeking to add new lending officers in connection with implementation of our business plan.
	•	The full public stock holding company structure, as compared to the mutual holding company structure, is a more familiar form of organization, which we believe will make our common stock more appealing to investors, and will give us greater flexibility to access the capital markets through possible future equity and debt offerings, although we have no current plans, agreements or understandings regarding any additional securities offerings. The mutual holding company structure is more restrictive due to the requirement that the parent mutual holding company always control a majority of the mid-tier holding company’s common stock.
	•	To eliminate some of the uncertainties associated with the recently enacted financial regulatory legislations which will result in changes to our primary bank regulator and holding company regulator, currently the Office of Thrift Supervision, as well as possibly material changes in regulations governing the conversion to a fully public stock holding company structure. Neither the Office of the Comptroller of Currency nor the Federal Reserve Board have adopted regulations addressing second-step conversions and there is no assurance that those agencies will adopt, without material change, the regulations issued by the Office of Thrift Supervision that currently govern second-step conversions. The statutory transfer date of the functions of the Office of Thrift Supervision to the other federal banking agencies is July 21, 2011, subject to extension up to January 21, 2012, during which time it may be difficult to receive regulatory approval for second-step conversions.
	•	We believe that our current mutual holding company structure limits our opportunities to acquire other institutions because we cannot now issue stock in an acquisition in an amount that would cause Home Federal Mutual Holding Company to own less than a majority of the outstanding shares of Home Federal Bancorp’s common stock. The conversion will facilitate our ability to acquire other institutions by eliminating the mutual holding company, although we do not currently have any agreements or understandings regarding any specific acquisition transaction.
	•	We expect that the conversion will result in greater liquidity for our stock by increasing the number of outstanding shares held by public shareholders and by being listed for trading on the Nasdaq Capital Market.

	•	The Plan of Conversion and Reorganization is approved by at least a majority of votes eligible to be cast by members of Home Federal Mutual Holding Company (depositors and certain borrowers of Home Federal Bank);
	•	The Plan of Conversion and Reorganization is approved by at least:

	-	two-thirds of the outstanding shares of Home Federal Bancorp common stock; and
	-	a majority of the outstanding shares of Home Federal Bancorp common stock, not including those shares held by Home Federal Mutual Holding Company;

	•	We sell at least the minimum number of shares offered; and
	•	We receive the final approval of the Office of Thrift Supervision to complete the conversion and offering and related transactions.

		Price to				Price to				Price to Tangible
		Earnings Multiple				Book Value Ratio				Book Value Ratio
Home Federal Bancorp (pro forma)
Minimum			41.7	x			53.9	%			53.9	%
Midpoint			50.0	x			60.3				60.3
Maximum			58.8	x			66.1				66.1
Maximum, as adjusted			66.7	x			72.0				72.0
Peer group companies as of August 27, 2010
Elmira Savings Bank, FSB			9.7	x			83.1	%			126.7	%
First Advantage Bancorp			67.0	x			66.0				66.0
First Capital, Inc.			17.9	x			87.5				99.0
GS Financial Corp.			NM				54.3				54.3
Louisiana Bancorp, Inc.			26.1	x			91.7				91.7
LSB Financial Corp.			18.1	x			44.0				44.0
Newport Bancorp, Inc.			34.6	x			84.8				84.8
North Central Bancshares, Inc.			13.8	x			53.6				53.6
Rome Bancorp, Inc.			16.5	x			102.2				102.2
Wayne Savings Bancshares, Inc.			9.9	x			63.3				66.9
Average			23.7	x			73.0				78.9
Median			17.9	x			74.5				75.9
All publicly traded savings institutions
Average			15.3	x			71.0	%			79.2	%
Median			13.7	x			71.3				77.0

	•	Full-time employees, including officers, are participants in our existing employee stock ownership plan which will purchase additional shares in connection with the conversion;
	•	Following the first anniversary of the completion of the conversion and offering, we intend to implement the following plans which will benefit our employees and directors:

	-	a new stock recognition and retention plan; and
	-	a new stock option plan.

		Number of Shares to be Granted or Purchased
										As a % of				Dilution
										Common				Resulting				Value of Grants
		At Minimum				At Maximum				Stock to Be				from				At Minimum				At Maximum
		of Offering				of Offering				Sold in the				Issuance of				of Offering				of Offering
		Range				Range				Offering				Shares(3)				Range				Range
																		(Dollars in thousands)
Employee stock ownership plan(1)			95,625				129,375				6.00	%			—	%		$	956			$	1,294
Recognition and retention plan awards(1)			63,750				86,250				4.00				2.49				638				863
Stock options(2)			159,375				215,625				10.00				6.00				385				521
Total			318,750				431,250				20.00	%			8.20	%		$	1,979			$	2,678

(1)		Assumes the value of the new holding company’s common stock is $10.00 per share for purposes of determining the total estimated value of the grants.
(2)		Assumes the value of a stock option is $2.42, which was determined using the Black-Scholes option-pricing formula. See “Pro Forma Data.”
(3)		Represents the dilution of stock ownership interest at the midpoint of the offering range. No dilution is reflected for the employee ownership because such shares are assumed to be purchased in the offering.

								Estimated				Percentage of Total
Existing and New Stock Benefit Plans		Participants		Shares(1)				Value				Shares Outstanding
				(Dollars in thousands)
Employee Stock Ownership Plan:		All Employees
Shares purchased in 2005 mutual holding company reorganization					115,005	(2)		$	1,150				3.4	%
Shares to be purchased in this offering					129,375				1,294				3.8	%
Total employee stock ownership plan shares					244,380				2,444				7.2	%
Recognition and Retention Plans:		Directors and Officers
2005 Recognition and Retention Plan					70,440	(3)			704				2.1	%
Proposed new recognition and retention plan					86,250				863	(4)			2.6	%
Total recognition and retention plan shares					156,690				1,567				4.6	%
Stock Option Plans:		Directors and Officers
2005 Stock Option Plan					176,098	(5)			426	(6)			5.2	%
Proposed new stock option plan					215,625				521	(7)			6.4	%
Total stock option plan shares					391,723				947				11.6	%
Total stock benefit plans					792,793			$	4,958				23.5	%

(1)		Shares purchased or awarded and options granted prior to the conversion and offering have been adjusted for the 1.0098 exchange ratio at the maximum of the offering range.
(2)		Approximately 28,751 (28,472 shares prior to adjustment for the exchange ratio) of these shares have been allocated to the accounts of participants. The employee stock ownership plan purchased 8.0% (113,889 shares) of the shares issued to shareholders other than Home Federal Mutual Holding Company (1,423,583 shares) in the mutual holding company reorganization completed in January 2005.
(3)		Home Federal Bancorp reserved 69,756 shares (before applying exchange ratio) which reflected an amount equal to 4.0% of the shares that would have been issued to persons other than Home Federal Mutual Holding Company in the mutual holding company reorganization if Home Federal Bancorp had issued 49% (1,743,889 shares) of the total shares issued in the reorganization (3,558,958 shares) to minority shareholders rather than 40% (1,423,583 shares) actually issued to such persons. As of June 30, 2010, awards covering 54,863 (55,400 shares after adjustment for the exchange ratio) of the 2005 Recognition and Retention Plan awards have vested, and the shares of Home Federal Bancorp common stock subject to these vested awards have been distributed.
(4)		The actual value of new recognition and retention plan awards will be determined based on their fair value as of the date grants are made. For purposes of this table, fair value is assumed to be the same as the offering price of $10.00 per share.
(5)		Of this amount, no options have been exercised to date. Home Federal Bancorp reserved 174,389 shares (before applying exchange ratio) under this plan which reflected 10.0% of the shares that would have been issued to persons other than Home Federal Mutual Holding Company in the mutual holding company reorganization if Home Federal Bancorp had issued 49% (1,743,889 shares) of the total shares issued in the reorganization (3,558,958 shares) to minority shareholders rather than the 40% (1,423,583 shares) actually issued to such persons. As of June 30, 2010, options covering 158,134 shares (before applying the exchange ratio) were issued and outstanding.
(6)		The weighted-average fair value of stock options under the 2005 Stock Option Plan has been estimated at $2.42 using the Black-Scholes option pricing model and assumes that all options have been granted and are outstanding. Prior to the adjustment for exchange ratio, the 2005 Stock Option Plan covered a total of 174,389 shares. The weighted-average assumptions used for the options issued under the 2005 Stock Option Plan were the following: exercise price, $10.00; dividend yield, 2.4%; expected life, 10 years; expected volatility, 23.23%; and risk-free interest rate, 2.97%.
(7)		The fair value of stock options to be granted under the new stock option plan has been estimated at $2.42 per option using the Black-Scholes option pricing model with the following assumptions: exercise price, $10.00; trading price on date of grant, $10.00; dividend yield, 2.4%; expected life, 10 years; expected volatility, 23.23%; and risk-free interest rate, 2.97%.

