Source: GlobeNewswire (MIL-OSI)
ASHEVILLE, N.C., Oct. 24, 2024 (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 the year ending December 31, 2024 and an increase in its quarterly cash dividend.
For the quarter ended September 30, 2024 compared to the quarter ended June 30, 2024:
- net income was $13.1 million compared to $12.4 million;
- diluted earnings per share (“EPS”) were $0.76 compared to $0.73;
- annualized return on assets (“ROA”) was 1.17% compared to 1.13%;
- annualized return on equity (“ROE”) was 9.76% compared to 9.58%;
- net interest margin was 4.00% compared to 4.08%;
- provision for credit losses was $3.0 million compared to $4.3 million; and
- quarterly cash dividends continued at $0.11 per share totaling $1.9 million for both periods.
For the nine months ended September 30, 2024 compared to the nine months ended September 30, 2023:
- net income was $40.6 million compared to $36.6 million;
- diluted EPS were $2.37 compared to $2.18;
- annualized ROA was 1.22% compared to 1.15%;
- annualized ROE was 10.39% compared to 10.56%;
- net interest margin was 4.03% compared to 4.29%;
- provision for credit losses was $8.4 million compared to $11.7 million;
- tax-free death benefit proceeds from life insurance were $1.1 million for both periods; and
- cash dividends of $0.33 per share totaling $5.6 million compared to $0.30 per share totaling $5.1 million.
Results for the nine months ended September 30, 2023 include the impact of the merger of Quantum Capital Corp. (“Quantum”) into the Company effective February 12, 2023. The addition of Quantum contributed total assets of $656.7 million, including loans of $561.9 million, and $570.6 million of deposits, all reflecting the impact of purchase accounting adjustments. Merger-related expenses of $4.7 million were recognized during the nine months ended September 30, 2023, while a $5.3 million provision for credit losses was recognized during the same period to establish allowances for credit losses on both Quantum’s loan portfolio and off-balance-sheet credit exposure.
The Company also announced today that its Board of Directors declared a quarterly cash dividend of $0.12 per common share, reflecting a $0.01, or 9.0%, increase over the previous quarter’s dividend. This is the sixth increase of the quarterly dividend since the Company initiated cash dividends in November 2018. The dividend is payable on November 27, 2024 to shareholders of record as of the close of business on November 14, 2024.
“We are pleased to report another quarter of strong financial results,” said Hunter Westbrook, President and Chief Executive Officer. “We maintained our top quartile net interest margin, our ninth straight quarter at 4.00% or more. In addition, noninterest income and expense were both in line with prior quarters. Our provision for credit losses of $3.0 million included an additional $2.2 million as a reserve build for the potential impact of Hurricane Helene upon our loan portfolio. We have begun working with our loan customers on payment deferrals of up to six months, and although we aren’t currently aware of any collectability issues, we will continue assessing the impact of the storm upon our customer base.
“As you know, many of the communities we serve were affected by this storm, impacting both our employees and customers. I’d first like to thank our employees who have assisted in maintaining bank operations while also tending to their personal and familial responsibilities. It has been amazing to watch the teamwork, collaboration and personal sacrifice across all areas of the Bank as we remained functionally operational throughout the storm, including our electronic banking services and online operations. Currently, all of our banking locations are open with most of the affected areas in our markets recovering well and operating close to normal. As for our customers in the affected areas, it will take time to assess, react and recover from Hurricane Helene. We are committed to working with them to provide the banking support needed for their businesses and homes.
“Lastly, I am thankful for the Company’s financial strength and geographic diversification which we have built over the last decade, with respect to both our employees and customer base, which provides the foundation to overcome unforeseen events such as this storm. We remain optimistic as we work together to continue the recovery.”
WEBSITE: WWW.HTB.COM
Comparison of Results of Operations for the Three Months Ended September 30, 2024 and June 30, 2024
Net Income. Net income totaled $13.1 million, or $0.76 per diluted share, for the three months ended September 30, 2024 compared to $12.4 million, or $0.73 per diluted share, for the three months ended June 30, 2024, an increase of $694,000, or 5.6%. Results for the three months ended September 30, 2024 were positively impacted by a decrease of $1.3 million in the provision for credit losses. Details of the changes in the various components of net income are further discussed below.
