UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 24, 2024
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||||||||
Registrant's telephone number, including area code: | ||
| Not Applicable | ||||||||||||||
| (Former name or former address, if changed since last report) | ||||||||||||||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Securities Registered Pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| Emerging growth company | |||||
| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ | ||||
Item 2.02 Results of Operations and Financial Condition
On April 24, 2024 , HomeTrust Bancshares, Inc., (the "Company") the holding company for HomeTrust Bank, issued a press release reporting financial results for the first quarter of the year ending December 31, 2024, the declaration and approval of its quarterly cash dividend, and the re-authorization of its stock buyback program. A copy of the press release, including unaudited financial information released as a part thereof, is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits
| Press release dated April 24, 2024 | |||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| HOMETRUST BANCSHARES, INC. | |||||||||||
| Date: April 24, 2024 | By: | /s/ Tony J. VunCannon | |||||||||
| Tony J. VunCannon | |||||||||||
| Executive Vice President, Chief Financial Officer, Corporate Secretary and Treasurer | |||||||||||
2
HomeTrust Bancshares, Inc. Announces Financial Results for the First Quarter of the Year Ending
December 31, 2024, Declaration of a Quarterly Dividend, and Re-Authorization of Stock Buyback Program
ASHEVILLE, N.C., April 24, 2024 – HomeTrust Bancshares, Inc. (NASDAQ: HTBI) ("Company"), the holding company of HomeTrust Bank ("Bank"), today announced preliminary net income for the first quarter of the year ending December 31, 2024 and approval of its quarterly cash dividend. In addition, on April 22, 2024, the Company's Board of Directors re-authorized the repurchase the remaining 266,639 shares of the Company’s common stock under the repurchase plan originally authorized in February of 2022. The shares may be purchased in the open market or in privately negotiated transactions from time to time depending upon market conditions and other factors.
For the quarter ended March 31, 2024 compared to the quarter ended December 31, 2023:
•net income was $15.1 million compared to $13.5 million;
•diluted earnings per share ("EPS") was $0.88 compared to $0.79;
•annualized return on assets ("ROA") was 1.37% compared to 1.21%;
•annualized return on equity ("ROE") was 11.91% compared to 10.81%;
•net interest margin was 4.02% for both periods;
•provision for credit losses was $1.2 million compared to $3.4 million;
•tax-free death benefit proceeds from life insurance of $1.1 million compared to $1.6 million;
•quarterly cash dividends continued at $0.11 per share totaling $1.9 million for both periods.
The Company also announced today that its Board of Directors declared a quarterly cash dividend of $0.11 per common share payable on May 30, 2024 to shareholders of record as of the close of business on May 16, 2024.
“Once again, I am pleased with the continuation of HomeTrust’s top quartile financial performance which has led to national recognition from both Forbes and S&P Global,” said Hunter Westbrook, President and Chief Executive Officer. “This quarter, we remained focused on further strengthening the balance sheet which resulted in the expansion of customer deposits by over $100 million, maintaining our net interest margin above 4.00% and continuing our strong credit quality. This is a direct reflection of HomeTrust’s philosophy of prudent, sound and profitable balance sheet management, its strong culture of engaged teammates and demonstrates the Company’s resilience through economic rate cycles.
“As previously stated, our Board of Directors re-authorized the repurchase of shares of the Company’s stock. This action allows the Company to take advantage of its low stock price as compared to its tangible book value while also publicly exhibiting our optimism regarding the Company’s future financial performance.
“Lastly, it has been over one year since the merger with, and integration of, Quantum National Bank, and I am extremely pleased that the legacy Quantum employees have embraced our culture and operating philosophies. The performance of these employees, combined with further hires in the Atlanta market, have validated this strategic opportunity.”
WEBSITE: WWW.HTB.COM
Contact:
C. Hunter Westbrook – President and Chief Executive Officer
Tony J. VunCannon – Executive Vice President, Chief Financial Officer, Corporate Secretary and Treasurer
828-259-3939
1
Comparison of Results of Operations for the Three Months Ended March 31, 2024 and December 31, 2023
Net Income. Net income totaled $15.1 million, or $0.88 per diluted share, for the three months ended March 31, 2024 compared to net income of $13.5 million, or $0.79 per diluted share, for the three months ended December 31, 2023, an increase of $1.6 million, or 11.9%. Results for the three months ended March 31, 2024 were positively impacted by a decrease of $2.2 million in the provision for credit losses and a $563,000 increase in noninterest income, partially offset by a decrease of $693,000 in net interest 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.
