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TMCNet: Huge Alert On: (NASDAQ:SPMD) - (NASDAQ:LECO) - (NASDAQ:HOME)

[July 28, 2010]

Huge Alert On: (NASDAQ:SPMD) - (NASDAQ:LECO) - (NASDAQ:HOME)

(M2 PressWIRE Via Acquire Media NewsEdge) Rochester NY, -- www.otc-advisors.com names (NASDAQ:SPMD) SuperMedia Inc. (NASDAQ:LECO) Lincoln Electric Holdings, Inc. (NASDAQ:HOME) Home Federal Bancorp, Inc. its "Bulls of the day"! Visit: www.otc-advisors.com for current profiles.


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To sign up for our free newsletter or to be added to our Quarterly Investment Magazine visit http://www.otc-advisors.com/contact.htm Also, you can receive up to the minute stock alerts via our Twitter/Facbook page. www.twitter.com/otcadvisors or www.facebook.com/pages/OTC-ADVISORS-LLC/259891872296 ------------------------------------------------------------------------------------------------------------------------------------------------------------ Visit: www.otc-advisors.com About SuperMedia Inc.

SuperMedia (NASDAQ:SPMD) is the advertising agency for local small- to medium-sized businesses across the United States. SuperMedia specializes in results. Click-here results. Ring-the-phone results. Knock-on-the-door results.

SuperMedia's advertising products and services include: the SuperGuarantee(R)and SuperTradeExchange(R) programs, Verizon(R) SuperYellowPages, FairPoint(R) SuperYellowPages and Frontier(R) SuperYellowPages, Superpages.com(R), EveryCarListed.com(SM), Switchboard.com(SM), LocalSearch.com(SM), Superpages Mobile(SM)and SuperpagesDirect(R) direct mail products. For more information, visit www.supermedia.com.

News Today: DALLAS, Jul 27, 2010-- SuperMedia (NASDAQ:SPMD), a leading advertising agency for local small- to medium-sized businesses across the United States, today announced its financial results for the second quarter 2010.

Second quarter highlights: -- Improvement in second quarter ad sales trends to a rate of decline of 16.9 percent, versus the first quarter rate of decline of 20.6 percent; -- Debt principal payments of $177 million during the quarter, in accordance with the mandatory cash sweep provisions of the Company's loan agreement, $122 million related to second quarter cash flows and $55 million related to first quarter cash flows; -- Continued aggressive cost management; and -- Cash on hand of $300 million at the end of the quarter.

"Today we stand almost a full seven months removed from exiting Chapter 11 and emerging as SuperMedia," said Scott W. Klein, chief executive officer of SuperMedia. "We continue to be encouraged by what we are seeing in the business as reflected in second quarter results, despite the fact that the overall economic climate remains uncertain.

"This view is based on the indicators we are seeing from the plans we have implemented thus far that are designed ultimately to drive revenue, reduce expenses, improve margins and continue to foster a high-performance culture." Klein continued, "We believe the fundamentals of our business model remain sound. Small- to medium-sized businesses need advertising-agency-like services for the Internet, direct mail and of course the print yellow pages to help them get consumers to click on their websites, make their phones ring and to get them to knock on their doors. We remain committed to improving our ability to deliver on our 'click-ring-knock' promise to our clients. " "We continue to be laser-focused on introducing new revenue-generating opportunities and achieving expense reductions." Klein continued. "That said, because of the nature and timing of the way we sell, publish and amortize revenue, there is a lag time between the implementation of changes and the impact of those changes on our financial results." Financial Summary SuperMedia reports financial results on a generally accepted accounting principles ("GAAP") and non-GAAP basis, referred to as "adjusted pro forma". The adjusted pro forma basis measures are described and reconciled to the corresponding GAAP measures in the accompanying financial schedules. These results were adjusted for the impacts of fresh start accounting and certain unique costs including reorganization items, restructuring costs and other non-recurring costs.

Reported GAAP operating revenue for Q2 2010 was $247 million. Adjusted pro forma operating revenue for Q2 2010 was $512 million, versus $651 million for Q2 2009, a decline of 21.4 percent.

Reported GAAP year-to-date operating revenue for 2010 was $401 million. Adjusted pro forma year-to-date operating revenue for 2010 was $1,045 million, versus $1,325 million for the same period in 2009, a decline of 21.1 percent.

