##### 



Exhibit 13.0
 
 2006 Annual Report
 to Shareholders




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##### 



TABLE OF CONTENTS
 PagePresidents
Letter to Shareholders
    
    
    1Selected Consolidated Financial and Other Data
    
    
    2Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    3Report of Independent Registered Public Accounting Firm
    
    
    10Consolidated Balance Sheets
    
    
    11Consolidated Statements of Income
    
    
    12Consolidated Statements of Comprehensive Income (Loss)
    
    
    13Consolidated Statements of Changes in Stockholders Equity
    
    
    14Consolidated Statements of Cash Flows
    
    
    15Notes to Consolidated Financial Statements
    
    
    17Market Price of Home Federal Bancorp, Inc. Common Shares and Related
Shareholder Matters
    
    
    41Directors and Executive Officers
    
    
    42Banking Locations
    
    
    42




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PRESIDENTS
LETTER TO SHAREHOLDERS
      Looking Forward
   
 
 1




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##### 



Home Federal Bancorp, Inc. of Louisiana
 SELECTED CONSOLIDATED FINANCIAL AND OTHER DATA
  At or For the Year Ended June 30,(Dollars in Thousands, except per share data)
    
    2006
    
    
    2005Selected Financial and Other Data:Total assets
    
    $
    114,000
    
    
    $
    111,331Cash and cash equivalents
    
    
    4,930
    
    
    
    9,292Securities available for sale
    
    
    83,694
    
    
    
    75,760Securities held to maturity
    
    
    1,425
    
    
    
    1,613Loans receivable, net
    
    
    20,866
    
    
    
    23,575Deposits
    
    
    71,279
    
    
    
    69,995FHLB advances
    
    
    13,417
    
    
    
    8,224Total Stockholders Equity
    
    
    28,539
    
    
    
    32,431Full service offices
    
    
    3
    
    
    
    3Selected Operating Data:Total interest income
    
    $
    5,664
    
    
    $
    5,064Total interest expense
    
    
    2,433
    
    
    
    2,030Net interest income
    
    
    3,231
    
    
    
    3,034Provision for loan losses
    
    
    
    
    
    
    Net interest income after provision for loan losses
    
    
    3,231
    
    
    
    3,034Total non-interest income
    
    
    144
    
    
    
    387Total non-interest expense
    
    
    2,414
    
    
    
    2,119Income before income taxes
    
    
    961
    
    
    
    1,302Income taxes
    
    
    327
    
    
    
    452Net income
    
    $
    634
    
    
    $
    850Selected Operating Ratios(1):Average yield on interest-earning assets
    
    
    5.35
    %
    
    
    5.09
    %Average rate on interest-bearing liabilities
    
    
    2.98
    
    
    
    2.62Average interest rate spread(2)
    
    
    2.37
    
    
    
    2.47Net interest margin(2)
    
    
    3.05
    
    
    
    3.05Average interest-earning assets to average interest-bearing liabilities
    
    
    129.49
    
    
    
    128.60Net interest income after provision for loan losses to non-interest expense
    
    
    133.82
    
    
    
    143.18Total non-interest expense to average assets
    
    
    2.14
    
    
    
    2.02Efficiency ratio(3)
    
    
    71.53
    
    
    
    61.94Return on average assets
    
    
    .56
    
    
    
    .81Return on average equity
    
    
    2.10
    
    
    
    3.17Average equity to average assets
    
    
    26.81
    
    
    
    25.57Asset Quality Ratios(4):Non-performing loans as a percent of total loans receivable(5)
    
    
    
    %
    
    
    
    %Non-performing assets as a percent of total assets(5)
    
    
    
    
    
    
    Allowance for loan losses as a percent of non-performing loans
    
    
    23,500.00
    %
    
    
    Allowance for loan losses as a percent of total loans receivable
    
    
    1.11
    
    
    
    .98Net charge-offs to average loans receivable
    
    
    
    
    
    
    Association Capital Ratios(4):Tangible capital ratio
    
    
    23.48
    %
    
    
    24.20
    %Core capital ratio
    
    
    23.48
    
    
    
    24.20Total capital ratio
    
    
    87.78
    
    
    
    91.56
 
 (1)
    
    With the exception of end of period ratios, all ratios are based on average monthly balances
during the indicated periods.(2)
    
    Average interest rate spread represents the difference between the average yield on
interest-earning assets and the average rate paid on interest-bearing liabilities, and net
interest margin represents net interest income as a percentage of average interest-earning
assets.(3)
    
    The efficiency ratio represents the ratio of non-interest expense divided by the sum of net
interest income and non-interest income.(4)
    
    Asset quality ratios and capital ratios are end of period ratios, except for net charge-offs
to average loans receivable.(5)
    
    Non-performing assets consist of non-performing loans at June 30, 2006 and 2005.
Non-performing loans consist of non-accruing loans plus accruing loans 90 days or more past
due. Home Federal Savings and Loan did not have any real estate owned or troubled debt
restructurings at June 30, 2006 or 2005. 2




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Home Federal Bancorp, Inc. of Louisiana
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
 CONDITION AND RESULTS OF OPERATIONS
 General
    Forward-Looking Statements Are Subject to Change
  Critical Accounting Policies
  Allowance for Loan Losses
 3




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Home Federal Bancorp, Inc. of Louisiana
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
 CONDITION AND RESULTS OF OPERATIONS
   Changes in Financial Condition
       4




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Home Federal Bancorp, Inc. of Louisiana
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
 CONDITION AND RESULTS OF OPERATIONS
  Average Balances, Net Interest Income, and Yields Earned and Rates Paid.
 Year Ended June 30,2006
    
    
    2005Yield/Rate
    
    
    Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    Averageat June 30, 2006
    
    
    Balance
    
    
    Interest
    
    
    Yield/Rate
    
    
    Balance
    
    
    Interest
    
    
    Yield/Rate(Dollars in Thousands)Interest-earning assets:Investment securities
    
    
    4.88
    %
    
    $
    80,734
    
    
    $
    4,039
    
    
    
    5.00
    %
    
    $
    71,088
    
    
    $
    3,358
    
    
    
    4.72
    %Loans receivable
    
    
    6.89
    
    
    
    20,141
    
    
    
    1,420
    
    
    
    7.05
    
    
    
    22,973
    
    
    
    1,568
    
    
    
    6.83Interest-earning deposits
    
    
    5.10
    
    
    
    4,936
    
    
    
    205
    
    
    
    4.15
    
    
    
    5,406
    
    
    
    137
    
    
    
    2.54Total interest-earning assets
    
    
    5.28
    
    
    
    105,811
    
    
    
    5,664
    
    
    
    5.35
    
    
    
    99,467
    
    
    
    5,063
    
    
    
    5.09Non-interest-earning assets
    
    
    
    
    
    
    6,774
    
    
    
    
    
    
    
    
    
    
    
    5,323Total assets
    
    
    
    
    
    $
    112,585
    
    
    
    
    
    
    
    
    
    
    $
    104,790Interest-bearing liabilities:Savings accounts
    
    
    .50
    
    
    $
    5,009
    
    
    
    24
    
    
    
    .48
    
    
    $
    5,368
    
    
    
    27
    
    
    
    .50NOW accounts
    
    
    .16
    
    
    
    7,597
    
    
    
    16
    
    
    
    .21
    
    
    
    6,041
    
    
    
    13
    
    
    
    .22Money market accounts
    
    
    .40
    
    
    
    3,516
    
    
    
    14
    
    
    
    .40
    
    
    
    4,129
    
    
    
    17
    
    
    
    .41Certificate accounts
    
    
    4.01
    
    
    
    56,269
    
    
    
    2,054
    
    
    
    3.65
    
    
    
    53,335
    
    
    
    1,710
    
    
    
    3.21Total deposits
    
    
    3.26
    
    
    
    72,391
    
    
    
    2,108
    
    
    
    2.91
    
    
    
    68,873
    
    
    
