UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 
 FORM 10-Q
 
 (Mark One)
 þ
    
    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
 o
    
    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: 000-53494
 HOME FEDERAL HOLDINGS CORPORATION
  Georgia
(State or Other Jurisdiction of Incorporation or Organization)
    
    26-1822378
(I.R.S. Employer Identification No.)3626 Mundy Mill Road 
Gainesville, Georgia 30504
(Address of Principal Executive Offices)
    
    30504
(Zip Code)
 Registrants Telephone Number, Including Area Code: (770) 532-4372
 o þ
  Large accelerated filer
    
    o
    
    Accelerated filer
    
    oNon-accelerated filer
    
    o
    
    Smaller reporting company
    
    þ(Do not check if a smaller reporting company)
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HOME FEDERAL HOLDINGS CORPORATION
(A DEVELOPMENT STAGE COMPANY)
 INDEX TO FORM 10-Q
 PAGEPART I. FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsBalance Sheet as of September 30, 2008 (Unaudited)
    
    
    1Statements of Operations for the three months ended September 30, 2008, the periods
from February 1, 2008 to September 30, 2008, and February 1, 2007, Date of Inception,
to September 30, 2008 (Unaudited)
    
    
    2Statements of Cash Flows for the periods February 1, 2008 to September 30, 2008, and
February 1, 2007, Date of Inception, to September 30, 2008 (Unaudited)
    
    
    3Notes to Financial Statements (Unaudited)
    
    
    4Item 2.
    
Managements
Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    9Item 3.
    
    Controls and Procedures
    
    
    12PART II. OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    13Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    13Item 3.
    
    Defaults Upon Senior Securities
    
    
    13Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    13Item 5.
    
    Other Information
    
    
    13Item 6.
    
    Exhibits
    
    
    13SIGNATURES
    
    
    14EXHIBIT INDEX
    
    
    15CERTIFICATIONS
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PART I  FINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements
 Home Federal Holdings Corporation
(A Development Stage Company)
 
 Balance Sheet
(Unaudited)
 September 30,2008(unaudited)ASSETSCash
    
    $
    72,605Fixed assets, less accumulated depreciation of $11,951
    
    
    27,006Escrow deposit on real estate
    
    
    190,300Deferred issuance costs
    
    
    257,205Other Assets
    
    
    6,250Total assets
    
    $
    553,366LIABILITIES AND STOCKHOLDERS EQUITYLiabilitiesAccrued liabilities
    
    $
    263,973Line of Credit
    
    
    1,500,000Total liabilities
    
    $
    1,763,973Stockholders DeficitSpecial stock, no par, 1,000,000 shares authorized, no shares issued
    
    
    Common Stock, par value $.01 per share, 10,000,000 authorized, 10
shares issued and
    
    
    Paid-in capital
    
    
    100Stock subscription receivable
    
    
    (100
    )Deficit accumulated during development stage
    
    
    (1,210,607
    )Total stockholders deficit
    
    
    (1,210,607
    )Total liabilities and stockholders deficit
    
    $
    533,366
  1




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Home Federal Holdings Corporation
(A Development Stage Company)
 
 Statements of Operations
For the three months ended September 30, 2008 and the periods,
February 1, 2008 to September 30, 2008
And February 1, 2007, Date of Inception, to September 30, 2008
(Unaudited)
 February 1, 2007,July 1, 2008
    
    
    February 1, 2008
    
    
    Date of Inception,to
    
    
    to
    
    
    toSeptember 30,
    
    
    September 30,
    
    
    September 30,2008
    
    
    2008
    
    
    2008Income
    
    $
    
    
    
    $
    
    
    
    $
    ExpensesConsulting expenses
    
    $
    39,450
    
    
    $
    151,900
    
    
    $
    561,722Salaries and benefits
    
    
    146,163
    
    
    
    272,093
    
    
    
    295,043Rent
    
    
    18,750
    
    
    
    50,750
    
    
    
    84,000Interest expense
    
    
    12,862
    
    
    
    28,411
    
    
    
    46,848Professional fees
    
    
    11,008
    
    
    
    57,399
    
    
    
    95,474Telephone and utilities expense
    
    
    6,263
    
    
    
    7,891
    
    
    
    26,906Training expense
    
    
    
    
    
    
    940
    
    
    
    12,458Other operating costs
    
    
    1,431
    
    
    
    46,111
    
    
    
    88,156Total expenses
    
    
    235,927
    
    
    
    615,495
    
    
    
    1,210,607Net loss and deficit accumulated during the
development stage
    
    $
    235,927
    
    
    $
    (615,495
    )
    
