8-K
HomeTrust Bancshares, Inc. (HTB)
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): April 29, 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 April 29, 2020, HomeTrust Bancshares, Inc., the holding company for HomeTrust Bank, issued a press release reporting third quarter 2020 financial results, approval of its quarterly cash dividend, and its 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
| 99.1 | Press release dated April 29, 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: April 29, 2020 | By: | /s/ Tony J. VunCannon |
| Tony J. VunCannon | ||
| Executive Vice President, Chief Financial Officer, Corporate Secretary and Treasurer |
Document
HomeTrust Bancshares, Inc. Announces Financial Results For The Third Quarter of Fiscal 2020 and Quarterly Dividend
ASHEVILLE, N.C., April 29, 2020 – HomeTrust Bancshares, Inc. (NASDAQ: HTBI) ("Company"), the holding company of HomeTrust Bank ("Bank"), today announced preliminary net income for the third quarter of fiscal 2020, approval of its quarterly cash dividend, and its response to the COVID-19 pandemic.
For the quarter ended March 31, 2020 compared to the corresponding quarter in the previous year:
•net income was $1.2 million, compared to $3.3 million;
•diluted earnings per share ("EPS") was $0.07, compared to $0.18;
•return on assets ("ROA") was 0.14%, compared to 0.39%;
•return on equity ("ROE") was 1.15%, compared to 3.24%;
•provision for loan losses was $5.4 million, compared to $5.5 million;
•noninterest income increased $1.0 million, or 18.1% to $6.4 million from $5.4 million;
•organic net loan growth, which excludes one-to-four family loans transferred to held for sale and purchases of home equity lines of credit, was $33.6 million, or 5.5% annualized compared to $38.5 million, or 6.2% annualized;
•635,800 shares were repurchased during the quarter at an average price of $20.45 per share completing the most recent buyback program; and
•quarterly cash dividends continued at $0.07 per share totaling $1.2 million.
For the nine months ended March 31, 2020 compared to the corresponding period in the previous year:
•net income was $19.2 million, compared to $19.1 million;
•EPS was $1.08, compared to $1.02;
•ROA was 0.72%, compared to 0.76%;
•ROE was 6.19%, compared to 6.21%;
•provision for loan losses was $5.8 million, compared to $5.5 million;
•noninterest income increased $7.0 million, or 43.6% to $23.1 million from $16.1 million;
•total deposits increased $246.4 million, or 10.7% to $2.6 billion from $2.3 billion; and
•1,032,221 shares of common stock were repurchased during the period at an average price of $22.50 per share.
Earnings during the three and nine months ended March 31, 2020 were negatively impacted by a significant increase in the provision for loan losses based on the Company's initial assessment of COVID-19 on various macroeconomic factors. In addition, earnings for the nine months ended March 31, 2020 included a $958,000 after-tax gain from the sale of $154.9 million in one-to-four family loans in December 2019.
The Company also announced today that its Board of Directors declared a quarterly cash dividend of $0.07 per common share payable on June 4, 2020 to shareholders of record as of the close of business on May 21, 2020.
"We could not be more proud of our team members for their courage, dedication and focus on taking care of our customers' needs during these unprecedented times. Their health and safety as well as the health and safety of our customers and communities is our primary concern," said Dana Stonestreet, Chairman, President, and Chief Executive Officer. "We understand that everyone is facing their own set of challenges relating to COVID-19 and we remain committed to helping our customers navigate through whatever financial challenges they may face. At the onset of the pandemic, we announced multiple relief programs for both individual and business customers, including payment deferrals, waiving late fees, suspension of foreclosures and repossessions, providing access to government sponsored lending programs as well as various other tailored
solutions. Our retail banking team has proactively reached out to many of our customers by phone while continuing to service them through our branch office drive-thrus, in our lobbies by appointment, and online. All of these activities have taken place just a few short weeks after our very successful core systems technology conversion in late February."
Response to COVID-19
Loan Programs. In response to the current global situation surrounding the COVID-19 pandemic, the Company is offering a variety of relief options designed to support our customers and communities, including participating in the U.S. Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”). As of April 24, 2020, we had received PPP applications totaling $89.0 million with confirmed allocation from the SBA for 243 applications totaling $76.9 million. Net origination fees on these loans are approximately $1.9 million which will be deferred and amortized into interest income as the loans are repaid or forgiven. Due to demand exceeding our capacity, on April 9, 2020 we partnered with a third party to process and fund additional PPP applications for our customers and communities. With the recent approval by Congress of additional funds for this program, applications will continue to be processed through our third party relationship. We are also working 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 April 24, 2020, we have processed and approved payment deferrals on loans totaling $510.4 million, or 19.2% of total loans. The breakout by loan type is as follows:
| Payment Deferrals by Loan Types | ||||
|---|---|---|---|---|
| (dollars in thousands) | ||||
| Outstanding Loan Balance | Percent of Total Loan Portfolio | |||
| Commercial real estate, construction and development, and commercial and industrial | $ | 412,525 | 15.5 | % |
| Equipment finance | 38,975 | 1.5 | % | |
| One-to-four family | 47,062 | 1.8 | % | |
| Other consumer loans | 11,876 | 0.4 | % | |
| Total | $ | 510,438 | 19.2 | % |
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.
Allowance for Loan Losses. The Company recorded a provision for loan losses of $5.4 million for the third quarter of 2020, compared to a $400,000 provision in the preceding quarter and $5.5 million in the third quarter a year ago, which was related to one commercial customer relationship. The provision for the current quarter reflects expected credit losses based upon the conditions that existed as of March 31, 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. Specifically, 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:
| Loan Segments (as of March 31, 2020) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (dollars in thousands) | Loan Risk Grade | ||||||||||
| Pass^(1)^ | Criticized^(2)^ | Outstanding Loan Balance | Percent of Total Loan Portfolio | ||||||||
| Lodging | $ | 108,864 | $ | 2,069 | $ | 110,933 | 4.2 | % | |||
| Restaurants | 47,780 | 71 | 47,851 | 1.8 | % | ||||||
| Shopping centers | 76,723 | 1,441 | 78,164 | 2.9 | % | ||||||
| Other retail businesses | 130,341 | 295 | 130,635 | 4.9 | % | ||||||
| Equipment finance | 197,651 | 1,311 | 198,862 | 7.5 | % | ||||||
| Total | $ | 561,359 | $ | 5,187 | $ | 566,445 | 21.3 | % | |||
| Percent of total | 99.1 | % | 0.9 | % | 100.0 | % | — |
(1) A pass rated loan is not adversely classified because it does not display any of the characteristics for adverse classification.