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| March 31, 2024 | December 31, 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) | $ | 3,864,258 | $ | 59,952 | 6.24 | % | $ | 3,876,051 | $ | 60,069 | 6.15 | % | |||||||||||||||||||||||
| Debt securities available for sale | 126,686 | 1,313 | 4.17 | 136,945 | 1,257 | 3.64 | |||||||||||||||||||||||||||||
Other interest-earning assets(2) | 131,495 | 2,090 | 6.39 | 121,366 | 1,493 | 4.88 | |||||||||||||||||||||||||||||
| Total interest-earning assets | 4,122,439 | 63,355 | 6.18 | 4,134,362 | 62,819 | 6.03 | |||||||||||||||||||||||||||||
| Other assets | 298,117 | 271,767 | |||||||||||||||||||||||||||||||||
| Total assets | $ | 4,420,556 | $ | 4,406,129 | |||||||||||||||||||||||||||||||
| Liabilities and equity | |||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities | |||||||||||||||||||||||||||||||||||
| Interest-bearing checking accounts | $ | 590,738 | $ | 1,426 | 0.97 | % | $ | 594,805 | $ | 1,209 | 0.81 | % | |||||||||||||||||||||||
| Money market accounts | 1,281,340 | 9,664 | 3.03 | 1,251,170 | 8,930 | 2.83 | |||||||||||||||||||||||||||||
| Savings accounts | 191,747 | 43 | 0.09 | 198,522 | 45 | 0.09 | |||||||||||||||||||||||||||||
| Certificate accounts | 887,618 | 9,185 | 4.16 | 818,698 | 8,105 | 3.93 | |||||||||||||||||||||||||||||
| Total interest-bearing deposits | 2,951,443 | 20,318 | 2.77 | 2,863,195 | 18,289 | 2.53 | |||||||||||||||||||||||||||||
| Junior subordinated debt | 10,029 | 236 | 9.46 | 10,005 | 239 | 9.48 | |||||||||||||||||||||||||||||
| Borrowings | 103,155 | 1,571 | 6.13 | 156,619 | 2,368 | 6.00 | |||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 3,064,627 | 22,125 | 2.90 | 3,029,819 | 20,896 | 2.74 | |||||||||||||||||||||||||||||
| Noninterest-bearing deposits | 810,114 | 837,048 | |||||||||||||||||||||||||||||||||
| Other liabilities | 36,945 | 45,156 | |||||||||||||||||||||||||||||||||
| Total liabilities | 3,911,686 | 3,912,023 | |||||||||||||||||||||||||||||||||
| Stockholders' equity | 508,870 | 494,106 | |||||||||||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 4,420,556 | $ | 4,406,129 | |||||||||||||||||||||||||||||||
| Net earning assets | $ | 1,057,812 | $ | 1,104,543 | |||||||||||||||||||||||||||||||
| Average interest-earning assets to average interest-bearing liabilities | 134.52 | % | 136.46 | % | |||||||||||||||||||||||||||||||
| Non-tax-equivalent | |||||||||||||||||||||||||||||||||||
| Net interest income | $ | 41,230 | $ | 41,923 | |||||||||||||||||||||||||||||||
| Interest rate spread | 3.28 | % | 3.29 | % | |||||||||||||||||||||||||||||||
Net interest margin(3) | 4.02 | % | 4.02 | % | |||||||||||||||||||||||||||||||
Tax-equivalent(4) | |||||||||||||||||||||||||||||||||||
| Net interest income | $ | 41,579 | $ | 42,264 | |||||||||||||||||||||||||||||||
| Interest rate spread | 3.32 | % | 3.32 | % | |||||||||||||||||||||||||||||||
Net interest margin(3) | 4.06 | % | 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 $349 and $341 for the three months ended March 31, 2024 and December 31, 2023, respectively, calculated based on a combined federal and state tax rate of 24%.
Total interest and dividend income for the three months ended March 31, 2024 increased $536,000, or 0.9%, compared to the three months ended December 31, 2023, which was driven by a $597,000, or 40.0%, increase in income on other investments and interest-bearing deposits due to the allocation of liquid funds in higher-yielding deposit accounts. Accretion income on acquired loans of $715,000 and $405,000 was recognized during the same periods, respectively, and was included in interest income on loans.