    $
    (1,210,607
    )
  2




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Home Federal Holdings Corporation
(A Development Stage Company)
 
 Statements of Cash Flows
For the Periods February 1, 2008 to September 30, 2008
And February 1, 2007, Date of Inception, to September 30, 2008
(Unaudited)
 February 1, 2007,February 1, 2008
    
    
    Date of Inception,to
    
    
    toSeptember 30,
    
    
    September 30,2008
    
    
    2008Operating activitiesReconciliation of net loss to net cash used in operating activities:Net Loss
    
    $
    (615,495
    )
    
    $
    (1,210,607
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation expense
    
    
    8,004
    
    
    
    11,951Decrease in prepaid rent
    
    
    7,000
    
    
    
    Increase in deposits
    
    
    (190,300
    )
    
    
    (196,550
    )Increase in deferred issuance costs
    
    
    (190,979
    )
    
    
    (257,205
    )Increase in accrued liabilities
    
    
    133,650
    
    
    
    263,973Net cash used in operating activities
    
    
    (848,120
    )
    
    
    (1,388,438
    )Investing ActivitiesPurchase of fixed assets
    
    
    (8,672
    )
    
    
    (38,957
    )Net cash used in investing activities
    
    
    (8,672
    )
    
    
    (38,957
    )Financing ActivitiesProceeds from borrowings
    
    
    923,925
    
    
    
    1,500,000Net cash provided by financing activities
    
    
    923,925
    
    
    
    1,500,000Net increase in cash
    
    
    67,133
    
    
    
    72,605Cash at beginning of period
    
    
    5,472
    
    
    
    Cash at end of period
    
    $
    (72,605
    )
    
    $
    72,605Supplemental disclosure of cash flow informationCash paid for interest
    
    $
    26,724
    
    
    $
    42,738
  3




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HOME FEDERAL HOLDINGS CORPORATION
(A Development State Company)
 
