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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): July 25, 2019

HOMETRUST BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
 
Maryland
 
001-35593
 
45-5055422
(State or other jurisdiction of incorporation)
 
(Commission File No.)
 
(IRS Employer Identification Number)

10 Woodfin Street, Asheville, North Carolina
 
 
 
28801
(Address of principal executive offices)
 
 
 
(Zip Code)

Registrant's telephone number, including area code: (828) 259-3939

 
 
Not Applicable
 
 
 
(Former name or former address, if changed since last report)
 


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company
[ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
[ ]





Item 2.02.  Results of Operations and Financial Condition
 
On July 25, 2019, HomeTrust Bancshares, Inc., the holding company for HomeTrust Bank, issued a press release reporting 2019 financial results.  A copy of the press release, including unaudited financial information released as a part thereof, is attached as Exhibit 99.1 to this Current Report on Form 8-K and incorporated by reference herein.
 
Item 9.01  Financial Statements and Exhibits
 
(d)           Exhibits
 
99.1





SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

HOMETRUST BANCSHARES, INC.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Date: July 25, 2019
 
By:
/s/ Tony J. VunCannon
 
 
 
Tony J. VunCannon
 
 
 
Executive Vice President, Chief Financial Officer, Corporate Secretary and Treasurer



Exhibit


https://cdn.kscope.io/ea6408c26a3715a96c86573364ba901b-htbi_imagea08.jpg
HomeTrust Bancshares, Inc. Reports Fourth Quarter and Fiscal Year 2019 Financial Results
ASHEVILLE, N.C., July 25, 2019 - HomeTrust Bancshares, Inc. (NASDAQ: HTBI) ("Company"), the holding company of HomeTrust Bank ("Bank"), today announced preliminary net income increased 11.2% to $8.0 million, or $0.44 per diluted share for the fourth quarter of fiscal 2019, compared to $7.2 million, or $0.38 per diluted share for the same period a year ago. Net income totaled $27.1 million, or $1.46 per diluted share for the year ended June 30, 2019, compared to $8.2 million, or $0.44 per diluted share for fiscal year 2018. Earnings during the year ended June 30, 2019 were negatively impacted by a $5.7 million provision primarily related to one $6.0 million commercial lending relationship, which was fully charged off. Earnings for the year ended June 30, 2018 included a $17.9 million write-down of deferred tax assets following a deferred tax revaluation resulting from enactment of the Tax Cuts and Jobs Act (“Tax Act”) with no comparable charge in fiscal year 2019.
"We concluded fiscal 2019 on yet another high note set by record net income,” said Dana Stonestreet, Chairman, President and Chief Executive Officer. “Our success reflects the hard work of our employees to ensure our customers and communities are, as we like to say, Ready for What's Next. As a result, we had over $1 billion in loan originations for the second year in a row; net organic loan growth of 10%; SBA loan sales that generated $3.4 million in noninterest income; and our new equipment finance line of business originated $147 million in loans and leases during the year. Continued improvements in our financial performance led to our first cash dividend along with the adoption of our sixth stock repurchase program. As we look into fiscal 2020 and beyond, we will remain focused and disciplined on executing our strategic plan to deliver more value to our customers and shareholders."
Highlights for the quarter ended June 30, 2019 compared to the corresponding quarter in the previous year:
•
return on assets ("ROA") increased 4.5% to 0.92% from 0.88%;
•
net interest income increased $1.0 million, or 3.9% to $26.9 million from $25.9 million;
•
noninterest income increased $1.7 million, or 34.6% to $6.8 million from $5.1 million;
•
provision for loan losses increased to $200,000 from $0;
•
organic net loan growth, which excludes purchases of home equity lines of credit, was $56.0 million, or 8.9%
     annualized compared to $80.3 million, or 14.1% annualized;
•
292,630 shares were repurchased during the quarter at an average price of $25.01 per share; and
•
quarterly cash dividends of $0.06 per share totaling $1.1 million.

Highlights for the year ended June 30, 2019 compared to the year ended June 30, 2018:
•
ROA was 0.80%, compared to 0.25%;
•
net interest income increased $5.5 million, or 5.5% to $106.9 million from $101.3 million;
•
noninterest income increased $3.9 million, or 20.7% to $22.9 million from $19.0 million;
•
provision for loan losses increased to $5.7 million from $0;
•
net loans receivable increased 7.1% to $2.7 billion from $2.5 billion;
•
organic net loan growth was $228.6 million, or 9.7% compared to $171.3 million, or 7.8%;
•
nonperforming assets decreased 9.0% to $13.3 million, or 0.38% of total assets compared to $14.6 million, or 0.44%
of total assets;
•
total deposits increased 6.0% to $2.3 billion from $2.2 billion; and
•
1,149,785 shares of common stock were repurchased during the year at an average price of $26.65 per share.


1



Income Statement Review
Net interest income increased to $26.9 million for the quarter ended June 30, 2019 compared to $25.9 million for the comparative quarter in fiscal 2018. The $1.0 million, or 3.9% increase was due to a $4.8 million increase in interest and dividend income primarily driven by an increase in average interest-earning assets, which was partially offset by a $3.8 million increase in interest expense, which was primarily driven by increases in the cost of interest-bearing liabilities. Average interest-earning assets increased $189.3 million, or 6.2% to $3.2 billion for the quarter ended June 30, 2019 compared to $3.0 billion for the corresponding quarter in fiscal 2018. For the quarter ended June 30, 2019, the average balance of total loans receivable increased $226.5 million, or 9.2% compared to the same quarter last year primarily due to organic loan growth. The average balance of other interest-earning assets increased $4.4 million, or 1.6% between the periods primarily due to increases in commercial paper investments and other investments at cost. These increases were mainly funded by the cumulative decrease of $41.7 million, or 15.4% in average interest-earning deposits in other banks and securities available for sale, and an increase in average interest-bearing liabilities, primarily deposits, of $203.1 million, or 8.1% as compared to the same quarter last year. Net interest margin (on a fully taxable-equivalent basis) for the three months ended June 30, 2019 decreased to 3.38% from 3.47% for the same period a year ago.