(2) Includes loans that are graded special mention or substandard. These loans have weaknesses (or potential weaknesses) that may result in deterioration of the repayment prospects or collateral position at some future date.
The Company does not have any exposure to oil/gas or credit cards at March 31, 2020.
Branch Operations and Support Personnel. We have taken various steps to ensure the safety of our customers and our team members by limiting 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 working 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 March 31, 2020, the Company’s tangible equity to total tangible assets ratio was 10.76% 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. As part of the Company’s risk management process, we have maintained strong capital ratios in the latter part of the longest economic recovery in U.S. history.
Income Statement Review
Net interest income decreased to $25.3 million for the quarter ended March 31, 2020, compared to $26.6 million for the comparative quarter in fiscal 2019. The $1.3 million, or 4.7% decrease was due to a $1.7 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 $417,000 decrease in interest expense. Average interest-earning assets increased $65.7 million, or 2.1% to $3.2 billion for the quarter ended March 31, 2020. The average balance of total loans receivable increased by $19.6 million, or 0.7% compared to the same quarter last year due to organic loan growth offset by the previously disclosed one-to-four family loans sold in December 2019. The average balance of commercial paper and deposits in other banks increased $40.8 million, or 12.1% between the periods driven by increases in commercial paper investments. Our investments in commercial paper have short-term maturities and limited exposure of $15.0 million or less per each highly-rated company. The average balance in securities available for sale increased $14.2 million, or 10.2%, which was primarily driven by the purchase of shorter-term corporate bonds. These increases were partially funded by a cumulative $52.9 million, or 1.8% increase in average interest-bearing liabilities and noninterest bearing deposits and the $8.9 million, or 19.0% 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 March 31, 2020 decreased to 3.16% from 3.39% for the same period a year ago.
Total interest and dividend income decreased $1.7 million, or 4.8% for the three months ended March 31, 2020 as compared to the same period last year, which was primarily driven by a $1.0 million, or 3.2% decrease in loan interest income, a $489,000, or 21.4% decrease in interest income from commercial paper and deposits in other banks, and a $261,000, or 32.2% decrease in other investment income which was partially offset by a $62,000, or 7.3% increase in interest income from securities available for sale. The lower interest income from loans and commercial paper and deposits in other banks was primarily driven by the decrease in yields. Average loan yields decreased 18 basis points to 4.51% for the quarter ended March 31, 2020 from 4.69% in the corresponding quarter last year. For the quarters ended March 31, 2020 and 2019, average loan yields included six and seven 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 $5.5 million at March 31, 2020, compared to $6.7 million at June 30, 2019, and $7.1 million at March 31, 2019.
Total interest expense decreased $417,000, or 5.1% for the quarter ended March 31, 2020 compared to the same period last year. The decrease was driven by a $2.0 million, or 53.0% decrease in interest expense on borrowings partially offset by a $1.6 million, or 35.6% increase in interest expense on deposits. The additional deposit interest expense was a result of our continued focus on increasing deposits as the average balance of interest-bearing deposits increased $205.3 million, or 10.4% along with a 20 basis point increase in the average cost of interest-bearing deposits for the quarter ended March 31, 2020 compared to the same quarter last year. Average borrowings for the quarter ended March 31, 2020 decreased $196.8 million, or 29.4% along with a 75 basis point decrease in the average cost of borrowings compared to the same period last year. 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 overall average cost of funds decreased seven basis points to 1.16% for the current quarter compared to 1.23% in the same quarter last year due primarily to the impact of the lower amount of borrowings and rates.
Net interest income decreased slightly to $79.4 million for the nine months ended March 31, 2020, compared to $79.9 million for the comparative period in fiscal 2019. The $526,000, or 0.7% decrease was due to a $3.8 million increase in interest and dividend income primarily driven by an increase in average interest-earning assets, which was offset by a $4.3 million increase in interest expense. Average interest-earning assets increased $166.8 million, or 5.3% to $3.3 billion for the nine months ended March 31, 2020 compared to $3.1 billion for the corresponding period in fiscal 2019. For the nine months ended March 31, 2020, the average balance of total loans receivable increased $125.8 million, or 4.8% compared to the same period last year primarily due to organic loan growth. The average balance of commercial paper and deposits in other banks increased $38.6 million, or 11.9% between the periods driven by increases in commercial paper investments. These increases were primarily funded by the $151.5 million, or 5.9% increase in average interest-bearing liabilities, as compared to the same nine month period last year. Net interest margin (on a fully taxable-equivalent basis) for the nine months ended March 31, 2020 decreased to 3.25% from 3.45% for the same period a year ago.
Total interest and dividend income increased $3.8 million, or 3.7% for the nine months ended March 31, 2020 as compared to the same period last year, which was primarily driven by a $4.1 million, or 4.6% increase in loan interest income, and a $319,000, or 12.4% increase in interest income from securities available for sale, which was partially offset by a $147,000, or 2.4% decrease in interest income from commercial paper and interest-bearing deposits and a $510,000, or 19.1% decrease in other investment income. The additional loan interest income was driven by the increase in the average balance of loans receivable compared to the prior year. Average loan yields decreased slightly by two basis points to 4.63% for the nine months ended March 31, 2020 from 4.65% in the corresponding period last year. For the nine months ended March 31, 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 $4.3 million, or 20.1% for the nine months ended March 31, 2020 compared to the same period last year. The increase was driven by a $7.4 million, or 68.6% increase in deposit interest expense partially offset by a $3.1 million, or 28.7% decrease in interest expense on borrowings. The additional deposit interest expense was a result of a $226.9 million, or 11.8% increase in the average balance of interest-bearing deposits along with a 37 basis point increase in the average cost of those deposits for the nine months ended March 31, 2020 as compared to the same period last year. Average borrowings for the nine months ended March 31, 2020 decreased $75.3 million, or 11.4% along with a 42 basis point decrease in the average cost of borrowings compared to the same period last year. The overall cost of funds increased 14 basis points to 1.25% for the nine months ended March 31, 2020 compared to 1.11% in the corresponding period last year.
