HomeTrust Bancshares, Inc. Announces Financial Results for the First Quarter of Fiscal Year 2023 and an Increase in the Quarterly Dividend


ASHEVILLE, N.C., Oct. 26, 2022 (GLOBE NEWSWIRE) -- HomeTrust Bancshares, Inc. (NASDAQ: HTBI) ("Company"), the holding company of HomeTrust Bank ("Bank"), today announced preliminary net income for the first quarter of fiscal year 2023 and an increase in its quarterly cash dividend.

For the quarter ended September 30, 2022 compared to the quarter ended June 30, 2022:

  • net income was $9.2 million compared to net income of $6.0 million;
  • diluted earnings per share ("EPS") was $0.60 compared to $0.39;
  • annualized return on assets ("ROA") was 1.02% compared to 0.68%;
  • annualized return on equity ("ROE") was 9.25% compared to 6.19%;
  • net interest income was $34.5 million compared to $28.9 million;
  • provision for credit losses was $4.0 million compared to $3.4 million;
  • noninterest income was $7.4 million compared to $9.7 million;
  • net loan growth was $98.5 million, or 14.2% annualized, compared to $69.8 million, or 10.3% annualized; and
  • quarterly cash dividends continued at $0.09 per share totaling $1.4 million.

For the quarter ended September 30, 2022 compared to the quarter ended September 30, 2021:

  • net income was $9.2 million compared to a net income of $10.5 million;
  • diluted EPS was $0.60 compared to $0.65;
  • annualized ROA was 1.02% compared to 1.20%;
  • annualized ROE was 9.25% compared to 10.62%;
  • net interest income was $34.5 million compared to $27.7 million;
  • provision for credit losses was $4.0 million compared to a net benefit of $1.5 million;
  • noninterest income was $7.4 million compared to $10.4 million;
  • net loan growth was $98.5 million, or 14.2% annualized, compared to a decrease of $13.6 million, or (2.0)% annualized; and
  • quarterly cash dividends of $0.09 per share totaling $1.4 million compared to $0.08 per share totaling $1.3 million.

The Company also announced today that its Board of Directors declared a quarterly cash dividend of $0.10 per common share, reflecting a $0.01, or 11.1%, increase over the previous quarter's dividend. This is the fourth increase of the quarterly dividend since the Company initiated cash dividends in November 2018. The dividend is payable on December 1, 2022 to shareholders of record as of the close of business on November 17, 2022.

“The Company’s strong end to the prior fiscal year carried over to the first quarter,” said Hunter Westbrook, President and Chief Executive Officer. “This quarter we grew our loan portfolio by $98.5 million, an annualized growth rate of 14.2%, which was distributed across our business lines. Our growth over the last two quarters, combined with an increase in our tax equivalent net interest margin from 3.53% to 4.13% this quarter, resulted in an increase in net interest income of $5.7 million, or 19.6%, over the prior quarter. This growth more than offset the decline in noninterest income caused by the continued slowdown in the mortgage market as a result of rising interest rates.

“Due to our loan growth and expected higher unemployment rates, we recorded another sizeable provision for credit losses this quarter; however, to this point credit metrics, including the levels of nonperforming and classified credits, remain at historically low levels. We will continue to prudently focus on the asset origination capacity of all our lines of business, while maintaining the credit culture that has supported our growth in recent years.”

WEBSITE: WWW.HTB.COM

Comparison of Results of Operations for the Three Months Ended September 30, 2022 and June 30, 2022

Net Income. Net income totaled $9.2 million, or $0.60 per diluted share, for the three months ended September 30, 2022 compared to net income of $6.0 million, or $0.39 per diluted share, for the three months ended June 30, 2022, an increase of $3.2 million, or 52.7%. The results for the three months ended September 30, 2022 were positively impacted by a $5.7 million increase in net interest income, partially offset by a $2.3 million decrease in noninterest income. Details of the changes in the various components of net income are further discussed below.

Net Interest Income. The following table presents the distribution of average assets, liabilities and equity, as well as interest income on average interest-earning assets and interest expense paid on average interest-bearing liabilities. All average balances are daily average balances. Nonaccruing loans have been included in the table as loans carrying a zero yield.

  Three Months Ended
  September 30, 2022 June 30, 2022
(Dollars in thousands) Average
Balance
Outstanding
 Interest
Earned/
Paid(2)
 Yield/
Rate(2)
 Average
Balance
Outstanding
 Interest
Earned/
Paid(2)
 Yield/
Rate(2)
Assets            
Interest-earning assets            
Loans receivable(1) $2,880,148  $33,522  4.62% $2,807,969  $28,457  4.06%
Commercial paper  214,214   1,116  2.07   295,485   852  1.16 
Debt securities available for sale  135,015   678  1.99   118,075   483  1.64 
Other interest-earning assets(3)  113,821   888  3.10   92,026   628  2.74 
Total interest-earning assets  3,343,198   36,204  4.30   3,313,555   30,420  3.68 
Other assets  243,113       255,596     
Total assets  3,586,311       3,569,151     
Liabilities and equity            
Interest-bearing liabilities            
Interest-bearing checking accounts $654,154  $268  0.16% $664,966  $340  0.20%
Money market accounts  968,084   521  0.21   979,816   350  0.14 
Savings accounts  238,992   45  0.07   235,848   42  0.07 
Certificate accounts  476,761   561  0.47   485,978   500  0.41 
Total interest-bearing deposits  2,337,991   1,395  0.24   2,366,608   1,232  0.21 
Borrowings  1,526   12  3.12   26,761   35  0.52 
Total interest-bearing liabilities  2,339,517   1,407  0.24   2,393,369   1,267  0.21 
Noninterest-bearing deposits  800,912       738,734     
Other liabilities  51,485       46,928     
Total liabilities  3,191,914       3,179,031     
Stockholders' equity  394,397       390,120     
Total liabilities and stockholders' equity  3,586,311       3,569,151     
Net earning assets $1,003,681      $920,186     
Average interest-earning assets to average interest-bearing liabilities  142.90%      138.45%    
Tax-equivalent            
Net interest income   $34,797      $29,153   
Interest rate spread     4.06%     3.47%
Net interest margin(4)     4.13%     3.53%
Non-tax-equivalent            
Net interest income   $34,520      $28,859   
Interest rate spread     4.02%     3.43%
Net interest margin(4)     4.10%     3.49%
               

