• HomeTrust Bancshares, Inc. Announces Financial Results for the Second Quarter of the Six-Month Transition Period Ending December 31, 2023* and Quarterly Dividend

    ソース: Nasdaq GlobeNewswire / 24 1 2024 07:45:01   America/Chicago

    ASHEVILLE, N.C., Jan. 24, 2024 (GLOBE NEWSWIRE) -- HomeTrust Bancshares, Inc. (NASDAQ: HTBI) ("Company"), the holding company of HomeTrust Bank ("Bank"), today announced preliminary net income for the second quarter of the six-month transition period ended December 31, 2023* and approval of its quarterly cash dividend.

    For the quarter ended December 31, 2023 compared to the quarter ended September 30, 2023:

    • net income was $13.5 million compared to $14.8 million;
    • diluted earnings per share ("EPS") was $0.79 compared to $0.88;
    • annualized return on assets ("ROA") was 1.21% compared to 1.33%;
    • annualized return on equity ("ROE") was 10.81% compared to 12.23%;
    • net interest income was $41.9 million compared to $42.2 million;
    • net interest margin was 4.02% for both periods;
    • provision for credit losses was $3.4 million compared to $2.6 million;
    • noninterest income was $8.2 million compared to $8.6 million;
    • tax-free death benefit proceeds from life insurance of $1.6 million compared to $1.1 million;
    • recorded $288,000 in additional tax expense related to a partial restructuring of our bank owned life insurance ("BOLI") portfolio which was unique to the current quarter; and
    • cash dividends increased $0.01 per share, or 10.00%, to $0.11 per share totaling $1.9 million compared to $0.10 per share totaling $1.7 million.

    For the six months ended December 31, 2023 compared to the six months ended December 31, 2022:

    • net income was $28.3 million compared to $22.9 million;
    • diluted EPS was $1.67 compared to $1.50;
    • annualized ROA was 1.27% compared to 1.28%;
    • annualized ROE was 11.51% compared to 11.32%;
    • net interest income was $84.1 million compared to $72.1 million;
    • net interest margin was 4.02% compared to 4.31%;
    • provision for credit losses was $5.9 million compared to $6.2 million;
    • noninterest income was $16.9 million compared to $15.9 million;
    • tax-free death benefit proceeds from life insurance of $2.7 million compared to $0; and
    • cash dividends of $0.21 per share totaling $3.5 million compared to $0.19 per share totaling $2.9 million.

    The Company also announced today that its Board of Directors declared a quarterly cash dividend of $0.11 per common share payable on February 29, 2024 to shareholders of record as of the close of business on February 15, 2024.

    "I am pleased HomeTrust maintained a net interest margin above 4.00% this quarter, which continues to be top quartile performance,” said Hunter Westbrook, President and Chief Executive Officer. “Our margin is a direct result of HomeTrust’s philosophy of prudent, sound, and profitable balance sheet management. We are optimistic that funding costs appear to be stabilizing; however, until our marginal spreads become more attractive, we will continue to be strategic as it relates to loan growth, while emphasizing the expansion of our core deposit base.

    “As part of our internal focus on expense rationalization, we recently made the decision to cease indirect auto originations and right-size our mortgage banking line of business. These changes, which will take effect by the end of the first quarter, are expected to result in annual cost savings of $800,000. In addition, the restructuring of our BOLI portfolio into higher-yielding policies is expected to annually contribute $1.0 million in additional noninterest income. We believe these changes and strategies should help HomeTrust continue our strong financial performance.”

    WEBSITE: WWW.HTB.COM

    *As previously announced, on July 24, 2023, the Board of Directors approved a change in the Company's fiscal year end from June 30 to December 31. The transition period of July 1, 2023 to December 31, 2023 will be covered on a Transition Report Form 10-KT.

    Comparison of Results of Operations for the Three Months Ended December 31, 2023 and September 30, 2023
    Net Income.  Net income totaled $13.5 million, or $0.79 per diluted share, for the three months ended December 31, 2023 compared to $14.8 million, or $0.88 per diluted share, for the three months ended September 30, 2023, a decrease of $1.4 million, or 9.2%. The results for the three months ended December 31, 2023 compared to the quarter ended September 30, 2023 were negatively impacted by decreases of $237,000 and $379,000 in net interest income and noninterest income, respectively, and an increase of $790,000 in the provision for credit losses. 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
     December 31, 2023 September 30, 2023
    (Dollars in thousands)Average
    Balance
    Outstanding    		 Interest
    Earned/
    Paid    		 Yield/
    Rate    		 Average
    Balance
    Outstanding    		 Interest
    Earned/
    Paid    		 Yield/
    Rate
    Assets           
    Interest-earning assets           
    Loans receivable(1)$3,876,051  $60,069 6.15% $3,865,502  $58,496 6.00%
    Debt securities available for sale 136,945   1,257 3.64   146,877   1,259 3.40 
    Other interest-earning assets(2) 121,366   1,493 4.88   148,386   2,110 5.64 
    Total interest-earning assets 4,134,362   62,819 6.03   4,160,765   61,865 5.90 
    Other assets 271,767       276,210     
    Total assets$4,406,129      $4,436,975     
    Liabilities and equity           
    Interest-bearing liabilities           
    Interest-bearing checking accounts$594,805  $1,209 0.81% $597,856  $1,117 0.74%
    Money market accounts 1,251,170   8,930 2.83   1,222,372   7,726 2.51 
    Savings accounts 198,522   45 0.09   207,489   46 0.09 
    Certificate accounts 818,698   8,105 3.93   789,668   7,540 3.79 
    Total interest-bearing deposits 2,863,195   18,289 2.53   2,817,385   16,429 2.31 
    Junior subordinated debt 10,005   239 9.48   9,979   236 9.38 
    Borrowings 156,619   2,368 6.00   208,157   3,040 5.79 
    Total interest-bearing liabilities 3,029,819   20,896 2.74   3,035,521   19,705 2.58 
    Noninterest-bearing deposits 837,048       861,788     
    Other liabilities 45,156       58,513     
    Total liabilities 3,912,023       3,955,822     
    Stockholders' equity 494,106       481,153     
    Total liabilities and stockholders' equity$4,406,129      $4,436,975     
    Net earning assets$1,104,543      $1,125,244     
    Average interest-earning assets to average interest-bearing liabilities 136.46%      137.07%    
    Non-tax-equivalent           
    Net interest income  $41,923     $42,160  
    Interest rate spread    3.29%     3.32%
    Net interest margin(3)    4.02%     4.02%
    Tax-equivalent(4)           
    Net interest income  $42,264     $42,475  
    Interest rate spread    3.32%     3.35%
    Net interest margin(3)    4.06%     4.05%