Reported Q2 2010 earnings before interest, taxes, depreciation and amortization ("EBITDA") was a loss of $14 million. On an adjusted pro forma basis, Q2 2010 EBITDA was $165 million with an EBITDA margin of 32.2 percent compared to 2Q 2009 EBITDA of $236 million with an EBITDA Margin of 36.3 percent.

Reported year-to-date 2010 EBITDA was a loss of $110 million. On an adjusted pro forma basis, year-to-date 2010 EBITDA was $328 million with an EBITDA margin of 31.4 percent compared to year-to-date 2009 EBITDA of $452 million with an EBITDA margin of 34.1 percent.

The above results include a $16 million general and administrative expense reduction related to a favorable non-recurring non-cash resolution of state tax claims.

Advertising sales in Q2 2010 declined 16.9 percent. Ad sales for Q2 2010 reflect activity primarily from the last quarter of 2009 and first quarter of 2010.

Free cash flow, a non-GAAP measure, year to date 2010 was $265 million representing cash from operating activities of $286 million, less capital expenditures (including capitalized software) of $21 million. This includes a net federal income tax refund of $94 million relative to 2009.

SuperMedia made debt principal payments of $177 million in the second quarter, in accordance with the mandatory cash sweep provisions of the Company's loan agreement, $122 million related to second quarter cash flows and $55 million related to first quarter cash flows. Cash on hand at the end of the quarter totaled $300 million, reflecting the net cash benefits of the items noted above.

Webcast Information Individuals within the United States can access the earnings call by dialing 888/603-6873. International participants should dial 973/582-2706. The pass code for the call is: 82225485. In order to ensure a prompt start time, please dial into the call by 9:50 a.m. (Eastern). A replay of the teleconference will be available at 800/642-1687. International callers can access the replay by calling 706/645-9291. The replay pass code is 82225485. The replay will be available through August 10, 2010. In addition, a live Web cast will be available on SuperMedia's Web site in the Investor Relations section at www.supermedia.com.

Basis of Presentation and Non-GAAP Measures In connection with SuperMedia's emergence from bankruptcy on December 31, 2009, and the application of fresh start accounting, the post-emergence results of the successor company and the pre-emergence results of the predecessor company are presented separately as successor and predecessor results in the financial statements presented in accordance with GAAP. This presentation is required by GAAP as the successor company is considered to be a new entity and the results of the new entity reflect the application of fresh start accounting. For the readers' convenience, the financial information accompanying this release provides a reconciliation of GAAP to non-GAAP results.

Forward-Looking Statements Certain statements included in this press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and the federal securities laws. Statements that include the words "may," "will," "could," "should," "would," "believe," "anticipate," "forecast," "estimate," "expect," "preliminary," "intend," "plan," "project," "outlook" and similar statements of a future or forward-looking nature identify forward-looking statements. You should not place undue reliance on these statements. These forward-looking statements include statements that reflect the current views of our senior management with respect to our financial performance and future events with respect to our business and industry in general. Forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to, the risks related to the following: -- our post-restructuring financial condition, financing requirements and cash flow; -- the inability to provide assurance for the long-term continued viability of our business; -- limitations on our operating and strategic flexibility and the ability to operate our business, finance our capital needs or expand business strategies under the terms of our debt agreements; -- results from any failure to comply with the financial covenants and other restrictive covenants in our debt agreements; -- limited access to capital markets and increased borrowing costs resulting from our leveraged capital structure and recent debt ratings; -- reduced advertising spending by our clients and contract cancellations resulting from the current economic environment, which drives reduced revenues; -- competition from other yellow pages directory publishers and other traditional and new media and our ability to anticipate or respond to changes in technology and user preferences; -- declining use of print yellow pages directories by consumers; -- our ability to complete the implementation of our plan of reorganization and the discharge of our Chapter 11 bankruptcy cases, including successfully resolving any remaining claims; -- any negative client, vendor, carrier and third-party responses resulting from the implementation of our confirmed plan of reorganization; -- the impact that the filing for and emerging from Chapter 11 bankruptcy has had and could continue to have on our business operations, financial condition, liquidity or cash flow; -- changes in the availability and cost of paper and other raw materials used to print our directories and our reliance on third-party providers for printing and distribution services; -- increased credit risk associated with our reliance on small- and medium-sized businesses as clients, in the current economic environment; -- changes in our operating performance; -- our ability to attract and retain qualified key personnel; -- our ability to maintain good relations with our unionized employees; -- changes in labor, business, political and economic conditions; -- changes in governmental regulations and policies and actions of regulatory bodies; and -- the outcome of pending or future litigation and other claims.