(1) The average loans receivable balances include loans held for sale and nonaccruing loans.
(2) Interest income used in the average interest earned and yield calculation includes the tax equivalent adjustment of $277 and $294 for the three months ended September 30, 2022 and June 30, 2022, respectively, calculated based on a combined federal and state tax rate of 24%.
(3) The average other interest-earning assets consist of FRB stock, FHLB stock, SBIC investments, and deposits in other banks.
(4) Net interest income divided by average interest-earning assets.

Total interest and dividend income for the three months ended September 30, 2022 increased $5.8 million, or 19.3%, compared to the three months ended June 30, 2022, which was driven by a $5.1 million, or 18.0%, increase in interest income on loans. The overall increase in average yield on interest-earning assets was the result of rising interest rates, while the rate paid on interest-bearing liabilities has not increased as rapidly. Specific to the commercial paper and debt securities available for sale, the Company has intentionally maintained relatively short-term duration portfolios which has allowed, and will continue to allow the Company, to take advantage of rising rates when reinvesting the proceeds of maturing instruments.

Total interest expense for the three months ended September 30, 2022 increased $140,000, or 11.0%, compared to the three months ended June 30, 2022. The increase was driven by a $163,000, or 13.2%, increase in interest expense on deposits as a result of a 3 basis point increase in the associated average cost of funds, offset by a $23,000 decrease in interest expense on borrowings.

The following table shows the effects that changes in average balances (volume), including differences in the number of days in the periods compared, and average interest rates (rate) had on the interest earned on interest-earning assets and interest paid on interest-bearing liabilities:

(Dollars in thousands) Increase/
(Decrease)
Due to
 Total
Increase/
(Decrease)
  Volume Rate 
Interest-earning assets      
Loans receivable $1,096  $3,969  $5,065 
Commercial paper  (222)  486   264 
Debt securities available for sale  77   118   195 
Other interest-earning assets  158   102   260 
Total interest-earning assets  1,109   4,675   5,784 
Interest-bearing liabilities      
Interest-bearing checking accounts  (3)  (69)  (72)
Money market accounts  1   170   171 
Savings accounts  1   2   3 
Certificate accounts  (3)  64   61 
Borrowings  (33)  10   (23)
Total interest-bearing liabilities  (37)  177   140 
Net increase in tax equivalent interest income     $5,644 
         

Provision for Credit Losses. The provision for credit losses is the amount of expense that, based on our judgment, is required to maintain the allowance for credit losses ("ACL") at an appropriate level under the current expected credit losses ("CECL") model.

The following table presents a breakdown of the components of the provision for credit losses:

  Three Months Ended  
  September
30, 2022
 June 30,
2022
 $ Change % Change
Provision for credit losses        
Loans $3,694  $2,942  $752  26%
Off-balance-sheet credit exposure  443   566   (123) (22)
Commercial paper  (150)  (95)  (55) (58)
Total provision for credit losses $3,987  $3,413  $574  17%
                

For the quarter ended September 30, 2022, the "loans" portion of the provision for credit losses was the result of the following, offset by net charge-offs of $83,000 during the quarter:

  • $1.3 million provision specific to fintech portfolios which have a riskier credit profile than loans originated in-house. The elevated credit risk is offset by the higher yields earned on the portfolios.
  • $1.1 million provision driven by a projected worsening of the economic forecast, specifically the national unemployment rate.
  • $1.3 million provision driven by loan growth, changes in the loan mix, and qualitative adjustments.

For the quarter ended June 30, 2022, the "loans" portion of the provision for credit losses was the result of the following, offset by net recoveries of $714,000 during the quarter:

  • $1.2 million provision specific to fintech portfolios.
  • $0.8 million provision driven by a projected worsening of the economic forecast, specifically the national unemployment rate.
  • $0.8 million provision driven by loan growth, changes in the loan mix, and qualitative adjustments.
  • $0.8 million provision to fully reserve a single individually evaluated commercial loan relationship where the borrower's financial performance deteriorated during the quarter.

For both periods presented, a provision for credit losses for off-balance-sheet credit exposure was required for the same reasons outlined above rather than as a result of significant increases in outstanding commitments.

