• HomeTrust Bancshares, Inc. Announces Financial Results for the Second Quarter of Fiscal Year 2023 and Quarterly Dividend

    ソース: Nasdaq GlobeNewswire / 24 1 2023 07:00:02   America/Chicago

    ASHEVILLE, N.C., Jan. 24, 2023 (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 fiscal year 2023 and approval of its quarterly cash dividend.

    For the quarter ended December 31, 2022 compared to the quarter ended September 30, 2022:

    • net income was $13.7 million compared to $9.2 million;
    • diluted earnings per share ("EPS") was $0.90 compared to $0.60;
    • annualized return on assets ("ROA") was 1.54% compared to 1.02%;
    • annualized return on equity ("ROE") was 13.37% compared to 9.25%;
    • net interest income was $37.5 million compared to $34.5 million;
    • provision for credit losses was $2.2 million compared to $4.0 million;
    • noninterest income was $8.5 million compared to $7.4 million;
    • net loan growth was $117.8 million, or 16.4% annualized, compared to $98.5 million, or 14.2% annualized; and
    • quarterly cash dividends increased $0.01 per share, or 11.1%, to $0.10 per share totaling $1.5 million compared to $0.09 per share totaling $1.4 million.

    For the six months ended December 31, 2022 compared to the six months ended December 31, 2021:

    • net income was $22.9 million compared to $21.6 million;
    • diluted EPS was $1.50 compared to $1.33;
    • annualized ROA was 1.28% compared to 1.21%;
    • annualized ROE was 11.32% compared to 10.78%;
    • net interest income was $72.1 million compared to $54.9 million;
    • provision for credit losses was $6.2 million compared to a net benefit of $4.0 million;
    • noninterest income was $15.9 million compared to $20.4 million;
    • net loan growth was $216.3 million, or 15.6% annualized, compared to a net decrease of $37.2 million, or (1.4)% annualized; and
    • cash dividends of $0.19 per share totaling $2.9 million compared to $0.17 per share totaling $2.7 million.

    The Company also announced today that its Board of Directors declared a quarterly cash dividend of $0.10 per common share payable on March 2, 2023 to shareholders of record as of the close of business on February 16, 2023.

    “This was a great quarter for HomeTrust as we continued our margin momentum and double-digit loan growth, and we are pleased with the relative resiliency of our deposit base,” said Hunter Westbrook, President and Chief Executive Officer. “Deposits declined during the quarter, but less than we had anticipated despite higher yielding alternatives. We continue to be pleased with our asset quality across all our lines of business and the continued strength of the customers and communities we serve.

    “From a strategic standpoint, the results of the quarter reflect the transition of our operating model and balance sheet over the last several years. I’m extremely proud of all our teammates and their collective hard work that delivered these strong quarterly results.

    "Lastly, for the third year in a row, HomeTrust Bank has been named the "Best Small Bank" in North Carolina by Newsweek. I once again congratulate all our teammates who have made this achievement possible."

    WEBSITE: WWW.HTB.COM

    Comparison of Results of Operations for the Three Months Ended December 31, 2022 and September 30, 2022

    Net Income.  Net income totaled $13.7 million, or $0.90 per diluted share, for the three months ended December 31, 2022 compared to net income of $9.2 million, or $0.60 per diluted share, for the three months ended September 30, 2022, an increase of $4.5 million, or 48.5%. The results for the three months ended December 31, 2022 were positively impacted by a $3.0 million increase in net interest income and a $1.1 million increase 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
     December 31,
    2022    		 September 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)$2,999,207  $39,282 5.20% $2,880,148  $33,522 4.62%
    Commercial paper 34,487   184 2.12   214,214   1,116 2.07 
    Debt securities available for sale 167,818   1,151 2.72   135,015   678 1.99 
    Other interest-earning assets(3) 86,430   1,072 4.92   113,821   888 3.10 
    Total interest-earning assets 3,287,942   41,689 5.03   3,343,198   36,204 4.30 
    Other assets 236,159       243,113     
    Total assets 3,524,101       3,586,311     
    Liabilities and equity           
    Interest-bearing liabilities           
    Interest-bearing checking accounts$627,548  $571 0.36% $654,154  $268 0.16%
    Money market accounts 954,007   1,935 0.80   968,084   521 0.21 
    Savings accounts 236,027   45 0.08   238,992   45 0.07 
    Certificate accounts 444,845   1,052 0.94   476,761   561 0.47 
    Total interest-bearing deposits 2,262,427   3,603 0.63   2,337,991   1,395 0.24 
    Borrowings 26,063   254 3.87   1,526   12 3.12 
    Total interest-bearing liabilities 2,288,490   3,857 0.67   2,339,517   1,407 0.24 
    Noninterest-bearing deposits 785,785       800,912     
    Other liabilities 44,333       51,485     
    Total liabilities 3,118,608       3,191,914     
    Stockholders' equity 405,493       394,397     
    Total liabilities and stockholders' equity 3,524,101       3,586,311     
    Net earning assets$999,452      $1,003,681     
    Average interest-earning assets to average interest-bearing liabilities 143.67%      142.90%    
    Tax-equivalent           
    Net interest income  $37,832     $34,797  
    Interest rate spread    4.36%     4.06%
    Net interest margin(4)    4.56%     4.13%
    Non-tax-equivalent           
    Net interest income  $37,545     $34,520  
    Interest rate spread    4.33%     4.02%
    Net interest margin(4)    4.53%     4.10%


