Operating Results

Revenues for the quarter ended September 30, 2008, which consisted of netinterest income before the provision for loan losses plus noninterestincome, increased 11% to $8.6 million, compared to $7.7 million for thequarter ended September 30, 2007. Net interest income before the provisionfor loan losses increased 15% to $5.9 million for the quarter endedSeptember 30, 2008 compared to $5.1 million for the same quarter of theprior year. The increase in net interest income is primarily attributableto a decrease in interest expense. Balances of Federal Home Loan Bankborrowings were lower for the quarter ended September 30, 2008 than in thesame period of the prior year as maturing advances were repaid with excessliquidity.

Revenues for the fiscal year ended September 30, 2008, increased 2% to$33.1 million, compared to $32.6 million for the same period of last year.Net interest income before the provision for loan losses increased 6% to$22.6 million, compared to $21.3 million for the same period of the prioryear.

The Company's net interest margin increased 37 basis points to 3.41% forthe quarter ended September 30, 2008, from 3.04% for the same quarter lastyear. The net interest margin for the fiscal year ended September 30, 2008increased 18 basis points to 3.21% from 3.03% for the same period a yearearlier. The improvement in the net interest margin is primarilyattributable to the increase in interest-earning assets during fiscal 2008that resulted from the proceeds of the Company's second-step conversion andstock offering completed on December 19, 2007. In addition, decreases ininterest expense and a shift in the loan portfolio toward higher yieldingcommercial real estate loans from residential mortgage loans alsocontributed to the increase in the margin in 2008.

A provision for loan losses of $1.1 million was established by managementin connection with its analysis of the loan portfolio for the quarter endedSeptember 30, 2008, compared to $338,000 for the same quarter of the prioryear. The provision for loan losses was $2.4 million for the fiscal yearended September 30, 2008, compared to $409,000 for the prior fiscal year.Asset quality performance is discussed further below in this release.

Noninterest income was basically flat year over year at $2.6 million forboth the quarters ended September 30, 2008 and 2007. Fee income fromdeposit accounts increased $51,000 during the fourth quarter of 2008compared to the fourth quarter of 2007. For the fiscal year endedSeptember 30, 2008, noninterest income decreased 7% to $10.5 million,compared to $11.3 million for the prior fiscal year. A decrease in gain onsale of loans of $655,000 was the primary reason for the decline.

Noninterest expense for the quarter ended September 30, 2008, increased$515,000, or 9%, to $6.0 million, from $5.4 million for the comparableperiod a year earlier. The Company's efficiency ratio was 69.7% for thequarter ended September 30, 2008, compared to 70.5% for the same quarter ayear ago. Compensation and benefit expenses increased $733,000, or 25%, to$3.6 million for the quarter ended September 30, 2008, compared to $2.9million for the same quarter a year ago. The majority of the increase incompensation expense in 2008 is attributable to higher costs associatedwith the Bank's employee stock ownership plan, the reversal of incentiveaccruals in the prior year, and an upward adjustment in accrued vacation in2008. The efficiency ratio was 73.8% for the fiscal year ended September30, 2008, compared to 72.5% for the prior fiscal year.

Balance Sheet

Total assets increased 2% to $725.1 million at September 30, 2008, comparedto $710.0 million a year earlier. The $15.1 million increase in totalassets was primarily attributable to $88.3 million in net proceeds raisedfrom the Company's second-step conversion and stock offering completed onDecember 19, 2007. This increase was partially offset by decreases indeposits and borrowings during this same period of $31.7 million and $43.8million, respectively.

Securities. Mortgage-backed securities increased $26.5 million to $188.8million at September 30, 2008, compared to $162.3 million at September 30,2007. The increase is attributable to purchases made with proceeds fromthe Company's second-step conversion and stock offering. Approximately 98%of the Company's mortgage-backed securities were issued by U.S. governmentsponsored enterprises. The Company does not own subordinated debt orpreferred or common equity securities issued by Freddie Mac or Fannie Mae.At September 30, 2008, the Company held $9.6 million of stock in theFederal Home Loan Bank of Seattle.

