HomeTrust Bancshares, Inc. Announces Financial Results for the Second Quarter of the Year Ending December 31, 2024 and Declaration of a Quarterly Dividend

Rhea-AI Summary

HomeTrust Bancshares (NASDAQ: HTBI) announced financial results for Q2 ending June 30, 2024, and declared a $0.11 per share quarterly dividend. Net income fell to $12.4 million from $15.1 million in Q1 2024, with diluted EPS dropping to $0.73 from $0.88. Key metrics saw annualized ROA at 1.13% (down from 1.37%) and ROE at 9.58% (down from 11.91%). The net interest margin improved slightly to 4.08%. The provision for credit losses increased significantly to $4.3 million. For the six months ended June 30, 2024, net income rose to $27.5 million from $21.8 million in the same period in 2023, with diluted EPS improving to $1.61 from $1.30. Annualized ROA and ROE also increased, while the net interest margin declined from 4.43% to 4.05%. The company repurchased 23,483 shares at an average price of $27.48. Quarterly dividends remained constant at $0.11 per share, totaling $1.9 million. The Board of Directors declared a quarterly dividend payable on August 29, 2024.

Positive

• Net income for the six months ended June 30, 2024, increased to $27.5 million compared to $21.8 million in the same period in 2023.
• Diluted EPS for the six months improved to $1.61 from $1.30.
• Annualized ROA and ROE for the six months increased to 1.25% and 10.73%, respectively.
• Provision for credit losses for the six months decreased to $5.4 million from $9.2 million.
• Quarterly dividend declared at $0.11 per share, payable on August 29, 2024.

Negative

• Q2 net income decreased to $12.4 million from $15.1 million in Q1 2024.
• Diluted EPS for Q2 fell to $0.73 from $0.88.
• Annualized ROA and ROE for Q2 dropped to 1.13% and 9.58%, respectively.
• Provision for credit losses for Q2 increased significantly to $4.3 million from $1.2 million.
• Noninterest income for Q2 decreased by $698,000 from the prior quarter.

Insights

Financial Analyst

HomeTrust Bancshares, Inc. has reported a decrease in net income of $12.4 million for the second quarter, down from $15.1 million in the previous quarter. This decline, along with a drop in diluted EPS to $0.73 from $0.88, may raise concerns for investors. Despite this, the bank maintained a strong net interest margin of 4.08, slightly up from 4.02 in the prior quarter, reflecting robust interest income from loans.

The increase in the provision for credit losses to $4.3 million from $1.2 million indicates caution, potentially due to economic uncertainties or specific loan portfolio issues. The company's decision to repurchase shares at an average price of $27.48 might be seen as a sign of confidence from the management in the firm's long-term value.

Overall, the mixed results show strength in certain areas like interest margins but also highlight areas of concern, particularly the rise in credit loss provisions.

Market Research Analyst

The announcement of the quarterly cash dividend remaining at $0.11 per share, totaling $1.9 million for both periods, demonstrates a commitment to returning value to shareholders. This consistency in dividends might appeal to income-focused investors, underscoring the company’s financial stability.

Net interest income saw a quarter-over-quarter increase of $936,000, driven by higher interest rates, which could offset some concerns about declining net income. The increase in loan interest income by $2.2 million shows effective loan portfolio management amidst a changing rate environment.

However, noninterest income dropped by $698,000, primarily due to lower bank-owned life insurance income. This fluctuation in noninterest income components reflects operational challenges that need addressing to stabilize future earnings.

Credit Risk Analyst

HomeTrust's provision for credit losses rose significantly to $4.3 million from $1.2 million quarter-over-quarter. This increase is primarily attributable to specific reserves on individually evaluated loans in the equipment finance and Small Business Administration (SBA) portfolios. The net charge-offs of $2.6 million also signal potential credit quality issues.

The increased provisions might indicate cautiousness towards future credit risks, likely influenced by the broader economic environment. Investors should keep an eye on future credit loss provisions and trends in non-performing loans, as continued increases could affect profitability.

The strategic build-up in credit allowances, although prudent, raises questions about underlying loan quality and the bank’s risk management strategies.

ASHEVILLE, N.C., July 24, 2024 (GLOBE NEWSWIRE) -- HomeTrust Bancshares, Inc. (NASDAQ: HTBI) ("Company" or "HomeTrust"), the holding company of HomeTrust Bank ("Bank"), today announced preliminary net income for the second quarter of the year ending December 31, 2024 and approval of its quarterly cash dividend.

For the quarter ended June 30, 2024 compared to the quarter ended March 31, 2024:

• net income was $12.4 million compared to $15.1 million;
• diluted earnings per share ("EPS") were $0.73 compared to $0.88;
• annualized return on assets ("ROA") was 1.13% compared to 1.37%;
• annualized return on equity ("ROE") was 9.58% compared to 11.91%;
• net interest margin was 4.08% compared to 4.02%;
• provision for credit losses was $4.3 million compared to $1.2 million;
• tax-free death benefit proceeds from life insurance were $0 compared to $1.1 million;
• The Company repurchased 23,483 shares of its outstanding common stock during the quarter at an average price of $27.48; and
• quarterly cash dividends continued at $0.11 per share totaling $1.9 million for both periods.

For the six months ended June 30, 2024 compared to the six months ended June 30, 2023:

• net income was $27.5 million compared to $21.8 million;
• diluted EPS were $1.61 compared to $1.30;
• annualized ROA was 1.25% compared to 1.06%;
• annualized ROE was 10.73% compared to 9.65%;
• net interest margin was 4.05% compared to 4.43%;
• provision for credit losses was $5.4 million compared to $9.2 million;
• tax-free death benefit proceeds from life insurance were $1.1 million compared to $0; and
• cash dividends of $0.22 per share totaling $3.7 million compared to $0.20 per share totaling $3.4 million.

