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HomeTrust Bancshares, Inc. Reports Financial Results For The First Quarter Of Fiscal 2020

Company Release - 10/29/2019 8:30 AM ET

ASHEVILLE, N.C., Oct. 29, 2019 (GLOBE NEWSWIRE) -- HomeTrust Bancshares, Inc. (NASDAQ: HTBI) ("Company"), the holding company of HomeTrust Bank ("Bank"), today announced preliminary net income increased 13.0% to $8.8 million for the first quarter of fiscal 2020, compared to $7.8 million for the same period a year ago. For the same periods, diluted earning per share increased 19.5% to $0.49 from $0.41 per diluted share.

Highlights for the quarter ended September 30, 2019 compared to the corresponding quarter in the previous year are as follows:

  • return on assets increased 5.3% to 0.99% from 0.94%;
  • return on equity increased 13.5% to 8.57% from 7.55%;
  • net interest income increased $801,000, or 3.0% to $27.1 million from $26.3 million;
  • noninterest income increased $2.0 million, or 36.5% to $7.7 million from $5.6 million;
  • organic net loan growth, which excludes one-to-four family loans transferred to held for sale and purchases of home equity lines of credit, was $73.0 million, or 11.3% annualized compared to $76.8 million, or 13.0% annualized;
  • total deposits increased $169.9 million, or 7.2% to $2.5 billion from $2.3 billion;
  • 189,160 shares were repurchased during the quarter at an average price of $25.38 per share; and
  • quarterly cash dividends continued at $0.06 per share totaling $1.0 million.

“Fiscal 2020 is off to a strong start as accelerated revenues across all business product lines led to record net income for the quarter. Our newer lines of business of SBA loans and equipment finance increased noninterest income $672,000 while our legacy mortgage banking line of business had gains from the sale of mortgage loans totaling $1.3 million, a $499,000, or 65% increase over the same quarter in the prior year," said Dana Stonestreet, Chairman, President, and Chief Executive Officer. "We have continued the methodical execution of our plan to layer in outstanding markets, complimentary lines of business and seasoned revenue producers in all lines of business. The cumulative impact of this strategy continues to increase revenue, earnings and shareholder value."

Income Statement Review

Net interest income increased to $27.1 million for the quarter ended September 30, 2019, compared to $26.3 million for the comparative quarter in fiscal 2019. The $801,000, or 3.0% increase was due to a $4.0 million increase in interest and dividend income primarily driven by an increase in average interest-earning assets, which was partially offset by a $3.2 million increase in interest expense. Average interest-earning assets increased $221.2 million, or 7.2% to $3.3 billion for the quarter ended September 30, 2019 compared to $3.1 billion for the corresponding quarter in fiscal 2019. For the quarter ended September 30, 2019, the average balance of total loans receivable increased $191.7 million, or 6.2% compared to the same quarter last year primarily due to organic loan growth. The average balance of commercial paper and deposits in other banks increased $41.9 million, or 13.0% between the periods driven by increases in commercial paper investments. The average balance in other interest-earning assets increased $3.2 million, or 7.5% as a result of additional Small Business Investment Company ("SBIC") investments and the required purchase of additional shares of Federal Home Loan Bank ("FHLB") stock as our FHLB borrowings have increased. These increases were mainly funded by the decrease of $15.5 million, or 10.1% in average securities available for sale, and an increase in average interest-bearing liabilities, primarily deposits, of $239.4 million, or 9.5% as compared to the same quarter last year. Net interest margin (on a fully taxable-equivalent basis) for the three months ended September 30, 2019 decreased to 3.32% from 3.45% for the same period a year ago.

Total interest and dividend income increased $4.0 million, or 12.3% for the three months ended September 30, 2019 as compared to the same period last year, which was primarily driven by a $3.5 million, or 12.3% increase in loan interest income and a $396,000, or 21.3% increase in interest income from commercial paper and interest-bearing deposits in other banks. The additional loan interest income was driven by increases in both the average balance of loans receivable and loan yields compared to the prior year quarter. Average loan yields increased 20 basis points to 4.74% for the quarter ended September 30, 2019 from 4.54% in the corresponding quarter last year. For each of the quarters ended September 30, 2019 and 2018, average loan yields included six basis points from the accretion of purchase discounts on acquired loans. The incremental accretion and the impact to the yield on loans may change during any period based on the volume of prepayments, but it is expected to decrease over time as the balance of the purchase discount for acquired loans decreases. The total purchase discount for acquired loans was $6.3 million at September 30, 2019, compared to $6.7 million at June 30, 2019, and $8.5 million at September 30, 2018.

