UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
 
FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 27, 2020

HOMETRUST BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
 
Maryland
 
001-35593
 
45-5055422
(State or other jurisdiction of incorporation)
 
(Commission File No.)
 
(IRS Employer Identification Number)

10 Woodfin Street, Asheville, North Carolina
 
 
 
28801
(Address of principal executive offices)
 
 
 
(Zip Code)

Registrant's telephone number, including area code: (828) 259-3939

 
 
Not Applicable
 
 
 
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
[ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
[ ]
Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol
Name of Each Exchange on Which Registered
Common Stock, par value $0.01 per share
HTBI
The NASDAQ Stock Market LLC





Item 2.02.  Results of Operations and Financial Condition
 
On July 27, 2020, HomeTrust Bancshares, Inc., the holding company for HomeTrust Bank, issued a press release reporting fourth quarter and fiscal year 2020 financial results, approval of its quarterly cash dividend, and its updated response to the COVID-19 pandemic. A copy of the press release, including unaudited financial information released as a part thereof, is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference herein.
 
Item 9.01  Financial Statements and Exhibits
 
(d)           Exhibits
 
Press release dated July 27, 2020


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

HOMETRUST BANCSHARES, INC.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Date: July 27, 2020
 
By:
/s/ Tony J. VunCannon
 
 
 
Tony J. VunCannon
 
 
 
Executive Vice President, Chief Financial Officer, Corporate Secretary and Treasurer




Exhibit


HomeTrust Bancshares, Inc. Announces Fourth Quarter and Fiscal Year 2020 Financial Results and Quarterly Dividend
ASHEVILLE, N.C., July 27, 2020 - HomeTrust Bancshares, Inc. (NASDAQ: HTBI) ("Company"), the holding company of HomeTrust Bank ("Bank"), today announced preliminary net income for the fourth quarter and fiscal year of 2020, approval of its quarterly cash dividend, and its updated response to the COVID-19 pandemic.
For the quarter ended June 30, 2020 compared to the corresponding quarter in the previous year:
net income was $3.6 million, compared to $8.0 million;
diluted earnings per share ("EPS") was $0.22, compared to $0.44;
return on assets ("ROA") was 0.39%, compared to 0.92%;
return on equity ("ROE") was 3.54%, compared to 7.87%;
provision for loan losses was $2.7 million, compared to $200,000;
noninterest income increased $377,000, or 5.5% to $7.2 million from $6.8 million;
organic net loan growth, which excludes one-to-four family loans transferred to held for sale, U.S. Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”) loans, and purchases of home equity lines of credit, was $35.3 million, or 5.5% annualized compared to $56.0 million, or 8.9% annualized; and
quarterly cash dividends continued at $0.07 per share totaling $1.1 million.
For the fiscal year ended June 30, 2020 compared to the previous year:
net income was $22.8 million, compared to $27.1 million;
EPS was $1.30, compared to $1.46;
ROA was 0.63%, compared to 0.80%;
ROE was 5.54%, compared to 6.62%;
provision for loan losses was $8.5 million, compared to $5.7 million;
noninterest income increased $7.4 million, or 32.2% to $30.3 million from $22.9 million;
organic net loan growth was $183.3 million, or 7.1% compared to $228.6 million, or 9.7%; and
total deposits increased $458.5 million, or 19.7% to $2.8 billion from $2.3 billion.
Earnings during the three months and year ended June 30, 2020 were negatively impacted by a significant increase in the provision for loan losses based on the Company's assessment of COVID-19 on various macroeconomic factors. In addition, the decrease in interest rates over the past year has negatively affected the Company's net interest margin.
The Company also announced today that its Board of Directors declared a quarterly cash dividend of $0.07 per common share payable on September 3, 2020 to shareholders of record as of the close of business on August 20, 2020.
“Fiscal 2020 has certainly been one for the record books in two significant ways,” said Dana Stonestreet, Chairman, President and Chief Executive Officer. “In the first half of fiscal 2020 we achieved record results in earnings per share, annualized return on assets and return on equity along with annualized loan and deposit growth of 9% and 20%, respectively. Our team members execution of our strategy to transform HomeTrust from a historic rural thrift to a top quartile performing community commercial bank was setting new milestones. We entered the second half of the year with tremendous momentum and in February successfully completed the conversion and upgrade of our core technology systems after two years of arduous preparation.
“Then just two weeks later, the COVID-19 pandemic hit and we quickly pivoted around employee safety and customer needs. We set new records in change management as more than 375 employees or 70% of our workforce were set up with safe and effective technology to work from home. Our courageous team members continued taking good care of our customers by keeping drive-thrus open at all branch locations and lobbies open by appointment while implementing continuously changing safety protocols. In addition, they began making personal phone calls to customers to check in on them and their banking needs. Over 40,000 conversations resulted in many customers getting the debit cards and mobile banking services they needed while others greatly appreciated a caring conversation during their quarantine time. Our lending and credit teams were proactive in communicating with customers and providing payment deferrals, originating PPP loans and providing consultations and discussions on dealing with the impacts of the pandemic.

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“We are so proud of the entire HomeTrust team for their dedication and personal sacrifices to find every way possible to serve and care for our customers and to support each other. Our people are truly the key to making HomeTrust always - Ready For What's Next!
“We enter fiscal 2021 with energy, enthusiasm and confidence that we will manage well through the impacts of the pandemic and continue maturing all of our new lines of business to achieve financial results that create shareholder value.” 
Response to COVID-19

Loan Programs. In response to the current global situation surrounding the COVID-19 pandemic, the Company continues to offer a variety of relief options designed to support our customers and communities, including participating in the SBA's PPP loans. As of June 30, 2020, we had originated $80.7 million of PPP loans for 285 customers. Net origination fees on these loans were approximately $2.1 million which will be deferred and amortized into interest income over the life of the loans. Due to demand exceeding our capacity, we partnered with a third party to process and fund an additional $30.4 million of PPP loans for almost 900 customers. We are also continuing to work with our clients to assist them with accessing other borrowing options, including the Main Street Lending Program and other government sponsored lending programs, as appropriate.

