UNITED
STATES


SECURITIES
AND EXCHANGE COMMISSION


Washington,
D.C.  20549





FORM
10-Q





(Mark
One)





S
            QUARTERLY
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
quarterly period ended September
30,
2008





OR





£
            TRANSITION
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934





For the
transition period from ____________ to ___________





Commission
File Number:000-51117





HOME
      FEDERAL BANCORP, INC. OF
    LOUISIANA(Exact
      name of registrant as specified in its
charter)





Federal
                
                86-1127166(State
      or other jurisdiction of incorporation or organization)
                
                (I.R.S.
      Employer Identification
No.)





624 Market Street, Shreveport, Louisiana
      71101(Address
      of principal executive offices)(318) 222-1145(Registrant's
      telephone number, including area code)(Former
      name, former address and former fiscal year, if changed since last
      report)





Indicate by check mark whether the
registrant (1) has filed all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90
days.


Yes S      No
£





Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company.  See the definitions of "large
accelerated filer," "accelerated filer" and "smaller reporting company" in Rule
12b-2 of the Exchange Act.





Large
      accelerated filer     £
                
                Accelerated
      Filer     £Non-accelerated
      filer       £
                (Do
      not check if a smaller reporting company)
                Smaller
      reporting company     S





Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).


Yes £     No
S





Shares of
common stock, par value $.01 per share, outstanding as of November 14,
2008:  The registrant had 3,377,600 shares of common stock
outstanding, of which 2,135,375 shares were held by Home Federal Mutual Holding
Company of Louisiana, the registrant's mutual holding company, and 1,242,225
shares were held by the public and directors, officers and employees of the
registrant, and the registrant's employee benefit plans.







INDEX





PagePART
      I
                  -
                  FINANCIAL
      INFORMATIONItem
      1:
                  
                  Financial
      Statements (Unaudited)Consolidated Statements of Financial
    Condition
                  1Consolidated Statements of Income
                  2Consolidated Statements of Changes in Stockholders'
      Equity
                  3Consolidated Statements of Cash Flows
                  4Notes to Consolidated Financial
    Statements
                  6Item
      2:
                  
                  Management’s Discussion and Analysis of Financial Condition and
      Results of Operations
                  11Item
      3
                  
                  Quantitative and Qualitative Disclosures About Market
      Risk
                  16Item
      4:
                  
                  Controls and Procedures
                  16Item
      4T:
                  
                  Controls and Procedures
                  16PART
      II
                  -
                  OTHER
      INFORMATIONItem
      1:
                  
                  Legal Proceedings
                  17Item
      1A:
                  
                  Risk Factors
                  17Item
      2:
                  
                  Unregistered Sales of Equity Securities and Use of
      Proceeds
                  17Item
      3:
                  
                  Defaults Upon Senior Securities
                  17Item
      4:
                  
                  Submission of Matters to a Vote of Security
      Holders
                  18Item
      5:
                  
                  Other Information
                  18Item
      6:
                  
                  Exhibits
                  18SIGNATURES


Index




HOMEFEDERAL BANCORP, INC. OF LOUISIANA





CONSOLIDATED
STATEMENTS OF FINANCIAL CONDITION





September 30,
                    2008
                  
                  
                  June 30,
                    2008(Unaudited)
                  
                  
                  (Audited)ASSETS
                  
                  (In
      Thousands)Cash
      and Cash Equivalents (Includes Interest-Bearing Deposits with Other Banks
      of $5,697 and $4,957 for September 30, 2008 and June 30, 2008,
      Respectively)
                  
                  $
                  7,118
                  
                  
                  $
                  7,363Securities
      Available-for-Sale
                  
                  
                  100,885
                  
                  
                  
                  96,324Securities
      Held-to-Maturity
                  
                  
                  1,853
                  
                  
                  
                  1,688Loans
      Held-for-Sale
                  
                  
                  631
                  
                  
                  
                  852Loans
      Receivable, Net
                  
                  
                  28,384
                  
                  
                  
                  28,263Accrued
      Interest Receivable
                  
                  
                  551
                  
                  
                  
                  550Premises
      and Equipment, Net
                  
                  
                  873
                  
                  
                  
                  880Deferred
      Tax Asset
                  
                  
                  652
                  
                  
                  
                  1,691Foreclosed
      Real Estate
                  
                  
                  48
                  
                  
                  
                  52Other
      Assets
                  
                  
                  34
                  
                  
                  
                  52Total
      Assets
                  
                  $
                  141,029
                  
                  
                  $
                  137,715LIABILITIES
      AND STOCKHOLDERS’ EQUITYLIABILITIESDeposits
                  
                  
                  78,240
                  
                  
                  
                  78,359Advances
      from Borrowers for Taxes and Insurance
                  
                  
                  233
                  
                  
                  
                  177Advances
      from Federal Home Loan Bank of Dallas
                  
                  
                  31,867
                  
                  
                  
                  26,876Stock
      Purchase Deposit Escrow
                  
                  
                  --
                  
                  
                  
                  3,575Other
      Accrued Expenses and Liabilities
                  
                  
                  756
                  
                  
                  
                  854Total
      Liabilities
                  
                  
                  111,096
                  
                  
                  
                  109,841STOCKHOLDERS’
      EQUITYPreferred
      Stock – No Par Value;2,000,000 Shares Authorized; None Issued and
      Outstanding
                  
                  
                  --
                  
                  
                  
                  --Common
      stock – 8,000,000 shares of $.01 par value authorized; 3,558,958 shares
      issued;3,377,600 shares
      outstanding and 3,383,287 shares outstanding at September 30, 2008 and
      June 30, 2008, respectively
                  
                  
                  14
                  
                  
                  
                  14Additional
      paid-in capital
                  
                  
                  13,579
                  
                  
                  
                  13,567Treasury
      Stock, at Cost – 181,358 Shares at September 30, 2008; 175,671 Shares at
      June 30, 2008
                  
                  
                  (1,858
                  )
                  
                  
                  (1,809
                  )Unearned
      ESOP Stock
                  
                  
                  (926
                  )
                  
                  
                  (940
                  )Unearned
      RRP Trust Stock
                  
                  
                  (269
                  )
                  
                  
                  (395
                  )Retained
      Earnings
                  
                  
                  20,105
                  
                  
                  
                  20,071Accumulated
      Other Comprehensive Loss
                  
                  
                  (712
                  )
                  