Total interest expense increased $3.2 million, or 52.7% for the quarter ended September 30, 2019 compared to the same period last year. The increase was driven by a $3.1 million, or 112.8% increase in deposit interest expense. The additional deposit interest expense was a result of our continued focus on increasing deposits as the average balance of interest-bearing deposits increased $201.8 million, or 10.8% along with a 54 basis point increase in the average cost of interest-bearing deposits for the quarter ended September 30, 2019 compared to the same quarter last year. Average borrowings for the quarter ended September 30, 2019 increased $37.6 million, or 5.8% and was offset by an eight basis point decrease in the average cost of borrowings compared to the same period last year. The overall average cost of funds increased 38 basis points to 1.33% for the current quarter compared to 0.95% in the same quarter last year due primarily to the impact of the deposit market interest rate increases on our interest-bearing liabilities.

Noninterest income increased $2.0 million, or 36.5% to $7.7 million for the three months ended September 30, 2019 from $5.6 million for the same period in the previous year. The leading factors of the increase included a $661,000, or 97.5% increase in other noninterest income primarily related to operating lease income from the new equipment finance line of business, a $499,000, or 64.6% increase in gains from the sale of mortgage loans, a $129,000, or 14.4% increase in gains from the sale of loans due to originations and sales of the guaranteed portion of U.S Small Business Administration (“SBA”) commercial loans, a $554,000, or 168.9% increase in loan income and fees primarily as a result of our adjustable rate conversion program and prepayment fees on equipment finance loans, and a $161,000, or 30.1% increase in BOLI income primarily from $134,000 of additional life insurance proceeds received for the three months ended September 30, 2019 compared to the same period last year.

Noninterest expense for the three months ended September 30, 2019 increased $1.7 million, or 7.5% to $23.5 million compared to $21.9 million for the three months ended September 30, 2018. The increase was primarily due to a $1.2 million, or 9.7% increase in salaries and employee benefits; a $510,000, or 19.5% increase in other expenses, mainly driven by depreciation from our equipment finance line of business; a $262,000, or 62.8% increase in marketing and advertising expense, which was used to promote deposit growth and other banking products; and a $175,000, or 9.5% increase in computer services. Partially offsetting these increases was a decrease of $304,000, or 100.0% in deposit insurance premiums as a result of credits issued by the Federal Deposit Insurance Corporation ("FDIC") and a $115,000, or 32.5% decrease in real estate owned ("REO") related expenses as a result of gain on sales for the three months ended September 30, 2019 compared to the same period last year.

For the three months ended September 30, 2019, the Company's income tax expense was $2.4 million compared to $2.2 million for the three months ended September 30, 2018. The increase in the Company’s federal income tax provision for the three months ended September 30, 2019 was due to an increase in taxable income. The effective tax rate for the three months ended September 30, 2019 and 2018 was 21.4% and 22.1%, respectively.

Balance Sheet Review

Total assets increased $179.1 million, or 5.2% to $3.7 billion at September 30, 2019 from $3.5 billion at June 30, 2019. Total liabilities increased $175.0 million, or 5.7% to $3.2 billion at September 30, 2019 from $3.1 billion at June 30, 2019. Deposit growth of $167.0 million, or 7.2% and a $5.0 million, or 0.7% increase in borrowings were used to fund the $74.7 million, or 2.7% net increase in total loans receivable including loans held for sale, the $43.9 million, or 36.1% increase in securities available for sale; the $12.9 million, or 5.3% increase in commercial paper as well as the $46.1 million, or 64.8% increase in cash and cash equivalents during the first three months of fiscal 2020. Loans held for sale increased with a corresponding decrease in total loans receivable as a result of approximately $256.8 million in one-to-four family loans being marketed for sale. This loan sale is expected to close in November 2019 and result in a gain. The Company is selling these lower rate one-to-four family loans to lower its loan to deposit ratio while increasing its net interest margin over time. Excluding these one-to-four family loans, loans held for sale increased $14.3 million as a result of SBA loans originations during the period.

