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

Rhea-AI Summary

HomeTrust Bancshares (NASDAQ: HTBI) reported a strong second quarter for fiscal year 2023, with net income of $13.7 million ($0.90 per diluted share), up 48.5% from the previous quarter. The annualized return on assets rose to 1.54%, and return on equity reached 13.37%. Net interest income increased to $37.5 million, while credit loss provisions decreased to $2.2 million. Noninterest income also grew to $8.5 million. The Board declared a quarterly cash dividend of $0.10 per share, representing an 11.1% increase. Total assets and stockholders' equity were reported at $3.6 billion and $410.2 million, respectively.

Positive

• Net income increased by $4.5 million, or 48.5%, compared to the prior quarter.
• Diluted EPS rose to $0.90, up from $0.60.
• Annualized ROA improved to 1.54% from 1.02%.
• Annualized ROE increased to 13.37% from 9.25%.
• Net interest income grew to $37.5 million from $34.5 million.
• Provision for credit losses decreased from $4.0 million to $2.2 million.
• Dividends were increased by 11.1% to $0.10 per share.

Negative

• Noninterest income decreased to $15.9 million, down from $20.4 million year-over-year.
• Provision for credit losses increased significantly by 257% year-over-year.

ASHEVILLE, N.C., Jan. 24, 2023 (GLOBE NEWSWIRE) -- HomeTrust Bancshares, Inc. (NASDAQ: HTBI) ("Company"), the holding company of HomeTrust Bank ("Bank"), today announced preliminary net income for the second quarter of fiscal year 2023 and approval of its quarterly cash dividend.

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

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

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

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

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

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

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

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

WEBSITE: WWW.HTB.COM

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

Net Income.  Net income totaled $13.7 million, or $0.90 per diluted share, for the three months ended December 31, 2022 compared to net income of $9.2 million, or $0.60 per diluted share, for the three months ended September 30, 2022, an increase of $4.5 million, or 48.5%. The results for the three months ended December 31, 2022 were positively impacted by a $3.0 million increase in net interest income and a $1.1 million increase in noninterest income. Details of the changes in the various components of net income are further discussed below.

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

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

(1)	The average loans receivable balances include loans held for sale and nonaccruing loans.
(2)	Interest income used in the average interest earned and yield calculation includes the tax equivalent adjustment of $287 and $277 for the three months ended December 31, 2022 and September 30, 2022, respectively, calculated based on a combined federal and state tax rate of 24%.
(3)	The average other interest-earning assets consist of FRB stock, FHLB stock, SBIC investments, and deposits in other banks.
(4)	Net interest income divided by average interest-earning assets.

Total interest and dividend income for the three months ended December 31, 2022 increased $5.5 million, or 15.2%, compared to the three months ended September 30, 2022, which was driven by a $5.8 million, or 17.3%, increase in interest income on loans. The overall increase in average yield on interest-earning assets and rate paid on liabilities was the result of rising interest rates. Specific to debt securities available for sale, the Company has intentionally maintained a relatively short-term duration portfolio which has allowed, and will continue to allow, the Company to take advantage of rising rates when reinvesting the proceeds of maturing instruments.

Total interest expense for the three months ended December 31, 2022 increased $2.5 million, or 174.1%, compared to the three months ended September 30, 2022. The increase was driven by a $2.2 million, or 158.3%, increase in interest expense on deposits as a result of a 39 basis point increase in the associated average cost of funds, and a $242,000 increase in interest expense on borrowings as a result of higher average balances and higher rates.

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

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

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

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

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

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

• $1.6 million provision driven by loan growth and changes in the loan mix.
• $0.4 million provision due to changes in the projected economic forecast, specifically the national unemployment rate, and changes in qualitative adjustments.
• $1.5 million reduction of specific reserves on individually evaluated credits, which was tied to two relationships which were fully charged-off during the quarter.