                  
                  (2,634
                  )Total
      Stockholders’ Equity
                  
                  
                  29,933
                  
                  
                  
                  27,874TOTAL
      LIABILITIES AND STOCKHOLDERS’ EQUITY
                  
                  $
                  141,029
                  
                  
                  $
                  137,715








1
 Index





HOMEFEDERAL BANCORP, INC. OF LOUISIANA





CONSOLIDATED
STATEMENTS OF INCOME


(Unaudited)





For
      the Three Months Ended September 30,2008
                
                
                2007INTEREST
      INCOME
                
                (In
      Thousands, Except Per Share Data)Loans,
      Including Fees
                
                $
                528
                
                
                $
                515Investment
      Securities
                
                
                40
                
                
                
                66Mortgage-Backed
      Securities
                
                
                1,266
                
                
                
                1,109Other
      Interest-Earning Assets
                
                
                16
                
                
                
                37Total
      Interest Income
                
                
                1,850
                
                
                
                1,554INTEREST
      EXPENSEDeposits
                
                
                674
                
                
                
                770Federal
      Home Loan Bank Borrowings
                
                
                306
                
                
                
                196Total
      Interest Expense
                
                
                980
                
                
                
                966Net
      Interest Income
                
                
                870
                
                
                
                761PROVISION
      FOR LOAN LOSSES
                
                
                --
                
                
                
                --Net
      Interest Income afterProvision
      for Loan Losses
                
                
                870
                
                
                
                761NON-INTEREST
      INCOMEGain
      on Sale of Loans
                
                
                --
                
                
                
                1Gain
      on Sale of Investments
                
                
                33
                
                
                
                22Other
      Income
                
                
                10
                
                
                
                15Total
      Non-Interest Income
                
                
                43
                
                
                
                38NON-INTEREST
      EXPENSEMerger
      and Stock Issuance Costs
                
                
                132
                
                
                
                --Compensation
      and Benefits
                
                
                397
                
                
                
                394Occupancy
      and Equipment
                
                
                46
                
                
                
                44Data
      Processing
                
                
                20
                
                
                
                17Audit
      and Professional Fees
                
                
                35
                
                
                
                41Franchise
      and Bank Shares Tax
                
                
                38
                
                
                
                38Other
      Expense
                
                
                80
                
                
                
                95Total
      Non-Interest Expense
                
                
                748
                
                
                
                629Income
      Before Income Taxes
                
                
                165
                
                
                
                170PROVISION
      FOR INCOME TAX EXPENSE
                
                
                56
                
                
                
                58Net
      Income
                
                $
                109
                
                
                $
                112INCOME
      PER COMMON SHARE:Basic
                
                $
                0.03
                
                
                $
                0.03Diluted
                
                $
                0.03
                
                
                $
                0.03DIVIDENDS
      DECLARED
                
                $
                0.06
                
                
                $
                0.06








2
 Index


HOMEFEDERAL BANCORP, INC. OF LOUISIANA





CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY


THREE
MONTHS ENDED SEPTEMBER 30, 2008 AND 2007





Common
      Stock
              
              
              Additional
                Paid-in
                Capital
              
              
              Unearned
                ESOP
                  Stock
              
              
              Unearned
      RRP
                Trust
                Stock
              
              
              Retained
                Earnings
              
              
              Treasury Stock
              
              
              Accumulated
                Other
                Comprehensive
                Income
      (Loss)
              
              
              Total
                Stockholders’
                Equity(In
      Thousands)BALANCE
      – JUNE 30, 2007
              
              $
              14
              
              
              $
              13,509
              
              
              $
              (997
              )
              
              $
              (551
              )
              
              $
              20,449
              
              
              $
              (1,771
              )
              
              $
              (2,841
              )
              
              $
              27,812Net
      Income
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              112
              
              
              
              --
              
              
              
              --
              
              
              
              112Other
      Comprehensive Loss:Changes
      in Unrealized Gain  on Securities Available-for-Sale, Net of Tax
      Effects
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              1,246
              
              
              
              1,246RRP
      Shares Earned
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              138
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              138Stock
      Options Vested
              
              
              --
              
              
              
              17
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              17ESOP
      Compensation Earned
              
              
              --
              
              
              
              --
              
              
              
              14
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              14Dividends
      Declared
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              (71
              )
              
              
              --
              
              
              
              --
              
              
              
              (71
              )Acquisition
      Treasury Stock
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              (38
              )
              
              
              --
              
              
              
              (38
              )BALANCE
      – SEPTEMBER 30, 2007
              
              $
              14
              
              
              $
              13,526
              
              
              $
              (983
              )
              
              $
              (413
              )
              
              $
              20,490
              
              
              $
              (1,809
              )
              
              $
              (1,595
              )
              
              $
              29,230BALANCE
      – JUNE 30, 2008
              
              $
              14
              
              
              $
              13,567
              
              
              $
              (940
              )
              
              $
              (395
              )
              
              $
              20,071
              
              
              $
              (1,809
              )
              
              $
              (2,634
              )
              
              $
              27,874Net
      Income
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              109
              
              
              
              --
              
              
              
              --
              
              
              
              109Other
      Comprehensive Loss:Changes
      in Unrealized Gain  on Securities Available-for-Sale, Net of Tax
      Effects
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              1,922
              
              
              
              1,922RRP
      Shares Earned
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              126
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              126Stock
      Options Vested
              
              
              --
              
              
              
              15
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              15ESOP
      Compensation Earned
              
              
              --
              
              
              
              (3
              )
              
              
              14
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              11Dividends
      Declared
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              (75
              )
              
              
              --
              
              
              
              --
              
              
              
              (75
              )Acquisition
      Treasury Stock
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              (49
              )
              
              
              --
              
              
              
              (49
              )BALANCE
      – SEPTEMBER 30, 2008
              
              $
              14
              
              
              $
              13,579
              
              
              $
              (926
              )
              
              $
              (269
              )
              
              $
              20,105
              
              
              $
              1,858
              
              
              $
              (712
              )
              
              $
              29,933








3
 Index




HOMEFEDERAL BANCORP, INC. OF LOUISIANA





CONSOLIDATED
STATEMENTS OF CASH FLOWS


(Unaudited)





Three
      Months EndedSeptember 30,2008
                
                
                2007(In
      Thousands)CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      Income
                
