HomeTrust Bancshares, Inc. Announces Financial Results for

ASHEVILLE, N.C., April 27, 2022 (GLOBE NEWSWIRE) — HomeTrust Bancshares, Inc. (NASDAQ: HTBI) (“Company”), the holding company of HomeTrust Bank (“Bank”), today announced preliminary net income for the third quarter of fiscal 2022 and approval of its quarterly dividend.

For the quarter ended March 31, 2022 compared to the corresponding quarter in the previous year:

  • net income was $8.0 million, compared to $7.9 million;
  • diluted earnings per share (“EPS”) was $0.51, compared to $0.48;
  • annualized return on assets (“ROA”) was 0.92%, compared to 0.84%;
  • annualized return on equity (“ROE”) was 8.15%, compared to 7.78%;
  • provision for credit losses was a net benefit of $45,000, compared to a net benefit of $4.1 million;
  • noninterest income was $8.9 million compared to $10.7 million;
  • prepayment penalty on the early retirement of borrowings was $0 compared to $3.7 million;
  • 419,931 shares of Company common stock were repurchased during the quarter at an average price of $30.76 per share;
  • net commercial loan growth, excluding U.S. Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”) loans, was $29.8 million, or 6.0% annualized compared to $42.7 million, or 9.7% annualized, in the prior year; and
  • quarterly cash dividends continued at $0.09 per share, totaling $1.4 million.

For the nine months ended March 31, 2022 compared to the previous year:

  • net income was $29.6 million, compared to $23.1 million;
  • diluted earnings per share (“EPS”) was $1.84, compared to $1.40;
  • annualized return on assets (“ROA”) was 1.12%, compared to 0.83%;
  • annualized return on equity (“ROE”) was 9.91%, compared to 7.64%;
  • provision for credit losses was a net benefit of $4.0 million, compared to a net benefit of $6.2 million;
  • noninterest income was $29.5 million compared to $28.7 million;
  • prepayment penalty on the early retirement of borrowings was $0 compared to $3.7 million;
  • 1,095,763 shares of Company common stock were repurchased during the nine months at an average price of $29.50 per share; and
  • net commercial loan growth, excluding PPP loans, was $108.7 million, or 7.5% annualized compared to $31.7 million, or 2.4% annualized in the prior year.

The Company also announced today that its Board of Directors declared a quarterly cash dividend of $0.09 per common share payable on June 2, 2022 to shareholders of record as of the close of business on May 19, 2022.

“The Company was able to maintain it’s positive momentum this past quarter,” said Dana Stonestreet, Chairman and Chief Executive Officer. “Our commercial loan portfolio had another strong quarter of net growth, primarily within the construction and development and equipment finance portfolios. As expected, upward movement in interest rates resulted in a decline in both the volume of residential mortgage sales and the value of our investment portfolio; however, due to the short-term duration of our investments, our tangible book value per share actually increased even after repurchasing $12.9 million of shares during the quarter. The Company is well-positioned to benefit from an increase in yield on our loan and investment portfolios going forward.”

Comparison of Results of Operations for the Three Months Ended March 31, 2022 and 2021

Net interest income increased by $1.3 million, or 5.2%, to $27.0 million for the quarter ended March 31, 2022, compared to $25.7 million for the comparative quarter in fiscal 2021. Interest and dividend income decreased by $1.1 million, or 3.8%, primarily driven by lower average balances on interest-earning assets combined with lower loan yields. This decrease was offset by a $2.5 million, or 68.2% decrease in interest expense. Average interest-earning assets decreased $225.4 million, or 6.4%, to $3.3 billion for the quarter ended March 31, 2022. The main drivers of the change were decreases of $179.4 million, or 34.3%, in the average balance of commercial paper and deposits in other banks and $42.0 million, or 27.3%, in debt securities available for sale as the Company used excess liquidity to reduce borrowings, which declined by $431.5 million, or 92.8%, when compared to the prior period. Net interest margin (on a fully taxable-equivalent basis) for the three months ended March 31, 2022 increased to 3.39% from 3.02% for the same period a year ago as all higher rate long-term borrowings were repaid during the quarter ended June 30, 2021.

Total interest and dividend income decreased $1.1 million, or 3.8%, for the quarter ended March 31, 2022 as compared to the same quarter last year, which was primarily a result of a $1.0 million, or 3.7%, decrease in loan interest income. The lower loan interest income was driven by a decline in the average yield on loans of 17 basis points, from 4.08% to 3.91%. Loan interest income for the quarter included the amortization of $265,000 of PPP loan origination fees, a decline of $349,000 when compared to the $614,000 recognized in the prior period. The overall average yield on interest-earning assets increased 10 basis points to 3.54% for the current quarter compared to 3.44% in the same quarter last year primarily due to the change in the mix of interest-earning assets.