    (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 $287 and $277 for the three months ended December 31, 2022 and September 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 December 31, 2022 increased $5.5 million, or 15.2%, compared to the three months ended September 30, 2022, which was driven by a $5.8 million, or 17.3%, increase in interest income on loans. The overall increase in average yield on interest-earning assets and rate paid on liabilities was the result of rising interest rates. Specific to debt securities available for sale, the Company has intentionally maintained a relatively short-term duration portfolio 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 December 31, 2022 increased $2.5 million, or 174.1%, compared to the three months ended September 30, 2022. The increase was driven by a $2.2 million, or 158.3%, increase in interest expense on deposits as a result of a 39 basis point increase in the associated average cost of funds, and a $242,000 increase in interest expense on borrowings as a result of higher average balances and higher rates.

    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$1,386  $4,374 $5,760 
    Commercial paper (936)  4  (932)
    Debt securities available for sale 165   308  473 
    Other interest-earning assets (214)  398  184 
    Total interest-earning assets 401   5,084  5,485 
    Interest-bearing liabilities     
    Interest-bearing checking accounts (11)  314  303 
    Money market accounts (8)  1,422  1,414 
    Savings accounts (1)  1  — 
    Certificate accounts (38)  529  491 
    Borrowings 193   49  242 
    Total interest-bearing liabilities 135   2,315  2,450 
    Net increase in tax equivalent interest income    $3,035 
            

    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  
     December 31,
    2022    		 September 30,
    2022    		 $ Change % Change
    Provision for credit losses       
    Loans$2,425  $3,694  $(1,269) (34)%
    Off-balance-sheet credit exposure (85)  443   (528) (119)
    Commercial paper (100)  (150)  50  33 
    Total provision for credit losses$2,240  $3,987  $(1,747) (44)%
                   

    For the quarter 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 quarter:

    • $1.6 million provision driven by loan growth and changes in the loan mix.
    • $0.4 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 quarter.

    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.
    • $1.3 million provision driven by loan growth and changes in the loan mix.
    • $1.1 million provision due to a projected worsening of the economic forecast, specifically the national unemployment rate, and changes in qualitative adjustments.

    For both periods presented, the change in the provision for credit losses for off-balance-sheet credit exposure was the result of changes in the balance of loan commitments as well as changes in the loan mix and changes in the projected economic forecast outlined above.

    Noninterest Income.  Noninterest income for the three months ended December 31, 2022 increased $1.1 million, or 14.3%, when compared to the quarter ended September 30, 2022. Changes in selected components of noninterest income are discussed below:

     Three Months Ended  
     December 31,
    2022    		 September 30,
    2022    		 $ Change % Change
    Noninterest income       
    Service charges and fees on deposit accounts$2,523 $2,338  $185  8%
    Loan income and fees 647  570   77  14 
    Gain on sale of loans held for sale 1,102  1,586   (484) (31)
    BOLI income 494  527   (33) (6)
    Operating lease income 1,156  1,585   (429) (27)
    Gain (loss) on sale of premises and equipment 1,127  (12)  1,139  9,492 
    Other 1,405  804   601  75 
    Total noninterest income$8,454 $7,398  $1,056  14%
                  