                $
                109
                
                
                $
                112Adjustments
      to Reconcile Net Income to Net Cash Provided by Operating
      ActivitiesNet
      Amortization and Accretion on Securities
                
                
                (69
                )
                
                
                (34
                )Gain
      on Sale of Investments
                
                
                (33
                )
                
                
                (22
                )Amortization
      of Deferred Loan Fees
                
                
                (2
                )
                
                
                (4
                )Depreciation
      of Premises and Equipment
                
                
                13
                
                
                
                14ESOP
      Expense
                
                
                11
                
                
                
                14Stock
      Option Expense
                
                
                15
                
                
                
                17Recognition
      and Retention Plan Expense
                
                
                32
                
                
                
                37Deferred
      Income Tax
                
                
                (5
                )
                
                
                (6
                )Changes
      in Assets and LiabilitiesLoans
      Held-for-Sale – Originations
                
                
                (4,481
                )
                
                
                (5,358
                )Loans
      Held-for-Sale – Principal Repayments
                
                
                4,703
                
                
                
                5,511Accrued
      Interest Receivable
                
                
                (1
                )
                
                
                (21
                )Other
      Operating Assets
                
                
                19
                
                
                
                39Other
      Operating Liabilities
                
                
                51
                
                
                
                149Net
      Cash Provided by Operating Activities
                
                
                362
                
                
                
                448CASH
      FLOWS FROM INVESTING ACTIVITIESLoan
      Originations and Purchases, Net of Principal Collections
                
                
                (121
                )
                
                
                (1,811
                )Deferred
      Loan Fees Collected
                
                
                5
                
                
                
                4Acquisition
      of Premises and Equipment
                
                
                (6
                )
                
                
                (12
                )Activity
      in Available-for-Sale Securities:Proceeds
      from Sales of Securities
                
                
                2,035
                
                
                
                1,913Principal
      Payments on Mortgage-backed Securities
                
                
                2,575
                
                
                
                3,929Purchases
      of Securities
                
                
                (6,159
                )
                
                
                (7,423
                )Activity
      in Held-to-Maturity Securities:Principal
      Payments on Mortgage-Backed Securities
                
                
                40
                
                
                
                47Purchases
      of Securities
                
                
                (204
                )
                
                
                --Net
      Cash Used in Investing Activities
                
                $
                (1,835
                )
                
                $
                (3,353
                )







4
 Index




HOME
FEDERAL BANCORP, INC. OF LOUISIANA





CONSOLIDATED
STATEMENTS OF CASH FLOWS (Continued)


(Unaudited)





Three
      Months EndedSeptember 30,2008
                
                
                2007CASH
      FLOWS FROM FINANCING ACTIVITIES
                
                (In
      Thousands)Net
      (Decrease) Increase in Deposits
                
                
                (120
                )
                
                
                383Proceeds
      from Federal Home Loan Bank Advances
                
                
                11,200
                
                
                
                5,500Repayments
      of Advances from Federal Home Loan Bank
                
                
                (6,209
                )
                
                
                (976
                )Net
      Increase in Mortgage-Escrow Funds
                
                
                56
                
                
                
                59Dividends
      Paid
                
                
                (75
                )
                
                
                (71
                )Acquisition
      of Treasury Stock
                
                
                (49
                )
                
                
                (38
                )Stock
      Purchase Deposits Received
                
                
                4,556
                
                
                
                --Stock
      Purchase Deposits Refunded
                
                
                (8,131
                )
                
                
                --Net
      Cash Provided by Financing Activities
                
                
                1,228
                
                
                
                3,965NET
      (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
                
                
                (245
                )
                
                
                4,262CASH
      AND CASH EQUIVALENTS - BEGINNING OF PERIOD
                
                
                7,363
                
                
                
                3,972CASH
      AND CASH EQUIVALENTS - END OF PERIOD
                
                $
                7,118
                
                
                $
                5,924SUPPLEMENTARY
      CASH FLOW INFORMATIONInterest
      Paid on Deposits and Borrowed Funds
                
                $
                954
                
                
                $
                914Income
      Taxes Paid
                
                
                --
                
                
                
                --Market
      Value Adjustment for Gain on Securities Available-for-Sale
                
                
                2,911
                
                
                
                1,889








5
 Index




HOMEFEDERAL BANCORP, INC. OF LOUISIANA


NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS








1.
            SUMMARY
      OF ACCOUNTING POLICIES





Basis
of Presentation





The
consolidated financial statements include the accounts of Home Federal Bancorp,
Inc. of Louisiana (the “Company”) and its subsidiary, Home Federal Savings and
Loan Association (the “Association”).  These consolidated financial
statements were prepared in accordance with instructions for Form 10-Q and
Regulation S-X and do not include information or footnotes necessary for a
complete presentation of financial condition, results of operations, and cash
flows in conformity with accounting principles generally accepted in the United
States of America. However, in the opinion of management, all adjustments
(consisting of normal recurring adjustments) necessary for a fair presentation
of the financial statements have been included. The results of operations for
the three month period ended September 30, 2008, is not necessarily indicative
of the results which may be expected for the fiscal year ending June 30,
2009.





Use
of Estimates





In
preparing consolidated financial statements in conformity with accounting
principles generally accepted in the United States of America, management is
required to make estimates and assumptions that affect the reported amounts of
assets and liabilities as of the date of the Consolidated Statements of
Financial Condition and reported amounts of revenues and expenses during the
reporting period.  Actual results could differ from those
estimates.  Material estimates that are particularly susceptible to
significant change in the near term relate to the allowance for loan
losses.





Nature
of Operations





On
January 18, 2005, Home Federal Savings and Loan Association (the “Association”),
completed its reorganization to the mutual holding company form of organization
and formed Home Federal Bancorp, Inc. of Louisiana (the “Company”) to serve as
the stock holding company for the Association.  In connection with the
reorganization, the Company sold 1,423,583 shares of its common stock in a
subscription and community offering at a price of $10.00 per
share.  The Company also issued 2,135,375 shares of common stock in
the reorganization to Home Federal Mutual Holding Company of Louisiana, or 63.2%
of our outstanding common stock at September 30, 2008.  The
Association is a federally chartered, stock savings and loan association and is
subject to federal regulation by the Federal Deposit Insurance Corporation and
the Office of Thrift Supervision.  Services are provided to its
customers by three offices, all of which are located in the City of Shreveport,
Louisiana.  The area served by the Association is primarily the
Shreveport-Bossier City metropolitan area; however, loan and deposit customers
are found dispersed in a wider geographical area covering much of northwest
Louisiana.





