HOME FEDERAL BANCORP, INC. OF LOUISIANA General
The Company's results of operations are primarily dependent on the results ofHome Federal Bank (the "Bank"), its wholly owned subsidiary. The Bank'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 expenses. 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. The Bank operates from its main office inShreveport, Louisiana and nine full service branch offices located inShreveport andBossier City, Louisiana . The Company's primary market area is theShreveport -Bossier City metropolitan area.
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 basis 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
General
AtMarch 31, 2022 , the Company reported total assets of$574.6 million , an increase of$8.9 million , or 1.6%, compared to total assets of$565.7 million atJune 30, 2021 . The increase in assets was comprised primarily of increases in loans receivable, net of$26.4 million , or 7.8%, from$336.4 million atJune 30, 2021 to$362.8 million atMarch 31, 2022 , investment securities of$18.9 million , or 22.5%, from$84.3 million atJune 30, 2021 to$103.2 million atMarch 31, 2022 , premises and equipment of$1.4 million , or 9.2%, from$14.9 million atJune 30, 2021 to$16.3 million atMarch 31, 2022 , other assets of$548,000 , or 31.2%, from$1.8 million atJune 30, 2021 to$2.3 million atMarch 31, 2022 , and deferred tax assets of$41,000 , or 5.0%, from$819,000 atJune 30, 2021 to$860,000 atMarch 31, 2022 . These increases were partially offset by decreases in cash and cash equivalents of$25.3 million , or 24.3%, from$104.4 million atJune 30, 2021 to$79.1 million atMarch 31, 2022 , loans held-for-sale of$12.0 million , or 83.2%, from$14.4 million atJune 30, 2021 to$2.4 million atMarch 31, 2022 , bank owned life insurance of$642,000 , or 8.9%, from$7.2 million atJune 30, 2021 to$6.6 million atMarch 31, 2022 , real estate owned of$383,000 , or 100.0%, from$383,000 atJune 30, 2021 to none atMarch 31, 2022 , and accrued interest receivable of$77,000 , or 6.6%, from$1.2 million atJune 30, 2021 to$1.1 million atMarch 31, 2022 . The decrease in cash and cash equivalents was primarily due to the funding of additional loan growth with excess liquidity. The increase in loans receivable, net, was primarily due to an increase of$24.0 million , or 24.9%, in commercial real estate loans. 30
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Index
Discussion of Financial Condition Changes from
The pipeline for our commercial loan originations remains strong. The increase in investment securities was primarily due to security purchases of$34.6 million offset by principal repayments on mortgage backed securities of$14.2 million . The decrease in loans held-for-sale primarily reflected a reduction in loans originated for sale during the nine-month period.
Cash and Cash Equivalents
Cash and cash equivalents decreased$25.3 million , or 24.3%, from$104.4 million atJune 30, 2021 to$79.1 million atMarch 31, 2022 . The decrease in cash and cash equivalents was primarily due to the funding of addition loan growth with excess liquidity. Loans Receivable, Net Loans receivable, net, increased by$26.4 million , or 7.8%, to$362.8 million atMarch 31, 2022 compared to$336.4 million atJune 30, 2021 . The increase in loans receivable, net was primarily due to increases in commercial real estate loans of$24.0 million , one-to-four-family residential loans of$16.0 million , construction loans of$6.3 million , equity line-of-credit loans of$2.2 million , land loans of$1.4 million , and equity and second mortgage loans of$4,000 , partially offset by decreases in commercial non-real estate loans of$22.7 million , multi-family residential loans of$1.1 million and consumer loans of$158,000 . Loans Held-for-Sale Loans held-for-sale decreased$12.0 million , or 83.2%, from$14.4 million atJune 30, 2021 to$2.4 million atMarch 31, 2022 . The decrease in loans held-for-sale results primarily from the decrease in the origination volume during the first nine months of fiscal year 2022 due primarily to a decrease in refinance activity during the period.