As of July 1, 2019, the Company adopted the new lease accounting standard, which drove several changes on the balance sheet. Land totaling $2.1 million related to the Company's one finance lease (f/k/a capital lease) was reclassed from premises and equipment, net to other assets as a right of use ("ROU") asset and the corresponding liability was reclassed from a separate line on the balance sheet to other liabilities as a lease liability. The Company's operating leases led to approximately $5.1 million in ROU assets and corresponding lease liabilities, which are maintained in other assets and other liabilities, respectively.

Stockholders' equity at September 30, 2019 increased $4.2 million, or 1.0% to $413.1 million in comparison to $408.9 million at June 30, 2019. Changes within stockholders' equity included $8.8 million in net income, $781,000 in stock-based compensation, and a $227,000 increase in other comprehensive income representing an increase in unrealized gains on investment securities, net of tax, partially offset by 189,160 shares of common stock repurchased at an average cost of $25.38, or approximately $4.8 million in total, and $1.0 million related to cash dividends declared. As of September 30, 2019, HomeTrust Bank and the Company were considered "well capitalized" in accordance with their regulatory capital guidelines and exceeded all regulatory capital requirements.

On October 16, 2019, the Company announced the authorization of a new stock repurchase program where up to 889,123 shares, or 5% of the Company’s common stock at that date are eligible to be repurchased.

Asset Quality

The allowance for loan losses was $21.3 million, or 0.85% of total loans, at September 30, 2019 compared to $21.4 million, or 0.79% of total loans, at June 30, 2019. The allowance for loan losses to total gross loans excluding acquired loans was 0.92% at September 30, 2019, compared to 0.85% at June 30, 2019. The increase in the ratio of allowance for loan losses to gross loans was driven by approximately $256.8 million of one-to-four family loans being transferred to loans held for sale from total loans. The allowance recovered on these transferred loans was offset by the need to increase allowances within our commercial real estate and equipment finance portfolios.

There was no provision for loan losses for the three months ended September 30, 2019 or 2018. Net loan charge-offs totaled $115,000 for the three months ended September 30, 2019, compared to $128,000 for the same period in fiscal 2019, respectively. Net charge-offs as a percentage of average loans remained stable at 0.02% for the three months ended September 30, 2019 and 2018.

Nonperforming assets increased by $177,000, or 1.3% to $13.5 million, or 0.37% of total assets, at September 30, 2019 compared to $13.3 million, or 0.40% of total assets at June 30, 2019. Nonperforming assets included $10.9 million in nonaccruing loans and $2.6 million in REO at September 30, 2019, compared to $10.4 million and $2.9 million, in nonaccruing loans and REO, respectively, at June 30, 2019. Included in nonperforming loans are $4.2 million of loans restructured from their original terms of which $664,000 were current at September 30, 2019, with respect to their modified payment terms. Purchased impaired loans aggregating $1.2 million obtained through prior acquisitions are excluded from nonaccruing loans due to the accretion of discounts established in accordance with the acquisition method of accounting for business combinations. Nonperforming loans to total loans was 0.43% at September 30, 2019 and 0.38% at June 30, 2019.

The ratio of classified assets to total assets decreased to 0.84% at September 30, 2019 from 0.89% at June 30, 2019. Classified assets decreased to $30.7 million at September 30, 2019 compared to $30.9 million at June 30, 2019. Our overall asset quality metrics continue to demonstrate our commitment to growing and maintaining a loan portfolio with a moderate risk profile.

About HomeTrust Bancshares, Inc.

HomeTrust Bancshares, Inc. is the holding company for HomeTrust Bank. As of September 30, 2019, the Company had assets of $3.7 billion. The Bank, founded in 1926, is a North Carolina state chartered, community-focused financial institution committed to providing value added relationship banking through 42 locations as well as online/mobile channels. Locations include: North Carolina (including the Asheville metropolitan area, the "Piedmont" region, Charlotte, and Raleigh/Cary), Upstate South Carolina (Greenville), East Tennessee (including Kingsport/Johnson City/Bristol, Knoxville, and Morristown) and Southwest Virginia (including the Roanoke Valley). The Bank is the 2nd largest community bank headquartered in North Carolina.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements often include words such as "believe," "expect," "anticipate," "estimate," and "intend" or future or conditional verbs such as "will," "would," "should," "could," or "may." Forward-looking statements are not historical facts but instead represent management's current expectations and forecasts regarding future events, many of which are inherently uncertain and outside of our control. Actual results may differ, possibly materially, from those currently expected or projected in these forward-looking statements. Factors that could cause our actual results to differ materially from those described in the forward-looking statements, include expected cost savings, synergies and other financial benefits from our acquisitions might not be realized within the expected time frames or at all, and costs or difficulties relating to integration matters 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 other factors described in HomeTrust's latest annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other documents filed with or furnished to the Securities and Exchange Commission - which are available on our website at www.htb.com and on the SEC's website at www.sec.gov. Any of the forward-looking statements that we make in this press release or the documents we file with or furnish to the SEC are based upon management's beliefs and assumptions at the time they are made and may turn out to be wrong because of inaccurate assumptions we might make, because of the factors described above or because of other factors that we cannot foresee. We do not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These risks could cause our actual results for fiscal 2020 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, us and could negatively affect our operating and stock performance.