 Notes to the Financial Statements
 September 30, 2008
(Unaudited)
 Note 1  Basis of Presentation
 The financial information contained herein is unaudited. Accordingly, the information does
not include all the information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial statements, however, such
information reflects adjustments, which are, in the opinion of management, necessary for a
fair statement of results for the interim periods.Operating results for the three months ended September 30, 2008, the periods February 1,
2008 to September 30, 2008 and the period February 1, 2007, date of inception, to
September 30, 2008 are not necessarily indicative of the results that may be expected
for the year ended December 31, 2008.
 Note 2  Organization and Summary of Accounting Policies
 Home Federal Holdings Corporation (the Company), was established for the purpose of
organizing Home Federal Bank, NA, I.O., (the Bank). The Company will file an application
to be a bank holding company as defined in the Bank Holding Company Act of 1956. The Bank is
a proposed national bank being organized under the laws of the Office of the Comptroller of
the Currency with the purpose of being principally located in Hall County, Georgia.The Company began its common stock offering in on November 13, 2008 to raise capital for the
initial capitalization of the Company. Upon capitalization of the Company, the Company will
capitalize the Bank, provided the OCC and FDIC applications are timely approved and the
necessary capital is raised. It is expected that banking operations will commence in the
first quarter of 2009. The Company received preliminary approval from the OCC in December 2008.
 The Company was established as HFHC Group, L.L.C., and commenced activities on February 1,
2007. Home Federal Holdings Corporation was incorporated on January 23, 2008 and assumed the
assets and liabilities of HFHC Group, L.L.C. on that date. Management has prepared these
financial statements to include financial information from the date of inception. Activities
since inception of the Company have consisted of the Organizers engaging in organizational
and pre-opening activities necessary to obtain regulatory approvals, preparing for the
common stock offering to capitalize the Bank, acquiring facilities, and preparing to
commence business as a financial institution.
 Home Federal Holdings Corporation is a development stage enterprise as defined by Statement
of Financial Accounting Standard (SFAS) No. 7, Accounting and Reporting by Development Stage
Enterprises, as it devotes substantially all its efforts to establishing a new business.
Planned principal operations have not commenced and significant revenue has not been
recognized from the planned principal operations.To capitalize the Bank, the Organizers intend to sell a minimum of 1,500,000 shares up to a
maximum of 2,000,000 shares of common stock of the Company at $10 per share. The offering is
expected to raise gross proceeds of between $15,000,000 and $20,000,000. The Organizers and
proposed directors and founders of the Bank plan to purchase a minimum of 207,500 shares of
common stock at $10.00 per share in the offering. Upon purchase of these shares, it is
expected that each Organizer will be granted, at no additional cost, a warrant to purchase
one share of the Companys common stock at a purchase price of $10 per share for every share
the Organizer purchases in the offering. It is expected that each Founder will be granted,
at no additional cost, a warrant to purchase up to one share of the Companys common stock
at a purchase price of $10 per share for every share the Founder purchases in the offering.
For each five shares an investor purchases in this offering, such investor will receive on
warrant to purchase an additional share of common stock of the Company. Each warrant will
vest immediately, become immediately exercisable, and have an exercise price of $12.50 per
share. A maximum of 400,000 shares have been set aside for these warrants.
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Note 2  Organization and Summary of Accounting Policies (continued)
 Additionally a maximum of 500,000 shares have been set aside for Organizer and Founder
warrants. The anticipated vesting period for Organizer warrants is three years with an
exercise price of $10. It is anticipated that Founder warrants will vest immediately with an
exercise price of $10.
 Basis of Presentation
 The financial statements have been prepared on the accrual basis in accordance with
accounting principles generally accepted in the United States of America.EstimatesThe financial statements include estimates and assumptions that affect the financial
position and results of operations of the Company and disclosure of contingent assets and
liabilities. Actual results could differ from these estimates.Fixed AssetsFixed assets consist of furniture and equipment and are stated at cost. Depreciation is
computed over their estimated useful lives of 3 to 10 years.Fiscal YearThe Bank will adopt a calendar year for both financial reporting and tax reporting purposes.Stock Compensation Plan
 Upon completion of the stock offering, the Company is expected to adopt a share-based
compensation plan. The Company will account for this plan in accordance with SFAS No. 123
(revised 2004), Share-Based Payments, SFAS 123(R). The Statement requires all share-based
payments to employees, including grants of employee stock options and director warrants, to
be recognized as compensation expense over the vesting period for the awards in the
financial statements based on their fair values.Organization CostsOrganization costs include incorporation, legal and consulting fees incurred in connection
with establishing the Company and Bank. In accordance with Statement of Position 98-5,
Reporting on the Costs of Start-Up Activities.Organization costs are expensed when incurred
and are included in the Statement of Operations as professional fees.Impact of Recently Issued Accounting Standards
 In February 2007, the Financial Accounting Standards Board (FASB) issued FASB Statement No.
159 (FAS 159), The Fair Value Option for Financial Assets and Financial Liabilities 
Including an amendment of FASB Statement No. 115. FAS 159 permits entities to choose to
measure many financial instruments and certain other items at fair value. The unrealized
gains and losses on items for which the fair value option has been elected should be
reported in earnings. The decision to elect the fair value option is determined on an
instrument basis and is irrevocable. Assets and liabilities measured at fair value pursuant
to the fair value option should be reported separately in the balance sheet from those
instruments measured using other measurement attributes. FAS 159 is effective for financial
statements issued for fiscal years beginning after November 15, 2007. As part of the
Companys adoption of FAS 159 as of January 1, 2008, it does not plan to choose the option
to measure eligible financial instruments at fair value and therefore the adoption of FAS
159 is not expected to have a material impact on the Companys financial condition or
results of operations.
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Note 2  Organization and Summary of Accounting Policies (continued)
 In December 2007, the FASB issued FASB Statement No. 160 (FAS 160), Noncontrolling Interests
in Consolidated Financial Statements  an amendment of ARB No. 51. FAS 160 changes the
accounting and reporting for minority interests, which will be recharacterized as
noncontrolling interests and classified as a component of equity. This new consolidation
method significantly changes the accounting for transactions with minority interest holders.
FAS 160 is effective for fiscal years beginning after December 15, 2008. The Companys
adoption of FAS 160 during the first quarter of 2009 is not expected to have a material
impact on its financial condition or results of operations.
 In December 2007, the FASB issued FASB Statement No. 141(revised 2007) (FAS 141R), Business