	•	restrictions on the acquisition of more than 10% of our common stock and limitations on voting rights of shares held in excess of 10%;
	•	staggered election of only approximately one-third of our board of directors each year;
	•	the absence of cumulative voting by shareholders in the election of directors;
	•	limitations on the ability of shareholders to call special meetings;
	•	advance notice requirements for shareholder nominations and new business;
	•	removal of directors without cause by a 75% vote of shareholders and with cause by a majority vote of all shareholders;
	•	requirement of a 75% vote of shareholders for certain amendments to the bylaws and certain provisions of the articles of incorporation; and
	•	the right of the board of directors to issue shares of preferred or common stock without shareholder approval.

 

You should consider carefully the following risk factors in deciding how to vote.

 

Risks Related to Our Business

 

Increased emphasis on commercial real estate lending may expose us to increased lending risks.  We intend to continue to emphasize commercial lending which includes loans secured by owner occupied and non-owner occupied commercial real estate, investment real estate with guarantor support. At June 30, 2010, commercial real estate loans totaled $15.4 million, or 16.4% of our total loan portfolio compared to $8.2 million, or 17.2%, at June 30, 2009. Such lending activities generally are considered to involve a higher degree of risk than single-family residential lending due to a variety of factors, including generally larger loan balances, shorter terms to maturity and loan terms which often do not require full amortization of the loan over its term and, instead, provide for a balloon payment at stated maturity. Several of our borrowers have more than one commercial real estate loan outstanding with us. Consequently, an adverse development with respect to one loan or one credit relationship can expose us to significantly greater risk of loss compared to an adverse development with respect to a one- to four-family residential mortgage loan. Finally, if we foreclose on a commercial real estate loan, our holding period for the collateral, if any, typically is longer than for one- to four-family residential property because there are fewer potential purchasers of the collateral. Since we plan to continue to emphasize our originations of these loans, it may be necessary to increase the level of our allowance for loan losses due to the increased risk characteristics associated with these types of loans. Any increase to our allowance for loan losses would adversely affect our earnings. Any delinquent payments or the failure to repay these loans would hurt our earnings.

 

Increased emphasis on commercial business lending may expose us to increased lending risks.  We intend to continue to emphasize commercial business lending which includes lines of credit, inventory financing and equipment loans. At June 30, 2010, our commercial business loans were $9.5 million, or 10.1% of our total loan portfolio compared to $3.9 million or 8.2% of our total loans at June 30, 2009. Although commercial business loans generally have shorter terms and higher interests rates than mortgage loans, they generally involve more risk than mortgage loans because of the nature of, or in certain cases the absence of, the collateral which secures such loans.

 

The loans in our commercial loan portfolio are unseasoned which means that we do not have a history of payments which would assist us in predicting future performance.  As a result of our increasing emphasis on commercial lending over the past year, a large portion of our commercial real estate and commercial non-mortgage loan portfolios is relatively unseasoned. As a result, we may not have enough payment history upon which to judge future collectibility or to predict the future performance of this part of our loan portfolio. These loans may have delinquency or charge-off levels above our historical experience, which could adversely affect our future performance. We attempt to mitigate such risks by lending to known borrowers in our market area. Many of our commercial loans originated in fiscal 2010, were to borrowers who had prior lending relationships with our loan officers.

 

If we do not achieve profitability on new branches, the new branches may hurt our earnings and negatively impact our expense ratio.  We intend to open a new branch office in North Bossier in November 2010 and expect to open an office in South Bossier at a future time. Our branch expansion strategy and our branch upgrading may not increase our earnings in the short term or within a reasonable period of time, if at all. Numerous factors will affect our branch expansion strategy, including our ability to attract new customers, select suitable branch locations and hire and retain qualified managers and personnel. It takes time for a new branch to generate significant deposits and loan volume to offset expenses, some of which like salaries, occupancy expense and depreciation of real property, are relatively fixed costs. We may not be able to increase the volume of our loans and deposits by expanding our branch network. We also may not be able to manage the costs and implementation risks associated with this strategy so that expansion of our branch network will be profitable.

Recently, we have increased our concentrations in land loans and commercial construction loans, including loans secured by speculative property and land loans.  At June 30, 2010, $8.4 million, or 9.0%, of our loan portfolio consisted of land loans and $7.8 million, or 8.3% of our loan portfolio, consisted of construction loans, including $3.4 million in loans secured by speculative property. Speculative construction loans are loans made to builders who have not identified a buyer for the completed property at the time of loan origination. We intend to continue to originate land loans and commercial construction loans. It is our policy to only originate construction loans with a permanent takeout. These loan types generally expose a lender to greater risk of non-payment and loss than one-to-four family mortgage loans because the repayment of such loans often depends on the successful operation or sale of the property and the income stream of the borrowers and such loans typically involve larger balances to a single borrower or groups of related borrowers. In addition, many borrowers of these types of loans have more than one loan outstanding with us so an adverse development with respect to one loan or credit relationship can expose us to significantly greater risk of non-payment and loss. We may need to increase our allowance for loan losses through future charges to income as the portfolio of these types of loans grows, which would hurt our earnings. Additionally, as a result of our increasing emphasis on this type of lending over the past year, a large portion of our land and construction loan portfolios is relatively unseasoned. As a result, we may not have enough payment history upon which to judge future collectibility or to predict the future performance of these parts of our loan portfolio. These loans may have delinquency or charge-off levels above our historical experience, which could adversely affect our future performance.

 

An expansion of gaming activities in other states, may lead to a decline in gaming revenue in Shreveport and Bossier City, Louisiana, which could hurt our business and our prospects.  Shreveport and Bossier City, Louisiana compete with other areas of the country for gaming revenue, and it is possible that the expansion of gaming operations in other states, as a result of changes in laws or otherwise, could significantly reduce gaming revenue in the Shreveport and Bossier City metropolitan area. This is particularly true if gaming operations are expanded in Oklahoma or were to be authorized in Texas, a state from which the Shreveport casino industry generally draws substantial year-round clientele. The expansion of casinos in Oklahoma or establishment of casino gaming in Texas, or other states, could have a substantial adverse effect on gaming revenue in Shreveport and Bossier City which would adversely affect the Shreveport economy and our business.

 

If our allowance for losses on loans is not adequate to cover losses, our earnings could decrease.  We have established an allowance for loan losses which we believe is adequate to offset probable losses on our existing loans. We anticipate originating more commercial real estate loans for which we will require additional provisions for loan losses. Material additions to our allowance would materially decrease our net income. We make various assumptions and judgments about the collectability of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of many of our loans. We rely on our loan quality reviews, our experience and our evaluation of economic conditions, among other factors, in determining the amount of the allowance for loan losses. While we are not aware of any specific factors indicating a deficiency in the amount of our allowance for loan losses, in light of the current economic slowdown, the increased number of foreclosures and lower real estate values, one of the most pressing current issues faced by financial institutions is the adequacy of their allowance for loan losses. Federal bank regulators have increased their scrutiny of the level of the allowance for losses maintained by regulated institutions. Many banks and other lenders are reporting significantly higher provisions to their allowance for loan losses, which are materially impacting their earnings. In the event that we have to increase our allowance for loan losses, it would have an adverse effect on our results in future periods. At June 30, 2010, our allowance for loan losses amounted to $489,000, or 0.52% of our total loan portfolio at such date.

 

The recent economic recession could result in increases in our level of non-performing loans and/or reduce demand for our products and services, which could have an adverse effect on our results of operations.  In recent periods, there has been a decline in the housing and real estate markets and the national economy has recently experienced a recession. Although improving, housing market conditions had deteriorated nationally as evidenced by reduced levels of sales, increasing inventories of houses on the market, declining house prices and an increase in the length of time houses remain on the market. These conditions

may not continue to improve or may worsen in the near term. Concerns over inflation, energy costs, geopolitical issues, the availability and cost of credit, the mortgage market and a declining real estate market have contributed to increased volatility and diminished expectations for the economy and markets going forward. This turbulence in the markets also has been largely attributable to the fallout associated with a deteriorating market for subprime mortgage loans and securities backed by such loans.

 

Dramatic declines in the housing market, with falling home prices and increasing foreclosures and unemployment, resulted in significant asset write-downs by financial institutions, which have caused many financial institutions to seek additional capital, to merge with other institutions and, in some cases, to fail. These developments also have contributed to a substantial decrease in both lending activities by banks and other financial institutions and activity in the secondary residential mortgage loan market. If these conditions do not improve or worsen, they could adversely affect our results of operations.

 

Our business is geographically concentrated in northern Louisiana, which makes us vulnerable to downturns in the local and regional economy.  Most of our loans are to individuals and businesses located in northern Louisiana. Regional economic conditions affect the demand for our products and services as well as the ability of our customers to repay loans. While economic conditions in northern Louisiana have been relatively good in recent periods, the concentration of our business operations makes us particularly vulnerable to downturns in the local economy. According to the US Department of Labor’s Bureau of Labor Statistics, unemployment in the Shreveport/Bossier metropolitan statistical area has increased from 6.2% in 2005 to 7.8% in June 2010. The population of Caddo Parish is projected to decline 1.3% from 2010 to 2015 according to the Louisiana Parish Population Projection Series, 2010-2030 available at www.louisiana.gov/Explore/Population_Projections/. Declines in local real estate values, both residential and commercial, could adversely affect the value of property used as collateral for the loans we make. Historically, the oil and gas industry has constituted a significant component of the local economy. The oil and gas industry remains an important factor in the regional economy in the markets that Home Federal Bank operates in and downturns in the local oil and gas industry could adversely affect Home Federal Bank.