Results for the six months ended June 30, 2023 include the impact of the merger of Quantum Capital Corp. ("Quantum") into the Company effective February 12, 2023. The addition of Quantum contributed total assets of $656.7 million, including loans of $561.9 million, and $570.6 million of deposits, all reflecting the impact of purchase accounting adjustments. Merger-related expenses of $4.7 million were recognized during the six months ended June 30, 2023, while a $5.3 million provision for credit losses was recognized during the same period to establish allowances for credit losses on both Quantum's loan portfolio and off-balance-sheet credit exposure.

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

“Our financial results for the second quarter continue to reflect our goal of high performance combined with our strategy of being a best place to work,” said Hunter Westbrook, President and Chief Executive Officer. “Our performance remained strong, aided by the expansion of our top quartile net interest margin which remains was again above 4.00%, while noninterest income and expense were both in line with the prior quarter. The decrease in our net income this quarter is reflective of an allowance build for potential credit losses on individual equipment finance and SBA loans that are in the early stages of collateral and collectability evaluation.

“As previously announced, HomeTrust was recently named a 2024 Best Place to Work in South Carolina by the Best Companies Group, supplementing our prior quarter Newsweek certification as a 2024 Most Loved Workplace. This is further validation of the culture we have developed at HomeTrust, which directly impacts our ability to continue as a high-performing, regional community bank.”

WEBSITE: WWW.HTB.COM

Comparison of Results of Operations for the Three Months Ended June 30, 2024 and March 31, 2024
Net Income.  Net income totaled $12.4 million, or $0.73 per diluted share, for the three months ended June 30, 2024 compared to net income of $15.1 million, or $0.88 per diluted share, for the three months ended March 31, 2024, a decrease of $2.7 million, or 17.6%. Results for the three months ended June 30, 2024 were negatively impacted by an increase of $3.1 million in the provision for credit losses. Details of the changes in the various components of net income are further discussed below.

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

	Three Months Ended
	June 30, 2024										March 31, 2024
(Dollars in thousands)	Average Balance Outstanding				Interest Earned / Paid			Yield / Rate			Average Balance Outstanding				Interest Earned / Paid			Yield / Rate
Assets
Interest-earning assets
Loans receivable(1)	$	3,885,222			$	62,161		6.43	%		$	3,864,258			$	59,952		6.24	%
Debt securities available for sale		134,334				1,495		4.48				126,686				1,313		4.17
Other interest-earning assets(2)		140,376				1,758		5.04				131,495				2,090		6.39
Total interest-earning assets		4,159,932				65,414		6.32				4,122,439				63,355		6.18
Other assets		266,983										298,117
Total assets	$	4,426,915									$	4,420,556
Liabilities and equity
Interest-bearing liabilities
Interest-bearing checking accounts	$	586,396			$	1,445		0.99	%		$	590,738			$	1,426		0.97	%
Money market accounts		1,298,177				10,221		3.17				1,281,340				9,664		3.03
Savings accounts		188,028				41		0.09				191,747				43		0.09
Certificate accounts		902,864				9,976		4.44				887,618				9,185		4.16
Total interest-bearing deposits		2,975,465				21,683		2.93				2,951,443				20,318		2.77
Junior subordinated debt		10,054				234		9.36				10,029				236		9.46
Borrowings		87,315				1,331		6.13				103,155				1,571		6.13
Total interest-bearing liabilities		3,072,834				23,248		3.04				3,064,627				22,125		2.90
Noninterest-bearing deposits		769,016										810,114
Other liabilities		63,503										36,945
Total liabilities		3,905,353										3,911,686
Stockholders' equity		521,562										508,870
Total liabilities and stockholders' equity	$	4,426,915									$	4,420,556
Net earning assets	$	1,087,098									$	1,057,812
Average interest-earning assets to average interest-bearing liabilities		135.38	%									134.52	%
Non-tax-equivalent
Net interest income					$	42,166									$	41,230
Interest rate spread								3.28	%									3.28	%
Net interest margin(3)								4.08	%									4.02	%
Tax-equivalent(4)
Net interest income					$	42,520									$	41,579
Interest rate spread								3.32	%									3.32	%
Net interest margin(3)								4.11	%									4.06	%

(1)  Average loans receivable balances include loans held for sale and nonaccruing loans.
(2)  Average other interest-earning assets consist of FRB stock, FHLB stock, SBIC investments and deposits in other banks.
(3)  Net interest income divided by average interest-earning assets.
(4)  Tax-equivalent results include adjustments to interest income of $354 and $349 for the three months ended June 30, 2024 and March 31, 2024, respectively, calculated based on a combined federal and state tax rate of 24%.

Total interest and dividend income for the three months ended June 30, 2024 increased $2.1 million, or 3.2%, compared to the three months ended March 31, 2024, which was driven by a $2.2 million, or 3.7%, increase in loan interest income primarily due to changes in interest rates. Accretion income on acquired loans of $678,000 and $715,000 was recognized during the same periods, respectively, and was included in interest income on loans.

Total interest expense for the three months ended June 30, 2024 increased $1.1 million, or 5.1%, compared to the three months ended March 31, 2024. The increase was the result of both increases in the average cost of funds, due to increased market rates, and average balances across interest-bearing deposit types, partially offset by a decline in average borrowings outstanding.