Noninterest income increased $1.0 million, or 18.1% to $6.4 million for the three months ended March 31, 2020 from $5.4 million for the same period in the previous year primarily due a $160,000, 119.4% increase in loan income and fees and a $749,000, or 74.4% increase in other noninterest income. The $160,000 increase for the quarter in loan income and fees is primarily a result of our adjustable rate conversion program and prepayment fees on equipment finance loans. The $749,000 increase in other noninterest income primarily related to operating lease income from the new equipment finance line of business. There were $32.2 million of residential mortgage loans originated for sale which were sold with gains of $852,000 compared to $24.7 million sold and gains of $628,000 in the corresponding quarter in the prior year. During the quarter ended March 31, 2020, $6.8 million of the guaranteed portion of SBA commercial loans were sold with gains of $469,000 compared to $11.5 million sold and gains of $843,000 in the corresponding quarter in the prior year. In addition, $18.0 million of home equity loans were sold during the quarter for a gain of $183,000.
Noninterest income increased $7.0 million, or 43.6% to $23.1 million for the nine months ended March 31, 2020 from $16.1 million for the same period in the previous year primarily due to a $3.5 million, or 85.4% increase in the gain on sale of loans held for sale, a $1.3 million, or 170.4% increase in loan income and fees, and a $2.0 million, or 81.1% increase in other noninterest income. 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, $135.4 million of residential mortgage loans sold with gains of $3.6 million for the nine months ended March 31, 2020, compared to $81.3 million sold and gains of $2.0 million in the corresponding period in the prior year. During the nine months ended March 31, 2020, $36.0 million of SBA commercial loans were sold with recorded gains of $2.5 million compared to $28.7 million sold and gains of $2.0 million in the corresponding period in the prior year. The increase in loan income and fees is primarily a result of our adjustable rate conversion program and prepayment fees on equipment finance loans. The $2.0 million increase in other noninterest income primarily related to operating lease income from the equipment finance line of business.
Noninterest expense for the three months ended March 31, 2020 increased $1.9 million, or 8.4% to $24.9 million compared to $23.0 million for the three months ended March 31, 2019. The increase was primarily due to a $1.0 million, or 7.4% increase in salaries and employee benefits as a result of new positions and annual salary increases; a $1.0 million, or 34.6% increase in other expenses, mainly driven by depreciation from our equipment finance line of business and expenses related to our recent core system conversion; a $164,000, or 23.5% increase in telephone, postage, and supplies as a result of our core conversion; and a $142,000, or 44.4% increase in deposit insurance premiums as a result of our growth and changing loan portfolio mix. Partially offsetting these increases was a cumulative decrease of $365,000, or 39.1% in real estate owned ("REO") related expenses and core deposit intangible amortization for the three months ended March 31, 2020 compared to the same period last year.
Noninterest expense for the nine months ended March 31, 2020 increased $5.8 million, or 8.6% to $72.5 million compared to $66.7 million for the nine months ended March 31, 2019. The increase was primarily due to a $3.5 million, or 9.1% increase in salaries and employee benefits; a $2.4 million, or 30.3% increase in other expenses, mainly driven by depreciation from our equipment finance line of business and expenses related to our core conversion; a $497,000, or 40.8% increase in marketing and advertising expense; a $308,000, or 5.4% increase in computer services; and a $252,000, or 11.4% increase in telephone, postage, and supplies. Partially offsetting these increases was a decrease of $485,000, or 50.6% in deposit insurance premiums related to credit from the Federal Deposit Insurance Corporation in the first and second quarter; a $462,000, or 29.2% decrease in core deposit intangible amortization; and a $214,000, or 20.4% decrease in REO related expenses for the nine months ended March 31, 2020 compared to the same period last year.
For the three months ended March 31, 2020, the Company's income tax expense increased $3,000, or 1.6% to $188,000 from $185,000. The effective tax rate for the three months ended March 31, 2020 and 2019 was 13.6% and 5.3%, respectively. These lower rates were due to the effects of $1.0 million in each quarter of tax-free income from municipal leases in the Company's loan portfolio.
For the nine months ended March 31, 2020, the Company's income tax expense increased $376,000, or 8.0% to $5.1 million from $4.7 million for the corresponding period in the previous year as a result of higher taxable income. The effective tax rate for the nine months ended March 31, 2020 and 2019 was 20.9% and 19.7%, respectively.
Balance Sheet Review
Total assets and liabilities remained relatively level at $3.5 billion and $3.1 billion, respectively, at March 31, 2020 compared to June 30, 2019. The funds received from the $154.9 million in one-to-four family loans sold and deposit growth of $227.5 million, or 9.8% were used to pay down $145.0 million, or 21.3% of borrowings, fund the $114.4 million, or 22.7% net increase in cash and cash equivalents, commercial paper, certificates of deposit in other banks, securities available for sale, and loans held for sale for the first nine months of fiscal 2020. Approximately $85.6 million one-to-four family loans being marketed for sale at December 31, 2019 were moved from loans held for sale and back into the loan portfolio during the current quarter as market conditions changed management's intent to sell these loans. The increase in loans held for sale relates to home equity loans originated for sale during the period. Deferred income taxes decreased $4.8 million, or 18.0% to $21.8 million at March 31, 2020 from $26.5 million at June 30, 2019 due to the use of net operating loss carryforwards.
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 March 31, 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 March 31, 2020 decreased $3.5 million, or 0.8% to $405.4 million compared to $408.9 million at June 30, 2019. Changes within stockholders' equity included $19.2 million in net income and $2.3 million in stock-based compensation, offset by 1,032,221 shares of common stock repurchased at an average cost of $22.50, or approximately $23.2 million in total, and $3.4 million related to cash dividends declared. As of March 31, 2020, HomeTrust Bank and the Company
were considered "well capitalized" in accordance with their regulatory capital guidelines and exceeded all regulatory capital requirements.