 

Changes in interest rates could have a material adverse effect on our operations.  Our profitability is dependent to a large extent on net interest income, which is the difference between the interest income earned on interest-earning assets such as loans and investment securities and the interest expense paid on interest-bearing liabilities such as deposits and borrowings. Changes in the general level of interest rates can affect our net interest income by affecting the difference between the weighted average yield earned on our interest-earning assets and the weighted average rate paid on our interest-bearing liabilities, or interest rate spread, and the average life of our interest-earning assets and interest-bearing liabilities. For the year ended June 30, 2010, our average interest rate spread was 3.03% compared to 1.89% for the year ended June 30, 2009. We continue to monitor our interest rate sensitivity and expect to emphasize higher yielding types of lending and grow our lower cost transaction deposit accounts, but may not be able to effectively do so.

 

We are dependent upon the services of key officers.  We rely heavily on our President and Chief Operating Officer, James R. Barlow, and our senior commercial lending team. The loss of Mr. Barlow or our other senior commercial loan officers could have a material adverse impact on our operations because, as a small company, we have fewer management-level personnel that have the experience and expertise to readily replace these individuals who were responsible for the increase in our commercial loan portfolio. In addition, competition with respect to hiring and retaining commercial loan officers in our market area is intense. Changes in key personnel and their responsibilities may be disruptive to our business and could have a material adverse effect on our business, financial condition, and results of operations.

 

Increased and/or special Federal Deposit Insurance Corporation assessments will hurt our earnings.  The recent economic recession has caused a high level of bank failures, which has dramatically increased Federal Deposit Insurance Corporation resolution costs and led to a significant reduction in the balance of the Deposit Insurance Fund. As a result, the Federal Deposit Insurance Corporation has significantly increased the initial base assessment rates paid by financial institutions for deposit insurance. Increases in the base assessment rate have increased our deposit insurance costs and negatively impacted our earnings. In addition, in May 2009, the Federal Deposit Insurance Corporation imposed a special assessment on all insured

institutions. Our special assessment, which was reflected in earnings for the year ended June 30, 2009, was $65,000. In lieu of imposing an additional special assessment, the Federal Deposit Insurance Corporation required all institutions to prepay their assessments for the fourth quarter of 2009 and all of 2010, 2011 and 2012. Additional increases in the base assessment rate or special assessments would negatively impact our earnings.

 

We operate in a highly regulated environment and we may be adversely affected by changes in laws and regulations.  We are subject to extensive regulation, supervision and examination by the Office of Thrift Supervision, our primary federal regulator, and by the Federal Deposit Insurance Corporation, as insurer of our deposits. Such regulation and supervision governs the activities in which an institution and its holding company may engage and are intended primarily for the protection of the insurance fund and the depositors and borrowers of Home Federal Bank rather than for holders of our common stock. Regulatory authorities have extensive discretion in their supervisory and enforcement activities, including the imposition of restrictions on our operations, the classification of our assets and determination of the level of our allowance for loan losses. Any change in such regulation and oversight, whether in the form of regulatory policy, regulations, legislation or supervisory action, may have a material impact on our operations.

 

Recently enacted regulatory reform may have a material impact on our operations.  On July 21, 2010, the President signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act that, among other things, imposes new restrictions and an expanded framework of regulatory oversight for financial institutions and their holding companies, including Home Federal Bank and Home Federal Bancorp. Under the new law, Home Federal Bank’s primary regulator, the Office of Thrift Supervision, will be eliminated and existing federal thrifts will be subject to regulation and supervision by the Office of Comptroller of the Currency, which currently supervises and regulates all national banks. Savings and loan holding companies will be regulated by the Federal Reserve Board, which will have the authority to promulgate new regulations governing Home Federal Bancorp that will impose additional capital requirements and may result in additional restrictions on investments and other holding company activities. The law also creates a new consumer financial protection bureau that will have the authority to promulgate rules intended to protect consumers in the financial products and services market. The creation of this independent bureau could result in new regulatory requirements and raise the cost of regulatory compliance. The federal preemption of state laws currently accorded federally chartered financial institutions will be reduced. In addition, regulation mandated by the new law could require changes in regulatory capital requirements, loan loss provisioning practices, and compensation practices which may have a material impact on our operations. Because the regulations under the new law have not been promulgated, we cannot determine the full impact on our business and operations at this time. See “Regulation — Recently Enacted Regulatory Reform.”

 

We face strong competition in our primary market area which may adversely affect our profitability.  We are subject to vigorous competition in all aspects and areas of our business from commercial banks, mortgage banking companies, credit unions and other providers of financial services, such as money market mutual funds, brokerage firms, consumer finance companies and insurance companies. Based on data from the Federal Deposit Insurance Corporation, as of June 30, 2009, the most recent date for which data is available, we had 1.6% of the total deposits in the Shreveport/Bossier metropolitan statistical area. The financial resources of our larger competitors may permit them to pay higher interest rates on their deposits and to be more aggressive in new loan originations. We also compete with non-financial institutions, including retail stores that maintain their own credit programs and governmental agencies that make available low cost or guaranteed loans to certain borrowers. Competition from both bank and non-bank organizations will continue.

 

Risks Related to the Conversion and the Exchange Offering

 

The market value of the common stock of the New Holding Company to be received in the share exchange may be less than the market value of Home Federal Bancorp common stock exchanged.  The number of shares of common stock of the new holding company you receive will be based on an exchange ratio which will be determined as of the date of completion of the conversion and offering. The exchange ratio will be based on the percentage of Home Federal Bancorp common stock held by the public prior to the conversion, the final independent appraisal of the new holding company common stock prepared by Feldman

Financial and the number of shares of common stock sold in the offering. The exchange ratio will ensure that existing public shareholders of Home Federal Bancorp common stock will own approximately the same percentage of common stock of the new holding company after the conversion and offering as they owned of Home Federal Bancorp common stock immediately prior to completion of the conversion and offering, exclusive of the effect of their purchase of additional shares in the offering and the receipt of cash in lieu of fractional shares. The exchange ratio will not depend on the market price of Home Federal Bancorp’s common stock.

 

The exchange ratio ranges from a minimum of 0.7464 to a maximum of 1.0098 shares of common stock of the new holding company per share of Home Federal Bancorp common stock. Under certain circumstances, the pro forma market value can be adjusted upward by 15.0% to reflect changes in market conditions, and, at the adjusted maximum, the exchange ratio would be 1.1612 shares of common stock of the new holding company per share of Home Federal Bancorp common stock. Shares of common stock of the new holding company issued in the share exchange will have an initial value of $10.00 per share. The exchange ratio and the number of shares of the new holding company you would receive in exchange for your Home Federal Bancorp shares will be determined by the number of shares we sell in the offering. The higher the number of shares sold, the higher the exchange ratio. If the offering closes at the minimum of the offering range and you own 100 shares of Home Federal Bancorp common stock, you would receive 74 shares of common stock of the new holding company, which would have an initial value of $740 based on the offering price, plus $6.40 cash. If the offering closes at 15% above the maximum of the offering range, you would receive 116 shares of common stock of the new holding company for each 100 shares of Home Federal Bancorp stock, with an initial value of $1,160 based on the offering price, plus $1.20 cash. We cannot tell you today whether the offering will close at the minimum or some other point in the valuation range. Depending on the exchange ratio and the market value of Home Federal Bancorp common stock at the time of the exchange, the initial market value of the common stock of the new holding company that you receive in the share exchange could be less than the market value of the Home Federal Bancorp common stock that you currently own. Based on the $9.70 per share closing price of Home Federal Bancorp common stock as of the date of this proxy statement/prospectus, unless at least 2,071,314 shares of common stock of the new holding company are sold in the offering (between the mid point and maximum of the offering range), the initial value of the common stock of the new holding company you receive in the share exchange would be less than the market value of the Home Federal Bancorp common stock you currently own. See “The Conversion and Offering — Delivery and Exchange of Home Federal Bancorp Stock Certificates” and “The Conversion and Offering — Effects of the Conversion on Public Shareholders.”

 

The implementation of stock-based benefit plans will increase our future compensation and may adversely affect our net income.  Following the offering, we will recognize additional employee compensation and benefit expenses stemming from options and shares granted to employees, directors and executives under our proposed new stock benefit plans. These additional expenses will adversely affect our net income. We cannot determine the actual amount of these new stock-related compensation and benefit expenses at this time because applicable accounting practices generally require that they be based on the fair market value of the options or shares of common stock at the date of the grant; however, we expect them to be significant. We will recognize expenses for our employee stock ownership plan when additional shares are committed to be released to participants’ accounts and will recognize expenses for restricted stock awards and stock options generally over the vesting period of awards made to recipients under our new plans. These benefit expenses in the first year following the offering have been estimated to be approximately $261,000, in the aggregate, at the maximum of the offering range as set forth in the pro forma financial information under “Pro Forma Data” assuming the $10.00 per share purchase price as fair market value. Actual expenses, however, may be higher or lower, depending on the price of our common stock at that time. For further discussion of these plans, see “Management Compensation — New Stock Benefit Plans.”