    (1)   Average loans receivable balances include loans held for sale and nonaccruing loans.
    (2)   Average other interest-earning assets consist of FRB stock, FHLB stock, SBIC investments and deposits in other banks.
    (3)   Net interest income divided by average interest-earning assets.
    (4)   Tax-equivalent results include adjustments to interest income of $341 and $315 for the three months ended December 31, 2023 and September 30, 2023, respectively, calculated based on a combined federal and state tax rate of 24%.

    Total interest and dividend income for the three months ended December 31, 2023 increased $954,000, or 1.5%, compared to the three months ended September 30, 2023, which was driven by a $1.6 million, or 2.7%, increase in interest income on loans. The overall quarter-over-quarter increase in average yield was the result of both new loan originations at higher interest rates and adjustable rate loans. Accretion income on acquired loans of $405,000 and $378,000 was recognized during the same periods, respectively, and was included in interest income on loans.

    Total interest expense for the three months ended December 31, 2023 increased $1.2 million, or 6.0%, compared to the three months ended September 30, 2023, the result of a $1.9 million, or 11.3%, increase in interest expense on deposits, partially offset by a $672,000, or 22.1%, decrease in interest expense on borrowings. The increase can be traced to increases in the average cost of funds across funding sources, offset by a decline in the average balance of 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:

     Increase / (Decrease)
    Due to    		 Total
    Increase/
    (Decrease)
    (Dollars in thousands)Volume Rate 
    Interest-earning assets     
    Loans receivable$160  $1,413  $1,573 
    Debt securities available for sale (85)  83   (2)
    Other interest-earning assets (384)  (233)  (617)
    Total interest-earning assets (309)  1,263   954 
    Interest-bearing liabilities     
    Interest-bearing checking accounts (6)  98   92 
    Money market accounts 182   1,022   1,204 
    Savings accounts (2)  1   (1)
    Certificate accounts 277   288   565 
    Junior subordinated debt 1   2   3 
    Borrowings (753)  81   (672)
    Total interest-bearing liabilities (301)  1,492   1,191 
    Decrease in net interest income    $(237)
     

    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 model.

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

     Three Months Ended    
    (Dollars in thousands)December 31, 2023 September 30, 2023 $ Change % Change
    Provision for credit losses       
    Loans$4,050  $2,850  $1,200  42%
    Off-balance-sheet credit exposure (690)  (280)  (410) (146)
    Total provision for credit losses$3,360  $2,570  $790  31%
     

    For the quarter ended December 31, 2023, the "loans" portion of the provision for credit losses was primarily the result of the following, offset by net charge-offs of $2.8 million during the quarter:

    • $0.5 million benefit driven by changes in the loan mix.
    • $0.9 million provision due to changes in the projected economic forecast, specifically the national unemployment rate, and changes in qualitative adjustments.
    • $0.8 million increase in specific reserves on individually evaluated credits.

    For the quarter ended September 30, 2023, the "loans" portion of the provision for credit losses was the result of the following, offset by net charge-offs of $2.6 million during the quarter:

    • $0.2 million benefit driven by changes in the loan mix.
    • $0.2 million provision due to changes in the projected economic forecast, specifically the national unemployment rate, and changes in qualitative adjustments.
    • $0.3 million increase in specific reserves on individually evaluated credits.

    For the quarters ended December 31, 2023 and September 30, 2023, the amounts recorded for off-balance-sheet credit exposure were the result of changes in the balance of loan commitments, loan mix and the projected economic forecast as outlined above.

    Noninterest Income.  Noninterest income for the three months ended December 31, 2023 decreased $379,000, or 4.4%, when compared to the quarter ended September 30, 2023. Changes in the components of noninterest income are discussed below:

     Three Months Ended  
    (Dollars in thousands)December 31, 2023 September 30, 2023 $ Change % Change
    Noninterest income       
    Service charges and fees on deposit accounts$2,368  $2,318 $50  2%
    Loan income and fees 423   559  (136) (24)
    Gain on sale of loans held for sale 1,037   1,293  (256) (20)
    BOLI income 2,152   1,749  403  23 
    Operating lease income 1,592   1,785  (193) (11)
    Loss on sale of premises and equipment (248)  —  (248) (100)
    Other 924   923  1  — 
    Total noninterest income$8,248  $8,627 $(379) (4)        %
     