Total interest and dividend income increased $4.8 million, or 15.6% for the three months ended June 30, 2019 as compared to the same period last year, which was primarily driven by a $4.5 million, or 16.5% increase in loan interest income and a $306,000, or 13.0% increase in interest income from other interest-earning assets (comprised primarily of income from commercial paper). 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 28 basis points to 4.76% for the quarter ended June 30, 2019 from 4.48% in the corresponding quarter last year primarily due to the impact of increases in the targeted federal funds rate. Partially offsetting the increase in loan interest income was a $164,000, or 27.5% decrease in the accretion of purchase discounts on acquired loans as a result of reduced prepayments as compared to the same quarter last year. For the quarters ended June 30, 2019 and 2018, average loan yields included six and ten basis points, respectively, from the accretion of purchase discounts on acquired loans. The incremental accretion and the impact to loan yield will 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 $6.7 million at June 30, 2019, compared to $7.1 million at March 31, 2019 and $8.8 million at June 30, 2018.
Total interest expense increased $3.8 million, or 75.0% for the quarter ended June 30, 2019 compared to the same period last year. The increase was due to a $2.7 million, or 122.1% increase in deposit interest expense and a $1.1 million, or 37.9% increase in interest expense on borrowings. The additional deposit interest expense was a result of our focus on increasing deposits as the average balance of interest-bearing deposits increased $128.5 million, or 6.9% along with a 52 basis point increase in the average cost of interest-bearing deposits for the quarter ended June 30, 2019 compared to the same quarter last year. Average borrowings for the quarter ended June 30, 2019 increased $74.6 million, or 12.0% and the average cost of borrowings increased 42 basis points compared to the same period last year, driving the increase in interest expense on those borrowings. The overall average cost of funds increased 50 basis points to 1.32% for the current quarter compared to 0.82% in the same quarter last year due primarily to the impact of the previously mentioned interest rate increases on our interest-bearing liabilities.
Net interest income increased $5.5 million or 5.5% to $106.9 million for the year ended June 30, 2019 compared to $101.3 million for the year ended June 30, 2018. Average interest-earning assets increased $173.6 million, or 5.8% to $3.1 billion for the year ended June 30, 2019 compared to $3.0 billion in the prior year. The $213.2 million, or 8.8% increase in average balance of total loans receivable for the year ended June 30, 2019 was primarily due to organic loan growth. The average balance of other interest-earning assets increased $35.2 million, or 14.2% between the periods primarily due to increases in commercial paper investments and other investments at cost. These increases were mainly funded by the cumulative decrease of $74.7 million, or 24.2% in average interest-earning deposits in other banks and securities available for sale, and an increase in average interest-bearing liabilities of $152.1 million, or 6.2%. Net interest margin (on a fully taxable-equivalent basis) for the year ended June 30, 2019 decreased three basis points to 3.43% from 3.46% for last year.
Total interest and dividend income increased $19.9 million, or 16.9% for the year ended June 30, 2019 as compared to the year ended June 30, 2018. The increase was primarily driven by a $16.8 million, or 16.0% increase in loan interest income and a $3.5 million, or 51.6% increase in interest income from other interest-earning assets, partially offset by a $433,000, or 7.7% decrease in interest income from securities available for sale and deposits in other banks. The additional loan interest income was primarily due to the increase in the average balance of loans receivable, which was partially offset by a $1.1 million decrease in the accretion of purchase discounts on acquired loans to $2.1 million for the year ended June 30, 2019 from $3.2 million for fiscal year 2018. Average loan yields increased 27 basis points to 4.68% for the year ended June 30, 2019 from 4.41% last year. For the year ended June 30, 2019 and 2018, average loan yields included eight and 14 basis points, respectively, from the accretion of purchase discounts on acquired loans.

2


Total interest expense increased $14.3 million, or 89.0% for the year ended June 30, 2019 compared to last year. This increase was primarily related to the $138.1 million, or 7.7% increase in average interest-bearing deposits and the corresponding 44 basis point increase in the average cost of those deposits, resulting in additional deposit interest expense of $9.0 million for the year ended June 30, 2019 as compared to the year ended June 30, 2018. In addition, average borrowings increased $13.9 million, or 2.1% along with a corresponding increase of 77 basis points in the average cost of those borrowings, resulting in additional interest expense of $5.3 million for the year ended June 30, 2019 as compared to the year ended June 30, 2018. The overall cost of funds increased 51 basis points to 1.16% for the year ended June 30, 2019 compared to 0.65% last year.
Noninterest income increased $1.7 million, or 34.6% to $6.8 million for the three months ended June 30, 2019 from $5.1 million for the same period in the previous year. The leading factors of the increase included an $819,000, or 62.4% increase in gains from the sale of loans due primarily to originations and sales of the guaranteed portion of U.S Small Business Administration (“SBA”) commercial loans; a $511,000, or 84.3% increase in other noninterest income primarily related to operating lease income from the new equipment finance line of business; and a $399,000, or 150.0% increase in loan income and fees as result of our adjustable rate conversion program, which allows borrowers to convert from an adjustable rate to a fixed rate loan.
Noninterest income increased $3.9 million, or 20.7% to $22.9 million for the year ended June 30, 2019 from $19.0 million for the year ended June 30, 2018. Driving the increase was a $1.9 million, or 45.4% increase on gain on sale of loans primarily due to originations and sales of SBA commercial loans; a $1.1 million, or 45.3% increase in other noninterest income primarily related to operating lease income; an $809,000, or 9.2% increase in service charges on deposit accounts as a result of an increase in deposit accounts and related fees; and a $246,000, or 20.9% increase in loan income and fees. There was also no gain from the sale of premises and equipment for the year ended June 30, 2019 as compared to $164,000 last year.
Noninterest expense for the three months ended June 30, 2019 increased $1.7 million, or 7.6% to $23.4 million compared to $21.8 million for the three months ended June 30, 2018. The increase was primarily due to a $1.4 million, or 11.5% increase in salaries and employee benefits; a $262,000, or 70.4% increase in marketing and advertising; a $240,000, or 14.1% increase in computer services; and a $53,000, or 6.8% increase in telephone, postage, and supplies expense, mainly driven by the expansion of our SBA and equipment finance lines of business. The $94,000, or 25.2% increase in deposit insurance premiums was due to changes in our loan mix and lower capital levels as a result of stock repurchases. Partially offsetting these increases was the cumulative decrease of $286,000, or 6.9% in real estate owned ("REO") related expenses; core deposit intangibles amortization; and other expense for the three months ended June 30, 2019 compared to the same period last year.
Noninterest expense for the year ended June 30, 2019 increased $4.8 million, or 5.6% to $90.1 million compared to $85.3 million for the year ended June 30, 2018. The increase was primarily due to a $4.1 million, or 8.6% increase in salaries and employee benefits; a $1.2 million, or 19.0% increase in computer services; a $375,000, or 25.4% increase in marketing and advertising; and a $121,000, or 10.2% increase in REO related expenses. Partially offsetting these increases was a $616,000, or 23.3% decrease in core deposit intangible amortization; a $235,000, or 2.4% decrease in net occupancy expense; and a $193,000, or 11.9% decrease in deposit insurance premiums as a result of lower nonaccrual loans during the year ended June 30, 2019 compared to last year.
For the three months ended June 30, 2019, the Company's income tax expense was $2.1 million compared to $2.0 million for the three months ended June 30, 2018. The effective tax rates for the three months ended June 30, 2019 and 2018 are 20.8% and 21.8%, respectively.
For the year ended June 30, 2019, the Company's income tax expense was $6.8 million compared to $26.7 million for the year ended June 30, 2018. The Company’s corporate federal income tax rate for the years ended June 30, 2019 and 2018 was 21% and 27.5%, respectively. In the quarter ended December 31, 2017, following a revaluation of net deferred tax assets due to the Tax Act, the Company recorded additional income tax expense of $17.9 million.
Balance Sheet Review
Total assets increased $172.0 million, or 5.2% to $3.5 billion at June 30, 2019 from $3.3 billion at June 30, 2018. Total liabilities increased $172.4 million, or 6.0% to $3.1 billion at June 30, 2019 from $2.9 billion at June 30, 2018. Deposit growth of $131.0 million, or 6.0%; a $45.0 million, or 7.1% increase in borrowings; and the cumulative decrease of $48.1 million, or 21.7% in certificates of deposit in other banks and securities available for sale were used to fund the $179.3 million, or 7.1% increase in total loans receivable, net of deferred loan fees, the $12.4 million, or 5.4% increase in commercial paper, the $12.3 million, or 209.5% increase in loans held for sale, and the $9.4 million, or 22.4% increase in other investments, net during the fiscal year 2019. The increase in net loans receivable from June 30, 2018, was driven by organic net loan growth of $228.6 million as primarily seen in the growth of our commercial and industrial and equipment finance loans which had a cumulative increase of $143.7 million, or 96.6%. In addition, commercial real estate loans increased during the year ended June 30, 2019, by $69.9 million or 8.2%. The increase in loans held for sale was due primarily to SBA loans originated during the period. The $13.7 million, or 391.2% increase in other assets was primarily due to the increase in operating leases originated by our new equipment finance line of business.