WEBSITE: WWW.HOMETRUSTBANCSHARES.COM

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

Consolidated Balance Sheets (Unaudited)

(Dollars in thousands)September 30,
2019
 June 30,
2019(1)
 March 31,
2019
 December 31,
2018
 September 30,
2018
Assets         
Cash$52,082  $40,909  $40,633  $44,425  $39,872 
Interest-bearing deposits65,011  30,134  37,678  26,881  18,896 
Cash and cash equivalents117,093  71,043  78,311  71,306  58,768 
Commercial paper254,302  241,446  246,903  239,286  238,224 
Certificates of deposit in other banks50,117  52,005  56,209  51,936  58,384 
Securities available for sale, at fair value165,714  121,786  139,112  149,752  148,704 
Other investments, at cost45,900  45,378  51,122  44,858  43,996 
Loans held for sale289,319  18,175  14,745  13,095  10,773 
Total loans, net of deferred loan fees2,508,730  2,705,190  2,660,647  2,632,231  2,587,106 
Allowance for loan losses(21,314) (21,429) (24,416) (21,419) (20,932)
Net loans2,487,416  2,683,761  2,636,231  2,610,812  2,566,174 
Premises and equipment, net58,509  61,051  60,559  66,610  62,681 
Accrued interest receivable10,434  10,533  10,885  10,372  10,252 
Real estate owned ("REO")2,582  2,929  3,003  2,955  3,286 
Deferred income taxes24,257  26,523  28,832  28,533  30,942 
Bank owned life insurance ("BOLI")90,499  90,254  89,663  89,156  88,581 
Goodwill25,638  25,638  25,638  25,638  25,638 
Core deposit intangibles2,088  2,499  2,948  3,436  3,963 
Other assets31,441  23,157  13,576  5,354  3,593 
Total Assets$3,655,309  $3,476,178  $3,457,737  $3,413,099  $3,353,959 
Liabilities and Stockholders' Equity         
Liabilities         
Deposits$2,494,194  $2,327,257  $2,308,395  $2,258,069  $2,203,044 
Borrowings685,000  680,000  680,000  688,000  675,000 
Other liabilities63,047  60,025  62,112  56,060  61,720 
Total liabilities3,242,241  3,067,282  3,050,507  3,002,129  2,939,764 
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)178  180  183  185  190 
Additional paid in capital186,359  190,315  196,824  203,660  214,803 
Retained earnings232,315  224,545  217,490  215,289  208,365 
Unearned Employee Stock Ownership Plan ("ESOP") shares(6,744) (6,877) (7,009) (7,142) (7,274)
Accumulated other comprehensive income (loss)960  733  (258) (1,022) (1,889)
Total stockholders' equity413,068  408,896  407,230  410,970  414,195 
Total Liabilities and Stockholders' Equity$3,655,309  $3,476,178  $3,457,737  $3,413,099  $3,353,959 

_________________________________

(1)Derived from audited financial statements.
(2)Shares of common stock issued and outstanding were 17,818,145 at September 30, 2019; 17,984,105 at June 30, 2019; 18,265,535 at March 31, 2019; 18,520,825 at December 31, 2018, and 18,939,280 at September 30, 2018.
  