    • Loan income and fees: The decrease was driven by lower servicing fees compared to the prior quarter.
    • Gain on sale of loans held for sale: The decrease was primarily driven by a decrease in the volume of U.S. Small Business Administration ("SBA") commercial loans sold. During the quarter ended December 31, 2023, $37.5 million in HELOCs were sold with gains of $322,000 during the quarter compared to $31.2 million sold with gains of $197,000 in the prior quarter. There were $20.5 million of residential mortgages originated for sale sold with gains of $417,000 in the current quarter compared to $20.4 million sold with gains of $251,000 for the quarter ended September 30, 2023. There were $5.6 million of sales of the guaranteed portion of SBA commercial loans with gains of $439,000 in the current quarter compared to $12.4 million sold and gains of $687,000 for the same period in the prior quarter. Lastly, our hedging of mandatory commitments on the residential mortgage loan pipeline resulted in a loss of $142,000 compared to a gain of $158,000 in the same periods, respectively
    • BOLI income: The increase was the result of higher tax-free gains on death benefit proceeds in excess of the cash surrender value of the policies. There were $1.6 million in gains during the current quarter compared to $1.1 million for the prior quarter.
    • Loss on sale of premises and equipment: During the three months ended December 31, 2023, the Company recognized $625,000 of expense to impair the remaining right of use asset associated with a previously closed branch, partially offset by a $380,000 gain on the sale of a parcel of land.

    Noninterest Expense.  Noninterest expense for the three months ended December 31, 2023 increased $217,000, or 0.7%, when compared to the three months ended September 30, 2023. Changes in the components of noninterest expense are discussed below:

     Three Months Ended  
    (Dollars in thousands)December 31, 2023 September 30, 2023 $ Change % Change
    Noninterest expense       
    Salaries and employee benefits$16,256 $16,514 $(258) (2)%
    Occupancy expense, net 2,443  2,489  (46) (2)
    Computer services 3,002  3,173  (171) (5)
    Telephone, postage and supplies 603  652  (49) (8)
    Marketing and advertising 625  487  138  28 
    Deposit insurance premiums 702  717  (15) (2)
    Core deposit intangible amortization 860  859  1  — 
    Other 5,290  4,673  617  13 
    Total noninterest expense$29,781 $29,564 $217  1%
     
    • Marketing and advertising: The increase is the result of differences in the timing of when expenses are incurred quarter-over-quarter.
    • Other: The increase is primarily the result of $321,000 in fraud losses during the current quarter versus a $16,000 net recovery of previously recorded losses in the prior quarter. In addition, the current quarter includes $115,000 of expenses incurred related to the previously discussed staff reductions in our mortgage banking and indirect auto finance lines of business.

    Income Taxes.  The amount of income tax expense is influenced by the amount of pre-tax income, tax-exempt income, changes in the statutory rate and the effect of changes in valuation allowances maintained against deferred tax benefits. The effective tax rates for the three months ended December 31, 2023 and September 30, 2023 were 20.9% and 20.5%, respectively. In both periods, the effective tax rate was positively impacted by tax-free gains on BOLI death benefit proceeds, while in the current quarter $288,000 in additional tax expense was recorded related to a partial restructuring of our BOLI portfolio where we both reduced the size of the portfolio and reinvested a portion of the funds in higher-yielding policies.

    Comparison of Results of Operations for the Six Months Ended December 31, 2023 and December 31, 2022
    Net Income.  Net income totaled $28.3 million, or $1.67 per diluted share, for the six months ended December 31, 2023 compared to $22.9 million, or $1.50 per diluted share, for the six months ended December 31, 2022, an increase of $5.4 million, or 23.8%. The results for the six months ended December 31, 2023 compared to the same period last year were positively impacted by a $12.0 million, or 16.7%, increase in net interest income, partially offset by a $3.5 million, or 11.8%, increase in salaries and employee benefits expense and a $1.7 million increase in core deposit intangible amortization as a result of the Company's February 11, 2023 merger with Quantum Capital Corp., and its wholly-owned subsidiary, Quantum National Bank, hereafter referred to as the "Quantum merger". 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.

     Six Months Ended December 31,
      2023   2022 
    (Dollars in thousands)Average
    Balance
    Outstanding    		 Interest
    Earned/
    Paid    		 Yield/
    Rate    		 Average
    Balance
    Outstanding    		 Interest
    Earned/
    Paid    		 Yield/
    Rate
    Assets           
    Interest-earning assets           
    Loans receivable(1)$3,870,776  $118,565 6.08% $2,939,677  $72,240 4.87%
    Commercial paper —   — —   124,351   1,300 2.07 
    Debt securities available for sale 141,911   2,516 3.52   151,417   1,829 2.40 
    Other interest-earning assets(2) 134,876   3,603 5.30   100,125   1,960 3.88 
    Total interest-earning assets 4,147,563   124,684 5.96   3,315,570   77,329 4.63 
    Other assets 273,989       239,636     
    Total assets$4,421,552      $3,555,206     
    Liabilities and equity           
    Interest-bearing liabilities           
    Interest-bearing checking accounts$596,330  $2,326 0.77% $640,851  $838 0.26%
    Money market accounts 1,236,771   16,657 2.67   961,045   2,456 0.51 
    Savings accounts 203,005   91 0.09   237,509   89 0.07 
    Certificate accounts 804,183   15,644 3.86   460,803   1,615 0.70 
    Total interest-bearing deposits 2,840,289   34,718 2.42   2,300,208   4,998 0.43 
    Junior subordinated debt 9,992   475 9.43   —   — — 
    Borrowings 182,388   5,408 5.88   13,795   266 3.83 
    Total interest-bearing liabilities 3,032,669   40,601 2.66   2,314,003   5,264 0.45 
    Noninterest-bearing deposits 849,418       793,349     
    Other liabilities 51,835       46,501     
    Total liabilities 3,933,922       3,153,853     
    Stockholders' equity 487,630       401,353     
    Total liabilities and stockholders' equity$4,421,552      $3,555,206     
    Net earning assets$1,114,894      $1,001,567     
    Average interest-earning assets to average interest-bearing liabilities 136.76%      143.28%    
    Non-tax-equivalent           
    Net interest income  $84,083     $72,065  
    Interest rate spread    3.30%     4.18%
    Net interest margin(3)    4.02%     4.31%
    Tax-equivalent(4)           
    Net interest income  $84,739     $72,639  
    Interest rate spread    3.33%     4.21%
    Net interest margin(3)    4.05%     4.35%