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

	Increase / (Decrease) Due to								Total Increase / (Decrease)
(Dollars in thousands)	Volume				Rate
Interest-earning assets
Loans receivable	$	325			$	1,884			$	2,209
Debt securities available for sale		79				103				182
Other interest-earning assets		141				(473	)			(332	)
Total interest-earning assets		545				1,514				2,059
Interest-bearing liabilities
Interest-bearing checking accounts		(10	)			29				19
Money market accounts		127				430				557
Savings accounts		(1	)			(1	)			(2	)
Certificate accounts		158				633				791
Junior subordinated debt		1				(3	)			(2	)
Borrowings		(241	)			1				(240	)
Total interest-bearing liabilities		34				1,089				1,123
Increase in net interest income									$	936

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

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

	Three Months Ended
(Dollars in thousands)	June 30, 2024				March 31, 2024			$ Change				% Change
Provision for credit losses
Loans	$	4,300			$	1,145		$	3,155			276	%
Off-balance-sheet credit exposure		(40	)			20			(60	)		(300	)
Total provision for credit losses	$	4,260			$	1,165		$	3,095			266	%

For the quarter ended June 30, 2024, the "loans" portion of the provision for credit losses was the result of the following, in addition to net charge-offs of $2.6 million during the quarter:

• $0.1 million provision driven by changes in the loan mix.
• $0.4 million benefit due to changes in the projected economic forecast and changes in qualitative adjustments.
• $2.0 million increase in specific reserves on individually evaluated loans which was proportional to the increase in the associated loan balances which increased from $8.3 million to $16.3 million quarter-over-quarter, concentrated in the equipment finance and SBA portfolios. Further information on the change in nonperforming loans may be found in the "Asset Quality" section.

For the quarter ended March 31, 2024, the "loans" portion of the provision for credit losses was the result of the following, offset by net charge-offs of $2.3 million during the quarter:

• $0.1 million benefit driven by changes in the loan mix.
• $0.9 million benefit due to changes in the projected economic forecast, specifically the national unemployment rate, and changes in qualitative adjustments.
• $0.2 million decrease in specific reserves on individually evaluated credits.

For the quarters ended June 30, 2024 and March 31, 2024, the amounts recorded for off-balance-sheet credit exposure were the result of changes in the balance of loan commitments, loan mix and projected economic forecast as outlined above.

Noninterest Income.  Noninterest income for the three months ended June 30, 2024 decreased $698,000, or 7.9%, when compared to the quarter ended March 31, 2024. Changes in the components of noninterest income are discussed below:

	Three Months Ended
(Dollars in thousands)	June 30, 2024			March 31, 2024				$ Change				% Change
Noninterest income
Service charges and fees on deposit accounts	$	2,354		$	2,149			$	205			10	%
Loan income and fees		647			678				(31	)		(5	)
Gain on sale of loans held for sale		1,828			1,457				371			25
Bank owned life insurance ("BOLI") income		807			1,835				(1,028	)		(56	)
Operating lease income		1,591			1,859				(268	)		(14	)
Loss on sale of premises and equipment		—			(9	)			9			100
Other		886			842				44			5
Total noninterest income	$	8,113		$	8,811			$	(698	)		(8	)%

• Service charges and fees on deposit accounts: The change was due to a $154,000 increase in debit card fees quarter-over-quarter.
• Gain on sale of loans held for sale: The increase was primarily driven by HELOCs sold during the period. There were $32.9 million of HELOCs sold for a gain of $457,000 compared to $7.8 million sold with gains of $16,000 in the prior quarter. There were $21.3 million of residential mortgage loans originated for sale which were sold during the current quarter with gains of $351,000 compared to $15.3 million sold with gains of $316,000 in the prior quarter. There were $12.7 million in sales of the guaranteed portion of SBA commercial loans with gains of $1.1 million for the quarter compared to $12.9 million sold and gains of $1.1 million for the prior quarter. Our hedging of mandatory commitments on the residential mortgage loan pipeline resulted in a loss of $58,000 for the quarter ended June 30, 2024 versus a gain of $55,000 for the quarter ended March 31, 2024.
• BOLI income: The decrease was due to $1.1 million in tax-free gains on death benefit proceeds in excess of the cash surrender value of the policies recognized during the prior quarter. No death benefit proceeds were recognized during the current quarter.
• Operating lease income: The decrease was the result of an increase of $497,000 in losses incurred on previously leased equipment, partially offset by an increase of $228,000 in contractual earnings on a larger average outstanding balance.
  
  

Noninterest Expense.  Noninterest expense for the three months ended June 30, 2024 decreased $346,000, or 1.2%, when compared to the three months ended March 31, 2024. Changes in the components of noninterest expense are discussed below:

	Three Months Ended
(Dollars in thousands)	June 30, 2024			March 31, 2024			$ Change				% Change
Noninterest expense
Salaries and employee benefits	$	16,608		$	16,976		$	(368	)		(2	)%
Occupancy expense, net		2,419			2,437			(18	)		(1	)
Computer services		3,116			3,088			28			1
Telephone, postage and supplies		580			585			(5	)		(1	)
Marketing and advertising		606			645			(39	)		(6	)
Deposit insurance premiums		531			554			(23	)		(4	)
Core deposit intangible amortization		567			762			(195	)		(26	)
Other		5,783			4,817			966			20
Total noninterest expense	$	30,210		$	29,864		$	346			1	%

• Core deposit intangible amortization: The intangible recorded associated with the QNB merger is being amortized on an accelerated basis, so the rate of amortization slowed quarter-over-quarter.
• Other: The increase quarter-over-quarter was primarily the result of $279,000 of additional depreciation expense on equipment subject to operating leases in addition to smaller increases across several other expense categories.

Income Taxes.  The amount of income tax expense is influenced by the amount of pre-tax income, tax-exempt income, changes in the statutory rate and the effect of changes in valuation allowances maintained against deferred tax benefits. The effective tax rates for the three months ended June 30, 2024 and March 31, 2024 were 21.4% and 20.8%, respectively. The increase was primarily driven by $1.1 million of tax-free gains on BOLI death benefit proceeds in excess of the cash surrender value of the policies during the prior quarter.

Comparison of Results of Operations for the Six Months Ended June 30, 2024 and June 30, 2023
Net Income.  Net income totaled $27.5 million, or $1.61 per diluted share, for the six months ended June 30, 2024 compared to net income of $21.7 million, or $1.30 per diluted share, for the six months ended June 30, 2023, an increase of $5.7 million, or 26.4%. The results for the six months ended June 30, 2024 were positively impacted by a decrease of $3.7 million in the provision for credit losses and a $4.7 million decrease in merger-related expenses. Details of the changes in the various components of net income are further discussed below.