 

A limited market for our common stock may depress our market price and make it difficult to buy or sell our stock.  We expect our stock to be listed on the Nasdaq Capital Market. If an active and liquid trading market for our stock does not develop, you may not be able to buy or sell our common stock immediately following the close of the offering or at or above the $10.00 per share offering price. There may be a wide

spread between the bid and asked price for our common stock after the conversion. You should consider the potentially long-term nature of an investment in our common stock.

 

Our stock price may decline when trading commences.  We are offering shares of our common stock at a uniform price of $10.00 per share. After the offering is completed, the trading price of the common stock will be determined by the marketplace, and will be influenced by many factors outside of our control, including prevailing interest rates, investor perceptions, securities analyst research reports and general industry, geopolitical and economic conditions. Publicly traded stock, including stocks of financial institutions, often experience substantial market price volatility. Market fluctuations in the price of our common stock may not be related to the operating performance of Home Federal Bancorp.

 

We intend to remain independent, which may mean you will not receive a premium for your common stock.  We intend to remain independent for the foreseeable future. Because we do not plan on seeking possible acquirors, it is unlikely that we will be acquired in the foreseeable future. Accordingly, you should not purchase our common stock with any expectation that a takeover premium will be paid to you in the near term.

 

We have broad discretion in investing the net proceeds of the offering.  Home Federal Bancorp intends to contribute 50% of the net proceeds as equity capital to Home Federal Bank for the purchase of all of Home Federal Bank’s capital stock and the remaining 50% of the net proceeds will be retained by Home Federal Bancorp. Initially, Home Federal Bancorp intends to use the proceeds that it retains to loan funds to the employee stock ownership plan to purchase 6.0% of the shares sold in the offering and will invest the remaining amount in a deposit account at Home Federal Bank. Under applicable regulations, Home Federal Bancorp may during the first year following the conversion, assuming shareholder approval, use a portion of the net proceeds it retains to fund the recognition and retention plan. After one year following the conversion, we may repurchase shares of common stock, subject to regulatory restriction. Home Federal Bank initially intends to use the net proceeds it receives as a contribution of capital from Home Federal Bancorp to fund loans and to invest in securities. We have not allocated specific amounts of proceeds for any of these purposes, and we will have significant flexibility in determining how much of the net proceeds we apply to different uses and the timing of such applications. There is a risk that we may fail to effectively use the net proceeds which could have a negative effect on our future profitability ratios.

 

Our stock-based benefit plans will be dilutive.  If the offering is completed and shareholders subsequently approve a new recognition and retention plan and a new stock option plan, we will allocate stock to our officers, employees and directors through these plans. If the shares for the recognition and retention plan are issued from our authorized but unissued stock, the ownership percentage of outstanding shares of Home Federal Bancorp would be diluted by approximately 2.49%. However, it is our intention to purchase shares of our common stock in the open market to fund the recognition and retention plan. Assuming the shares of our common stock to be awarded under the recognition and retention plan are purchased at a price equal to the offering price in the offering, the reduction to stockholders’ equity from the recognition and retention plan would be between $638,000 and $992,000 at the minimum and the maximum, as adjusted, of the offering range. The ownership percentage of Home Federal Bancorp shareholders would also decrease by approximately 6.00% if all potential stock options under our proposed stock option plan are exercised and are filled using shares issued from authorized but unissued common stock, assuming the offering closes at the maximum of the offering range. See “Pro Forma Data” for data on the dilutive effect of the recognition and retention plan and the stock option plan and “Management Compensation — New Stock Benefit Plans” for a description of the plans.

 

Our stock value may suffer from anti-takeover provisions in our articles of incorporation and bylaws that may impede potential takeovers that management opposes.  Provisions in our corporate documents, as well as certain federal regulations, may make it difficult and expensive to pursue a tender offer, change in control or takeover attempt that our board of directors opposes. As a result, our shareholders may not have an opportunity to participate in such a transaction, and the trading price of our stock may not rise to the level of

other institutions that are more vulnerable to hostile takeovers. Anti-takeover provisions contained in our corporate documents include:

 

 

See “Restrictions on Acquisitions of Home Federal Bancorp (New) and Home Federal Bank and Related Anti-Takeover Provisions” for a description of anti-takeover provisions in our corporate documents and federal regulations.

 

This document contains forward-looking statements, which can be identified by the use of words such as “would be,” “will,” “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect” and similar expressions. These forward-looking statements include:

 

 

These forward-looking statements are subject to significant risks, assumptions and uncertainties, including, among other things, the factors discussed under the heading “Risk Factors” beginning on page 14 that could affect the actual outcome of future events and the following factors:

 

 

Any of the forward-looking statements that we make in this prospectus and in other public statements we make may turn out to be wrong because of inaccurate assumptions we might make, because of the factors illustrated above or because of other factors that we cannot foresee.

 

Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements and you should not rely on such statements.

INFORMATION ABOUT THE ANNUAL MEETING OF SHAREHOLDERS

To Be Held on December 15, 2010

 

General

 

This proxy statement/prospectus is being furnished to you in connection with the solicitation by the board of directors of Home Federal Bancorp of proxies to be voted at the annual meeting of shareholders to be held at Home Federal Bancorp’s main office, located at 624 Market Street, Shreveport, Louisiana on Wednesday, December 15, 2010 at 10:00 a.m., Central time, and any adjournment or postponement thereof.

 

The purpose of the annual meeting is to consider and vote upon, among other things, the Plan of Conversion and Reorganization of Home Federal Mutual Holding Company, Home Federal Bancorp, Home Federal Bank and the new holding company.

 

The Plan of Conversion and Reorganization provides for a series of transactions, referred to as the conversion and offering, which will result in the elimination of the mutual holding company. The Plan of Conversion and Reorganization will also result in the creation of a new stock form holding company which will own all of the outstanding shares of Home Federal Bank, the exchange of shares of common stock of Home Federal Bancorp by shareholders other than Home Federal Mutual Holding Company, who are referred to as the “public shareholders,” for shares of the new stock form holding company, the issuance and the sale of additional shares to depositors of Home Federal Bank and others in an offering. The conversion and offering will be accomplished through a series of substantially simultaneous and interdependent transactions as follows:

 

 

As a result of the above transactions, Home Federal Bank will become a wholly-owned subsidiary of the new holding company, and the outstanding shares of Home Federal Bancorp common stock will be converted into the shares of common stock of the new holding company pursuant to the exchange ratio, which will result in the holders of such shares owning in the aggregate approximately the same percentage of the common stock of the new holding company to be outstanding upon the completion of the conversion and offering as the percentage of common stock of Home Federal Bancorp owned by them in the aggregate immediately prior to consummation of the conversion and offering before giving effect to (a) the payment of cash in lieu of issuing fractional exchange shares, and (b) any shares of common stock purchased by public shareholders in the offering.

 

In addition to the Plan of Conversion and Reorganization, you will be asked to vote on informational proposals regarding the new holding company’s articles of incorporation, the election of directors and the ratification of the appointment of our independent public accounting firm for fiscal 2011. You may also be asked to vote on a proposal to adjourn the annual meeting, if necessary, to permit further solicitation of proxies if there are not sufficient votes at the time of the meeting to approve the Plan of Conversion and Reorganization.

 

This proxy statement/prospectus, together with the accompanying proxy card(s), is first being mailed or delivered to shareholders of Home Federal Bancorp on or about November 15, 2010.

 

Voting in favor of or against the Plan of Conversion and Reorganization includes a vote for or against the conversion of Home Federal Mutual Holding Company to a stock form holding company as contemplated by the Plan of Conversion and Reorganization. Voting in favor of the Plan of Conversion and Reorganization will not obligate you to purchase any common stock in the offering and will not affect the balance, interest rate or federal deposit insurance of any deposits at Home Federal Bank.

Record Date and Voting Rights

 

You are entitled to one vote at the annual meeting for each share of Home Federal Bancorp common stock that you owned of record at the close of business on October 29, 2010 (the “Record Date.”) On the Record Date, there were 3,343,601 shares of common stock outstanding.

 

Shareholders of record may vote by attending the annual meeting and voting in person, as well as by appointing a proxy by telephone, via the Internet or by mail. Our telephone and Internet voting procedures are designed to authenticate shareholders. The telephone and Internet voting facilities will close at 2:00 a.m., Central time, on December 15, 2010.

 

 

You may vote your shares at the annual meeting in person or by proxy. To vote in person, you must attend the annual meeting and obtain and submit a ballot, which we will provide to you at the annual meeting. To vote by proxy, you must complete, sign and return the enclosed proxy card. If you properly complete your proxy card and send it to us in time to vote, your “proxy” (one of the individuals named on your proxy card) will vote your shares as you have directed. If you sign the proxy card but do not make specific choices, your proxy will vote your shares “FOR” all the proposals identified in the Notice of Annual Meeting.