    • 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 and SBA loans sold during the period as a result of rising interest rates. During the quarter ended December 31, 2022, $7.3 million of residential mortgage loans originated for sale were sold with gains of $183,000 compared to $20.9 million sold with gains of $493,000 for the quarter ended September 30, 2022. There were $8.2 million of sales of the guaranteed portion of SBA commercial loans with gains of $568,000 in the current quarter compared to $12.1 million sold and gains of $891,000 in the prior quarter. There were $41.4 million of home equity lines of credit ("HELOCs") sold during the current quarter for a gain of $340,000 compared to $22.8 million sold and gains of $202,000 in the prior quarter.
    • Operating lease income: The decrease in operating lease income can be traced to lower contractual earnings as well as gains or losses incurred at the end of operating leases, where we recognized a net loss of $337,000 for the quarter ended December 31, 2022 versus a net gain of $148,000 for the quarter ended September 30, 2022.
    • Gain (loss) on sale of premises and equipment: During the quarter ended December 31, 2022 two properties were sold for a combined gain of $1.6 million, partially offset by additional impairment of $420,000 on premises and equipment associated with prior branch closures.
    • Other: The increase in other income was driven by a $721,000 gain recognized on the sale of closely held equity securities which the Company obtained through a prior bank acquisition.

    Noninterest Expense.  Noninterest expense for the three months ended December 31, 2022 decreased $12,000, or 0.0%, when compared to the three months ended September 30, 2022. Changes in selected components of noninterest expense are discussed below:

     Three Months Ended  
     December 31,
    2022    		 September 30,
    2022    		 $ Change % Change
    Noninterest expense       
    Salaries and employee benefits$14,484 $14,815 $(331) (2)%
    Occupancy expense, net 2,428  2,396  32  1 
    Computer services 2,796  2,763  33  1 
    Telephone, postage and supplies 575  603  (28) (5)
    Marketing and advertising 481  590  (109) (18)
    Deposit insurance premiums 546  542  4  1 
    Core deposit intangible amortization 26  34  (8) (24)
    Merger-related expenses 250  474  (224) (47)
    Other 4,490  3,872  618  16 
    Total noninterest expense$26,076 $26,089 $(13) —%
                 
    • Salaries and employee benefits: The decrease in salaries and employee benefits expense is primarily the result of lower mortgage banking incentive pay as a result of the reduction in the volume of originations due to 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 both periods are costs incurred related to due diligence and legal work performed associated with the transaction, in addition to ongoing costs incurred in preparation for the transaction.
    • Other: During the quarter ended December 31, 2022 the Company wrote off $350,000 in previously capitalized costs associated with a technology project which the Company is no longer pursuing. No such expense was incurred in the prior quarter.

    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 December 31, 2022 increased $1.4 million as a result of higher taxable income in the current quarter and an increase in the effective tax rate which moved from 22.3% to 22.8% quarter-over-quarter.

    Comparison of Results of Operations for the Six Months Ended December 31, 2022 and December 31, 2021

    Net Income.  Net income totaled $22.9 million, or $1.50 per diluted share, for the six months ended December 31, 2022 compared to net income of $21.6 million, or $1.33 per diluted share, for the six months ended December 31, 2021, an increase of $1.3 million, or 5.8%. The results for the six months ended December 31, 2022 were positively impacted by a $17.2 million increase in net interest income, partially offset by an increase of $10.2 million in the provision for credit losses and a $4.7 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 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,
    2022    		 December 31,
    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)$2,939,677  $72,814 4.91% $2,819,482  $55,441 3.90%
    Commercial paper 124,351   1,300 2.07   191,712   458 0.47 
    Debt securities available for sale 151,417   1,829 2.40   130,143   935 1.43 
    Other interest-earning assets(3) 100,125   1,960 3.88   126,054   1,576 2.48 
    Total interest-earning assets 3,315,570   77,903 4.66   3,267,391   58,410 3.55 
    Other assets 239,636       260,288     
    Total assets 3,555,206       3,527,679     
    Liabilities and equity           
    Interest-bearing liabilities           
    Interest-bearing checking accounts$640,851  $838 0.26% $635,362  $728 0.23%
    Money market accounts 961,045   2,456 0.51   993,643   716 0.14 
    Savings accounts 237,509   89 0.07   223,061   81 0.07 
    Certificate accounts 460,803   1,615 0.70   450,706   1,352 0.60 
    Total interest-bearing deposits 2,300,208   4,998 0.43   2,302,772   2,877 0.25 
    Borrowings 13,795   266 3.83   56,356   41 0.15 
    Total interest-bearing liabilities 2,314,003   5,264 0.45   2,359,128   2,918 0.25 
    Noninterest-bearing deposits 793,349       722,432     
    Other liabilities 46,501       48,393     
    Total liabilities 3,153,853       3,129,953     
    Stockholders' equity 401,353       397,726     
    Total liabilities and stockholders' equity 3,555,206       3,527,679     
    Net earning assets$1,001,567      $908,263     
    Average interest-earning assets to average interest-bearing liabilities 143.28%      138.50%    
    Tax-equivalent           
    Net interest income  $72,639     $55,492  
    Interest rate spread    4.21%     3.30%
    Net interest margin(4)    4.35%     3.37%
    Non-tax-equivalent           
    Net interest income  $72,065     $54,875  
    Interest rate spread    4.18%     3.26%
    Net interest margin(4)    4.31%     3.33%