The foregoing factors should not be construed as exhaustive and should be read together with the other cautionary statements included in this and other reports we file with the Securities and Exchange Commission, including the information in "Item 1A. Risk Factors" in Part I of our Annual Report on Form 10-K for the year ended December 31, 2009. If one or more events related to these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may differ materially from what we anticipate. All forward-looking statements included in this report are expressly qualified in their entirety by these cautionary statements. The forward-looking statements speak only as of the date made and, other than as required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

---------------------------------------------------------------------------------------------------------------------------------------------------------------------- Visit: www.otc-advisors.com About Lincoln Electric Holdings, Inc.

Lincoln Electric is the world leader in the design, development and manufacture of arc welding products, robotic arc-welding systems, plasma and oxyfuel cutting equipment and has a leading global position in the brazing and soldering alloys market. Headquartered in Cleveland, Ohio, Lincoln has 37 manufacturing locations, including operations and joint ventures in 18 countries and a worldwide network of distributors and sales offices covering more than 160 countries. For more information about Lincoln Electric, its products and services, visit the Company's website at http://www.lincolnelectric.com.

News Today: CLEVELAND, July 27, 2010 -- Second Quarter and First Half 2010 Highlights Sales were $515.6 million, an increase of 24.8% from the Second Quarter 2009; First Half sales were $986.5 million, an increase of 19.6% from the First Half 2009 Adjusted operating income increased to $49.8 million from $24.8 million or an increase of 101.2% from the Second Quarter 2009 Adjusted operating income increased to $85.4 million from $37.4 million or an increase of 128.6% from the First Half 2009 Adjusted net income was $32.9 million, or $0.77 per diluted share compared with $14.5 million, or $0.34 per diluted share in the Second Quarter 2009 Adjusted net income was $57.7 million, or $1.35 per diluted share compared with $18.3 million, or $0.43 per diluted share in the First Half 2009 Lincoln Electric Holdings, Inc. (the "Company") (Nasdaq: LECO) today reported 2010 second quarter net income of $32.5 million, or $0.76 per diluted share, on sales of $515.6 million. Operating income for the second quarter increased sequentially to $51.1 million, or 9.9% of sales, from $34.7 million, or 7.4% of sales, in the first quarter of 2010. Adjusted operating income in the quarter was $49.8 million or 9.7% of sales.

Sales were $515.6 million in the second quarter 2010 versus $413.3 million in the comparable 2009 period, an increase of 24.8%.

Net income for the second quarter 2010 was $32.5 million, or $0.76 per diluted share, compared with net income of $15.1 million, or $0.35 per diluted share, in the second quarter of 2009. Adjusted net income was $32.9 million, or $0.77 per diluted share, compared with $14.5 million, or $0.34 per diluted share, in the second quarter of 2009. The effective tax rate for the second quarter of 2010 was 33.5% compared with 35.9% in 2009.

Adjusted operating income for the second quarter excludes pre-tax rationalization gains of $3.6 million primarily related to gains on the disposal of assets and a charge of $2.3 million related to the Venezuelan functional currency change and devaluation of the Venezuelan currency, the bolivar, in cost of goods sold.

Adjusted net income for the second quarter 2010 excludes after-tax rationalization gains of $3.8 million, a charge of $2.3 million related to the Venezuelan functional currency change and devaluation of the bolivar and a charge of $1.8 million in noncontrolling interest on a gain on the disposal of assets.

"Our second quarter results were excellent and demonstrated a steady and significant improvement in operating results," said John M. Stropki, Chairman and Chief Executive Officer. "The improving economic environment and important new product introductions delivered a significant increase in sales. Our cost improvement initiatives resulting from the rationalization actions taken throughout 2009, early 2010 and our ongoing strategic capital investments drove increases in margins.

"While demand levels have significantly improved in most markets and geographic regions on a year-over-year basis, volume trends are stabilizing. Although recent economic forecasts are more guarded, we remain cautiously optimistic as we continue to pursue market share gains. We believe that our strong financial position will continue to provide the required flexibility to execute our long-term strategic objectives to the benefit of our shareholders." Net cash provided by operating activities was $32.1 million in the second quarter compared with $62.6 million for the comparable period in 2009.

Sales for the first half of 2010 were $986.5 million versus $825.0 million in the comparable 2009 period, an increase of 19.6%.