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

	Six Months Ended
	June 30, 2024										June 30, 2023
(Dollars in thousands)	Average Balance Outstanding				Interest Earned / Paid			Yield / Rate			Average Balance Outstanding				Interest Earned / Paid			Yield / Rate
Assets
Interest-earning assets
Loans receivable(1)	$	3,874,740			$	122,113		6.34	%		$	3,592,527			$	104,030		5.84	%
Debt securities available for sale		130,510				2,808		4.33				160,462				2,521		3.17
Other interest-earning assets(2)		135,936				3,848		5.69				131,310				3,246		4.98
Total interest-earning assets		4,141,186				128,769		6.25				3,884,299				109,797		5.70
Other assets		282,550										262,118
Total assets	$	4,423,736									$	4,146,417
Liabilities and equity
Interest-bearing liabilities
Interest-bearing checking accounts	$	588,567			$	2,870		0.98	%		$	642,115			$	2,124		0.67	%
Money market accounts		1,289,758				19,885		3.10				1,197,856				10,877		1.83
Savings accounts		189,887				84		0.09				224,373				97		0.09
Certificate accounts		895,242				19,162		4.30				578,639				7,428		2.59
Total interest-bearing deposits		2,963,454				42,001		2.85				2,642,983				20,526		1.57
Junior subordinated debt		10,042				470		9.41				7,640				327		8.63
Borrowings		95,235				2,902		6.13				133,962				3,594		5.41
Total interest-bearing liabilities		3,068,731				45,373		2.97				2,784,585				24,447		1.78
Noninterest-bearing deposits		789,565										855,041
Other liabilities		50,224										52,480
Total liabilities		3,908,520										3,692,106
Stockholders' equity		515,216										454,311
Total liabilities and stockholders' equity	$	4,423,736									$	4,146,417
Net earning assets	$	1,072,455									$	1,099,714
Average interest-earning assets to average interest-bearing liabilities		134.95	%									139.49	%
Non-tax-equivalent
Net interest income					$	83,396									$	85,350
Interest rate spread								3.28	%									3.92	%
Net interest margin(3)								4.05	%									4.43	%
Tax-equivalent(4)
Net interest income					$	84,100									$	85,938
Interest rate spread								3.32	%									3.95	%
Net interest margin(3)								4.08	%									4.46	%

(1)  Average loans receivable balances include loans held for sale and nonaccruing loans.
(2)  Average other interest-earning assets consist of FRB stock, FHLB stock, SBIC investments and deposits in other banks.
(3)  Net interest income divided by average interest-earning assets.
(4)  Tax-equivalent results include adjustments to interest income of $704 and $588 for the six months ended June 30, 2024 and June 30, 2023, respectively, calculated based on a combined federal and state tax rate of 24%.

Total interest and dividend income for the six months ended June 30, 2024 increased $19.0 million, or 17.3%, compared to the six months ended June 30, 2023, which was driven by an $18.1 million, or 17.4%, increase in interest income on loans and an increase of $602,000, or 18.5%, in interest income on other interest-earning assets. The overall increase in average yield on interest-earning assets was the result of both higher average balances and rising interest rates.

Total interest expense for the six months ended June 30, 2024 increased $20.9 million, or 85.6%, compared to the six months ended June 30, 2023. The increase was primarily the result of increases in the average balances and cost of funds across all funding sources driven by higher market interest rates, as well as the inclusion of Quantum's portfolio for the entire period, unlike last year.

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

	Increase / (Decrease) Due to							Total Increase / (Decrease)
(Dollars in thousands)	Volume				Rate
Interest-earning assets
Loans receivable	$	8,510			$	9,573		$	18,083
Debt securities available for sale		(463	)			750			287
Other interest-earning assets		125				477			602
Total interest-earning assets		8,172				10,800			18,972
Interest-bearing liabilities
Interest-bearing checking accounts		(169	)			915			746
Money market accounts		890				8,118			9,008
Savings accounts		(15	)			2			(13	)
Certificate accounts		4,117				7,617			11,734
Junior subordinated debt		104				39			143
Borrowings		(1,031	)			339			(692	)
Total interest-bearing liabilities		3,896				17,030			20,926
Decrease in net interest income								$	(1,954	)

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

	Six Months Ended
(Dollars in thousands)	June 30, 2024				June 30, 2023				$ Change				% Change
Provision for credit losses
Loans	$	5,445			$	9,270			$	(3,825	)		(41	)%
Off-balance-sheet credit exposure		(20	)			(105	)			85			81
Total provision for credit losses	$	5,425			$	9,165			$	(3,740	)		(41	)%

For the six months ended June 30, 2024, the "loans" portion of the provision for credit losses was the result of the following, in addition to net charge-offs of $4.9 million during the period:

• $1.3 million benefit due to changes in the projected economic forecast, specifically the national unemployment rate, and changes in qualitative adjustments.
• $1.8 million increase in specific reserves on individually evaluated loans which was proportional to the increase in the associated loan balances which increased from $8.1 million to $16.3 million during the six month period, concentrated in the equipment finance and SBA portfolios. Further information on the change in nonperforming loans may be found in the "Asset Quality" section.

For the six months ended June 30, 2023, the "loans" portion of the provision for credit losses was the result of the following, in addition to net charge-offs of $1.3 million during the period:

• $4.9 million provision to establish an allowance on Quantum's loan portfolio.
• $2.1 million provision driven by loan growth and changes in the loan mix.
• $0.9 million provision due to changes in the projected economic forecast, specifically the national unemployment rate, and changes in qualitative adjustments.
• $0.1 million increase in specific reserves on individually evaluated credits.

For the six months ended June 30, 2024 and June 30, 2023, the amounts recorded for off-balance-sheet credit exposure were the result of changes in the balance of loan commitments, loan mix and projected economic forecast as outlined above.