Asset Quality
The allowance for loan losses was $26.9 million, or 1.01% of total loans, at March 31, 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 acquired loans was 1.07% at March 31, 2020, compared to 0.85% at June 30, 2019. The overall increase was primarily driven by additional allowance stemming from the initial assessment of COVID-19 on the loan portfolio.
There was a $5.8 million provision for loan losses for the nine months ended March 31, 2020, compared to $5.5 million for the corresponding period in fiscal year 2019. The current year provision included significant adjustments relating to COVID-19 as a result of changes in qualitative factors based on our perceived increase in at risk loan sub-categories, which include: lodging, restaurants, shopping centers, other retail, and equipment finance. The provision in the corresponding period in the prior year related to one commercial loan relationship. Net loan charge offs totaled $379,000 for the nine months ended March 31, 2020, compared to $2.1 million for the same period in fiscal year 2019. Net charge offs as a percentage of average loans were 0.02% and 0.11% for the nine months ended March 31, 2020 and 2019, respectively.
Nonperforming assets increased by $3.4 million, or 20.6% to $16.7 million, or 0.47% of total assets, at March 31, 2020 compared to $13.3 million, or 0.38% of total assets at June 30, 2019. Nonperforming assets included $15.6 million in nonaccruing loans and $1.1 million in REO at March 31, 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 real estate loan relationship that was moved to nonaccrual during the second quarter. Included in nonperforming loans are $7.2 million of loans restructured from their original terms of which $5.8 million were current at March 31, 2020, with respect to their modified payment terms. Purchased impaired loans aggregating $1.0 million 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 0.59% at March 31, 2020 and 0.38% at June 30, 2019.
The ratio of classified assets to total assets decreased to 0.86% at March 31, 2020 from 0.89% at June 30, 2019. Classified assets decreased to $30.7 million at March 31, 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.
About HomeTrust Bancshares, Inc.
HomeTrust Bancshares, Inc. is the holding company for HomeTrust Bank. As of March 31, 2020, the Company had assets of $3.5 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
Consolidated Balance Sheets (Unaudited)
| (Dollars in thousands) | March 31, 2020 | December 31, 2019 | September 30, 2019 | June 30, 2019^(1)^ | March 31, 2019 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Assets | ||||||||||
| Cash | $ | 41,206 | $ | 47,213 | $ | 52,082 | $ | 40,909 | $ | 40,633 |
| Interest-bearing deposits | 40,855 | 41,705 | 65,011 | 30,134 | 37,678 | |||||
| Cash and cash equivalents | 82,061 | 88,918 | 117,093 | 71,043 | 78,311 | |||||
| Commercial paper | 281,955 | 253,794 | 254,302 | 241,446 | 246,903 | |||||
| Certificates of deposit in other banks | 57,544 | 47,628 | 50,117 | 52,005 | 56,209 | |||||
| Securities available for sale, at fair value | 158,621 | 146,022 | 165,714 | 121,786 | 139,112 | |||||
| Other investments, at cost | 41,201 | 36,898 | 45,900 | 45,378 | 51,122 | |||||
| Loans held for sale | 38,682 | 118,055 | 289,319 | 18,175 | 14,745 | |||||
| Total loans, net of deferred loan fees | 2,663,524 | 2,554,541 | 2,508,730 | 2,705,190 | 2,660,647 | |||||
| Allowance for loan losses | (26,850) | (22,031) | (21,314) | (21,429) | (24,416) | |||||
| Net loans | 2,636,674 | 2,532,510 | 2,487,416 | 2,683,761 | 2,636,231 | |||||
| Premises and equipment, net | 58,738 | 58,020 | 58,509 | 61,051 | 60,559 | |||||
| Accrued interest receivable | 9,501 | 9,714 | 10,434 | 10,533 | 10,885 | |||||
| Real estate owned ("REO") | 1,075 | 1,451 | 2,582 | 2,929 | 3,003 | |||||
| Deferred income taxes | 21,750 | 22,066 | 24,257 | 26,523 | 28,832 | |||||
| Bank owned life insurance ("BOLI") | 91,612 | 91,048 | 90,499 | 90,254 | 89,663 | |||||
| Goodwill | 25,638 | 25,638 | 25,638 | 25,638 | 25,638 | |||||
| Core deposit intangibles | 1,381 | 1,715 | 2,088 | 2,499 | 2,948 | |||||
| Other assets | 41,600 | 36,755 | 31,441 | 23,157 | 13,576 | |||||
| Total Assets | $ | 3,548,033 | $ | 3,470,232 | $ | 3,655,309 | $ | 3,476,178 | $ | 3,457,737 |
| Liabilities and Stockholders' Equity | ||||||||||
| Liabilities | ||||||||||
| Deposits | $ | 2,554,787 | $ | 2,557,769 | $ | 2,494,194 | $ | 2,327,257 | $ | 2,308,395 |
| Borrowings | 535,000 | 435,000 | 685,000 | 680,000 | 680,000 | |||||
| Other liabilities | 52,806 | 60,468 | 63,047 | 60,025 | 62,112 | |||||
| Total liabilities | 3,142,593 | 3,053,237 | 3,242,241 | 3,067,282 | 3,050,507 | |||||
| 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)^ | 171 | 177 | 178 | 180 | 183 | |||||
| Additional paid in capital | 170,368 | 182,366 | 186,359 | 190,315 | 196,824 | |||||
| Retained earnings | 240,325 | 240,312 | 232,315 | 224,545 | 217,490 | |||||
| Unearned Employee Stock Ownership Plan ("ESOP") shares | (6,480) | (6,612) | (6,744) | (6,877) | (7,009) | |||||
| Accumulated other comprehensive income (loss) | 1,056 | 752 | 960 | 733 | (258) | |||||
| Total stockholders' equity | 405,440 | 416,995 | 413,068 | 408,896 | 407,230 | |||||
| Total Liabilities and Stockholders' Equity | $ | 3,548,033 | $ | 3,470,232 | $ | 3,655,309 | $ | 3,476,178 | $ | 3,457,737 |
_________________________________
(1)Derived from audited financial statements.