Loans. Net loans (excluding loans held for sale) at September 30, 2008,decreased 4% to $459.8 million, compared to $480.1 million at September 30,2007. One- to four-family residential loans represented 45% of the Bank'sloan portfolio at September 30, 2008, compared to 52% at September 30,2007. The Company currently originates conventional one- to four-familyresidential loans for sale in the secondary market. As a result, theresidential loan portfolio will likely continue to decline as new loans arenot added to the portfolio. The Company plans to continue its increasedemphasis on commercial and small business banking products. Commercialloans, including commercial real estate, multi-family, construction andacquisition and development loans, totaled $198.6 million at September 30,2008, compared to $187.7 million at September 30, 2007.

Asset Quality. Loans delinquent 30 to 89 days totaled $6.5 million atSeptember 30, 2008, compared to $2.0 million at June 30, 2008, and $2.8million at September 30, 2007. Non-performing assets and impaired loanstotaled $10.6 million or 2% of gross loans at September 30, 2008, comparedto $3.5 million at June 30, 2008, and $2.1 million at September 30, 2007.The allowance for loan losses was $4.6 million, or 0.98% of gross loans, atSeptember 30, 2008, compared to $3.0 million, or 0.62% of gross loans, atSeptember 30, 2007. The increase in non-performing and impaired loans is aresult of the rapid deterioration of the residential construction market inthe Treasure Valley.

The following table summarizes the change in nonperforming and impairedloans from June 30, 2008:

September 30, 2008 June 30, 2008 Loss Loss(in thousands) Balance Reserve Balance Reserve --------- --------- ------- -------Land acquisition and development $ 3,975 $ 916 $ 906 $ 277One- to four-family construction 4,239 596 458 55One- to four-family residential 1,701 219 1,381 324Other 30 2 10 -- --------- --------- ------- ------- Total nonperforming and impaired loans $ 9,945 $ 1,733 $ 2,755 $ 656 ========= ========= ======= =======

Commenting on asset quality, President and Chief Executive Officer Len E.Williams stated, "Clearly we are disappointed with the deterioration in ourconstruction and land development loan portfolios. However, we recognizedlast year that these portfolios were about to undergo stress, so weincreased the monitoring of the performance of all of our construction andland development loans. At September 30, 2008, construction and landdevelopment loans comprised 7% of our loan portfolio."

Deposits. Deposits decreased 8% to $372.9 million at September 30, 2008,compared to $404.6 million at September 30, 2007. Demand deposits andsavings accounts increased $6.1 million, or 3%, to $195.5 million atSeptember 30, 2008. The increase was a result of growth in money marketand non-interest bearing commercial demand deposit accounts. Certificatesof deposit decreased $37.8 million, or 18%, to $177.4 million at September30, 2008, compared to $215.2 million at September 30, 2007. The decreasein certificates of deposit was primarily the result of the Bank choosingnot to match rates offered by local competitors that in some instancesexceeded the Bank's cost of alternative funding sources. Advances from theFederal Home Loan Bank of Seattle decreased 24% to $137.0 million atSeptember 30, 2008, compared to $180.7 million at September 30, 2007. Thedecrease resulted from maturing advances being repaid with excessliquidity.

Equity. Stockholders' equity increased $92.6 million, or 82%, to $205.2million at September 30, 2008, compared to $112.6 million at September 30,2007. The increase was primarily a result of the $88.3 million in netproceeds received from the second-step conversion and stock offering. TheCompany sold approximately 9.4 million shares of common stock in itssubscription, community and syndicated community offerings and issuedapproximately 7.1 million shares of common stock in exchange for thepreviously outstanding shares of the Bank's former mid-tier holdingcompany. A portion of the offering proceeds was used to fund a loan to theCompany's employee stock ownership plan ("ESOP"), which purchasedapproximately 816,000 shares of the Company's common stock for an aggregateof $8.2 million.