Investment securities amounted to$103.2 million atMarch 31, 2022 compared to$84.3 million atJune 30, 2021 , an increase of$18.9 million , or 22.5%. The increase in investment securities was primarily due to held-to-maturity security purchases of$34.6 million offset by principal repayments on mortgage backed securities of$14.2 million . Premises and Equipment, Net Premises and equipment, net increased$1.4 million , or 9.2%, to$16.3 million atMarch 31, 2022 compared to$14.9 million atJune 30, 2021 . The increase in premises and equipment was primarily due to the construction of the Company's new Huntington branch onPines Road which opened as a full service branch onDecember 20, 2021 . Asset Quality AtMarch 31, 2022 , the Company had$341,000 , or 0.06%, of non-performing assets (defined as non-accruing loans, accruing loans 90 days or more past due, and other real estate owned) compared to$1.4 million on non-performing assets atJune 30, 2021 , consisting of three single-family residential loans atMarch 31, 2022 , compared to six commercial real estate loans to one borrower, three single-family residential loans, and one commercial real estate property and one single family residence in other real estate owned atJune 30, 2021 . AtMarch 31, 2022 , the Company had two single family residential loans and two commercial real estate loans classified as substandard compared to two single family residential loans and eight commercial real estate loans classified as substandard atJune 30, 2021 . There were no loans classified as doubtful atMarch 31, 2022 orJune 30, 2021 . 31
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Discussion of Financial Condition Changes from
Total Liabilities Total liabilities increased$9.0 million , or 1.7%, from$513.0 million atJune 30, 2021 to$522.0 million atMarch 31, 2022 primarily due to increases in total deposits of$10.3 million , or 2.0%, to$516.9 million atMarch 31, 2022 compared to$506.6 million atJune 30, 2021 , partially offset by a decrease of$600,000 , or 25.0%, in other borrowings from$2.4 million atJune 30, 2021 to$1.8 million atMarch 31, 2022 , a decrease of$470,000 , or 17.3%, in other liabilities from$2.7 million atJune 30, 2021 to$2.2 million atMarch 31, 2022 , a decrease of$219,000 , or 51.4%, in advances from borrowers for taxes and insurance from$426,000 atJune 30, 2021 to$207,000 atMarch 31, 2022 , and a decrease of$26,000 , or 3.0%, in advances from theFederal Home Loan Bank from$867,000 atJune 30, 2021 to$841,000 atMarch 31, 2022 . The increase in deposits was primarily due to a$17.2 million , or 13.1%, increase in non-interest bearing deposits from$131.0 million atJune 30, 2021 to$148.2 million atMarch 31, 2022 , a$9.3 million , or 10.5%, increase in money market deposits from$88.2 million atJune 30, 2021 to$97.5 million atMarch 31, 2022 , a$7.5 million , or 5.8%, increase in savings deposits from$129.1 million atJune 30, 2021 to$136.6 million atMarch 31, 2022 , and an increase in NOW accounts of$5.9 million , or 12.0%, from$49.3 million atJune 30, 2021 to$55.2 million atMarch 31, 2022 , partially offset by a decrease of$29.6 million , or 27.1%, in certificates of deposit from$109.0 million atJune 30, 2021 to$79.4 million atMarch 31, 2022 . The Company had$6.0 million in brokered deposits atMarch 31, 2022 compared to$10.7 million atJune 30, 2021 . The decrease in advances from theFederal Home Loan Bank was primarily due to principal paydowns on amortizing advances. The entire balance in advances from theFederal Home Loan Bank are now short-term advances due to our only advance atMarch 31, 2022 having a balloon maturity inJanuary 2023 .
Shareholders' Equity
Shareholders' equity decreased$93,000 , or 0.2%, to$52.6 million atMarch 31, 2022 from$52.7 million atJune 30, 2021 . The primary reasons for the changes in shareholders' equity fromJune 30, 2021 were the repurchase of Company stock of$4.2 million , a decrease in the Company's accumulated other comprehensive income of$1.1 million , and dividends paid totaling$1.0 million , partially offset by net income of$3.8 million , proceeds from the issuance of common stock from the exercise of stock options of$1.9 million , and the vesting of restricted stock awards, stock options, and the release of employee stock ownership plan shares totaling$530,000 .Regulatory Capital The Bank is required to meet minimum capital standards promulgated by theOffice of the Comptroller of the Currency ("OCC"). AtMarch 31, 2022 ,Home Federal Bank's regulatory capital was well in excess of the minimum capital requirements. AtMarch 31, 2022 ,Home Federal Bank exceeded each of its regulatory capital requirements with tangible equity, common equity Tier 1, core, and total risk-based capital ratios of 9.61%, 14.85%, 9.61%, and 15.98%, respectively.