(2)Shares of common stock issued and outstanding were 17,101,954 at March 31, 2020; 17,664,384 at December 31, 2019; 17,818,145 at September 30, 2019; 17,984,105 at June 30, 2019; and 18,265,535 at March 31, 2019.
Consolidated Statement of Income (Unaudited)
| Three Months Ended | Nine Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| March 31, | December 31, | March 31, | March 31, | March 31, | ||||||
| (Dollars in thousands) | 2020 | 2019 | 2019 | 2020 | 2019 | |||||
| Interest and Dividend Income | ||||||||||
| Loans | $ | 29,781 | $ | 32,119 | $ | 30,770 | $ | 94,166 | $ | 90,042 |
| Commercial paper and interest-bearing deposits | 1,794 | 1,912 | 2,283 | 5,959 | 6,106 | |||||
| Securities available for sale | 912 | 1,093 | 850 | 2,901 | 2,582 | |||||
| Other investments | 550 | 772 | 811 | 2,154 | 2,664 | |||||
| Total interest and dividend income | 33,037 | 35,896 | 34,714 | 105,180 | 101,394 | |||||
| Interest Expense | ||||||||||
| Deposits | 5,971 | 6,321 | 4,404 | 18,145 | 10,761 | |||||
| Borrowings | 1,757 | 2,541 | 3,741 | 7,619 | 10,691 | |||||
| Total interest expense | 7,728 | 8,862 | 8,145 | 25,764 | 21,452 | |||||
| Net Interest Income | 25,309 | 27,034 | 26,569 | 79,416 | 79,942 | |||||
| Provision for Loan Losses | 5,400 | 400 | 5,500 | 5,800 | 5,500 | |||||
| Net Interest Income after Provision for Loan Losses | 19,909 | 26,634 | 21,069 | 73,616 | 74,442 | |||||
| Noninterest Income | ||||||||||
| Service charges and fees on deposit accounts | 2,304 | 2,605 | 2,265 | 7,352 | 7,243 | |||||
| Loan income and fees | 294 | 871 | 134 | 2,047 | 757 | |||||
| Gain on sale of loans held for sale | 1,503 | 3,775 | 1,472 | 7,577 | 4,086 | |||||
| BOLI income | 518 | 509 | 518 | 1,724 | 1,574 | |||||
| Other, net | 1,756 | 1,314 | 1,007 | 4,409 | 2,434 | |||||
| Total noninterest income | 6,375 | 9,074 | 5,396 | 23,109 | 16,094 | |||||
| Noninterest Expense | ||||||||||
| Salaries and employee benefits | 14,455 | 14,170 | 13,463 | 42,537 | 39,005 | |||||
| Net occupancy expense | 2,246 | 2,384 | 2,294 | 6,972 | 7,046 | |||||
| Computer services | 2,023 | 1,985 | 1,980 | 6,032 | 5,724 | |||||
| Telephone, postage, and supplies | 862 | 798 | 698 | 2,462 | 2,210 | |||||
| Marketing and advertising | 396 | 641 | 400 | 1,716 | 1,219 | |||||
| Deposit insurance premiums | 462 | 12 | 320 | 474 | 959 | |||||
| Loss (gain) on sale and impairment of REO | (15) | 122 | 246 | 88 | 500 | |||||
| REO expense | 250 | 238 | 200 | 746 | 548 | |||||
| Core deposit intangible amortization | 334 | 373 | 488 | 1,118 | 1,580 | |||||
| Other | 3,890 | 3,318 | 2,889 | 10,332 | 7,928 | |||||
| Total noninterest expense | 24,903 | 24,041 | 22,978 | 72,477 | 66,719 | |||||
| Income Before Income Taxes | 1,381 | 11,667 | 3,487 | 24,248 | 23,817 | |||||
| Income Tax Expense | 188 | 2,476 | 185 | 5,060 | 4,684 | |||||
| Net Income | $ | 1,193 | $ | 9,191 | $ | 3,302 | $ | 19,188 | $ | 19,133 |
Per Share Data
| Three Months Ended | Nine Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| March 31, | December 31, | March 31, | March 31, | March 31, | ||||||
| 2020 | 2019 | 2019 | 2020 | 2019 | ||||||
| Net income per common share:^(1)^ | ||||||||||
| Basic | $ | 0.07 | $ | 0.54 | $ | 0.19 | $ | 1.12 | $ | 1.07 |
| Diluted | $ | 0.07 | $ | 0.52 | $ | 0.18 | $ | 1.08 | $ | 1.02 |
| Average shares outstanding: | ||||||||||
| Basic | 16,688,646 | 16,906,457 | 17,506,018 | 16,898,391 | 17,811,962 | |||||
| Diluted | 17,258,428 | 17,567,680 | 18,197,429 | 17,524,252 | 18,528,161 | |||||
| Book value per share at end of period | $ | 23.71 | $ | 23.61 | $ | 22.29 | $ | 23.71 | $ | 22.29 |
| Tangible book value per share at end of period ^(2)^ | $ | 22.15 | $ | 22.08 | $ | 20.77 | $ | 22.15 | $ | 20.77 |
| Cash dividends declared per common share | $ | 0.07 | $ | 0.07 | $ | 0.06 | $ | 0.20 | $ | 0.12 |
| Total shares outstanding at end of period | 17,101,954 | 17,664,384 | 18,265,535 | 17,101,954 | 18,265,535 |
__________________________________________________
(1)Basic and diluted net income per common share have been prepared in accordance with the two-class method.
(2)See Non-GAAP reconciliation tables below for adjustments.