Noninterest Income. Noninterest income for the three months ended September 30, 2022 decreased $2.3 million, or 23.7%, when compared to the quarter ended June 30, 2022. Changes in selected components of noninterest income are discussed below:

  Three Months Ended  
  September
30, 2022
 June 30,
2022
 $ Change % Change
Noninterest income        
Service charges and fees on deposit accounts $2,338  $2,361  $(23) (1)%
Loan income and fees  570   649   (79) (12)
Gain on sale of loans held for sale  1,586   1,949   (363) (19)
BOLI income  527   500   27  5 
Operating lease income  1,585   1,472   113  8 
Gain on sale of debt securities available for sale     1,895   (1,895) (100)
Other  804   890   (86) (10)
Total noninterest income $7,410  $9,716  $(2,306) (24)%
               
  • Gain on sale of loans held for sale: The decrease in the gain on sale of loans held for sale was primarily driven by a decrease in volume of residential mortgage loans sold during the period as a result of rising interest rates. During the quarter ended September 30, 2022, $20.9 million of residential mortgage loans originated for sale were sold with gains of $493,000 compared to $38.3 million sold with gains of $835,000 for the quarter ended June 30, 2022. There were $12.1 million of sales of the guaranteed portion of SBA commercial loans with gains of $891,000 in the current quarter compared to $11.2 million sold and gains of $904,000 in the prior quarter. Lastly, the Company sold $22.8 million of home equity lines of credit ("HELOCs") during the current quarter for a gain of $202,000 compared to $22.8 million sold and gains of $210,000 in the prior quarter.
  • Gain on sale of debt securities available for sale: The decrease in the gain was driven by the sale of seven trust preferred securities during the quarter ended June 30, 2022 which had previously been written down to zero through purchase accounting adjustments from a merger in a prior period. No other securities were sold during either period presented.

Noninterest Expense. Noninterest expense for the three months ended September 30, 2022 decreased $1.4 million, or 4.9%, when compared to the three months ended June 30, 2022. Changes in selected components of noninterest expense are discussed below:

  Three Months Ended  
  September
30, 2022
 June 30,
2022
 $ Change % Change
Noninterest expense        
Salaries and employee benefits $14,815  $14,709  $106  1%
Occupancy expense, net  2,408   2,491   (83) (3)
Computer services  2,763   2,811   (48) (2)
Telephone, postage and supplies  603   599   4  1 
Marketing and advertising  590   473   117  25 
Deposit insurance premiums  542   432   110  25 
Core deposit intangible amortization  34   42   (8) (19)
Merger-related expenses  474      474  100 
Officer transition agreement expense     1,795   (1,795) (100)
Other  3,872   4,107   (235) (6)
Total noninterest expense $26,101  $27,459  $(1,358) (5)%
               
  • Merger-related expenses: On July 24, 2022, the Company entered into an Agreement and Plan of Merger with Quantum Capital Corp. The expense for the three months ended September 30, 2022 are costs incurred related to due diligence and legal work performed associated with the transaction. No such expense was incurred in the quarter ended June 30, 2022.
  • Officer transition agreement expense: In May 2022, the Company entered into an amended and restated employment and transition agreement with the Company's Chairman and former CEO. As part of this agreement, the full amount of the estimated separation payment was accrued in the quarter ended June 30, 2022. No such expenses were incurred in the quarter ended September 30, 2022.

Income Taxes. The amount of income tax expense is influenced by the amount of pre-tax income, the amount of tax-exempt income, changes in the statutory rate, and the effect of changes in valuation allowances maintained against deferred tax benefits. Income tax expense for the three months ended September 30, 2022 increased $965,000 as a result of higher taxable income in the current quarter and an increase in the effective tax rate which moved from 21.8% to 22.3% quarter-over-quarter.

Comparison of Results of Operations for the Three Months Ended September 30, 2022 and September 30, 2021

Net Income. Net income totaled $9.2 million, or $0.60 per diluted share, for the three months ended September 30, 2022 compared to net income of $10.5 million, or $0.65 per diluted share, for the three months ended September 30, 2021, a decrease of $1.3 million, or 12.6%. The results for the three months ended September 30, 2022 were negatively impacted by an increase of $5.4 million in the provision for credit losses and a $2.9 million decrease in noninterest income, partially offset by a $6.8 million increase in net interest income. Details of the changes in the various components of net income are further discussed below.

Net Interest Income. The following table presents the distribution of average assets, liabilities and equity, as well as interest income earned on average interest-earning assets and interest expense paid on average interest-bearing liabilities. All average balances are daily average balances. Nonaccruing loans have been included in the table as loans carrying a zero yield.

  Three Months Ended
  September 30, 2022 September 30, 2021
(Dollars in thousands) Average
Balance
Outstanding
 Interest
Earned/
Paid(2)
 Yield/
Rate(2)
 Average
Balance
Outstanding
 Interest
Earned/
Paid(2)
 Yield/
Rate(2)
Assets            
Interest-earning assets            
Loans receivable(1) $2,880,148  $33,522  4.62% $2,819,716  $28,205  3.97%
Commercial paper  214,214   1,116  2.07   160,857   155  0.38 
Debt securities available for sale  135,015   678  1.99   138,435   524  1.50 
Other interest-earning assets(3)  113,821   888  3.10   138,438   731  2.09 
Total interest-earning assets  3,343,198   36,204  4.30   3,257,446   29,615  3.61 
Other assets  243,113       260,976     
Total assets  3,586,311       3,518,422     
Liabilities and equity            
Interest-bearing liabilities            
Interest-bearing checking accounts $654,154  $268  0.16% $635,456  $397  0.25%
Money market accounts  968,084   521  0.21   988,990   367  0.15 
Savings accounts  238,992   45  0.07   223,658   41  0.07 
Certificate accounts  476,761   561  0.47   457,865   767  0.67 
Total interest-bearing deposits  2,337,991   1,395  0.24   2,305,969   1,572  0.27 
Borrowings  1,526   12  3.12   55,464   26  0.18 
Total interest-bearing liabilities  2,339,517   1,407  0.24   2,361,433   1,598  0.27 
Noninterest-bearing deposits  800,912       708,219     
Other liabilities  51,485       52,305     
Total liabilities  3,191,914       3,121,957     
Stockholders' equity  394,397       396,465     
Total liabilities and stockholders' equity  3,586,311       3,518,422     
Net earning assets $1,003,681      $896,013     
Average interest-earning assets to average interest-bearing liabilities  142.90%      137.94%    
Tax-equivalent            
Net interest income   $34,797      $28,017   
Interest rate spread     4.06%     3.34%
Net interest margin(4)     4.13%     3.41%
Non-tax-equivalent            
Net interest income   $34,520      $27,707   
Interest rate spread     4.02%     3.30%
Net interest margin(4)     4.10%     3.37%
               