Loan Modifications. The Company is closely monitoring the effects of COVID-19 on our loan portfolio and will continue to monitor all the associated risks to minimize any potential losses. HomeTrust Bank is offering payment and financial relief programs for borrowers impacted by COVID-19. These programs include loan payment deferrals for up to 90 days, waived late fees, and suspension of foreclosure proceedings and repossessions. We have received numerous requests from borrowers for some type of payment relief. As of July 22, 2020, we have processed and approved payment deferrals on loans totaling $585.0 million, or 21.1% of total loans. The breakout by loan type is as follows:
Payment Deferrals by Loan Types as of July 22, 2020
 
 
 
Percent of Total Loan Portfolio
 
 
 
 
 
 
(dollars in thousands)
 
 
 
 
 
Total Current Deferrals
 
 
 
 
 
 
Percent of Total Loan Portfolio
 
 
1st Deferral(1)
 
2nd Deferral(2)
 
 
 
Out of Deferral(3)
 
Total Deferrals
 
Commercial real estate, construction and development, and commercial and industrial
 
$
392,714

 
$
82,147

 
$
474,861

 
17.1
%
 
$

 
$
474,861

 
17.1
%
Equipment finance
 
20,428

 
1,488

 
21,916

 
0.8

 
21,925

 
43,841

 
1.6

One-to-four family
 
19,401

 
8,871

 
28,272

 
1.0

 
25,015

 
53,287

 
1.9

Other consumer loans
 
1,072

 
933

 
2,005

 
0.1

 
11,007

 
13,012

 
0.5

     Total
 
$
433,615

 
$
93,439

 
$
527,054

 
19.0
%
 
$
57,947

 
$
585,001

 
21.1
%
(1) Loans that have requested an initial payment deferral. 
(2) Loans that have requested a second deferral after the original deferral period ended. 
(3) Loans that have exited their deferral period. 
In addition, the Company’s management has evaluated its loan portfolio and identified the following loan categories as potentially the most impacted by the COVID-19 pandemic:
Payment Deferrals In Higher Risk Loan Sub-Categories as of June 30, 2020
(dollars in thousands)
 
 
 
 
 
Percent of Dollars in Deferral
 
Percent of Total Loan Portfolio
 
 
Total Deferrals
 
Total Balance
 
 
Lodging
 
$
108,171

 
$
118,729

 
91.1
%
 
3.9
%
Restaurants
 
28,044

 
45,560

 
61.6

 
1.0

Shopping centers
 
53,337

 
89,285

 
59.7

 
1.9

Other retail businesses
 
36,101

 
150,229

 
24.0

 
1.3

Equipment finance
 
43,841

 
229,239

 
19.1

 
1.6

     Total
 
$
269,494

 
$
633,042

 
42.6
%
 
9.7
%
The Company does not have any exposure to oil/gas or credit cards at June 30, 2020.

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We believe the steps we are taking are necessary to effectively manage our portfolio and assist our customers through the ongoing uncertainty surrounding the duration, impact and government response to the COVID-19 pandemic. In addition, we will continue to work with our customers to determine the best option for repayment of accrued interest on the deferred payments.
Allowance for Loan Losses. The Company recorded a provision for loan losses of $2.7 million and $8.5 million for the three months and year ended June 30, 2020, respectively, compared to a $200,000 and $5.7 million provision in the corresponding periods in fiscal 2019. Approximately $4.3 million of the provision for the current year reflects probable credit losses related to COVID-19 based upon the conditions that existed as of June 30, 2020, including consideration for the recent downturn in certain leading economic indicators, such as the weaker stock market, lower manufacturing activity and retail sales, consumer confidence, and increases in unemployment with the remaining provision being driven by increased charge-offs and impairments in our commercial and equipment finance portfolios. The provision during the previous year was primarily related to one commercial customer relationship.
Branch Operations and Support Personnel. We have taken various steps to ensure the safety of our customers and our team members by continuing to limit branch activities to appointment only and use of our drive-up facilities, and by encouraging the use of our digital and electronic banking channels, all the while adjusting for evolving State and Federal guidelines. Many of our employees are continuing to work remotely or have flexible work schedules, and we have established protective measures within our offices to help ensure the safety of those employees who must work on-site.
Capital. At June 30, 2020, the Company’s tangible equity to total tangible assets ratio was 10.33% and HomeTrust Bank’s capital was well in excess of all regulatory requirements. Our strong capital level positions us well in the face of the challenges of the COVID-19 pandemic.

Income Statement Review
Net interest income decreased to $24.7 million for the quarter ended June 30, 2020, compared to $26.9 million for the comparative quarter in fiscal 2019. The $2.2 million, or 8.2% decrease was due to a $4.7 million decrease in interest and dividend income primarily driven by lower rates on loans and commercial paper as a result of lower federal funds and other market interest rates, which was partially offset by a $2.5 million decrease in interest expense. Average interest-earning assets increased $198.4 million, or 6.2% to $3.4 billion for the quarter ended June 30, 2020. The average balance of total loans receivable increased by $82.0 million, or 3.0% compared to the same quarter last year due to organic loan growth and PPP loan originations partially offset by the sale of $154.9 million of one-to-four family loans in December 2019. The average balance of commercial paper and deposits in other banks increased $120.8 million, or 36.4% between the periods driven by increases in commercial paper investments as a result of the Company's increased liquidity. Our investments in commercial paper have short-term maturities and limited exposure of $15.0 million or less per each highly-rated company. These increases were partially funded by a cumulative $128.3 million, or 4.3% increase in average interest-bearing liabilities and noninterest-bearing deposits and a $11.6 million, or 22.3% decrease in other interest-earning assets as compared to the same quarter last year. Net interest margin (on a fully taxable-equivalent basis) for the three months ended June 30, 2020 decreased to 2.92% from 3.37% for the same period a year ago due to lower market interest rates.
Total interest and dividend income decreased $4.7 million, or 13.2% for the three months ended June 30, 2020 as compared to the same period last year, which was primarily driven by a $3.9 million, or 12.1% decrease in loan interest income, a $432,000, or 19.9% decrease in interest income from commercial paper and deposits in other banks, and a $386,000, or 41.7% decrease in interest income on other interest-earning assets. The lower interest income from loans and commercial paper and deposits in other banks was primarily driven by the decrease in yields caused by the significant reduction in current market rates. Average loan yields decreased 69 basis points to 4.06% for the quarter ended June 30, 2020 from 4.75% in the corresponding quarter last year. For the quarters ended June 30, 2020 and 2019, average loan yields included five and six basis points, respectively, from the accretion of purchase discounts on acquired loans. The incremental accretion and the impact to the yield on loans may change during any period based on the volume of prepayments, but it is expected to decrease over time as the balance of the purchase discount for acquired loans decreases. The total purchase discount for acquired loans was $5.1 million at June 30, 2020, compared to $6.7 million at June 30, 2019.
Total interest expense decreased $2.5 million, or 28.5% for the quarter ended June 30, 2020 compared to the same period last year. The decrease was driven by a $2.2 million, or 57.0% decrease in interest expense on borrowings and, to a lesser extent, a $304,000, or 6.1% decrease in interest expense on deposits. Average borrowings for the quarter ended June 30, 2020 decreased $189.8 million, or 27.1% along with a 92 basis point decrease in the average cost of borrowings compared to the same period last year. The decrease in average borrowings was offset by the $318.1 million, or 13.8% increase in average deposits (interest and noninterest bearing) due to successful deposit gathering campaigns and funds from PPP loans and other government stimulus. The decrease in the average cost of borrowing was driven by the lower federal funds rate during the current quarter compared to the prior year. The