Consolidated Statement of Income (Unaudited)

 Three Months Ended
 September 30, June 30, September
(Dollars in thousands)2019 2019 2018
Interest and Dividend Income     
Loans$32,266  $31,861  $28,728 
Commercial paper and interest-bearing deposits2,253  2,172  1,857 
Securities available for sale896  861  856 
Other investments832  926  839 
Total interest and dividend income36,247  35,820  32,280 
Interest Expense     
Deposits5,853  4,996  2,750 
Borrowings3,321  3,935  3,258 
Total interest expense9,174  8,931  6,008 
Net Interest Income27,073  26,889  26,272 
Provision for Loan Losses  200   
Net Interest Income after Provision for Loan Losses27,073  26,689  26,272 
Noninterest Income     
Service charges and fees on deposit accounts2,443  2,368  2,401 
Loan income and fees882  665  328 
Gain on sale of loans held for sale2,299  2,132  1,670 
BOLI income697  529  536 
Other, net1,339  1,152  678 
Total noninterest income7,660  6,846  5,613 
Noninterest Expense     
Salaries and employee benefits13,912  13,286  12,685 
Net occupancy expense2,342  2,408  2,326 
Marketing and advertising679  634  417 
Telephone, postage, and supplies802  830  769 
Deposit insurance premiums  467  304 
Computer services2,024  1,940  1,849 
Loss (gain) on sale and impairment of REO(19) (61) 179 
REO expense258  326  175 
Core deposit intangible amortization411  449  565 
Other3,124  3,136  2,614 
Total noninterest expense23,533  23,415  21,883 
Income Before Income Taxes11,200  10,120  10,002 
Income Tax Expense2,396  2,107  2,212 
Net Income$8,804  $8,013  $7,790 
            

Per Share Data

 Three months ended
 September 30, June 30, September 30,
 2019 2019 2018
Net income per common share:(1)     
Basic$0.51  $0.45  $0.43 
Diluted$0.49  $0.44  $0.41 
Average shares outstanding:     
Basic17,097,647  17,332,700  18,125,637 
Diluted17,753,657  17,984,958  18,880,476 
Book value per share at end of period$23.18  $22.74  $21.87 
Tangible book value per share at end of period (2)$21.65  $21.20  $20.35 
Cash dividends declared per common share$0.06  $0.06  $ 
Total shares outstanding at end of period17,818,145  17,984,105  18,939,280 

_________________________________

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

Selected Financial Ratios and Other Data

 Three Months Ended
 September 30, June 30, September 30,
 2019 2019 2018
Performance ratios: (1)     
Return on assets (ratio of net income to average total assets)0.99% 0.92% 0.94%
Return on equity (ratio of net income to average equity)8.57  7.87  7.55 
Tax equivalent yield on earning assets(2)4.43  4.49  4.23 
Rate paid on interest-bearing liabilities1.33  1.32  0.95 
Tax equivalent average interest rate spread (2)3.10  3.17  3.28 
Tax equivalent net interest margin(2) (3)3.32  3.38  3.45 
Average interest-earning assets to average interest-bearing liabilities119.41  119.16  121.97 
Operating expense to average total assets2.64  2.70  2.64 
Efficiency ratio67.75  69.41  68.63 
Efficiency ratio - adjusted (4)67.20  68.81  68.03 

_________________________________

(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, respectively since the interest from these leases is tax exempt.
(3)Net interest income divided by average interest-earning assets.
(4)See Non-GAAP reconciliation tables below for adjustments.
  


 At or For the Three Months Ended
 September 30, June 30, March 31, December 31, September 30,
 2019 2019 2019 2018 2018
Asset quality ratios:         
Nonperforming assets to total assets(1)0.37% 0.38% 0.41% 0.37% 0.40%
Nonperforming loans to total loans(1)0.43  0.38  0.43  0.37  0.39 
Total classified assets to total assets0.84  0.89  1.00  0.97  0.93 
Allowance for loan losses to nonperforming loans(1)195.88  206.90  215.46  221.45  207.06 
Allowance for loan losses to total loans0.85  0.79  0.92  0.81  0.81 
Allowance for loan losses to total gross loans excluding acquired loans(2)0.92  0.85  0.99  0.89  0.88 
Net charge-offs (recoveries) to average loans (annualized)0.02  0.47  0.38  (0.07) 0.02 
Capital ratios:         
Equity to total assets at end of period11.30% 11.76% 11.78% 12.04% 12.35%
Tangible equity to total tangible assets(2)10.63  11.06  11.06  11.31  11.59 
Average equity to average assets11.54  11.72  11.93  12.20  12.43 

_________________________________

(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 September 30, 2019, there were $4.2 million of restructured loans included in nonaccruing loans and $2.6 million, or 24.0% of nonaccruing loans were current on their loan payments. Purchased impaired loans acquired through bank acquisitions are excluded from nonaccruing loans due to the accretion of discounts in accordance with the acquisition method of accounting for business combinations.
(2)See Non-GAAP reconciliation tables below for adjustments.
  