3


Stockholders' equity at June 30, 2019 decreased $346,000, or 0.1% to $408.9 million compared to $409.2 million at June 30, 2018. Changes within stockholders' equity included $27.1 million in net income, $3.0 million in stock-based compensation, and a $2.3 million increase in other comprehensive income representing a reduction in unrealized losses on investment securities, net of tax, to an unrealized gain of $733,000, partially offset by 1,149,785 shares of common stock repurchased at an average price per share of $26.65, or approximately $30.6 million in total, and $3.2 million related to cash dividends. As of June 30, 2019, HomeTrust Bank and the Company were considered "well capitalized" in accordance with their regulatory capital guidelines and exceeded all regulatory capital requirements.
Asset Quality
The allowance for loan losses was $21.4 million, or 0.79% of total loans, at June 30, 2019 compared to $21.1 million, or 0.83% of total loans, at June 30, 2018. The allowance for loan losses to gross loans, excluding acquired loans, was 0.85% at June 30, 2019, compared to 0.91% at June 30, 2018.
There was a $200,000 provision for loan losses for the three months ended June 30, 2019 compared to none for the same period last year. The $5.7 million provision for loan losses for the year ended June 30, 2019 compared to no provision for the year ended June 30, 2018 is primarily related to a $6.0 million commercial lending relationship, which was fully charged off in the third and fourth quarters this fiscal year. At the end of March 2019, the Company became aware that a commercial borrower operating as a heavy equipment contractor with $6.0 million of outstanding borrowings from the Bank had unexpectedly ceased operations. Based on further investigation and certain actions taken by the principal of the borrower, the Company believed that the Bank's collateral, consisting primarily of accounts receivable, had substantially deteriorated. As a result of this investigation and further subsequent developments, the Company determined a full charge-off of this relationship was appropriate. The Company is continuing to take action to enforce its rights against the borrower, guarantors and its collateral, including to preserve and recover the borrower’s assets, where appropriate.
As a result of this charged off lending relationship, net loan charge-offs increased to $3.2 million for the three months ended June 30, 2019 as compared to $412,000 for the same period during the prior fiscal year. Net loan charge-offs increased to $5.3 million for the year ended June 30, 2019 from $91,000 for fiscal 2018. Net charge-offs as a percentage of average loans were 0.47% for the quarter ended June 30, 2019 compared to 0.07% for the same period last fiscal year. Net charge-offs as a percentage of average loans increased to 0.20% for the year ended June 30, 2019 from 0% for last fiscal year.
Nonperforming assets decreased 9.0% to $13.3 million, or 0.38% of total assets, at June 30, 2019, compared to $14.6 million, or 0.44% of total assets, at June 30, 2018. Nonperforming assets included $10.4 million in nonaccruing loans and $2.9 million in REO at June 30, 2019, compared to $10.9 million and $3.7 million, in nonaccruing loans and REO, respectively, at June 30, 2018.  Included in nonperforming loans are $4.5 million of loans restructured from their original terms of which $1.8 million were current at June 30, 2019, with respect to their modified payment terms. The decrease in nonaccruing loans was primarily due to continued improvement in credit quality throughout the loan portfolio and loans returning to performing status as payment history and the borrower's financial status improved. At June 30, 2019, $4.1 million, or 39.6%, of nonaccruing loans were current on their required loan payments. Purchased impaired loans acquired from prior acquisitions aggregating $1.3 million 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 decreased to 0.38% at June 30, 2019 from 0.43% at June 30, 2018.
The ratio of classified assets to total assets decreased to 0.89% at June 30, 2019 from 1.0% at June 30, 2018. Classified assets decreased 6.5% to $30.9 million at June 30, 2019 compared to $33.1 million at June 30, 2018. While the previously mentioned significant provision for loan losses negatively affected our earnings, we believe our overall asset quality metrics continue to demonstrate our commitment to growing and maintaining a loan portfolio with a moderate risk profile.