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overall average cost of funds decreased 37 basis points to 0.95% for the current quarter compared to 1.32% in the same quarter last year due primarily to the impact of the lower amount of borrowings and rates.
Net interest income decreased to $104.1 million for the year ended June 30, 2020, compared to $106.8 million for fiscal 2019. The $2.7 million, or 2.6% decrease was due to a $960,000 decrease in interest and dividend income primarily driven by a decrease in yields and a $1.8 million increase in interest expense. Average interest-earning assets increased $174.7 million, or 5.5% to $3.3 billion for the year ended June 30, 2020 compared to $3.2 billion in the prior year. For the year ended June 30, 2020, the average balance of total loans receivable increased $114.8 million, or 4.4% compared to last year primarily due to organic loan growth. The average balance of commercial paper and deposits in other banks increased $59.2 million, or 18.1% between the years driven by increases in commercial paper investments. These increases were primarily funded by the $165.5 million, or 5.7% increase in average interest-bearing liabilities and noninterest-bearing deposits, as compared to last year. Net interest margin (on a fully taxable-equivalent basis) for the year ended June 30, 2020 decreased to 3.17% from 3.43% for the year ended June 30, 2019.
Total interest and dividend income decreased $960,000, or 0.7% for the year ended June 30, 2020 as compared to last year, which was driven by a $896,000, or 25.0% decrease in interest income on other interest-earning assets and a $579,000, or 7.0% decrease in interest income from commercial paper and interest-bearing deposits in other banks. The reduced income was a result of lower interest rates on commercial paper and other investments as well as lower interest earned on FHLB stock as borrowings were paid down during the year. The overall decreases were partially offset by a $271,000, or 0.2% increase in loan interest income and a $244,000, or 7.1% increase in interest income from securities available for sale. The additional loan interest income was driven by the increase in the average balance of loans receivable offset by a decrease in loan interest yield compared to the prior year. Average loan yields decreased by 18 basis points to 4.49% for the year ended June 30, 2020 from 4.67% last year. For the year ended June 30, 2020 and 2019, average loan yields included six and eight basis points, respectively, from the accretion of purchase discounts on acquired loans.
Total interest expense increased $1.8 million, or 5.8% for the year ended June 30, 2020 compared to last year. The increase was driven by a $7.1 million, or 44.9% increase in deposit interest expense partially offset by a $5.3 million, or 36.3% decrease in interest expense on borrowings. The additional deposit interest expense was a result of a $211.1 million, or 10.9% increase in the average balance of interest-bearing deposits along with a 25 basis point increase in the average cost of those deposits for the year ended June 30, 2020 as compared to last year. Average borrowings for the year ended June 30, 2020 decreased $103.8 million, or 15.4% along with a 54 basis point decrease in the average cost of borrowings compared to last year. The overall cost of funds increased two basis points to 1.18% for the year ended June 30, 2020 compared to 1.16% last year.
Noninterest income increased $377,000, or 5.5% to $7.2 million for the three months ended June 30, 2020 from $6.8 million for the same period in the previous year primarily due a $702,000, or 60.9% increase in other noninterest income and $237,000, or 11.1% increase in gains on the sale of loans, partially offset by a $338,000, or 14.3% decrease in service charges and fees on deposit accounts and fees and a $218,000, or 32.8% decrease in loan income and fees. The increase in other noninterest income primarily related to operating lease income from the new equipment finance line of business. The increase in gain on the sale of loans was driven by an increase in mortgage loan sales that was partially offset by lower SBA loan sales. There were $68.6 million of residential mortgage loans originated for sale which were sold with gains of $1.9 million compared to $39.4 million sold and gains of $792,000 in the corresponding quarter in the prior year. During the quarter ended June 30, 2020, $4.0 million of the guaranteed portion of SBA commercial loans were sold with gains of $286,000 compared to $18.8 million sold and gains of $1.3 million in the corresponding quarter in the prior year as COVID-19 dramatically affected our SBA line of business. In addition, $53.1 million of home equity loans were sold during the quarter for a gain of $232,000. The decrease in service charges on deposit accounts was a result of fewer transactions as customers have decreased spending during the pandemic. The decrease in loan income and fees is primarily a result of lower fees from our adjustable rate conversion program.
Noninterest income increased $7.4 million, or 32.2% to $30.3 million for the year ended June 30, 2020 from $22.9 million in the previous year primarily due to a $3.7 million, or 60.0% increase in the gain on sale of loans held for sale, a $2.7 million, or 74.7% increase in other noninterest income, and a $1.1 million, or 75.4% increase in loan income and fees. The increase in the gain on sale of loans held for sale was a result of the previously discussed one-to-four family loans sold during the period which resulted in a non-recurring $1.3 million gain. In addition to this non-recurring gain, $203.9 million of residential mortgage loans were sold with gains of $5.4 million for the year ended June 30, 2020, compared to $120.6 million sold with gains of $2.8 million in the corresponding period in the prior year. During the year ended June 30, 2020, $38.1 million of SBA commercial loans were sold with recorded gains of $2.8 million compared to $47.4 million sold and gains of $3.4 million in the prior year. In addition, $71.1 million of home equity loans were sold during the year for a gain of $415,000. The increase in other noninterest income primarily related to operating lease income from the equipment finance line of business. The increase in loan income and fees is primarily a result of our adjustable rate conversion program and prepayment fees on equipment finance loans.
Noninterest expense for the three months ended June 30, 2020 increased $1.2 million, or 5.3% to $24.7 million compared to $23.4 million for the three months ended June 30, 2019. The increase was primarily due to a $886,000, or 6.7% increase in salaries and