 

If any other matter is presented, your proxy will vote the shares represented by all properly executed proxies on such matters as a majority of the board of directors determines. As of the date of this proxy statement/prospectus, we know of no other matters that may be presented at the annual meeting, other than those listed in the Notice of Annual Meeting.

 

Quorum

 

A quorum of shareholders is necessary to hold a valid meeting. If the holders of at least a majority of the total number of the outstanding shares of common stock entitled to vote are represented in person or by proxy at the annual meeting, a quorum will exist. We will include proxies marked as abstentions and broker non-votes to determine the number of shares present at the annual meeting.

 

Vote Required

 

Proposal 1: Approval of the Plan of Conversion and Reorganization.  We must obtain the affirmative vote of (i) the holders of a majority of the outstanding shares of common stock of Home Federal Bancorp, other than Home Federal Mutual Holding Company, and (ii) the holders of two-thirds of the votes eligible to be cast by all shareholders of Home Federal Bancorp, including Home Federal Mutual Holding Company.

 

Informational Proposals 2A — 2C: Related to Certain Provisions in the Articles of Incorporation of the New Holding Company.  The provisions of the articles of incorporation of the new holding company which are summarized as informational proposals 2A through 2C were approved by the board of directors of Home Federal Bancorp as part of the process to approve the Plan of Conversion and Reorganization. These proposals are informational in nature only, because the Office of Thrift Supervision regulations governing mutual to stock conversion do not provide for votes on matters other than the Plan of Conversion and Reorganization. While we are asking you to vote with respect to each of the informational proposals, we are not required to receive the approval of shareholders of the proposed provisions for which an informational

vote is being requested. The proposed provisions will become effective if shareholders approve the Plan of Conversion and Reorganization, regardless of whether shareholders vote to approve any or all of the informational proposals.

 

Proposal 3. Election of Directors.  Directors are elected by a plurality of the votes cast at the annual meeting. The four nominees receiving the most “for” votes will be elected as directors.

 

Proposal 4. Ratification of Appointment of Independent Registered Public Accounting Firm.  Ratification of our appointment of LaPorte Sehrt Romig & Hand as our independent public accounting firm for the fiscal year ended June 30, 2011 requires the affirmative vote of a majority of the shares present in person or by proxy at the annual meeting.

 

Proposal 5: Adjournment of the annual meeting, if necessary, to solicit additional proxies.  We must obtain the affirmative vote of a majority of the total votes present at the annual meeting in person and by proxy to approval the proposal to adjourn the annual meeting, if necessary, to solicit additional proxies.

 

Other Matters.  We must obtain the affirmative vote of a majority of the total votes present at the annual meeting in person or by proxy to approve other proposals.

 

We expect that Home Federal Mutual Holding Company will vote all of the shares of Home Federal Bancorp common stock that it owns in favor of the proposals to approve of the Plan of Conversion and Reorganization, the informational proposals, the election of directors, ratification of the appointment of our independent public accounting firm and the proposal to adjourn the annual meeting, if necessary, to solicit additional proxies.

 

Effect of Abstentions and Broker Non-Votes

 

If you do not instruct your broker how to vote on the proposals, your broker is not permitted to vote on the proposals to approve the Plan of Conversion and Reorganization or the informational proposals on your behalf and this will constitute a “broker non-vote.” Broker non-votes and abstentions will have the same effect as a vote “Against” the proposal to approve the Plan of Conversion and Reorganization and the other proposals. Home Federal Mutual Holding Company is expected to vote all of its shares to approve the Plan of Conversion and Reorganization and the other proposals.

 

Revoking Your Proxy

 

You may revoke your proxy at any time before it is voted by:

 

 

If your shares are not registered in your own name, you will need appropriate documentation from your shareholder of record to vote personally at the annual meeting. Examples of such documentation include a broker’s statement, letter or other document that will confirm your ownership of shares of Home Federal Bancorp common stock.

 

Solicitation of Proxies

 

This proxy statement/prospectus and the accompanying proxy card are being furnished to you in connection with the solicitation of proxies for the annual meeting by the Home Federal Bancorp board of directors. Home Federal Bancorp will pay the costs of soliciting proxies from its shareholders. To the extent necessary to permit approval of the Plan of Conversion and Reorganization and the other proposals being

considered, directors, officers or employees of Home Federal Bancorp and Home Federal Bank may solicit proxies by mail, telephone and other forms of communication. We will reimburse such persons for their reasonable out-of-pocket expenses incurred in connection with such solicitation.

 

We have retained Phoenix Advisory Partners, LLC, a professional proxy solicitation firm, to assist in the solicitation of proxies for the special meeting and to serve as our Proxy Information Agent. The fee payable to such firm is $6,000, plus reimbursement for reasonable out-of-pocket expenses and other charges in connection with the proxy solicitation, which shall not exceed $10,000 without our prior approval. Arrangements also will be made with brokerage firms and other custodians, nominees and fiduciaries for the forwarding of the proxy statement/prospectus to the beneficial owners of common stock held of record by such persons, and we will reimburse such custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses in connection therewith.

 

The board of directors of Home Federal Bancorp recommends that you promptly sign, date and mark the enclosed proxy card in favor of the adoption of the Plan of Conversion and Reorganization and “for” each of the other proposals being presented at the annual meeting promptly return it in the enclosed self-addressed, postage-prepaid proxy reply envelope. Returning the proxy card will not prevent you from voting in person at the annual meeting.

 

Your prompt vote is very important. Failure to vote will have the same effect as voting against the Plan of Conversion and Reorganization.

 

The Boards of Directors of Home Federal Bancorp, the new holding company, Home Federal Mutual Holding Company and Home Federal Bank all have approved the Plan of Conversion and Reorganization. The Plan of Conversion and Reorganization also has been conditionally approved by the Office of Thrift Supervision, subject to approval by the depositors and certain borrowers of Home Federal Bank and the shareholders of Home Federal Bancorp. Such approval by the Office of Thrift Supervision, however, does not constitute a recommendation or endorsement of the Plan of Conversion and Reorganization by such agency.

 

General

 

The boards of directors of Home Federal Mutual Holding Company, Home Federal Bancorp and Home Federal Bank unanimously adopted the Plan of Conversion and Reorganization on July 8, 2010. The Plan of Conversion and Reorganization has been approved by the Office of Thrift Supervision subject to, among other things, approval of the Plan of Conversion and Reorganization by the depositors and certain depositors of Home Federal Bank and the shareholders of Home Federal Bancorp. The special meeting of depositors and certain borrowers of Home Federal Bank and the annual meeting of shareholders of Home Federal Bancorp have been called for this purpose on December 15, 2010.

 

The second-step conversion that we are now undertaking involves a series of transactions by which we will convert our organization from the partially public mutual holding company form to the fully public stock holding company structure. Under the Plan of Conversion and Reorganization, Home Federal Bank will convert from the mutual holding company form of organization to the stock holding company form of organization and become a wholly owned subsidiary of the new holding company. Current shareholders of Home Federal Bancorp, other than Home Federal Mutual Holding Company, will receive shares of common stock of the new holding company, also using the corporate title “Home Federal Bancorp, Inc. of Louisiana,” in exchange for their existing shares of Home Federal Bancorp common stock. Following the conversion and offering, Home Federal Bancorp and Home Federal Mutual Holding Company will no longer exist.

 

A copy of the Plan of Conversion and Reorganization is available for inspection at each branch office of Home Federal Bank and at the Western Regional Office (in Dallas, Texas) and Washington D.C. office of the Office of Thrift Supervision. The Plan of Conversion and Reorganization also is filed as an exhibit to the

registration statement of which this document is a part, copies of which may be obtained from the Securities and Exchange Commission. See “Where You Can Find Additional Information.”

 

Purposes of the Conversion and Offering

 

Home Federal Mutual Holding Company, as a mutual holding company, does not have shareholders and has no authority to issue capital stock. As a result of the conversion and offering, Home Federal Bank will be structured in the form used by holding companies of commercial banks, most business entities and most stock savings institutions. The conversion to the fully public form of ownership will remove the uncertainties associated with the mutual holding company structure created by the recently enacted financial reform legislation. The conversion and offering will also be important to our future growth and performance by providing a larger capital base to support our operations and by enhancing our future access to capital markets, ability to continue to grow our asset base, through additional new branches, further acquisitions or otherwise, and enhancing our ability to diversify into other financial services related activities and to provide additional services to the public. Although Home Federal Bancorp currently has the ability to raise additional capital through the sale of additional shares of Home Federal Bancorp common stock, that ability is limited by the mutual holding company structure which, among other things, requires that Home Federal Mutual Holding Company always hold a majority of the outstanding shares of Home Federal Bancorp’s common stock.

 

The conversion and offering also will result in an increase in the number of shares of common stock held by public shareholders, as compared to the current number of outstanding shares of Home Federal Bancorp common stock, which we expect will facilitate development of a more active and liquid trading market for our common stock. See “Market for Our Common Stock.”