Cash
and Cash Equivalents





For
purposes of the Consolidated Statements of Cash Flows, cash and cash equivalents
include cash on hand, balances due from banks, and federal funds sold, all of
which mature within ninety days.


6
 Index


HOME
FEDERAL BANCORP, INC. OF LOUISIANA
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 Securities





The
Company classifies its debt and equity investment securities into one of three
categories:  held-to-maturity, available-for-sale, or
trading.  Investments in nonmarketable equity securities and debt
securities, in which the Company has the positive intent and ability to hold to
maturity, are classified as held-to-maturity and carried at amortized
cost.  Investments in debt securities that are not classified as
held-to-maturity and marketable equity securities that have readily determinable
fair values are classified as either trading or available-for-sale
securities.  Securities that are acquired and held principally for the
purpose of selling in the near term are classified as trading
securities.  Investments in securities not classified as trading or
held-to-maturity are classified as available-for-sale.





Trading
account and available-for-sale securities are carried at fair
value.  Unrealized holding gains and losses on trading securities are
included in earnings while net unrealized holding gains and losses on
available-for-sale securities are excluded from earnings and reported in other
comprehensive income.  Purchase premiums and discounts are recognized
in interest income using the interest method over the term of the
securities.  Declines in the fair value of held-to-maturity and
available-for-sale securities below their cost that are deemed to be other than
temporary are reflected in earnings as realized losses.  In estimating
other-than-temporary impairment losses, management considers (1) the length of
time and the extent to which the fair value has been less than cost, (2) the
financial condition and near-term prospects of the issuer, and (3) the intent
and ability of the Association to retain its investment in the issuer for a
period of time sufficient to allow for any anticipated recovery in fair
value.  Gains and losses on the sale of securities are recorded on the
trade date and are determined using the specific identification
method.




Loans
Held For Sale





Loans
originated and intended for sale in the secondary market are carried at the
lower of cost or estimated fair value in the aggregate.  Net
unrealized losses, if any, are recognized through a valuation allowance by
charges to income.




Loans





Loans
receivable are stated at unpaid principal balances, less allowances for loan
losses and unamortized deferred loan fees.  Net nonrefundable fees
(loan origination fees, commitment fees, discount points) and costs associated
with lending activities are being deferred and subsequently amortized into
income as an adjustment of yield on the related interest earning assets using
the interest method.  Interest income on contractual loans receivable
is recognized on the accrual method.  Unearned discount on property
improvement and automobile loans is deferred and amortized on the interest
method over the life of the loan.




Allowance
for Loan Losses





The
allowance for loan losses is established as losses are estimated to have
occurred through a provision for loan losses charged to
earnings.  Loan losses are charged against the allowance when
management believes the uncollectibility of a loan balance is
confirmed.  Subsequent recoveries, if any, are credited to the
allowance.





The
allowance for loan losses is evaluated on a regular basis by management and is
based upon management’s periodic review of the collectibility of the loans in
light of historical experience, the nature and volume of the loan portfolio,
adverse situations that may affect the borrower’s ability to repay, estimated
value of the underlying collateral and prevailing economic
conditions.  The evaluation is inherently subjective as it requires
estimates that are susceptible to significant revision as more information
becomes available.


7
 Index




HOME
FEDERAL BANCORP, INC. OF LOUISIANA





NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)





A loan is
considered impaired when, based on current information or events, it is probable
that the Association will be unable to collect the scheduled payments of
principal and interest when due according to the contractual terms of the loan
agreement.  When a loan is impaired, the measurement of such
impairment is based upon the fair value of the collateral of the
loan.  If the fair value of the collateral is less than the recorded
investment in the loan, the Association will recognize the impairment by
creating a valuation allowance with a corresponding charge against
earnings.





An
allowance is also established for uncollectible interest on loans classified as
substandard. Substandard loans are those, which are in excess of ninety days
delinquent.  The allowance is established by a charge to interest
income equal to all interest previously accrued and income is subsequently
recognized only to the extent that cash payments are received.  When,
in management’s judgment, the borrower’s ability to make periodic interest and
principal payments is back to normal, the loan is returned to accrual
status.




Off-Balance
Sheet Credit Related Financial Instruments





In the
ordinary course of business, the Association has entered into commitments to
extend credit.  Such financial instruments are recorded when they are
funded.




Premises
and Equipment




Land is
carried at cost.  Buildings and equipment are carried at cost less
accumulated depreciation computed on the straight-line method over the estimated
useful lives of the assets.




Income
Taxes




Deferred
income tax assets and liabilities are determined using the liability (or balance
sheet) method.  Under this method, the net deferred tax asset or
liability is determined based on the tax effects of the temporary differences
between the book and tax bases of the various assets and liabilities and gives
current recognition to changes in tax rates and laws.




Comprehensive
Income





Accounting
principles generally accepted in the United States of America require that
recognized revenue, expenses, gains and losses be included in net
income.  Although certain changes in assets and liabilities, such as
unrealized gains and losses on available-for-sale securities, are reported as a
separate component of the equity section of the Consolidated Statements of
Financial Condition, such items, along with net income, are components of
comprehensive income.


8
 Index
  HOME
FEDERAL BANCORP, INC. OF LOUISIANA
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


2.
            EARNINGS
      PER SHARE





Basic
earnings per common share are computed based on the weighted average number of
shares outstanding as prescribed in SFAS No. 128.  Diluted earnings
per share is computed based on the weighted average number of shares outstanding
and common share equivalents that would arise from the exercise of dilutive
securities. Earnings per share for the three ended September 30, 2008 and 2007
were calculated as follows:





Three
      Months Ended September 30, 2008
              
              
              Three
      Months Ended September 30, 2007Basic
              
              
              Diluted
              
              
              Basic
              
              
              DilutedNet
      income
              
              $
              108,607
              
              
              $
              108,607
              
              
              $
              112,328
              
              
              $
              112,328Weighted
      average shares outstanding
              
              
              3,253,877
              
              
              
              3,253,877
              
              
              
              3,236,285
              
              
              
              3,236,285Effect
      of unvested common stock awards
              
              
              --
              
              
              
              --
              
              
              
              --
              
              
              
              3,382Adjusted
      weighted average shares used in earnings per share
    computation
              
              
              3,253,877
              
              
              
              3,253,877
              
              
              
              3,236,285
              
              
              
              3,239,667Earnings
      per share
              
              $
              .03
              
              
              $
              .03
              
              
              $
              .03
              
              
              $
              .03





For the
three months ended September 30, 2008 and 2007, there were outstanding options
to purchase 169,982 and 170,857 shares, respectively, at $9.85 per
share.  For the quarter ended September 30, 2008, the options were not
included in the computation of diluted earnings per share because the options’
exercise price was greater than the average market value price of the common
shares during the period.