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employee benefits as a result of new positions and annual salary increases; a $628,000, or 20.0% increase in other expenses, mainly driven by depreciation from our equipment finance line of business; a $181,000, or 9.3% increase in computer services; and a $376,000, or 141.9% increase in real estate owned ("REO") related expenses as a result of losses in the current year versus a gain in the prior year. Partially offsetting these increases was a cumulative decrease of $834,000, or 17.4% in net occupancy expense; marketing and advertising expense; telephone, postage, and supplies expense; deposit insurance premiums; and core deposit intangible amortization for the three months ended June 30, 2020 compared to the same period last year.
Noninterest expense for the year ended June 30, 2020 increased $7.0 million, or 7.8% to $97.1 million compared to $90.1 million for the year ended June 30, 2019. The increase was primarily due to a $4.4 million, or 8.4% increase in salaries and employee benefits; a $3.0 million, or 27.4% increase in other expenses, mainly driven by depreciation from our equipment finance line of business and expenses related to our core conversion; a $489,000, or 6.4% increase in computer services; a $235,000, or 7.7% increase in telephone, postage, and supplies; and a $162,000, or 12.3% increase in REO-related expenses. Partially offsetting these increases was a $608,000, or 30.0% decrease in core deposit intangible amortization; a decrease of $526,000, or 36.9% in deposit insurance premiums related to credit from the Federal Deposit Insurance Corporation in the first and second fiscal quarter; and a $226,000, or 2.4% decrease in net occupancy expenses for the year ended June 30, 2020 compared to the last year.
For the three months ended June 30, 2020, the Company's income tax expense decreased $1.1 million, or 54.2% to $964,000 from $2.1 million as a result of lower taxable income. The effective tax rate for the three months ended June 30, 2020 and 2019 was 21.1% and 20.8%, respectively.
For the year ended June 30, 2020, the Company's income tax expense decreased $767,000, or 11.3% to $6.0 million from $6.8 million in the previous year as a result of lower taxable income. The effective tax rate for the year ended June 30, 2020 and 2019 was 20.9% and 20.0%, respectively.
Balance Sheet Review
Total assets increased $246.7 million, or 7.1% to $3.7 billion at June 30, 2020 compared $3.5 billion at June 30, 2019. Total liabilities increased $247.3 million, or 8.1% to $3.3 billion at June 30, 2020 compared $3.1 billion at June 30, 2019. Deposit growth of $458.5 million, or 19.7% was used to pay down $205.0 million, or 30.1% of borrowings and fund the increase in total assets for fiscal 2020. The increase in loans held for sale primarily relates to home equity loans originated for sale during the period. Deferred income taxes decreased $5.6 million, or 21.0% to $20.9 million at June 30, 2020 from $26.5 million at June 30, 2019 due to the use of net operating loss carryforwards and increases in deferred tax liabilities from bonus depreciation during the year.
As of July 1, 2019, the Company adopted the new lease accounting standard, which drove several changes on the balance sheet. Land totaling $2.1 million related to the Company's one finance lease (f/k/a capital lease) was reclassed from premises and equipment, net to other assets as a right of use ("ROU") asset and the corresponding liability was reclassed from a separate line on the balance sheet to other liabilities as a lease liability. As of June 30, 2020, the Company has $4.6 million in ROU assets and corresponding lease liabilities, which are maintained in other assets and other liabilities, respectively.
Stockholders' equity at June 30, 2020 decreased $633,000, or 0.2% to $408.3 million compared to $408.9 million at June 30, 2019. Changes within stockholders' equity included $22.8 million in net income and $2.5 million in stock-based compensation, offset by 1,114,094 shares of common stock repurchased at an average cost of $21.98, or approximately $24.5 million in total, and $4.6 million related to cash dividends declared. The Company has not repurchased any stock since April 1, 2020. As of June 30, 2020, HomeTrust Bank and the Company were considered "well capitalized" in accordance with their regulatory capital guidelines and exceeded all regulatory capital requirements.

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Asset Quality
The allowance for loan losses was $28.1 million, or 1.01% of total loans, at June 30, 2020 compared to $21.4 million, or 0.79% of total loans, at June 30, 2019. The allowance for loan losses to total gross loans excluding PPP loans and acquired loans was 1.11% at June 30, 2020, compared to 0.85% at June 30, 2019. The overall increase was primarily driven by additional allowance stemming from the Company's assessment of COVID-19 on the loan portfolio.
There was a $8.5 million provision for loan losses for the year ended June 30, 2020, compared to $5.7 million for the corresponding period in fiscal year 2019. The increase in the current year provision included significant adjustments relating to COVID-19 as a result of changes in qualitative factors based on increased risk in loan sub-categories, which include: lodging, restaurants, shopping centers, other retail businesses, and equipment finance. The provision in the prior year primarily related to one commercial loan relationship. Net loan charge offs totaled $1.9 million for the year ended June 30, 2020, compared to $5.3 million for fiscal year 2019. Net charge-offs as a percentage of average loans were 0.07% and 0.20% for the year ended June 30, 2020 and 2019, respectively.
Nonperforming assets increased by $3.0 million, or 22.4% to $16.3 million, or 0.44% of total assets, at June 30, 2020 compared to $13.3 million, or 0.38% of total assets at June 30, 2019. Nonperforming assets included $15.9 million in nonaccruing loans and $337,000 in REO at June 30, 2020, compared to $10.4 million and $2.9 million, in nonaccruing loans and REO, respectively, at June 30, 2019. The increase in nonaccruing loans primarily relates to one commercial loan relationship that was moved to nonaccrual during the second quarter. Included in nonperforming loans are $6.3 million of loans restructured from their original terms of which $293,000 were current at June 30, 2020, with respect to their modified payment terms. Purchased impaired loans aggregating $965,000 obtained through prior acquisitions are excluded from nonaccruing loans due to the accretion of discounts established in accordance with the acquisition method of accounting for business combinations. Nonperforming loans to total loans was 0.58% at June 30, 2020 and 0.38% at June 30, 2019.
The ratio of classified assets to total assets decreased to 0.84% at June 30, 2020 from 0.89% at June 30, 2019 due to the increase in total assets during fiscal 2020. Classified assets increased slightly to $31.1 million at June 30, 2020 compared to $30.9 million at June 30, 2019. Our overall asset quality metrics continue to demonstrate our commitment to growing and maintaining a loan portfolio with a moderate risk profile, however we will remain diligent in our review of the portfolio and overall economy as we continue to maneuver through the uncertainty surrounding COVID-19.

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About HomeTrust Bancshares, Inc.
HomeTrust Bancshares, Inc. is the holding company for HomeTrust Bank. As of June 30, 2020, the Company had assets of $3.7 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 40 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/Bristol, Knoxville, and Morristown) and Southwest Virginia (including the Roanoke Valley). The Bank is the 2nd largest community bank headquartered in North Carolina.
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 our control. Actual results may differ, possibly materially, from those currently expected or projected in these forward-looking statements. Factors that could cause our actual results to differ materially from those described in the forward-looking statements include: the effect of the COVID-19 pandemic, including on our credit quality and business operations, as well as its impact on general economic and financial market conditions and other uncertainties resulting from the COVID-19 pandemic, such as the extent and duration of the impact on public health, the U.S. and global economies, and consumer and corporate customers, including economic activity, employment levels and market liquidity; 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 other factors described in HomeTrust'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 we make in this press release or the documents we 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 we might make, because of the factors described above or because of other factors that we cannot foresee. We do 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. These risks could cause our actual results for fiscal 2020 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, us and could negatively affect our operating and stock performance.