Total interest expense decreased $2.5 million, or 68.2%, for the quarter ended March 31, 2022 compared to the same period last year. The decrease was driven by a $1.6 million, or 99.8%, decrease in interest expense on borrowings as discussed above and a $845,000, or 42.3%, decrease in interest expense on deposits. The average balance of total deposits increased by $228.1 million, or 8.1%, with noninterest-bearing deposits and interest-bearing deposits increasing $161.7 million and $66.4 million, respectively. The increase in interest-bearing deposits was driven by a $113.5 million, or 12.5% increase in money market accounts, partially offset by a $74.9 million, or 14.5%, decrease in certificates of deposit. As stated above, average borrowings for the quarter ended March 31, 2022 decreased $431.5 million, or 92.8%, along with a 137 basis point decrease in the average cost of borrowings compared to the same period last year. The decrease in the average cost of borrowings was primarily driven by the early retirement of long-term borrowings reducing the average balance and partially driven by a shift to short-term borrowings at lower rates. The overall average cost of funds decreased 34 basis points to 0.20% for the current quarter compared to 0.54% in the same quarter last year.

Noninterest income decreased $1.7 million, or 16.2%, to $8.9 million for the quarter ended March 31, 2022 from $10.7 million for the same period in the previous year. This change was primarily due to a $1.9 million, or 39.2%, decrease in gain on sale of loans, partially offset by a $229,000, or 16.0%, increase in operating lease income. The decrease in gain on sale of loans was driven by decreases in loan principal sold across all portfolios. During the quarter ended March 31, 2022, $53.4 million of residential mortgage loans originated for sale were sold with gains of $1.3 million compared to $106.5 million sold and gains of $2.7 million in the corresponding period in the prior year. There were $16.5 million of sales of the guaranteed portion of SBA commercial loans with gains of $1.5 million in the current quarter compared to $20.2 million sold and gains of $1.8 million for the same period last year. The Company sold $25.0 million of home equity lines of credit (HELOC) during the quarter for a gain of $156,000 compared to $43.8 million sold and gains of $301,000 in the corresponding period last year.

Noninterest expense decreased $4.7 million, or 15.4%, for the quarter ended March 31, 2022 as compared to the same period last year, which was primarily a result of a decrease of $3.7 million in prepayment penalties on long-term borrowings, and a $1.1 million, or 6.7%, decrease in salaries and benefits expense due to branch closures and lower mortgage banking incentive pay in the period.

For the quarter ended March 31, 2022, the Company’s income tax expense increased $114,000, or 5.4%, to $2.2 million from $2.1 million primarily as a result of higher taxable income. The effective tax rates for the quarters ended March 31, 2022 and 2021 were 21.6% and 21.0%, respectively.

Comparison of Results of Operations for the Nine Months Ended March 31, 2022 and 2021

Net interest income increased by $4.6 million, or 5.9%, to $81.9 million for the nine months ended March 31, 2022, compared to the same period last year. Interest and dividend income decreased by $3.9 million, or 4.4%, primarily driven by lower average balances on interest-earning assets. This decrease was offset by a $8.5 million, or 67.7%, decrease in interest expense. Average interest-earning assets decreased $184.0 million, or 5.3%, to $3.3 billion for the nine months ended March 31, 2022. The biggest reason for the change was a decrease of $143.2 million, or 31.5%, in commercial paper and deposits in other banks, as the Company used excess liquidity to reduce borrowings, where the average balance declined from $471.7 million to $48.9 million. Net interest margin (on a fully taxable-equivalent basis) for the nine months ended March 31, 2022 increased to 3.38% from 3.02% for the same period a year ago as all higher rate long-term borrowings were repaid during the quarter ended June 30, 2021.

Total interest and dividend income decreased $3.9 million, or 4.4%, for the nine months ended March 31, 2022 as compared to the same period last year, which was primarily a result of a $3.1 million, or 3.7%, decrease in loan interest income and a $744,000, or 35.3%, decrease in interest income on commercial paper and deposits in other banks. The lower interest income in each category was driven by the combined effect of a decrease in average balances, as discussed above, and a decline in average loan yields which decreased 13 basis points to 3.90%, and average yields on debt securities available for sale which decreased 13 basis points to 1.42%. Loan interest income for the nine months included the amortization of $975,000 of PPP loan origination fees, a decline of $381,000 when compared to the $1.4 million recognized in the prior period. The overall average yield on interest-earning assets increased three basis points to 3.54% for the nine months compared to 3.51% in the same period last year as a result of a shift to higher yielding assets.