3.
            RECOGNITION
      AND RETENTION PLAN





On August
10, 2005, the shareholders of the Company approved the establishment of the Home
Federal Bancorp, Inc. of Louisiana 2005 Recognition and Retention Plan and Trust
Agreement (the “Recognition Plan”) for the benefit of directors, officers, and
employees as an incentive to retain personnel of experience and ability in key
positions.  The aggregate number of shares of the Company’s common
stock subject to award under the Recognition Plan totaled 69,756
shares.  During fiscal 2006, the Company purchased 69,756 shares at an
aggregate cost of $688,439.  As the shares were acquired for the
Recognition Plan, the purchase price of these shares was recorded as a contra
equity account.  As the shares are distributed, the contra equity
account is reduced.  During the quarter ended September 30, 2008,
12,781 shares vested and were released from the Recognition Plan Trust and
27,504 shares remained in the Recognition Plan Trust at September 30,
2008.





Recognition
Plan shares are earned by recipients at a rate of 20% of the aggregate number of
shares covered by the Recognition Plan award over five
years.  Generally, if the employment of an employee or service as a
non-employee director is terminated prior to the fifth anniversary of the date
of grant of Recognition Plan share award, the recipient shall forfeit the right
to any shares subject to the award that have not been earned.  In the
case of death or disability of the recipient or a change in control of the
Company, the Recognition Plan awards will be vested and shall be distributed as
soon as practicable thereafter.  As of September 30, 2008, 1,871
awards had been forfeited and vesting was accelerated on 2,390 shares as a
result of the death of two of the participants.





The
present cost associated with the Recognition Plan is based on a share price of
$9.85, which represents the market price of the Company’s stock on August 18,
2005, the date on which the Recognition Plan shares were granted.  The
cost is being recognized over five years.


9
 Index
  HOME
FEDERAL BANCORP, INC. OF LOUISIANA
 
 NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)


4.
            STOCK
      OPTION PLAN





On August
10, 2005, the shareholders of the Company approved the establishment of the Home
Federal Bancorp, Inc. of Louisiana 2005 Stock Option Plan (the “Option Plan”)
for the benefit of directors, officers, and other key employees.  The
aggregate number of shares of common stock reserved for issuance under the
Option Plan totaled 174,389.  Both incentive stock options and
non-qualified stock options may be granted under the Option Plan.





On August
18, 2005, the Company granted 174,389 options to directors, officers and
employees.  Under the Option Plan, the exercise price of each option
cannot be less than the fair market value of the underlying common stock as of
the date of the option grant, which was $9.85, and the maximum term is ten
years.  Incentive stock options and non-qualified stock options
granted under the Option Plan become vested and exercisable at a rate of 20% per
year over five years, commencing one year from the date of the grant, with an
additional 20% vesting on each successive anniversary of the date the option was
granted.  No vesting shall occur after an employee’s employment or
service as a director is terminated.  As of September 30, 2008, 4,627
stock options had been forfeited and are available for future
grant.  In the event of the death or disability of an employee or
director or change in control of the Company, the unvested options shall become
vested and exercisable.  The Company accounts for the Option Plan
under the guidance of SFAS No. 123(R).





5.
            RECENT
      ACCOUNTING PRONOUNCEMENTS





In
September 2006, the FASB issued SFAS No. 157, Fair Value
Measurements.  This Statement defines fair value, establishes a
framework for measuring fair value in generally accepted accounting principles,
and expands disclosures about fair value measurements.  This Statement
is effective for financial statements issued for fiscal years beginning after
November 15, 2007.





In
September 2006, the FASB issued SFAS No. 158, Employers’ Accounting for Defined
Benefit Pension and Other Postretirement Plans (as
amended).  This Statement improves financial reporting by
requiring an employer to recognize the overfunded or underfunded status of a
defined benefit postretirement plan (other than a multiemployer plan) as an
asset or liability in its statement of financial position and to recognize
changes in that funded status in the year in which the changes occur through
comprehensive income.  This Statement also requires an employer to
measure the funded status of a plan as of the date of its year-end statement of
financial position.  An employer with publicly traded equity
securities shall initially apply the requirement to recognize the funded status
of a benefit plan as of the end of the fiscal year ending after December 31,
2006.  The requirement to measure plan assets and benefit obligations
as of the date of the employer’s fiscal year-end statement of financial position
is effective for fiscal years ending after December 31, 2008.





In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities (as amended).  This Statement
permits entities to choose to measure many financial instruments and certain
other items at fair value. The objective is to provide entities with the
opportunity to mitigate volatility in reported earnings caused by measuring
related assets and liabilities differently without having to apply complex hedge
accounting provisions. This Statement is effective as of the beginning of an
entity’s first fiscal year that begins after November 15, 2007.





In
December 2007, the FASB issued SFAS 141(R), Business
Combinations.  SFAS 141 (R) will impact how entities apply the
acquisition method to business combinations.  Significant changes to
how the Company accounts for business combinations under this Statement include
1) the acquisition date will be the date the acquirer obtains control, 2) all
identifiable assets acquired, liabilities assumed, and noncontrolling interests
in the acquiree  will be stated at fair value on the acquisition date,
3) assets or liabilities arising from noncontractual contingencies will be
measured at their acquisition date fair value only if it is more likely than not
that they meet the definition of an asset or liability on the acquisition date,
4) adjustments subsequently made to the provisional amounts recorded on the
acquisition date will be made retroactively during a measurement period not to
exceed one year, 5) acquisition-related restructuring costs that do not meet the
criteria in SFAS 146, Accounting for Costs Associated with Exit or Disposal
Activities, will be expensed as incurred, transaction costs will be expensed as
incurred, 7) reversals of deferred income tax valuation allowances and income
tax contingencies will be recognized in earnings subsequent to the measurement
period, and 8) the allowance for loan losses of an acquiree will not be
permitted to be recognized by the acquirer.  Additionally, SFAS 141(R)
will require additional disclosures regarding subsequent changes to
acquisition-related contingencies, contingent consideration, noncontrolling
interests, acquisition-related transaction costs, fair values and cash flows not
expected to be collected for acquired loans, and goodwill
valuation.