For the quarter ended September 30, 2022, the "loans" portion of the provision for credit losses was the result of the following, offset by net charge-offs of $83,000 during the quarter:

• $1.3 million provision specific to fintech portfolios which have a riskier credit profile than loans originated in-house. The elevated credit risk is offset by the higher yields earned on the portfolios.
• $1.3 million provision driven by loan growth and changes in the loan mix.
• $1.1 million provision due to a projected worsening of the economic forecast, specifically the national unemployment rate, and changes in qualitative adjustments.

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

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

	Three Months Ended
	December 31, 2022			September 30, 2022				$ Change				% Change
Noninterest income
Service charges and fees on deposit accounts	$	2,523		$	2,338			$	185			8	%
Loan income and fees		647			570				77			14
Gain on sale of loans held for sale		1,102			1,586				(484	)		(31	)
BOLI income		494			527				(33	)		(6	)
Operating lease income		1,156			1,585				(429	)		(27	)
Gain (loss) on sale of premises and equipment		1,127			(12	)			1,139			9,492
Other		1,405			804				601			75
Total noninterest income	$	8,454		$	7,398			$	1,056			14	%

• Gain on sale of loans held for sale: The decrease in the gain on sale of loans held for sale was primarily driven by a decrease in volume of residential mortgage and SBA loans sold during the period as a result of rising interest rates. During the quarter ended December 31, 2022, $7.3 million of residential mortgage loans originated for sale were sold with gains of $183,000 compared to $20.9 million sold with gains of $493,000 for the quarter ended September 30, 2022. There were $8.2 million of sales of the guaranteed portion of SBA commercial loans with gains of $568,000 in the current quarter compared to $12.1 million sold and gains of $891,000 in the prior quarter. There were $41.4 million of home equity lines of credit ("HELOCs") sold during the current quarter for a gain of $340,000 compared to $22.8 million sold and gains of $202,000 in the prior quarter.
• Operating lease income: The decrease in operating lease income can be traced to lower contractual earnings as well as gains or losses incurred at the end of operating leases, where we recognized a net loss of $337,000 for the quarter ended December 31, 2022 versus a net gain of $148,000 for the quarter ended September 30, 2022.
• Gain (loss) on sale of premises and equipment: During the quarter ended December 31, 2022 two properties were sold for a combined gain of $1.6 million, partially offset by additional impairment of $420,000 on premises and equipment associated with prior branch closures.
• Other: The increase in other income was driven by a $721,000 gain recognized on the sale of closely held equity securities which the Company obtained through a prior bank acquisition.

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

	Three Months Ended
	December 31, 2022			September 30, 2022			$ Change				% Change
Noninterest expense
Salaries and employee benefits	$	14,484		$	14,815		$	(331	)		(2	)%
Occupancy expense, net		2,428			2,396			32			1
Computer services		2,796			2,763			33			1
Telephone, postage and supplies		575			603			(28	)		(5	)
Marketing and advertising		481			590			(109	)		(18	)
Deposit insurance premiums		546			542			4			1
Core deposit intangible amortization		26			34			(8	)		(24	)
Merger-related expenses		250			474			(224	)		(47	)
Other		4,490			3,872			618			16
Total noninterest expense	$	26,076		$	26,089		$	(13	)		—	%

• Salaries and employee benefits: The decrease in salaries and employee benefits expense is primarily the result of lower mortgage banking incentive pay as a result of the reduction in the volume of originations due to rising interest rates.
• Merger-related expenses: On July 24, 2022, the Company entered into an Agreement and Plan of Merger with Quantum Capital Corp. The expense for both periods are costs incurred related to due diligence and legal work performed associated with the transaction, in addition to ongoing costs incurred in preparation for the transaction.
• Other: During the quarter ended December 31, 2022 the Company wrote off $350,000 in previously capitalized costs associated with a technology project which the Company is no longer pursuing. No such expense was incurred in the prior quarter.