Total interest expense decreased $8.5 million, or 67.7%, for the nine months ended March 31, 2022 compared to the same period last year. The decrease was driven by a $5.0 million, or 99.1%, decrease in interest expense on borrowings as discussed above and a $3.6 million, or 47.0%, decrease in interest expense on deposits. The average balance of total deposits increased by $257.5 million, or 9.3%, with noninterest-bearing deposits and interest-bearing deposits increasing $197.5 million and $60.0 million, respectively. The increase in interest-bearing deposits was driven by a $142.4 million, or 16.6%, increase in money market accounts and $46.4 million, or 7.8%, increase in interest-bearing checking accounts, partially offset by a $146.9 million, or 24.7%, decrease in certificates of deposit. As stated above average borrowings for the nine months ended March 31, 2022 decreased $422.8 million, or 89.6%, along with a 129 basis point decrease in the average cost of borrowings compared to the same period last year. The increase in average deposits (interest and noninterest-bearing) was due to successful deposit gathering campaigns and the effect of government stimulus in prior periods. The decrease in the average cost of borrowings was primarily driven by the early retirement of long-term borrowings reducing the average balance and partially driven by a shift to short-term borrowings at lower rates. The overall average cost of funds decreased 39 basis points to 0.23% for the nine months compared to 0.62% in the same period last year.

Noninterest income increased $819,000, or 2.9%, to $29.5 million for the nine months ended March 31, 2022 from $28.7 million for the same period in the previous year. This change was due to an $857,000, or 51.0%, increase in loan income and fees, an $813,000, or 19.8% increase in operating lease income, a $394,000, or 5.9% increase in service charges and fees on deposit accounts, partially offset by a $1.0 million, or 8.4%, decrease in gain on sale of loans. The increase in loan income and fees was primarily a result of $924,000 in additional loan servicing fees as a result of bringing the Company’s SBA loan servicing process in-house, which began July 1, 2021. The increase in operating lease income was primarily driven by increases in loan originations and higher outstanding lease balances during the period, while the increase in service charges on deposit accounts was the result of a $234,000 increase in interchange income driven by higher debit card usage. During the nine months ended March 31, 2022, $204.1 million of residential mortgage loans originated for sale were sold with gains of $5.6 million compared to $297.2 million sold and gains of $7.7 million in the corresponding period in the prior year. There were $43.5 million of sales of the guaranteed portion of SBA commercial loans with gains of $4.5 million in the nine months compared to $44.6 million sold and gains of $3.7 million for the same period last year. The Company sold $97.2 million of HELOCs during the nine months ended March 31, 2022 for a gain of $581,000 compared to $85.9 million sold and gains of $559,000 in the corresponding period last year. Lastly, $11.5 million of indirect auto finance loans were sold out of the held for investment portfolio during the current period for a gain of $205,000. No such sales occurred in the same period in the prior year.

Noninterest expense decreased $5.2 million, or 6.3%, for the nine months ended March 31, 2022 as compared to the same period last year, which was primarily a result of a decrease of $3.7 million in prepayment penalties on borrowings, a $1.8 million, or 3.9%, decrease in salaries and benefits expense due to branch closures and lower mortgage banking incentive pay in the period, and a reduction of core deposit amortization expense of $397,000, or 65.6%, partially offset by an increase of $1.1 million, or 117.2%, in marketing and advertising expense driven by reduced media advertising in prior periods as a result of the pandemic as well as current year advertising for newly opened locations.

For the nine months ended March 31, 2022, the Company’s income tax expense increased $1.9 million, or 31.2%, to $8.0 million from $6.1 million primarily as a result of higher taxable income. The effective tax rates for the nine months ended March 31, 2022 and 2021 were 21.4% and 21.0%, respectively.

Balance Sheet Review

Total assets and liabilities increased by $17.1 million and $18.5 million to $3.5 billion and $3.1 billion, respectively, at March 31, 2022 as compared to June 30, 2021. Deposits increased by $103.6 million, or 3.5%, which were used to continue paying down borrowings during the period. In addition, excess liquidity from a $50.1 million, or 32.0%, decrease in debt securities available for sale, a $33.7 million, or 1.2%, decrease in loans receivable, a $12.0 million, or 29.9%, decrease in certificates of deposits in other banks, and a $8.3 million, or 8.8%, decrease in loans held for sale was invested in commercial paper which increased by $123.3 million, or 65.0%, during the period.

The decrease in loans was driven by PPP forgiveness of $43.9 million and a $98.5 million, or 12.9%, decrease in retail consumer loans primarily within the one-to-four family loans and indirect auto loan portfolios. This decrease was partially offset by a $108.7 million, or 5.7%, increase in commercial loans (excluding PPP loans) as the Company continues its focus on the growth of the commercial loan segment.

Stockholders’ equity decreased $1.4 million, or 0.4%, to $395.1 million at March 31, 2022 as compared to June 30, 2021. Activity within stockholders’ equity included $29.6 million in net income, $6.7 million in stock-based compensation expense and option exercises, stock repurchases of $32.3 million, and $4.1 million in cash dividends declared. As of March 31, 2022, the Bank was considered “well capitalized” in accordance with its regulatory capital guidelines and exceeded all regulatory capital requirements.