10
 Index




HOME
FEDERAL BANCORP, INC. OF LOUISIANA





NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)





The
Company will be required to apply SFAS 141(R) prospectively to all business
combinations completed on or after July 1, 2009.  Early adoption is
not permitted.  For business combinations with an acquisition date
before the effective date, the provisions of SFAS 141(R) will apply to the
subsequent accounting for deferred income tax valuation allowances and income
tax contingencies and will require any changes in those amounts to be recorded
in earnings.





In
December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements (an amendment of ARB No.
51).  This Statement was issued to improve the relevance,
comparability, and transparency of the financial information that a reporting
entity provides in its consolidated financial statements.  This
Statement is effective for fiscal years, and interim periods with those fiscal
years, beginning on or after December 31, 2008.





In March
2008, the FASB issued SFAS No. 161, Disclosures about Derivative
Instruments and Hedging Activities (an amendment of FASB Statement No.
133).  This Statement requires enhanced disclosures about an entity's
derivative and hedging activities and thereby improves the transparency of
financial reporting.  This Statement is effective for financial
statements issued for fiscal years and interim periods beginning after November
15, 2008, with early application encouraged. This Statement encourages, but does
not require, comparative disclosures for earlier periods at initial
adoption.





In May
2008, the FASB issued SFAS No. 162, The Hierarchy of Generally Accepted
Accounting Principles.  This Statement identifies the sources
of accounting principles and the framework for selecting the principles to be
used in the preparation of financial statements of nongovernmental entities that
are presented in conformity with generally accepted accounting principles in the
United States (the GAAP hierarchy).  This Statement is effective 60
days following the SEC’s approval of the PCAOB amendments to AU Section 411, The
Meaning of Present Fairly in Conformity with Generally Accepted Accounting
Principles.





The above
pronouncements are not expected to have a significant impact on the consolidated
financial statements of the Company.





ITEM2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS





General





The
Company was formed by the Association in connection with the Association’s
reorganization and commenced operations on January 18, 2005.  The
Company’s results of operations are primarily dependent on the results of the
Association, which became a wholly owned subsidiary upon completion of the
reorganization.  The Association’s results of operations depend, to a
large extent, on net interest income, which is the difference between the income
earned on its loan and investment portfolios and the cost of funds, consisting
of the interest paid on deposits and borrowings.  Results of
operations are also affected by provisions for loan losses and loan sale
activities.  Non-interest expense principally consists of compensation
and employee benefits, office occupancy and equipment expense, data processing
and other expense.  Our results of operations are also significantly
affected by general economic and competitive conditions, particularly changes in
interest rates, government policies and actions of regulatory
authorities.  Future changes in applicable law, regulations or
government policies may materially impact our financial conditions and results
of operations.


11
 Index




HOME
FEDERAL BANCORP, INC. OF LOUISIANA





MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)





Critical
Accounting Policies





Allowance for Loan
Losses.  The Company has identified the calculation of the
allowance for loan losses as a critical accounting policy, due to the higher
degree of judgment and complexity than its other significant accounting
policies.  Provisions for loan losses are based upon management’s
periodic valuation and assessment of the overall loan portfolio and the
underlying collateral, trends in non-performing loans, current economic
conditions and other relevant factors in order to maintain the allowance for
loan losses at a level believed by management to represent all known and
inherent losses in the portfolio that are both probable and reasonably
estimable.  Although management uses the best information available,
the level of the allowance for loan losses remains an estimate which is subject
to significant judgment and short-term change.





Income Taxes.Deferred income
tax assets and liabilities are determined using the liability (or balance sheet)
method.  Under this method, the net deferred tax asset or liability is
determined based on the tax effects of the temporary differences between the
book and tax bases of the various assets and liabilities and gives current
recognition to changes in tax rates and laws.  The realization of our
deferred tax assets principally depends upon our achieving projected future
taxable income.  We may change our judgments regarding future
profitability due to future market conditions and other factors.  We
may adjust our deferred tax asset balances if our judgments change.





Discussion of Financial
Condition Changes from June 30, 2008 to September 30, 2008





At
September 30, 2008, total assets amounted to $141.0 million compared to $137.7
million at June 30, 2008, an increase of approximately $3.3 million, or
2.4%.  This increase was primarily due to an increase in investment
securities of $4.7 million, or 4.8%, partially offset by a decrease in the
Company’s deferred tax asset of $1.0 million, or 61.4%, and a decrease in cash
and cash equivalents of $245,000, or 3.3%.





The
increase in investment securities was primarily due to purchases of securities
available-for-sale funded through advances from the Federal Home Loan Bank of
Dallas, combined with an increase in the market value of such
securities.  The increase in the market value of available-for-sale
securities reduced the deferred tax asset associated with unrealized loss
associated with these securities.





The
Company’s total liabilities amounted to $111.1 million at September 30, 2008, an
increase of approximately $1.3 million, or 1.2%, compared to total liabilities
of $109.8 million at June 30, 2008.  The primary reason for the
increase in liabilities was due to the $5.0 million, or 18.6%, increase in
advances from the Federal Home Loan Bank, partially offset by a decrease of $3.6
million in stock purchase deposits.





Stockholders’
equity increased $2.1 million, or 7.4%, to $29.9 million at September 30, 2008
compared to $27.9 million at June 30, 2008.  This increase was
primarily the result of the change in the Company’s Accumulated Other
Comprehensive Loss associated with unrealized gain on securities
available-for-sale of $1.9 million, the recognition of net income of $109,000
for the three months ended September 30, 2008, and the distribution of shares
associated with the Company’s Recognition Plan of $126,000.  These
increases were offset by dividends of $75,000 paid during the quarter ended
September 30, 2008, and the acquisition of treasury shares of
$49,000.


12
 Index




HOME
FEDERAL BANCORP, INC. OF LOUISIANA





MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)




The
Association is required to meet minimum capital standards promulgated by the
Office of Thrift Supervision (“OTS”).  At September 30, 2008, Home
Federal Savings and Loan’s regulatory capital was well in excess of the minimum
capital requirements.