Other significant activity among equity accounts over the past twelvemonths included $4.0 million in net income, the allocation of earned ESOPshares, equity compensation and the exercise of stock options totaling $2.4million, and an $826,000 decrease in unrealized losses on securitiesavailable for sale, offset by $3.0 million in cash dividends paid tostockholders. The Company's book value per share as of September 30, 2008was $11.81 per share based upon 17,374,161 outstanding shares of commonstock.

Commentary on the Troubled Asset Relief Program (TARP)

On October 24, 2008, the Company's Board of Directors passed a resolutionthat stated the Company will not participate in the U.S. TreasuryDepartment's Capital Purchase Program under the TARP. Mr. Williamscommented, "In December 2007, we raised $88.3 million of common stock forHome Federal Bancorp, Inc., through our second-step conversion. AtSeptember 30, 2008, Home Federal Bank's risk based capital ratio was 32.8%.We do not intend to apply for government assistance through the TARPCapital Purchase Program. We believe our high capital level and liquidbalance sheet provides us flexibility in today's environment to execute ourorganic growth and acquisition plans without TARP capital."

About the Company

Home Federal Bancorp, Inc. is a Maryland corporation headquartered inNampa, Idaho, and is the savings and loan holding company of Home FederalBank, a federal savings bank that was originally organized as a buildingand loan association in 1920. The Company serves the Treasure Valleyregion of southwestern Idaho that includes Ada, Canyon, Elmore and GemCounties, through 15 full-service banking offices and one loan center. TheCompany's common stock is traded on the NASDAQ Global Select Market underthe symbol "HOME." The Company's stock is also included in the America'sCommunity Bankers NASDAQ Index. For more information, visit the Company'sweb site at www.myhomefed.com.

Forward-Looking Statements:

Statements in this news release regarding future events, performance orresults are "forward-looking statements" within the meaning of the PrivateSecurities Litigation Reform Act of 1995 ("PSLRA") and are made pursuant tothe safe harbors of the PSLRA. These forward-looking statements relate to,among other things, expectations of the business environment in which theCompany operates, projections of future performance, perceivedopportunities in the market, potential future credit experience, andstatements regarding the Company's mission and vision. Theseforward-looking statements are based upon current management expectationsand may, therefore, involve risks and uncertainties. Actual results couldbe materially different from those expressed or implied by the forward-looking statements. Factors that could cause results to differinclude but are not limited to: general economic and banking businessconditions, competitive conditions between banks and non-bank financialservice providers, interest rate fluctuations, the credit risk of lendingactivities, including changes in the level and trend of loan delinquenciesand write-offs; results of examinations by our banking regulators,regulatory and accounting changes, the value of mortgage servicing rights,risks related to construction and development lending, commercial and smallbusiness banking and other risks. Additional factors that could causeactual results to differ materially are disclosed in Home Federal Bancorp,Inc.'s recent filings with the Securities and Exchange Commission,including but not limited to its Annual Report on Form 10-K for the yearended September 30, 2007, Quarterly Reports on Form 10-Q and CurrentReports on Form 8-K. Forward-looking statements are accurate only as ofthe date released, and we do not undertake any responsibility to update orrevise anyforward-looking statements to reflect subsequent events or circumstances.