2
Total interest expense for the three months ended March 31, 2024 increased $1.2 million, or 5.9%, compared to the three months ended December 31, 2023. The increase was the result of both increases in the average cost of funds 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 | $ | (1,008) | $ | 891 | $ | (117) | |||||||||||
| Debt securities available for sale | (112) | 168 | 56 | ||||||||||||||
| Other interest-earning assets | 96 | 501 | 597 | ||||||||||||||
| Total interest-earning assets | (1,024) | 1,560 | 536 | ||||||||||||||
| Interest-bearing liabilities | |||||||||||||||||
| Interest-bearing checking accounts | (28) | 245 | 217 | ||||||||||||||
| Money market accounts | 82 | 652 | 734 | ||||||||||||||
| Savings accounts | (2) | — | (2) | ||||||||||||||
| Certificate accounts | 556 | 524 | 1,080 | ||||||||||||||
| Junior subordinated debt | (3) | — | (3) | ||||||||||||||
| Borrowings | (830) | 33 | (797) | ||||||||||||||
| Total interest-bearing liabilities | (225) | 1,454 | 1,229 | ||||||||||||||
| Decrease in net interest income | $ | (693) | |||||||||||||||
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) | March 31, 2024 | December 31, 2023 | $ Change | % Change | |||||||||||||||||||
| Provision for credit losses | |||||||||||||||||||||||
| Loans | $ | 1,145 | $ | 4,050 | $ | (2,905) | (72) | % | |||||||||||||||
| Off-balance-sheet credit exposure | 20 | (690) | 710 | 103 | |||||||||||||||||||
| Total provision for credit losses | $ | 1,165 | $ | 3,360 | $ | (2,195) | (65) | % | |||||||||||||||
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 quarter ended December 31, 2023, the "loans" portion of the provision for credit losses was primarily the result of the following, offset by net charge-offs of $2.8 million during the quarter:
•$0.5 million benefit driven by 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.
•$0.8 million increase in specific reserves on individually evaluated credits.
For the quarters ended March 31, 2024 and December 31, 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.
3
Noninterest Income. Noninterest income for the three months ended March 31, 2024 increased $572,000, or 6.9%, when compared to the quarter ended December 31, 2023. Changes in the components of noninterest income are discussed below:
| Three Months Ended | |||||||||||||||||||||||
| (Dollars in thousands) | March 31, 2024 | December 31, 2023 | $ Change | % Change | |||||||||||||||||||
| Noninterest income | |||||||||||||||||||||||
| Service charges and fees on deposit accounts | $ | 2,149 | $ | 2,368 | $ | (219) | (9) | % | |||||||||||||||
| Loan income and fees | 678 | 423 | 255 | 60 | |||||||||||||||||||
| Gain on sale of loans held for sale | 1,457 | 1,037 | 420 | 41 | |||||||||||||||||||
| Bank owned life insurance ("BOLI") income | 1,835 | 2,152 | (317) | (15) | |||||||||||||||||||
| Operating lease income | 1,859 | 1,592 | 267 | 17 | |||||||||||||||||||
| Loss on sale of premises and equipment | (9) | (248) | 239 | 96 | |||||||||||||||||||
| Other | 842 | 924 | (82) | (9) | |||||||||||||||||||
| Total noninterest income | $ | 8,811 | $ | 8,248 | $ | 563 | 7 | % | |||||||||||||||
•Loan income and fees: The increase was the result of loan servicing fee income returning to normal levels in the current quarter. The prior quarter included $150,000 of expense associated with the early payoff and/or charge-off of loans being serviced.
•Gain on sale of loans held for sale: The increase was primarily driven by SBA loans sold during the period. There were $12.9 million in sales of the guaranteed portion of SBA commercial loans with gains of $1.1 million for the quarter compared to $5.6 million sold and gains of $439,000 for the prior quarter. There were $15.3 million of residential mortgage loans originated for sale which were sold during the current quarter with gains of $316,000 compared to $20.5 million sold with gains of $417,000 in the prior quarter. Our hedging of mandatory commitments on the residential mortgage loan pipeline resulted in a gain of $55,000 for the quarter ended March 31, 2024 versus a loss of $142,000 for the quarter ended December 31, 2023. There were $7.8 million of HELOCs sold for a gain of $16,000 compared to $37.5 million sold with gains of $322,000 in the prior quarter. The decrease in the gain on sale of HELOCs was due to only one sale in the current quarter versus three sales in the prior quarter as well as a combined $78,000 in expense recorded in the current quarter to refund premiums previously received under sold loan recourse provisions and to establish a liability for potential future requests. No such expense was recorded in the prior quarter.
•BOLI income: The decrease was due to only $1.1 million in tax-free gains on death benefit proceeds in excess of the cash surrender value of the policies in the current quarter compared to $1.6 million in the prior quarter, partially offset by an increase in policy earnings as a result of the partial restructuring of the Company's BOLI policies, which was executed at the end of the prior quarter.
•Operating lease income: The increase was the result of an increase in the average outstanding balance as well as gains/losses incurred on previously leased equipment, where we recognized net losses of $145,000 and $192,000 in the quarters ended March 31, 2024 and December 31, 2023, respectively.
•Loss on sale of premises and equipment: During the quarter ended December 31, 2023, the Company recognized $625,000 of expense due to the impairment of the remaining right of use asset associated with a previously closed branch, partially offset by a $380,000 gain on the sale of a parcel of land.