(1) The average loans receivable balances include loans held for sale and nonaccruing loans.
(2) Interest income used in the average interest earned and yield calculation includes the tax equivalent adjustment of $277 and $310 for the three months ended September 30, 2022 and September 30, 2021, respectively, calculated based on a combined federal and state tax rate of 24%.
(3) The average other interest-earning assets consist of FRB stock, FHLB stock, SBIC investments, and deposits in other banks.
(4) Net interest income divided by average interest-earning assets.

Total interest and dividend income for the three months ended September 30, 2022 increased $6.6 million, or 22.6%, compared to the three months ended September 30, 2021, which was driven by a $5.4 million, or 19.2%, increase in interest income on loans, and a $961,000, or 620.0%, increase in interest income on commercial paper. The overall increase in average yield on interest-earning assets was the result of rising interest rates, while the rate paid on interest-bearing liabilities has not increased as rapidly. Specific to the commercial paper and debt securities available for sale, the Company has intentionally maintained relatively short-term duration portfolios which has allowed, and will continue to allow the Company, to take advantage of rising rates when reinvesting the proceeds of maturing instruments.

Total interest expense for the three months ended September 30, 2022 decreased $191,000, or 12.0%, compared to the three months ended September 30, 2021. The decrease was driven by a $177,000, or 11.3%, decrease in interest expense on deposits as a result of a 3 basis point decrease in the associated average cost of funds.

The following table shows the effects that changes in average balances (volume), including differences in the number of days in the periods compared, and average interest rates (rate) had on the interest earned on interest-earning assets and interest paid on interest-bearing liabilities:

(Dollars in thousands) Increase/
(Decrease)
Due to
 Total
Increase/
(Decrease)
  Volume Rate 
Interest-earning assets      
Loans receivable $604  $4,713  $5,317 
Commercial paper  51   910   961 
Debt securities available for sale  (13)  167   154 
Other interest-earning assets  (130)  287   157 
Total interest-earning assets  512   6,077   6,589 
Interest-bearing liabilities      
Interest-bearing checking accounts  12   (141)  (129)
Money market accounts  (8)  162   154 
Savings accounts  3   1   4 
Certificate accounts  32   (238)  (206)
Borrowings  (25)  11   (14)
Total interest-bearing liabilities  14   (205)  (191)
Net increase in tax equivalent interest income     $6,780 
         

Provision (Benefit) for Credit Losses. The following table presents a breakdown of the components of the provision (benefit) for credit losses:

  Three Months Ended  
  September
30, 2022
 September
30, 2021
 $ Change % Change
Provision (benefit) for credit losses        
Loans $3,694  $(1,335) $5,029  (377)%
Off-balance-sheet credit exposure  443   (125)  568  (454)
Commercial paper  (150)     (150) (100)
Total provision (benefit) for credit losses $3,987  $(1,460) $5,447  (373)%
               

For the quarter ended September 30, 2022, the "loans" portion of the provision (benefit) for credit losses was the result of the following, offset by net charge-offs of $83,000 during the quarter:

  • $1.3 million provision specific to fintech portfolios which have a riskier credit profile than loans originated in-house. The elevated credit risk is offset by the higher yields earned on the portfolios.
  • $1.1 million provision driven by a projected worsening of the economic forecast, specifically the national unemployment rate.
  • $1.3 million provision driven by loan growth, changes in the loan mix, and qualitative adjustments.

For the quarter ended September 30, 2021, the "loans" portion of the benefit for credit losses was driven by a slight improvement in the economic forecast, as more clarity was gained regarding the impact of COVID-19 upon the loan portfolio.

Noninterest Income. Noninterest income for the three months ended September 30, 2022 decreased $2.9 million, or 28.4%, when compared to the quarter ended September 30, 2021. Changes in selected components of noninterest income are discussed below:

  Three Months Ended  
  September
30, 2022
 September
30, 2021
 $ Change % Change
Noninterest income        
Service charges and fees on deposit accounts $2,338  $2,372  $(34) (1)%
Loan income and fees  570   979   (409) (42)
Gain on sale of loans held for sale  1,586   4,057   (2,471) (61)
BOLI income  527   518   9  2 
Operating lease income  1,585   1,540   45  3 
Gain on sale of debt securities available for sale           
Other  804   886   (82) (9)
Total noninterest income $7,410  $10,352  $(2,942) (28)%
               