    (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 $574 and $617 for the six months ended December 31, 2022 and December 31, 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 six months ended December 31, 2022 increased $19.5 million, or 33.8%, compared to the six months ended December 31, 2021, which was driven by a $17.4 million, or 31.8%, increase in interest income on loans, and a combined increase of $1.7 million, or 124.6%, in interest income on commercial paper and debt securities available for sale. The overall increase in average yield on interest-earning assets and rate paid on liabilities was the result of rising interest rates. Specific to debt securities available for sale, the Company has intentionally maintained a relatively short-term duration portfolio 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 six months ended December 31, 2022 increased $2.3 million, or 80.4%, compared to the six months ended December 31, 2021. The increase was driven by a $2.1 million, or 73.7%, increase in interest expense on deposits as a result of an 18 basis point increase 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$2,363  $15,010 $17,373
    Commercial paper (161)  1,003  842
    Debt securities available for sale 153   741  894
    Other interest-earning assets (324)  708  384
    Total interest-earning assets 2,031   17,462  19,493
    Interest-bearing liabilities     
    Interest-bearing checking accounts 6   104  110
    Money market accounts (23)  1,763  1,740
    Savings accounts 5   3  8
    Certificate accounts 30   233  263
    Borrowings (31)  256  225
    Total interest-bearing liabilities (13)  2,359  2,346
    Net increase in tax equivalent interest income    $17,147
           

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

     Six Months Ended  
     December 31,
    2022    		 December 31,
    2021    		 $ Change % Change
    Provision (benefit) for credit losses       
    Loans$6,119  $(3,775) $9,894  262%
    Off-balance-sheet credit exposure 358   (235)  593  252 
    Commercial paper (250)  50   (300) (600)
    Total provision (benefit) for credit losses$6,227  $(3,960) $10,187  257%
                   

    For the six months ended December 31, 2022, the "loans" portion of the provision (benefit) 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, 2021, the "loans" portion of the benefit for credit losses was driven by an improvement in the economic forecast, as more clarity was gained regarding the impact of COVID-19 upon the loan portfolio.

    For both periods presented, the change in the provision for credit losses for off-balance-sheet credit exposure was the result of changes in the balance of loan commitments as well as changes in the loan mix and changes in the projected economic forecast outlined above.

    Noninterest Income.  Noninterest income for the six months ended December 31, 2022 decreased $4.7 million, or 22.7%, when compared to the same period last year. Changes in selected components of noninterest income are discussed below:

     Six Months Ended  
     December 31,
    2022    		 December 31,
    2021    		 $ Change % Change
    Noninterest income       
    Service charges and fees on deposit accounts$4,861 $4,885  $(24) —%
    Loan income and fees 1,217  1,784   (567) (32)
    Gain on sale of loans held for sale 2,688  7,958   (5,270) (66)
    BOLI income 1,021  1,008   13  1 
    Operating lease income 2,741  3,258   (517) (16)
    Gain (loss) on sale of premises and equipment 1,115  (87)  1,202  1,382 
    Other 2,209  1,639   570  35 
    Total noninterest income$15,852 $20,445  $(4,593) (22)% 
                  
    • Loan income and fees: The decrease in loan income and fees was driven by lower underwriting fees, interest rate swap fees, and prepayment penalties in the current period compared to the same period last year, all of which were impacted by rising interest rates.
    • 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 and SBA loans sold during the period as a result of rising interest rates. During the six months ended December 31, 2022, $28.2 million of residential mortgage loans originated for sale were sold with gains of $676,000 compared to $150.7 million sold with gains of $4.3 million for the corresponding period in the prior year. There were $20.3 million of sales of the guaranteed portion of SBA commercial loans with gains of $1.5 million in the current period compared to $27.0 million sold and gains of $3.1 million for the corresponding period in the prior year. There were $64.2 million of HELOCs sold during the current period for a gain of $542,000 compared to $72.2 million sold and gains of $426,000 for the corresponding period in the prior year. Lastly, $11.5 million of indirect auto finance loans were sold out of the held for investment portfolio during the six months ended December 31, 2021 for a gain of $205,000. No such sales occurred in the same period in the current year.
    • Operating lease income: The decrease in operating lease income can be traced to lower contractual earnings as well as gains or losses incurred at the end of operating leases, where we recognized a net loss of $189,000 for the six months ended December 31, 2022 versus a net loss of $92,000 in the same period last year.
    • Gain (loss) on sale of premises and equipment: During the six months ended December 31, 2022 two properties were sold for a combined gain of $1.6 million, partially offset by additional impairment of $420,000 on premises and equipment associated with prior branch closures. No such sales occurred in the same period in the prior year.
    • Other: The increase in other income was driven by a $721,000 gain recognized on the sale of closely held equity securities which the Company obtained through a prior bank acquisition. No such sales occurred in the same period in the prior year.