    1,767
    
    
    
    2.57FHLB advances
    
    
    4.34
    
    
    
    9,320
    
    
    
    325
    
    
    
    3.49
    
    
    
    8,471
    
    
    
    262
    
    
    
    3.10Total interest-bearing liabilities
    
    
    3.44
    
    
    
    81,711
    
    
    
    2,433
    
    
    
    2.98
    
    
    
    77,344
    
    
    
    2,029
    
    
    
    2.62Non-interest-bearing liabilities
    
    
    
    
    
    
    688
    
    
    
    
    
    
    
    
    
    
    
    649Total liabilities
    
    
    
    
    
    
    82,399
    
    
    
    
    
    
    
    
    
    
    
    77,993Total Stockholders Equity(1)
    
    
    
    
    
    
    30,186
    
    
    
    
    
    
    
    
    
    
    
    26,797Total liabilities and equity
    
    
    
    
    
    $
    112,585
    
    
    
    
    
    
    
    
    
    
    $
    104,790Net interest-earning assets
    
    
    
    
    
    $
    24,100
    
    
    
    
    
    
    
    
    
    
    $
    22,123Net interest income; average interest
rate spread(2)
    
    
    
    
    
    
    
    
    
    $
    3,231
    
    
    
    2.37
    %
    
    
    
    
    
    $
    3,034
    
    
    
    2.47
    %Net interest margin(3)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3.05
    %
    
    
    
    
    
    
    
    
    
    
    3.05
    %Average interest-earning assets to
average interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    129.49
    %
    
    
    
    
    
    
    
    
    
    
    128.60
    %
 
 (1)
    
    Includes retained earnings and accumulated other comprehensive income (loss).(2)
    
    Interest rate spread represents the difference between the weighted-average yield on
interest-earning assets and the weighted-average rate on interest-bearing liabilities.(3)
    
    Net interest margin is net interest income divided by net average interest-earning assets. 5




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Home Federal Bancorp, Inc. of Louisiana
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
 CONDITION AND RESULTS OF OPERATIONS
 Rate/Volume Analysis.
 2006 vs. 2005
    
    
    2005 vs. 2004Total
    
    
    
    
    
    
    
    
    
    
    TotalIncrease (Decrease) Due to
    
    
    Increase
    
    
    Increase (Decrease) Due to
    
    
    IncreaseRate
    
    
    Volume
    
    
    (Decrease)
    
    
    Rate
    
    
    Volume
    
    
    (Decrease)(In Thousands)Interest income:Investment securities
    
    $
    225
    
    
    $
    455
    
    
    $
    680
    
    
    $
    (85
    )
    
    $
    348
    
    
    $
    263Loans receivable, net
    
    
    44
    
    
    
    (192
    )
    
    
    (148
    )
    
    
    (117
    )
    
    
    (316
    )
    
    
    (433
    )Interest-earning deposits
    
    
    79
    
    
    
    11
    
    
    
    68
    
    
    
    82
    
    
    
    (1
    )
    
    
    81Total interest-earning assets
    
    
    348
    
    
    
    252
    
    
    
    600
    
    
    
    (120
    )
    
    
    31
    
    
    
    (89
    )Interest expense:Savings accounts
    
    
    (1
    )
    
    
    (2
    )
    
    
    (3
    )
    
    
    1
    
    
    
    
    
    
    
    1NOW accounts
    
    
    
    
    
    
    3
    
    
    
    3
    
    
    
    
    
    
    
    1
    
    
    
    1Money market accounts
    
    
    
    
    
    
    (3
    )
    
    
    (3
    )
    
    
    
    
    
    
    (2
    )
    
    
    (2
    )Certificate accounts
    
    
    248
    
    
    
    95
    
    
    
    343
    
    
    
    (80
    )
    
    
    (19
    )
    
    
    (99
    )Total deposits
    
    
    247
    
    
    
    93
    
    
    
    340
    
    
    
    (79
    )
    
    
    (20
    )
    
    
    (99
    )FHLB advances
    
    
    37
    
    
    
    26
    
    
    
    63
    
    
    
    1
    
    
    
    (33
    )
    
    
    (32
    )Total interest-bearing liabilities
    
    
    284
    
    
    
    119
    
    
    
    403
    
    
    
    (78
    )
    
    
    (53
    )
    
    
    (131
    )Increase (decrease) in net interest income
    
    $
    64
    
    
    $
    133
    
    
    $
    197
    
    
    $
    (42
    )
    
    $
    84
    
    
    $
    42
 Comparison of Operating Results for the Years Ended June 30, 2006 and 2005
 General.
 Net Interest Income.
   6




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Home Federal Bancorp, Inc. of Louisiana
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
 CONDITION AND RESULTS OF OPERATIONS
  Provision for Loan Losses.
     Non-Interest Income.
 Non-Interest Expense.
 Provision For Income Tax Expense.
 Exposure to Changes in Interest Rates
  7




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Home Federal Bancorp, Inc. of Louisiana
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
 CONDITION AND RESULTS OF OPERATIONS
  Quantitative Analysis.
 Net Portfolio Value.
 Change inInterest Rates
    
    
    
    
    
    
    
    
    
    
    
    
    
    NPV as % of PortfolioIn Basis Points
    
    Net Portfolio Value
    
    Value of Assets(Rate Shock)
    
    Amount
    
    $ Change
    
    % Change
    
    NPV Ratio
    
    Change(Dollars in Thousands)300
    
    $
    15,996
    
    
    $
    (11,603
    )
    
    
    (42.04
    )%
    
    
    16.16
    %
    
    
    (8.01
    )%200
    
    
    19,576
    
    
    
    (8,023
    )
    
    
    (29.07
    )
    
    
    18.88
    
    
    
    (5.29
    )100
    
    
    23,469
    
    
    
    (4,130
    )
    
    
    (14.96
    )
    
    
    21.57
    
    
    
    (2.60
    )Static
    
    
    27,599
    
    
    
    
    
    
    
    
    
    
    
    24.17(100)
    
    
    31,623
    
    
    
    4,024
    
    
    
    14.58
    
    
    
    26.46
    
    
    
    2.29(200)
    
    
    34,035
    
    
    
    6,436
    
    
    
    23.32
    
    
    
    27.62
    
    
    
    3.44
 Qualitative Analysis.
 8




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Home Federal Bancorp, Inc. of Louisiana
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
 CONDITION AND RESULTS OF OPERATIONS
 Liquidity and Capital Resources
      Off-Balance Sheet Arrangements
  Impact of Inflation and Changing Prices
  9




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Report of Independent Registered Public Accounting Firm
 
    
  
 veterans boulevard, suite metairie,   fax  village walk, suite covington,   fax   professional accounting corporation
 
  10




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Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 CONSOLIDATED BALANCE SHEETS
 June 30,2006
    
    
    2005ASSETSCash and Cash Equivalents (Includes Interest-Bearing
Deposits with Other Banks of $4,183,577 and
$8,570,838 for 2006 and 2005)
    
    $
    4,929,595
    
    
    $
    9,292,489Securities Available-for-Sale
    
    
    83,693,681
    
    
    
    75,760,424Securities Held-to-Maturity
    
    
    1,424,866
    
    
    
    1,612,657Loans Held-for-Sale
    
    
    
    
    
    
    70,000Loans Receivable, Net
    
    
    20,866,117
    
    
    
    23,575,037Accrued Interest Receivable
    
    
    464,908
    
    
    
    435,534Premises and Equipment, Net
    
    
    947,584
    
    
    
    524,755Deferred Tax Asset
    
    
    1,597,083
    
    
    
    Other Assets
    
    
    76,218
    
    
    
    59,936Total Assets
    
    $
    114,000,052
    
    
    $
    111,330,832LIABILITIES AND STOCKHOLDERS EQUITYLIABILITIESDeposits
    
    $
    71,278,564
    
    
    $
    69,995,056Advances from Borrowers for Taxes and Insurance
    
    
    219,054
    
    
    