WEBSITE: WWW.HOMETRUSTBANCSHARES.COM
Contact:
Dana L. Stonestreet - Chairman, President and Chief Executive Officer
Tony J. VunCannon - Executive Vice President, Chief Financial Officer, Corporate Secretary and Treasurer
828-259-3939


7



Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)
June 30, 2020
 
March 31, 2020
 
December 31, 2019
 
September 30,
2019
 
June 30, 2019 (2)
Assets
 
 
 
 
 
 
 
 
 
Cash
$
31,908

 
$
41,206

 
$
47,213

 
$
52,082

 
$
40,909

Interest-bearing deposits
89,714

 
40,855

 
41,705

 
65,011

 
30,134

Cash and cash equivalents
121,622

 
82,061

 
88,918

 
117,093

 
71,043

Commercial paper
304,967

 
281,955

 
253,794

 
254,302

 
241,446

Certificates of deposit in other banks
55,689

 
57,544

 
47,628

 
50,117

 
52,005

Securities available for sale, at fair value
127,537

 
158,621

 
146,022

 
165,714

 
121,786

Other investments, at cost
38,946

 
41,201

 
36,898

 
45,900

 
45,378

Loans held for sale
77,177

 
38,682

 
118,055

 
289,319

 
18,175

Total loans, net of deferred loan fees
2,769,119

 
2,663,524

 
2,554,541

 
2,508,730

 
2,705,190

Allowance for loan losses
(28,072
)
 
(26,850
)
 
(22,031
)
 
(21,314
)
 
(21,429
)
Net loans
2,741,047

 
2,636,674

 
2,532,510

 
2,487,416

 
2,683,761

Premises and equipment, net
58,462

 
58,738

 
58,020

 
58,509

 
61,051

Accrued interest receivable
12,312

 
9,501

 
9,714

 
10,434

 
10,533

Real estate owned ("REO")
337

 
1,075

 
1,451

 
2,582

 
2,929

Deferred income taxes
20,944

 
21,750

 
22,066

 
24,257

 
26,523

Bank owned life insurance ("BOLI")
92,187

 
91,612

 
91,048

 
90,499

 
90,254

Goodwill
25,638

 
25,638

 
25,638

 
25,638

 
25,638

Core deposit intangibles
1,078

 
1,381

 
1,715

 
2,088

 
2,499

Other assets
44,909

 
41,600

 
36,755

 
31,441

 
23,157

Total Assets
$
3,722,852

 
$
3,548,033

 
$
3,470,232

 
$
3,655,309

 
$
3,476,178

Liabilities and Stockholders' Equity
 

 
 

 
 
 
 
 
 

Liabilities
 

 
 

 
 
 
 
 
 

Deposits
$
2,785,756

 
$
2,554,787

 
$
2,557,769

 
$
2,494,194

 
$
2,327,257

Borrowings
475,000

 
535,000

 
435,000

 
685,000

 
680,000

Other liabilities
53,833

 
52,806

 
60,468

 
63,047

 
60,025

Total liabilities
3,314,589

 
3,142,593

 
3,053,237

 
3,242,241

 
3,067,282

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 (1)
170

 
171

 
177

 
178

 
180

Additional paid in capital
169,648

 
170,368

 
182,366

 
186,359

 
190,315

Retained earnings
242,776

 
240,325

 
240,312

 
232,315

 
224,545

Unearned Employee Stock Ownership Plan ("ESOP") shares
(6,348
)
 
(6,480
)
 
(6,612
)
 
(6,744
)
 
(6,877
)
Accumulated other comprehensive income
2,017

 
1,056

 
752

 
960

 
733

Total stockholders' equity
408,263

 
405,440

 
416,995

 
413,068

 
408,896

Total Liabilities and Stockholders' Equity
$
3,722,852

 
$
3,548,033

 
$
3,470,232

 
$
3,655,309

 
$
3,476,178

_________________________________
(1)
Shares of common stock issued and outstanding were 17,016,372 at June 30, 2020; 17,101,954 at March 31, 2020; 17,664,384 at December 31, 2019; 17,818,145 at September 30, 2019; and 17,984,105 at June 30, 2019.
(2)
Derived from audited financial statements.


8



Consolidated Statement of Income (Unaudited)
 
Three Months Ended
 
Year Ended
 
June 30,
 
March 31,
 
June 30,
 
June 30,
 
June 30,
(Dollars in thousands)
2020
 
2020
 
2019
 
2020
 
2019 (1)
Interest and Dividend Income
 
 
 
 
 
 
 
 
 
Loans
$
28,008

 
29,781

 
$
31,861

 
$
122,174

 
$
121,903

Commercial paper and interest-bearing deposits in other banks
1,740

 
1,794

 
2,172

 
7,699

 
8,278

Securities available for sale
786

 
912

 
861

 
3,687

 
3,443

Other investments
540

 
550

 
926

 
2,694

 
3,590

Total interest and dividend income
31,074

 
33,037

 
35,820

 
136,254

 
137,214

Interest Expense
 
 
 
 
 
 
 
 
 
Deposits
4,692

 
5,971

 
4,996

 
22,837

 
15,757

Borrowings
1,694

 
1,757

 
3,935

 
9,313

 
14,626

Total interest expense
6,386

 
7,728

 
8,931

 
32,150

 
30,383

Net Interest Income
24,688

 
25,309

 
26,889

 
104,104

 
106,831

Provision for Loan Losses
2,700

 
5,400

 
200

 
8,500

 
5,700

Net Interest Income after Provision for Loan Losses
21,988

 
19,909

 
26,689

 
95,604

 
101,131

Noninterest Income
 
 
 
 
 
 
 

 
 

Service charges and fees on deposit accounts
2,030

 
2,304

 
2,368

 
9,382

 
9,611

Loan income and fees
447

 
294

 
665

 
2,494

 
1,422

Gain on sale of loans held for sale
2,369

 
1,503

 
2,132

 
9,946

 
6,218

BOLI income
522

 
518

 
529

 
2,246

 
2,103

Other, net
1,855

 
1,756

 
1,152

 
6,264

 
3,586

Total noninterest income
7,223

 
6,375

 
6,846

 
30,332

 
22,940

Noninterest Expense
 
 
 
 
 
 
 

 
 