Net Interest Income. The following table presents the distribution of average assets, liabilities and equity, as well as interest income earned on average interest-earning assets and interest expense paid on average interest-bearing liabilities. All average balances are daily average balances. Nonaccruing loans have been included in the table as loans carrying a zero yield.
| |
Three Months Ended |
| |
September 30, 2024 |
|
June 30, 2024 |
| (Dollars in thousands) |
Average
Balance
Outstanding |
|
Interest
Earned /
Paid |
|
Yield /
Rate |
|
Average
Balance
Outstanding |
|
Interest
Earned /
Paid |
|
Yield /
Rate |
| Assets |
|
|
|
|
|
|
|
|
|
|
|
| Interest-earning assets |
|
|
|
|
|
|
|
|
|
|
|
| Loans receivable(1) |
$ |
3,899,460 |
|
|
$ |
63,305 |
|
6.46 |
% |
|
$ |
3,885,222 |
|
|
$ |
62,161 |
|
6.43 |
% |
| Debt securities available for sale |
|
140,246 |
|
|
|
1,616 |
|
4.58 |
|
|
|
134,334 |
|
|
|
1,495 |
|
4.48 |
|
| Other interest-earning assets(2) |
|
144,931 |
|
|
|
1,728 |
|
4.74 |
|
|
|
140,376 |
|
|
|
1,758 |
|
5.04 |
|
| Total interest-earning assets |
|
4,184,637 |
|
|
|
66,649 |
|
6.34 |
|
|
|
4,159,932 |
|
|
|
65,414 |
|
6.32 |
|
| Other assets |
|
264,579 |
|
|
|
|
|
|
|
266,983 |
|
|
|
|
|
| Total assets |
$ |
4,449,216 |
|
|
|
|
|
|
$ |
4,426,915 |
|
|
|
|
|
| Liabilities and equity |
|
|
|
|
|
|
|
|
|
|
|
| Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
| Interest-bearing checking accounts |
$ |
548,024 |
|
|
$ |
1,278 |
|
0.93 |
% |
|
$ |
586,396 |
|
|
$ |
1,445 |
|
0.99 |
% |
| Money market accounts |
|
1,335,798 |
|
|
|
10,757 |
|
3.20 |
|
|
|
1,298,177 |
|
|
|
10,221 |
|
3.17 |
|
| Savings accounts |
|
182,618 |
|
|
|
40 |
|
0.09 |
|
|
|
188,028 |
|
|
|
41 |
|
0.09 |
|
| Certificate accounts |
|
1,012,765 |
|
|
|
11,617 |
|
4.56 |
|
|
|
902,864 |
|
|
|
9,976 |
|
4.44 |
|
| Total interest-bearing deposits |
|
3,079,205 |
|
|
|
23,692 |
|
3.06 |
|
|
|
2,975,465 |
|
|
|
21,683 |
|
2.93 |
|
| Junior subordinated debt |
|
10,079 |
|
|
|
235 |
|
9.28 |
|
|
|
10,054 |
|
|
|
234 |
|
9.36 |
|
| Borrowings |
|
40,399 |
|
|
|
648 |
|
6.38 |
|
|
|
87,315 |
|
|
|
1,331 |
|
6.13 |
|
| Total interest-bearing liabilities |
|
3,129,683 |
|
|
|
24,575 |
|
3.12 |
|
|
|
3,072,834 |
|
|
|
23,248 |
|
3.04 |
|
| Noninterest-bearing deposits |
|
719,710 |
|
|
|
|
|
|
|
769,016 |
|
|
|
|
|
| Other liabilities |
|
65,097 |
|
|
|
|
|
|
|
63,503 |
|
|
|
|
|
| Total liabilities |
|
3,914,490 |
|
|
|
|
|
|
|
3,905,353 |
|
|
|
|
|
| Stockholders’ equity |
|
534,726 |
|
|
|
|
|
|
|
521,562 |
|
|
|
|
|
| Total liabilities and stockholders’ equity |
$ |
4,449,216 |
|
|
|
|
|
|
$ |
4,426,915 |
|
|
|
|
|
| Net earning assets |
$ |
1,054,954 |
|
|
|
|
|
|
$ |
1,087,098 |
|
|
|
|
|
| Average interest-earning assets to average interest-bearing liabilities |
|
133.71 |
% |
|
|
|
|
|
|
135.38 |
% |
|
|
|
|
| Non-tax-equivalent |
|
|
|
|
|
|
|
|
|
|
|
| Net interest income |
|
|
$ |
42,074 |
|
|
|
|
|
$ |
42,166 |
|
|
| Interest rate spread |
|
|
|
|
3.22 |
% |
|
|
|
|
|
3.28 |
% |
| Net interest margin(3) |
|
|
|
|
4.00 |
% |
|
|
|
|
|
4.08 |
% |
| Tax-equivalent(4) |
|
|
|
|
|
|
|
|
|
|
|
| Net interest income |
|
|
$ |
42,442 |
|
|
|
|
|
$ |
42,520 |
|
|
| Interest rate spread |
|
|
|
|
3.25 |
% |
|
|
|
|
|
3.32 |
% |
| Net interest margin(3) |
|
|
|
|
4.03 |
% |
|
|
|
|
|
4.11 |
% |
(1) Average loans receivable balances include loans held for sale and nonaccruing loans.