    170,037Advances from Federal Home Loan Bank of Dallas
    
    
    13,417,166
    
    
    
    8,224,459Deferred Tax Liability
    
    
    
    
    
    
    186,118Other Accrued Expenses and Liabilities
    
    
    545,991
    
    
    
    323,688Total Liabilities
    
    
    85,460,775
    
    
    
    78,899,358COMMITMENTS
    
    
    
    
    
    
    STOCKHOLDERS EQUITYPreferred Stock  No Par Value; 2,000,000 Shares Authorized;
None Issued and Outstanding
    
    
    
    
    
    
    Common Stock  $.01 Par Value; 8,000,000 Shares Authorized;
3,558,958 Shares Issued; 3,538,258 Shares Outstanding at June 30, 2006 and 3,558,958 Shares
Outstanding at June 30, 2005
    
    
    14,236
    
    
    
    14,236Additional Paid-in Capital
    
    
    13,445,231
    
    
    
    13,391,061Treasury Stock, at Cost  20,700 Shares at June 30, 2006; No Shares at June 30, 2005
    
    
    (210,500
    )
    
    
    Unearned ESOP Stock
    
    
    (1,053,731
    )
    
    
    (1,110,683
    )Unearned RRP Trust Stock
    
    
    (688,439
    )
    
    
    Retained Earnings  Partially Restricted
    
    
    20,148,695
    
    
    
    19,827,439Accumulated Other Comprehensive (Loss) Income
    
    
    (3,116,215
    )
    
    
    309,421Total Stockholders Equity
    
    
    28,539,277
    
    
    
    32,431,474Total Liabilities and Stockholders Equity
    
    $
    114,000,052
    
    
    $
    111,330,832
 See accompanying notes to consolidated financial statements.
 11




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##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 CONSOLIDATED STATEMENTS OF INCOME
 For the Years EndedJune 30,2006
    
    
    2005INTEREST INCOMELoans, Including Fees
    
    $
    1,419,877
    
    
    $
    1,568,239Investment Securities
    
    
    337,995
    
    
    
    146,154Mortgage-Backed Securities
    
    
    3,700,662
    
    
    
    3,211,922Other Interest-Earning Assets
    
    
    205,156
    
    
    
    137,232Total Interest Income
    
    
    5,663,690
    
    
    
    5,063,547INTEREST EXPENSEDeposits
    
    
    2,107,892
    
    
    
    1,767,403Federal Home Loan Bank Borrowings
    
    
    324,959
    
    
    
    262,340Total Interest Expense
    
    
    2,432,851
    
    
    
    2,029,743Net Interest Income
    
    
    3,230,839
    
    
    
    3,033,804PROVISION FOR LOAN LOSSES
    
    
    
    
    
    
    Net Interest Income after
Provision for Loan Losses
    
    
    3,230,839
    
    
    
    3,033,804NON-INTEREST INCOMEGain on Sale of Loans
    
    
    24,178
    
    
    
    17,882Gain on Sale
of Securities
    
    
    52,210
    
    
    
    328,880Other Income
    
    
    68,129
    
    
    
    40,403Total Non-Interest Income
    
    
    144,517
    
    
    
    387,165NON-INTEREST EXPENSECompensation and Benefits
    
    
    1,485,630
    
    
    
    1,363,091Occupancy and Equipment
    
    
    177,563
    
    
    
    182,806Data Processing
    
    
    80,513
    
    
    
    66,337Audit and
Examination Fees
    
    
    139,744
    
    
    
    113,527Advertising
    
    
    50,600
    
    
    
    81,873Deposit Insurance Premiums
    
    
    9,621
    
    
    
    10,366Legal Fees
    
    
    93,696
    
    
    
    36,488Franchise and Bank Shares Tax
    
    
    88,796
    
    
    
    Other Expense
    
    
    288,102
    
    
    
    264,352Total Non-Interest Expense
    
    
    2,414,265
    
    
    
    2,118,840Income Before Income Taxes
    
    
    961,091
    
    
    
    1,302,129PROVISION FOR INCOME TAX EXPENSE
    
    
    326,689
    
    
    
    452,231NET INCOME
    
    $
    634,402
    
    
    $
    849,898EARNINGS PER SHARE:Basic
    
    $
    0.19
    
    
    $
    0.25Diluted
    
    $
    0.19
    
    
    $
    0.25
 See accompanying notes to consolidated financial statements.
 12




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##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
 For The Years EndedJune 30,2006
    
    
    2005NET INCOME
    
    $
    634,402
    
    
    $
    849,898OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAXUnrealized Holding (Losses) Gains Arising During the Period
    
    
    (3,327,850
    )
    
    
    2,001,553Reclassification Adjustment for Gains included in Net Income
    
    
    (97,786
    )
    
    
    (23,744
    )Total Other Comprehensive (Loss) Income
    
    
    (3,425,636
    )
    
    
    1,977,809TOTAL COMPREHENSIVE (LOSS) INCOME
    
    $
    (2,791,234
    )
    
    $
    2,827,707
 See accompanying notes to consolidated financial statements.
 13




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##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
YEARS ENDED JUNE 30, 2006 AND 2005
 AccumulatedAdditional
    
    
    Unearned
    
    
    
    
    
    
    Other
    
    
    Unearned
    
    
    
    
    
    
    TotalCommon
    
    
    Paid-in
    
    
    ESOP
    
    
    Retained
    
    
    Comprehensive
    
    
    RRP Trust
    
    
    Treasury
    
    
    StockholdersStock
    
    
    Capital
    
    
    Stock
    
    
    Earnings
    
    
    Income (Loss)
    
    
    Stock
    
    
    Stock
    
    
    EquityBALANCE
 July 1, 2004
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    18,977,541
    
    
    $
    (1,668,388
    )
    
    $
    
    
    
    $
    
    
    
    $
    17,309,153Issuance of Common Stock
    
    
    14,236
    
    
    
    13,391,560
    
    
    
    (1,138,870
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,266,926ESOP Compensation Earned
    
    
    
    
    
    
    (499
    )
    
    
    28,187
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,688Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    849,898
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    849,898Other Comprehensive Income,
Net of Applicable
Deferred Income Taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,977,809
    
    
    
    
    
    
    
    
    
    
    
    1,977,809BALANCE
 June 30, 2005
    
    $
    14,236
    
    
    $
    13,391,061
    
    
    $
    (1,110,683
    )
    
    $
    19,827,439
    
    
    $
    309,421
    
    
    $
    
    
    
    $
    
    
    
    $
    32,431,474ESOP Compensation Earned
    
    
    
    
    
    
    (182
    )
    
    
    56,952
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56,770Acquisition of RRP Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (688,439
    )
    
    
    
    
    
    
    (688,439
    )Dividends Declared
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (313,146
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (313,146
    )Stock Options Vested
    
    
    
    
    
    
    54,352
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    54,352Acquisition
of Treasury Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (210,500
    )
    
    
    (210,500
    )Net Income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    634,402
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    634,402Other Comprehensive Loss,
Net of Applicable
Deferred Income Taxes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,425,636
    )
    
    
    
    
    
    
    
    
    
    
    (3,425,636
    )BALANCE
 June 30, 2006
    
    $
    14,236
    
    
    $
    13,445,231
    
    
    $
    (1,053,731
    )
    
    $
    20,148,695
    
    
    $
    3,116,215
    
    
    $
    (688,439
    )
    
    $
    (210,500
    )
    
    $
    28,539,277
 See accompanying notes to consolidated financial statements.
 14




---



##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Years EndedJune 30,2006
    
    
    2005CASH FLOWS FROM OPERATING ACTIVITIESNet Income
    
    $
    634,402
    
    
    $
    849,898Adjustments to Reconcile Net Income to Net
Cash Provided by Operating Activities:Net Amortization and Accretion on Securities
    
    
    (95,951
    )
    
    
    (37,932
    )Amortization of Deferred Loan Fees
    
    
    (44,602
    )
    