Asset Quality

The allowance for credit losses on loans was $31.0 million, or 1.15%, of total loans at March 31, 2022 compared to $35.5 million, or 1.30%, of total loans at June 30, 2021. The overall decrease was driven by lower expected credit losses estimated by management based on an improving economic outlook.

The provision for credit losses was a net benefit of $4.0 million for the nine months ended March 31, 2022, compared to a net benefit of $6.2 million for the corresponding period in fiscal year 2021. Net loan charge-offs totaled $19,000 for the nine months ended March 31, 2022, compared to $452,000 for the same period last year. Net charge-offs as a percentage of average loans were 0.00% for the nine months ended March 31, 2022 compared to 0.02% for the corresponding period last year.

Nonperforming assets decreased by $7.0 million, or 54.6%, to $5.8 million, or 0.16%, of total assets at March 31, 2022 compared to $12.8 million, or 0.36% of total assets at June 30, 2021. The significant decrease from June 30, 2021 was primarily a result of the payoff of two commercial real estate loan relationships totaling $5.1 million during the nine month period. Nonperforming assets included $5.8 million in nonaccruing loans and no REO at March 31, 2022, compared to $12.6 million and $188,000 in nonaccruing loans and REO, respectively, at June 30, 2021. Nonperforming loans to total loans was 0.22% at March 31, 2022 and 0.46% at June 30, 2021.

As of March 31, 2022, the Company had no loans with full principal and interest payment deferrals related to COVID-19 which had been granted prior to January 1, 2022, compared to $107,000 at June 30, 2021. All loans placed on full payment deferral during the pandemic have come out of deferral and borrowers are either making regular loan payments or interest-only payments. As of March 31, 2022, the Company had $9.6 million in commercial loan deferrals on interest-only payments compared to $78.9 million at June 30, 2021.

The ratio of classified assets to total assets decreased to 0.61% at March 31, 2022 from 0.76% at June 30, 2021. Classified assets decreased $5.0 million, or 18.5%, to $21.7 million at March 31, 2022 compared to $26.7 million at June 30, 2021 primarily due to the payoff of two commercial real estate loan relationships discussed above.

About HomeTrust Bancshares, Inc.

HomeTrust Bancshares, Inc. is the holding company for the Bank. As of March 31, 2022, 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 with over 30 locations as well as online/mobile channels. Locations include: North Carolina (including the Asheville metropolitan area, the “Piedmont” region, Charlotte, and Raleigh/Cary), Upstate South Carolina (Greenville), East Tennessee (including Kingsport/Johnson City, Knoxville, and Morristown) and Southwest Virginia (including the Roanoke Valley).

Forward-Looking Statements

This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements often include words such as “believe,” “expect,” “anticipate,” “estimate,” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could,” or “may.” Forward-looking statements are not historical facts but instead represent management’s current expectations and forecasts regarding future events, many of which are inherently uncertain and outside of the Company’s control. Actual results may differ, possibly materially, from those currently expected or projected in these forward-looking statements. Factors that could cause the Company’s actual results to differ materially from those described in the forward-looking statements include: the effect of the COVID-19 pandemic, including on the Company’s credit quality and business operations, as well as its impact on general economic and financial market conditions and other uncertainties resulting from the COVID-19 pandemic, such as the extent and duration of the impact on public health, the U.S. and global economies, and consumer and corporate customers, including economic activity, employment levels and market liquidity; 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 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. These risks could cause the Company’s actual results for fiscal 2022 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, the Company and could negatively affect its operating and stock performance. Any of the forward-looking statements that the Company makes in this press release or the documents they file with or furnish to the SEC are based upon management’s beliefs and assumptions at the time they are made and may turn out to be wrong because of inaccurate assumptions they might make, because of the factors described above or because of other factors that they cannot foresee. The Company does not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

WEBSITE: WWW.HTB.COM

Consolidated Balance Sheets (Unaudited)