(2) Average other interest-earning assets consist of FRB stock, FHLB stock, SBIC investments and deposits in other banks.
(3) Net interest income divided by average interest-earning assets.
(4) Tax-equivalent results include adjustments to interest income of $368 and $354 for the three months ended September 30, 2024 and June 30, 2024, respectively, calculated based on a combined federal and state tax rate of 24%.
Total interest and dividend income for the three months ended September 30, 2024 increased $1.2 million, or 1.9%, compared to the three months ended June 30, 2024, which was driven by a $1.1 million, or 1.8%, increase in loan interest income primarily due to the difference in the number of days in each quarter. Accretion income on acquired loans of $640,000 and $678,000 was recognized during the same periods, respectively, and was included in interest income on loans.
Total interest expense for the three months ended September 30, 2024 increased $1.3 million, or 5.7%, compared to the three months ended June 30, 2024. The increase was primarily the result of increases in the average balances of money market and certificate accounts, partially offset by a decline in average borrowings outstanding.
The following table shows the effects that changes in average balances (volume), including the difference in the number of days in the periods compared, and average interest rates (rate) had on the interest earned on interest-earning assets and interest paid on interest-bearing liabilities:
| |
Increase / (Decrease)
Due to |
|
Total
Increase /
(Decrease) |
| (Dollars in thousands) |
Volume |
|
Rate |
|
| Interest-earning assets |
|
|
|
|
|
| Loans receivable |
$ |
916 |
|
|
$ |
228 |
|
|
$ |
1,144 |
|
| Debt securities available for sale |
|
83 |
|
|
|
38 |
|
|
|
121 |
|
| Other interest-earning assets |
|
76 |
|
|
|
(106 |
) |
|
|
(30 |
) |
| Total interest-earning assets |
|
1,075 |
|
|
|
160 |
|
|
|
1,235 |
|
| Interest-bearing liabilities |
|
|
|
|
|
| Interest-bearing checking accounts |
|
(81 |
) |
|
|
(86 |
) |
|
|
(167 |
) |
| Money market accounts |
|
413 |
|
|
|
123 |
|
|
|
536 |
|
| Savings accounts |
|
(1 |
) |
|
|
— |
|
|
|
(1 |
) |
| Certificate accounts |
|
1,341 |
|
|
|
300 |
|
|
|
1,641 |
|
| Junior subordinated debt |
|
3 |
|
|
|
(2 |
) |
|
|
1 |
|
| Borrowings |
|
(708 |
) |
|
|
25 |
|
|
|
(683 |
) |
| Total interest-bearing liabilities |
|
967 |
|
|
|
360 |
|
|
|
1,327 |
|
| Decrease in net interest income |
|
|
|
|
$ |
(92 |
) |
Provision for Credit Losses. The provision for credit losses is the amount of expense that, based on our judgment, is required to maintain the allowance for credit losses (“ACL”) at an appropriate level under the current expected credit losses model.
The following table presents a breakdown of the components of the provision for credit losses:
| |
Three Months Ended |
|
|
|
| (Dollars in thousands) |
September 30, 2024 |
|
June 30, 2024 |
|
$ Change |
|
% Change |
| Provision for credit losses |
|
|
|
|
|
|
|
|
| Loans |
$ |
2,990 |
|
|
$ |
4,300 |
|
|
$ |
(1,310 |
) |
|
(30 |
)% |
| Off-balance-sheet credit exposure |
|
(15 |
) |
|
|
(40 |
) |
|
|
25 |
|
|
63 |
|
| Total provision for credit losses |
$ |
2,975 |
|
|
$ |
4,260 |
|
|
$ |
(1,285 |
) |
|
(30 |
)% |
For the quarter ended September 30, 2024, the “loans” portion of the provision for credit losses was the result of the following, offset by net charge-offs of $4.1 million during the quarter:
- $0.4 million benefit driven by changes in the loan mix.
- $1.2 million provision due to changes in the projected economic forecast, specifically the national unemployment rate, and changes in qualitative adjustments. Included in this change was the addition of a $2.2 million qualitative allocation for the potential impact of Hurricane Helene upon our loan portfolio.