Salaries and employee benefits
14,172

 
14,455

 
13,286

 
56,709

 
52,291

Net occupancy expense
2,256

 
2,246

 
2,408

 
9,228

 
9,454

Computer services
2,121

 
2,023

 
1,940

 
8,153

 
7,664

Telephone, postage, and supplies
813

 
862

 
830

 
3,275

 
3,040

Marketing and advertising
156

 
396

 
634

 
1,872

 
1,853

Deposit insurance premiums
426

 
462

 
467

 
900

 
1,426

Loss (gain) on sale and impairment of REO
448

 
(15
)
 
(61
)
 
536

 
439

REO expense
193

 
250

 
326

 
939

 
874

Core deposit intangible amortization
303

 
334

 
449

 
1,421

 
2,029

Other
3,764

 
3,890

 
3,136

 
14,096

 
11,064

Total noninterest expense
24,652

 
24,903

 
23,415

 
97,129

 
90,134

Income Before Income Taxes
4,559

 
1,381

 
10,120

 
28,807

 
33,937

Income Tax Expense
964

 
188

 
2,107

 
6,024

 
6,791

Net Income
$
3,595

 
1,193

 
$
8,013

 
$
22,783

 
$
27,146

_________________________________
(1)
Derived from audited financial statements.

 
 
 
 
 
 
 
 
 
 
 
 
 


9



Per Share Data
 
 
Three Months Ended 
 
Year Ended
 
 
June 30,
 
March 31,
 
June 30,
 
June 30,
 
June 30,
 
 
2020
 
2020
 
2019
 
2020
 
2019
Net income per common share:(1)
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.22

 
$
0.07

 
$
0.45

 
$
1.34

 
$
1.52

Diluted
 
$
0.22

 
$
0.07

 
$
0.44

 
$
1.30

 
$
1.46

Average shares outstanding:
 
 
 
 
 
 
 
 
 
 
Basic
 
16,217,185

 
16,688,646

 
17,332,700

 
16,729,056

 
17,692,493

Diluted
 
16,489,125

 
17,258,428

 
17,984,958

 
17,292,239

 
18,393,184

Book value per share at end of period
 
$
23.99

 
$
23.71

 
$
22.74

 
$
23.99

 
$
22.74

Tangible book value per share at end of period (2)
 
$
22.44

 
$
22.15

 
$
21.20

 
$
22.44

 
$
21.20

Cash dividends declared per common share
 
$
0.07

 
$
0.07

 
$
0.06

 
$
0.25

 
$
0.18

Total shares outstanding at end of period
 
17,016,372

 
17,101,954

 
17,984,105

 
17,016,372

 
17,984,105

__________________________________________________
(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
 
Year Ended
 
 
June 30, 2020
 
March 31, 2020
 
June 30, 2019
 
June 30, 2020
 
June 30, 2019
Performance ratios:(1)
 
 
 
 
 
 
Return on assets (ratio of net income to average total assets)
 
0.39
%
 
0.14
%
 
0.92
%
 
0.63
%
 
0.80
%
Return on equity (ratio of net income to average equity)
 
3.54

 
1.15

 
7.87

 
5.54

 
6.62

Tax equivalent yield on earning assets(2)
 
3.66

 
4.12

 
4.48

 
4.13

 
4.39

Rate paid on interest-bearing liabilities
 
0.96

 
1.16

 
1.32

 
1.18

 
1.16

Tax equivalent average interest rate spread(2)
 
2.71

 
2.96

 
3.16

 
2.95

 
3.23

Tax equivalent net interest margin(2) (3)
 
2.92

 
3.16

 
3.37

 
3.17

 
3.43

Average interest-earning assets to average interest-bearing liabilities
 
127.89

 
121.79

 
119.33

 
122.10

 
120.39

Operating expense to average total assets
 
2.67

 
2.84

 
2.70

 
2.71

 
2.65

Efficiency ratio
 
77.25

 
78.60

 
69.41

 
72.25

 
69.46

Efficiency ratio - adjusted(4)
 
76.51

 
77.85

 
68.81

 
71.62

 
68.83

__________________________________
(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.



10



 
 
At or For the Three Months Ended
 
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
 
2020
 
2020
 
2019
 
2019
 
2019
Asset quality ratios:
 
 
 
 
 
 
 
 
 
 
Nonperforming assets to total assets(1)
 
0.44
%
 
0.47
%
 
0.45
 %
 
0.37
%
 
0.38
%
Nonperforming loans to total loans(1)
 
0.58

 
0.59

 
0.56

 
0.43

 
0.38

Total classified assets to total assets
 
0.84

 
0.86

 
0.90

 
0.84

 
0.89

Allowance for loan losses to nonperforming loans(1)
 
176.30

 
171.40

 
154.48

 
195.88

 
206.90

Allowance for loan losses to total loans
 
1.01

 
1.01

 
0.86

 
0.85

 
0.79

Allowance for loan losses to total gross loans excluding PPP loans and acquired loans(2)
 
1.11

 
1.07

 
0.92

 
0.92

 
0.85

Net charge-offs (recoveries) to average loans (annualized)
 
0.21

 
0.09

 
(0.05
)
 
0.02

 
0.47

Capital ratios:
 
 
 
 
 
 
 
 
 
 
Equity to total assets at end of period
 
10.97
%
 
11.43
%
 
12.02
 %
 
11.30
%
 
11.76
%
Tangible equity to total tangible assets(2)
 
10.33

 
10.76

 
11.33

 
10.63

 
11.06

Average equity to average assets
 
11.02

 
11.80

 
11.52

 
11.54

 
11.72

__________________________________________
(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 June 30, 2020, there were $6.3 million of restructured loans included in nonaccruing loans and $2.8 million, or 17.6%, of nonaccruing loans were current on their loan payments as of that date. Purchased impaired loans acquired through acquisitions are excluded from nonaccruing loans due to the accretion of discounts in accordance with the acquisition method of accounting for business combinations.
(2)
See Non-GAAP reconciliations below for adjustments.