Income Taxes.  The amount of income tax expense is influenced by the amount of pre-tax income, the amount of tax-exempt income, changes in the statutory rate, and the effect of changes in valuation allowances maintained against deferred tax benefits. Income tax expense for the three months ended December 31, 2022 increased $1.4 million as a result of higher taxable income in the current quarter and an increase in the effective tax rate which moved from 22.3% to 22.8% quarter-over-quarter.

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

Net Income.  Net income totaled $22.9 million, or $1.50 per diluted share, for the six months ended December 31, 2022 compared to net income of $21.6 million, or $1.33 per diluted share, for the six months ended December 31, 2021, an increase of $1.3 million, or 5.8%. The results for the six months ended December 31, 2022 were positively impacted by a $17.2 million increase in net interest income, partially offset by an increase of $10.2 million in the provision for credit losses and a $4.7 million decrease in noninterest income. Details of the changes in the various components of net income are further discussed below.

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

	Six Months Ended
	December 31, 2022										December 31, 2021
(Dollars in thousands)	Average Balance Outstanding				Interest Earned / Paid(2)			Yield / Rate(2)			Average Balance Outstanding				Interest Earned / Paid(2)			Yield / Rate(2)
Assets
Interest-earning assets
Loans receivable(1)	$	2,939,677			$	72,814		4.91	%		$	2,819,482			$	55,441		3.90	%
Commercial paper		124,351				1,300		2.07				191,712				458		0.47
Debt securities available for sale		151,417				1,829		2.40				130,143				935		1.43
Other interest-earning assets(3)		100,125				1,960		3.88				126,054				1,576		2.48
Total interest-earning assets		3,315,570				77,903		4.66				3,267,391				58,410		3.55
Other assets		239,636										260,288
Total assets		3,555,206										3,527,679
Liabilities and equity
Interest-bearing liabilities
Interest-bearing checking accounts	$	640,851			$	838		0.26	%		$	635,362			$	728		0.23	%
Money market accounts		961,045				2,456		0.51				993,643				716		0.14
Savings accounts		237,509				89		0.07				223,061				81		0.07
Certificate accounts		460,803				1,615		0.70				450,706				1,352		0.60
Total interest-bearing deposits		2,300,208				4,998		0.43				2,302,772				2,877		0.25
Borrowings		13,795				266		3.83				56,356				41		0.15
Total interest-bearing liabilities		2,314,003				5,264		0.45				2,359,128				2,918		0.25
Noninterest-bearing deposits		793,349										722,432
Other liabilities		46,501										48,393
Total liabilities		3,153,853										3,129,953
Stockholders' equity		401,353										397,726
Total liabilities and stockholders' equity		3,555,206										3,527,679
Net earning assets	$	1,001,567									$	908,263
Average interest-earning assets to average interest-bearing liabilities		143.28	%									138.50	%
Tax-equivalent
Net interest income					$	72,639									$	55,492
Interest rate spread								4.21	%									3.30	%
Net interest margin(4)								4.35	%									3.37	%
Non-tax-equivalent
Net interest income					$	72,065									$	54,875
Interest rate spread								4.18	%									3.26	%
Net interest margin(4)								4.31	%									3.33	%

(1)	The average loans receivable balances include loans held for sale and nonaccruing loans.
(2)	Interest income used in the average interest earned and yield calculation includes the tax equivalent adjustment of $574 and $617 for the six months ended December 31, 2022 and December 31, 2021, respectively, calculated based on a combined federal and state tax rate of 24%.
(3)	The average other interest-earning assets consist of FRB stock, FHLB stock, SBIC investments, and deposits in other banks.
(4)	Net interest income divided by average interest-earning assets.

Total interest and dividend income for the six months ended December 31, 2022 increased $19.5 million, or 33.8%, compared to the six months ended December 31, 2021, which was driven by a $17.4 million, or 31.8%, increase in interest income on loans, and a combined increase of $1.7 million, or 124.6%, in interest income on commercial paper and debt securities available for sale. The overall increase in average yield on interest-earning assets and rate paid on liabilities was the result of rising interest rates. Specific to debt securities available for sale, the Company has intentionally maintained a relatively short-term duration portfolio which has allowed, and will continue to allow, the Company to take advantage of rising rates when reinvesting the proceeds of maturing instruments.