    (1)   Average loans receivable balances include loans held for sale and nonaccruing loans.
    (2)   Average other interest-earning assets consist of FRB stock, FHLB stock, SBIC investments and deposits in other banks.
    (3)   Net interest income divided by average interest-earning assets.
    (4)   Tax-equivalent results include adjustments to interest income of $656 and $574 for the six months ended December 31, 2023 and 2022, respectively, calculated based on a combined federal and state tax rate of 24%.

    Total interest and dividend income for the six months ended December 31, 2023 increased $47.4 million, or 61.2%, compared to the six months ended December 31, 2022, which was driven by a $46.3 million, or 64.1%, increase in interest income on loans, a $1.6 million, or 83.8%, increase in interest income on other interest-earning assets, and a $687,000, or 37.6%, increase in interest income on debt securities available for sale, partially offset by a $1.3 million decrease in commercial paper as none was held during the current period. Accretion income on acquired loans, included in loan interest income, increased $410,000 to $783,000 for the six months ended December 31, 2023 compared to $373,000 recognized during the same period in the period year.

    Total interest expense for the six months ended December 31, 2023 increased $35.3 million, or 671.3%, compared to the six months ended December 31, 2022. The increase was the result of both increases in the average cost of funds across funding sources and an increase in average deposits and borrowings outstanding.

    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:

     Increase / (Decrease)
    Due to    		 Total
    Increase/
    (Decrease)
    (Dollars in thousands)Volume Rate 
    Interest-earning assets     
    Loans receivable$22,881  $23,444 $46,325 
    Commercial paper (1,300)  —  (1,300)
    Debt securities available for sale (115)  802  687 
    Other interest-earning assets 680   963  1,643 
    Total interest-earning assets 22,146   25,209  47,355 
    Interest-bearing liabilities     
    Interest-bearing checking accounts (58)  1,546  1,488 
    Money market accounts 705   13,496  14,201 
    Savings accounts (13)  15  2 
    Certificate accounts 1,203   12,826  14,029 
    Junior subordinated debt 475   —  475 
    Borrowings 3,251   1,891  5,142 
    Total interest-bearing liabilities 5,563   29,774  35,337 
    Increase in net interest income    $12,018 
     

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

     Six Months Ended December 31,  
    (Dollars in thousands) 2023   2022  $ Change % Change
    Provision for credit losses       
    Loans$6,900  $6,119  $781  13%
    Off-balance-sheet credit exposure (970)  358   (1,328) (371)
    Commercial paper —   (250)  250  100 
    Total provision for credit losses$5,930  $6,227  $(297) (5)% 
     

    For the six months ended December 31, 2023, the "loans" portion of the provision for credit losses was the result of the following, offset by net charge-offs of $5.5 million during the period:

    • $0.8 million benefit driven by changes in the loan mix.
    • $1.1 million provision due to changes in the projected economic forecast, specifically the national unemployment rate, and changes in qualitative adjustments.
    • $1.1 million increase in specific reserves on individually evaluated credits.

    For the six months ended December 31, 2022, the "loans" portion of the provision for credit losses was the result of the following, offset by net charge-offs of $1.9 million during the period:

    • $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.
    • $2.9 million provision driven by loan growth and changes in the loan mix.
    • $1.5 million provision due to changes in the projected economic forecast, specifically the national unemployment rate, and changes in qualitative adjustments.
    • $1.5 million reduction of specific reserves on individually evaluated credits, which was tied to two relationships which were fully charged-off during the period.

    For the six months ended December 31, 2023 and December 31, 2022, the amounts recorded for off-balance-sheet credit exposure were the result of changes in the balance of loan commitments, loan mix and the projected economic forecast as outlined above.

    Noninterest Income.  Noninterest income for the six months ended December 31, 2023 increased $1.0 million, or 6.5%, when compared to the same period last year. Changes in the components of noninterest income are discussed below:

     Six Months Ended December 31,  
    (Dollars in thousands) 2023   2022 $ Change % Change
    Noninterest income       
    Service charges and fees on deposit accounts$4,686  $4,861 $(175) (4)        %
    Loan income and fees 982   1,217  (235) (19)
    Gain on sale of loans held for sale 2,330   2,688  (358) (13)
    BOLI income 3,901   1,021  2,880  282 
    Operating lease income 3,377   2,741  636  23 
    Gain (loss) on sale of premises and equipment (248)  1,115  (1,363) (122)
    Other 1,847   2,209  (362) (16)
    Total noninterest income$16,875  $15,852 $1,023  6%
     