    
    (50,118
    )Depreciation of Premises and Equipment
    
    
    67,850
    
    
    
    62,261Loss on Disposal of Premises and Equipment
    
    
    
    
    
    
    4,584Gain on Sale of Securities
    
    
    (52,210
    )
    
    
    (328,880
    )ESOP Compensation Expense
    
    
    56,770
    
    
    
    27,688Deferred Income Tax (Benefit)
    
    
    (18,480
    )
    
    
    Stock Option Expense
    
    
    54,352
    
    
    
    Recognition and Retention Plan Expense
    
    
    121,889
    
    
    
    Changes in Assets and LiabilitiesOrigination and Purchase of Loans Held-for-Sale
    
    
    (2,895,575
    )
    
    
    (2,108,200
    )Sale and Principal Repayments of Loans Held-for-Sale
    
    
    2,965,575
    
    
    
    2,145,700Accrued Interest Receivable
    
    
    (29,374
    )
    
    
    (29,722
    )Other Operating Assets
    
    
    (16,282
    )
    
    
    15,935Other Operating Liabilities
    
    
    100,415
    
    
    
    67,705Net Cash Provided by Operating Activities
    
    
    848,779
    
    
    
    618,919CASH FLOWS FROM INVESTING ACTIVITIESLoan Originations and Principal Collections, Net
    
    
    2,688,278
    
    
    
    1,210,229Purchases of Loans
    
    
    
    
    
    
    (2,085,658
    )Deferred Loan Fees Collected
    
    
    65,244
    
    
    
    29,250Acquisition of Premises and Equipment
    
    
    (490,679
    )
    
    
    (123,818
    )Activity in Available-for-Sale SecuritiesProceeds from Sales of Securities
    
    
    3,378,017
    
    
    
    Principal Payments on Mortgage-Backed Securities
    
    
    11,997,575
    
    
    
    9,419,057Purchases
    
    
    (28,352,935
    )
    
    
    (17,891,105
    )Activity in Held-to-Maturity SecuritiesRedemption or Maturity Proceeds
    
    
    
    
    
    
    885,480Principal Payments on Mortgage-Backed Securities
    
    
    207,080
    
    
    
    346,301Purchases of Securities
    
    
    (17,400
    )
    
    
    Net Cash Used in Investing Activities
    
    
    (10,524,820
    )
    
    
    (8,210,264
    )
 See accompanying notes to consolidated financial statements.
 15




---



##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
 For the Years EndedJune 30,2006
    
    
    2005CASH FLOWS FROM FINANCING ACTIVITIESNet Increase in Deposits
    
    
    1,283,508
    
    
    
    1,861,550Proceeds from Advances from Federal Home Loan Bank
    
    
    8,025,000
    
    
    
    1,000,000Repayment of Advances from Federal Home Loan Bank
    
    
    (2,832,293
    )
    
    
    (2,523,857
    )Net Proceeds from Issuance of Common Stock
    
    
    
    
    
    
    12,266,926Dividends Paid
    
    
    (313,146
    )
    
    
    Acquisition of Recognition and Retention Plan Stock
    
    
    (688,439
    )
    
    
    Acquisition of Treasury Stock
    
    
    (210,500
    )
    
    
    Net Increase (Decrease) in Mortgage-Escrow Funds
    
    
    49,017
    
    
    
    (62,910
    )Net Cash Provided by
Financing Activities
    
    
    5,313,147
    
    
    
    12,541,709NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS
    
    
    (4,362,894
    )
    
    
    4,950,364CASH AND
CASH EQUIVALENTS, BEGINNING
OF YEAR
    
    
    9,292,489
    
    
    
    4,342,125CASH AND
CASH EQUIVALENTS, END OF YEAR
    
    $
    4,929,595
    
    
    $
    9,292,489SUPPLEMENTARY CASH FLOW INFORMATIONInterest Paid on Deposits and Borrowed Funds
    
    $
    2,372,702
    
    
    $
    2,028,665Income Taxes Paid
    
    
    361,160
    
    
    
    445,000Market Value Adjustment for (Loss) Gain on Securities
Available-for-Sale
    
    
    (5,190,357
    )
    
    
    2,996,679
 See accompanying notes to consolidated financial statements.
 16




---



##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1.
 SUMMARY OF ACCOUNTING POLICIES
 NATURE OF OPERATIONS
    BASIS OF PRESENTATION AND CONSOLIDATION
  USE OF ESTIMATES
  SIGNIFICANT GROUP CONCENTRATIONS OF CREDIT RISK
  CASH AND CASH EQUIVALENTS
   17




---



##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED
 NOTE 1.
 SUMMARY OF ACCOUNTING POLICIES (Continued)
 CASH AND CASH EQUIVALENTS (Continued)
 2006
    
    
    2005Cash on Hand
    
    $
    229,186
    
    
    $
    260,126Demand Deposits at Other Institutions
    
    
    1,934,944
    
    
    
    2,478,563Federal Funds Sold
    
    
    2,765,465
    
    
    
    6,553,800$
    4,929,595
    
    
    $
    9,292,489
 SECURITIES
    LOANS HELD FOR SALE
  LOANS
  ALLOWANCE FOR LOAN LOSSES
  18




---



##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE 1.
 SUMMARY OF ACCOUNTING POLICIES (Continued)
 ALLOWANCE FOR LOAN LOSSES (Continued)
     OFF-BALANCE SHEET CREDIT RELATED FINANCIAL INSTRUMENTS
  FORECLOSED ASSETS
  PREMISES AND EQUIPMENT
  INCOME TAXES
   19




---



##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE 1.
 SUMMARY OF ACCOUNTING POLICIES (Continued)
 INCOME TAXES (Continued)
  EARNINGS PER SHARE
  NON-DIRECT RESPONSE ADVERTISING
  COMPREHENSIVE INCOME
   2006
    
    
    2005Unrealized Holding (Losses) Gains on
Available-for-Sale Securities
    
    $
    (5,042,196
    )
    
    $
    3,032,655Reclassification Adjustment for Gains
Realized in Income
    
    
    (148,161
    )
    
    
    (35,976
    )Net Unrealized (Losses) Gains
    
    
    (5,190,357
    )
    
    
    2,996,679Tax Effect
    
    
    1,764,721
    
    
    
    1,018,870Net-of-Tax Amount
    
    $
    (3,425,636
    )
    
    $
    1,977,809
  2006
    
    
    2005Net Unrealized (Loss) Gain on Securities
Available-for-Sale
    
    $
    (4,721,537
    )
    
    $
    468,819Tax Effect
    
    
    1,605,322
    
    
    
    159,398Net of Tax Amount
    
    $
    (3,116,215
    )
    
    $
    309,421
 RECENT ACCOUNTING PRONOUNCEMENTS
 Share-Based Payment.
 20




---



##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE 1.
 SUMMARY OF ACCOUNTING POLICIES (Continued)
 RECENT ACCOUNTING PRONOUNCEMENTS (Continued)
  Accounting Changes and Error Corrections Accounting Changes Reporting
Accounting Changes in Interim Financial Statements
 Accounting for Certain Hybrid Financial
Instruments Accounting for Derivative Instruments and
Hedging Activities, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities,
 Accounting for Servicing of Financial
Assets Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities
 21




---



##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE 2.
 SECURITIES
  June 30, 2006Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueSecurities Available-for-SaleDebt SecuritiesFHLB Note
    
    $
    996,006
    
    
    $
    
    
    
    $
    6,038
    
    
    $
    989,968FNMA Note
    
    
    996,066
    
    
    
    
    
    
    
    10,663
    
    
    
    985,403FHLMC Mortgage-Backed
Certificates
    
    
    8,930,066
    
    
    
    154
    
    
    
    549,556
    
    
    
    8,380,664FNMA Mortgage-Backed
Certificates
    
    
    74,824,882
    
    
    
    239
    
    
    
    4,086,912
    
    
    