11



Average Balance Sheet Data
 
Three Months Ended June 30,
 
2020
 
2019
(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)
$
2,789,751

 
$
28,319

 
4.06
%
 
$
2,707,738

 
$
32,156

 
4.75
%
Commercial paper and deposits in other banks
453,038

 
1,740

 
1.54
%
 
332,246

 
2,172

 
2.62
%
Securities available for sale
142,601

 
786

 
2.21
%
 
135,438

 
861

 
2.54
%
Other interest-earning assets(3)
40,490

 
540

 
5.34
%
 
52,080

 
926

 
7.11
%
Total interest-earning assets
3,425,880

 
31,385

 
3.66
%
 
3,227,502

 
36,115

 
4.48
%
Other assets
263,212

 
 
 
 
 
247,356

 
 
 
 
Total Assets
3,689,092

 
 
 
 
 
3,474,858

 
 
 
 
Liabilities and equity:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing checking accounts
481,314

 
522

 
0.43
%
 
462,626

 
348

 
0.30
%
Money market accounts
772,823

 
1,150

 
0.60
%
 
691,701

 
1,472

 
0.85
%
Savings accounts
166,216

 
42

 
0.10
%
 
184,719

 
56

 
0.12
%
Certificate accounts
748,722

 
2,978

 
1.59
%
 
666,219

 
3,120

 
1.87
%
Total interest-bearing deposits
2,169,075

 
4,692

 
0.87
%
 
2,005,265

 
4,996

 
1.00
%
Borrowings
509,617

 
1,694

 
1.33
%
 
699,374

 
3,935

 
2.25
%
Total interest-bearing liabilities
2,678,692

 
6,386

 
0.95
%
 
2,704,639

 
8,931

 
1.32
%
Noninterest-bearing deposits
453,048

 
 
 
 
 
298,769

 
 
 
 
Other liabilities
150,788

 
 
 
 
 
64,102

 
 
 
 
Total liabilities
3,282,528

 
 
 
 
 
3,067,510

 
 
 
 
Stockholders' equity
406,564

 
 
 
 
 
407,348

 
 
 
 
Total liabilities and stockholders' equity
3,689,092

 
 
 
 
 
3,474,858

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earning assets
$
747,188

 
 
 
 
 
$
522,863

 
 
 
 
Average interest-earning assets to average interest-bearing liabilities
127.89
%
 
 
 
 
 
119.33
%
 
 
 
 
Tax-equivalent:
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
24,999

 
 
 
 
 
$
27,184

 
 
Interest rate spread
 
 
 
 
2.71
%
 
 
 
 
 
3.16
%
Net interest margin(4)
 
 
 
 
2.92
%
 
 
 
 
 
3.37
%
Non-tax-equivalent:
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
24,688

 
 
 
 
 
$
26,889

 
 
Interest rate spread
 
 
 
 
2.68
%
 
 
 
 
 
3.12
%
Net interest margin(4)
 
 
 
 
2.88
%
 
 
 
 
 
3.33
%
_________________________________________________
(1) The average loans receivable, net 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 $311 and $295 for the three months ended June 30, 2020 and 2019, 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, and SBIC investments.
(4) Net interest income divided by average interest-earning asset.

12



 
Years Ended June 30,
 
2020
 
2019
 
(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)
$
2,748,124

 
$
123,364

 
4.49
%
 
$
2,633,298

 
$
123,076

 
4.67
%
 
Commercial paper and deposits in other banks
385,208

 
7,699

 
2.00
%
 
326,035

 
8,278

 
2.54
%
 
Securities available for sale
150,249

 
3,687

 
2.45
%
 
145,344

 
3,443

 
2.37
%
 
Other interest-earning assets(3)
42,119

 
2,694

 
6.40
%
 
46,360

 
3,590

 
7.74
%
 
Total interest-earning assets
3,325,700

 
137,444

 
4.13
%
 
3,151,037

 
138,387

 
4.39
%
 
Other assets
265,376

 
 
 
 
 
245,859

 
 
 
 
 
Total Assets
3,591,076

 
 
 
 
 
3,396,896

 
 
 
 
 
Liabilities and equity:
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing checking accounts
457,455

 
1,627

 
0.36
%
 
462,933

 
1,251

 
0.27
%
 
Money market accounts
767,315

 
6,910

 
0.90
%
 
689,946

 
5,102

 
0.74
%
 
Savings accounts
166,588

 
195

 
0.12
%
 
194,635

 
245

 
0.13
%
 
Certificate accounts
764,013

 
14,105

 
1.85
%
 
596,727

 
9,159

 
1.53
%
 
Total interest-bearing deposits
2,155,371

 
22,837

 
1.06
%
 
1,944,241

 
15,757

 
0.81
%
 
Borrowings
568,377

 
9,313

 
1.64
%
 
672,186

 
14,626

 
2.18
%
 
Total interest-bearing liabilities
2,723,748

 
32,150

 
1.18
%
 
2,616,427

 
30,383

 
1.16
%
 
Noninterest-bearing deposits
365,634

 
 
 
 
 
307,420

 
 
 
 
 
Other liabilities
90,247

 
 
 
 
 
63,229

 
 
 
 
 
Total liabilities
3,179,629

 
 
 
 
 
2,987,076

 
 
 
 
 
Stockholders' equity
411,447

 
 
 
 
 
409,820

 
 
 
 
 
Total liabilities and stockholders' equity
3,591,076

 
 
 
 
 
3,396,896

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earning assets
$
601,952

 
 
 
 
 
$
534,610

 
 
 
 
 
Average interest-earning assets to average interest-bearing liabilities
122.10
%
 
 
 
 
 
120.43
%
 
 
 
 
 
Tax-equivalent:
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
105,294

 
 
 
 
 
$
108,004

 
 
 
Interest rate spread
 
 
 
 
2.95
%
 
 
 
 
 
3.23
%
 
Net interest margin(4)
 
 
 
 
3.17
%
 
 
 
 
 
3.43
%
 
Non-tax-equivalent:
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
104,104

 
 
 
 
 
$
106,831

 
 
 
Interest rate spread
 
 
 
 
2.92
%
 
 
 
 
 
3.19
%
 
Net interest margin(4)
 
 
 
 
3.13
%
 
 
 
 
 
3.39
%
 
__________________
(1) The average loans receivable, net 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 $1,190 and $1,173 for the year ended June 30, 2020 and 2019, 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, and SBIC investments.
(4) Net interest income divided by average interest-earning assets.