Noninterest Income.  Noninterest income for the six months ended June 30, 2024 increased $1.7 million, or 11.4%, when compared to the same period last year. Changes in the components of noninterest income are discussed below:

	Six Months Ended
(Dollars in thousands)	June 30, 2024				June 30, 2023			$ Change				% Change
Noninterest income
Service charges and fees on deposit accounts	$	4,503			$	4,649		$	(146	)		(3	)%
Loan income and fees		1,325				1,354			(29	)		(2	)
Gain on sale of loans held for sale		3,285				2,920			365			13
BOLI income		2,642				1,095			1,547			141
Operating lease income		3,450				2,730			720			26
Gain (loss) on sale of premises and equipment		(9	)			982			(991	)		(101	)
Other		1,728				1,468			260			18
Total noninterest income	$	16,924			$	15,198		$	1,726			11	%

• Gain on sale of loans held for sale: The increase in the gain on sale of loans held for sale was primarily driven by HELOCs and SBA loans sold during the period. During the six months ended June 30, 2024, there were $40.7 million of HELOCs sold for a gain of $473,000 compared to $35.2 million sold and gains of $354,000 for the corresponding period in the prior year. There were $25.6 million of sales of the guaranteed portion of SBA commercial loans with gains of $2.1 million compared to $28.8 million sold and gains of $1.9 million for the corresponding period in the prior year. There were $36.6 million of residential mortgage loans originated for sale which were sold during the current period with gains of $667,000 compared to $28.4 million sold with gains of $382,000 for the corresponding period in the prior year. Our hedging of mandatory commitments on the residential mortgage loan pipeline resulted in a loss of $3,000 for the six months ended June 30, 2024 versus a gain of $268,000 for the six months ended June 30, 2023.
• BOLI income: The increase was due to the combined effect of $1.1 million in tax-free gains on death benefit proceeds in excess of the cash surrender value of the policies recognized and higher yielding policies as a result of restructuring the portfolio at the end of the prior calendar year.
• Operating lease income: The increase was the result of $1.2 million in additional contractual earnings on a higher average outstanding balance of the associated contracts, partially offset by losses incurred on previously leased equipment, where we recognized net losses of $787,000 and $262,000 in the six months ended June 30, 2024 and June 30, 2023, respectively.
• Gain (loss) on sale of premises and equipment: During the six months ended June 30, 2023, two properties were sold for a combined gain of $982,000. No material disposal activity occurred during the six months ended June 30, 2024.
• Other: The increase was driven by a $270,000 increase in investment services income recognized period-over-period.

Noninterest Expense.  Noninterest expense for the six months ended June 30, 2024 decreased $3.7 million, or 5.8%, when compared to the same period last year. Changes in the components of noninterest expense are discussed below:

	Six Months Ended
(Dollars in thousands)	June 30, 2024			June 30, 2023			$ Change				% Change
Noninterest expense
Salaries and employee benefits	$	33,584		$	32,922		$	662			2	%
Occupancy expense, net		4,856			5,067			(211	)		(4	)
Computer services		6,204			6,213			(9	)		—
Telephone, postage and supplies		1,165			1,290			(125	)		(10	)
Marketing and advertising		1,251			1,068			183			17
Deposit insurance premiums		1,085			1,161			(76	)		(7	)
Core deposit intangible amortization		1,329			1,465			(136	)		(9	)
Merger-related expenses		—			4,741			(4,741	)		(100	)
Other		10,600			9,817			783			8
Total noninterest expense	$	60,074		$	63,744		$	(3,670	)		(6	)%

• Marketing and advertising: The increase was the result of differences in the timing of when expenses were incurred quarter-over-quarter.
• Merger-related expenses: The prior period included expenses associated with the Company's merger with Quantum. No such expenses were incurred in the six months ended June 30, 2024.
• Other: The increase period-over-period was primarily driven by $1.0 million of additional depreciation expense on equipment subject to operating leases, partially offset by a decrease of $314,000 in fraud losses.

Income Taxes.  The amount of income tax expense is influenced by the amount of pre-tax income, tax-exempt income, changes in the statutory rate and the effect of changes in valuation allowances maintained against deferred tax benefits. The effective tax rates for the six months ended June 30, 2024 and June 30, 2023 were 21.1% and 21.3%, respectively.

Balance Sheet Review
Total assets decreased by $1.8 million to $4.7 billion and total liabilities decreased by $25.5 million to $4.1 billion, respectively, at June 30, 2024 as compared to December 31, 2023. The majority of these changes were the result of an increase in deposits, which, combined with the collection of BOLI redemption proceeds, were used to fund growth in loans and pay down borrowings.

Stockholders' equity increased $23.7 million to $523.6 million at June 30, 2024 as compared to December 31, 2023. Activity within stockholders' equity included $27.5 million in net income, partially offset by $3.7 million in cash dividends declared. As of June 30, 2024, the Bank was considered "well capitalized" in accordance with its regulatory capital guidelines and exceeded all regulatory capital requirements.

Asset Quality
The ACL on loans was $49.2 million, or 1.33% of total loans, at June 30, 2024 compared to $48.6 million, or 1.34% of total loans, at December 31, 2023. The drivers of the changes between periods are discussed in the "Comparison of Results of Operations for the Six Months Ended June 30, 2024 and June 30, 2023 – Provision for Credit Losses" section above.

Net loan charge-offs totaled $4.9 million for the six months ended June 30, 2024 compared to $1.3 million for the same period last year. As discussed in previous quarters, the increase in net charge-offs has been concentrated in our equipment finance portfolio, primarily smaller over-the-road truck loans, with net charge-offs of $3.4 million during the identified period. In response, during the first quarter of calendar year 2024 the Company elected to cease further originations within the transportation sector of equipment finance loans. In spite of the increase, annualized net charge-offs as a percentage of average assets were 0.25% for the six months ended June 30, 2024, in line with the Company's historical experience, as compared to 0.07% for the six months ended June 30, 2023.