Selected Financial Ratios and Other Data
| Three Months Ended | Nine Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| March 31, | December 31, | March 31, | March 31, | March 31, | ||||||
| 2020 | 2019 | 2019 | 2020 | 2019 | ||||||
| Performance ratios: ^(1)^ | ||||||||||
| Return on assets (ratio of net income to average total assets) | 0.14 | % | 1.02 | % | 0.39 | % | 0.72 | % | 0.76 | % |
| Return on equity (ratio of net income to average equity) | 1.15 | 8.87 | 3.24 | 6.19 | 6.21 | |||||
| Tax equivalent yield on earning assets^(2)^ | 4.12 | 4.34 | 4.42 | 4.30 | 4.36 | |||||
| Rate paid on interest-bearing liabilities | 1.16 | 1.27 | 1.23 | 1.25 | 1.11 | |||||
| Tax equivalent average interest rate spread ^(2)^ | 2.96 | 3.07 | 3.19 | 3.05 | 3.25 | |||||
| Tax equivalent net interest margin^(2) (3)^ | 3.16 | 3.27 | 3.39 | 3.25 | 3.45 | |||||
| Average interest-earning assets to average interest-bearing liabilities | 121.79 | 119.53 | 119.70 | 120.22 | 120.81 | |||||
| Operating expense to average total assets | 2.84 | 2.66 | 2.69 | 2.72 | 2.64 | |||||
| Efficiency ratio | 78.60 | 66.58 | 71.88 | 70.69 | 69.47 | |||||
| Efficiency ratio - adjusted ^(4)^ | 77.85 | 66.05 | 71.19 | 70.09 | 68.84 |
_____________________________
(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 reconciliation tables below for adjustments.
| At or For the Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| March 31, | December 31, | September 30, | June 30, | March 31, | ||||||
| 2020 | 2019 | 2019 | 2019 | 2019 | ||||||
| Asset quality ratios: | ||||||||||
| Nonperforming assets to total assets^(1)^ | 0.47 | % | 0.45 | % | 0.37 | % | 0.38 | % | 0.41 | % |
| Nonperforming loans to total loans^(1)^ | 0.59 | 0.56 | 0.43 | 0.38 | 0.43 | |||||
| Total classified assets to total assets | 0.86 | 0.90 | 0.84 | 0.89 | 1.00 | |||||
| Allowance for loan losses to nonperforming loans^(1)^ | 171.40 | 154.48 | 195.88 | 206.90 | 215.46 | |||||
| Allowance for loan losses to total loans | 1.01 | 0.86 | 0.85 | 0.79 | 0.92 | |||||
| Allowance for loan losses to total gross loans excluding acquired loans^(2)^ | 1.07 | 0.92 | 0.92 | 0.85 | 0.99 | |||||
| Net charge-offs (recoveries) to average loans (annualized) | 0.09 | (0.05) | 0.02 | 0.47 | 0.38 | |||||
| Capital ratios: | ||||||||||
| Equity to total assets at end of period | 11.43 | % | 12.02 | % | 11.30 | % | 11.76 | % | 11.78 | % |
| Tangible equity to total tangible assets^(2)^ | 10.76 | 11.33 | 10.63 | 11.06 | 11.06 | |||||
| Average equity to average assets | 11.80 | 11.52 | 11.54 | 11.72 | 11.93 |
__________________________________________
(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 March 31, 2020, there were $7.2 million of restructured loans included in nonaccruing loans and $7.7 million, or 49.3% of nonaccruing loans were current on their loan payments. Purchased impaired loans acquired through bank 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 reconciliation tables below for adjustments.
Average Balance Sheet Data
| For the Three Months Ended March 31, | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||||||||||
| Average<br>Balance<br>Outstanding | Interest<br>Earned/<br>Paid(2) | Yield/<br>Rate(2) | Average<br>Balance<br>Outstanding | Interest<br>Earned/<br>Paid(2) | Yield/<br>Rate(2) | |||||||||
| (Dollars in thousands) | ||||||||||||||
| Assets: | ||||||||||||||
| Interest-earning assets: | ||||||||||||||
| Loans receivable^(1)^ | $ | 2,669,796 | $ | 30,086 | 4.51 | % | $ | 2,650,155 | $ | 31,083 | 4.69 | % | ||
| Commercial paper and deposits in other banks | 378,296 | 1,794 | 1.90 | % | 337,522 | 2,283 | 2.71 | % | ||||||
| Securities available for sale | 154,108 | 912 | 2.37 | % | 139,898 | 850 | 2.43 | % | ||||||
| Other interest-earning assets^(3)^ | 37,877 | 550 | 5.81 | % | 46,756 | 811 | 6.94 | % | ||||||
| Total interest-earning assets | 3,240,077 | 33,342 | 4.12 | % | 3,174,331 | 35,027 | 4.42 | % | ||||||
| Other assets | 265,139 | 246,858 | ||||||||||||
| Total assets | $ | 3,505,216 | $ | 3,421,189 | ||||||||||
| Liabilities and equity: | ||||||||||||||
| Interest-bearing deposits: | ||||||||||||||
| Interest-bearing checking accounts | 451,335 | 412 | 0.36 | % | 463,807 | 332 | 0.29 | % | ||||||
| Money market accounts | 792,313 | 1,916 | 0.97 | % | 701,692 | 1,408 | 0.80 | % | ||||||
| Savings accounts | 159,641 | 50 | 0.12 | % | 188,848 | 58 | 0.12 | % | ||||||
| Certificate accounts | 783,758 | 3,593 | 1.83 | % | 627,444 | 2,606 | 1.66 | % | ||||||
| Total interest-bearing deposits | 2,187,047 | 5,971 | 1.09 | % | 1,981,791 | 4,404 | 0.89 | % | ||||||
| Borrowings | 473,319 | 1,757 | 1.48 | % | 670,142 | 3,741 | 2.23 | % | ||||||
| Total interest-bearing liabilities | 2,660,366 | 7,728 | 1.16 | % | 2,651,933 | 8,145 | 1.23 | % | ||||||
| Noninterest-bearing deposits | 342,581 | 298,118 | ||||||||||||
| Other liabilities | 88,725 | 63,015 | ||||||||||||
| Total liabilities | 3,091,672 | 3,013,066 | ||||||||||||
| Stockholders' equity | 413,544 | 408,123 | ||||||||||||
| Total liabilities and stockholders' equity | $ | 3,505,216 | $ | 3,421,189 | ||||||||||
| Net earning assets | $ | 579,711 | $ | 522,398 | ||||||||||
| Average interest-earning assets to | ||||||||||||||
| average interest-bearing liabilities | 121.79 | % | 119.70 | % | ||||||||||
| Tax-equivalent: | ||||||||||||||
| Net interest income | $ | 25,614 | $ | 26,882 | ||||||||||
| Interest rate spread | 2.96 | % | 3.19 | % | ||||||||||
| Net interest margin^(4)^ | 3.16 | % | 3.39 | % | ||||||||||
| Non-tax-equivalent: | ||||||||||||||
| Net interest income | $ | 25,309 | $ | 26,569 | ||||||||||
| Interest rate spread | 2.92 | % | 3.14 | % | ||||||||||
| Net interest margin^(4)^ | 3.12 | % | 3.35 | % |
__________________
(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 $305 and $313 for the three months ended March 31, 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.