(Dollars in thousands) March 31,
2022
  December 31,
2021
  September 30,
2021
  June 30,
2021
(1)
  March 31,
2021
Assets                  
Cash $ 19,783     $ 20,586     $ 22,431     $ 22,312     $ 24,621  
Interest-bearing deposits   32,267       14,240       20,142       28,678       139,474  
Cash and cash equivalents   52,050       34,826       42,573       50,990       164,095  
Commercial paper   312,918       254,157       196,652       189,596       238,445  
Certificates of deposit in other banks   28,125       34,002       35,495       40,122       42,015  
Debt securities available for sale, at fair value   106,315       121,851       124,576       156,459       162,417  
Other investments, at cost   23,040       22,117       20,891       23,710       28,899  
Loans held for sale   85,263       102,070       105,161       93,539       86,708  
Total loans, net of deferred loan fees and costs   2,699,538       2,696,072       2,719,642       2,733,267       2,690,153  
Allowance for credit losses – loans   (31,034 )     (30,933 )     (34,406 )     (35,468 )     (36,059 )
Loans, net   2,668,504       2,665,139       2,685,236       2,697,799       2,654,094  
Premises and equipment, net   69,629       69,461       68,568       70,909       70,886  
Accrued interest receivable   7,980       8,200       8,429       7,933       8,271  
Real estate owned (“REO”)         45       45       188       143  
Deferred income taxes, net   12,494       12,019       15,722       16,901       16,889  
Bank owned life insurance (“BOLI”)   94,740       94,209       93,679       93,108       93,877  
Goodwill   25,638       25,638       25,638       25,638       25,638  
Core deposit intangibles, net   135       185       250       343       473  
Other assets   54,954       58,900       58,445       57,488       55,763  
Total assets $ 3,541,785     $ 3,502,819     $ 3,481,360     $ 3,524,723     $ 3,648,613  
Liabilities and stockholders’ equity                  
Liabilities                  
Deposits $ 3,059,157     $ 2,998,691     $ 2,987,284     $ 2,955,541     $ 2,908,478  
Borrowings   30,000       48,000       40,000       115,000       275,000  
Other liabilities   57,497       54,382       57,565       57,663       58,683  
Total liabilities   3,146,654       3,101,073       3,084,849       3,128,204       3,242,161  
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)   160       163       163       167       167  
Additional paid in capital   136,181       147,552       151,425       160,582       162,010  
Retained earnings   265,609       258,986       249,331       240,075       248,767  
Unearned Employee Stock Ownership Plan (“ESOP”) shares   (5,422 )     (5,555 )     (5,687 )     (5,819 )     (5,951 )
Accumulated other comprehensive income (loss)   (1,397 )     600       1,279       1,514       1,459  
Total stockholders’ equity   395,131       401,746       396,511       396,519       406,452  
Total liabilities and stockholders’ equity $ 3,541,785     $ 3,502,819     $ 3,481,360     $ 3,524,723     $ 3,648,613  

_________________________________

(1)    Derived from audited financial statements.
(2)    Shares of common stock issued and outstanding were 15,978,262 at March 31, 2022; 16,303,461 at December 31, 2021; 16,307,658 at September 30, 2021; 16,636,483 at June 30, 2021; and 16,655,347 at March 31, 2021.    

Consolidated Statements of Income (Unaudited)

  Three Months Ended   Nine Months Ended
(Dollars in thousands) March 31,
2022
  December 31,
2021
  March 31,
2021
  March 31,
2022
  March 31,
2021
Interest and dividend income                  
Loans $ 26,616     $ 26,929     $ 27,629     $ 81,440     $ 84,564  
Commercial paper and interest-bearing deposits   563       468       611     $ 1,362       2,106  
Debt securities available for sale   384       411       496       1,319       1,528  
Other investments   632       680       585       1,867       1,729  
Total interest and dividend income   28,195       28,488       29,321       85,988       89,927  
Interest expense                  
Deposits   1,151       1,305       1,996       4,028       7,596  
Borrowings   4       15       1,632       45       5,007  
Total interest expense   1,155       1,320       3,628       4,073       12,603  
Net interest income   27,040       27,168       25,693       81,915       77,324  
Provision (benefit) for credit losses   (45 )     (2,500 )     (4,100 )     (4,005 )     (6,180 )
Net interest income after provision (benefit) for credit losses   27,085       29,668       29,793       85,920       83,504  
Noninterest income                  
Service charges and fees on deposit accounts   2,216       2,513       2,194       7,101       6,707  
Loan income and fees   752       805       636       2,536       1,679  
Gain on sale of loans held for sale   2,969       3,901       4,881       10,927       11,929  
BOLI income   492       490       508       1,500       1,551  
Operating lease income   1,661       1,718       1,432       4,920       4,107  
Other   857       753       1,027       2,496       2,688  
Total noninterest income   8,947       10,180       10,678       29,480       28,661  
Noninterest expense                  
Salaries and employee benefits   14,730       14,872       15,784       44,882       46,691  
Occupancy expense, net   2,483       2,401       2,456       7,201       7,010  
Computer services   2,455       2,369       2,581       7,148       7,108  
Telephone, postage, and supplies   686       735       812       2,133       2,345  
Marketing and advertising   573       832       319       2,110       971  
Deposit insurance premiums   412       302       363       1,280       1,361  
REO related expense, net   220       116       84       478       462  
Core deposit intangible amortization   50       65       165       208       605  
Prepayment penalties on borrowings               3,656             3,656  
Other   4,190       4,217       4,286       12,285       12,740  
Total noninterest expense   25,799       25,909       30,506       77,725       82,949  
Net income before income taxes   10,233       13,939       9,965       37,675       29,216  
Income tax expense   2,210       2,861       2,096       8,047       6,133  
Net income $ 8,023     $ 11,078     $ 7,869     $ 29,628     $ 23,083  