4


About HomeTrust Bancshares, Inc.
HomeTrust Bancshares, Inc. is the holding company for HomeTrust Bank. As of June 30, 2019, the Company had assets of $3.5 billion. The Bank, founded in 1926, is a North Carolina state chartered, community-focused financial institution committed to providing value added relationship banking through 43 locations as well as online/mobile channels. Locations include: North Carolina (including the Asheville metropolitan area, the "Piedmont" region, Charlotte, Cary, and Raleigh), 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.HTB.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


5


Consolidated Balance Sheets (Unaudited)
(Dollars in thousands)
June 30, 2019
 
March 31, 2019
 
December 31, 2018
 
September 30,
2018
 
June 30, 2018 (2)
Assets
 
 
 
 
 
 
 
 
 
Cash
$
40,909

 
$
40,633

 
$
44,425

 
$
39,872

 
$
45,222

Interest-bearing deposits
30,134

 
37,678

 
26,881

 
18,896

 
25,524

Cash and cash equivalents
71,043

 
78,311

 
71,306

 
58,768

 
70,746

Commercial paper
241,446

 
246,903

 
239,286

 
238,224

 
229,070

Certificates of deposit in other banks
52,005

 
56,209

 
51,936

 
58,384

 
66,937

Securities available for sale, at fair value
121,786

 
139,112

 
149,752

 
148,704

 
154,993

Other investments, at cost
51,328

 
51,122

 
44,858

 
43,996

 
41,931

Loans held for sale
18,175

 
14,745

 
13,095

 
10,773

 
5,873

Total loans, net of deferred loan fees
2,705,190

 
2,660,647

 
2,632,231

 
2,587,106

 
2,525,852

Allowance for loan losses
(21,429
)
 
(24,416
)
 
(21,419
)
 
(20,932
)
 
(21,060
)
Net loans
2,683,761

 
2,636,231

 
2,610,812

 
2,566,174

 
2,504,792

Premises and equipment, net
61,051

 
60,559

 
61,232

 
61,737

 
62,537

Accrued interest receivable
10,533

 
10,885

 
10,372

 
10,252

 
9,344

Real estate owned ("REO")
2,929

 
3,003

 
2,955

 
3,286

 
3,684

Deferred income taxes
26,523

 
28,832

 
28,533

 
30,942

 
32,565

Bank owned life insurance ("BOLI")
90,254

 
89,663

 
89,156

 
88,581

 
88,028

Goodwill
25,638

 
25,638

 
25,638

 
25,638

 
25,638

Core deposit intangibles
2,499

 
2,948

 
3,436

 
3,963

 
4,528

Other assets
17,207

 
13,576

 
10,732

 
4,537

 
3,503

Total Assets
$
3,476,178

 
$
3,457,737

 
$
3,413,099

 
$
3,353,959

 
$
3,304,169

Liabilities and Stockholders' Equity
 

 
 

 
 

 
 

 
 

Liabilities
 

 
 

 
 

 
 

 
 

Deposits
$
2,327,257

 
$
2,308,395

 
$
2,258,069

 
$
2,203,044

 
$
2,196,253

Borrowings
680,000

 
680,000

 
688,000

 
675,000

 
635,000

Capital lease obligations
1,880

 
1,888

 
1,897

 
1,905

 
1,914

Other liabilities
58,145

 
60,224

 
54,163

 
59,815

 
61,760

Total liabilities
3,067,282

 
3,050,507

 
3,002,129

 
2,939,764

 
2,894,927

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 (1)
180

 
183

 
185

 
190

 
191

Additional paid in capital
190,315

 
196,824

 
203,660

 
214,803

 
217,480

Retained earnings
224,545

 
217,490

 
215,289

 
208,365

 
200,575

Unearned Employee Stock Ownership Plan ("ESOP") shares
(6,877
)
 
(7,009
)
 
(7,142
)
 
(7,274
)
 
(7,406
)
Accumulated other comprehensive income (loss)
733

 
(258
)
 
(1,022
)
 
(1,889
)
 
(1,598
)
Total stockholders' equity
408,896

 
407,230

 
410,970

 
414,195

 
409,242

Total Liabilities and Stockholders' Equity
$
3,476,178

 
$
3,457,737

 
$
3,413,099

 
$
3,353,959

 
$
3,304,169

_________________________________
(1)
Shares of common stock issued and outstanding was 17,984,105 at June 30, 2019; 18,265,535 at March 31, 2019; 18,520,825 at December 31, 2018, 18,939,280 at September 30, 2018; and 19,041,668 at June 30, 2018.
(2)
Derived from audited financial statements.


6


Consolidated Statement of Income (Unaudited)
 
Three Months Ended
 
Year Ended
 
June 30,
 
March 31,
 
June 30,
 
June 30,
 
June 30,
(Dollars in thousands)
2019
 
2019
 
2018
 
2019
 
2018 (1)
Interest and Dividend Income
 
 
 
 
 
 
 
 
 
Loans
$
31,861

 
$
30,770

 
$
27,337

 
$
121,903

 
$
105,082

Securities available for sale
861

 
850

 
877

 
3,443

 
3,668

Certificates of deposit and other interest-bearing deposits
2,172

 
2,283

 
1,969

 
8,278

 
5,939

Other investments
961

 
821

 
830

 
3,635

 
2,713

Total interest and dividend income
35,855

 
34,724

 
31,013

 
137,259

 
117,402

Interest Expense
 
 
 
 
 
 
 
 
 
Deposits
4,996

 
4,404

 
2,249

 
15,757

 
6,758

Borrowings
3,935

 
3,741

 
2,854

 
14,626

 
9,314

Total interest expense
8,931

 
8,145

 
5,103

 
30,383

 
16,072

Net Interest Income
26,924

 
26,579

 
25,910

 
106,876

 
101,330

Provision for Loan Losses
200

 
5,500

 
—

 
5,700

 
—

Net Interest Income after Provision for Loan Losses
26,724

 
21,079

 
25,910

 
101,176

 
101,330

Noninterest Income
 
 
 
 
 
 
 

 
 

Service charges and fees on deposit accounts
2,368

 
2,265

 
2,376

 
9,611

 
8,802

Loan income and fees
665

 
134

 
266

 
1,422

 
1,176

Gain on sale of loans held for sale
2,132

 
1,472

 
1,313

 
6,218

 
4,276

BOLI income
529

 
518

 
501

 
2,103

 
2,117

Gain from sale of premises and equipment
—

 
—

 
—

 
—

 
164

Other, net
1,117

 
997

 
606

 
3,541

 
2,437

Total noninterest income
6,811

 
5,386

 
5,062

 
22,895

 
18,972

Noninterest Expense
 
 
 