Noninterest Expense. Noninterest expense for the three months ended March 31, 2024 increased $92,000, or 0.3%, when compared to the three months ended December 31, 2023. Changes in the components of noninterest expense are discussed below:
| Three Months Ended | |||||||||||||||||||||||
| (Dollars in thousands) | March 31, 2024 | December 31, 2023 | $ Change | % Change | |||||||||||||||||||
| Noninterest expense | |||||||||||||||||||||||
| Salaries and employee benefits | $ | 16,976 | $ | 16,256 | $ | 720 | 4 | % | |||||||||||||||
| Occupancy expense, net | 2,437 | 2,443 | (6) | — | |||||||||||||||||||
| Computer services | 3,088 | 3,002 | 86 | 3 | |||||||||||||||||||
| Telephone, postage and supplies | 585 | 603 | (18) | (3) | |||||||||||||||||||
| Marketing and advertising | 645 | 625 | 20 | 3 | |||||||||||||||||||
| Deposit insurance premiums | 554 | 702 | (148) | (21) | |||||||||||||||||||
| Core deposit intangible amortization | 762 | 860 | (98) | (11) | |||||||||||||||||||
| Other | 4,817 | 5,290 | (473) | (9) | |||||||||||||||||||
| Total noninterest expense | $ | 29,864 | $ | 29,781 | $ | 83 | — | % | |||||||||||||||
•Salaries and employee benefits: The quarter-over-quarter increase was primarily the result of $389,000 in additional FICA taxes.
•Deposit insurance premiums: The decrease was due to a drop in the assessment rate the Company is charged for deposit insurance.
•Other: The decrease was primarily the result of a $173,000 decrease in fraud losses and $115,000 of severance expense included in the prior quarter related to staff reductions.
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 March 31, 2024 and December 31, 2023 were 20.8% and 20.9%, respectively. In both periods, the effective tax rate was positively impacted by tax-free gains on BOLI death benefit proceeds of $1.1 million and $1.6 million, respectively.
4
Balance Sheet Review
Total assets increased by $11.4 million to $4.7 billion and total liabilities decreased by $1.9 million to $4.2 billion, respectively, at March 31, 2024 as compared to December 31, 2023. The majority of these changes were the result of an increase in deposits, which, combined with amounts received from maturing investments, were used to fund growth in loans held for sale, pay down borrowings, and provide additional liquidity.
Stockholders' equity increased $13.3 million to $513.2 million at March 31, 2024 as compared to December 31, 2023. Activity within stockholders' equity included $15.1 million in net income, partially offset by $1.9 million in cash dividends declared. As of March 31, 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 $47.5 million, or 1.30% of total loans, at March 31, 2024 compared to $48.6 million, or 1.34% of total loans, at December 31, 2023. The drivers of this change are discussed in the "Comparison of Results of Operations for the Three Months Ended March 31, 2024 and December 31, 2023 – Provision for Credit Losses" section above.
Net loan charge-offs totaled $2.3 million for the three months ended March 31, 2024 compared to $2.8 million for the three months ended December 31, 2023. Annualized net charge-offs as a percentage of average assets were 0.24% for the three months ended March 31, 2024 compared to 0.29% for the three months ended December 31, 2023. The net charge-offs recognized the past two quarters have been concentrated in our equipment finance and SBA portfolios, with net charge-offs in these portfolios totaling $2.8 million and $0.9 million, respectively.
Nonperforming assets, made up entirely of nonaccrual loans for both periods, increased by $865,000, or 4.5%, to $20.2 million, or 0.43% of total assets, at March 31, 2024 compared to $19.3 million, or 0.41% of total assets, at December 31, 2023. Consistent with last quarter, equipment finance loans, specifically smaller over-the-road truck loans, made up the largest portion of nonperforming assets at $6.6 million and $6.5 million, respectively, at these same dates. During the quarter, the Company elected to cease further originations within the transportation sector of equipment finance loans. The ratio of nonperforming loans to total loans was 0.55% at March 31, 2024 compared to 0.53% at December 31, 2023.
The ratio of classified assets to total assets decreased to 0.80% at March 31, 2024 from 0.90% at December 31, 2023 as classified assets decreased $4.6 million, or 11.0%, to $37.4 million at March 31, 2024 compared to $42.0 million at December 31, 2023. The decrease was primarily due to the upgrade of a $3.7 million commercial and industrial relationship and a $1.3 million owner-occupied commercial real estate relationship during the period.
About HomeTrust Bancshares, Inc.
HomeTrust Bancshares, Inc. is the holding company for the Bank. As of March 31, 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.