HOME FEDERAL BANCORP, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS(In thousands, except share data) September September (Unaudited) 30, 2008 30, 2007 ----------- -----------ASSETS Cash and amounts due from depository institutions $ 23,270 $ 20,588 Certificates of deposit in correspondent bank 5,000 - Mortgage-backed securities available for sale, at fair value 188,787 162,258 Federal Home Loan Bank ("FHLB") stock, at cost 9,591 9,591 Loans receivable, net of allowance for loan losses of $4,579 and $2,988 459,813 480,118 Loans held for sale 2,831 4,904 Accrued interest receivable 2,681 2,804 Property and equipment, net 15,246 12,364 Mortgage servicing rights, net 1,707 2,047 Bank owned life insurance 11,590 11,168 Real estate and other property owned 650 549 Deferred income tax asset 1,770 1,245 Other assets 2,134 2,318 ----------- ----------- TOTAL ASSETS $ 725,070 $ 709,954 =========== ===========LIABILITIES AND STOCKHOLDERS’ EQUITYLIABILITIES Deposit accounts: Noninterest-bearing demand deposits $ 41,398 $ 38,643 Interest-bearing demand deposits 127,714 127,659 Savings deposits 26,409 23,116 Certificates of deposit 177,404 215,191 ----------- ----------- Total deposit accounts 372,925 404,609 Advances by borrowers for taxes and insurance 1,386 1,605 Interest payable 552 731 Deferred compensation 5,191 4,515 FHLB advances 136,972 180,730 Other liabilities 2,857 5,127 ----------- ----------- Total liabilities 519,883 597,317STOCKHOLDERS’ EQUITY Serial preferred stock, $.01 par value; 10,000,000 authorized, issued and outstanding, none - - Common stock, $.01 par value; 90,000,000 authorized, issued and outstanding: Sept. 30, 2008 - 17,412,449 issued, 17,374,161 outstanding 174 152 Sept. 30, 2007 - 15,278,803 issued, 15,232,243 outstanding Additional paid-in capital 157,205 59,613 Retained earnings 59,814 58,795 Unearned shares issued to ESOP (10,606) (3,698) Accumulated other comprehensive loss (1,400) (2,225) ----------- ----------- Total stockholders’ equity 205,187 112,637 ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 725,070 $ 709,954 =========== ===========HOME FEDERAL BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME(In thousands, except share data) Three Months Ended (Unaudited) September 30, Year Ended September 30, ----------------------- ------------------------- 2008 2007 2008 2007 ---------- ----------- ----------- -----------Interest and dividend income: Loan interest $ 7,296 $ 8,222 $ 30,686 $ 33,553 Investment interest 121 122 1,012 345 Mortgage-backed security interest 2,279 2,019 8,742 8,692 FHLB dividends 33 15 143 48 ---------- ----------- ----------- ----------- Total interest and dividend income 9,729 10,378 40,583 42,638 ---------- ----------- ----------- -----------Interest expense: Deposits 2,170 3,133 10,685 12,279 FHLB advances 1,656 2,115 7,250 9,057 ---------- ----------- ----------- ----------- Total interest expense 3,826 5,248 17,935 21,336 ---------- ----------- ----------- ----------- Net interest income 5,903 5,130 22,648 21,302Provision for loan losses 1,114 338 2,431 409 ---------- ----------- ----------- ----------- Net interest income after provision for loan losses 4,789 4,792 20,217 20,893 ---------- ----------- ----------- -----------Noninterest income: Service charges and fees 2,346 2,329 9,077 9,308 Gain on sale of loans 204 251 764 1,419 Increase in cash surrender value of bank owned life insurance 107 104 421 405 Loan servicing fees 115 129 484 549 Mortgage servicing rights, net (134) (222) (340) (445) Other 9 5 84 45 ---------- ----------- ----------- ----------- Total noninterest income 2,647 2,596 10,490 11,281 ---------- ----------- ----------- -----------Noninterest expense: Compensation and