| For the Nine Months Ended March 31, | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | |||||||||||||
| Average<br>Balance<br>Outstanding | Interest<br><br>Earned/<br><br>Paid^(2)^ | Yield/<br><br>Rate^(2)^ | Average<br>Balance<br>Outstanding | Interest<br><br>Earned/<br><br>Paid^(2)^ | Yield/<br><br>Rate^(2)^ | |||||||||
| (Dollars in thousands) | ||||||||||||||
| Assets: | ||||||||||||||
| Interest-earning assets: | ||||||||||||||
| Loans receivable^(1)^ | $ | 2,734,249 | $ | 95,045 | 4.63 | % | $ | 2,608,485 | $ | 90,918 | 4.65 | % | ||
| Commercial paper and deposits in other banks | 362,598 | 5,959 | 2.19 | % | 323,966 | 6,106 | 2.51 | % | ||||||
| Securities available for sale | 152,798 | 2,901 | 2.53 | % | 148,645 | 2,582 | 2.32 | % | ||||||
| Other interest-earning assets^(3)^ | 42,662 | 2,154 | 6.73 | % | 44,453 | 2,664 | 8.02 | % | ||||||
| Total interest-earning assets | 3,292,307 | 106,059 | 4.30 | % | 3,125,549 | 102,270 | 4.36 | % | ||||||
| Other assets | 266,097 | 245,360 | ||||||||||||
| Total assets | $ | 3,558,404 | $ | 3,370,909 | ||||||||||
| Liabilities and equity: | ||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||
| Interest-bearing checking accounts | 449,560 | 1,105 | 0.33 | % | 463,035 | 903 | 0.26 | % | ||||||
| Money market accounts | 765,492 | 5,760 | 1.00 | % | 689,363 | 3,630 | 0.70 | % | ||||||
| Savings accounts | 166,711 | 153 | 0.12 | % | 197,929 | 189 | 0.13 | % | ||||||
| Certificate accounts | 769,073 | 11,127 | 1.93 | % | 573,647 | 6,039 | 1.40 | % | ||||||
| Total interest-bearing deposits | 2,150,836 | 18,145 | 1.12 | % | 1,923,974 | 10,761 | 0.75 | % | ||||||
| Borrowings | 587,822 | 7,619 | 1.73 | % | 663,157 | 10,691 | 2.15 | % | ||||||
| Total interest-bearing liabilities | 2,738,658 | 25,764 | 1.25 | % | 2,587,131 | 21,452 | 1.11 | % | ||||||
| Noninterest-bearing deposits | 336,496 | 310,304 | ||||||||||||
| Other liabilities | 70,175 | 62,830 | ||||||||||||
| Total liabilities | 3,145,329 | 2,960,265 | ||||||||||||
| Stockholders' equity | 413,075 | 410,645 | ||||||||||||
| Total liabilities and stockholders' equity | $ | 3,558,404 | $ | 3,370,910 | ||||||||||
| Net earning assets | $ | 553,649 | $ | 538,418 | ||||||||||
| Average interest-earning assets to | ||||||||||||||
| average interest-bearing liabilities | 120.22 | % | 120.81 | % | ||||||||||
| Tax-equivalent: | ||||||||||||||
| Net interest income | $ | 80,295 | $ | 80,818 | ||||||||||
| Interest rate spread | 3.05 | % | 3.25 | % | ||||||||||
| Net interest margin^(4)^ | 3.25 | % | 3.45 | % | ||||||||||
| Non-tax-equivalent: | ||||||||||||||
| Net interest income | $ | 79,416 | $ | 79,942 | ||||||||||
| Interest rate spread | 3.01 | % | 3.22 | % | ||||||||||
| Net interest margin^(4)^ | 3.22 | % | 3.41 | % |
__________________
(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 $879 and $876 for the nine months ended March 31, 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.