5
Consolidated Balance Sheets (Unaudited)
(Dollars in thousands) | March 31, 2024 | December 31, 2023(1) | September 30, 2023 | June 30, 2023(1) | March 31, 2023 | ||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
| Cash | $ | 16,134 | $ | 18,307 | $ | 18,090 | $ | 19,266 | $ | 18,262 | |||||||||||||||||||
| Interest-bearing deposits | 364,359 | 328,833 | 306,924 | 284,231 | 296,151 | ||||||||||||||||||||||||
| Cash and cash equivalents | 380,493 | 347,140 | 325,014 | 303,497 | 314,413 | ||||||||||||||||||||||||
| Certificates of deposit in other banks | 33,625 | 34,722 | 35,380 | 33,152 | 33,102 | ||||||||||||||||||||||||
| Debt securities available for sale, at fair value | 120,807 | 126,950 | 134,348 | 151,926 | 157,718 | ||||||||||||||||||||||||
| FHLB and FRB stock | 13,691 | 18,393 | 19,612 | 20,208 | 19,125 | ||||||||||||||||||||||||
| SBIC investments, at cost | 14,568 | 13,789 | 14,586 | 14,927 | 13,620 | ||||||||||||||||||||||||
| Loans held for sale, at fair value | 2,764 | 3,359 | 4,616 | 6,947 | 1,209 | ||||||||||||||||||||||||
| Loans held for sale, at the lower of cost or fair value | 220,699 | 198,433 | 200,834 | 161,703 | 89,172 | ||||||||||||||||||||||||
| Total loans, net of deferred loan fees and costs | 3,648,152 | 3,640,022 | 3,659,914 | 3,658,823 | 3,649,333 | ||||||||||||||||||||||||
| Allowance for credit losses – loans | (47,502) | (48,641) | (47,417) | (47,193) | (47,503) | ||||||||||||||||||||||||
| Loans, net | 3,600,650 | 3,591,381 | 3,612,497 | 3,611,630 | 3,601,830 | ||||||||||||||||||||||||
| Premises and equipment, net | 70,588 | 70,937 | 72,463 | 73,171 | 74,107 | ||||||||||||||||||||||||
| Accrued interest receivable | 16,944 | 16,902 | 16,513 | 14,829 | 13,813 | ||||||||||||||||||||||||
| Deferred income taxes, net | 11,222 | 11,796 | 9,569 | 10,912 | 10,894 | ||||||||||||||||||||||||
| BOLI | 88,369 | 88,257 | 106,059 | 106,572 | 105,952 | ||||||||||||||||||||||||
| Goodwill | 34,111 | 34,111 | 34,111 | 34,111 | 33,682 | ||||||||||||||||||||||||
| Core deposit intangibles, net | 8,297 | 9,059 | 9,918 | 10,778 | 11,637 | ||||||||||||||||||||||||
| Other assets | 67,183 | 107,404 | 56,477 | 53,124 | 49,596 | ||||||||||||||||||||||||
| Total assets | $ | 4,684,011 | $ | 4,672,633 | $ | 4,651,997 | $ | 4,607,487 | $ | 4,529,870 | |||||||||||||||||||
| Liabilities and stockholders' equity | |||||||||||||||||||||||||||||
| Liabilities | |||||||||||||||||||||||||||||
| Deposits | $ | 3,799,807 | $ | 3,661,373 | $ | 3,640,961 | $ | 3,601,168 | $ | 3,675,599 | |||||||||||||||||||
| Junior subordinated debt | 10,045 | 10,021 | 9,995 | 9,971 | 9,945 | ||||||||||||||||||||||||
| Borrowings | 291,513 | 433,763 | 452,263 | 457,263 | 320,263 | ||||||||||||||||||||||||
| Other liabilities | 69,473 | 67,583 | 64,367 | 67,899 | 62,821 | ||||||||||||||||||||||||
| Total liabilities | 4,170,838 | 4,172,740 | 4,167,586 | 4,136,301 | 4,068,628 | ||||||||||||||||||||||||
| 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 | 174 | 174 | 174 | 174 | ||||||||||||||||||||||||
| Additional paid in capital | 172,919 | 172,366 | 171,663 | 171,222 | 170,670 | ||||||||||||||||||||||||
| Retained earnings | 346,598 | 333,401 | 321,799 | 308,651 | 295,325 | ||||||||||||||||||||||||
| Unearned Employee Stock Ownership Plan ("ESOP") shares | (4,364) | (4,497) | (4,629) | (4,761) | (4,893) | ||||||||||||||||||||||||
| Accumulated other comprehensive loss | (2,155) | (1,551) | (4,596) | (4,100) | (3,034) | ||||||||||||||||||||||||
| Total stockholders' equity | 513,173 | 499,893 | 484,411 | 471,186 | 458,242 | ||||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 4,684,011 | $ | 4,672,633 | $ | 4,651,997 | $ | 4,607,487 | $ | 4,526,870 | |||||||||||||||||||
(1)Derived from audited financial statements.