Total interest expense for the six months ended December 31, 2022 increased $2.3 million, or 80.4%, compared to the six months ended December 31, 2021. The increase was driven by a $2.1 million, or 73.7%, increase in interest expense on deposits as a result of an 18 basis point increase in the associated average cost of funds.

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

(Dollars in thousands)	Increase / (Decrease) Due to							Total Increase / (Decrease)
	Volume				Rate
Interest-earning assets
Loans receivable	$	2,363			$	15,010		$	17,373
Commercial paper		(161	)			1,003			842
Debt securities available for sale		153				741			894
Other interest-earning assets		(324	)			708			384
Total interest-earning assets		2,031				17,462			19,493
Interest-bearing liabilities
Interest-bearing checking accounts		6				104			110
Money market accounts		(23	)			1,763			1,740
Savings accounts		5				3			8
Certificate accounts		30				233			263
Borrowings		(31	)			256			225
Total interest-bearing liabilities		(13	)			2,359			2,346
Net increase in tax equivalent interest income								$	17,147

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

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

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

• $1.3 million provision specific to fintech portfolios which have a riskier credit profile than loans originated in-house. The elevated credit risk is offset by the higher yields earned on the portfolios.
• $2.9 million provision driven by loan growth and changes in the loan mix.
• $1.5 million provision due to changes in the projected economic forecast, specifically the national unemployment rate, and changes in qualitative adjustments.
• $1.5 million reduction of specific reserves on individually evaluated credits, which was tied to two relationships which were fully charged-off during the period.

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

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

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

	Six Months Ended
	December 31, 2022			December 31, 2021				$ Change				% Change
Noninterest income
Service charges and fees on deposit accounts	$	4,861		$	4,885			$	(24	)		—	%
Loan income and fees		1,217			1,784				(567	)		(32	)
Gain on sale of loans held for sale		2,688			7,958				(5,270	)		(66	)
BOLI income		1,021			1,008				13			1
Operating lease income		2,741			3,258				(517	)		(16	)
Gain (loss) on sale of premises and equipment		1,115			(87	)			1,202			1,382
Other		2,209			1,639				570			35
Total noninterest income	$	15,852		$	20,445			$	(4,593	)		(22	)%

• Loan income and fees: The decrease in loan income and fees was driven by lower underwriting fees, interest rate swap fees, and prepayment penalties in the current period compared to the same period last year, all of which were impacted by rising interest rates.
• Gain on sale of loans held for sale: The decrease in the gain on sale of loans held for sale was primarily driven by a decrease in volume of residential mortgage and SBA loans sold during the period as a result of rising interest rates. During the six months ended December 31, 2022, $28.2 million of residential mortgage loans originated for sale were sold with gains of $676,000 compared to $150.7 million sold with gains of $4.3 million for the corresponding period in the prior year. There were $20.3 million of sales of the guaranteed portion of SBA commercial loans with gains of $1.5 million in the current period compared to $27.0 million sold and gains of $3.1 million for the corresponding period in the prior year. There were $64.2 million of HELOCs sold during the current period for a gain of $542,000 compared to $72.2 million sold and gains of $426,000 for the corresponding period in the prior year. Lastly, $11.5 million of indirect auto finance loans were sold out of the held for investment portfolio during the six months ended December 31, 2021 for a gain of $205,000. No such sales occurred in the same period in the current year.
• Operating lease income: The decrease in operating lease income can be traced to lower contractual earnings as well as gains or losses incurred at the end of operating leases, where we recognized a net loss of $189,000 for the six months ended December 31, 2022 versus a net loss of $92,000 in the same period last year.
• Gain (loss) on sale of premises and equipment: During the six months ended December 31, 2022 two properties were sold for a combined gain of $1.6 million, partially offset by additional impairment of $420,000 on premises and equipment associated with prior branch closures. No such sales occurred in the same period in the prior year.
• Other: The increase in other income was driven by a $721,000 gain recognized on the sale of closely held equity securities which the Company obtained through a prior bank acquisition. No such sales occurred in the same period in the prior year.