Nonperforming assets, made up entirely of nonaccrual loans for both periods, increased by $5.9 million, or 30.7%, to $25.3 million, or 0.54% of total assets, at June 30, 2024 compared to $19.3 million, or 0.41% of total assets, at December 31, 2023. Consistent with the change in net charge-offs, equipment finance loans made up the largest portion of nonperforming assets at $10.6 million and $6.5 million, respectively, at these same dates; however, the increase between these two dates was mainly the result of a $3.1 million medical equipment relationship where a loss is not currently anticipated. The ratio of nonperforming loans to total loans was 0.68% at June 30, 2024 compared to 0.53% at December 31, 2023.

The ratio of classified assets to total assets increased to 0.91% at June 30, 2024 from 0.90% at December 31, 2023 as classified assets increased $696,000, or 1.7%, to $42.7 million at June 30, 2024 compared to $42.0 million at December 31, 2023. The largest portfolios of classified assets at June 30, 2024 included $11.8 million of non-owner occupied commercial real estate (NOO CRE) loans, $10.6 million of equipment finance loans, $8.1 million of SBA loans, and $5.2 million of 1-4 family residential real estate loans.

About HomeTrust Bancshares, Inc.
HomeTrust Bancshares, Inc. is the holding company for the Bank. As of June 30, 2024, the Company had assets of $4.7 billion. The Bank, founded in 1926, is a North Carolina state chartered, community-focused financial institution committed to providing value added relationship banking with over 30 locations as well as online/mobile channels. Locations include: North Carolina (the Asheville metropolitan area, the "Piedmont" region, Charlotte and Raleigh/Cary), South Carolina (Greenville and Charleston), East Tennessee (Kingsport/Johnson City, Knoxville and Morristown), Southwest Virginia (the Roanoke Valley) and Georgia (Greater Atlanta).

Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact, but instead are based on certain assumptions including statements with respect to the Company's beliefs, plans, objectives, goals, expectations, assumptions and statements about future economic performance and projections of financial items. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated or implied by forward-looking statements. The factors that could result in material differentiation include, but are not limited to the impact of bank failures or adverse developments involving other banks and related negative press about the banking industry in general on investor and depositor sentiment; the remaining effects of the COVID-19 pandemic on general economic and financial market conditions and on public health, both nationally and in the Company's market areas; expected revenues, cost savings, synergies and other benefits from merger and acquisition activities might not be realized to the extent anticipated, within the anticipated time frames, or at all, costs or difficulties relating to integration matters, including but not limited to customer and employee retention, might be greater than expected, and goodwill impairment charges might be incurred; increased competitive pressures among financial services companies; changes in the interest rate environment; changes in general economic conditions, both nationally and in our market areas; legislative and regulatory changes; and the effects of inflation, a potential recession, and other factors described in the Company's latest Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other documents filed with or furnished to the Securities and Exchange Commission - which are available on the Company's website at www.htb.com and on the SEC's website at www.sec.gov. Any of the forward-looking statements that the Company makes in this press release or in the documents the Company files with or furnishes to the SEC are based upon management's beliefs and assumptions at the time they are made and may turn out to be wrong because of inaccurate assumptions, the factors described above or other factors that management cannot foresee. The Company does not undertake, and specifically disclaims any obligation, to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

Consolidated Balance Sheets (Unaudited)

(Dollars in thousands)	June 30, 2024				March 31, 2024				December 31, 2023(1)				September 30, 2023				June 30, 2023(1)
Assets
Cash	$	18,382			$	16,134			$	18,307			$	18,090			$	19,266
Interest-bearing deposits		275,808				364,359				328,833				306,924				284,231
Cash and cash equivalents		294,190				380,493				347,140				325,014				303,497
Certificates of deposit in other banks		32,131				33,625				34,722				35,380				33,152
Debt securities available for sale, at fair value		134,135				120,807				126,950				134,348				151,926
FHLB and FRB stock		19,637				13,691				18,393				19,612				20,208
SBIC investments, at cost		15,462				14,568				13,789				14,586				14,927
Loans held for sale, at fair value		1,614				2,764				3,359				4,616				6,947
Loans held for sale, at the lower of cost or fair value		224,976				220,699				198,433				200,834				161,703
Loans, net of deferred loan fees and costs		3,701,454				3,648,152				3,640,022				3,659,914				3,658,823
Allowance for credit losses – loans		(49,223	)			(47,502	)			(48,641	)			(47,417	)			(47,193	)
Loans, net		3,652,231				3,600,650				3,591,381				3,612,497				3,611,630
Premises and equipment, net		69,880				70,588				70,937				72,463				73,171
Accrued interest receivable		18,412				16,944				16,902				16,513				14,829
Deferred income taxes, net		10,512				11,222				11,796				9,569				10,912
BOLI		89,176				88,369				88,257				106,059				106,572
Goodwill		34,111				34,111				34,111				34,111				34,111
Core deposit intangibles, net		7,730				8,297				9,059				9,918				10,778
Other assets		66,667				67,183				107,404				56,477				53,124
Total assets	$	4,670,864			$	4,684,011			$	4,672,633			$	4,651,997			$	4,607,487
Liabilities and stockholders' equity
Liabilities
Deposits	$	3,707,779			$	3,799,807			$	3,661,373			$	3,640,961			$	3,601,168
Junior subordinated debt		10,070				10,045				10,021				9,995				9,971
Borrowings		364,513				291,513				433,763				452,263				457,263
Other liabilities		64,874				69,473				67,583				64,367				67,899
Total liabilities		4,147,236				4,170,838				4,172,740				4,167,586				4,136,301
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)		175				175				174				174				174
Additional paid in capital		172,907				172,919				172,366				171,663				171,222
Retained earnings		357,147				346,598				333,401				321,799				308,651
Unearned Employee Stock Ownership Plan ("ESOP") shares		(4,232	)			(4,364	)			(4,497	)			(4,629	)			(4,761	)
Accumulated other comprehensive loss		(2,369	)			(2,155	)			(1,551	)			(4,596	)			(4,100	)
Total stockholders' equity		523,628				513,173				499,893				484,411				471,186
Total liabilities and stockholders' equity	$	4,670,864			$	4,684,011			$	4,672,633			$	4,651,997			$	4,607,487

(1)  Derived from audited financial statements.
(2)  Shares of common stock issued and outstanding were 17,437,326 at June 30, 2024; 17,444,787 at March 31, 2024; 17,387,069 at December 31, 2023; 17,380,307 at September 30, 2023; and 17,366,673 at June 30, 2023.