 

Per Share Data

    Three Months Ended   Nine Months Ended
    March 31,
2022
  December 31,
2021
  March 31,
2021
  March 31,
2022
  March 31,
2021
Net income per common share:(1)                    
Basic   $ 0.51   $ 0.70   $ 0.49   $ 1.87   $ 1.42
Diluted   $ 0.51   $ 0.68   $ 0.48   $ 1.84   $ 1.40
Average shares outstanding:                    
Basic     15,523,813     15,632,283     15,979,590     15,666,093     16,139,059
Diluted     15,793,012     15,989,606     16,485,718     15,997,377     16,339,130
Book value per share at end of period   $ 24.73   $ 24.64   $ 24.40   $ 24.73   $ 24.40
Tangible book value per share at end of period (2)   $ 23.12   $ 23.06   $ 22.84   $ 23.13   $ 22.84
Cash dividends declared per common share   $ 0.09   $ 0.09   $ 0.08   $ 0.26   $ 0.23
Total shares outstanding at end of period     15,978,262     16,303,461     16,655,347     15,978,262     16,655,347

_________________________________

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

Selected Financial Ratios and Other Data

    Three Months Ended   Nine Months Ended
    March 31,
2022
  December 31,
2021
  March 31,
2021
  March 31,
2022
  March 31,
2021
Performance ratios: (1)            
Return on assets (ratio of net income to average total assets)   0.92 %   1.24 %   0.84 %   1.12 %   0.83 %
Return on equity (ratio of net income to average equity)   8.15     11.02     7.78     9.91     7.64  
Tax equivalent yield on earning assets(2)   3.54     3.49     3.44     3.54     3.51  
Rate paid on interest-bearing liabilities   0.20     0.22     0.54     0.23     0.62  
Tax equivalent average interest rate spread (2)   3.34     3.27     2.90     3.31     2.89  
Tax equivalent net interest margin(2) (3)   3.39     3.33     3.02     3.38     3.02  
Average interest-earning assets to average interest-bearing liabilities   137.72     139.06     127.59     138.24     126.60  
Noninterest expense to average total assets   2.97     2.91     3.25     2.94     2.98  
Efficiency ratio   71.69     69.37     83.87     69.77     78.26  
Efficiency ratio – adjusted (4)   71.06     68.81     73.17     69.19     74.16  

_________________________________

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

  Three Months Ended
  March 31,
2022
  December 31,
2021
  September 30,
2021
  June 30,
2021
(1)
  March 31,
2021
Asset quality ratios:                  
Nonperforming assets to total assets(1) 0.16 %   0.18 %   0.19 %   0.36 %   0.37 %
Nonperforming loans to total loans(1) 0.22     0.23     0.25     0.46     0.49  
Total classified assets to total assets 0.61     0.65     0.65     0.76     0.76  
Allowance for credit losses to nonperforming loans(1) 534.06     500.70     510.63     281.38     272.64  
Allowance for credit losses to total loans 1.15     1.15     1.27     1.30     1.34  
Net charge-offs (recoveries) to average loans (annualized) (0.11 )   0.15     (0.04 )   (0.04 )   (0.03 )
Capital ratios:                  
Equity to total assets at end of period 11.16 %   11.47 %   11.39 %   11.25 %   11.14 %
Tangible equity to total tangible assets(2) 10.51     10.81     10.73     10.59     10.50  
Average equity to average assets 11.32     11.28     11.27     11.06     10.79  

_________________________________

(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 March 31, 2022, there were $1.8 million of restructured loans included in nonaccruing loans and $2.9 million, or 50.6% of nonaccruing loans were current on their loan payments.
(2)    See Non-GAAP reconciliation tables below for adjustments.

Average Balance Sheet Data

  Three Months Ended
(Dollars in thousands) March 31, 2022   March 31, 2021
  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) $ 2,791,650     $ 26,936   3.91 %   $ 2,779,094     $ 27,955   4.08 %
Commercial paper and deposits in other banks   342,878       563   0.67       522,256       611   0.47  
Debt securities available for sale   111,874       384   1.39       153,871       496   1.31  
Other interest-earning assets(3)   22,614       632   11.33       39,184       585   6.05  
Total interest-earning assets   3,269,016       28,515   3.54 %     3,494,405       29,647   3.44 %
Other assets   258,126               258,858          
Total assets $ 3,527,142             $ 3,753,263          
Liabilities and equity:                      
Interest-bearing deposits:                      
Interest-bearing checking accounts   650,072       310   0.19 %     637,381       391   0.25 %
Money market accounts   1,020,734       340   0.14       907,228       373   0.17  
Savings accounts   227,936       40   0.07       212,809       39   0.08  
Certificate accounts   441,314       461   0.42       516,221       1,193   0.94  
Total interest-bearing deposits   2,340,056       1,151   0.20       2,273,639       1,996   0.36  
Borrowings   33,599       4   0.05       465,111       1,632   1.42  
  Total interest-bearing liabilities   2,373,655       1,155   0.20 %     2,738,750       3,628   0.54 %
Noninterest-bearing deposits   714,753               553,045          
Other liabilities   39,374               56,655          
Total liabilities   3,127,782               3,348,450          
Stockholders’ equity   399,360               404,813          
Total liabilities and stockholders’ equity $ 3,527,142             $ 3,753,263          
                       