    Noninterest Expense.  Noninterest expense for the six months ended December 31, 2022 increased $265,000, or 0.5%, when compared to the same period last year. Changes in selected components of noninterest expense are discussed below:

     Six Months Ended  
     December 31,
    2022    		 December 31,
    2021    		 $ Change % Change
    Noninterest expense       
    Salaries and employee benefits$29,299 $30,152 $(853) (3)%
    Occupancy expense, net 4,824  4,718  106  2 
    Computer services 5,559  5,130  429  8 
    Telephone, postage and supplies 1,178  1,322  (144) (11)
    Marketing and advertising 1,071  1,537  (466) (30)
    Deposit insurance premiums 1,088  868  220  25 
    Core deposit intangible amortization 60  158  (98) (62)
    Merger-related expenses 724  —  724  100 
    Other 8,362  7,953  409  5 
    Total noninterest expense$52,165 $51,838 $327  1%
                 
    • Salaries and employee benefits: The decrease in salaries and employee benefits expense in the current period compared to the same period last year is primarily the result of branch closures and lower mortgage banking incentive pay as a result of the reduction in the volume of originations due to rising interest rates.
    • Computer services: The increase in expense between periods is due to continued investments in technology as well as increases in the cost of services provided by third parties.
    • Marketing and advertising: The decrease in expense between periods is partially due to timing differences when expenses are incurred and paid as well as lower projected marketing expenses for the current fiscal year versus the prior period.
    • Deposit insurance premiums: The rates the Company is charged for deposit insurance have increased year-over-year.
    • 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 six months ended December 31, 2022 are costs incurred related to due diligence and legal work performed associated with the transaction, in addition to ongoing costs incurred in preparation for the transaction. No such expense was incurred in the prior period.
    • Other: During the six months ended December 31, 2022 the Company wrote off $350,000 in previously capitalized costs associated with a technology project which the Company is no longer pursuing. No such expense was incurred in the prior period.

    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 six months ended December 31, 2022 increased $831,000 as a result of higher taxable income in the current quarter compared to the corresponding period in the prior year, and an increase in the effective tax rate from 21.3% to 22.6% between periods.

    Balance Sheet Review
    Total assets increased by $97.8 million to $3.6 billion and total liabilities increased by $76.5 million to $3.2 billion, respectively, at December 31, 2022 as compared to June 30, 2022. The combined decrease in commercial paper of $194.4 million and net increase in funding sources of $78.3 million was used to fund loan growth of $216.3 million during the period.

    Stockholders' equity increased $21.3 million to $410.2 million at December 31, 2022 as compared to June 30, 2022. Activity within stockholders' equity included $22.9 million in net income, $2.7 million in stock-based compensation and stock option exercises, offset by $2.9 million in cash dividends declared and a $1.3 million increase in accumulated other comprehensive loss associated with available for sale debt securities. As of December 31, 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 $38.9 million, or 1.30% of total loans, at December 31, 2022 compared to $34.7 million, or 1.25% of total loans, as of June 30, 2022. The drivers of this change are discussed in the "Six Months Ended December 31, 2022 and December 31, 2021" section above.

    Net loan charge-offs totaled $1.9 million for the six months ended December 31, 2022 compared to $760,000 for the same period last year. Net charge-offs as a percentage of average loans were 0.13% for the six months ended December 31, 2022 compared to 0.05% for the corresponding period last year.

    Nonperforming assets increased by $54,000, or 0.9%, to $6.4 million, or 0.17% of total assets, at December 31, 2022 compared to $6.3 million, or 0.18% of total assets, at June 30, 2022. Nonperforming assets included $6.2 million in nonaccruing loans and $200,000 of real estate owned ("REO") at December 31, 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 0.21% at December 31, 2022 and 0.22% at June 30, 2022.