 
 
 
 

 
 

Salaries and employee benefits
13,286

 
13,463

 
11,918

 
52,291

 
48,170

Net occupancy expense
2,408

 
2,294

 
2,478

 
9,454

 
9,689

Marketing and advertising
634

 
400

 
372

 
1,853

 
1,478

Telephone, postage, and supplies
830

 
698

 
777

 
3,040

 
2,958

Deposit insurance premiums
467

 
320

 
373

 
1,426

 
1,619

Computer services
1,940

 
1,980

 
1,700

 
7,664

 
6,440

Loss (gain) on sale and impairment of REO
(61
)
 
246

 
(25
)
 
439

 
127

REO expense
326

 
200

 
308

 
874

 
1,065

Core deposit intangible amortization
449

 
488

 
603

 
2,029

 
2,645

Other
3,136

 
2,889

 
3,250

 
11,064

 
11,140

Total noninterest expense
23,415

 
22,978

 
21,754

 
90,134

 
85,331

Income Before Income Taxes
10,120

 
3,487

 
9,218

 
33,937

 
34,971

Income Tax Expense
2,107

 
185

 
2,011

 
6,791

 
26,736

Net Income
$
8,013

 
$
3,302

 
$
7,207

 
$
27,146

 
$
8,235

_________________________________
(1)
Derived from audited financial statements.

 
 
 
 
 
 
 
 
 
 
 
 
 


7


Per Share Data
 
 
Three Months Ended 
 
Year Ended
 
 
June 30,
 
March 31,
 
June 30,
 
June 30,
 
June 30,
 
 
2019
 
2019
 
2018
 
2019
 
2018
Net income per common share:(1)
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.45

 
$
0.19

 
$
0.40

 
$
1.52

 
$
0.45

Diluted
 
$
0.44

 
$
0.18

 
$
0.38

 
$
1.46

 
$
0.44

Adjusted net income per common share:(2)
 
 
 
 
 
 
 
 
 
 
Basic
 
$
0.45

 
$
0.17

 
$
0.38

 
$
1.52

 
$
1.44

Diluted
 
$
0.44

 
$
0.16

 
$
0.36

 
$
1.46

 
$
1.38

Average shares outstanding:
 
 
 
 
 
 
 
 
 
 
Basic
 
17,332,700

 
17,506,018

 
18,121,690

 
17,692,493

 
18,028,854

Diluted
 
17,984,958

 
18,197,429

 
18,847,279

 
18,393,184

 
18,726,431

Book value per share at end of period
 
$
22.74

 
$
22.29

 
$
21.49

 
$
22.74

 
$
21.49

Tangible book value per share at end of period (2)
 
$
21.20

 
$
20.77

 
$
19.96

 
$
21.20

 
$
19.96

Cash dividends declared per common share
 
$
0.06

 
$
0.06

 
$
—

 
$
0.18

 
$
—

Total shares outstanding at end of period
 
17,984,105

 
18,265,535

 
19,041,668

 
17,984,105

 
19,041,668

__________________________________________________
(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
 
Year Ended
 
 
June 30, 2019
 
March 31, 2019
 
June 30, 2018
 
June 30, 2019
 
June 30, 2018
Performance ratios:(1)
 
 
 
 
 
 
Return on assets (ratio of net income to average total assets)
 
0.92
%
 
0.39
%
 
0.88
%
 
0.80
%
 
0.25
%
Return on assets - adjusted(2)
 
0.92

 
0.35

 
0.83

 
0.79

 
0.80

Return on equity (ratio of net income to average equity)
 
7.87

 
3.24

 
7.12

 
6.62

 
2.05

Return on equity - adjusted(2)
 
7.87

 
2.92

 
6.75

 
6.54

 
6.43

Tax equivalent yield on earning assets(3)
 
4.49

 
4.42

 
4.14

 
4.39

 
4.00

Rate paid on interest-bearing liabilities
 
1.32

 
1.23

 
0.82

 
1.16

 
0.65

Tax equivalent average interest rate spread(3)
 
3.17

 
3.19

 
3.32

 
3.23

 
3.35

Tax equivalent net interest margin(3) (4)
 
3.38

 
3.39

 
3.47

 
3.43

 
3.46

Average interest-earning assets to average interest-bearing liabilities
 
119.16

 
119.70

 
121.27

 
120.39

 
120.77

Operating expense to average total assets
 
2.70

 
2.69

 
2.62

 
2.65

 
2.63

Efficiency ratio
 
69.41

 
71.88

 
70.24

 
69.46

 
70.93

Efficiency ratio - adjusted(2)
 
68.81

 
71.19

 
69.36

 
68.83

 
70.12

__________________________________
(1)
Ratios are annualized where appropriate.
(2)
See Non-GAAP reconciliations below for adjustments.
(3)
For the three months ended June 30, 2019, March 31, 2019, and June 30, 2018, the weighted average rate for municipal leases is adjusted for a 24%, 24%, and 30%
combined federal and state tax rate, respectively since the interest from these leases is tax exempt. For the years ended June 30, 2019 and 2018, the weighted average rate for municipal leases is adjusted for a 24% and 30% combined federal and state tax rate, respectively.
(4)
Net interest income divided by average interest-earning assets.



8


 
 
At or For the Three Months Ended
 
 
June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
 
2019
 
2019
 
2018
 
2018
 
2018
Asset quality ratios:
 
 
 
 
 
 
 
 
 
 
Nonperforming assets to total assets(1)
 
0.38
%
 
0.41
%
 
0.37
 %
 
0.40
%
 
0.44
%
Nonperforming loans to total loans(1)
 
0.38

 
0.43

 
0.37

 
0.39

 
0.43

Total classified assets to total assets
 
0.89

 
1.00

 
0.97

 
0.93

 
1.00

Allowance for loan losses to nonperforming loans(1)
 
206.90

 
215.46

 
221.45

 
207.06

 
192.96

Allowance for loan losses to total loans
 
0.79

 
0.92

 
0.81

 
0.81

 
0.83

Allowance for loan losses to total gross loans excluding acquired loans(2)
 
0.85

 
0.99

 
0.89

 
0.88

 
0.91

Net charge-offs (recoveries) to average loans (annualized)
 
0.47

 
0.38

 
(0.07
)
 
0.02

 
0.07

Capital ratios:
 
 
 
 
 
 
 
 
 
 
Equity to total assets at end of period
 
11.76
%
 
11.78
%
 
12.04
 %
 
12.35
%
 
12.39
%
Tangible equity to total tangible assets(2)
 
11.06

 
11.06

 
11.31

 
11.59

 
11.61

Average equity to average assets
 
11.72

 
11.93

 
12.20

 
12.43

 
12.31

__________________________________________
(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 June 30, 2019, there were $4.5 million of restructured loans included in nonaccruing loans and $4.1 million, or 39.6%, of nonaccruing loans were current on their loan payments. Purchased impaired loans acquired through 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 reconciliations below for adjustments.