Net earning assets $ 895,361             $ 755,655          
Average interest-earning assets to                      
average interest-bearing liabilities   137.72 %             127.59 %        
Tax-equivalent:                      
Net interest income     $ 27,360           $ 26,019    
Interest rate spread         3.34 %           2.90 %
Net interest margin(4)         3.39 %           3.02 %
Non-tax-equivalent:                      
Net interest income     $ 27,040           $ 25,693    
Interest rate spread         3.30 %           2.87 %
Net interest margin(4)         3.35 %           2.98 %

_________________________________

(1)    The average loans receivable balances include loans held for sale and nonaccruing loans.
(2)    Interest income used in the average interest earned and yield calculation includes the tax equivalent adjustment of $320 and $326 for the three months ended March 31, 2022 and 2021, respectively, calculated based on a combined federal and state tax rate of 24%.
(3)    The average other interest-earning assets consist of FRB stock, FHLB stock, and SBIC investments.
(4)    Net interest income divided by average interest-earning assets.

  Nine Months Ended
(Dollars in thousands) March 31, 2022   March 31, 2021
  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) $ 2,810,205     $ 82,377   3.90 %   $ 2,826,886     $ 85,505   4.03 %
Commercial paper and deposits in other banks   311,457       1,362   0.58       454,609       2,106   0.62  
Debt securities available for sale   124,053       1,319   1.42       131,332       1,528   1.55  
Other interest-earning assets(3)   22,218       1,867   11.19       39,140       1,729   5.88  
Total interest-earning assets   3,267,933       86,925   3.54 %     3,451,967       90,868   3.51 %
Other assets   259,570               256,026          
Total assets $ 3,527,503             $ 3,707,993          
Liabilities and equity:                      
Interest-bearing liabilities:                      
Interest-bearing checking accounts   640,194       1,038   0.22 %     593,815       1,142   0.26 %
Money market accounts   1,002,542       1,056   0.14       860,170       1,337   0.21  
Savings accounts   224,664       120   0.07       206,478       114   0.07  
Certificate accounts   447,623       1,814   0.54       594,565       5,003   1.12  
Total interest-bearing deposits   2,315,023       4,028   0.23       2,255,028       7,596   0.45  
Borrowings   48,894       45   0.12       471,716       5,007   1.41  
  Total interest-bearing liabilities   2,363,917       4,073   0.23 %     2,726,744       12,603   0.62 %
Noninterest-bearing deposits   719,872               522,406          
Other liabilities   45,443               56,141          
Total liabilities   3,129,232               3,305,291          
Stockholders’ equity   398,271               402,702          
Total liabilities and stockholders’ equity $ 3,527,503             $ 3,707,993          
                       
Net earning assets $ 904,016             $ 725,223          
Average interest-earning assets to                      
average interest-bearing liabilities   138.24 %             126.60 %        
Tax-equivalent:                      
Net interest income     $ 82,852           $ 78,265    
Interest rate spread         3.31 %           2.89 %
Net interest margin(4)         3.38 %           3.02 %
Non-tax-equivalent:                      
Net interest income     $ 81,915           $ 77,323    
Interest rate spread         3.28 %           2.85 %
Net interest margin(4)                 3.34 %                   2.98 %

_________________________________

(1)    The average loans receivable balances include loans held for sale and nonaccruing loans.
(2)    Interest income used in the average interest earned and yield calculation includes the tax equivalent adjustment of $937 and $942 for the nine months ended March 31, 2022 and 2021, respectively, calculated based on a combined federal and state tax rate of 24%.
(3)    The average other interest-earning assets consist of FRB stock, FHLB stock, and SBIC investments.
(4)    Net interest income divided by average interest-earning assets.   