Average Balance Sheet Data

 For the Three Months Ended September 30,
 2019 2018
 Average
Balance
Outstanding
 Interest
Earned/
Paid(2)
 Yield/
Rate(2)
 Average
Balance
Outstanding
 Interest
Earned/
Paid(2)
 Yield/
Rate(2)
(Dollars in thousands)                     
Assets:                
Interest-earning assets:                
Loans receivable(1)$2,749,635  $32,551  4.74% $2,557,970  $29,010  4.54%
Commercial paper and deposits in other banks363,123  2,253  2.48% 321,217  1,856  2.31%
Securities available for sale138,709  896  2.58% 154,249  856  2.22%
Other interest-earning assets(3)45,710  832  7.28% 42,520  839  7.89%
Total interest-earning assets3,297,177  36,532  4.43% 3,075,956  32,561  4.23%
Other assets264,375      245,855     
Total assets$3,561,552      $3,321,811     
Liabilities and equity:           
Interest-bearing liabilities:           
Interest-bearing checking accounts441,524  319  0.29% 459,895  270  0.23%
Money market accounts718,981  1,761  0.98% 677,329  957  0.57%
Savings accounts172,393  52  0.12% 208,289  68  0.13%
Certificate accounts744,956  3,721  2.00% 530,507  1,455  1.10%
Total interest-bearing deposits2,077,854  5,853  1.13% 1,876,020  2,750  0.59%
Borrowings683,413  3,321  1.94% 645,859  3,258  2.02%
 Total interest-bearing liabilities2,761,267  9,174  1.33% 2,521,879  6,008  0.95%
Noninterest-bearing deposits326,105      323,781     
Other liabilities63,101      63,282     
Total liabilities3,150,473      2,908,942     
Stockholders' equity411,079      412,868     
Total liabilities and stockholders' equity$3,561,552      $3,321,811     
            
Net earning assets$535,910      $554,077     
Average interest-earning assets to average interest-bearing liabilities119.41%     121.97%    
Tax-equivalent:           
Net interest income  $27,358      $26,553   
Interest rate spread    3.10%     3.28%
Net interest margin(4)    3.32%     3.45%
Non-tax-equivalent:           
Net interest income  $27,073      $26,272   
Interest rate spread    3.07%     3.25%
Net interest margin(4)    3.28%     3.42%

_________________________________

(1)The average loans receivable, net balances include loans held for sale and nonaccruing loans.
(2)Interest income used in the average interest earned and yield calculation includes the tax equivalent adjustment of $285 and $281 for the three months ended September 30, 2019 and 2018, respectively, calculated based on a combined federal and state tax rate of 24%.
(3)The average other interest-earning assets consists of FRB stock, FHLB stock, and SBIC investments.
(4)Net interest income divided by average interest-earning assets.
  

Loans

(Dollars in thousands) September 30,
2019
   June 30,
2019
   March 31,
2019
   December 31,
2018
   September 30,
2018
 
Retail consumer loans:                   
One-to-four family$396,649  $660,591  $658,723  $661,374  $656,011 
HELOCs - originated141,129  131,095  133,203  135,430  135,512 
HELOCs - purchased104,324  116,972  128,832  138,571  150,733 
Construction and land/lots85,319  80,602  76,153  74,507  75,433 
Indirect auto finance147,808  153,448  162,127  170,516  173,305 
Consumer11,400  19,756  19,374  13,520  13,139 
Total retail consumer loans886,629  1,162,464  1,178,412  1,193,918  1,204,133 
Commercial loans:         
Commercial real estate990,787  927,261  892,383  904,357  879,184 
Construction and development203,494  210,916  214,511  198,738  198,809 
Commercial and industrial158,706  160,471  154.47  143,201  150,362 
Equipment finance154,479  132,058  109.175  81,380  43,377 
Municipal leases114,382  112,016  112,067  111,135  111,951 
Total commercial loans1,621,848  1,542,722  1,482,607  1,438,812  1,383,683 
Total loans2,508,477  2,705,186  2,661,019  2,632,730  2,587,816 
Deferred loan costs (fees), net253  4  (372) (499) (710)
Total loans, net of deferred loan fees2,508,730  2,705,190  2,660,647  2,632,231  2,587,106 
Allowance for loan losses(21,314) (21,429) (24,416) (21,419) (20,932)
Loans, net$2,487,416  $2,683,761  $2,636,231  $2,610,812  $2,566,174 
                    