Net income for the first six months of 2010 was $56.3 million, or $1.32 per diluted share, compared with net income of $11.5 million, or $0.27 per diluted share, for the comparable period in 2009. Adjusted net income was $57.7 million, or $1.35 per diluted share, compared with $18.3 million, or $0.43 per diluted share, in the first half of 2009. The 2010 first half effective tax rate was 32.7% compared with 46.4% in 2009.

Adjusted operating income for the first half of 2010 excludes pre-tax rationalization gains of $2.8 million primarily related to gains on the disposal of assets, a charge of $4.9 million related to the Venezuelan functional currency change and devaluation of the bolivar in cost of goods sold and foreign currency gains of $2.6 million related to the Venezuelan functional currency change and devaluation of the bolivar in selling, general and administrative expenses.

Adjusted net income for the first half of 2010 excludes after-tax rationalization gains of $3.2 million, a charge of $2.7 million related to the Venezuelan functional currency change and devaluation of the bolivar and a charge of $1.8 million in noncontrolling interest on a gain on the disposal of assets.

Net cash provided by operating activities was $47.7 million in the first six months of 2010 compared with $134.2 million for the comparable period in 2009. The Company returned $36.7 million to shareholders through the payment of $23.8 million in dividends and the repurchase of $12.9 million of the Company's shares for treasury during the first half of 2010.

The Company's Board of Directors declared a quarterly cash dividend of $0.28 per share, which was paid on July 15, 2010 to holders of record as of June 30, 2010.

Financial results for the 2010 second quarter can also be obtained at: http://www.lincolnelectric.com/InvestorNews.

A conference call to discuss the 2010 second quarter financial results is scheduled for today, Tuesday, July 27, 2010, at 10:00 a.m., Eastern Time. An audio webcast of the call is accessible through the investor tab on the Company's website at http://www.lincolnelectric.com/corporate/.

----------------------------------------------------------------------------------------------------------------------------------------------------------------------- Visit: www.otc-advisors.com About Home Federal Bancorp, Inc.

Home Federal Bancorp, Inc., is headquartered in Nampa, Idaho, and is the parent company of Home Federal Bank, a community bank originally organized in 1920. The Company serves the Treasure Valley region of Southwestern Idaho and the Tri-County Region of Central Oregon through 22 full-service banking offices and one commercial loan center. The Company's common stock is traded on the NASDAQ Global Select Market under the symbol "HOME." The Company's stock is also included in the Russell 2000 Index. For more information, visit the Company web site at www.myhomefed.com.

News Today: NAMPA, Idaho, Jul 27, 2010 -- Home Federal Bancorp, Inc. (the "Company") (Nasdaq:HOME), the parent company of Home Federal Bank (the "Bank"), today announced third quarter results for the fiscal year ending September 30, 2010. For the quarter ended June 30, 2010, the Company reported a net loss of ($1.9 million), or ($0.12) per diluted share, compared to a net loss of ($1.2 million), or ($0.08) per diluted share, for the same period a year ago. For the nine months ended June 30, 2010, the Company reported a net loss of ($3.9 million), or ($0.25) per diluted share, compared to a net loss of ($1.6 million), or $(0.10) per diluted share, for the same period last year. Total assets increased $17.1 million, or 2.0%, from $852.1 million at March 31, 2010, to $869.2 million at June 30, 2010.

The following summarizes key activities of the Company during the quarter ended June 30, 2010: -- Deposits increased $20.0 million during the quarter as core deposits (checking, money market and savings accounts) increased $29.1 million -- Cash and cash equivalents continued to increase as a result of strong deposit growth and declining loan balances -- Gross loans declined $32.2 million from the linked quarter as quality loan demand remains weak -- Nonperforming assets decreased $3.4 million from the linked quarter to $60.6 million -- Provision for loan losses totaled $3.3 million while net charge-offs totaled $4.0 million. The Company also adjusted certain preliminary estimated fair values related to loans purchased in the August 7, 2009, acquisition of the failed Community First Bank (the "Acquisition"), resulting in a decrease in the allowance for loan losses and the indemnification receivable from the Federal Deposit Insurance Corporation ("FDIC") -- Valuation adjustments on real estate owned totaled $418,000 -- The Bank received $4.1 million in reimbursed losses from the FDIC on assets covered under the loss share agreement in connection with the Acquisition.