    70,738,209GNMA Mortgage-Backed
Certificates
    
    
    488,666
    
    
    
    132
    
    
    
    10,236
    
    
    
    478,562Total Debt Securities
    
    
    86,235,686
    
    
    
    525
    
    
    
    4,663,405
    
    
    
    81,572,806Equity Securities219,780 Shares, AMF ARM Fund
    
    
    2,179,532
    
    
    
    
    
    
    
    58,657
    
    
    
    2,120,875Total Securities Available-for-Sale
    
    $
    88,415,218
    
    
    $
    525
    
    
    $
    4,722,062
    
    
    $
    83,693,681Securities Held-to-MaturityDebt SecuritiesGNMA Mortgage-Backed
Certificates
    
    $
    535,024
    
    
    $
    14,135
    
    
    $
    
    
    
    $
    549,159FNMA Mortgage-Backed
Certificates
    
    
    184,093
    
    
    
    2,831
    
    
    
    438
    
    
    
    186,486FHLMC Mortgage-Backed
Certificates
    
    
    56,549
    
    
    
    772
    
    
    
    185
    
    
    
    57,136Total Debt Securities
    
    
    775,666
    
    
    
    17,738
    
    
    
    623
    
    
    
    792,781Equity Securities (Nonmarketable)6,492 Shares  Federal Home
Loan Bank
    
    
    649,200
    
    
    
    
    
    
    
    
    
    
    
    649,200Total Securities Held-to-
Maturity
    
    $
    1,424,866
    
    
    $
    17,738
    
    
    $
    623
    
    
    $
    1,441,981
 
 22




---



##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
 NOTE 2.
 SECURITIES (Continued)
 June 30, 2005Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    FairCost
    
    
    Gains
    
    
    Losses
    
    
    ValueSecurities Available-for-SaleDebt SecuritiesFHLB Note
    
    $
    985,739
    
    
    $
    2,855
    
    
    $
    
    
    
    $
    988,594FNMA Note
    
    
    989,887
    
    
    
    1,363
    
    
    
    
    
    
    
    991,250FHLMC Mortgage-Backed
Certificates
    
    
    8,996,881
    
    
    
    96,631
    
    
    
    44,980
    
    
    
    9,048,532FNMA Mortgage-Backed
Certificates
    
    
    61,411,259
    
    
    
    644,890
    
    
    
    183,599
    
    
    
    61,872,550GNMA Mortgage-Backed
Certificates
    
    
    813,413
    
    
    
    835
    
    
    
    11,908
    
    
    
    802,340Total Debt Securities
    
    
    73,197,179
    
    
    
    746,574
    
    
    
    240,487
    
    
    
    73,703,266Equity Securities210,991 Shares, AMF ARM Fund
    
    
    2,094,424
    
    
    
    
    
    
    
    37,266
    
    
    
    2,057,158Total Securities Available-for-
Sale
    
    $
    75,291,603
    
    
    $
    746,574
    
    
    $
    277,753
    
    
    $
    75,760,424Securities Held-to-MaturityDebt SecuritiesGNMA Mortgage-Backed
Certificates
    
    $
    665,280
    
    
    $
    36,554
    
    
    $
    
    
    
    $
    701,834FNMA Mortgage-Backed
Certificates
    
    
    228,039
    
    
    
    4,864
    
    
    
    19
    
    
    
    232,884FHLMC Mortgage-Backed
Certificates
    
    
    87,538
    
    
    
    1,415
    
    
    
    73
    
    
    
    88,880Total Debt Securities
    
    
    980,857
    
    
    
    42,833
    
    
    
    92
    
    
    
    1,023,598Equity Securities (Nonmarketable)6,318 Shares  Federal Home
Loan Bank
    
    
    631,800
    
    
    
    
    
    
    
    
    
    
    
    631,800Total Securities Held-to-Maturity
    
    $
    1,612,657
    
    
    $
    42,833
    
    
    $
    92
    
    
    $
    1,655,398
  Available-for-Sale
    
    
    Held-to-MaturityAmortized
    
    
    Fair
    
    
    Amortized
    
    
    FairCost
    
    
    Value
    
    
    Cost
    
    
    ValueMaturityDue within One Year
    
    $
    996,006
    
    
    $
    989,968
    
    
    $
    
    
    
    $
    Due from One Year to Five Years
    
    
    996,066
    
    
    
    985,403
    
    
    
    
    
    
    
    Due from Five Years to Ten Years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Due after Ten Years
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,992,072
    
    
    
    1,975,371
    
    
    
    
    
    
    
    Mortgage-Backed Securities
    
    
    84,243,614
    
    
    
    79,597,435
    
    
    
    775,666
    
    
    
    792,781$
    86,235,686
    
    
    $
    81,572,806
    
    
    $
    775,666
    
    
    $
    792,781
 23




---



##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE 2.
 SECURITIES (Continued)
   Less Than Twelve Months
    
    
    Over Twelve MonthsGross
    
    
    
    
    
    
    GrossUnrealized
    
    
    Fair
    
    
    Unrealized
    
    
    FairSecurities Available for Sale
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    ValueDebt Securities:FHLB Note
    
    $
    6,038
    
    
    $
    989,968
    
    
    $
    
    
    
    $
    FNMA Note
    
    
    10,663
    
    
    
    985,403
    
    
    
    
    
    
    
    Mortgage-Backed
    
    
    3,202,554
    
    
    
    61,658,344
    
    
    
    1,444,150
    
    
    
    17,773,002Marketable Equity Securities
    
    
    
    
    
    
    
    
    
    
    58,657
    
    
    
    2,120,875Total
Securities Available-for-Sale
    
    $
    3,219,255
    
    
    $
    63,633,715
    
    
    $
    1,502,807
    
    
    $
    19,893,877
 Less Than Twelve Months
    
    
    Over Twelve MonthsGross
    
    
    
    
    
    
    GrossUnrealized
    
    
    Fair
    
    
    Unrealized
    
    
    FairSecurities Held-to-Maturity
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    ValueMortgage-Backed
    
    $
    435
    
    
    $
    99,197
    
    
    $
    188
    
    
    $
    25,332Total Securities Held-to-Maturity
    
    $
    435
    
    
    $
    99,197
    
    
    $
    188
    
    
    $
    25,332
    
 24




---



##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
 NOTE 3.
 LOANS RECEIVABLE
  2006
    
    
    2005Mortgage Loans (Principally Conventional)Principal BalancesSecured by One-to-Four Family Residences
    
    $
    13,721,121
    
    
    $
    19,301,369Secured by Other Properties
    
    
    3,163,986
    
    
    
    837,042Total Mortgage Loans
    
    
    16,885,107
    
    
    
    20,138,411Consumer and Other LoansPrincipal BalancesEquity and Second Mortgage
    
    
    3,286,823
    
    
    
    2,776,487Loans on Savings Accounts
    
    
    612,388
    
    
    
    469,952Equity Lines of Credit
    
    
    374,041
    
    
    
    499,598Automobile Loans
    
    
    43,201
    
    
    
    5,390Total Consumer and Other Loans
    
    
    4,316,453
    
    
    
    3,751,427Total Loans
    
    
    21,201,560
    
    
    
    23,889,838Less: Allowance for Loan Losses
    
    
    (235,000
    )
    
    
    (235,000
    )Unamortized Loan Fees
    
    
    (100,443
    )
    
    
    (79,801
    )Net Loans Receivable
    
    $
    20,866,117
    
    
    $
    23,575,037
  2006
    
    
    2005Balance  Beginning of Year
    
    $
    235,000
    
    
    $
    235,000Provision for Loan Losses
    
    
    
    
    
    
    Balance  End of Year
    
    $
    235,000
    
    
    $
    235,000
  Under
    
    
    One
    
    
    Six
    
    
    OverOne
    
    
    to Five
    
    
    to Ten
    
    
    TenYear
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    Total(In Thousands)Loans Secured by One-to-Four
Family Residential:Fixed Rate
    