 

Home Federal Bank remains committed to controlled growth and diversification. The additional funds received in the conversion and reorganization will facilitate Home Federal Bank’s ability to continue to grow in accordance with its business plan, through both internal growth and possible acquisitions of other institutions or through the expansion of its branch office network. We believe that the conversion and reorganization will enhance Home Federal Bank’s ability to continue its growth through possible acquisitions and will support its ability to more fully serve the borrowing and other financial needs of the communities it serves.

 

In light of the foregoing, the boards of directors of Home Federal Mutual Holding Company, Home Federal Bancorp and Home Federal Bank as well as the new holding company believe that it is in the best interests of such companies, the depositors and borrowers of Home Federal Bank and shareholders of Home Federal Bancorp to continue to implement our strategic business plan, and that the most feasible way to do so is through the conversion and reorganization.

 

For information regarding the effects of the conversion and offering on public shareholders, see “The Conversion and Offering — Effect of the Conversion and Offering on Public Shareholders” and “— Ownership of Home Federal Bancorp after the Conversion and Offering.”

 

Exchange of Shares

 

The conversion of your shares of common stock of Home Federal Bancorp into the right to receive shares of common stock of the new holding company will occur automatically on the effective date of the conversion, although you will need to exchange your stock certificate(s) if you hold shares in certificate form. As soon as practicable after the effective date of the conversion, our exchange agent will send a transmittal form to you. The transmittal forms are expected to be mailed promptly after the effective date and will contain instructions on how to submit the stock certificate(s) representing existing shares of common stock of Home Federal Bancorp.

 

No fractional shares of common stock of the new holding company will be issued to you when the conversion is completed. For each fractional share that would otherwise be issued to a shareholder who holds a certificate, you will be paid by check an amount equal to the product obtained by multiplying the fractional share interest to which you would otherwise be entitled by $10.00. If your shares are held in street name, you

will automatically receive cash in lieu of fractional shares. For more information regarding the exchange of your shares see “The Conversion and Offering — Delivery and Exchange of Home Federal Bancorp Stock Certificates.”

 

Conditions to the Conversion and Offering

 

Consummation of the conversion and stock offering are subject to the receipt of all requisite regulatory approvals, including various approvals of the Office of Thrift Supervision. No assurance can be given that all regulatory approvals will be received. Receipt of such approvals from the Office of Thrift Supervision will not constitute a recommendation or endorsement of the Plan of Conversion and Reorganization or the stock offering by the Office of Thrift Supervision. Consummation of the conversion and stock offering also are subject to approval by the shareholders of Home Federal Bancorp at the annual meeting of shareholders of Home Federal Bancorp and of depositors and certain borrowers of Home Federal Bank at a special meeting of depositors and certain borrowers to be held the same day as the annual meeting of shareholders.

 

The board of directors of Home Federal Bancorp unanimously recommends that you vote ‘‘FOR” approval of the Plan of Conversion and Reorganization.

 

By their approval of the Plan of Conversion and Reorganization as set forth in Proposal 1, the board of directors of Home Federal Bancorp has approved each of the informational proposals numbered 2A through 2C, all of which relate to provisions included in the articles of incorporation of the new holding company. Each of these informational proposals is discussed in more detail below.

 

As a result of the conversion, the public shareholders of Home Federal Bancorp, whose rights are presently governed by the charter and bylaws of Home Federal Bancorp, will become shareholders of the new holding company, whose rights will be governed by the articles of incorporation and bylaws of the new holding company. The following informational proposals address the material differences between the governing documents of the two companies. This discussion is qualified in its entirety by reference to the charter of Home Federal Bancorp and the articles of incorporation of the new holding company. See “Where You Can Find Additional Information” for procedures for obtaining a copy of those documents.

 

The provisions of the articles of incorporation of the new holding company which are summarized as informational proposals 2A through 2C were approved as part of the process in which the board of directors of Home Federal Bancorp approved the Plan of Conversion and Reorganization. These proposals are informational in nature only, because the Office of Thrift Supervision regulations governing mutual to stock conversion do not provide for votes on matters other than the Plan of Conversion and Reorganization. While we are asking shareholders of Home Federal Bancorp to vote with respect to each of the informational proposals, shareholders are not being asked to approve the proposed provisions for which an informational vote is requested and the proposed provisions will become effective if shareholders approve the Plan of Conversion and Reorganization, regardless of whether shareholders vote to approve any or all of the informational proposals.

 

Informational Proposal 2A — Approval of a Provision in the Articles of Incorporation of the New Holding Company Providing for the Authorized Capital Stock of 40,000,000 shares of Common Stock and 10,000,000 Shares of Serial Preferred Stock Compared to 8,000,000 Shares of Common Stock and 2,000,000 Shares of Preferred Stock in the Charter of Home Federal Bancorp.

 

Home Federal Bancorp’s authorized capital stock consists of 8,000,000 shares of common stock and 2,000,000 shares of preferred stock. The articles of incorporation of the new holding company authorize 40,000,000 shares of common stock and 10,000,000 shares of serial preferred stock.

 

At June 30, 2010, there were 3,348,237 issued and outstanding shares of common stock of Home Federal Bancorp and no outstanding shares of preferred stock. At the maximum of the offering range, we expect to

issue an aggregate of 3,379,959 shares of common stock of the new holding company in the offering and as Exchange Shares. At the maximum of the offering range, an additional 215,625 shares of common stock of the new holding company will be reserved for issuance under the new stock option plan which is contemplated.

 

All authorized and unissued shares of common stock of the new holding company and preferred stock following the conversion and offering will be available for issuance without further action of the shareholders, unless such action is required by applicable law or the listing standards of The Nasdaq Stock Market or the listing standards of any other stock exchange on which securities of the new holding company may then be listed. The board of directors of the new holding company currently has no plans for the issuance of additional shares of common stock, other than the issuance of shares of pursuant to the terms of the proposed new stock option plan.

 

This increase in the number of authorized shares of capital stock may have the effect of deterring or rendering more difficult attempts by third parties to obtain control of the new holding company, if such attempts are not approved by the board of directors. In the event that a tender offer or other takeover attempt is threatened, the board of directors could issue shares of stock from authorized and unissued shares in order to dilute the stock ownership of persons seeking to take control of the company.

 

Informational Proposal 2B — Approval of a Provision in the Articles of Incorporation of the New Holding Company Requiring Super-Majority Shareholder Approval of Amendments to Certain Provisions in the Articles of Incorporation and Bylaws of the New Holding Company.

 

No amendment of the current charter of Home Federal Bancorp may be made unless it is first proposed by the board of directors, then preliminarily approved by the Office of Thrift Supervision, and thereafter approved by the holders of a majority of the total votes eligible to be cast at a legal meeting. The articles of incorporation of the new holding company generally provide that no amendment of the articles of incorporation may be made unless it is first approved by the board of directors and thereafter approved by the holders of a majority of the shares entitled to vote generally in an election of directors, voting together as a single class, as well as such additional vote of the preferred stock as may be required by the provisions of any series thereof, provided, however, any amendment which is inconsistent with Articles 5 (directors), 6 (preemptive rights), 7 (liability of directors and officers), 8 (meetings of shareholders, actions without a meeting), 9 (restrictions on offers and acquisitions) and 10 (amendments to the articles of incorporation and bylaws) must be approved by the affirmative vote of the holders of not less than 75% of the voting power of the shares entitled to vote thereon.

 

The current bylaws of Home Federal Bancorp may be amended by a majority vote of the full board of directors or by a majority vote of the votes cast by the shareholders at any legal meeting. The bylaws of the new holding company may similarly be amended by the majority vote of the full board of directors at a regular or annual meeting of the board of directors or by a majority vote of the shares entitled to vote generally in an election of directors, voting together as a single class, as well as such additional vote the preferred stock as may be required by the provisions of any series thereof, provided, however, that the shareholder vote requirement for any amendment to the bylaws which is inconsistent with Articles II (shareholder meetings), IV (board of directors), VII (personal liability of directors) and XII (amendments) is the affirmative vote of the holders of not less than 75% of the voting power of the shares entitled to vote thereon.

 

These limitations on amendments to specified provisions of the articles of incorporation and bylaws of the new holding company are intended to ensure that the referenced provisions are not limited or changed upon a simple majority vote. While this limits the ability of shareholders of the new holding company to amend those provisions, Home Federal Mutual Holding Company, as a 63.8% shareholder of Home Federal Bancorp, currently can effectively block any shareholder proposed change to the charter or bylaws of Home Federal Bancorp.

 

These provisions in the articles of incorporation of the new holding company could have the effect of discouraging a tender offer or other takeover attempt where to ability to make fundamental changes through

amendments to the articles of incorporation or bylaws is an important element of the takeover strategy of the potential acquiror. The board of directors believes that the provisions limiting certain amendments to the articles of incorporation and bylaws will put the board of directors in a stronger position to negotiate with third parties with respect to transactions potentially affecting the corporate structure of the new holding company and the fundamental rights of its shareholders, and to preserve the ability of all shareholders to have an effective voice in the outcome of such matters.