On August 7, 2009, the Company purchased certain assets and assumed certain liabilities of Community First Bank located in Prineville, Oregon in an FDIC-facilitated acquisition, which has been incorporated prospectively in the Company's financial statements. Therefore, year over year results of operations may not be comparable.

Len E. Williams, the Company's President and CEO, commented, "We continue to execute our core deposit growth strategy. However, the stagnant economies of Southwestern Idaho and Central Oregon continue to challenge our lending and credit teams as loan balances decline and nonperforming assets remain at high levels. We intend on deploying a portion of our significant cash balance over the next couple of quarters into select high-quality securities. However, we remain cautious due to the extremely low yields on short and medium-term securities. We also have a stock repurchase plan in place that authorizes the repurchase of up to 834,900 shares of our common stock, and we evaluate that alternative. Lastly, we will endure organizational change in the next quarter as we convert core applications systems in each region. We look forward to the integration of our Central Oregon customers into a common platform and to the benefits of a strong core services provider." Results of operations Total revenue for the quarter ended June 30, 2010, which consisted of net interest income before the provision for loan losses and noninterest income, increased $500,000, or 6%, to $8.8 million compared to $8.3 million for the same period of 2009. Total revenue for the quarter ended June 30, 2010, was unchanged from the second quarter of fiscal 2010. Total revenue for the nine months ended June 30, 2010, increased $2.1 million or 8% to $26.9 million, compared to $24.8 million for the same period of the prior year.

Net interest income. Net interest income before the provision for loan losses increased $215,000, or 4%, to $5.9 million for the quarter ended June 30, 2010, compared to $5.7 million for the same quarter of the prior year. Net interest income before provision for loan losses for the nine months ended June 30, 2010, increased $1.2 million or 7% to $18.6 million, from $17.4 million from the same period of the prior year. For both periods, the increase was attributable to the increase in earning assets. The Company's cost of funds declined to 1.79% in the quarter ended June 30, 2010, compared to 2.54% in the year-ago period.

The Company's net interest margin decreased 60 basis points to 2.93% for the quarter ended June 30, 2010, when compared to the quarter ended June 30, 2009, and was down 36 basis points from 3.29% in the linked quarter. Net interest margin was reduced by the mix of interest-earning assets as we continued to increase our liquidity. In addition, the increase in nonperforming loans purchased in the Acquisition is reducing the average yield earned on the loan portfolio.

Provision for loan losses. A provision for loan losses of $3.3 million was recorded for the quarter ended June 30, 2010, compared to $3.5 million for the same period of the prior year. The provision recorded during the third quarter of fiscal 2010 was primarily a result of the continued signs of stress in the commercial real estate portfolio in the Idaho Region, including higher delinquencies, nonperforming loans and classified loans at June 30, 2010. The provision for loan losses was $6.4 million for the nine months ended June 30, 2010, compared to $8.1 million for the same period in 2009.

Noninterest income. Noninterest income increased $285,000, or 11%, to $2.9 million for the quarter ended June 30, 2010, compared to $2.6 million for the same quarter a year ago and $2.5 million for the linked quarter. Service charges and fees increased $317,000 from the prior year quarter reflecting the increase in accounts assumed in the Acquisition. In connection with management's continued identification and estimation of fair values of assets and liabilities assumed in the Acquisition, a net fair value adjustment of $278,000 was recorded in other income during the quarter ended June 30, 2010. These increases were offset by a decrease in gain on sale of loans from the prior year of $291,000 as residential loan volumes continue to be down significantly from the prior year, despite historically-low interest rates.

Noninterest income for the nine months ended June 30, 2010, increased $823,000, or 11%, to $8.2 million compared to $7.4 million for the same period of the prior year. Service charges and fees increased $726,000 from the prior year period but were offset by a decline in gain on sale of loans, which decreased $580,000 from the prior year. Accretable income related to the FDIC indemnification receivable of $328,000 was recorded in the nine months ended June 30, 2010. In addition, rental income increased $131,000 from the same period in 2009 as a result of the increase in rental income from foreclosed properties.

Management expects newly effective overdraft and interchange income rules to have a significant impact on noninterest income in future quarters. Customers are now explicitly provided the opportunity to "opt-out" of using the Bank's overdraft services on debit card and ATM transactions. While the Company is diligently educating customers on the new regulations there may be a large percentage of customers who choose to opt-out of this service, which could reduce noninterest income in the future.