    $
    1,434
    
    
    $
    563
    
    
    $
    926
    
    
    $
    7,763
    
    
    $
    10,686Adjustable Rate
    
    
    3,061
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,061Other Loans Secured by
Real Estate:Fixed Rate
    
    
    
    
    
    
    
    
    
    
    25
    
    
    
    3,139
    
    
    
    3,164Adjustable Rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    All Other Loans
    
    
    987
    
    
    
    549
    
    
    
    981
    
    
    
    1,774
    
    
    
    4,291$
    5,482
    
    
    $
    1,112
    
    
    $
    1,932
    
    
    $
    12,676
    
    
    $
    21,202
 25




---



##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE 3.
 LOANS RECEIVABLE (Continued)
  NOTE 4.
 ACCRUED INTEREST RECEIVABLE
  2006
    
    
    2005Accrued Interest on:Mortgage Loans
    
    $
    81,675
    
    
    $
    101,289Other Loans
    
    
    18,385
    
    
    
    26,462Investments
    
    
    23,338
    
    
    
    20,902Mortgage-Backed Securities
    
    
    341,510
    
    
    
    286,881$
    464,908
    
    
    $
    435,534
 NOTE 5.
 PREMISES AND EQUIPMENT
  2006
    
    
    2005Land
    
    $
    727,075
    
    
    $
    290,798Buildings
    
    
    1,124,602
    
    
    
    1,097,318Equipment
    
    
    599,628
    
    
    
    578,3652,451,305
    
    
    
    1,966,481Accumulated Depreciation
    
    
    (1,503,721
    )
    
    
    (1,441,726
    )$
    947,584
    
    
    $
    524,755
   Year Ended June 30,2007
    
    $
    20,1602008
    
    
    20,1602009
    
    
    8,400$
    48,720
  26




---



##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE 6.
 DEPOSITS
  WeightedAverageRate at
    
    
    2006
    
    
    20056/30/2006
    
    
    Amount
    
    
    Percent
    
    
    Amount
    
    
    PercentNon-Interest Bearing
    
    
    0.00
    %
    
    $
    828,038
    
    
    
    1.16
    %
    
    $
    1,094,211
    
    
    
    1.56
    %NOW Accounts
    
    
    0.16
    %
    
    
    5,412,279
    
    
    
    7.59
    
    
    
    5,731,383
    
    
    
    8.19Money Market
    
    
    0.40
    %
    
    
    3,302,146
    
    
    
    4.63
    
    
    
    3,743,813
    
    
    
    5.35Passbook Savings
    
    
    0.50
    %
    
    
    4,755,594
    
    
    
    6.67
    
    
    
    4,916,784
    
    
    
    7.0214,298,057
    
    
    
    20.06
    
    
    
    15,486,191
    
    
    
    22.12Certificates of Deposit
    
    
    4.01
    %
    
    
    56,980,507
    
    
    
    79.94
    
    
    
    54,508,865
    
    
    
    77.88Total Deposits
    
    
    
    
    
    $
    71,278,564
    
    
    
    100.00
    %
    
    $
    69,995,056
    
    
    
    100.00
    %
  2006
    
    
    2005Amount
    
    
    Percent
    
    
    Amount
    
    
    Percent0.00% to 0.99%
    
    $
    244,467
    
    
    
    0.43
    %
    
    $
    250,124
    
    
    
    0.46
    %1.00% to 1.99%
    
    
    410,920
    
    
    
    0.72
    
    
    
    6,543,324
    
    
    
    12.002.00% to 2.99%
    
    
    9,911,468
    
    
    
    17.39
    
    
    
    20,563,556
    
    
    
    37.723.00% to 3.99%
    
    
    14,901,810
    
    
    
    26.15
    
    
    
    12,921,542
    
    
    
    23.714.00% to 4.99%
    
    
    28,229,915
    
    
    
    49.54
    
    
    
    10,493,301
    
    
    
    19.255.00% to 5.99%
    
    
    3,281,927
    
    
    
    5.77
    
    
    
    1,940,639
    
    
    
    3.566.00% to 6.99%
    
    
    
    
    
    
    
    
    
    
    1,796,379
    
    
    
    3.30Total Deposits
    
    $
    56,980,507
    
    
    
    100.00
    %
    
    $
    54,508,865
    
    
    
    100.00
    %
  WeightedYear Ending
    
    
    
    
    
    
    
    
    
    AverageJune 30,
    
    Amount
    
    
    Percent
    
    
    Rate2007
    
    $
    34,389,421
    
    
    
    60.35
    %
    
    
    3.9
    %2008
    
    
    9,010,487
    
    
    
    15.81
    
    
    
    4.2
    %2009
    
    
    3,566,792
    
    
    
    6.26
    
    
    
    3.8
    %2010
    
    
    6,376,135
    
    
    
    11.19
    
    
    
    4.4
    %2011
    
    
    3,637,672
    
    
    
    6.39
    
    
    
    4.8
    %$
    56,980,507
    
    
    
    100.00
    %
 27




---



##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE 6.
 DEPOSITS (Continued)
  2006
    
    
    2005NOW and Money Market
    
    $
    29,557
    
    
    $
    30,520Passbook Savings
    
    
    24,450
    
    
    
    26,570Certificates of Deposit
    
    
    2,053,885
    
    
    
    1,710,313$
    2,107,892
    
    
    $
    1,767,403
  NOTE 7.
 ADVANCES FROM FEDERAL HOME LOAN BANK OF DALLAS
   Advance Total2006
    
    
    20052.00% to 2.99%
    
    $
    2,158,554
    
    
    $
    3,367,2993.00% to 3.99%
    
    
    2,028,464
    
    
    
    3,008,4764.00% to 4.99%
    
    
    4,230,148
    
    
    
    1,848,6845.00% to 5.99%
    
    
    5,000,000
    
    
    
    $
    13,417,166
    
    
    $
    8,224,459
  Year EndedJune 30,2007
    
    $
    5,972,7612008
    
    
    2,419,8122009
    
    
    1,204,2632010
    
    
    911,3952011
    
    
    751,247Thereafter
    
    
    2,157,688$
    13,417,166
 28




---



##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE 8.
 COMMITMENTS
  Year EndedJune 30,2007
    
    $
    48,4922008
    
    
    48,4922009
    
    
    48,4922010
    
    
    28,287$
    173,763
 NOTE 9.
 FEDERAL INCOME TAXES
  2006
    
    
    2005Federal:Current
    
    $
    344,256
    
    
    $
    436,385Deferred (Benefit)
    
    
    (18,480
    )
    
    
    State:Current
    
    
    913
    
    
    
    15,846$
    326,689
    
    
    $
    452,231
  2006
    
    
    2005Expected Tax Provision at a 34% Rate
    
    $
    326,461
    
    
    $
    437,336Expected State Corporate Tax
    
    
    913
    
    
    
    15,846Effect of Non-Taxable Income
    
    
    (685
    )
    
    
    (951
    )Provision for Income Tax
    
    $
    326,689
    
    
    $
    452,231
  29




---



##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE 9.
 FEDERAL INCOME TAXES (Continued)
 2006
    
    
    2005Deferred Tax Asset or Liability:Stock Option Compensation
    
    $
    18,480
    
    
    $
    Loans Receivable-Bad Debt Loss Allowances
    
    
    (26,720
    )
    
    
    (26,720
    )Securities Available-for-Sale Unrealized
Loss (Gain)
    
    
    1,605,323
    
    
    
    (159,398
    )Total Deferred Tax Asset (Liability)
    
    $
    1,597,083
    
    
    $
    (186,118
    )
  NOTE 10.
 OTHER NON-INTEREST INCOME AND EXPENSE
  2006
    
    
    2005Other Non-Interest Income:Service Fees on NOW Accounts
    
    $
    18,941
    
    
    $
    20,779Late Charges
    
    
    4,418
    
    
    
    4,720Commissions and Other
    
    
    44,770
    
    
    