Loans
| (Dollars in thousands) | March 31, 2020 | December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Retail consumer loans: | ||||||||||
| One-to-four family | $ | 487,777 | $ | 417,255 | $ | 396,649 | $ | 660,591 | $ | 658,723 |
| HELOCs - originated | 144,804 | 142,989 | 141,129 | 139.435 | 133,203 | |||||
| HELOCs - purchased | 82,232 | 92,423 | 104,324 | 116,972 | 128,832 | |||||
| Construction and land/lots | 80,765 | 71,901 | 85,319 | 80,602 | 76,153 | |||||
| Indirect auto finance | 135,449 | 142,533 | 147,808 | 153,448 | 162,127 | |||||
| Consumer | 11,576 | 11,102 | 11,400 | 11.416 | 19,374 | |||||
| Total retail consumer loans | 942,603 | 878,203 | 886,629 | 1,162,464 | 1,178,412 | |||||
| Commercial loans: | ||||||||||
| Commercial real estate | 990,693 | 998,019 | 990,787 | 927,261 | 892,383 | |||||
| Construction and development | 249,714 | 223,839 | 203,494 | 210,916 | 214,511 | |||||
| Commercial and industrial | 164,539 | 152,727 | 158,706 | 160,471 | 154,471 | |||||
| Equipment finance | 198,962 | 185,427 | 154,479 | 132,058 | 109.175 | |||||
| Municipal leases | 115,992 | 115,240 | 114,382 | 112,016 | 112,067 | |||||
| Total commercial loans | 1,719,900 | 1,675,252 | 1,621,848 | 1,542,722 | 1,482,607 | |||||
| Total loans | 2,662,503 | 2,553,455 | 2,508,477 | 2,705,186 | 2,661,019 | |||||
| Deferred loan costs (fees), net | 1,021 | 1,086 | 253 | 4 | (372) | |||||
| Total loans, net of deferred loan fees | 2,663,524 | 2,554,541 | 2,508,730 | 2,705,190 | 2,660,647 | |||||
| Allowance for loan losses | (26,850) | (22,031) | (21,314) | (21,429) | (24,416) | |||||
| Loans, net | $ | 2,636,674 | $ | 2,532,510 | $ | 2,487,416 | $ | 2,683,761 | $ | 2,636,231 |
Deposits
| (Dollars in thousands) | March 31, 2020 | December 31, 2019 | September 30, 2019 | June 30, 2019 | March 31, 2019 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Core deposits: | ||||||||||
| Noninterest-bearing accounts | $ | 322,812 | $ | 327,320 | $ | 327,371 | $ | 294,322 | $ | 301,083 |
| NOW accounts | 496,561 | 457,428 | 449,623 | 452,295 | 477,637 | |||||
| Money market accounts | 801,424 | 815,949 | 769,000 | 691,172 | 692,102 | |||||
| Savings accounts | 169,792 | 167,520 | 169,872 | 177,278 | 192,754 | |||||
| Total core deposits | 1,790,589 | 1,768,217 | 1,715,866 | 1,615,067 | 1,663,576 | |||||
| Certificates of deposit | 764,198 | 789,552 | 778,328 | 712,190 | 644,819 | |||||
| Total deposits | $ | 2,554,787 | $ | 2,557,769 | $ | 2,494,194 | $ | 2,327,257 | $ | 2,308,395 |
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 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 | Nine Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands) | March 31, | December 31, | March 31, | March 31, | March 31, | ||||||||||
| 2020 | 2019 | 2019 | 2020 | 2019 | |||||||||||
| Noninterest expense | $ | 24,903 | $ | 24,041 | $ | 22,978 | $ | 72,477 | $ | 66,719 | |||||
| Net interest income | $ | 25,309 | $ | 27,034 | $ | 26,569 | $ | 79,416 | $ | 79,942 | |||||
| Plus noninterest income | 6,375 | 9,074 | 5,396 | 23,109 | 16,094 | ||||||||||
| Plus tax equivalent adjustment | 305 | 290 | 313 | 879 | 877 | ||||||||||
| Net interest income plus noninterest income – as adjusted | $ | 31,989 | $ | 36,398 | $ | 32,278 | $ | 103,404 | $ | 96,913 | |||||
| Efficiency ratio - adjusted | 77.85 | % | 66.05 | % | 71.19 | % | 70.09 | % | 68.84 | % | |||||
| Efficiency ratio | 78.60 | % | 66.58 | % | 71.88 | % | 70.69 | % | 69.47 | % |
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) | March 31, | December 31, | September 30, | June 30, | March 31, | |||||
| 2020 | 2019 | 2019 | 2019 | 2019 | ||||||
| Total stockholders' equity | $ | 405,440 | $ | 416,995 | $ | 413,068 | $ | 408,896 | $ | 407,230 |
| Less: goodwill, core deposit intangibles, net of taxes | 26,701 | 26,959 | 27,246 | 27,562 | 27,908 | |||||
| Tangible book value ^(1)^ | $ | 378,739 | $ | 390,036 | $ | 385,822 | $ | 381,334 | $ | 379,322 |
| Common shares outstanding | 17,101,954 | 17,664,384 | 17,818,145 | 17,984,105 | 18,265,535 | |||||
| Tangible book value per share | $ | 22.15 | $ | 22.08 | $ | 21.65 | $ | 21.20 | $ | 20.77 |
| Book value per share | $ | 23.71 | $ | 23.61 | $ | 23.18 | $ | 22.74 | $ | 22.29 |
(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 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31, | December 31, | September 30, | June 30, | March 31, | |||||||||||
| 2020 | 2019 | 2019 | 2019 | 2019 | |||||||||||
| (Dollars in thousands) | |||||||||||||||
| Tangible equity^(1)^ | $ | 378,739 | $ | 390,036 | $ | 385,822 | $ | 381,334 | $ | 379,322 | |||||
| Total assets | 3,548,033 | 3,470,232 | 3,655,309 | 3,476,178 | 3,457,737 | ||||||||||
| Less: goodwill, core deposit intangibles, net of taxes | 26,701 | 29,959 | 27,246 | 27,562 | 27,908 | ||||||||||
| Total tangible assets^(2)^ | $ | 3,521,332 | $ | 3,443,273 | $ | 3,628,063 | $ | 3,448,616 | $ | 3,429,829 | |||||
| Tangible equity to tangible assets | 10.76 | % | 11.33 | % | 10.63 | % | 11.06 | % | 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.
Set forth below is a reconciliation to GAAP of the allowance for loan losses to total loans (excluding net deferred loan fees) and the allowance for loan losses as adjusted to exclude acquired loans:
| As of | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands) | March 31, | December 31, | September 30, | June 30, | March 31, | ||||||||||
| 2020 | 2019 | 2019 | 2019 | 2019 | |||||||||||
| Total gross loans receivable (GAAP) | $ | 2,662,503 | $ | 2,553,455 | $ | 2,508,477 | $ | 2,705,186 | $ | 2,661,019 | |||||
| Less: acquired loans | 176,971 | 186,970 | 206,937 | 214,046 | 223,101 | ||||||||||
| Adjusted loans (non-GAAP) | $ | 2,485,532 | $ | 2,366,485 | $ | 2,301,540 | $ | 2,491,140 | $ | 2,437,918 | |||||
| Allowance for loan losses (GAAP) | $ | 26,850 | $ | 22,031 | $ | 21,314 | $ | 21,429 | $ | 24,416 | |||||
| Less: allowance for loan losses on acquired loans | 182 | 152 | 194 | 201 | 201 | ||||||||||
| Adjusted allowance for loan losses | $ | 26,668 | $ | 21,879 | $ | 21,120 | $ | 21,228 | $ | 24,215 | |||||
| Adjusted allowance for loan losses / Adjusted loans (non-GAAP) | 1.07 | % | 0.92 | % | 0.92 | % | 0.85 | % | 0.99 | % |
16