  • Loan income and fees: The decrease in loan income and fees during the quarter ended September 30, 2022 was the result of lower prepayment and underwriting fees recognized during the period compared to the same period last year.
  • Gain on sale of loans held for sale: The decrease in the gain on sale of loans held for sale was primarily driven by a decrease in the volume of residential mortgage loans, SBA commercial loans, and HELOCs sold during the period as a result of rising interest rates. During the quarter ended September 30, 2022, $20.9 million of residential mortgage loans originated for sale were sold with gains of $493,000 compared to $63.8 million sold with gains of $2.1 million for the quarter ended September 30, 2021. There were $12.1 million of sales of the guaranteed portion of SBA commercial loans with gains of $891,000 in the current quarter compared to $14.4 million sold and gains of $1.7 million for the same period in the prior year. Lastly, the Company sold $22.8 million of HELOCs during the quarter for a gain of $202,000 compared to $47.4 million sold and gains of $267,000 in the same period last year.

Noninterest Expense. Noninterest expense for the three months ended September 30, 2022 increased $85,000, or 0.3%, when compared to the three months ended September 30, 2021. Changes in selected components of noninterest expense are discussed below:

  Three Months Ended  
  September
30, 2022
 September
30, 2021
 $ Change % Change
Noninterest expense        
Salaries and employee benefits $14,815  $15,280  $(465) (3)%
Occupancy expense, net  2,408   2,317   91  4 
Computer services  2,763   2,521   242  10 
Telephone, postage and supplies  603   650   (47) (7)
Marketing and advertising  590   705   (115) (16)
Deposit insurance premiums  542   566   (24) (4)
Core deposit intangible amortization  34   93   (59) (63)
Merger-related expenses  474      474  100 
Officer transition agreement expense           
Other  3,872   3,884   (12)  
Total noninterest expense $26,101  $26,016  $85  %
                
  • Salaries and employee benefits: The decrease in salaries and employee benefits expense is primarily the result of branch closures and lower mortgage banking incentive pay as a result of the reduction of the volume of originations as a result of rising interest rates.
  • Merger-related expenses: On July 24, 2022, the Company entered into an Agreement and Plan of Merger with Quantum Capital Corp. The expense for the three months ended September 30, 2022 are costs incurred related to due diligence and legal work performed associated with the transaction. No such expense was incurred in the quarter ended September 30, 2021.

Income Taxes. The amount of income tax expense is influenced by the amount of pre-tax income, the amount of tax-exempt income, changes in the statutory rate, and the effect of changes in valuation allowances maintained against deferred tax benefits. Income tax expense for the three months ended September 30, 2022 decreased $333,000 as a result of lower taxable income in the current quarter compared to the corresponding period in the prior year, partially offset by an increase in the effective tax rate from 22.0% to 22.3% between periods.

Balance Sheet Review

Total assets increased by $5.9 million to $3.6 billion and total liabilities decreased by $1.4 million to $3.2 billion, respectively, at September 30, 2022 as compared to June 30, 2022. The decrease in commercial paper of $109.1 million was used to fund loan growth of $98.5 million and an increase of $34.8 million in available for sale debt securities during the period.

Stockholders' equity increased $7.4 million to $396.2 million at September 30, 2022 as compared to June 30, 2022. Activity within stockholders' equity included $9.2 million in net income, $1.2 million in stock-based compensation and stock option exercises, offset by $1.4 million in cash dividends declared and a $1.6 million decline in accumulated other comprehensive income associated with available for sale debt securities. As of September 30, 2022, the Bank was considered "well capitalized" in accordance with its regulatory capital guidelines and exceeded all regulatory capital requirements.

Asset Quality

The ACL on loans was $38.3 million, or 1.34% of total loans, at September 30, 2022 compared to $34.7 million, or 1.25% of total loans, as of June 30, 2022. The drivers of this quarter-over-quarter change are discussed in the "Three Months Ended September 30, 2022 and June 30, 2022" section above.

Net loan charge-offs totaled $83,000 for the three months ended September 30, 2022 compared to net recoveries of $714,000 for the three months ended June 30, 2022. Net charge-offs as a percentage of average loans were 0.01% for the three months ended September 30, 2022 compared to net recoveries of 0.10% for the prior quarter.

Nonperforming assets increased by $706,000, or 11.2%, to $7.0 million, or 0.20% of total assets, at September 30, 2022 compared to $6.3 million, or 0.18% of total assets, at June 30, 2022. Nonperforming assets included $6.8 million in nonaccruing loans and $200,000 of real estate owned ("REO") at September 30, 2022, compared to $6.1 million and $200,000 in nonaccruing loans and REO, respectively, at June 30, 2022. Nonperforming loans to total loans was 0.24% at September 30, 2022 and 0.22% at June 30, 2022.

The ratio of classified assets to total assets decreased to 0.54% at September 30, 2022 from 0.61% at June 30, 2022. Classified assets decreased $2.2 million, or 10.2%, to $19.3 million at September 30, 2022 compared to $21.5 million at June 30, 2022, due to loan paydowns.

About HomeTrust Bancshares, Inc.

HomeTrust Bancshares, Inc. is the holding company for the Bank. As of September 30, 2022, the Company had assets of $3.6 billion. The Bank, founded in 1926, is a North Carolina state chartered, community-focused financial institution committed to providing value added relationship banking with over 30 locations as well as online/mobile channels. Locations include: North Carolina (including the Asheville metropolitan area, the "Piedmont" region, Charlotte, and Raleigh/Cary), Upstate South Carolina (Greenville), East Tennessee (including Kingsport/Johnson City, Knoxville, and Morristown) and Southwest Virginia (including the Roanoke Valley).