9


Average Balance Sheet Data
 
Three Months Ended June 30,
 
2019
 
2018
(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)
$
2,703,056

 
$
32,156

 
4.76
%
 
$
2,476,524

 
$
27,727

 
4.48
%
Deposits in other banks
93,365

 
468

 
2.00
%
 
110,819

 
440

 
1.59
%
Securities available for sale
135,438

 
861

 
2.54
%
 
159,667

 
877

 
2.20
%
Other interest-earning assets(3)
290,962

 
2,665

 
3.66
%
 
286,524

 
2,359

 
3.29
%
Total interest-earning assets
3,222,821

 
36,150

 
4.49
%
 
3,033,534

 
31,403

 
4.14
%
Other assets
252,037

 
 
 
 
 
255,903

 
 
 
 
Total Assets
3,474,858

 
 
 
 
 
3,289,437

 
 
 
 
Liabilities and equity:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing checking accounts
462,626

 
348

 
0.30
%
 
480,688

 
282

 
0.24
%
Money market accounts
691,701

 
1,472

 
0.85
%
 
670,486

 
746

 
0.45
%
Savings accounts
184,719

 
56

 
0.12
%
 
216,058

 
70

 
0.13
%
Certificate accounts
666,219

 
3,120

 
1.87
%
 
509,543

 
1,151

 
0.90
%
Total interest-bearing deposits
2,005,265

 
4,996

 
1.00
%
 
1,876,775

 
2,249

 
0.48
%
Borrowings
699,374

 
3,935

 
2.25
%
 
624,725

 
2,854

 
1.83
%
Total interest-bearing liabilities
2,704,639

 
8,931

 
1.32
%
 
2,501,500

 
5,103

 
0.82
%
Noninterest-bearing deposits
298,769

 
 
 
 
 
317,356

 
 
 
 
Other liabilities
64,102

 
 
 
 
 
65,678

 
 
 
 
Total liabilities
3,067,510

 
 
 
 
 
2,884,534

 
 
 
 
Stockholders' equity
407,348

 
 
 
 
 
404,903

 
 
 
 
Total liabilities and stockholders' equity
3,474,858

 
 
 
 
 
3,289,437

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earning assets
$
518,182

 
 
 
 
 
$
532,034

 
 
 
 
Average interest-earning assets to average interest-bearing liabilities
119.16
%
 
 
 
 
 
121.27
%
 
 
 
 
Tax-equivalent:
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
27,219

 
 
 
 
 
$
26,300

 
 
Interest rate spread
 
 
 
 
3.17
%
 
 
 
 
 
3.32
%
Net interest margin(4)
 
 
 
 
3.38
%
 
 
 
 
 
3.47
%
Non-tax-equivalent:
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
26,924

 
 
 
 
 
$
25,910

 
 
Interest rate spread
 
 
 
 
3.13
%
 
 
 
 
 
3.27
%
Net interest margin(4)
 
 
 
 
3.34
%
 
 
 
 
 
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 $295 and $390 for the three months ended June 30, 2019 and 2018, respectively, calculated based on a combined federal and state tax rate of 24% and 30%, respectively.
(3) The average other interest-earning assets consist of FRB stock, FHLB stock, Small Business Investment Company ("SBIC") investments, and commercial paper.
(4) Net interest income divided by average interest-earning asset.

10


 
Years Ended June 30,
 
2019
 
2018
 
(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)
$
2,632,127

 
$
123,076

 
4.68
%
 
$
2,418,946

 
$
106,641

 
4.41
%
 
Deposits in other banks
89,410

 
1,726

 
1.93
%
 
137,026

 
1,934

 
1.41
%
 
Securities available for sale
145,344

 
3,443

 
2.37
%
 
172,461

 
3,668

 
2.13
%
 
Other interest-earning assets(3)
282,986

 
10,187

 
3.60
%
 
247,829

 
6,718

 
2.71
%
 
Total interest-earning assets
3,149,867

 
138,432

 
4.39
%
 
2,976,262

 
118,961

 
4.00
%
 
Other assets
247,029

 
 
 
 
 
267,399

 
 
 
 
 
Total Assets
3,396,896

 
 
 
 
 
3,243,661

 
 
 
 
 
Liabilities and equity:
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing checking accounts
462,933

 
1,251

 
0.27
%
 
473,880

 
970

 
0.20
%
 
Money market accounts
689,946

 
5,102

 
0.74
%
 
644,331

 
2,442

 
0.38
%
 
Savings accounts
194,635

 
245

 
0.13
%
 
224,582

 
295

 
0.13
%
 
Certificate accounts
596,727

 
9,159

 
1.53
%
 
463,306

 
3,051

 
0.66
%
 
Total interest-bearing deposits
1,944,241

 
15,757

 
0.81
%
 
1,806,099

 
6,758

 
0.37
%
 
Borrowings
672,186

 
14,626

 
2.18
%
 
658,240

 
9,314

 
1.41
%
 
Total interest-bearing liabilities
2,616,427

 
30,383

 
1.16
%
 
2,464,339

 
16,072

 
0.65
%
 
Noninterest-bearing deposits
307,420

 
 
 
 
 
311,210

 
 
 
 
 
Other liabilities
63,229

 
 
 
 
 
65,489

 
 
 
 
 
Total liabilities
2,987,076

 
 
 
 
 
2,841,038

 
 
 
 
 
Stockholders' equity
409,820

 
 
 
 
 
402,623

 
 
 
 
 
Total liabilities and stockholders' equity
3,396,896

 
 
 
 
 
3,243,661

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net earning assets
$
533,440

 
 
 
 
 
$
511,923

 
 
 
 
 
Average interest-earning assets to average interest-bearing liabilities
120.39
%
 
 
 
 
 
120.77
%
 
 
 
 
 
Tax-equivalent:
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
108,049

 
 
 
 
 
$
102,889

 
 
 
Interest rate spread
 
 
 
 
3.23
%
 
 
 
 
 
3.35
%
 
Net interest margin(4)
 
 
 
 
3.43
%
 
 
 
 
 
3.46
%
 
Non-tax-equivalent:
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
106,876

 
 
 
 
 
$
101,330

 
 
 
Interest rate spread
 
 
 
 
3.20
%
 
 
 
 
 
3.29
%
 
Net interest margin(4)
 
 
 
 
3.39
%
 
 
 
 
 
3.40
%
 
__________________
(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 $1,173 and $1,559 for the year ended June 30, 2019 and 2018, respectively, calculated based on a combined federal and state tax rate of 24% and 30%, respectively.
(3) The average other interest-earning assets consist of FRB stock, FHLB stock, SBIC investments, and commercial paper.
(4) Net interest income divided by average interest-earning assets.