Comparison of Operating Results for the Three and Nine Month Periods Ended
General The decrease in net income for the three months endedMarch 31, 2022 , as compared to the prior year quarter resulted primarily from a$377,000 , or 31.1%, decrease in non-interest income, a decrease of$174,000 , or 3.9%, in net interest income, and an increase of$166,000 , or 4.9%, in non-interest expense, partially offset by a decrease of$450,000 , or 100.0%, in provision for loan losses, and a$126,000 , or 31.9%, decrease in provision for income taxes. The decrease in the provision for loan losses for the three months endedMarch 31, 2022 , was primarily due to improvement in economic and credit quality factors. The decrease in net income for the nine months endedMarch 31, 2022 resulted primarily from a$1.5 million , or 34.7%, decrease in non-interest income, an increase of$373,000 , or 3.6%, in non-interest expense, and a decrease of$227,000 , or 1.8%, in net interest income, partially offset by a decrease of$1.7 million , or 96.5%, in provision for loan losses, and a decrease of$186,000 , or 16.8%, in provision for income taxes. The decrease in the provision for loan losses for the nine-month period was primarily due to improvement in economic and credit quality factors. 32
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Index
Comparison of Operating Results for the Three and Nine Month Periods Ended
Net Interest Income The decrease in net interest income for the three months endedMarch 31, 2022 was primarily due to a$503,000 , or 9.7%, decrease in total interest income, partially offset by a decrease of$329,000 , or 43.7%, in total interest expense. The Company's average interest rate spread was 3.13% for the three months endedMarch 31, 2022 compared to 3.31% for the three months endedMarch 31, 2021 . The Company's net interest margin was 3.27% for the three months endedMarch 31, 2022 compared to 3.53% for the three months endedMarch 31, 2021 . The decrease in net interest income for the nine-month period was primarily due to a$1.4 million , or 9.0%, decrease in total interest income, partially offset by a$1.2 million , or 44.5%, decrease in total interest expense. The Company's average interest rate spread was 3.03% for the nine months endedMarch 31, 2022 compared to 3.15% for the nine months endedMarch 31, 2021 . The Company's net interest margin was 3.19% for the nine months endedMarch 31, 2022 compared to 3.41% for the nine months endedMarch 31, 2021 .
Provision for Losses on Loans
Based on an analysis of historical experience, the volume and type of lending conducted byHome Federal Bank , the status of past due principal and interest payments, general economic conditions, particularly as such conditions relate to our market area, and other factors related to the collectability ofHome Federal Bank's loan portfolio, the provision for loan losses was none and$61,000 for the three and nine months endedMarch 31, 2022 , compared to$450,000 and$1.8 million in provisions made during the three and nine months endedMarch 31, 2021 . The allowance for loan losses was$4.2 million , or 1.14% of total loans receivable, atMarch 31, 2022 compared to$4.4 million , or 1.26% of total loans receivable, atMarch 31, 2021 . AtMarch 31, 2022 ,Home Federal Bank had$341,000 in non-performing loans and no other real estate owned which totaled$341,000 million in non-performing assets.
Non-interest Income
The$377,000 decrease in non-interest income for the three months endedMarch 31, 2022 , compared to the prior year quarterly period, was primarily due to a decrease of$609,000 in gain on sale of loans, a$48,000 increase on loss on sale of real estate and fixed assets, and a$4,000 decrease in income from bank owned life insurance, partially offset by an increase of$226,000 in other non-interest income, and a$58,000 increase in service charges on deposit accounts. The$1.5 million decrease in non-interest income for the nine months endedMarch 31, 2022 compared to the prior year nine-month period was primarily due to a decrease of$1.8 million in gain on sale of loans, an increase of$48,000 in loss on sale of real estate, and a decrease of$17,000 in income from bank owned life insurance, partially offset by an increase of$226,000 in other non-interest income, and a$107,000 increase in service charges on deposit accounts. The decreases in gain on sale of loans for both the quarter and nine-month periods were primarily due to a decrease in refinance activity causing a decrease in mortgage loan originations. The Company sells most of its long-term fixed rate residential mortgage loan originations primarily in order to manage interest rate risk. The increases in other non-interest income for both the quarter and nine-month periods were due to a$228,000 bank-owned life insurance claim on a retired bank executive officer.