    • Loan income and fees: The decrease was driven by lower prepayment penalties, partially offset by an increase in other servicing fees during the period.
    • Gain on sale of loans held for sale: The decrease was primarily driven by a decrease in the premium received on SBA loans sold during the current period. During the six months ended December 31, 2023, there were $68.7 million of HELOCs sold during the current period with gains of $519,000 compared to $64.2 million sold with gains of $542,000 in the same period in the prior year. There were $40.9 million of residential mortgages originated for sale sold with gains of $668,000 compared to $28.2 million sold with gains of $676,000 in the prior year. There were $18.0 million of sales of the guaranteed portion of SBA commercial loans with gains of $1.1 million in the current period compared to $20.3 million sold with gains of $1.5 million during the same period in the prior year.
    • BOLI income: The increase was primarily the result of a $2.7 million tax-free gain on death benefit proceeds in excess of the cash surrender value of the policies. No such gains were recognized in the prior year.
    • Operating lease income: The increase in operating lease income was the result of higher contractual earnings due to an increase in the average balance of assets being leased during the six months ended December 31, 2023 when compared to the prior period.
    • Gain (loss) on sale of premises and equipment: During the six months ended December 31, 2023, the Company recognized $625,000 of expense to impair the remaining right of use asset associated with a previously closed branch, partially offset by a $380,000 gain on the sale of a parcel of land. During the six months ended December 31, 2022, two properties were sold for a combined gain of $1.6 million, partially offset by $420,000 of expense to partially impair the right of use asset associated with a previously closed branch.
    • Other: The decrease was the result of a $721,000 gain recognized in the prior period on the sale of closely held equity securities which the Company obtained through a prior bank acquisition. No such sales occurred in the current year. Partially offsetting the prior period gain, investment services income increased $162,000 during the current prior period.

    Noninterest Expense.  Noninterest expense for the six months ended December 31, 2023 increased $7.2 million, or 13.8%, when compared to the same period last year. Changes in the components of noninterest expense are discussed below:

     Six Months Ended December 31,  
    (Dollars in thousands) 2023  2022 $ Change % Change
    Noninterest expense       
    Salaries and employee benefits$32,770 $29,299 $3,471  12%
    Occupancy expense, net 4,932  4,824  108  2 
    Computer services 6,175  5,559  616  11 
    Telephone, postage and supplies 1,255  1,178  77  7 
    Marketing and advertising 1,112  1,071  41  4 
    Deposit insurance premiums 1,419  1,088  331  30 
    Core deposit intangible amortization 1,719  60  1,659  2,765 
    Merger-related expense —  724  (724) (100)
    Other 9,963  8,362  1,601  19 
    Total noninterest expense$59,345 $52,165 $7,180  14%
     
    • Salaries and employee benefits: The year-over-year increase in expense can be tied to the Quantum merger.
    • Computer services: The increase in expense between periods was primarily due to a $377,000 increase in processing charges, partially related to operations acquired as a result of the Quantum merger, and further investments in technology.
    • Deposit insurance premium: The increase in expense was due to increases in the assessment rate the Company is charged for deposit insurance as well as growth in the assessment base, mainly due to deposits assumed through the Quantum merger.
    • Core deposit intangible amortization: The increase in amortization expense was a result of a $12.2 million core deposit intangible associated with the Quantum merger, which is being amortized on an accelerated basis over ten years.
    • Merger-related expense: The prior year period included costs incurred related to due diligence and legal work performed which was associated with the Quantum merger. No such expense was incurred in the current period.
    • Other: The increase period-over-period is primarily the result of $533,000 of additional depreciation expense on equipment subject to operating leases and a $183,000 increase in fraud losses, in addition to small increases across several other expense categories.

    Income Taxes.  The amount of income tax expense is influenced by the amount of pre-tax income, tax-exempt income, changes in the statutory rate and the effect of changes in valuation allowances maintained against deferred tax benefits. The effective tax rates for the six months ended December 31, 2023 and 2022 were 20.7% and 22.6%, respectively. The decline in the effective tax rate was primarily driven by the tax-free gain on BOLI death benefit proceeds.

    Balance Sheet Review
    Total assets increased by $65.1 million to $4.7 billion and total liabilities increased by $36.4 million to $4.2 billion, respectively, at December 31, 2023 as compared to June 30, 2023. The majority of these changes were the result of an increase in deposits, which, combined with maturing investments, were used to fund growth in loans held for sale and provide additional liquidity.

    At the end of the period we executed a partial restructuring of our BOLI portfolio, surrendering policies with a cash surrender value of $47.6 million and re-investing $31.3 million of these funds in higher-yielding policies. The net effect was a $16.3 million reduction in BOLI while recording a $47.6 million receivable for the proceeds as included in other assets.

    Stockholders' equity increased $28.7 million, or 6.1%, to $499.9 million at December 31, 2023 as compared to June 30, 2023, as a result of $28.3 million in net income. In addition, the improvement in the accumulated other comprehensive loss was driven by a $2.5 million reduction of the unrealized loss on available for sale securities as a result of movement in market interest rates.

    As of December 31, 2023, 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 $48.6 million, or 1.34% of total loans, at December 31, 2023 compared to $47.2 million, or 1.29% of total loans, as of June 30, 2023. The drivers of this change are discussed in the "Comparison of Results of Operations for the Six Months Ended December 31, 2023 and December 31, 2022 – Provision for Credit Losses" section above.

    Net loan charge-offs totaled $5.5 million for the six months ended December 31, 2023 compared to $1.9 million for the same period last year. Annualized net charge-offs as a percentage of average loans were 0.29% for the six months ended December 31, 2023 compared to 0.13% for the same period last year. The charge-offs recognized the past two quarters have been concentrated in our equipment finance and SBA portfolios, with the quarter-over-quarter increase primarily driven by smaller over-the-road truck loans in the equipment finance portfolio.