Historically, the Bank relied on low-balance, high-transaction deposit accounts for funding, which resulted in a higher-than-peer ratio of nonsufficient fee income as a percentage of total revenue. In recent years, management has changed the Bank's deposit aggregation strategy by focusing on higher-balance consumer, small business and commercial deposit relationships, which may result in less fee income, but more stable and low-cost funding sources. Additionally, the Bank offered a new interest-bearing checking account in 2009 that is designed to provide stable high-balance accounts with features intended to increase interchange income, which may offset some of the declines in nonsufficient fund fees.

Noninterest expense. Noninterest expense for the quarter ended June 30, 2010, increased $1.7 million, or 24%, to $8.7 million from $7.0 million for the comparable period a year earlier but declined $892,000 from the linked quarter. Noninterest expense for the nine months ended June 30, 2010, increased $7.7 million or 39% to $27.3 million from $19.6 million from the same period in 2009. Noninterest expense was higher compared to the same period in 2009 as a result of the Acquisition and the costs associated with maintaining two back offices. The Bank will continue to operate separate back offices until a full conversion and integration to a new core application platform is completed, which is anticipated in the fourth quarter of fiscal 2010.

Management continues to review and address branch performance in order to improve profitability. During the quarter ended June 30, 2010, the Bank announced the intent to close its Walmart office in Nampa, Idaho, in July 2010. Accounts and customers will be relocated and referred to the Bank's main office in downtown Nampa. After the closure of this office, two Walmart branches will remain in the Bank's footprint.

Balance Sheet Total assets increased $196.5 million, or 29%, to $869.2 million at June 30, 2010, compared to $672.7 million a year earlier primarily as a result of the Acquisition. Assets increased $17.1 million during the third quarter of fiscal year 2010 from $852.1 million at March 31, 2010.

Cash and Investments. Cash and amounts due from depository institutions increased to $170.2 million at June 30, 2010, from $50.0 million at September 30, 2009, and $26.8 million at June 30, 2009. The Company has increased its liquidity as a result of the very low interest rate environment, which makes medium-term investments unattractive, and to provide increased flexibility for potential acquisitions. In addition, deposit growth continues to be extremely strong. The strong deposit growth combined with limited creditworthy lending opportunities resulted in a significant increase in cash balances.

Investments decreased $6.0 million, or 4%, to $163.7 million at June 30, 2010, compared to $169.7 million at June 30, 2009. The decrease was attributable to regular principal repayments on mortgage-backed securities, offset partially by investment purchases.

Loans. Gross loans at June 30, 2010, increased $48.2 million or 11% to $475.6 million, compared to $427.4 million at June 30, 2009. Gross loans purchased in the Acquisition totaled $98.1 million at June 30, 2010. The increase in loans as a result of the Acquisition was offset by lower balances in real estate loans in the Idaho Region when compared to the same period in 2009.

The loan portfolio in the Idaho Region declined $48.0 million at June 30, 2010, from June 30, 2009, with one-to-four family residential real estate loans declining $30.2 million from the prior year. This was consistent with management's strategy to reduce the Bank's exposure to loans secured by residential real estate. Real estate construction loans declined $10.8 million at June 30, 2010, compared to June 30, 2009. Real estate construction loans have experienced high levels of losses over the past year as a result of declining real estate prices and excess housing inventory in the Idaho Region.

Asset Quality. The allowance for loan losses was $17.9 million, or 3.76%, of gross loans at June 30, 2010, compared to $28.7 million, or 5.32% of gross loans at September 30, 2009, and $8.3 million, or 1.93% of gross loans at June 30, 2009. The general allowance for loan losses allocated to loans covered under the loss share agreement with the FDIC in connection with the Acquisition totaled $3.2 million, or 3.30% of all covered loans. The allowance for loan losses allocated to the Idaho Region loan portfolio was $14.7 million, or 3.88% of the portfolio. Net charge-offs totaled $4.0 million during the quarter ended June 30, 2010.