    The ratio of classified assets to total assets decreased to 0.50% at December 31, 2022 from 0.61% at June 30, 2022. Classified assets decreased $3.2 million, or 15.1%, to $18.3 million at December 31, 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 December 31, 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 remaining 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 remaining 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)December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022(1)    		 March 31,
    2022    		 December 31,
    2021
    Assets         
    Cash$15,825  $18,026  $20,910  $19,783  $20,586 
    Interest-bearing deposits 149,209   76,133   84,209   32,267   14,240 
    Cash and cash equivalents 165,034   94,159   105,119   52,050   34,826 
    Commercial paper, net —   85,296   194,427   312,918   254,157 
    Certificates of deposit in other banks 29,371   27,535   23,551   28,125   34,002 
    Debt securities available for sale, at fair value 147,942   161,741   126,978   106,315   121,851 
    FHLB and FRB stock 13,661   9,404   9,326   10,451   10,368 
    SBIC investments, at cost 12,414   12,235   12,758   12,589   11,749 
    Loans held for sale, at fair value 518   —   —   —   — 
    Loans held for sale, at the lower of cost or fair value 72,777   76,252   79,307   85,263   102,070 
    Total loans, net of deferred loan fees and costs 2,985,623   2,867,783   2,769,295   2,699,538   2,696,072 
    Allowance for credit losses – loans (38,859)  (38,301)  (34,690)  (31,034)  (30,933)
    Loans, net 2,946,764   2,829,482   2,734,605   2,668,504   2,665,139 
    Premises and equipment, net 65,216   68,705   69,094   69,629   69,461 
    Accrued interest receivable 11,076   9,667   8,573   7,980   8,200 
    Deferred income taxes, net 11,319   11,838   11,487   12,494   12,019 
    Bank owned life insurance ("BOLI") 96,335   95,837   95,281   94,740   94,209 
    Goodwill 25,638   25,638   25,638   25,638   25,638 
    Core deposit intangibles, net 32   58   93   135   185 
    Other assets 48,918   47,339   52,967   54,954   58,945 
    Total assets$3,647,015  $3,555,186  $3,549,204  $3,541,785  $3,502,819 
    Liabilities and stockholders' equity         
    Liabilities         
    Deposits$3,048,020  $3,102,668  $3,099,761  $3,059,157  $2,998,691 
    Borrowings 130,000   —   —   30,000   48,000 
    Other liabilities 58,840   56,296   60,598   57,497   54,382 
    Total liabilities 3,236,860   3,158,964   3,160,359   3,146,654   3,101,073 
    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) 157   156   156   160   163 
    Additional paid in capital 128,486   127,153   126,106   136,181   147,552 
    Retained earnings 290,271   278,120   270,276   265,609   258,986 
    Unearned Employee Stock Ownership Plan ("ESOP") shares (5,026)  (5,158)  (5,290)  (5,422)  (5,555)
    Accumulated other comprehensive income (loss) (3,733)  (4,049)  (2,403)  (1,397)  600 
    Total stockholders' equity 410,155   396,222   388,845   395,131   401,746 
    Total liabilities and stockholders' equity$3,647,015  $3,555,186  $3,549,204  $3,541,785  $3,502,819 


    (1)Derived from audited financial statements.
    (2)Shares of common stock issued and outstanding were 15,673,595 at December 31, 2022; 15,632,348 at September 30, 2022; 15,591,466 at June 30, 2022; 15,978,262 at March 31, 2022; and 16,303,461 at December 31, 2021.
      

    Consolidated Statements of Income (Unaudited)