- $1.9 million decrease in specific reserves on individually evaluated loans as we charged-off specific reserves which had previously been established.
For the quarter ended June 30, 2024, the “loans” portion of the provision for credit losses was the result of the following, in addition to net charge-offs of $2.6 million during the quarter:
- $0.1 million provision driven by changes in the loan mix.
- $0.4 million benefit due to changes in the projected economic forecast and changes in qualitative adjustments.
- $2.0 million increase in specific reserves on individually evaluated loans which was proportional to the increase in the associated loan balances which increased from $8.3 million to $16.3 million quarter-over-quarter, concentrated in the equipment finance and SBA portfolios.
For the quarters ended September 30, 2024 and June 30, 2024, the amounts recorded for off-balance-sheet credit exposure were the result of changes in the balance of loan commitments, loan mix and projected economic forecast as outlined above.
Noninterest Income. Noninterest income for the three months ended September 30, 2024 increased $169,000, or 2.1%, when compared to the quarter ended June 30, 2024. Changes in the components of noninterest income are discussed below:
| |
Three Months Ended |
|
|
| (Dollars in thousands) |
September 30, 2024 |
|
June 30, 2024 |
|
$ Change |
|
% Change |
| Noninterest income |
|
|
|
|
|
|
|
| Service charges and fees on deposit accounts |
$ |
2,336 |
|
|
$ |
2,354 |
|
|
$ |
(18 |
) |
|
(1 |
)% |
| Loan income and fees |
|
684 |
|
|
|
647 |
|
|
|
37 |
|
|
6 |
|
| Gain on sale of loans held for sale |
|
1,900 |
|
|
|
1,828 |
|
|
|
72 |
|
|
4 |
|
| Bank owned life insurance (“BOLI”) income |
|
828 |
|
|
|
807 |
|
|
|
21 |
|
|
3 |
|
| Operating lease income |
|
1,637 |
|
|
|
1,591 |
|
|
|
46 |
|
|
3 |
|
| Other |
|
897 |
|
|
|
886 |
|
|
|
11 |
|
|
1 |
|
| Total noninterest income |
$ |
8,282 |
|
|
$ |
8,113 |
|
|
$ |
169 |
|
|
2 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Gain on sale of loans held for sale: The increase was primarily driven by residential mortgage loans sold during the period. There were $21.7 million of residential mortgage loans originated for sale which were sold during the current quarter with gains of $479,000 compared to $21.3 million sold with gains of $351,000 in the prior quarter, with the improvement in profitability due to movement in interest rates. There were $54.6 million of HELOCs sold for a gain of $414,000 compared to $32.9 million sold with gains of $457,000 in the prior quarter. There were $12.9 million in sales of the guaranteed portion of SBA commercial loans with gains of $1.0 million for the quarter compared to $12.7 million sold and gains of $1.1 million for the prior quarter. Our hedging of mandatory commitments on the residential mortgage loan pipeline resulted in a gain of $18,000 for the quarter ended September 30, 2024 versus a loss of $58,000 for the quarter ended June 30, 2024.
Noninterest Expense. Noninterest expense for the three months ended September 30, 2024 increased $375,000, or 1.2%, when compared to the three months ended June 30, 2024. Changes in the components of noninterest expense are discussed below:
| |
Three Months Ended |
|
|
| (Dollars in thousands) |
September 30, 2024 |
|
June 30, 2024 |
|
$ Change |
|
% Change |
| Noninterest expense |
|
|
|
|
|
|
|
| Salaries and employee benefits |
$ |
17,082 |
|
|
$ |
16,608 |
|
|
$ |
474 |
|
|
3 |
% |
| Occupancy expense, net |
|
2,436 |
|
|
|
2,419 |
|
|
|
17 |
|
|
1 |
|
| Computer services |
|
3,192 |
|
|
|
3,116 |
|
|
|
76 |
|
|
2 |
|
| Telephone, postage and supplies |
|
547 |
|
|
|
580 |
|
|
|
(33 |
) |
|
(6 |
) |
| Marketing and advertising |
|
408 |
|
|
|
606 |
|
|
|
(198 |
) |
|
(33 |
) |
| Deposit insurance premiums |
|
589 |
|
|
|
531 |
|
|
|
58 |
|
|
11 |
|
| Core deposit intangible amortization |
|
567 |
|
|
|
567 |
|
|
|
— |
|
|
— |
|
| Other |
|
5,764 |
|
|
|
5,783 |
|
|
|
(19 |
) |
|
— |
|
| Total noninterest expense |
$ |
30,585 |
|
|
$ |
30,210 |
|
|
$ |
375 |
|
|
1 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Salaries and employee benefits: The quarter-over-quarter increase was primarily the result of executive pay increases effective this quarter and additional stock incentive expense associated with the vesting of performance-based equity awards.