Consolidated Statements of Income (Unaudited)

	Three Months Ended							Six Months Ended
(Dollars in thousands)	June 30, 2024			March 31, 2024				June 30, 2024				June 30, 2023
Interest and dividend income
Loans	$	62,161		$	59,952			$	122,113			$	104,030
Debt securities available for sale		1,495			1,313				2,808				2,521
Other investments and interest-bearing deposits		1,758			2,090				3,848				3,246
Total interest and dividend income		65,414			63,355				128,769				109,797
Interest expense
Deposits		21,683			20,318				42,001				20,526
Junior subordinated debt		234			236				470				327
Borrowings		1,331			1,571				2,902				3,594
Total interest expense		23,248			22,125				45,373				24,447
Net interest income		42,166			41,230				83,396				85,350
Provision for credit losses		4,260			1,165				5,425				9,165
Net interest income after provision for credit losses		37,906			40,065				77,971				76,185
Noninterest income
Service charges and fees on deposit accounts		2,354			2,149				4,503				4,649
Loan income and fees		647			678				1,325				1,354
Gain on sale of loans held for sale		1,828			1,457				3,285				2,920
BOLI income		807			1,835				2,642				1,095
Operating lease income		1,591			1,859				3,450				2,730
Gain (loss) on sale of premises and equipment		—			(9	)			(9	)			982
Other		886			842				1,728				1,468
Total noninterest income		8,113			8,811				16,924				15,198
Noninterest expense
Salaries and employee benefits		16,608			16,976				33,584				32,922
Occupancy expense, net		2,419			2,437				4,856				5,067
Computer services		3,116			3,088				6,204				6,213
Telephone, postage and supplies		580			585				1,165				1,290
Marketing and advertising		606			645				1,251				1,068
Deposit insurance premiums		531			554				1,085				1,161
Core deposit intangible amortization		567			762				1,329				1,465
Merger-related expenses		—			—				—				4,741
Other		5,783			4,817				10,600				9,817
Total noninterest expense		30,210			29,864				60,074				63,744
Income before income taxes		15,809			19,012				34,821				27,639
Income tax expense		3,391			3,945				7,336				5,892
Net income	$	12,418		$	15,067			$	27,485			$	21,747

Per Share Data

		Three Months Ended						Six Months Ended
		June 30, 2024			March 31, 2024			June 30, 2024			June 30, 2023
Net income per common share(1)
Basic		$	0.73		$	0.88		$	1.61		$	1.31
Diluted		$	0.73		$	0.88		$	1.61		$	1.30
Average shares outstanding
Basic			16,883,028			16,859,738			16,871,383			16,400,370
Diluted			16,904,098			16,872,840			16,888,550			16,427,587
Book value per share at end of period		$	30.03		$	29.42		$	30.03		$	27.13
Tangible book value per share at end of period(2)		$	27.73		$	27.10		$	27.73		$	24.69
Cash dividends declared per common share		$	0.11		$	0.11		$	0.22		$	0.20
Total shares outstanding at end of period			17,437,326			17,444,787			17,437,326			17,366,673

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

Selected Financial Ratios and Other Data

	Three Months Ended						Six Months Ended
	June 30, 2024			March 31, 2024			June 30, 2024			June 30, 2023
Performance ratios(1)
Return on assets (ratio of net income to average total assets)	1.13	%		1.37	%		1.25	%		1.06	%
Return on equity (ratio of net income to average equity)	9.58			11.91			10.73			9.65
Yield on earning assets	6.32			6.18			6.25			5.70
Rate paid on interest-bearing liabilities	3.04			2.90			2.97			1.78
Average interest rate spread	3.28			3.28			3.28			3.92
Net interest margin(2)	4.08			4.02			4.05			4.43
Average interest-earning assets to average interest-bearing liabilities	135.38			134.52			134.95			139.88
Noninterest expense to average total assets	2.74			2.72			2.73			3.10
Efficiency ratio	60.08			59.69			59.88			63.40
Efficiency ratio – adjusted(3)	59.66			60.64			60.14			58.91

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

	At or For the Three Months Ended
	June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023			June 30, 2023
Asset quality ratios
Nonperforming assets to total assets(1)	0.54	%		0.43	%		0.41	%		0.25	%		0.18	%
Nonperforming loans to total loans(1)	0.68			0.55			0.53			0.32			0.23
Total classified assets to total assets	0.91			0.80			0.90			0.76			0.53
Allowance for credit losses to nonperforming loans(1)	194.80			235.18			251.60			400.41			567.56
Allowance for credit losses to total loans	1.33			1.30			1.34			1.30			1.29
Net charge-offs to average loans (annualized)	0.27			0.24			0.29			0.27			0.13
Capital ratios
Equity to total assets at end of period	11.21	%		10.96	%		10.70	%		10.41	%		10.23	%
Tangible equity to total tangible assets(2)	10.44			10.18			9.91			9.60			9.39
Average equity to average assets	11.78			11.51			11.03			10.84			10.79

(1)  Nonperforming assets include nonaccruing loans and REO. There were no accruing loans more than 90 days past due at the dates indicated. At June 30, 2024, $8.3 million, or 32.9%, of nonaccruing loans were current on their loan payments as of that date.
(2)  See Non-GAAP reconciliations below for adjustments.