11


Loans
(Dollars in thousands)
June 30, 2019
 
March 31, 2019
 
December 31, 2018
 
September 30, 2018
 
June 30, 2018
Retail consumer loans:
 
 
 
 
 
 
 
 
 
     One-to-four family
$
660,591

 
$
658,723

 
$
661,374

 
$
656,011

 
$
664,289

     HELOCs - originated
131,095

 
133,203

 
135,430

 
135,512

 
137,564

     HELOCs - purchased
116,972

 
128,832

 
138,571

 
150,733

 
166,276

     Construction and land/lots
80,602

 
76,153

 
74,507

 
75,433

 
65,601

     Indirect auto finance
153,448

 
162,127

 
170,516

 
173,305

 
173,095

     Consumer
19,756

 
19,374

 
13,520

 
13,139

 
12,379

Total retail consumer loans
1,162,464

 
1,178,412

 
1,193,918

 
1,204,133

 
1,219,204

Commercial loans:
 
 
 
 
 
 
 
 
 
     Commercial real estate
927,261

 
892,383

 
904,357

 
879,184

 
857,315

     Construction and development
210,916

 
214,511

 
198,738

 
198,809

 
192,102

     Commercial and industrial
160,471

 
154,470

 
143,201

 
150,362

 
135,336

     Equipment finance
132,058

 
109,175

 
81,380

 
43,377

 
13,487

     Municipal leases
112,016

 
112,067

 
111,135

 
111,951

 
109,172

Total commercial loans
1,542,722

 
1,482,607

 
1,438,812

 
1,383,683

 
1,307,412

Total loans
2,705,186

 
2,661,019

 
2,632,730

 
2,587,816

 
2,526,616

     Deferred loan costs (fees), net
4

 
(372
)
 
(499
)
 
(710
)
 
(764
)
Total loans, net of deferred loan fees
2,705,190

 
2,660,647

 
2,632,231

 
2,587,106

 
2,525,852

     Allowance for loan losses
(21,429
)
 
(24,416
)
 
(21,419
)
 
(20,932
)
 
(21,060
)
Loans, net
$
2,683,761

 
$
2,636,231

 
$
2,610,812

 
$
2,566,174

 
$
2,504,792

Deposits
(Dollars in thousands)
June 30, 2019
 
March 31, 2019
 
December 31, 2018
 
September 30, 2018
 
June 30, 2018
Core deposits:
 
 
 
 
 
 
 
 
 
    Noninterest-bearing accounts
$
294,322

 
$
301,083

 
$
300,031

 
$
313,110

 
$
317,822

    NOW accounts
452,295

 
477,637

 
474,080

 
462,694

 
471,364

    Money market accounts
691,172

 
692,102

 
703,445

 
687,148

 
677,665

    Savings accounts
177,278

 
192,754

 
192,954

 
203,372

 
213,250

Total core deposits
1,615,067

 
1,663,576

 
1,670,510

 
1,666,324

 
1,680,101

Certificates of deposit
712,190

 
644,819

 
587,559

 
536,720

 
516,152

Total
$
2,327,257

 
$
2,308,395

 
$
2,258,069

 
$
2,203,044

 
$
2,196,253

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; net income excluding certain state income tax expense, adjustments for the change in federal tax law, and gain from the sale of premises and equipment; earnings per share ("EPS"), return on assets ("ROA"), and return on equity ("ROE") excluding certain state income tax expense, adjustments for the change in federal tax law, and gain from the sale of premises and equipment; 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 facilitate comparison of the quality and composition of the Company's capital and earnings ability 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. 


12


Set forth below is a reconciliation to GAAP of our efficiency ratio:
 
 
Three Months Ended
 
Year Ended
(Dollars in thousands)
 
June 30,
 
March 31,
 
June 30,
 
June 30,
 
 
2019
 
2019
 
2018
 
2019
 
2018
Noninterest expense
 
$
23,415

 
$
22,978

 
$
21,754

 
$
90,134

 
$
85,331

 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
$
26,924

 
$
26,579

 
$
25,910

 
$
106,876

 
$
101,330

Plus noninterest income
 
6,811

 
5,386

 
5,062

 
22,895

 
18,972

Plus tax equivalent adjustment
 
295

 
313

 
390

 
1,174

 
1,559

Less gain on sale of fixed assets
 
—

 
—

 
—

 
—

 
164

Net interest income plus noninterest income – as adjusted
 
$
34,030

 
$
32,278

 
$
31,362

 
$
130,945

 
$
121,697

Efficiency ratio - adjusted
 
68.81
%
 
71.19
%
 
69.36
%
 
68.83
%
 
70.12
%
Efficiency ratio (without adjustments)
 
69.41
%
 
71.88
%
 
70.24
%
 
69.46
%
 
70.93
%
Set forth below is a reconciliation to GAAP of tangible book value and tangible book value per share:
 
 
As of
(Dollars in thousands, except per share data)
 
June 30, 2019
 
March 31, 2019
 
December 31, 2018
 
September 30, 2018
 
June 30, 2018
Total stockholders' equity
 
$
408,896

 
$
407,230

 
$
410,970

 
$
414,195

 
$
409,242

Less: goodwill, core deposits intangibles, net of taxes
 
27,562

 
27,908

 
28,284

 
28,690

 
29,125

Tangible book value (1)
 
$
381,334

 
$
379,322

 
$
382,686

 
$
385,505

 
$
380,117

Common shares outstanding
 
17,984,105

 
18,265,535

 
18,520,825

 
18,939,280

 
19,041,668

Tangible book value per share
 
$
21.20

 
$
20.77

 
$
20.66

 
$
20.35

 
$
19.96

Book value per share
 
$
22.74

 
$
22.29

 
$
22.19

 
$
21.87

 
$
21.49

_________________________________________________________________
(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
 
 
June 30, 2019
 
March 31, 2019
 
December 31, 2018
 
September 30, 2018
 
June 30, 2018
(Dollars in thousands)
 
 
Tangible equity(1)
 
$
381,334

 
$
379,322

 
$
382,686

 
$
385,505

 
$
380,117

Total assets
 
$
3,476,178

 
$
3,457,737

 
$
3,413,099

 
$
3,353,959

 
$
3,304,169

Less: goodwill and core deposit intangibles, net of taxes
 
27,562

 
27,908

 
28,284

 
28,690

 
29,125

Total tangible assets(2)
 
$
3,448,616

 
$
3,429,829

 
$
3,384,815

 
$
3,325,269

 
$
3,275,044

Tangible equity to tangible assets
 
11.06
%
 
11.06
%
 
11.31
%
 
11.59
%
 
11.61
%
_________________________________________________________________
(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.