     Three Months Ended Six Months Ended
    (Dollars in thousands)December 31,
    2022    		 September 30,
    2022    		 December 31,
    2022    		 December 31,
    2021
    Interest and dividend income       
    Loans$38,995 $33,245  $72,240 $54,824 
    Commercial paper 184  1,116   1,300  458 
    Debt securities available for sale 1,151  678   1,829  935 
    Other investments and interest-bearing deposits 1,072  888   1,960  1,576 
    Total interest and dividend income 41,402  35,927   77,329  57,793 
    Interest expense       
    Deposits 3,603  1,395   4,998  2,877 
    Borrowings 254  12   266  41 
    Total interest expense 3,857  1,407   5,264  2,918 
    Net interest income 37,545  34,520   72,065  54,875 
    Provision (benefit) for credit losses  2,240  3,987   6,227  (3,960)
    Net interest income after provision (benefit) for credit losses 35,305  30,533   65,838  58,835 
    Noninterest income       
    Service charges and fees on deposit accounts 2,523  2,338   4,861  4,885 
    Loan income and fees 647  570   1,217  1,784 
    Gain on sale of loans held for sale 1,102  1,586   2,688  7,958 
    BOLI income 494  527   1,021  1,008 
    Operating lease income 1,156  1,585   2,741  3,258 
    Gain (loss) on sale of premises and equipment 1,127  (12)  1,115  (87)
    Other 1,405  804   2,209  1,639 
    Total noninterest income 8,454  7,398   15,852  20,445 
    Noninterest expense       
    Salaries and employee benefits 14,484  14,815   29,299  30,152 
    Occupancy expense, net 2,428  2,396   4,824  4,718 
    Computer services 2,796  2,763   5,559  5,130 
    Telephone, postage, and supplies 575  603   1,178  1,322 
    Marketing and advertising 481  590   1,071  1,537 
    Deposit insurance premiums 546  542   1,088  868 
    Core deposit intangible amortization 26  34   60  158 
    Merger-related expenses 250  474   724  — 
    Other 4,490  3,872   8,362  7,953 
    Total noninterest expense 26,076  26,089   52,165  51,838 
    Income before income taxes 17,683  11,842   29,525  27,442 
    Income tax expense 4,025  2,643   6,668  5,837 
    Net income$13,658 $9,199  $22,857 $21,605 
                  

    Per Share Data

      Three Months Ended Six Months Ended
      December 31,
    2022    		 September 30,
    2022    		 December 31,
    2022    		 December 31,
    2021
    Net income per common share(1)        
    Basic $0.90 $0.61 $1.51 $1.36
    Diluted $0.90 $0.60 $1.50 $1.33
    Average shares outstanding        
    Basic  15,028,179  14,988,006  15,008,092  15,696,765
    Diluted  15,161,153  15,130,762  15,145,701  16,057,607
    Book value per share at end of period $26.17 $25.35 $26.17 $24.64
    Tangible book value per share at end of period(2) $24.53 $23.70 $24.53 $23.06
    Cash dividends declared per common share $0.10 $0.09 $0.19 $0.17
    Total shares outstanding at end of period  15,673,595  15,632,348  15,673,595  16,303,461


    (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,
    2022    		 September 30,
    2022    		 December 31,
    2022    		 December 31,
    2021
    Performance ratios(1)      
    Return on assets (ratio of net income to average total assets) 1.54% 1.02% 1.28% 1.21%
    Return on equity (ratio of net income to average equity) 13.37  9.25  11.32  10.78 
    Tax equivalent yield on earning assets(2) 5.03  4.30  4.66  3.55 
    Rate paid on interest-bearing liabilities 0.67  0.24  0.45  0.25 
    Tax equivalent average interest rate spread(2) 4.36  4.06  4.21  3.30 
    Tax equivalent net interest margin(2) (3) 4.56  4.13  4.35  3.37 
    Average interest-earning assets to average interest-bearing liabilities 143.67  142.90  143.28  138.50 
    Noninterest expense to average total assets 2.94  2.89  2.91  2.92 
    Efficiency ratio 56.69  62.24  59.33  68.82 
    Efficiency ratio – adjusted(4) 58.12  60.69  59.36  68.19 


    (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
      December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022    		 March 31,
    2022    		 December 31,
    2021
    Asset quality ratios          
    Nonperforming assets to total assets(1) 0.17% 0.20% 0.18% 0.16% 0.18%
    Nonperforming loans to total loans(1) 0.21  0.24  0.22  0.22  0.23 
    Total classified assets to total assets 0.50  0.54  0.61  0.61  0.65 
    Allowance for credit losses to nonperforming loans(1) 629.40  561.10  566.83  534.06  500.70 
    Allowance for credit losses to total loans 1.30  1.34  1.25  1.15  1.15 
    Net charge-offs (recoveries) to average loans (annualized) 0.25  0.01  (0.10) (0.11) 0.15 
    Capital ratios          
    Equity to total assets at end of period 11.25% 11.14% 10.96% 11.16% 11.47%
    Tangible equity to total tangible assets(2) 10.62  10.50  10.31  10.51  10.81 
    Average equity to average assets 11.50  11.00  10.93  11.32  11.28 