(2)Shares of common stock issued and outstanding were 17,444,787 at March 31, 2024; 17,387,069 at December 31, 2023; 17,380,307 at September 30, 2023; 17,366,673 at June 30, 2023; and 17,370,063 at March 31, 2023.
6
Consolidated Statements of Income (Unaudited)
| Three Months Ended | |||||||||||
(Dollars in thousands) | March 31, 2024 | December 31, 2023 | |||||||||
| Interest and dividend income | |||||||||||
| Loans | $ | 59,952 | $ | 60,069 | |||||||
| Debt securities available for sale | 1,313 | 1,257 | |||||||||
| Other investments and interest-bearing deposits | 2,090 | 1,493 | |||||||||
| Total interest and dividend income | 63,355 | 62,819 | |||||||||
| Interest expense | |||||||||||
| Deposits | 20,318 | 18,289 | |||||||||
| Junior subordinated debt | 236 | 239 | |||||||||
| Borrowings | 1,571 | 2,368 | |||||||||
| Total interest expense | 22,125 | 20,896 | |||||||||
| Net interest income | 41,230 | 41,923 | |||||||||
| Provision for credit losses | 1,165 | 3,360 | |||||||||
| Net interest income after provision for credit losses | 40,065 | 38,563 | |||||||||
| Noninterest income | |||||||||||
| Service charges and fees on deposit accounts | 2,149 | 2,368 | |||||||||
| Loan income and fees | 678 | 423 | |||||||||
| Gain on sale of loans held for sale | 1,457 | 1,037 | |||||||||
| BOLI income | 1,835 | 2,152 | |||||||||
| Operating lease income | 1,859 | 1,592 | |||||||||
| Loss on sale of premises and equipment | (9) | (248) | |||||||||
| Other | 842 | 924 | |||||||||
| Total noninterest income | 8,811 | 8,248 | |||||||||
| Noninterest expense | |||||||||||
| Salaries and employee benefits | 16,976 | 16,256 | |||||||||
| Occupancy expense, net | 2,437 | 2,443 | |||||||||
| Computer services | 3,088 | 3,002 | |||||||||
| Telephone, postage and supplies | 585 | 603 | |||||||||
| Marketing and advertising | 645 | 625 | |||||||||
| Deposit insurance premiums | 554 | 702 | |||||||||
| Core deposit intangible amortization | 762 | 860 | |||||||||
| Other | 4,817 | 5,290 | |||||||||
| Total noninterest expense | 29,864 | 29,781 | |||||||||
| Income before income taxes | 19,012 | 17,030 | |||||||||
| Income tax expense | 3,945 | 3,566 | |||||||||
| Net income | $ | 15,067 | $ | 13,464 | |||||||
7
Per Share Data
| Three Months Ended | ||||||||||||||
| March 31, 2024 | December 31, 2023 | |||||||||||||
Net income per common share(1) | ||||||||||||||
| Basic | $ | 0.88 | $ | 0.79 | ||||||||||
| Diluted | $ | 0.88 | $ | 0.79 | ||||||||||
| Average shares outstanding | ||||||||||||||
| Basic | 16,859,738 | 16,820,369 | ||||||||||||
| Diluted | 16,872,840 | 16,827,460 | ||||||||||||
| Book value per share at end of period | $ | 29.42 | $ | 28.75 | ||||||||||
Tangible book value per share at end of period(2) | $ | 27.10 | $ | 26.39 | ||||||||||
| Cash dividends declared per common share | $ | 0.11 | $ | 0.11 | ||||||||||
| Total shares outstanding at end of period | 17,444,787 | 17,387,069 | ||||||||||||
(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 | ||||||||||||||
| March 31, 2024 | December 31, 2023 | |||||||||||||
Performance ratios(1) | ||||||||||||||
| Return on assets (ratio of net income to average total assets) | 1.37 | % | 1.21 | % | ||||||||||
| Return on equity (ratio of net income to average equity) | 11.91 | 10.81 | ||||||||||||
| Yield on earning assets | 6.18 | 6.03 | ||||||||||||
| Rate paid on interest-bearing liabilities | 2.90 | 2.74 | ||||||||||||
| Average interest rate spread | 3.28 | 3.29 | ||||||||||||
Net interest margin(2) | 4.02 | 4.02 | ||||||||||||
Average interest-earning assets to average interest-bearing liabilities | 134.52 | 136.46 | ||||||||||||
| Noninterest expense to average total assets | 2.72 | 2.68 | ||||||||||||