Loans

(Dollars in thousands) March 31,
2022
  December 31,
2021
  September 30,
2021
  June 30,
2021
(1)
  March 31,
2021
Commercial loans:                  
Commercial real estate $ 1,102,184     $ 1,113,330     $ 1,132,764     $ 1,142,276     $ 1,088,178  
Construction and development   251,668       226,439       187,900       179,427       162,820  
Commercial and industrial   167,342       162,396       153,612       141,341       140,579  
Equipment finance   378,629       367,008       341,995       317,920       291,950  
Municipal leases   130,260       131,078       142,100       140,421       129,141  
PPP loans   2,756       19,044       28,762       46,650       73,090  
Total commercial loans   2,032,839       2,019,295       1,987,133       1,968,035       1,885,758  
Retail consumer loans                  
One-to-four family   347,945       356,850       384,901       406,549       430,001  
HELOCs – originated   128,445       128,189       129,791       130,225       131,867  
HELOCs – purchased   26,911       30,795       33,943       38,976       46,086  
Construction and land/lots   72,735       69,253       69,835       66,027       68,118  
Indirect auto finance   83,903       84,581       106,184       115,093       119,656  
Consumer   6,760       7,109       7,855       8,362       8,667  
Total retail consumer loans   666,699       676,777       732,509       765,232       804,395  
Total loans, net of deferred loan fees and costs   2,699,538       2,696,072       2,719,642       2,733,267       2,690,153  
Allowance for credit losses – loans   (31,034 )     (30,933 )     (34,406 )     (35,468 )     (36,059 )
Loans, net $ 2,668,504     $ 2,665,139     $ 2,685,236     $ 2,697,799     $ 2,654,094  

Deposits

(Dollars in thousands) March 31,
2022
  December 31,
2021
  September 30,
2021
  June 30,
2021
(1)
  March 31,
2021
Core deposits:                  
Noninterest-bearing accounts $ 704,344   $ 677,159   $ 711,764   $ 636,414   $ 528,711
NOW accounts   652,577     644,343     621,675     644,958     727,240
Money market accounts   1,026,595     1,010,901     987,650     975,001     927,519
Savings accounts   232,831     224,474     220,614     226,391     221,537
Total core deposits   2,616,347     2,556,877     2,541,703     2,482,764     2,405,007
Certificates of deposit   442,810     441,814     445,581     472,777     503,471
Total deposits $ 3,059,157   $ 2,998,691   $ 2,987,284   $ 2,955,541   $ 2,908,478

Non-GAAP Reconciliations

In addition to results presented in accordance with generally accepted accounting principles utilized in the United States (“GAAP”), this earnings release contains certain non-GAAP financial measures, which include: the efficiency ratio; tangible book value; tangible book value per share; tangible equity to tangible assets ratio; and the ratio of the allowance for credit losses to total loans excluding PPP loans. The Company believes these non-GAAP financial measures and ratios as presented are useful for both investors and management to understand the effects of certain items and 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   Nine Months Ended
(Dollars in thousands)   March 31,
2022
  December 31,
2021
  March 31,
2021
  March 31,
2022
  March 31,
2021
Noninterest expense   $ 25,799     $ 25,909     $ 30,506     $ 77,725     $ 82,949  
Less: prepayment penalties on borrowings                 3,656             3,656  
Noninterest expense   $ 25,799     $ 25,909     $ 26,850     $ 77,725     $ 79,293  
                     
Net interest income   $ 27,040     $ 27,168     $ 25,693     $ 81,915     $ 77,324  
Plus: noninterest income     8,947       10,180       10,678       29,480       28,661  
Plus: tax equivalent adjustment     320       307       326       937       942  
Net interest income plus noninterest income – adjusted   $ 36,307     $ 37,655     $ 36,697     $ 112,332     $ 106,927  
Efficiency ratio     71.69 %     69.37 %     83.87 %     69.77 %     78.26 %
Efficiency ratio – adjusted     71.06 %     68.81 %     73.17 %     69.19 %     74.16 %

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

(Dollars in thousands, except per share data)   March 31,
2022
  December 31,
2021
  September 30,
2021
  June 30,
2021
(1)
  March 31,
2021
Total stockholders’ equity   $ 395,131   $ 401,746   $ 396,511   $ 396,519   $ 406,452
Less: goodwill, core deposit intangibles, net of taxes     25,742     25,780     25,830     25,902     26,002
Tangible book value   $ 369,389   $ 375,966   $ 370,681   $ 370,617   $ 380,450
Common shares outstanding     15,978,262     16,303,461     16,307,658     16,636,483     16,655,347
Tangible book value per share   $ 23.12   $ 23.06   $ 22.73   $ 22.28   $ 22.84
Book value per share   $ 24.73   $ 24.64   $ 24.31   $ 23.83   $ 24.40

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

(Dollars in thousands)   March 31,
2022
  December 31,
2021
  September 30,
2021
  June 30,
2021
(1)
  March 31,
2021
Tangible equity(1)   $ 369,389     $ 375,966     $ 370,681     $ 370,617     $ 380,450  
Total assets     3,541,785       3,502,819       3,481,360       3,524,723       3,648,613  
Less: goodwill, core deposit intangibles, net of taxes     25,742       25,780       25,830       25,902       26,002  
Total tangible assets   $ 3,516,043     $ 3,477,039     $ 3,455,530     $ 3,498,821     $ 3,622,611  
Tangible equity to tangible assets     10.51 %     10.81 %     10.73 %     10.59 %     10.50 %

_________________________________

(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.


        

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