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

	Six Months Ended
	December 31, 2022			December 31, 2021			$ Change				% Change
Noninterest expense
Salaries and employee benefits	$	29,299		$	30,152		$	(853	)		(3	)%
Occupancy expense, net		4,824			4,718			106			2
Computer services		5,559			5,130			429			8
Telephone, postage and supplies		1,178			1,322			(144	)		(11	)
Marketing and advertising		1,071			1,537			(466	)		(30	)
Deposit insurance premiums		1,088			868			220			25
Core deposit intangible amortization		60			158			(98	)		(62	)
Merger-related expenses		724			—			724			100
Other		8,362			7,953			409			5
Total noninterest expense	$	52,165		$	51,838		$	327			1	%

• Salaries and employee benefits: The decrease in salaries and employee benefits expense in the current period compared to the same period last year is primarily the result of branch closures and lower mortgage banking incentive pay as a result of the reduction in the volume of originations due to rising interest rates.
• Computer services: The increase in expense between periods is due to continued investments in technology as well as increases in the cost of services provided by third parties.
• Marketing and advertising: The decrease in expense between periods is partially due to timing differences when expenses are incurred and paid as well as lower projected marketing expenses for the current fiscal year versus the prior period.
• Deposit insurance premiums: The rates the Company is charged for deposit insurance have increased year-over-year.
• Merger-related expenses: On July 24, 2022, the Company entered into an Agreement and Plan of Merger with Quantum Capital Corp. The expense for the six months ended December 31, 2022 are costs incurred related to due diligence and legal work performed associated with the transaction, in addition to ongoing costs incurred in preparation for the transaction. No such expense was incurred in the prior period.
• Other: During the six months ended December 31, 2022 the Company wrote off $350,000 in previously capitalized costs associated with a technology project which the Company is no longer pursuing. No such expense was incurred in the prior period.

Income Taxes.  The amount of income tax expense is influenced by the amount of pre-tax income, the amount of tax-exempt income, changes in the statutory rate, and the effect of changes in valuation allowances maintained against deferred tax benefits. Income tax expense for the six months ended December 31, 2022 increased $831,000 as a result of higher taxable income in the current quarter compared to the corresponding period in the prior year, and an increase in the effective tax rate from 21.3% to 22.6% between periods.

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

Stockholders' equity increased $21.3 million to $410.2 million at December 31, 2022 as compared to June 30, 2022. Activity within stockholders' equity included $22.9 million in net income, $2.7 million in stock-based compensation and stock option exercises, offset by $2.9 million in cash dividends declared and a $1.3 million increase in accumulated other comprehensive loss associated with available for sale debt securities. As of December 31, 2022, the Bank was considered "well capitalized" in accordance with its regulatory capital guidelines and exceeded all regulatory capital requirements.

Asset Quality
The ACL on loans was $38.9 million, or 1.30% of total loans, at December 31, 2022 compared to $34.7 million, or 1.25% of total loans, as of June 30, 2022. The drivers of this change are discussed in the "Six Months Ended December 31, 2022 and December 31, 2021" section above.

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

Nonperforming assets increased by $54,000, or 0.9%, to $6.4 million, or 0.17% of total assets, at December 31, 2022 compared to $6.3 million, or 0.18% of total assets, at June 30, 2022. Nonperforming assets included $6.2 million in nonaccruing loans and $200,000 of real estate owned ("REO") at December 31, 2022, compared to $6.1 million and $200,000 in nonaccruing loans and REO, respectively, at June 30, 2022. Nonperforming loans to total loans was 0.21% at December 31, 2022 and 0.22% at June 30, 2022.