Combinations. FAS 141R significantly changes the accounting for business combinations in a
number of areas including the treatment of contingent consideration, preacquisition
contingencies, transaction costs, in-process research and development and restructuring
costs. In addition, under FAS 141R, changes in an entitys deferred tax assets and
uncertain tax positions after the measurement period will impact income tax expense. FAS
141R is effective for fiscal years beginning after December 15, 2008. The Companys
adoption of FAS 1141R during the first quarter of 2009 is not expected to have a material
impact on its financial condition or results of operations.
 In March 2008, the FASB issued SFAS 161, Disclosures about Derivative Instruments and
Hedging Activities,an amendment to SFAS 133 intended to improve financial reporting about
derivative instruments and hedging activities by requiring enhanced disclosures. Entities
are required to provide enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are accounted for under
SFAS 133 and its related interpretations, and (c) how derivative instruments and related
hedged items affect an entitys financial position, financial performance, and cash flows.
It is effective for financial statements issued for fiscal years and interim periods
beginning after November 15, 2008, with early application encouraged. The Company believes
the adoption of SFAS 161 will not have a material impact on its financial statements.
 Note 3  Debt
 On February 6, 2007, HFHC Group, L.L.C. established a $400,000 line of credit with a
financial institution to fund organizational expenses , pre-opening expenses and the
expenses of the Companys common stock offering. On June 25, 2007, HFHC Group, L.L.C.
increased the maximum borrowing under this line of credit to $750,000 to provide additional
funding during the development stage. On January 29, 2008 HFHC Group, L.L.C. increased the
maximum borrowing under this line of credit to $1,750,000. On January 23, 2008, Home Federal
Holdings Corporation had assumed the liabilities of HFHC Group, L.L.C. and responsibility
for this line of credit. The line is uncollateralized and is guaranteed by the Organizers.
Interest is payable monthly, with all principal due at maturity. When the line matured on
June 8, 2008, the line of credit was reduced to $1,500,000 with a maturity date of December
31, 2008. The balance at September 30, 2008 was $1,500,000. The note bears interest at
prime minus 1% with a floor rate of 4%. At September 30, 2008 the rate was 4%.
 Interest expense incurred related to the above line of credit was $46,848 through September
30, 2008.On October 9, 2008, Home Federal Holdings Corporation established a second line of credit in
the amount of $750,000 with Peoples State Bank of Commerce in Nolensville, Tennessee, in
order to complete its organizational efforts. This line of credit bears interest at prime +
3/4% with a maturity date of July 10, 2009.
 Note 4  Liquidity and Going Concern Considerations
 Home Federal Holdings Corporation incurred a net loss of $1,210,607 for the period from
February 1, 2007, date of inception, to September 30, 2008. At September 30, 2008
liabilities exceeded assets by $1,210,607.
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Note 4  Liquidity and Going Concern Considerations (continued)
 Management believes that the current level of expenditures is within the financial and
borrowing capabilities of the Company and adequate to meet existing obligations and fund
current operations, but obtaining final regulatory approvals and commencing banking
operations is dependent on successfully completing the stock offering.To provide permanent funding for the capitalization of the Bank, the Company is facilitating
a stock offering for a minimum of 1,500,000 shares up to a maximum of 2,000,000 shares of
common stock of the Company at $10 per share. Costs related to the offering of the Companys
common stock will be paid from the gross proceeds of the offering. The Company must receive
the minimum amount of $15,000,000 in the offering in order to capitalize the Bank. Should
the Company be unable to raise this amount, the ability of Home Federal Holdings Corporation
to continue as a going concern would be doubtful.
 Note 5  Commitments
 The Organizers of the Bank had entered into an employment agreement with its proposed Chief
Executive Officer. The agreement provided for a base salary of $150,000 annually and the
granting of 15,000 stock options and other perquisites commensurate with his employment.
This contract has been superseded by a new agreement to allow for changes in the
organizational structure due to the Company adding the position of president. The proposed
Chief Executive Officers agreement was modified due to change in title of Chief Executive
Officer to President. The new agreement, executed June 2008, provides for a base salary of
$140,000 and the granting of 15,000 stock options and other perquisites commensurate with
his employment.
 The Company has entered into an employment agreement with its proposed Chief Executive
Officer. The agreement provides for a base salary of $140,000 annually and the granting of
7,500 stock options and other perquisites commensurate with his employment.The Company also contemplates that the Bank will enter into an employment agreement with the
Chief Financial Officer upon opening the Bank.The Company has entered into an agreement for consulting services for assistance in the
organization of the Bank. The Company has committed to pay a total of $99,300 plus expenses
for these services. Additionally, upon the Bank receiving its final charter approval, the
Company shall grant to the consulting firm stock options to purchase 6,000 shares of the
common stock of the Company which vest upon the Bank receiving its final approval and which
expire ten years from date of the award.The Company has terminated its agreement with an entity to provide assistance in the
proposed capital raise for the Company.
 Note 6  Lease
 The Company entered into a lease for the main office location with total annual rent of
$75,000. The lease term is August 1, 2007 through January 1, 2010 renewable on an annual
basis. The Company notified the landlord of their intention of not renewing the lease
beyond the initial one year lease period. The Company was occupying the temporary office
location on a month-to-month basis at $6,250 per month. As of September 30, 2008, the
Company has expensed $81,250 related to this lease.
 Note 7  Income Taxes
 The Company is a corporation. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax bases and for operating
loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled.
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Note 7  Income Taxes (continued)
 The effect on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.In the event the future tax consequences of differences between the financial reporting
bases and the tax bases of the assets and liabilities result in deferred tax assets, an
evaluation of the probability of being able to realize the future benefits indicated by such
asset is required. A valuation allowance is provided for the deferred tax asset when it is
more likely than not that some portion or all of the deferred tax asset will not be
realized. In assessing the realizability of the deferred tax assets, management considers
the scheduled reversals of deferred tax liabilities projected future taxable income and tax
planning strategies.The future tax consequences of the differences between the financial reporting and tax basis
of the Companys assets and liabilities resulted in a net deferred tax asset. A valuation
allowance was established for the net deferred tax asset, as realization of these deferred
tax assets is dependent on future taxable income.The following summarizes the sources and expected tax consequences of future taxable
deductions which comprise the net deferred taxes at September 30, 2008.
 Deferred
tax asset relating to organization expenses
and net operating loss carryforward
    