 

Informational Proposal 2C — Approval of a provision in the Articles of Incorporation of the New Holding Company to Limit the Voting Rights of Shares Beneficially Owned in Excess of 10% of the Outstanding Voting Securities of the New Holding Company.

 

The articles of incorporation of the new holding company provide that no person shall directly or indirectly offer to acquire or acquire the beneficial ownership of (a) more than 10% of the issued and outstanding shares of any class of an equity security of the new holding company or (b) any securities convertible into, or exercisable for, any equity securities of the new holding company if, assuming conversion or exercise by such person of all securities of which such person is the beneficial owner which are convertible into, or exercisable for such equity securities, such person would be the beneficial owner of more than 10% of any class of an equity security of the new holding company. The term “person” is broadly defined in the articles of incorporation to prevent circumvention of this restriction.

 

The foregoing restrictions do not apply to (a) any offer with a view toward public resale made exclusively to the new holding company by underwriters or a selling group acting on its behalf, (b) any employee benefit plan established by the new holding company or Home Federal Bank and (c) any other offer or acquisition approved in advance by the affirmative vote of 80% of the board of directors. In the event that shares are acquired in violation of this restriction, all shares beneficially owned by any person in excess of 10% will not be counted as shares entitled to vote and will not be voted by any person or counted as voting shares in connection with any matters submitted to shareholders for a vote, and the board of directors may cause the excess shares to be transferred to an independent trustee for sale.

 

This provision is intended to limit the ability of any person to acquire a significant number of shares of common stock of the new holding company and thereby gain sufficient voting control so as to cause the new holding company to effect a transaction that may not be in the best interests of the new holding company and its shareholders generally. This provision will not prevent a shareholder from seeking to acquire a controlling interest in the new holding company, but it will prevent a shareholder from voting more than 10% of the outstanding shares of common stock unless that shareholder has first persuaded the board of directors of the merits of the course of action proposed by the shareholder. The board of directors believes that fundamental transactions generally should be first considered and approved by the board of directors as the board generally believes that it is in the best position to make an initial assessment of the merits of any such transactions and that the board of directors’ ability to make the initial assessment could be impeded if a single shareholder could acquire a sufficiently large voting interest so as to control a shareholder vote on any given proposal. This provision in the articles of incorporation of the new holding company makes an acquisition, merger or other similar corporate transaction less likely to occur, even if such transaction is supported by most shareholders, because it can prevent a holder of shares in excess of the 10% limit from voting the excess shares in favor of the transaction. Thus, it may be deemed to have an anti-takeover effect.

 

The board of directors of Home Federal Bancorp unanimously recommends that you vote ‘‘FOR’’ approval of the Informational Proposals 2A through 2C.

 

Our bylaws provide that the Board of Directors shall be divided into three classes as nearly equal in number as possible. The directors are elected by our shareholders for staggered terms and until their successors are elected and qualified. One class shall be elected annually. At this meeting, you will be asked to elect one class of directors, consisting of three directors, for a three-year term expiring in 2013 as well as one nominee for a two-year term expiring in 2012 and until their successors are elected and qualified. Mr. Wilhite, the

nominee for the two-year term, is being presented for election because under Home Federal Bancorp’s bylaws, a director appointed to fill a vacancy can only serve until the next annual meeting of shareholders.

 

Our Board of Directors has recommended the re-election of Messrs. Colquitt, Herndon, Lawrence and Wilhite as directors. No director or nominee for director is related to any other director or executive officer by blood, marriage or adoption, except Daniel Herndon and David Herndon III who are brothers. Shareholders are not permitted to use cumulative voting for the election of directors.

 

Unless otherwise directed, each proxy signed and returned by a shareholder will be voted for the election of the nominees for director listed below. If any person named as a nominee should be unable or unwilling to stand for election at the time of the annual meeting, the proxies will nominate and vote for any replacement nominee or nominees recommended by our Board of Directors. At this time, the Board of Directors knows of no reason why any of the nominees listed below may not be able to serve as a director if elected.

 

The following tables present information concerning the nominees for director, and our continuing directors, all of whom also serve as directors of Home Federal Bank. The indicated period of service as a director includes service as a director of Home Federal Bank prior to the organization of Home Federal Bancorp in 2005. Ages are reflected as of June 30, 2010.

 

Nominees for Director for Three-Year Terms Expiring in 2013

 

Nominee for Director for Two-Year Term Expiring in 2012

 

 

The Board of Directors recommends that you vote FOR election
of the nominees for director.

 

Members of the Board of Directors Continuing in Office

 

Directors Whose Terms Expire in 2011

 

Directors Whose Terms Expire in 2012

 

 

 

The Audit Committee of the Board of Directors of Home Federal Bancorp has appointed LaPorte Sehrt Romig & Hand, independent registered public accounting firm, to perform the audit of our financial statements for the year ending June 30, 2011, and further directed that the selection of auditors be submitted for ratification by the shareholders at the annual meeting.

 

We have been advised by LaPorte Sehrt Romig & Hand that neither that firm nor any of its associates has any relationship with Home Federal Bancorp or its subsidiaries other than the usual relationship that exists between an independent registered public accounting firm and its clients. LaPorte Sehrt Romig & Hand will have one or more representatives at the annual meeting who will have an opportunity to make a statement, if they so desire, and will be available to respond to appropriate questions.

 

In determining whether to appoint LaPorte Sehrt Romig & Hand as our independent registered public accounting firm, the Audit Committee considered whether the provision of services, other than auditing services, by LaPorte Sehrt Romig & Hand is compatible with maintaining their independence. In fiscal 2010 and 2009, LaPorte Sehrt Romig & Hand performed auditing services as well as reviewed our public filings. The Audit Committee believes that LaPorte Sehrt Romig & Hand’s performance of these services is compatible with maintaining the independent registered public accounting firm’s independence.

 

Audit Fees

 

The following table sets forth the aggregate fees paid by us to LaPorte Sehrt Romig & Hand for professional services rendered by LaPorte Sehrt Romig & Hand in connection with the audit of Home Federal Bancorp’s consolidated financial statements for fiscal 2010 and 2009, as well as the fees paid by us to LaPorte

Sehrt Romig & Hand for audit-related services, tax services and all other services rendered by LaPorte Sehrt Romig & Hand to us during fiscal 2010 and 2009.

 

 

 

 

The Audit Committee selects our independent registered public accounting firm and pre-approves all audit services to be provided by it to Home Federal Bancorp. The Audit Committee also reviews and pre-approves all audit-related and non-audit related services rendered by our independent registered public accounting firm in accordance with the Audit Committee’s charter. In its review of these services and related fees and terms, the Audit Committee considers, among other things, the possible effect of the performance of such services on the independence of our independent registered public accounting firm. The Audit Committee pre-approves certain audit-related services and certain non-audit related tax services which are specifically described by the Audit Committee on an annual basis and separately approves other individual engagements as necessary.

 

Each new engagement of LaPorte Sehrt Romig & Hand was approved in advance by the Audit Committee or its Chair, and none of those engagements made use of the de minimis exception to pre-approval contained in the Securities and Exchange Commission’s rules.

 

The Board of Directors recommends that you vote FOR the ratification of the
appointment of LaPorte Sehrt Romig & Hand
for the fiscal year ending June 30, 2011.

 

If there are not sufficient votes to constitute a quorum or to approve the Plan of Conversion and Reorganization at the time of the annual meeting, the Plan of Conversion and Reorganization may not be approved unless the annual meeting is adjourned to a later date or dates in order to permit further solicitation of proxies. In order to allow proxies that have been received by Home Federal Bancorp at the time of the annual meeting to be voted for an adjournment, if necessary, Home Federal Bancorp has submitted the question of adjournment to its shareholders as a separate matter for their consideration. If it is necessary to adjourn the annual meeting, no notice of the adjourned annual meeting is required to be given to shareholders (unless the adjournment is for more than 30 days or if a new record date is fixed), other than an announcement at the annual meeting of the hour, date and place to which the annual meeting is adjourned.

 

The board of directors of Home Federal Bancorp recommends that you vote “FOR” approval of the adjournment of the annual meeting, if necessary, to solicit additional proxies in the event that there are not sufficient votes at the time of the annual meeting to approve the proposal to approve the Plan of Conversion and Reorganization.

 

Set forth below is selected consolidated financial and other data of Home Federal Bancorp. The information at or for the years ended June 30, 2010 and 2009 is derived in part from the audited financial statements that appear in this prospectus. The information at or for the years ended June 30, 2008, 2007 and 2006, is also derived from audited financial statements that do not appear in this prospectus. You should read the consolidated financial statements and related notes contained at the end of this prospectus which provide more detailed information.