benefits 3,619 2,886 15,211 14,249 Occupancy and equipment 765 726 3,007 2,871 Data processing 530 548 2,198 2,097 Advertising 257 487 1,043 1,427 Postage and supplies 149 163 617 650 Professional services 255 236 788 856 Insurance and taxes 150 106 533 429 Other 233 291 1,042 1,057 ---------- ----------- ----------- ----------- Total noninterest expense 5,958 5,443 24,439 23,636 ---------- ----------- ----------- -----------Income before income taxes 1,478 1,945 6,268 8,538Income tax expense 484 750 2,263 3,267 ---------- ----------- ----------- ----------- NET INCOME $ 994 $ 1,195 $ 4,005 $ 5,271 ========== =========== =========== ===========Earnings per common share: Basic $ 0.06 $ 0.07(1) $ 0.25(1) $ 0.32(1) Diluted 0.06 0.07(1) 0.25(1) 0.31(1)Weighted average number of shares outstanding: Basic 16,042,720 16,665,710(1) 16,233,200(1) 16,602,082(1) Diluted 16,078,302 16,737,825(1) 16,252,747(1) 16,767,219(1)Dividends declared per share: $ 0.055 $ 0.048(1) $ 0.213(1)$ 0.194(1)(1) Earnings per share, dividends per share and average common shares outstanding have been adjusted to reflect the impact of the second-step conversion and reorganization of the Company, which occurred on December 19, 2007. At Or For At Or ForHOME FEDERAL BANCORP, INC. AND SUBSIDIARY The Year The Year ADDITIONAL FINANCIAL INFORMATION (Dollars in Ended Sept. Ended Sept. thousands, except share data) (Unaudited) 30, 2008 30, 2007 ----------- -----------FINANCIAL CONDITION DATA Average interest-earning assets $ 705,794 $ 703,675 Average interest-bearing liabilities 512,061 582,936 Net average earning assets 193,733 120,739 Average interest-earning assets to average interest-bearing liabilities 137.83% 120.71% Stockholders’ equity to assets 28.30 15.87ASSET QUALITY Allowance for loan losses $ 4,579 $ 2,988 Non-performing loans 9,945 1,531 Non-performing assets 10,596 2,080 Allowance for loan losses to non-performing loans 46.04% 195.17% Allowance for loan losses to gross loans 0.98 0.62 Non-performing loans to gross loans 2.14 0.32 Non-performing assets to total assets 1.46 0.29 At Or For The Three At Or For The Year Months Ended Sept. 30, Ended Sept. 30, ----------------------- -------------------------- 2008 2007 2008 2007 ---------- ----------- ----------- -----------SELECTED PERFORMANCE RATIOS Return on average assets (1) 0.54% 0.67% 0.54% 0.71% Return on average equity (1) 1.94 4.27 2.16 4.75 Pre-tax, pre-provision return on average assets(5) 1.42 1.28 1.17 1.21 Net interest margin (1) 3.41 3.04 3.21 3.03 Efficiency ratio (2) 69.68 70.46 73.75 72.54PER SHARE DATA Basic earnings per share $ 0.06 $ 0.07(4) $ 0.25(4) $ 0.32(4) Diluted earnings per share 0.06 0.07(4) 0.25(4) 0.31(4) Book value per share 11.81 6.51(4) 11.81 6.51(4) Cash dividends declared per share 0.055 0.048(4) 0.213(4) 0.194(4) Average number of shares outstanding: Basic (3) 16,042,720 16,665,710(4) 16,233,200(4) 16,602,082(4) Diluted (3) 16,078,302 16,737,825(4) 16,252,747(4) 16,767,219(4)(1) Amounts are annualized.(2) Noninterest expense divided by net interest income plus noninterest income.(3) Amounts calculated exclude ESOP shares not committed to be released and unvested restricted shares granted under the 2005 Recognition and Retention Plan.(4) Earnings per share, book value per share, dividends per share and average common shares outstanding have been adjusted to reflect the impact of the second-step conversion and reorganization of the Company, which occurred on December 19, 2007.(5) Income before income taxes plus provision for loan losses divided by average assets for the period presented.

Contact:Home Federal Bancorp, Inc.Len E. WilliamsPresident & CEOEric S. NadeauEVP, Treasurer & CFO208-466-4634www.myhomefed.com