    Nonperforming assets, made up entirely of nonaccrual loans for both periods, increased $11.0 million to $19.3 million, or 0.41% of total assets, at December 31, 2023 compared to $8.3 million, or 0.18% of total assets, at June 30, 2023. This increase was primarily driven by increases of $4.0 million in non-owner occupied commercial real estate ("NOO CRE"), $3.6 million in equipment finance, and $1.2 million in home equity loans. One NOO CRE hotel loan represented $3.1 million of this change, while the increase in equipment finance loans was due to the above referenced smaller over-the-road truck loans. The ratio of nonperforming loans to total loans was 0.53% at December 31, 2023 compared to 0.23% at June 30, 2023.

    The ratio of classified assets to total assets increased to 0.90% at December 31, 2023 compared to 0.53% at June 30, 2023 as classified assets increased $17.5 million to $42.0 million at December 31, 2023 compared to $24.5 million at June 30, 2023. This increase was primarily driven by increases of $10.2 million in NOO CRE, $5.4 million in equipment finance, and $2.1 million in commercial and industrial loans. The increase in NOO CRE loans included an accruing $8.9 million hotel relationship and the previously referenced $3.1 million nonaccrual loan, offset by the payoff of $2.8 million in loans, while the increase in equipment finance loans was due to the above referenced smaller over-the-road truck loans, the majority of which are on nonaccrual.

    About HomeTrust Bancshares, Inc.
    HomeTrust Bancshares, Inc. is the holding company for the Bank. As of December 31, 2023, the Company had assets of $4.7 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), South Carolina (Greenville and Charleston), East Tennessee (including Kingsport/Johnson City, Knoxville, and Morristown), Southwest Virginia (including the Roanoke Valley) and Georgia (Greater Atlanta).

    Forward-Looking Statements
    This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact, but instead are based on certain assumptions including statements with respect to the Company's beliefs, plans, objectives, goals, expectations, assumptions, and statements about future economic performance and projections of financial items. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated or implied by forward-looking statements. The factors that could result in material differentiation include, but are not limited to the impact of bank failures or adverse developments involving other banks and related negative press about the banking industry in general on investor and depositor sentiment; the remaining effect of the COVID-19 pandemic on general economic and financial market conditions and on public health, both nationally and in the Company's market areas; expected revenues, cost savings, synergies and other benefits from merger and acquisition activities, including the Company's recent merger with 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; goodwill impairment charges might be incurred; increased competitive pressures; changes in the interest rate environment; changes in general economic conditions, both nationally and in our market areas; 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 the Company's 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 in the documents the Company files with or furnishes 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, the factors described above or other factors that management cannot foresee. The Company does not undertake, and specifically disclaims 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)December 31, 2023 September 30, 2023 June 30, 2023(1) March 31, 2023 December 31, 2022
    Assets         
    Cash$18,307  $18,090  $19,266  $18,262  $15,825 
    Interest-bearing deposits 328,833   306,924   284,231   296,151   149,209 
    Cash and cash equivalents 347,140   325,014   303,497   314,413   165,034 
    Certificates of deposit in other banks 34,722   35,380   33,152   33,102   29,371 
    Debt securities available for sale, at fair value 126,950   134,348   151,926   157,718   147,942 
    FHLB and FRB stock 18,393   19,612   20,208   19,125   13,661 
    SBIC investments, at cost 13,789   14,586   14,927   13,620   12,414 
    Loans held for sale, at fair value 3,359   4,616   6,947   1,209   518 
    Loans held for sale, at the lower of cost or fair value 198,433   200,834   161,703   89,172   72,777 
    Total loans, net of deferred loan fees and costs 3,640,022   3,659,914   3,658,823   3,649,333   2,985,623 
    Allowance for credit losses – loans (48,641)  (47,417)  (47,193)  (47,503)  (38,859)
    Loans, net 3,591,381   3,612,497   3,611,630   3,601,830   2,946,764 
    Premises and equipment, net 70,937   72,463   73,171   74,107   65,216 
    Accrued interest receivable 16,902   16,513   14,829   13,813   11,076 
    Deferred income taxes, net 11,796   9,569   10,912   10,894   11,319 
    BOLI 88,257   106,059   106,572   105,952   96,335 
    Goodwill 34,111   34,111   34,111   33,682   25,638 
    Core deposit intangibles, net 9,059   9,918   10,778   11,637   32 
    Other assets 107,404   56,477   53,124   49,596   48,918 
    Total assets$4,672,633  $4,651,997  $4,607,487  $4,529,870  $3,647,015 
    Liabilities and stockholders' equity         
    Liabilities         
    Deposits$3,661,373  $3,640,961  $3,601,168  $3,675,599  $3,048,020 
    Junior subordinated debt 10,021   9,995   9,971   9,945   — 
    Borrowings 433,763   452,263   457,263   320,263   130,000 
    Other liabilities 67,583   64,367   67,899   62,821   58,840 
    Total liabilities 4,172,740   4,167,586   4,136,301   4,068,628   3,236,860 
    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) 174   174   174   174   157 
    Additional paid in capital 172,366   171,663   171,222   170,670   128,486 
    Retained earnings 333,401   321,799   308,651   295,325   290,271 
    Unearned Employee Stock Ownership Plan ("ESOP") shares (4,497)  (4,629)  (4,761)  (4,893)  (5,026)
    Accumulated other comprehensive loss (1,551)  (4,596)  (4,100)  (3,034)  (3,733)
    Total stockholders' equity 499,893   484,411   471,186   458,242   410,155 
    Total liabilities and stockholders' equity$4,672,633  $4,651,997  $4,607,487  $4,526,870  $3,647,015 

    (1)   Derived from audited financial statements.
    (2)   Shares of common stock issued and outstanding were 17,387,069 at December 31, 2023; 17,380,307 at September 30, 2023; 17,366,673 at June 30, 2023; 17,370,063 at March 31, 2023; and 15,673,595 at December 31, 2022.