    (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 December 31, 2022, there were $1.8 million of restructured loans included in nonaccruing loans and $3.2 million, or 52.0%, 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)December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022    		 March 31,
    2022    		 December 31,
    2021
    Commercial real estate loans         
    Construction and land development$328,253  $310,985  $291,202   251,668   226,439 
    Commercial real estate – owner occupied 340,824   336,456   335,658   332,078   323,434 
    Commercial real estate – non-owner occupied 690,241   661,644   662,159   688,071   709,825 
    Multifamily 69,156   79,082   81,086   82,035   80,071 
    Total commercial real estate loans 1,428,474   1,388,167   1,370,105   1,353,852   1,339,769 
    Commercial loans         
    Commercial and industrial 194,465   205,606   192,652   167,342   162,396 
    Equipment finance 426,507   411,012   394,541   378,629   367,008 
    Municipal leases 135,922   130,777   129,766   130,260   131,078 
    PPP loans 214   238   661   2,756   19,044 
    Total commercial loans 757,108   747,633   717,620   678,987   679,526 
    Residential real estate loans         
    Construction and land development 100,002   91,488   81,847   72,735   69,253 
    One-to-four family 400,595   374,849   354,203   347,945   356,850 
    HELOCs 194,296   164,701   160,137   155,356   158,984 
    Total residential real estate loans 694,893   631,038   596,187   576,036   585,087 
    Consumer loans 105,148   100,945   85,383   90,663   91,690 
    Total loans, net of deferred loan fees and costs 2,985,623   2,867,783   2,769,295   2,699,538   2,696,072 
    Allowance for credit losses – loans (38,859)  (38,301)  (34,690)  (31,034)  (30,933)
    Loans, net$2,946,764  $2,829,482  $2,734,605  $2,668,504  $2,665,139 
                        

    As of December 31, 2022, $28.6 million of commercial and industrial and $4.8 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 2022 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)December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022    		 March 31,
    2022    		 December 31,
    2021
    Core deposits         
                   
                   
                   
                   
    Noninterest-bearing accounts$726,416 $794,242 $745,746 $704,344 $677,159
                   
                   
                   
                   
    NOW accounts 638,896  636,859  654,981  652,577  644,343
                   
                   
                   
                   
    Money market accounts 992,083  960,150  969,661  1,026,595  1,010,901
                   
                   
                   
                   
    Savings accounts 230,896  240,412  238,197  232,831  224,474
    Total core deposits 2,588,291  2,631,663  2,608,585  2,616,347  2,556,877
    Certificates of deposit 459,729  471,005  491,176  442,810  441,814
    Total$3,048,020 $3,102,668 $3,099,761 $3,059,157 $2,998,691
                   

    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,
    2022    		 September 30,
    2022    		 December 31,
    2022    		 December 31,
    2021
    Noninterest expense $26,076  $26,089  $52,165  $51,838 
    Less: merger expense  250   474   724   — 
    Noninterest expense – adjusted $25,826  $25,615  $51,441  $51,838 
             
    Net interest income $37,545  $34,520  $72,065  $54,875 
    Plus: tax equivalent adjustment  287   277   574   617 
    Plus: noninterest income  8,454   7,398   15,852   20,445 
    Less: gain on sale of equity securities  721   —   721   — 
    Less: gain (loss) on sale of premises and equipment  1,127   (12)  1,115   (87)
    Net interest income plus noninterest income – adjusted $44,438  $42,207  $86,655  $76,024 
    Efficiency ratio  56.69%  62.24%  59.33%  68.82%
    Efficiency ratio – adjusted  58.12%  60.69%  59.36%  68.19%
                     

    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,
    2022    		 September 30,
    2022    		 June 30,
    2022    		 March 31,
    2022    		 December 31,
    2021
    Total stockholders' equity $410,155 $396,222 $388,845 $395,131 $401,746
    Less: goodwill, core deposit intangibles, net of taxes  25,663  25,683  25,710  25,742  25,780
    Tangible book value $384,492 $370,539 $363,135 $369,389 $375,966
    Common shares outstanding  15,673,595  15,632,348  15,591,466  15,978,262  16,303,461
    Book value per share at end of period $26.17 $25.35 $24.94 $24.73 $24.64
    Tangible book value per share at end of period $24.53 $23.70 $23.29 $23.12 $23.06
                    

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

      As of
    (Dollars in thousands) December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022    		 March 31,
    2022    		 December 31,
    2021
    Tangible equity(1) $384,492  $370,539  $363,135  $369,389  $375,966 
    Total assets  3,647,015   3,555,186   3,549,204   3,541,785   3,502,819 
    Less: goodwill and core deposit intangibles, net of taxes  25,663   25,683   25,710   25,742   25,780 
    Total tangible assets $3,621,352  $3,529,503  $3,523,494  $3,516,043  $3,477,039 
    Tangible equity to tangible assets  10.62%  10.50%  10.31%  10.51%  10.81%


    (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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