Deposits

(Dollars in thousands) September 30,
2019
   June 30,
2019
   March 31,
2019
   December 31,
2018
   September 30,
2018
 
Core deposits:                   
Noninterest-bearing accounts$327,371  $294,322  $301,083  $300,031  $313,110 
NOW accounts449,623  452,295  477,637  474,080  462,694 
Money market accounts769,000  691,172  692,102  703,445  687,148 
Savings accounts169,872  177,278  192,754  192,954  203,372 
Total core deposits1,715,866  1,615,067  1,663,576  1,670,510  1,666,324 
Certificates of deposit778,328  712,190  644,819  587,559  536,720 
Total deposits$2,494,194  $2,327,257  $2,308,395  $2,258,069  $2,203,044 
                    

Non-GAAP Reconciliations

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

Set forth below is a reconciliation to GAAP of our efficiency ratio:

 Three Months Ended
(Dollars in thousands)September 30,
 June 30,
 September 30,
 2019
 2019
 2018
Noninterest expense$23,533  $23,415  $21,883 
Net interest income$27,073  $26,889  $26,272 
Plus noninterest income7,660  6,846  5,613 
Plus tax equivalent adjustment285  295  281 
Less gain on sale of premises and equipment     
Net interest income plus noninterest income – as adjusted$35,018  $34,030  $32,166 
Efficiency ratio - adjusted67.20% 68.81% 68.03%
Efficiency ratio67.75% 69.41% 68.63%
         

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)September 30, June 30, March 31, December 31, September 30,
 2019 2019 2019 2018 2018
Total stockholders' equity              
 $413,068 $408,896 $407,230 $410,970 $414,195
Less: goodwill, core deposit intangibles, net of taxes 27,246  27,562  27,908  28,284  28,690
Tangible book value (1)$385,822 $381,334 $379,322 $382,686 $385,505
Common shares outstanding 17,818,145  17,984,105  18,265,535  18,520,825  18,939,280
Tangible book value per share$21.65 $21.20 $20.77 $20.66 $20.35
Book value per share$23.18 $22.74 $22.29 $22.19 $21.87


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

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

 As of
 September 30, June 30, March 31, December 31, September 30,
 2019 2019 2019 2018 2018
                    
(Dollars in thousands)                   
Tangible equity(1)                   
 $385,822  $381,334  $379,322  $382,686  $385,505 
Total assets 3,655,309   3,476,178   3,457,737   3,413,099   3,353,959 
Less: goodwill, core deposit intangibles, net of taxes 27,246   27,562   27,908   28,284   28,690 
Total tangible assets(2)$3,628,063  $3,448,616  $3,429,829  $3,384,815  $3,325,269 
                    
Tangible equity to tangible assets 10.63%  11.06%  11.06%  11.31%  11.59%


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

Set forth below is a reconciliation to GAAP of the allowance for loan losses to total loans (excluding net deferred loan fees) and the allowance for loan losses as adjusted to exclude acquired loans:

 As of
(Dollars in thousands)September 30, June 30, March 31, December 31, September 30,
 2019 2019 2019 2018 2018
Total gross loans receivable (GAAP)$2,508,477  $2,705,186  $2,661,019  $2,632,730  $2,587,816 
Less: acquired loans206,937  214,046  223,101  236,389  253,695 
Adjusted loans (non-GAAP)$2,301,540  $2,491,140  $2,437,918  $2,396,341  $2,334,121 
               
Allowance for loan losses (GAAP)$21,314  $21,429  $24,416  $21,419  $20,932 
Less: allowance for loan losses on acquired loans194  201  201  199  295 
Adjusted allowance for loan losses$21,120  $21,228  $24,215  $21,220  $20,637 
Adjusted allowance for loan losses / Adjusted loans (non-GAAP)0.92% 0.85% 0.99% 0.89% 0.88%

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Source: HomeTrust Bancshares, Inc.