| Efficiency ratio | 59.69 | 59.36 | ||||||||||||
Efficiency ratio – adjusted(3) | 60.64 | 60.52 | ||||||||||||
(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 | |||||||||||||||||||||||||||||
| March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | |||||||||||||||||||||||||
| Asset quality ratios | |||||||||||||||||||||||||||||
Nonperforming assets to total assets(1) | 0.43 | % | 0.41 | % | 0.25 | % | 0.18 | % | 0.18 | % | |||||||||||||||||||
Nonperforming loans to total loans(1) | 0.55 | 0.53 | 0.32 | 0.23 | 0.22 | ||||||||||||||||||||||||
| Total classified assets to total assets | 0.80 | 0.90 | 0.76 | 0.53 | 0.49 | ||||||||||||||||||||||||
Allowance for credit losses to nonperforming loans(1) | 235.18 | 251.60 | 400.41 | 567.56 | 600.47 | ||||||||||||||||||||||||
| Allowance for credit losses to total loans | 1.30 | 1.34 | 1.30 | 1.29 | 1.30 | ||||||||||||||||||||||||
| Net charge-offs to average loans (annualized) | 0.24 | 0.29 | 0.27 | 0.13 | 0.01 | ||||||||||||||||||||||||
| Capital ratios | |||||||||||||||||||||||||||||
| Equity to total assets at end of period | 10.96 | % | 10.70 | % | 10.41 | % | 10.23 | % | 10.12 | % | |||||||||||||||||||
Tangible equity to total tangible assets(2) | 10.18 | 9.91 | 9.60 | 9.39 | 9.27 | ||||||||||||||||||||||||
| Average equity to average assets | 11.51 | 11.03 | 10.84 | 10.79 | 11.14 | ||||||||||||||||||||||||
(1)Nonperforming assets include nonaccruing loans and REO. There were no accruing loans more than 90 days past due at the dates indicated. At March 31, 2024, $7.7 million, or 38.2%, of nonaccruing loans were current on their loan payments as of that date.
(2)See Non-GAAP reconciliations below for adjustments.
8
Loans
(Dollars in thousands) | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | ||||||||||||||||||||||||
| Commercial real estate loans | |||||||||||||||||||||||||||||
| Construction and land development | $ | 304,727 | $ | 305,269 | $ | 352,143 | $ | 356,674 | $ | 368,756 | |||||||||||||||||||
| Commercial real estate – owner occupied | 532,547 | 536,545 | 526,534 | 529,721 | 524,247 | ||||||||||||||||||||||||
| Commercial real estate – non-owner occupied | 881,143 | 875,694 | 880,348 | 901,685 | 926,991 | ||||||||||||||||||||||||
| Multifamily | 89,692 | 88,623 | 83,430 | 81,827 | 85,285 | ||||||||||||||||||||||||
| Total commercial real estate loans | 1,808,109 | 1,806,131 | 1,842,455 | 1,869,907 | 1,905,279 | ||||||||||||||||||||||||
| Commercial loans | |||||||||||||||||||||||||||||
| Commercial and industrial | 243,732 | 237,255 | 237,366 | 245,428 | 229,840 | ||||||||||||||||||||||||
| Equipment finance | 462,649 | 465,573 | 470,387 | 462,211 | 440,345 | ||||||||||||||||||||||||
| Municipal leases | 151,894 | 150,292 | 147,821 | 142,212 | 138,436 | ||||||||||||||||||||||||
| Total commercial loans | 858,275 | 853,120 | 855,574 | 849,851 | 808,621 | ||||||||||||||||||||||||
| Residential real estate loans | |||||||||||||||||||||||||||||
| Construction and land development | 85,840 | 96,646 | 103,381 | 110,074 | 105,617 | ||||||||||||||||||||||||
| One-to-four family | 605,570 | 584,405 | 560,399 | 529,703 | 518,274 | ||||||||||||||||||||||||
| HELOCs | 184,274 | 185,878 | 185,289 | 187,193 | 193,037 | ||||||||||||||||||||||||
| Total residential real estate loans | 875,684 | 866,929 | 849,069 | 826,970 | 816,928 | ||||||||||||||||||||||||
| Consumer loans | 106,084 | 113,842 | 112,816 | 112,095 | 118,505 | ||||||||||||||||||||||||
| Total loans, net of deferred loan fees and costs | 3,648,152 | 3,640,022 | 3,659,914 | 3,658,823 | 3,649,333 | ||||||||||||||||||||||||
| Allowance for credit losses – loans | (47,502) | (48,641) | (47,417) | (47,193) | (47,503) | ||||||||||||||||||||||||