    14,904$
    68,129
    
    
    $
    40,403Other Non-Interest Expense:NOW Account Expense
    
    $
    37,539
    
    
    $
    24,367Loan Expenses
    
    
    4,848
    
    
    
    5,097Office Supplies
    
    
    34,307
    
    
    
    20,648Telephone
    
    
    33,662
    
    
    
    32,358Postage
    
    
    18,310
    
    
    
    24,671Business Insurance and Bonds
    
    
    35,250
    
    
    
    36,560Organization Dues and Publications
    
    
    5,217
    
    
    
    12,667Charitable Contributions
    
    
    4,009
    
    
    
    3,050Miscellaneous
    
    
    46,144
    
    
    
    48,772Automobile Expense, Including Depreciation
    
    
    21,371
    
    
    
    21,773Consulting Fees
    
    
    29,820
    
    
    
    30,175Registration Fees
    
    
    17,625
    
    
    
    4,214$
    288,102
    
    
    $
    264,352
 30




---



##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE 11.
 RETIREMENT PLANS
  NOTE 12.
 EMPLOYEE STOCK OWNERSHIP PLAN
      Allocated Shares
    
    
    5,694Shares Released for Allocation
    
    
    2,847Unreleased Shares
    
    
    105,346Total ESOP Shares
    
    
    113,887Fair Value of Unreleased Shares
    
    $
    1,100,866Stock Price at June 30, 2006
    
    $
    10.45
 31




---



##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE 13.
 RECOGNITION AND RETENTION PLAN
     Unawarded Shares
    
    Awarded Shares2006
    
    2005
    
    2006
    
    2005Balance, Beginning of Year
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Purchased by Plan
    
    
    69,756
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    (69,756
    )
    
    
    
    
    
    
    69,756
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Earned and Issued
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance  End of Year
    
    
    
    
    
    
    
    
    
    
    69,756
    
    
    
    
 NOTE 14.
 STOCK OPTION PLAN
   
 32




---



##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE 14.
 STOCK OPTION PLAN (Continued)
  WeightedAverageNumber of
    
    
    ExerciseShares
    
    
    PriceOutstanding at July 1, 2005
    
    
    
    
    
    $
    Granted
    
    
    174,389
    
    
    
    9.85Exercised
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    Outstanding at June 30, 2006
    
    
    174,389
    
    
    $
    9.85Options
Exercisable at June 30, 2006
    
    
    
    
    
    $
    9.85Weighted Average Fair Value of
Options Granted During the Year
    
    $
    1.80
  Dividend Yield
    
    
    2.0
    %Expected Term
    
    10 YearsRisk-free Interest Rate
    
    
    4.13
    %Expected Life
    
    10 YearsExpected Volatility
    
    
    8.59
    %
   Options Outstanding
    
    Options ExercisableWeightedAverage
    
    Weighted
    
    
    
    
    
    WeightedExercise
    
    
    
    
    
    Remaining
    
    Average
    
    
    
    
    
    AveragePrice
    
    
    
    
    
    Contractual
    
    Exercise
    
    
    
    
    
    ExerciseRange
    
    Number
    
    Life
    
    Price
    
    Number
    
    Price$9.85
    
    
    174,389
    
    
    9.88 years
    
    $
    9.85
    
    
    
    
    
    
    $
    
 NOTE 15.
 OFF-BALANCE SHEET ACTIVITIES
 CREDIT RELATED FINANCIAL INSTRUMENTS
  33




---



##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE 15.
 OFF-BALANCE SHEET ACTIVITIES (Continued)
 CREDIT RELATED FINANCIAL INSTRUMENTS (Continued)
    Contract Amount2006
    
    2005Commitments to Grant Loans
    
    $
    
    
    
    $
    2,430,000Unfunded Commitments Under Lines of Credit
    
    
    285,247
    
    
    
    214,282
  CASH DEPOSITS
  REGIONAL CREDIT CONCENTRATION
  OTHER CREDIT CONCENTRATIONS
  INTEREST RATE FLOORS AND CAPS
  34




---



##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE 16.
 RELATED PARTY EVENTS
   Years Ended June 30,2006
    
    
    2005Balance  Beginning of Year
    
    $
    159,286
    
    
    $
    183,584Additions
    
    
    174,442
    
    
    
    64,036Principal Payments
    
    
    (33,748
    )
    
    
    (88,334
    )Balance  End of Year
    
    $
    299,980
    
    
    $
    159,286
  NOTE 17.
 REGULATORY MATTERS
    35




---



##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE 17.
 REGULATORY MATTERS (Continued)
  Required for CapitalActual
    
    
    Adequacy PurposesAmount
    
    
    Ratio
    
    
    Amount
    
    
    RatioJune 30, 2006Core Capital
    
    
    (1
    )
    
    $
    27,028,756
    
    
    
    23.48
    %
    
    $
    3,452,740
    
    
    
    3.00
    %Tangible Capital
    
    
    (1
    )
    
    
    27,028,756
    
    
    
    23.48
    %
    
    
    1,726,370
    
    
    
    1.50
    %Total Risk-Based Capital
    
    
    (2
    )
    
    
    27,263,756
    
    
    
    87.78
    %
    
    
    2,485,520
    
    
    
    8.00
    %June 30, 2005Core Capital
    
    
    (1
    )
    
    $
    26,352,571
    
    
    
    24.20
    %
    
    $
    3,267,074
    
    
    
    3.00
    %Tangible Capital
    
    
    (1
    )
    
    
    26,352,571
    
    
    
    24.20
    %
    
    
    1,633,537
    
    
    
    1.50
    %Total Risk-Based Capital
    
    
    (2
    )
    
    
    26,587,571
    
    
    
    91.56
    %
    
    
    2,322,960
    
    
    
    8.00
    %
  Required to beActual
    
    
    Well CapitalizedAmount
    
    
    Ratio
    
    
    Amount
    
    
    RatioJune 30, 2006Tier 1 Leverage Capital
    
    
    (1
    )
    
    $
    27,028,756
    
    
    
    23.48
    %
    
    $
    5,754,567
    
    
    
    5.00
    %Tier 1 Risk-Based Capital
    
    
    (2
    )
    
    
    27,028,756
    
    
    
    87.00
    %
    
    
    1,864,140
    
    
    
    6.00
    %Total Risk-Based Capital
    
    
    (2
    )
    
    
    27,263,756
    
    
    
    87.78
    %
    
    
    3,106,900
    
    
    
    10.00
    %June 30, 2005Tier 1 Leverage Capital
    
    
    (1
    )
    
    $
    26,352,571
    
    
    
    24.20
    %
    
    $
    5,445,123
    
    
    
    5.00
    %Tier 1 Risk-Based Capital
    
    
    (2
    )
    
    
    26,352,571
    
    
    
    90.76
    %
    
    
    1,742,220
    
    
    
    6.00
    %Total Risk-Based Capital
    
    
    (2
    )
    
    
    26,587,571
    
    
    
    91.56
    %
    
    
    2,903,700
    
    
    
    10.00
    %
 
 (1)
    
    Amounts and Ratios to Adjusted Total Assets(2)
    
    Amounts and Ratios to Total Risk-Weighted Assets NOTE 18.
 RESTRICTIONS ON DIVIDENDS
  NOTE 19.
 FAIR VALUE OF FINANCIAL INSTRUMENTS
   Cash and Cash Equivalents
  36




---



##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE 19.
 FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
 Securities to be Held-to-Maturity and Available-for-Sale
  Mortgage Loans Held for Sale
  Loans Receivable
  Deposit Liabilities
  Advances from Federal Home Loan Bank
  Accrued Interest Payable
  Off-Balance-Sheet Credit-Related Instruments
  
 37




---



##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE 19.
 FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)
  2006
    