The ratio of classified assets to total assets decreased to 0.50% at December 31, 2022 from 0.61% at June 30, 2022. Classified assets decreased $3.2 million, or 15.1%, to $18.3 million at December 31, 2022 compared to $21.5 million at June 30, 2022, due to loan paydowns.

About HomeTrust Bancshares, Inc.
HomeTrust Bancshares, Inc. is the holding company for the Bank. As of December 31, 2022, the Company had assets of $3.6 billion. The Bank, founded in 1926, is a North Carolina state chartered, community-focused financial institution committed to providing value added relationship banking with over 30 locations as well as online/mobile channels. Locations include: North Carolina (including the Asheville metropolitan area, the "Piedmont" region, Charlotte, and Raleigh/Cary), Upstate South Carolina (Greenville), East Tennessee (including Kingsport/Johnson City, Knoxville, and Morristown) and Southwest Virginia (including the Roanoke Valley).

Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements often include words such as "believe," "expect," "anticipate," "estimate," and "intend" or future or conditional verbs such as "will," "would," "should," "could," or "may." Forward-looking statements are not historical facts but instead represent management's current expectations and forecasts regarding future events, many of which are inherently uncertain and outside of the Company's control. Actual results may differ, possibly materially, from those currently expected or projected in these forward-looking statements. Factors that could cause the Company's actual results to differ materially from those described in the forward-looking statements include: the remaining effect of the COVID-19 pandemic, including on the Company's credit quality and business operations, as well as its impact on general economic and financial market conditions and other uncertainties resulting from the COVID-19 pandemic, such as the extent and remaining duration of the impact on public health, the U.S. and global economies, and consumer and corporate customers, including economic activity, employment levels and labor shortages, and market liquidity, both nationally and in our market areas; expected revenues, cost savings, synergies and other benefits from our merger and acquisition activities, including the proposed acquisition of Quantum Capital Corp. might not be realized to the extent anticipated, within the anticipated time frames, or at all, and costs or difficulties relating to integration matters, including but not limited to customer and employee retention, might be greater than expected; increased competitive pressures; changes in the interest rate environment; changes in general economic conditions and conditions within the securities markets; legislative and regulatory changes; and the effects of inflation, a potential recession, and other factors described in the Company's latest annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other documents filed with or furnished to the Securities and Exchange Commission - which are available on our website at www.htb.com and on the SEC's website at www.sec.gov. Any of the forward-looking statements that the Company makes in this press release or the documents they file with or furnish to the SEC are based upon management's beliefs and assumptions at the time they are made and may turn out to be wrong because of inaccurate assumptions they might make, because of the factors described above or because of other factors that they cannot foresee. The Company does not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

Consolidated Balance Sheets (Unaudited)