Non-interest Expense
The$166,000 increase in non-interest expense for the three months endedMarch 31, 2022 , compared to the same period in 2021, is primarily attributable to increases of$65,000 in other non-interest expenses,$62,000 in occupancy and equipment expense,$53,000 in audit and examination fees,$43,000 in advertising expense,$27,000 in franchise and bank shares tax expense, and$3,000 in deposit insurance premiums expense. The increases were partially offset by decreases of$45,000 in loan and collection expense,$27,000 in data processing expense,$9,000 in legal fees, and$6,000 in compensation and benefits expense. The$373,000 increase in non-interest expense for the nine months endedMarch 31, 2022 , compared to the same nine month period in 2021, is primarily attributable to increases of$163,000 in occupancy and equipment expense,$158,000 in compensation and benefits expense,$115,000 in advertising expense,$115,000 in audit and examination fees expense,$101,000 in franchise and bank shares tax expense,$97,000 in other non-interest expenses, and$11,000 in deposit insurance premium expense, partially offset by decreases of$200,000 in real estate owned valuation adjustment expense,$82,000 in loan and collection expense,$68,000 in legal fees, and$37,000 in data processing expense. 33
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Index
Comparison of Operating Results for the Three and Nine Month Periods Ended
The aggregate compensation expense recognized by the Company for its Stock
Option, Share Award and ESOP amounted to
TheLouisiana bank shares tax is assessed on the Bank's equity and earnings. For the three and nine months endedMarch 31, 2022 , the Company recognized franchise and bank shares tax expense of$132,000 and$403,000 , respectively, compared to$105,000 and$302,000 for the same periods in 2021.
Income Taxes
Income taxes amounted to$269,000 and$922,000 for the three and nine months endedMarch 31, 2022 , respectively, resulting in an effective tax rate of 17.4% and 19.5%. Income taxes amounted to$395,000 and$1.1 million for the three and nine months endedMarch 31, 2021 , respectively. Average Balances, Net Interest Income, Yields Earned, and Rates Paid. The following tables show for the periods indicated the total dollar amount of interest from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates, and the net interest margin. Tax-exempt income and yields have not been adjusted to a tax-equivalent basis. All average balances are based on monthly balances. Management does not believe that the monthly averages differ significantly from what the daily averages would be. Three Months Ended March 31, 2022 2021 Average Average Average Yield/ Average Yield/ Balance Interest Rate Balance Interest Rate (Dollars In Thousands)
Interest-earning assets: Loans receivable$ 365,277 $ 4,277 4.75 %$ 359,414 $ 4,853 5.48 % Investment securities 102,549 380 1.50 66,428 308 1.88 Interest-earning deposits 61,733 35 0.23 84.661 34 0.16 Total interest-earning assets$ 529,559 4,692 3.59 %$ 510,503 5,195 4.13 % Non-interest-earning assets 41,840 33,938 Total assets$ 571,399 $ 544,441 Interest-bearing liabilities: Savings accounts$ 138,742 96 0.28 %$ 115,788 131 0.46 % NOW accounts 53,980 14 0.11 45,920 19 0.17 Money market accounts 94,986 28 0.12 77,451 45 0.24 Certificate accounts 80,850 256 1.29 132,423 528 1.62 Total interest-bearing deposits 368,558 394 0.43 371,582 723 0.79 Other Borrowings 2,400 20 3.35 2,399 19 3.21 FHLB advances 844 10 4.90 879 11 5.07 Total interest-bearing liabilities$ 371,802 424 0.46 %$ 374,860 753 0.81 % Non-interest-bearing liabilities: Non-interest-bearing demand accounts 144,523 115,396 Other liabilities 2,659 2,433 Total liabilities 518,984 492,689 Total Stockholders' Equity(1) 52,415 51,752 Total liabilities and equity$ 571,399 $ 544,441 Net interest-earning assets$ 157,757 $ 135,643 Net interest income; average interest rate spread(2)$ 4,268 3.13 %$ 4,442 3.31 % Net interest margin(3) 3.27 % 3.53 % Average interest-earning assets to average interest-bearing liabilities 142.43 % 136.18 %
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(1) Includes retained earnings and accumulated other comprehensive loss.
(2) Interest rate spread represents the difference between the weighted-average
yield on interest-earning assets and the weighted-average rate on
interest-bearing liabilities.
(3) Net interest margin is net interest income divided by net average
interest-earning assets.