| Loans, net | $ | 3,600,650 | $ | 3,591,381 | $ | 3,612,497 | $ | 3,611,630 | $ | 3,601,830 | |||||||||||||||||||
Deposits
(Dollars in thousands) | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | ||||||||||||||||||||||||
| Core deposits | |||||||||||||||||||||||||||||
| Noninterest-bearing accounts | $ | 773,901 | $ | 784,950 | $ | 827,362 | $ | 825,481 | $ | 872,492 | |||||||||||||||||||
| NOW accounts | 600,561 | 591,270 | 602,804 | 611,105 | 678,178 | ||||||||||||||||||||||||
| Money market accounts | 1,308,467 | 1,246,807 | 1,195,482 | 1,241,840 | 1,299,503 | ||||||||||||||||||||||||
| Savings accounts | 191,302 | 194,486 | 202,971 | 212,220 | 228,390 | ||||||||||||||||||||||||
| Total core deposits | 2,874,231 | 2,817,513 | 2,828,619 | 2,890,646 | 3,078,563 | ||||||||||||||||||||||||
| Certificates of deposit | 925,576 | 843,860 | 812,342 | 710,522 | 597,036 | ||||||||||||||||||||||||
| Total | $ | 3,799,807 | $ | 3,661,373 | $ | 3,640,961 | $ | 3,601,168 | $ | 3,675,599 | |||||||||||||||||||
9
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 | ||||||||||||||
| (Dollars in thousands) | March 31, 2024 | December 31, 2023 | ||||||||||||
| Noninterest expense | $ | 29,864 | $ | 29,781 | ||||||||||
| Net interest income | $ | 41,230 | $ | 41,923 | ||||||||||
| Plus: tax-equivalent adjustment | 349 | 341 | ||||||||||||
| Plus: noninterest income | 8,811 | 8,248 | ||||||||||||
| Less: BOLI death benefit proceeds in excess of cash surrender value | 1,143 | 1,554 | ||||||||||||
| Less: loss on sale of premises and equipment | (9) | (248) | ||||||||||||
| Net interest income plus noninterest income – adjusted | $ | 49,256 | $ | 49,206 | ||||||||||
| Efficiency ratio | 59.69 | % | 59.36 | % | ||||||||||
| Efficiency ratio – adjusted | 60.64 | % | 60.52 | % | ||||||||||
Set forth below is a reconciliation to GAAP of tangible book value and tangible book value per share:
| As of | ||||||||||||||||||||||||||||||||
| (Dollars in thousands, except per share data) | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | |||||||||||||||||||||||||||
| Total stockholders' equity | $ | 513,173 | $ | 499,893 | $ | 484,411 | $ | 471,186 | $ | 458,242 | ||||||||||||||||||||||
| Less: goodwill, core deposit intangibles, net of taxes | 40,500 | 41,086 | 41,748 | 42,410 | 42,642 | |||||||||||||||||||||||||||
| Tangible book value | $ | 472,673 | $ | 458,807 | $ | 442,663 | $ | 428,776 | $ | 415,600 | ||||||||||||||||||||||
| Common shares outstanding | 17,444,787 | 17,387,069 | 17,380,307 | 17,366,673 | 17,370,063 | |||||||||||||||||||||||||||
| Book value per share | $ | 29.42 | $ | 28.75 | $ | 27.87 | $ | 27.13 | $ | 26.38 | ||||||||||||||||||||||
| Tangible book value per share | $ | 27.10 | $ | 26.39 | $ | 25.47 | $ | 24.69 | $ | 23.93 | ||||||||||||||||||||||
Set forth below is a reconciliation to GAAP of tangible equity to tangible assets:
| As of | ||||||||||||||||||||||||||||||||
| (Dollars in thousands) | March 31, 2024 | December 31, 2023 | September 30, 2023 | June 30, 2023 | March 31, 2023 | |||||||||||||||||||||||||||
Tangible equity(1) | $ | 472,673 | $ | 458,807 | $ | 442,663 | $ | 428,776 | $ | 415,600 | ||||||||||||||||||||||
| Total assets | 4,684,011 | 4,672,633 | 4,651,997 | 4,607,487 | 4,526,870 | |||||||||||||||||||||||||||
| Less: goodwill, core deposit intangibles, net of taxes | 40,500 | 41,086 | 41,748 | 42,410 | 42,642 | |||||||||||||||||||||||||||
| Total tangible assets | $ | 4,643,511 | $ | 4,631,547 | $ | 4,610,249 | $ | 4,565,077 | $ | 4,484,228 | ||||||||||||||||||||||
| Tangible equity to tangible assets | 10.18 | % | 9.91 | % | 9.60 | % | 9.39 | % | 9.27 | % | ||||||||||||||||||||||
(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.
10