Since the Acquisition, the Company has continued to review preliminary estimates of fair values of loans purchased in the Acquisition. During this allocation period, management obtained information on additional loans that evidence credit impairment on the date of the Acquisition. Additionally, management updated the preliminary fair values of loans previously identified as purchased impaired loans on the date of acquisition. These adjustments reduced the preliminary estimated fair values of purchased impaired loans. Lastly, management updated preliminary estimated loss rates for loans acquired, which resulted in a reduction in the allowance for loan losses. The adjustment in the allowance for loan losses on purchased loans resulted in a reduction in the FDIC indemnification receivable due to lower loss estimates, which was offset somewhat by the reduction in estimated fair values of purchased impaired loans. The difference between the allowance for loan losses adjustment and the reduction in the FDIC indemnification receivable resulted in other income due to fair value adjustments of $278,000 during the quarter ended June 30, 2010. Should loans purchased in the Acquisition deteriorate further, the Company may be required to record a provision for loan losses and increase the allowance for loan losses in future periods.

Loans delinquent 30 to 89 days totaled $12.3 million at June 30, 2010, compared to $10.7 million at March 31, 2010, including $6.9 million and $4.4 million, respectively, of delinquent loans covered by the loss share agreement with the FDIC. Nonperforming assets, which include nonaccrual loans and real estate owned, totaled $60.6 million at June 30, 2010, compared to $56.9 million at September 30, 2009, and $25.1 million at June 30, 2009. Real estate owned and other repossessed assets decreased $6.1 million or 33% to $12.3 million compared to $18.4 million as of September 30, 2009. Real estate owned and other repossessed assets was comprised of $6.9 million of land development and speculative one-to-four family construction projects, $3.4 million of commercial real estate, and $2.0 million of one-to-four family residential properties.

The following table summarizes nonperforming loans and real estate owned at June 30, 2010, and March 31, 2010: June 30, 2010 March 31, 2010 Quarterly Change ----------------------------- ------------------------------ -------------------------------Covered  Legacy(1)             Covered  Legacy(1)    Total     Covered   Legacy(1) (in thousands)            Assets  Portfolio    Total     Assets  Portfolio  Portfolio    Assets   Portfolio    Total -------- --------- -------- -------- --------- --------- --------- --------- --------- Acquisition and development            $  7,936    $ 3,378  $ 11,314  $  7,382    $ 1,641    $ 9,023      $ 554    $ 1,737    $ 2,291 One-to-four family construction                347        446       793       740        828      1,568      (393)      (382)      (775) Commercial real estate    15,049      8,907    23,956    16,163      9,993     26,156    (1,114)    (1,086)    (2,200) One-to-four family residential               2,244      5,879     8,123     3,413      7,546     10,959    (1,169)    (1,667)    (2,836) Other                      2,105      1,985     4,090     2,689         50      2,739      (584)      1,935      1,351 -------- --------- -------- -------- --------- --------- --------- --------- --------- Total nonperforming loans                    27,681     20,595    48,276    30,387     20,058     50,445    (2,706)        537    (2,169) Real estate owned and other repossessed assets         6,291      6,016    12,307     5,547      8,017     13,564        744    (2,001)    (1,257) -------- --------- -------- -------- --------- --------- --------- --------- --------- Total nonperforming assets                 $ 33,972   $ 26,611  $ 60,583  $ 35,934   $ 28,075   $ 64,009  $ (1,962)  $ (1,464)  $ (3,426) ======== ========= ======== ======== ========= ========= ========= ========= ========= (1) Assets included within the Idaho Region Deposits and borrowings. Deposits increased $198.9 million, or 53%, to $574.9 million at June 30, 2010, compared to $376.0 million at June 30, 2009, primarily as a result of the Acquisition. Deposits in the Central Oregon Region totaled $157.5 million at June 30, 2010, compared to $143.5 million on the date of the Acquisition. Core deposits (defined as checking, savings and money market accounts) in the Central Oregon Region totaled $98.0 million at June 30, 2010, compared to $68.0 million on the date of the Acquisition, highlighting the execution of the retail banking division's goal to increase core deposits. Total deposits increased $20.0 million from the linked quarter including an increase of $29.1 million in core deposits and a decrease of $9.1 million in certificates of deposit.

FHLB advances and other borrowings decreased $15.4 million, or 17%, to $73.5 million at June 30, 2010, compared to $88.9 million at June 30, 2009. The decrease resulted from maturing FHLB advances being repaid with excess liquidity.

Equity. Stockholders' equity increased $7.1 million, or 4%, to $205.8 million at June 30, 2010, compared to $198.7 million at June 30, 2009. The extraordinary gain of $15.6 million associated with the Acquisition was the most significant factor in the increase in stockholders' equity, which occurred in the quarter ended September 30, 2009. The gain was offset by dividends of $3.4 million and a loss from operations of $9.0 million for the twelve months ended June 30, 2010.

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