    2005Carrying
    
    Estimated
    
    Carrying
    
    EstimatedValue
    
    Fair Value
    
    Value
    
    Fair ValueFinancial Assets:Cash and Cash Equivalents
    
    $
    4,929,595
    
    
    $
    4,929,595
    
    
    $
    9,292,489
    
    
    $
    9,292,489Securities Available-for-Sale
    
    
    83,693,681
    
    
    
    83,693,681
    
    
    
    75,760,424
    
    
    
    75,760,424Securities to be Held-to-Maturity
    
    
    1,424,866
    
    
    
    1,441,981
    
    
    
    1,612,657
    
    
    
    1,655,398Loans Held-for-Sale
    
    
    
    
    
    
    
    
    
    
    70,000
    
    
    
    70,000Loans Receivable
    
    
    20,866,117
    
    
    
    21,420,000
    
    
    
    23,575,037
    
    
    
    24,703,000Accrued Interest Receivable
    
    
    464,908
    
    
    
    464,908
    
    
    
    435,534
    
    
    
    435,534Financial LiabilitiesDeposits
    
    
    71,278,564
    
    
    
    70,475,278
    
    
    
    69,995,056
    
    
    
    69,947,453Accrued Interest Payable
    
    
    109,600
    
    
    
    109,600
    
    
    
    47,192
    
    
    
    47,192Advances from Borrowers
    
    
    219,054
    
    
    
    219,054
    
    
    
    170,037
    
    
    
    170,037Advances from FHLB
    
    
    13,417,166
    
    
    
    12,744,000
    
    
    
    8,224,459
    
    
    
    8,052,000Off-Balance-Sheet LiabilitiesMortgage Loan Commitments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,300
  NOTE 20.
 PLAN OF REORGANIZATION AND STOCK ISSUANCE
   
 38




---



##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE 21.
 EARNINGS PER COMMON SHARE
  2006
    
    
    2005Average Common Shares Issued
    
    
    3,558,958
    
    
    
    3,558,958Average Treasury Shares Held
    
    
    (1,715
    )
    
    
    Average Unearned ESOP Shares
    
    
    (109,245
    )
    
    
    (113,871
    )Average Unearned RRP Trust Shares
    
    
    (49,868
    )
    
    
    Weighted Average Number of Common
Shares Used in Basic EPS
    
    
    3,398,130
    
    
    
    3,445,087Effect of Dilutive Securities:Stock Options
    
    
    3,379
    
    
    
    Weighted Average Number of Common
Shares and Dilutive Potential Common
Shares Used in Dilutive EPS
    
    
    3,401,509
    
    
    
    3,445,087
 NOTE 22.
 PARENT COMPANY FINANCIAL STATEMENTS
  HOME FEDERAL BANCORP, INC. OF LOUISIANA
CONDENSED BALANCE SHEET
 June
30,2006
    
    
    2005ASSETSCash and Cash Equivalents
    
    $
    2,294
    
    
    $
    3,505Investments  Available-for-Sale, at Fair Value
    
    
    1,975
    
    
    
    1,980Investment in Subsidiary
    
    
    24,196
    
    
    
    26,910Other Assets
    
    
    74
    
    
    
    81Total Assets
    
    $
    28,539
    
    
    $
    32,476LIABILITIES AND STOCKHOLDERS EQUITYOther Liabilities
    
    $
    
    
    
    $
    44Stockholders Equity
    
    
    28,539
    
    
    
    32,432Total Liabilities and Stockholders Equity
    
    $
    28,539
    
    
    $
    32,476
 39




---



##### 



Home Federal Bancorp, Inc. of Louisiana
and Subsidiary
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 NOTE 22.
 PARENT COMPANY FINANCIAL STATEMENTS (Continued)
 HOME FEDERAL BANCORP, INC. OF LOUISIANA
CONDENSED STATEMENT OF INCOME
Years Ended June 30, 2006 and 2005
 2006
    
    
    2005Equity in Undistributed Earnings of Subsidiary
    
    $
    698
    
    
    $
    607Interest Income
    
    
    133
    
    
    
    43Total Income
    
    
    831
    
    
    
    650Total Expenses
    
    
    230
    
    
    
    79Income Before Income Taxes
    
    
    601
    
    
    
    571Income Tax (Benefit)
    
    
    (33
    )
    
    
    (13
    )Net Income
    
    $
    634
    
    
    $
    584
 HOME FEDERAL BANCORP, INC. OF LOUISIANA
CONDENSED STATEMENT OF CASH FLOWS
Years Ended June 30, 2006 and 2005
 2006
    
    
    2005OPERATING ACTIVITIESNet Income
    
    $
    634
    
    
    $
    584Adjustments to Reconcile Net Income to Net
Cash Used in Operating Activities:Equity in Undistributed Earnings of Subsidiary
    
    
    (698
    )
    
    
    (607
    )Decrease (Increase) in Other Assets
    
    
    14
    
    
    
    (55
    )(Decrease) Increase in Other Liabilities
    
    
    (44
    )
    
    
    44Accretion on Investments
    
    
    (16
    )
    
    
    Net Cash Used in Operating Activities
    
    
    (110
    )
    
    
    (34
    )INVESTING ACTIVITIESInvestment in Subsidiary
    
    
    
    
    
    
    (6,753
    )Purchase of Investments Available-for-Sale
    
    
    
    
    
    
    (1,975
    )Net Cash Used in Investing Activities
    
    
    
    
    
    
    (8,728
    )FINANCING ACTIVITIESNet Proceeds from Issuance of Common Stock
    
    
    
    
    
    
    12,267Paid-In Capital
    
    
    111
    
    
    
    Purchase of Treasury Stock
    
    
    (899
    )
    
    
    Dividends Paid
    
    
    (313
    )
    
    
    Net Cash (Used in) Provided by Financing Activities
    
    
    (1,101
    )
    
    
    12,267(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    (1,211
    )
    
    
    3,505CASH AND
CASH EQUIVALENTS, BEGINNING OF YEAR
    
    
    3,505
    
    
    
    CASH AND
CASH EQUIVALENTS, END OF YEAR
    
    $
    2,294
    
    
    $
    3,505
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MARKET PRICE OF HOME FEDERAL BANCORP, INC. COMMON SHARES
AND RELATED SHAREHOLDER MATTERS
  Quarter ended:
    
    High
    
    Low
    
    Cash dividends per shareFiscal 2006June 30, 2006
    
    $
    10.45
    
    
    $
    10.05
    
    
    $
    0.06March 31, 2006
    
    
    10.25
    
    
    
    9.80
    
    
    
    0.06December 31, 2005
    
    
    9.90
    
    
    
    9.45
    
    
    
    0.05September 30, 2005
    
    
    9.85
    
    
    
    9.35
    
    
    
    0.05Fiscal 2005June 30, 2005
    
    $
    9.90
    
    
    $
    9.30
    
    
    
    n/aMarch 31, 2005
    
    
    10.25
    
    
    
    9.60
    
    
    
    n/a
   Transfer Agent/Registrar
 
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DIRECTORS AND EXECUTIVE OFFICERS
 Directors
 Daniel R. Herndon
    
    Scott D. LawrenceChairman of the Board, President and
    
    Director. President of Southwestern Wholesale,Chief Executive Officer
    
    Shreveport, LouisianaClyde D. Patterson
    
    Amos L. Wedgeworth Jr.Director. Executive Vice President
    
    Director. Currently retiredDavid A. Herndon III
    
    Sidney D. YorkDirector. Currently retired
    
    Director. Currently retiredWoodus K. Humphrey
    
    Henry M. HearneDirector. Insurance executive, Woodus Humphrey
    
    Director. Self employed inInsurance, Inc., Shreveport, Louisiana
    
    the fields of investmentsand farmingWalter T. Colquitt IIIDirector. Dentist, Shreveport, Louisiana
 Executive Officer
  Vice President and Senior Lending Officer
 BANKING LOCATIONS
 Main Office
 
 Branch Offices
 6363 Youree Drive
    
    8990 Mansfield RoadShreveport, Louisiana
    
    Shreveport, Louisiana
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