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements often include words such as "believe," "expect," "anticipate," "estimate," and "intend" or future or conditional verbs such as "will," "would," "should," "could," or "may." Forward-looking statements are not historical facts but instead represent management's current expectations and forecasts regarding future events, many of which are inherently uncertain and outside of the Company's control. Actual results may differ, possibly materially, from those currently expected or projected in these forward-looking statements. Factors that could cause the Company's actual results to differ materially from those described in the forward-looking statements include: the effect of the COVID-19 pandemic, including on the Company's credit quality and business operations, as well as its impact on general economic and financial market conditions and other uncertainties resulting from the COVID-19 pandemic, such as the extent and duration of the impact on public health, the U.S. and global economies, and consumer and corporate customers, including economic activity, employment levels and labor shortages, and market liquidity, both nationally and in our market areas; expected revenues, cost savings, synergies and other benefits from our merger and acquisition activities, including the proposed acquisition of Quantum Capital Corp. might not be realized to the extent anticipated, within the anticipated time frames, or at all, and costs or difficulties relating to integration matters, including but not limited to customer and employee retention, might be greater than expected; increased competitive pressures; changes in the interest rate environment; changes in general economic conditions and conditions within the securities markets; legislative and regulatory changes; and the effects of inflation, a potential recession, and other factors described in the Company's latest annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other documents filed with or furnished to the Securities and Exchange Commission - which are available on our website at www.htb.com and on the SEC's website at www.sec.gov. Any of the forward-looking statements that the Company makes in this press release or the documents they file with or furnish to the SEC are based upon management's beliefs and assumptions at the time they are made and may turn out to be wrong because of inaccurate assumptions they might make, because of the factors described above or because of other factors that they cannot foresee. The Company does not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

Consolidated Balance Sheets (Unaudited)

(Dollars in thousands) September
30, 2022
 June 30,
2022(1)
 March 31,
2022
 December
31, 2021
 September
30, 2021
Assets          
Cash $18,026  $20,910  $19,783  $20,586  $22,431 
Interest-bearing deposits  76,133   84,209   32,267   14,240   20,142 
Cash and cash equivalents  94,159   105,119   52,050   34,826   42,573 
Commercial paper, net  85,296   194,427   312,918   254,157   196,652 
Certificates of deposit in other banks  27,535   23,551   28,125   34,002   35,495 
Debt securities available for sale, at fair value  161,741   126,978   106,315   121,851   124,576 
FHLB and FRB stock  9,404   9,326   10,451   10,368   10,360 
SBIC investments, at cost  12,235   12,758   12,589   11,749   10,531 
Loans held for sale  76,252   79,307   85,263   102,070   105,161 
Total loans, net of deferred loan fees and costs  2,867,783   2,769,295   2,699,538   2,696,072   2,719,642 
Allowance for credit losses – loans  (38,301)  (34,690)  (31,034)  (30,933)  (34,406)
Loans, net  2,829,482   2,734,605   2,668,504   2,665,139   2,685,236 
Premises and equipment, net  68,705   69,094   69,629   69,461   68,568 
Accrued interest receivable  9,667   8,573   7,980   8,200   8,429 
Deferred income taxes, net  11,838   11,487   12,494   12,019   15,722 
Bank owned life insurance ("BOLI")  95,837   95,281   94,740   94,209   93,679 
Goodwill  25,638   25,638   25,638   25,638   25,638 
Core deposit intangibles, net  58   93   135   185   250 
Other assets  47,339   52,967   54,954   58,945   58,490 
Total assets $3,555,186  $3,549,204  $3,541,785  $3,502,819  $3,481,360 
Liabilities and stockholders' equity          
Liabilities          
Deposits $3,102,668  $3,099,761  $3,059,157  $2,998,691  $2,987,284 
Borrowings        30,000   48,000   40,000 
Other liabilities  56,296   60,598   57,497   54,382   57,565 
Total liabilities  3,158,964   3,160,359   3,146,654   3,101,073   3,084,849 
Stockholders' equity          
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued or outstanding               
Common stock, $0.01 par value, 60,000,000 shares authorized(2)  156   156   160   163   163 
Additional paid in capital  127,153   126,106   136,181   147,552   151,425 
Retained earnings  278,120   270,276   265,609   258,986   249,331 
Unearned Employee Stock Ownership Plan ("ESOP") shares  (5,158)  (5,290)  (5,422)  (5,555)  (5,687)
Accumulated other comprehensive income (loss)  (4,049)  (2,403)  (1,397)  600   1,279 
Total stockholders' equity  396,222   388,845   395,131   401,746   396,511 
Total liabilities and stockholders' equity $3,555,186  $3,549,204  $3,541,785  $3,502,819  $3,481,360 

(1) Derived from audited financial statements.
(2) Shares of common stock issued and outstanding were 15,632,348 at September 30, 2022; 15,591,466 at June 30, 2022; 15,978,262 at March 31, 2022; 16,303,461 at December 31, 2021; and 16,307,658 at September 30, 2021.