    Consolidated Statements of Income (Unaudited)

     Three Months Ended Six Months Ended
    (Dollars in thousands)December 31, 2023 September 30, 2023 December 31, 2023 December 31, 2022
    Interest and dividend income       
    Loans$60,069  $58,496 $118,565  $72,240
    Commercial paper —   —  —   1,300
    Debt securities available for sale 1,257   1,259  2,516   1,829
    Other investments and interest-bearing deposits 1,493   2,110  3,603   1,960
    Total interest and dividend income 62,819   61,865  124,684   77,329
    Interest expense       
    Deposits 18,289   16,429  34,718   4,998
    Junior subordinated debt 239   236  475   —
    Borrowings 2,368   3,040  5,408   266
    Total interest expense 20,896   19,705  40,601   5,264
    Net interest income 41,923   42,160  84,083   72,065
    Provision for credit losses  3,360   2,570  5,930   6,227
    Net interest income after provision for credit losses 38,563   39,590  78,153   65,838
    Noninterest income       
    Service charges and fees on deposit accounts 2,368   2,318  4,686   4,861
    Loan income and fees 423   559  982   1,217
    Gain on sale of loans held for sale 1,037   1,293  2,330   2,688
    BOLI income 2,152   1,749  3,901   1,021
    Operating lease income 1,592   1,785  3,377   2,741
    Gain (loss) on sale of premises and equipment (248)  —  (248)  1,115
    Other 924   923  1,847   2,209
    Total noninterest income 8,248   8,627  16,875   15,852
    Noninterest expense       
    Salaries and employee benefits 16,256   16,514  32,770   29,299
    Occupancy expense, net 2,443   2,489  4,932   4,824
    Computer services 3,002   3,173  6,175   5,559
    Telephone, postage and supplies 603   652  1,255   1,178
    Marketing and advertising 625   487  1,112   1,071
    Deposit insurance premiums 702   717  1,419   1,088
    Core deposit intangible amortization 860   859  1,719   60
    Merger-related expenses —   —  —   724
    Other 5,290   4,673  9,963   8,362
    Total noninterest expense 29,781   29,564  59,345   52,165
    Income before income taxes 17,030   18,653  35,683   29,525
    Income tax expense 3,566   3,820  7,386   6,668
    Net income$13,464  $14,833 $28,297  $22,857
     

    Per Share Data

     Three Months Ended  Six Months Ended
     December 31, 2023 September 30, 2023 December 31, 2023 December 31, 2022
    Net income per common share(1)       
    Basic$0.79 $0.88 $1.67 $1.51
    Diluted$0.79 $0.88 $1.67 $1.50
    Average shares outstanding       
    Basic 16,820,369  16,792,177  16,806,273  15,008,092
    Diluted 16,827,460  16,800,901  16,814,176  15,145,701
    Book value per share at end of period$28.75 $27.87 $28.75 $26.17
    Tangible book value per share at end of period(2)$26.39 $25.47 $26.39 $24.53
    Cash dividends declared per common share$0.11 $0.10 $0.21 $0.19
    Total shares outstanding at end of period 17,387,069  17,380,307  17,387,069  15,673,595

    (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 Six Months Ended
     December 31, 2023 September 30, 2023 December 31, 2023 December 31, 2022
    Performance ratios(1)     
    Return on assets (ratio of net income to average total assets)1.21% 1.33% 1.27% 1.28%
    Return on equity (ratio of net income to average equity)10.81  12.23  11.51  11.32 
    Yield on earning assets6.03  5.90  5.96  4.66 
    Rate paid on interest-bearing liabilities2.74  2.58  2.66  0.45 
    Average interest rate spread3.29  3.32  3.30  4.21 
    Net interest margin(2)4.02  4.02  4.02  4.35 
    Average interest-earning assets to average interest-bearing liabilities136.46  137.07  136.76  143.28 
    Noninterest expense to average total assets2.68  2.64  2.66  2.91 
    Efficiency ratio59.36  58.21  58.78  59.33 
    Efficiency ratio – adjusted(3)60.52  59.12  59.81  59.36 

    (1)   Ratios are annualized where appropriate.
    (2)   Net interest income divided by average interest-earning assets.
    (3)   See Non-GAAP reconciliations below for adjustments.

     At or For the Three Months Ended
     December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022
    Asset quality ratios         
    Nonperforming assets to total assets(1)0.41% 0.25% 0.18% 0.18% 0.17%
    Nonperforming loans to total loans(1)0.53  0.32  0.23  0.22  0.21 
    Total classified assets to total assets0.90  0.76  0.53  0.49  0.50 
    Allowance for credit losses to nonperforming loans(1)251.60  400.41  567.56  600.47  629.40 
    Allowance for credit losses to total loans1.34  1.30  1.29  1.30  1.30 
    Net charge-offs to average loans (annualized)0.29  0.27  0.13  0.01  0.25 
    Capital ratios         
    Equity to total assets at end of period10.70% 10.41% 10.23% 10.12% 11.25%
    Tangible equity to total tangible assets(2)9.91  9.60  9.39  9.27  10.62 
    Average equity to average assets11.03  10.84  10.79  11.14  11.50 