    $
    457,000Less valuation allowance
    
    
    (457,000
    )Net deferred taxes
    
    $
    
 Note 8  Subsequent Events
 On November 6, 2008, the Company purchased an existing banking facility located at 3626
Mundy Mill Road in Oakwood, Georgia. The facility was formerly a SunTrust banking facility
that SunTrust closed on August 8, 2008 as a result of a merger with Gainesville Bank and
Trust in Gainesville, Georgia. The purchase price was $1,903,000. To facilitate the purchase
of the property, a real estate mortgage was obtained from Peoples State Bank of Commerce,
Nolensville, Tennessee. The amount of the real estate mortgage is $1,522,400. The loan has
an interest rate of prime +3/4% and matures on July 10, 2009.
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Item 2.
    
    Managements Discussion and Analysis or Plan of Operations
  
    
    our lack of operating history;
    
    potential delays in the opening date of the bank;
    
    significant increases in competitive pressure in the banking and financial services
industries;
    
    changes in the interest rate environment which could reduce anticipated or actual
margins;
    
    changes in political conditions or the legislative or regulatory environment;
    
    general economic conditions, either nationally or regionally and especially in
primary service area, becoming less favorable than expected, resulting in, among other
things, a deterioration in credit quality;
    
    changes occurring in business conditions and inflation;
    
    changes in technology;
    
    the level of allowance for loan loss and the lack of seasoning of our loan
portfolio, once we open;
    
    the rate of delinquencies and amounts of charge-offs, once we open;
    
    the rates of loan growth, once we open;
    
    adverse changes in asset quality and resulting credit risk-related losses and
expenses;
    
    changes in monetary and tax policies;
    
    loss of consumer confidence and economic disruptions resulting from terrorist
activities;
    
    changes in the securities markets; and
    
    other risks and uncertainties detailed from time to time in our filings with the
Securities and Exchange Commission.
  9




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Financial Results and Plan of Operation
        10




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Liquidity and Interest Rate Sensitivity
 Organizational Period
    Commencement of Banking Operations
  11




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Capital Adequacy
     
 Item 3.
    
    Controls and Procedures
   12




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PART II  OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings
  
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3.
    
    Default Upon Senior Securities
  
 Item 4.
    
    Submission of Matters to a Vote of Security Holders
  
 Item 5.
    
    Other Information
  
 Item 6.
    
    Exhibits
 Exhibit
    
    Description10.1
    
    
    Term Loan Agreement, dated November 6, 2008, between Peoples State Bank of Commerce and
Home Federal Holdings Corporation.10.2
    
    
    $1,522,400 Term Note, dated November 6, 2008, in favor of Peoples State Bank of
Commerce.31.1
    
    
    Certification of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification of the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of the Chief Executive Officer and Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
 13




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SIGNATURES
  HOME FEDERAL HOLDINGS CORPORATIONDate: December 29, 2008
    By:
    /s/ Robert B. WiseRobert B. WiseChief Executive OfficerDate: December 29, 2008
    By:
    /s/ Clyde A. McArthurClyde A. McArthurChief Financial Officer 14




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EXHIBIT INDEX
 Exhibit No.
    
    Document10.1
    
    
    Term Loan Agreement, dated November 6, 2008, between Peoples State Bank of Commerce and
Home Federal Holdings Corporation.10.2
    
    
    $1,522,400 Term Note, dated November 6, 2008, in favor of Peoples State Bank of Commerce.31.1
    
    
    Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 200231.2
    
    
    Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
Act of 200232
    
    
    Certification of the Chief Executive Officer and Chief Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
 15