Consolidated Statements of Income (Unaudited)

  Three Months Ended
(Dollars in thousands) September
30, 2022
 June 30,
2022
 September
30, 2021
Interest and dividend income      
Loans $33,245  $28,163  $27,895 
Commercial paper  1,116   852   155 
Debt securities available for sale  678   483   524 
Other investments and interest-bearing deposits  888   628   731 
Total interest and dividend income  35,927   30,126   29,305 
Interest expense      
Deposits  1,395   1,232   1,572 
Borrowings  12   35   26 
Total interest expense  1,407   1,267   1,598 
Net interest income  34,520   28,859   27,707 
Provision (benefit) for credit losses  3,987   3,413   (1,460)
Net interest income after provision (benefit) for credit losses  30,533   25,446   29,167 
Noninterest income      
Service charges and fees on deposit accounts  2,338   2,361   2,372 
Loan income and fees  570   649   979 
Gain on sale of loans held for sale  1,586   1,949   4,057 
BOLI income  527   500   518 
Operating lease income  1,585   1,472   1,540 
Gain on sale of securities available for sale     1,895    
Other  804   890   886 
Total noninterest income  7,410   9,716   10,352 
Noninterest expense      
Salaries and employee benefits  14,815   14,709   15,280 
Occupancy expense, net  2,408   2,491   2,317 
Computer services  2,763   2,613   2,521 
Telephone, postage, and supplies  603   621   650 
Marketing and advertising  590   473   705 
Deposit insurance premiums  542   432   566 
Core deposit intangible amortization  34   42   93 
Officer transition agreement expense     1,795    
Merger-related expenses  474       
Other  3,872   4,283   3,884 
Total noninterest expense  26,101   27,459   26,016 
Income before income taxes  11,842   7,703   13,503 
Income tax expense  2,643   1,678   2,976 
Net income $9,199  $6,025  $10,527 
             

Per Share Data

  Three Months Ended
  September
30, 2022
 June 30,
2022
 September
30, 2021
Net income per common share(1)      
Basic $0.61  $0.40  $0.66 
Diluted $0.60  $0.39  $0.65 
Average shares outstanding      
Basic  14,988,006   15,064,694   15,761,247 
Diluted  15,130,762   15,245,673   16,146,611 
Book value per share at end of period $25.35  $24.94  $24.31 
Tangible book value per share at end of period(2) $23.70  $23.29  $22.73 
Cash dividends declared per common share $0.09  $0.09  $0.08 
Total shares outstanding at end of period  15,632,348   15,591,466   16,307,658 

(1) Basic and diluted net income per common share have been prepared in accordance with the two-class method.
(2) See Non-GAAP reconciliations below for adjustments.

Selected Financial Ratios and Other Data

  Three Months Ended
  September
30, 2022
 June 30,
2022
 September
30, 2021
Performance ratios(1)  
Return on assets (ratio of net income (loss) to average total assets) 1.02% 0.68% 1.20%
Return on equity (ratio of net income (loss) to average equity) 9.25  6.19  10.62 
Tax equivalent yield on earning assets(2) 4.30  3.68  3.61 
Rate paid on interest-bearing liabilities 0.24  0.21  0.27 
Tax equivalent average interest rate spread(2) 4.06  3.47  3.34 
Tax equivalent net interest margin(2) (3) 4.13  3.53  3.41 
Average interest-earning assets to average interest-bearing liabilities 142.90  138.45  137.94 
Noninterest expense to average total assets 2.89  3.09  2.96 
Efficiency ratio 62.25  71.18  68.36 
Efficiency ratio – adjusted(4) 60.72  69.41  67.80 

(1) Ratios are annualized where appropriate.
(2) The weighted average rate for municipal leases is adjusted for a 24% combined federal and state tax rate since the interest from these leases is tax exempt.
(3) Net interest income divided by average interest-earning assets.
(4) See Non-GAAP reconciliations below for adjustments.

  At or For the Three Months Ended
  September
30, 2022
 June 30,
2022
 March 31,
2022
 December
31, 2021
 September
30, 2021
Asset quality ratios          
Nonperforming assets to total assets(1) 0.20% 0.18% 0.16% 0.18% 0.19%
Nonperforming loans to total loans(1) 0.24  0.22  0.22  0.23  0.25 
Total classified assets to total assets 0.54  0.61  0.61  0.65  0.65 
Allowance for credit losses to nonperforming loans(1) 561.10  566.83  534.06  500.70  510.63 
Allowance for credit losses to total loans 1.34  1.25  1.15  1.15  1.27 
Net charge-offs (recoveries) to average loans (annualized) 0.01  (0.10) (0.11) 0.15  (0.04)
Capital ratios          
Equity to total assets at end of period 11.14% 10.96% 11.16% 11.47% 11.39%
Tangible equity to total tangible assets(2) 10.50  10.31  10.51  10.81  10.73 
Average equity to average assets 11.00  10.93  11.32  11.28  11.27 

(1) Nonperforming assets include nonaccruing loans, consisting of certain restructured loans, and REO. There were no accruing loans more than 90 days past due at the dates indicated. At September 30, 2022, there were $2.6 million of restructured loans included in nonaccruing loans and $4.4 million, or 64.2%, of nonaccruing loans were current on their loan payments as of that date.
(2) See Non-GAAP reconciliations below for adjustments.