(Dollars in thousands)	December 31, 2022				September 30, 2022				June 30, 2022(1)				March 31, 2022				December 31, 2021
Assets
Cash	$	15,825			$	18,026			$	20,910			$	19,783			$	20,586
Interest-bearing deposits		149,209				76,133				84,209				32,267				14,240
Cash and cash equivalents		165,034				94,159				105,119				52,050				34,826
Commercial paper, net		—				85,296				194,427				312,918				254,157
Certificates of deposit in other banks		29,371				27,535				23,551				28,125				34,002
Debt securities available for sale, at fair value		147,942				161,741				126,978				106,315				121,851
FHLB and FRB stock		13,661				9,404				9,326				10,451				10,368
SBIC investments, at cost		12,414				12,235				12,758				12,589				11,749
Loans held for sale, at fair value		518				—				—				—				—
Loans held for sale, at the lower of cost or fair value		72,777				76,252				79,307				85,263				102,070
Total loans, net of deferred loan fees and costs		2,985,623				2,867,783				2,769,295				2,699,538				2,696,072
Allowance for credit losses – loans		(38,859	)			(38,301	)			(34,690	)			(31,034	)			(30,933	)
Loans, net		2,946,764				2,829,482				2,734,605				2,668,504				2,665,139
Premises and equipment, net		65,216				68,705				69,094				69,629				69,461
Accrued interest receivable		11,076				9,667				8,573				7,980				8,200
Deferred income taxes, net		11,319				11,838				11,487				12,494				12,019
Bank owned life insurance ("BOLI")		96,335				95,837				95,281				94,740				94,209
Goodwill		25,638				25,638				25,638				25,638				25,638
Core deposit intangibles, net		32				58				93				135				185
Other assets		48,918				47,339				52,967				54,954				58,945
Total assets	$	3,647,015			$	3,555,186			$	3,549,204			$	3,541,785			$	3,502,819
Liabilities and stockholders' equity
Liabilities
Deposits	$	3,048,020			$	3,102,668			$	3,099,761			$	3,059,157			$	2,998,691
Borrowings		130,000				—				—				30,000				48,000
Other liabilities		58,840				56,296				60,598				57,497				54,382
Total liabilities		3,236,860				3,158,964				3,160,359				3,146,654				3,101,073
Stockholders' equity
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued or outstanding		—				—				—				—				—
Common stock, $0.01 par value, 60,000,000 shares authorized(2)		157				156				156				160				163
Additional paid in capital		128,486				127,153				126,106				136,181				147,552
Retained earnings		290,271				278,120				270,276				265,609				258,986
Unearned Employee Stock Ownership Plan ("ESOP") shares		(5,026	)			(5,158	)			(5,290	)			(5,422	)			(5,555	)
Accumulated other comprehensive income (loss)		(3,733	)			(4,049	)			(2,403	)			(1,397	)			600
Total stockholders' equity		410,155				396,222				388,845				395,131				401,746
Total liabilities and stockholders' equity	$	3,647,015			$	3,555,186			$	3,549,204			$	3,541,785			$	3,502,819

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

Consolidated Statements of Income (Unaudited)

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

Per Share Data

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

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

Selected Financial Ratios and Other Data

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

(1)	Ratios are annualized where appropriate.
(2)	The weighted average rate for municipal leases is adjusted for a 24% combined federal and state tax rate since the interest from these leases is tax exempt.
(3)	Net interest income divided by average interest-earning assets.
(4)	See Non-GAAP reconciliations below for adjustments.

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

(1)	Nonperforming assets include nonaccruing loans, consisting of certain restructured loans, and REO. There were no accruing loans more than 90 days past due at the dates indicated. At December 31, 2022, there were $1.8 million of restructured loans included in nonaccruing loans and $3.2 million, or 52.0%, of nonaccruing loans were current on their loan payments as of that date.
(2)	See Non-GAAP reconciliations below for adjustments.

Loans

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

As of December 31, 2022, $28.6 million of commercial and industrial and $4.8 million of consumer loans were purchased from fintech partners. As of June 30, 2022, $17.5 million of commercial and industrial and $0.4 million of consumer loans were purchased from fintech partners. Although we value these strategic relationships, in August 2022 we temporarily paused purchases within both loan segments until the impact of the current economic environment upon these portfolios can be better understood.

Deposits

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

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

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

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

Set forth below is a reconciliation to GAAP of tangible book value and tangible book value per share:

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

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

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

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

FAQ

What were HomeTrust Bancshares' earnings for Q2 2023?

HomeTrust Bancshares reported net income of $13.7 million, or $0.90 per diluted share, for the second quarter of fiscal year 2023.

How much is the cash dividend declared by HomeTrust Bancshares?

The Board declared a quarterly cash dividend of $0.10 per common share.

What is the net interest income for HomeTrust Bancshares for Q2 2023?

Net interest income for HomeTrust Bancshares for Q2 2023 was $37.5 million.

What are the return on assets and equity for HomeTrust Bancshares?

The annualized return on assets was 1.54% and the annualized return on equity was 13.37%.

What is the provision for credit losses for HomeTrust Bancshares?

The provision for credit losses for Q2 2023 was $2.2 million, a decrease from $4.0 million in the previous quarter.