13



Loans
(Dollars in thousands)
June 30, 2020
 
March 31, 2020
 
December 31, 2019
 
September 30, 2019
 
June 30, 2019
Retail consumer loans:
 
 
 
 
 
 
 
 
 
     One-to-four family
$
473,693

 
$
487,777

 
$
417,255

 
$
396,649

 
$
660,591

     HELOCs - originated
137,447

 
144,804

 
142,989

 
141,129

 
139.435

     HELOCs - purchased
71,781

 
82,232

 
92,423

 
104,324

 
116,972

     Construction and land/lots
81,859

 
80,765

 
71,901

 
85,319

 
80,602

     Indirect auto finance
132,303

 
135,449

 
142,533

 
147,808

 
153,448

     Consumer
10,259

 
11,576

 
11,102

 
11,400

 
11,416

Total retail consumer loans
907,342

 
942,603

 
878,203

 
886,629

 
1,162,464

Commercial loans:
 
 
 
 
 
 
 
 
 
     Commercial real estate
1,052,906

 
990,693

 
998,019

 
990,787

 
927,261

     Construction and development
215,934

 
249,714

 
223,839

 
203,494

 
210,916

     Commercial and industrial
154,825

 
164,539

 
152,727

 
158,706

 
160,471

     Equipment finance
229,239

 
198,962

 
185,427

 
154,479

 
132,058

     Municipal leases
127,987

 
115,992

 
115,240

 
114,382

 
112,016

     PPP loans
80,697

 

 

 

 

Total commercial loans
1,861,588

 
1,719,900

 
1,675,252

 
1,621,848

 
1,542,722

Total loans
2,768,930

 
2,662,503

 
2,553,455

 
2,508,477

 
2,705,186

     Deferred loan costs, net
189

 
1,021

 
1,086

 
253

 
4

Total loans, net of deferred loan fees
2,769,119

 
2,663,524

 
2,554,541

 
2,508,730

 
2,705,190

     Allowance for loan losses
(28,072
)
 
(26,850
)
 
(22,031
)
 
(21,314
)
 
(21,429
)
Loans, net
$
2,741,047

 
$
2,636,674

 
$
2,532,510

 
$
2,487,416

 
$
2,683,761

Deposits
(Dollars in thousands)
June 30, 2020
 
March 31, 2020
 
December 31, 2019
 
September 30, 2019
 
June 30, 2019
Core deposits:
 
 
 
 
 
 
 
 
 
    Noninterest-bearing accounts
$
429,901

 
$
322,812

 
$
327,320

 
$
327,371

 
$
294,322

    NOW accounts
582,299

 
496,561

 
457,428

 
449,623

 
452,295

    Money market accounts
836,738

 
801,424

 
815,949

 
769,000

 
691,172

    Savings accounts
197,676

 
169,792

 
167,520

 
169,872

 
177,278

Total core deposits
2,046,614

 
1,790,589

 
1,768,217

 
1,715,866

 
1,615,067

Certificates of deposit
739,142

 
764,198

 
789,552

 
778,328

 
712,190

Total
$
2,785,756

 
$
2,554,787

 
$
2,557,769

 
$
2,494,194

 
$
2,327,257


14



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; tangible equity to tangible assets ratio; and the ratio of the allowance for loan losses to total loans excluding PPP loans and acquired loans. 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 provides an alternative view of the Company's performance over time and in comparison to the Company's 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 our efficiency ratio:
 
 
Three Months Ended
 
Year Ended
(Dollars in thousands)
 
June 30,
 
March 31,
 
June 30,
 
June 30,
 
 
2020
 
2020
 
2019
 
2020
 
2019
Noninterest expense
 
$
24,652

 
$
24,903

 
$
23,415

 
$
97,129

 
$
90,134

 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
$
24,688

 
$
25,309

 
$
26,889

 
$
104,104

 
$
106,831

Plus noninterest income
 
7,223

 
6,375

 
6,846

 
30,332

 
22,940

Plus tax equivalent adjustment
 
311

 
305

 
295

 
1,190

 
1,173

Net interest income plus noninterest income – as adjusted
 
$
32,222

 
$
31,989

 
$
34,030

 
$
135,626

 
$
130,944

Efficiency ratio - adjusted
 
76.51
%
 
77.85
%
 
68.81
%
 
71.62
%
 
68.83
%
Efficiency ratio (without adjustments)
 
77.25
%
 
78.60
%
 
69.41
%
 
72.25
%
 
69.46
%
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)
 
June 30, 2020
 
March 31, 2020
 
December 31, 2019
 
September 30, 2019
 
June 30, 2019
Total stockholders' equity
 
$
408,263

 
$
405,440

 
$
416,995

 
$
413,068

 
$
408,896

Less: goodwill, core deposits intangibles, net of taxes
 
26,468

 
26,701

 
26,959

 
27,246

 
27,562

Tangible book value (1)
 
$
381,795

 
$
378,739

 
$
390,036

 
$
385,822

 
$
381,334

Common shares outstanding
 
17,016,372

 
17,101,954

 
17,664,384

 
17,818,145

 
17,984,105

Tangible book value per share
 
$
22.44

 
$
22.15

 
$
22.08

 
$
21.65

 
$
21.20

Book value per share
 
$
23.99

 
$
23.71

 
$
23.61

 
$
23.18

 
$
22.74

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

Set forth below is a reconciliation to GAAP of tangible equity to tangible assets:
 
 
As of
 
 
June 30, 2020
 
March 31, 2020
 
December 31, 2019
 
September 30, 2019
 
June 30, 2019
(Dollars in thousands)
 
 
Tangible equity(1)
 
$
381,795

 
$
378,739

 
$
390,036

 
$
385,822

 
$
381,334

Total assets
 
$
3,722,852

 
$
3,548,033

 
$
3,470,232

 
$
3,655,309

 
$
3,476,178

Less: goodwill and core deposit intangibles, net of taxes
 
26,468

 
26,701

 
26,959

 
27,246

 
27,562

Total tangible assets(2)
 
$
3,696,384

 
$
3,521,332

 
$
3,443,273

 
$
3,628,063

 
$
3,448,616

Tangible equity to tangible assets
 
10.33
%
 
10.76
%
 
11.33
%
 
10.63
%
 
11.06
%
_________________________________________________________________
(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.
(2)    Total tangible assets is equal to total assets less goodwill and core deposit intangibles, net of related deferred tax liabilities.
 
 
 
 
 
 
 
 
 
 
 

15



Set forth below is a reconciliation to GAAP of the allowance for loan losses to total loans and the allowance for loan losses as adjusted to exclude PPP loans and acquired loans:
 
As of
(Dollars in thousands)
June 30, 2020
 
March 31, 2020
 
December 31, 2019
 
September 30, 2019
 
June 30, 2019
Total gross loans receivable (GAAP)
$
2,768,930

 
$
2,662,503

 
$
2,553,455

 
$
2,508,477

 
$
2,705,186

Less: acquired loans
168,266

 
176,971

 
186,970

 
206,937

 
214,046

Less: PPP loans
80,697

 

 

 

 

Adjusted loans (non-GAAP)
$
2,519,967

 
$
2,485,532

 
$
2,366,485

 
$
2,301,540

 
$
2,491,140

 
 
 
 
 
 
 
 
 
 
Allowance for loan losses (GAAP)
$
28,072

 
$
26,850

 
$
22,031

 
$
21,314

 
$
21,429

Less: allowance for loan losses on acquired loans
182

 
182

 
152

 
194

 
201

Adjusted allowance for loan losses
$
27,890

 
$
26,668

 
$
21,879

 
$
21,120