13


Set forth below is a reconciliation to GAAP of net income, ROA, ROE, and EPS as adjusted to exclude certain state tax expense, adjustments for the change in federal tax law, and gain on sale of premises and equipment:
 
 
Three Months Ended
 
Year Ended
(Dollars in thousands, except per share data)
 
June 30,
 
March 31,
 
June 30,
 
June 30,
 
June 30,
 
 
2019
 
2019
 
2018
 
2019
 
2018
State tax expense adjustment (1)
 
—

 
—

 
(275
)
 
—

 
(142
)
Change in federal tax law adjustment (2)
 
—

 
(325
)
 
(103
)
 
(325
)
 
17,908

Gain on sale of premises and equipment
 
—

 
—

 
—

 
—

 
(164
)
Total adjustments
 
—

 
(325
)
 
(378
)
 
(325
)
 
17,602

Tax effect (3)
 
—

 
—

 
—

 
—

 
49

Total adjustments, net of tax
 
—

 
(325
)
 
(378
)
 
(325
)
 
17,651

 
 
 
 
 
 
 
 
 
 
 
Net income (GAAP)
 
8,013

 
3,302

 
7,207

 
27,146

 
8,235

 
 
 
 
 
 
 
 
 
 
 
Net income (non-GAAP)
 
$
8,013

 
$
2,977

 
$
6,829

 
$
26,821

 
$
25,886

 
 
 
 
 
 
 
 
 
 
 
Per Share Data
 
 
 
 
 
 
 
 
 
 
Average shares outstanding - basic
 
17,332,700

 
17,506,018

 
18,121,690

 
17,692,493

 
18,028,854

Average shares outstanding - diluted
 
17,984,958

 
18,197,429

 
18,847,279

 
18,393,184

 
18,726,431

 
 
 
 
 
 
 
 
 
 
 
Basic EPS
 
 
 
 
 
 
 
 
 
 
EPS (GAAP)
 
$
0.45

 
$
0.19

 
$
0.40

 
$
1.52

 
$
0.45

Non-GAAP adjustment
 
—

 
(0.02
)
 
(0.02
)
 
—

 
0.99

EPS (non-GAAP)
 
$
0.45

 
$
0.17

 
$
0.38

 
$
1.52

 
$
1.44

 
 
 
 
 
 
 
 
 
 
 
Diluted EPS
 
 
 
 
 
 
 
 
 
 
EPS (GAAP)
 
$
0.44

 
$
0.18

 
$
0.38

 
$
1.46

 
$
0.44

Non-GAAP adjustment
 
—

 
(0.02
)
 
(0.02
)
 
—

 
0.94

EPS (non-GAAP)
 
$
0.44

 
$
0.16

 
$
0.36

 
$
1.46

 
$
1.38

 
 
 
 
 
 
 
 
 
 
 
Average Balances
 
 
 
 
 
 
 
 
 
 
Average assets
 
$
3,474,858

 
$
3,241,189

 
$
3,289,437

 
$
3,396,896

 
$
3,243,661

Average equity
 
$
407,348

 
$
408,123

 
$
404,903

 
$
409,820

 
$
402,623

 
 
 
 
 
 
 
 
 
 
 
ROA
 
 
 
 
 
 
 
 
 
 
ROA (GAAP)
 
0.92
%
 
0.39
 %
 
0.88
 %
 
0.80
 %
 
0.25
%
Non-GAAP adjustment
 
—
%
 
(0.04
)%
 
(0.05
)%
 
(0.01
)%
 
0.55
%
ROA (non-GAAP)
 
0.92
%
 
0.35
 %
 
0.83
 %
 
0.79
 %
 
0.80
%
 
 
 
 
 
 
 
 
 
 
 
ROE
 
 
 
 
 
 
 
 
 
 
ROE (GAAP)
 
7.87
%
 
3.24
 %
 
7.12
 %
 
6.62
 %
 
2.05
%
Non-GAAP adjustment
 
—
%
 
(0.32
)%
 
(0.37
)%
 
(0.08
)%
 
4.38
%
ROE (non-GAAP)
 
7.87
%
 
2.92
 %
 
6.75
 %
 
6.54
 %
 
6.43
%
________________________________________________________________________
(1)    State tax adjustment is a result of various revaluations of state deferred tax assets.
(2)    Revaluation of net deferred tax assets due to the Tax Act.


14


Set forth below is a reconciliation to GAAP of the allowance for loan losses to total loans and the allowance for loan losses as adjusted to exclude acquired loans:
 
As of
(Dollars in thousands)
June 30, 2019
 
March 31, 2019
 
December 31, 2018
 
September 30, 2018
 
June 30, 2018
Total gross loans receivable (GAAP)
$
2,705,186

 
$
2,661,019

 
$
2,632,730

 
$
2,587,816

 
$
2,526,616

Less: acquired loans
214,046

 
223,101

 
236,389

 
253,695

 
271,801

Adjusted loans (non-GAAP)
$
2,491,140

 
$
2,437,918

 
$
2,396,341

 
$
2,334,121

 
$
2,254,815

 
 
 
 
 
 
 
 
 
 
Allowance for loan losses (GAAP)
$
21,429

 
$
24,416

 
$
21,419

 
$
20,932

 
$
21,060

Less: allowance for loan losses on acquired loans
201

 
201

 
199

 
295

 
483

Adjusted allowance for loan losses
$
21,228

 
$
24,215

 
$
21,220

 
$
20,637

 
$
20,577

Allowance for loan losses / Adjusted loans (non-GAAP)
0.85
%
 
0.99
%
 
0.89
%
 
0.88
%
 
0.91
%

15