Loans

(Dollars in thousands) September
30, 2022
 June 30,
2022
 March 31,
2022
 December
31, 2021
 September
30, 2021
Commercial real estate loans:          
Construction and land development $310,985  $291,202   251,668   226,439   187,900 
Commercial real estate – owner occupied  336,456   335,658   332,078   323,434   329,252 
Commercial real estate – non-owner occupied  661,644   662,159   688,071   709,825   715,324 
Multifamily  79,082   81,086   82,035   80,071   88,188 
Total commercial real estate loans  1,388,167   1,370,105   1,353,852   1,339,769   1,320,664 
Commercial loans:          
Commercial and industrial  205,606   192,652   167,342   162,396   153,612 
Equipment finance  411,012   394,541   378,629   367,008   341,995 
Municipal leases  130,777   129,766   130,260   131,078   142,100 
PPP loans  238   661   2,756   19,044   28,762 
Total commercial loans  747,633   717,620   678,987   679,526   666,469 
Residential real estate loans:          
Construction and land development  91,488   81,847   72,735   69,253   69,835 
One-to-four family  374,849   354,203   347,945   356,850   384,901 
HELOCs  164,701   160,137   155,356   158,984   163,734 
Total residential real estate loans  631,038   596,187   576,036   585,087   618,470 
Consumer loans  100,945   85,383   90,663   91,690   114,039 
Total loans, net of deferred loan fees and costs  2,867,783   2,769,295   2,699,538   2,696,072   2,719,642 
Allowance for credit losses – loans  (38,301)  (34,690)  (31,034)  (30,933)  (34,406)
Loans, net $2,829,482  $2,734,605  $2,668,504  $2,665,139  $2,685,236 
                     

As of September 30, 2022, $30.5 million of commercial and industrial and $5.3 million of consumer loans were purchased from fintech partners. As of June 30, 2022, $17.5 million of commercial and industrial and $0.4 million of consumer loans were purchased from fintech partners. Although we value these strategic relationships, in August we temporarily paused purchases within both loan segments until the impact of the current economic environment upon these portfolios can be better understood.

Deposits

(Dollars in thousands) September
30, 2022
 June 30,
2022
 March 31,
2022
 December
31, 2021
 September
30, 2021
Core deposits          
Noninterest-bearing accounts $794,242  $745,746  $704,344  $677,159  $711,764 
NOW accounts  636,859   654,981   652,577   644,343   621,675 
Money market accounts  960,150   969,661   1,026,595   1,010,901   987,650 
Savings accounts  240,412   238,197   232,831   224,474   220,614 
Total core deposits  2,631,663   2,608,585   2,616,347   2,556,877   2,541,703 
Certificates of deposit  471,005   491,176   442,810   441,814   445,581 
Total $3,102,668  $3,099,761  $3,059,157  $2,998,691  $2,987,284 
                     

Non-GAAP Reconciliations

In addition to results presented in accordance with generally accepted accounting principles utilized in the United States ("GAAP"), this earnings release contains certain non-GAAP financial measures, which include: the efficiency ratio, tangible book value, tangible book value per share and the tangible equity to tangible assets ratio. The Company believes these non-GAAP financial measures and ratios as presented are useful for both investors and management to understand the effects of certain items and provide an alternative view of its performance over time and in comparison to its competitors. These non-GAAP measures have inherent limitations, are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for total stockholders' equity or operating results determined in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.

Set forth below is a reconciliation to GAAP of the Company's efficiency ratio:

  Three Months Ended
(Dollars in thousands) September
30, 2022
 June 30,
2022
 September
30, 2021
Noninterest expense $26,101  $27,459  $26,016 
Less: officer transition agreement expense     1,795    
Less: merger expense  474       
Noninterest expense – adjusted $25,627  $25,664  $26,016 
       
Net interest income $34,520  $28,859  $27,707 
Plus: tax equivalent adjustment  277   294   310 
Plus: noninterest income  7,410   9,716   10,352 
Less: gain on sale of securities available for sale     1,895    
Net interest income plus noninterest income – adjusted $42,207  $36,974  $38,369 
Efficiency ratio  62.25%  71.18%  68.36%
Efficiency ratio – adjusted  60.72%  69.41%  67.80%
             

Set forth below is a reconciliation to GAAP of tangible book value and tangible book value per share:

  As of
(Dollars in thousands, except per share data) September
30, 2022
 June 30,
2022
 March 31,
2022
 December
31, 2021
 September
30, 2021
Total stockholders' equity $396,222  $388,845  $395,131  $401,746  $396,511 
Less: goodwill, core deposit intangibles, net of taxes  25,683   25,710   25,742   25,780   25,830 
Tangible book value $370,539  $363,135  $369,389  $375,966  $370,681 
Common shares outstanding  15,632,348   15,591,466   15,978,262   16,303,461   16,307,658 
Book value per share at end of period $25.35  $24.94  $24.73  $24.64  $24.31 
Tangible book value per share at end of period $23.70  $23.29  $23.12  $23.06  $22.73 
                     

Set forth below is a reconciliation to GAAP of tangible equity to tangible assets:

  As of
  September
30, 2022
 June 30,
2022
 March 31,
2022
 December
31, 2021
 September
30, 2021
(Dollars in thousands)  
Tangible equity(1) $370,539  $363,135  $369,389  $375,966  $370,681 
Total assets  3,555,186   3,549,204   3,541,785   3,502,819   3,481,360 
Less: goodwill and core deposit intangibles, net of taxes  25,683   25,710   25,742   25,780   25,830 
Total tangible assets $3,529,503  $3,523,494  $3,516,043  $3,477,039  $3,455,530 
Tangible equity to tangible assets  10.50%  10.31%  10.51%  10.81%  10.73%

(1) Tangible equity (or tangible book value) is equal to total stockholders' equity less goodwill and core deposit intangibles, net of related deferred tax liabilities.

 

Coordonnées