Comparison of Operating
Results for the Three Month Periods Ended September 30, 2008 and
2007





General





Net
income amounted to $109,000 for the three months ended September 30, 2008
compared to $112,000 for the same period in 2007, a decrease of $3,000, or
2.7%.  The decrease was primarily due to an increase in non-interest
expense, partially offset by an increase in net interest income.  The
increase in non interest expense was caused primarily by merger and stock
issuance cost incurred during the period.





Net Interest
Income





Net
interest income for the three months ended September 30, 2008, was $870,000, an
increase of $109,000 in comparison to $761,000 for the three months ended
September 30, 2007.  This increase was primarily due to increases of
$13,000 and $157,000 in interest income and fees on loans, and mortgage-backed
securities, respectively, offset by a combined decrease in interest income on
investment securities and other interest earning assets of $47,000 and a net
increase in total interest expense paid on deposits and Federal Home Loan Bank
borrowings of $14,000.  Interest on deposits decreased $96,000, or
12.5%, while interest on Federal Home Loan Bank borrowings increased $110,000,
or 56.1%, compared to the three month period ended September 30,
2007.





The
Company’s average interest rate spread was 1.69% for the three months ended
September 30, 2008, compared to 1.72% for the three months ended September 30,
2007.  The Company’s net interest margin was 2.56% for the three
months ended September 30, 2008, compared to 2.52% for the three months ended
September 30, 2007.  The increase in net interest income and net
interest margin is attributable primarily to the increase in interest income
offset by an increase in cost associated with deposits and advances from the
Federal Home Loan Bank.





Provision for Losses on
Loans





Based on
an analysis of historical experience, the volume and type of lending conducted
by the Association, the status of past due principal and interest payments,
general economic conditions, particularly as such conditions relate to the
Association’s market area, the decrease in the loan portfolio and other factors
related to the collectibility of the Association’s loan portfolio, no provisions
for loan losses were made during the three months ended September 30, 2008 or
2007.  The Association’s allowance for loan losses was $231,087, or
approximately 0.8% of total loans, at September 30, 2008 and
2007.  The Association did not have any non-performing loans at
September 30, 2008 or 2007.  There can be no assurance that the loan
loss allowance will be sufficient to cover losses on non-performing assets in
the future.


13
 Index


HOME
FEDERAL BANCORP, INC. OF LOUISIANA
 
 MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)


Non-interest
Income





Total
non-interest income amounted to $43,000 for the three months ended September 30,
2008, compared to $38,000 for the same period in 2007.  The decrease
was primarily due to a decrease of $5,000 in other income partially offset by an
increase in gain on sale of investments amounting to $11,000.





Non-interest
Expense





Total
non-interest expense increased $119,000, or 18.9%, for the three months ended
September 30, 2008 compared to the prior year period.  The increase
was primarily due to the recognition of $132,000 of conversion and merger
expense in the quarter ended September 30, 2008, related to the terminated
conversion and merger described below, and an increase in compensation and
benefits expense of $3,000, or 0.8%.  These increases were partially
offset by a $15,000, or 15.8%, decrease in other operating
expenses.





On August
11, 2008, the Board of Directors of Home Federal Bancorp, Inc. of Louisiana
terminated the stock offering in connection with the conversion of Home Federal
Mutual Holding Company of Louisiana and the acquisition of a local financial
institution that was contingent on the completion of the
offering.  The recognition of conversion and merger expense for the
quarter ended September 30, 2008 was a result of this action.





The
increase in compensation and benefits expenses was a result of normal
compensation increases including Stock Options and Recognition and Retention
Plan expenses.  Compensation expense recognized by the Company for its
Stock Option and Recognition and Retention Plans amounted to $14,000 and
$32,000, respectively, for the three months ended September 30, 2008, and
$17,000 and $37,000, respectively, for the three months ended September 30,
2007.  The decrease in other operating expense was due primarily to a
$15,000 decrease in miscellaneous expense for the quarter ended September 30,
2008 compared to the quarter ended September 30, 2007.





Effective
January 1, 2006, the Company, through its subsidiary Home Federal Savings and
Loan Association, became subject to the Louisiana bank shares
tax.  This tax is assessed on the Association’s equity and
earnings.  For the three months ended September 30, 2008, the Company
recognized expense of $36,000 pertaining to bank shares tax
assessment.





Income
Taxes





Income
taxes amounted to $56,000 and $58,000 for the three months ended September 30,
2008 and 2007, respectively, resulting in an effective tax rate of 34% for both
periods.  The decrease in income taxes for the three months ended
September 30, 2008, was due to decreased income before income
taxes.





Liquidity and Capital
Resources





Home
Federal Savings and Loan maintains levels of liquid assets deemed adequate by
management.  The Association adjusts its liquidity levels to fund
deposit outflows, repay its borrowings and to fund loan
commitments.  Home Federal Savings and Loan also adjusts liquidity as
appropriate to meet asset and liability management objectives.





Home
Federal Savings and Loan’s primary sources of funds are deposits, amortization
and prepayment of loans and mortgage-backed securities, maturities of investment
securities and other short-term investments, loan sales and earnings and funds
provided from operations.  While scheduled principal repayments on
loans and mortgage-backed securities are a relatively predictable source of
funds, deposit flows and loan prepayments are greatly influenced by general
interest rates, economic conditions and competition.  The Association
sets the interest rates on its deposits to maintain a desired level of total
deposits.  In addition, Home Federal Savings and Loan invests excess
funds in short-term interest-earning accounts and other assets, which provide
liquidity to meet lending requirements.  Home Federal Savings and
Loan’s deposit accounts with the Federal Home Loan Bank of Dallas amounted to
$5.5 million at September 30, 2008.


14
 Index




HOME
FEDERAL BANCORP, INC. OF LOUISIANA





MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)





A
significant portion of Home Federal Savings and Loan’s liquidity consists of
securities classified as available-for-sale and cash and cash
equivalents.  Home Federal Savings and Loan’s primary sources of cash
are net income, principal repayments on loans and mortgage-backed securities and
increases in deposit accounts.  If Home Federal Savings and Loan
requires funds beyond its ability to generate them internally, borrowing
agreements exist with the Federal Home Loan Bank of Dallas which provides an
additional source of funds.  At September 30, 2008, Home Federal
Savings and Loan had $31.9 million in advances from the Federal Home Loan Bank
of Dallas.