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Index
Comparison of Operating Results for the Three and Nine Month Periods Ended
Nine Months Ended March 31,
2022 2021
Average Average
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
(Dollars In Thousands)Interest-earning assets: Loans receivable$ 355,732 $ 12,985 4.86 %$ 371,247 $ 14,574 5.23 % Investment securities 95,141 1,066 1.49 62,039 910 1.95 Interest-earning deposits 78,223 101 0.17 71,087 76 0.14 Total interest-earning assets$ 529,096 14,152 3.56 %$ 504,373 15,560 4.11 % Non-interest-earning assets 39,229 32,781 Total assets$ 568,325 $ 537,154 Interest-bearing liabilities: Savings accounts$ 136,102 304 0.30 %$ 102,642 442 0.57 % NOW accounts 49,972 41 0.11 43,360 75 0.23 Money market accounts 89,624 79 0.12 74,629 185 0.33 Certificate accounts 91,642 973 1.41 145,450 1,869 1.71 Total interest bearing deposits 367,340 1,397 0.51 366,081 2,571 0.94 Other Borrowings 1,892 46 3.24 2,062 50 3.23 FHLB advances 853 31 4.84 941 34 4.81 Total interest-bearing liabilities$ 370,085 1,474 0.53 %$ 369,084 2,655 0.96 % Non-interest-bearing liabilities: Non-interest-bearing demand accounts 142,661 113,897 Other liabilities 2,852 3,239 Total liabilities 515,598 486,220 Total Stockholders' Equity(1) 52,727 50,934 Total liabilities and equity$ 568,325 $ 537,154 Net interest-earning assets$ 159,011 $ 135,289 Net interest income; average interest rate spread(2)$ 12,678 3.03 %$ 12,905 3.15 % Net interest margin(3) 3.19 % 3.41 %
Average interest-earning assets to average interest-bearing liabilities
142.97 % 136.66 %
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(1) Includes retained earnings and accumulated other comprehensive loss.
(2) Interest rate spread represents the difference between the weighted-average
yield on interest-earning assets and the weighted-average rate on
interest-bearing liabilities.
(3) Net interest margin is net interest income divided by net average
interest-earning assets.
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Index
Comparison of Operating Results for the Three and Nine Month Periods Ended
Liquidity and Capital Resources
Home Federal Bank'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 Bank sets the interest rates on its deposits to maintain a desired level of total deposits. In addition,Home Federal Bank invests excess funds in short-term interest-earning accounts and other assets which provide liquidity to meet lending requirements.Home Federal Bank's deposit accounts with theFederal Home Loan Bank of Dallas amounted to$28.7 million atMarch 31, 2022 . A significant portion ofHome Federal Bank's liquidity consists of securities classified as available-for-sale and cash and cash equivalents.Home Federal Bank's primary sources of cash are net income, principal repayments on loans and mortgage-backed securities, and increases in deposit accounts. IfHome Federal Bank requires funds beyond its ability to generate them internally, borrowing agreements exist with theFederal Home Loan Bank of Dallas which provides an additional source of funds. AtMarch 31, 2022 ,Home Federal Bank had$841,000 in advances from theFederal Home Loan Bank of Dallas and had$187.7 million in additional borrowing capacity. Additionally, atMarch 31, 2022 ,Home Federal Bank was a party to a Master Purchase Agreement withFirst National Bankers Bank wherebyHome Federal Bank may purchase Federal Funds fromFirst National Bankers Bank in an amount not to exceed$20.4 million . There were no amounts purchased under this agreement as ofMarch 31, 2022 . In addition, the Company had available a$5.0 million line of credit agreement atMarch 31, 2022 withFirst National Bankers Bank . AtMarch 31, 2022 there was a$1.8 million balance in the credit line. AtMarch 31, 2022 ,Home Federal Bank had outstanding loan commitments of$56.7 million to originate loans and commitments under unused lines of credit of$11.1 million . AtMarch 31, 2022 , certificates of deposit scheduled to mature in less than one year totaled$46.0 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 Bank intends to utilize its high levels of liquidity to fund its lending activities. If additional funds are required to fund lending activities,Home Federal Bank intends to sell its securities classified as available-for-sale, as needed.
At
Off-Balance Sheet Arrangements
At
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.
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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. In addition to factors previously disclosed in the reports filed by the Company with theSecurities and Exchange Commission and those identified elsewhere in this Form 10-Q, the following factors, among others, could cause actual results to differ materially from forward-looking statements or historical performance: the strength ofthe United States economy in general and the strength of the local economies in which the Company conducts its operations; general economic conditions; the scope and duration of the COVID-19 pandemic; the effects of the COVID-19 pandemic, including on the Company's credit quality and operations as well as its impact on general economic conditions; legislative and regulatory changes including actions taken by governmental authorities in response to the COVID-19 pandemic; monetary and fiscal policies of the federal government; changes in tax policies, rates and regulations of federal, state and local tax authorities including the effects of the Tax Reform Act; changes in interest rates, deposit flows, the cost of funds, demand for loan products and the demand for financial services, in each case as may be affected by the COVID-19 pandemic, competition, changes in the quality or composition of the Company's loans, investment and mortgage-backed securities portfolios; geographic concentration of the Company's business; fluctuations in real estate values; the adequacy of loan loss reserves; the risk that goodwill and intangibles recorded in the Company's financial statements will become impaired; changes in accounting principles, policies or guidelines and other economic, competitive, governmental and technological factors affecting the Company's operations, markets, products, services and fees.
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