Loans

(Dollars in thousands)	June 30, 2024				March 31, 2024				December 31, 2023				September 30, 2023				June 30, 2023
Commercial real estate loans
Construction and land development	$	316,050			$	304,727			$	305,269			$	352,143			$	356,674
Commercial real estate – owner occupied		545,631				532,547				536,545				526,534				529,721
Commercial real estate – non-owner occupied		892,653				881,143				875,694				880,348				901,685
Multifamily		92,292				89,692				88,623				83,430				81,827
Total commercial real estate loans		1,846,626				1,808,109				1,806,131				1,842,455				1,869,907
Commercial loans
Commercial and industrial		266,136				243,732				237,255				237,366				245,428
Equipment finance		461,010				462,649				465,573				470,387				462,211
Municipal leases		152,509				151,894				150,292				147,821				142,212
Total commercial loans		879,655				858,275				853,120				855,574				849,851
Residential real estate loans
Construction and land development		70,679				85,840				96,646				103,381				110,074
One-to-four family		621,196				605,570				584,405				560,399				529,703
HELOCs		188,465				184,274				185,878				185,289				187,193
Total residential real estate loans		880,340				875,684				866,929				849,069				826,970
Consumer loans		94,833				106,084				113,842				112,816				112,095
Total loans, net of deferred loan fees and costs		3,701,454				3,648,152				3,640,022				3,659,914				3,658,823
Allowance for credit losses – loans		(49,223	)			(47,502	)			(48,641	)			(47,417	)			(47,193	)
Loans, net	$	3,652,231			$	3,600,650			$	3,591,381			$	3,612,497			$	3,611,630

Deposits

(Dollars in thousands)	June 30, 2024			March 31, 2024			December 31, 2023			September 30, 2023			June 30, 2023
Core deposits
Noninterest-bearing accounts	$	683,346		$	773,901		$	784,950		$	827,362		$	825,481
NOW accounts		561,789			600,561			591,270			602,804			611,105
Money market accounts		1,311,940			1,308,467			1,246,807			1,195,482			1,241,840
Savings accounts		185,499			191,302			194,486			202,971			212,220
Total core deposits		2,742,574			2,874,231			2,817,513			2,828,619			2,890,646
Certificates of deposit		965,205			925,576			843,860			812,342			710,522
Total	$	3,707,779		$	3,799,807		$	3,661,373		$	3,640,961		$	3,601,168

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

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

		Three Months Ended								Six Months Ended
(Dollars in thousands)		June 30, 2024				March 31, 2024				June 30, 2024				June 30, 2023
Noninterest expense		$	30,210			$	29,864			$	60,074			$	63,744
Less: merger expense			—				—				—				4,741
Noninterest expense – adjusted		$	30,210			$	29,864			$	60,074			$	59,003
Net interest income		$	42,166			$	41,230			$	83,396			$	85,350
Plus: tax-equivalent adjustment			354				349				704				588
Plus: noninterest income			8,113				8,811				16,924				15,198
Less: BOLI death benefit proceeds in excess of cash surrender value			—				1,143				1,143				—
Less: gain (loss) on sale of premises and equipment			—				(9	)			(9	)			982
Net interest income plus noninterest income – adjusted		$	50,633			$	49,256			$	99,890			$	100,154
Efficiency ratio			60.08	%			59.69	%			59.88	%			63.40	%
Efficiency ratio – adjusted			59.66	%			60.64	%			60.14	%			58.91	%

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, 2024			March 31, 2024			December 31, 2023			September 30, 2023			June 30, 2023
Total stockholders' equity		$	523,628		$	513,173		$	499,893		$	484,411		$	471,186
Less: goodwill, core deposit intangibles, net of taxes			40,063			40,500			41,086			41,748			42,410
Tangible book value		$	483,565		$	472,673		$	458,807		$	442,663		$	428,776
Common shares outstanding			17,437,326			17,444,787			17,387,069			17,380,307			17,366,673
Book value per share		$	30.03		$	29.42		$	28.75		$	27.87		$	27.13
Tangible book value per share		$	27.73		$	27.10		$	26.39		$	25.47		$	24.69

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

		As of
(Dollars in thousands)		June 30, 2024				March 31, 2024				December 31, 2023				September 30, 2023				June 30, 2023
Tangible equity(1)		$	483,565			$	472,673			$	458,807			$	442,663			$	428,776
Total assets			4,670,864				4,684,011				4,672,633				4,651,997				4,607,487
Less: goodwill, core deposit intangibles, net of taxes			40,063				40,500				41,086				41,748				42,410
Total tangible assets		$	4,630,801			$	4,643,511			$	4,631,547			$	4,610,249			$	4,565,077
Tangible equity to tangible assets			10.44	%			10.18	%			9.91	%			9.60	%			9.39	%

(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.

FAQ

What were HomeTrust Bancshares' Q2 2024 earnings?

HomeTrust Bancshares reported Q2 2024 net income of $12.4 million and diluted EPS of $0.73.

How much was HomeTrust Bancshares' dividend for Q2 2024?

The quarterly dividend declared for Q2 2024 was $0.11 per share, payable on August 29, 2024.

What was the change in net interest margin for HomeTrust Bancshares in Q2 2024?

The net interest margin for Q2 2024 increased slightly to 4.08% from 4.02% in Q1 2024.

How did HomeTrust Bancshares' provision for credit losses change in Q2 2024?

The provision for credit losses increased significantly to $4.3 million in Q2 2024 from $1.2 million in Q1 2024.

What was HomeTrust Bancshares' net income for the six months ended June 30, 2024?

For the six months ended June 30, 2024, HomeTrust Bancshares' net income was $27.5 million.

How did HomeTrust Bancshares' annualized ROA and ROE change in the six months ended June 30, 2024?

Annualized ROA increased to 1.25% and annualized ROE increased to 10.73% in the six months ended June 30, 2024.