At
September 30, 2008, Home Federal Savings and Loan had outstanding loan
commitments of $1.2 million to originate loans.  At September 30,
2008, certificates of deposit scheduled to mature in less than one year, totaled
$41.4 million.





Based on
prior experience, management believes that a significant portion of such
deposits will remain with us, although there can be no assurance that this will
be the case. In addition, the cost of such deposits could be significantly
higher upon renewal, in a rising interest rate environment.  Home
Federal Savings and Loan intends to utilize its high levels of liquidity to fund
its lending activities.  If additional funds are required to fund
lending activities, Home Federal Savings and Loan intends to sell its securities
classified as available-for-sale as needed.





Home
Federal Savings and Loan is required to maintain regulatory capital sufficient
to meet tangible, core and risk-based capital ratios of at least 1.5%, 3.0% and
8.0%, respectively.  At September 30, 2008, Home Federal Savings and
Loan exceeded each of its capital requirements with ratios of 20.14%, 20.14% and
71.67%, respectively.





Off-Balance Sheet
Arrangements





At
September 30, 2008, the Association did not have any off-balance sheet
arrangements, as defined by Securities and Exchange Commission
rules.





Impact of Inflation and
Changing Prices





The
financial statements and related financial data presented herein have been
prepared in accordance with instructions to Form 10-Q, which require the
measurement of financial position and operating results in terms of historical
dollars, without considering changes in relative purchasing power over time due
to inflation.





Unlike
most industrial companies, virtually all of the Company’s assets and liabilities
are monetary in nature.  As a result, interest rates generally have a
more significant impact on a financial institution’s performance than does the
effect of inflation.


15
 Index




HOME
FEDERAL BANCORP, INC. OF LOUISIANA





MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)





Forward-Looking
Statements





This Form
10-Q contains certain forward-looking statements and information relating to the
Company that are based on the beliefs of management as well as assumptions made
by and information currently available to management.  In addition, in
those and other portions of this document, the words “anticipate,” “believe,”
“estimate,” “except,” “intend,” “should” and similar expressions, or the
negative thereof, as they relate to the Company or the Company’s management, are
intended to identify forward-looking statements.  Such statements
reflect the current views of the Company with respect to future looking events
and are subject to certain risks, uncertainties and
assumptions.  Should one or more of these risks or uncertainties
materialize or should underlying assumptions prove incorrect, actual results may
vary from those described herein as anticipated, believed, estimated, expected
or intended.  The Company does not intend to update these
forward-looking statements.





ITEM3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK





Not
applicable.





ITEM4. CONTROLS AND PROCEDURES





See Item
4T below.





ITEM4T.  CONTROLS AND PROCEDURES





Evaluation of Disclosures Controls
and Procedures. Under the supervision and with the
participation of our management, including our Chief Executive Officer and our
principal financial officer, we evaluated the effectiveness of the design and
operation of our disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end
of the period covered by this report. Based upon that evaluation, the Chief
Executive Officer and the principal financial officer have concluded that, as of
the end of the period covered by this report, our disclosure controls and
procedures are effective to ensure that information required to be disclosed in
the reports that the Company files or submits under the Securities Exchange Act
of 1934, is recorded, processed, summarized and reported within the applicable
time periods specified by the Securities and Exchange Commission’s rules and
forms.





Changes in Internal Control over
Financial Reporting.  There has been no change in the Company’s
internal control over financial reporting during the Company’s most recent
fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial
reporting.


16
 Index


PART
II








ITEM1. LEGAL PROCEEDINGS





The
Company is not involved in any pending legal proceedings other than routine
legal proceedings occurring in the ordinary course of business, which involve
amounts in the aggregate believed by management to be immaterial to the
financial condition of the Company.





ITEM1A. RISK
FACTORS





Not
applicable.





ITEM2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS




(a)
            Not
      applicable.




(b)
            Not
      applicable.





(c)
            Purchases
      of Equity Securities





The
following table represents the repurchasing activity of the stock repurchase
program during the first quarter of fiscal 2008:





Period
              
              Total
      Number of Shares
                Purchased
              
              
              Average
      Price
                Paid
      per
                Share
              
              
              Total
      Number of Shares Purchased as Part of
                Publicly
                Announced
      Plans or
                Programs
              
              
              Maximum
      Number of Shares that May Yet Be Purchased Under the Plans or
                ProgramsMonth
      #1 July 1, 2008 – July 31, 2008
              
              
              --
              
              
              $
              --
              
              
              
              --
              
              
              
              --Month
      #2 August 1, 2008 – August 31, 2008
              
              
              3,687
              
              
              
              8.85
              
              
              
              3,687
              
              
              
              121,313Month
      #3 September 1, 2008 –  September 30, 2008
              
              
              2,000
              
              
              
              8.15
              
              
              
              2,000
              
              
              
              119,313Total
              
              
              5,687
              
              
              $
              8.60
              
              
              
              5,687
              
              
              
              119,313


_____________________


Notes
to this table:





(a)  On
August 26, 2008, the Company issued a press release announcing that the Board of
Directors authorized a stock repurchase program (the "program") on August 13,
2008.





(b)  The
Company was authorized to repurchase 10% or 125,000 of the outstanding shares
other than shares held by Home Federal Mutual Holding Company.





(c)  The
program does not have an expiration date.





ITEM3. DEFAULTS UPON SENIOR SECURITIES





Not
applicable.


17
 Index




ITEM4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS





Not
applicable.





ITEM5. OTHER INFORMATION





Not
applicable.





ITEM6. EXHIBITS





The
following Exhibits are filed as part of this report:





No.
              
              Description31.1
              
              Rule
      13a-14(a)/15d-14(a) Certification of Chief Executive
    Officer31.2
              
              Rule
      13a-14(a)/15d-14(a) Certification of Chief Financial
    Officer32.0
              
              Certification
      Pursuant to 18 U.S.C Section
1350


18
 Index




SIGNATURES








In
accordance with the requirements of the Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.








Date:  November 14,
      2008
                      By:
                      /s/
      Daniel R. HerndonDaniel
      R. HerndonPresident
      and Chief Executive OfficerDate:  November 14,
      2008
                      By:
                      /s/
      Clyde D. PattersonClyde
      D. PattersonExecutive
      Vice President(principal
      financial
officer)