    (1)   Nonperforming assets include nonaccruing loans and REO. There were no accruing loans more than 90 days past due at the dates indicated. At December 31, 2023, $2.4 million, or 12.3%, of nonaccruing loans were current on their loan payments.
    (2)   See Non-GAAP reconciliations below for adjustments.
    Loans

    (Dollars in thousands)December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022
    Commercial real estate loans         
    Construction and land development$305,269  $352,143  $356,674  $368,756  $328,253 
    Commercial real estate – owner occupied 536,545   526,534   529,721   524,247   340,824 
    Commercial real estate – non-owner occupied 875,694   880,348   901,685   926,991   690,241 
    Multifamily 88,623   83,430   81,827   85,285   69,156 
    Total commercial real estate loans 1,806,131   1,842,455   1,869,907   1,905,279   1,428,474 
    Commercial loans         
    Commercial and industrial 237,255   237,366   245,428   229,840   194,679 
    Equipment finance 465,573   470,387   462,211   440,345   426,507 
    Municipal leases 150,292   147,821   142,212   138,436   135,922 
    Total commercial loans 853,120   855,574   849,851   808,621   757,108 
    Residential real estate loans         
    Construction and land development 96,646   103,381   110,074   105,617   100,002 
    One-to-four family 584,405   560,399   529,703   518,274   400,595 
    HELOCs 185,878   185,289   187,193   193,037   194,296 
    Total residential real estate loans 866,929   849,069   826,970   816,928   694,893 
    Consumer loans 113,842   112,816   112,095   118,505   105,148 
    Total loans, net of deferred loan fees and costs 3,640,022   3,659,914   3,658,823   3,649,333   2,985,623 
    Allowance for credit losses – loans (48,641)  (47,417)  (47,193)  (47,503)  (38,859)
    Loans, net$3,591,381  $3,612,497  $3,611,630  $3,601,830  $2,946,764 
     

    Deposits

    (Dollars in thousands)December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022
    Core deposits         
    Noninterest-bearing accounts$784,950 $827,362 $825,481 $872,492 $726,416
    NOW accounts 591,270  602,804  611,105  678,178  638,896
    Money market accounts 1,246,807  1,195,482  1,241,840  1,299,503  992,083
    Savings accounts 194,486  202,971  212,220  228,390  230,896
    Total core deposits 2,817,513  2,828,619  2,890,646  3,078,563  2,588,291
    Certificates of deposit 843,860  812,342  710,522  597,036  459,729
    Total$3,661,373 $3,640,961 $3,601,168 $3,675,599 $3,048,020
     

    The following bullet points provide further information regarding the composition of our deposit portfolio as of December 31, 2023:

    • Total deposits increased $20.4 million, or 0.6%, during the quarter.
    • The balance of uninsured deposits was $907.4 million, or 24.8% of total deposits, which included $268.0 million of collateralized deposits to municipalities.
    • The balance of brokered deposits was $355.8 million, or 9.7% of total deposits.
    • Commercial and consumer depositors represented 51% and 49% of total deposits, respectively.
    • The average balance of our deposit accounts was $34,000.
    • Our largest 25 depositors made up $579.7 million, or 15.8% of total deposits.

    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 Six Months Ended
    (Dollars in thousands)December 31, 2023 September 30, 2023 December 31, 2023 December 31, 2022
    Noninterest expense$29,781  $29,564 $59,345  $52,165
    Less: merger-related expenses —   —  —   724
    Noninterest expense – adjusted$29,781  $29,564 $59,345  $51,441
            
    Net interest income$41,923  $42,160 $84,083  $72,065
    Plus: tax-equivalent adjustment 341   315  656   574
    Plus: noninterest income 8,248   8,627  16,875   15,852
    Less: BOLI death benefit proceeds in excess of cash surrender value 1,554   1,092  2,646   721
    Less: gain (loss) on sale of premises and equipment (248)  —  (248)  1,115
    Net interest income plus noninterest income – adjusted$49,206  $50,010 $99,216  $86,655
                  
    Efficiency ratio 59.36%  58.21% 58.78%  59.33%
    Efficiency ratio – adjusted 60.52%  59.12% 59.81%  59.36%
    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)December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022
    Total stockholders' equity$499,893 $484,411 $471,186 $458,242 $410,155
    Less: goodwill, core deposit intangibles, net of taxes 41,086  41,748  42,410  42,642  25,663
    Tangible book value$458,807 $442,663 $428,776 $415,600 $384,492
    Common shares outstanding 17,387,069  17,380,307  17,366,673  17,370,063  15,673,595
    Book value per share$28.75 $27.87 $27.13 $26.38 $26.17
    Tangible book value per share$26.39 $25.47 $24.69 $23.93 $24.53
    Set forth below is a reconciliation to GAAP of tangible equity to tangible assets:


     As of
    (Dollars in thousands)December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022
    Tangible equity(1)$458,807 $442,663 $428,776 $415,600 $384,492
    Total assets 4,672,633  4,651,997  4,607,487  4,526,870  3,647,015
    Less: goodwill, core deposit intangibles, net of taxes 41,086  41,748  42,410  42,642  25,663
    Total tangible assets$4,631,547 $4,610,249 $4,565,077 $4,484,228 $3,621,352
                   
    Tangible equity to tangible assets 9.91%  9.60%  9.39%  9.27%  10.62%

    (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.


    Contact:
C. Hunter Westbrook – President and Chief Executive Officer
Tony J. VunCannon – Executive Vice President, Chief Financial Officer, Corporate Secretary and Treasurer
828-259-3939

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