 

 

 

(Footnotes on following page)

 

 

 

 

The following tables contain certain information concerning the financial position and results of operations of Home Federal Bancorp at and for the three months ended September 30, 2010 as well as the prior comparison periods. You should read this information in conjunction with the audited financial statements included in this prospectus. The financial information as of and for the three months ended September 30, 2010 and 2009 are unaudited and are derived from our interim condensed consolidated financial statements. The balance sheet data as of June 30, 2010 is derived from Home Federal Bancorp’s audited consolidated financial statements. In the opinion of management, financial information at September 30, 2010 and for the three months ended September 30, 2010 and 2009 reflect all adjustments, consisting only of normal recurring accruals, which are necessary to present fairly the results for such periods. Results for the three-month period ended September 30, 2010 may not be indicative of operations of Home Federal Bancorp for the year ending June 30, 2011.

 

 

 

(Footnotes on following page)

 

 

 

 

Comparison of Financial Condition at September 30, 2010 and June 30, 2010

 

Home Federal Bancorp’s total assets increased $8.3 million, or 4.5%, to $193.4 million at September 30, 2010, compared to $185.1 million at June 30, 2010. This increase was primarily due to an increase in cash and cash equivalents of $15.8 million, an increase in loans receivable and loans held-for-sale of $506,000, partially offset by a decrease in available-for-sale securities of $8.2 million at September 30, 2010 compared to June 30, 2010.

 

Loans receivable, net, excluding loans-held-for sale, increased $6.5 million, or 7.0%, from $93.1 million at June 30, 2010, to $99.6 million at September 30, 2010. The increase in loans receivable, net was attributable primarily to increases in commercial real estate loans, land loans and one-to four family residential loans.

Commercial real estate loans increased $1.1 million, one-to-four family residential loans increased $2.6 million, land loans increased $2.8 million and commercial business loans increased $570,000 at September 30, 2010, compared to June 30, 2010. Although we primarily originate one-to-four family residential loans for sale, certain lending relationships are retained for portfolio. Home equity and second mortgage loans decreased $902,000 and construction loans decreased $221,000 at September 30, 2010 compared to the year ended June 30, 2010. Loans held-for-sale decreased $6.0 million at September 30, 2010 compared to June 30, 2010. During the quarter ended September 30, 2010, originations of loans held-for-sale declined to $41.0 million, a decrease of $3.0 million from $44.0 million originated during the previous quarter ended June 30, 2010. Originations of all other loans for portfolio declined to $8.0 million from $28.0 million in the previous quarter. The originations in the previous quarter of $28.0 million were the result of hiring several new loan officers who moved relationships to Home Federal Bank. The $8.0 million of originations during the quarter ended September 30, 2010 is a normalized level that is more in line with our business plan.

 

Securities available-for-sale decreased $8.2 million, or 12.8%, from $63.7 million at June 30, 2010 to $55.5 million at September 30, 2010. This decrease resulted primarily from the reduction of new investment acquisitions, the sale of securities and normal principal paydowns, offset by market value increases in the portfolio. In recent periods, there have been significant loan prepayments due to the heavy volume of loan refinancing.

 

Cash and cash equivalents increased $15.8 million, or 178.9%, from $8.8 million at June 30, 2010 to $24.6 million at September 30, 2010. The net increase in cash and cash equivalents was attributable primarily to the growth in our deposits and sales and principal payments from our securities, offset by the funding of our loan growth and repayment of advances from Federal Home Loan Bank.

 

Total liabilities increased $7.8 million, or 5.2%, from $151.8 million at June 30, 2010 to $159.6 million at September 30, 2010 due primarily to an increase of $11.2 million, or 9.5%, in our deposits, offset by a decrease in advances from the Federal Home Loan Bank of $3.5 million, or 11.1%. The increase in deposits was attributable primarily to increases in our NOW accounts, certificates of deposit accounts, and savings accounts. NOW accounts increased $5.9 million as the result of an expansion of commercial deposit accounts. Certificate accounts increased $4.4 million, or 5.9%, from $73.9 million at June 30, 2010 to $78.2 million at September 30, 2010. Savings accounts increased $703,000 from $5.3 million at June 30, 2010 to $6.0 million at September 30, 2010.

 

Stockholders’ equity increased $394,000, or 1.2%, to $33.8 million at September 30, 2010 from $33.4 million at June 30, 2010, due primarily to net income of 646,000 for the three months ended September 30, 2010, and the distribution of shares associated with Home Federal Bancorp’s Recognition Plan of $116,000, less dividends of $73,000 paid during the three months ended September 30, 2010, treasury stock acquisitions of $46,000, and a decrease of $270,000 in Home Federal Bancorp’s accumulated other comprehensive income. The change in accumulated other comprehensive income was primarily due to the change in net unrealized gain on securities available for sale due to recent declines in interest rates. The net unrealized loss on securities available-for-sale is affected by interest rate fluctuations. Generally, an increase in interest rates will have an adverse impact while a decrease in interest rates will have a positive impact.

 

Comparison of Operating Results for the Three Months Ended September 30, 2010 and 2009

 

General.  Net income amounted to $646,000 for the three months ended September 30, 2010, reflecting an increase of $394,000 compared to net income of $252,000 for the three months ended September 30, 2009. This change was due to an increase of $780,000 in non-interest income and a $425,000 increase in net interest income, partially offset by an increase of $537,000 in non-interest expense and an increase of $202,000 in the provision for income taxes and an increase in the provision for loan losses of $72,000.

 

Net Interest Income.  Net interest income after provision for loan losses amounted to $1.6 million for the three months ended September 30, 2010, an increase of $353,000, or 27.6%, compared to $1.3 million for the three months ended September 30, 2009. The increase was due primarily to an increase of $347,000 in total interest income, and a $78,000 decrease in interest expense.

The average interest rate spread increased from 2.50% for the three months ended September 30, 2009 to 3.47% for the three months ended September 30, 2010 while the average balance of net interest-earning assets increased from $155.7 million to $180.0 million during the same periods. The percentage of average interest-earning assets to average interest-bearing liabilities decreased to 117.47% for the three months ended September 30, 2010 compared to 123.07% for the three months ended September 30, 2009. The increase in the average interest rate spread reflects the lower interest rates paid on interest bearing liabilities. Additionally, Home Federal Bancorp’s average cost of funds decreased 71 basis points for the three months ended September 30, 2010, compared to the three months ended September 30, 2009, as the Federal Reserve continued to reduce short-term rates. Lower certificate of deposit interest rates in our market area led us to decrease the average rates paid on certificates of deposit 74 basis points for the three months ended September 30, 2010 compared to the three months ended September 30, 2009. Net interest margin increased to 3.79% for the three months ended September 30, 2010 compared to 3.04% for the three months ended September 30, 2009.

 

Interest income increased $347,000, or 15.8%, to $2.5 million for the three months ended September 30, 2010 compared to $2.2 million for the three months ended September 30, 2009. Such increase was primarily due to an increase in the average balance of total interest earning assets as well as an increase in the average yield. The increase in average yields on interest earning assets reflects an increase in higher yielding loans during the three months ended September 30, 2010. The decrease in the average balance of investment securities was due to security sales and normal principal payments while no purchase of new securities were made. The increase in the average balance of loans receivable was primarily due to new loans originated by our new commercial lending activities.

 

Interest expense decreased $78,000, or 8.5%, to $831,000 for the three months ended September 30, 2010, compared to $909,000 for the three months ended September 30, 2009, primarily as a result of decreases in the average rates paid on interest-bearing liabilities, partially offset by increases in the average balance of interest-bearing deposits.

 

Provision for Loan Losses.  A provision of $72,000 was made to the allowance in the first quarter of fiscal 2011, primarily in response to the increase in commercial lending during the period. No provision for loan losses was made in the first quarter of fiscal 2010. We held two residential mortgage loans at September 30, 2010 classified as substandard compared to one at September 30, 2009.

 

Non-Interest Income.  Non-interest income amounted to $834,000 for the three months ended September 30, 2010, an increase of $780,000 compared to non-interest income of $54,000 for the three months ended September 30, 2009. The increase was primarily due to a $229,000 increase in gain on sale of securities, and a $535,000 increase in gain on sale of loans.

 

Non-Interest Expense.  Non-interest expense increased $537,000, or 56.3%, for the three months ended September 30, 2010, largely due to increases in compensation and benefits of $405,000, legal and examination fees of $33,000, occupancy expenses of $31,000 and miscellaneous non-interest expenses of $68,000. The increase in compensation and benefits expense was primarily attributable to the hiring of additional personnel and operating costs associated with our new and expanding commercial loan activities. Non-interest expense also increased as a result of increases in advertising expense, and other general overhead expenses, including printing and office supplies expense.

 

Provision for Income Tax Expense.  The provision for income taxes amounted to $332,000 and $130,000 for the three months ended September 30, 2010 and 2009, respectively. Our effective tax rate was 33.9% for the three months ended September 30, 2010 and 34.0% for the three months Ended September 30, 2009.

 

The following table shows how we intend to use the net proceeds of the offering. The actual net proceeds will depend on the number of shares of common stock sold in the offering and the expenses incurred in connection with the offering. Payments for shares made through withdrawals from deposit accounts at Home Federal Bank will reduce Home Federal Bank’s deposits and will not result in the receipt of new funds for investment. See “Pro Forma Data” for the assumptions used to arrive at these amounts.