- Marketing and advertising: The decrease in expense was the result of both differences in the timing of when expenses were incurred quarter-over-quarter as well as a reduction in traditional media advertising (print, billboards, etc.) in favor of digital platforms at lower costs.
Income Taxes. The amount of income tax expense is influenced by the amount of pre-tax income, tax-exempt income, changes in the statutory rate and the effect of changes in valuation allowances maintained against deferred tax benefits. The effective tax rates for the three months ended September 30, 2024 and June 30, 2024 were 21.9% and 21.4%, respectively.
Comparison of Results of Operations for the Nine Months Ended September 30, 2024 and September 30, 2023
Net Income. Net income totaled $40.6 million, or $2.37 per diluted share, for the nine months ended September 30, 2024 compared to $36.6 million, or $2.18 per diluted share, for the nine months ended September 30, 2023, an increase of $4.0 million, or 11.0%. The results for the nine months ended September 30, 2024 were positively impacted by a decrease of $3.3 million in the provision for credit losses, a $1.4 million increase in noninterest income, and a $2.6 million decrease in noninterest expense, partially offset by a $2.0 million decrease in net interest income and a $1.3 million increase in income tax expense. Details of the changes in the various components of net income are further discussed below.
Net Interest Income. The following table presents the distribution of average assets, liabilities and equity, as well as interest income earned on average interest-earning assets and interest expense paid on average interest-bearing liabilities. All average balances are daily average balances. Nonaccruing loans have been included in the table as loans carrying a zero yield.
| |
Nine Months Ended |
| |
September 30, 2024 |
|
September 30, 2023 |
| (Dollars in thousands) |
Average
Balance
Outstanding |
|
Interest
Earned /
Paid |
|
Yield /
Rate |
|
Average
Balance
Outstanding |
|
Interest
Earned /
Paid |
|
Yield /
Rate |
| Assets |
|
|
|
|
|
|
|
|
|
|
|
| Interest-earning assets |
|
|
|
|
|
|
|
|
|
|
|
| Loans receivable(1) |
$ |
3,883,040 |
|
|
$ |
185,418 |
|
6.38 |
% |
|
$ |
3,684,518 |
|
|
$ |
162,526 |
|
5.90 |
% |
| Debt securities available for sale |
|
133,779 |
|
|
|
4,424 |
|
4.42 |
|
|
|
155,884 |
|
|
|
3,780 |
|
3.24 |
|
| Other interest-earning assets(2) |
|
138,956 |
|
|
|
5,576 |
|
5.36 |
|
|
|
137,065 |
|
|
|
5,356 |
|
5.22 |
|
| Total interest-earning assets |
|
4,155,775 |
|
|
|
195,418 |
|
6.28 |
|
|
|
3,977,467 |
|
|
|
171,662 |
|
5.77 |
|
| Other assets |
|
276,516 |
|
|
|
|
|
|
|
266,867 |
|
|
|
|
|
| Total assets |
$ |
4,432,291 |
|
|
|
|
|
|
$ |
4,244,334 |
|
|
|
|
|
| Liabilities and equity |
|
|
|
|
|
|
|
|
|
|
|
| Interest-bearing liabilities |
|
|
|
|
|
|
|
|
|
|
|
| Interest-bearing checking accounts |
$ |
574,954 |
|
|
$ |
4,149 |
|
0.96 |
% |
|
$ |
627,200 |
|
|
$ |
3,241 |
|
0.69 |
% |
| Money market accounts |
|
1,305,217 |
|
|
|
30,642 |
|
3.14 |
|
|
|
1,206,119 |
|
|
|
18,604 |
|
2.06 |
|
| Savings accounts |
|
187,447 |
|
|
|
124 |
|
0.09 |
|
|
|
218,683 |
|
|
|
143 |
|
0.09 |
|
| Certificate accounts |
|
934,702 |
|
|
|
30,778 |
|
4.40 |
|
|
|
649,755 |
|
|
|
14,967 |
|
3.08 |
|
| Total interest-bearing deposits |
|
3,002,320 |
|
|
|
65,693 |
|
2.92 |
|
|
|
2,701,757 |
|
|
|
36,955 |
|
1.83 |
|
| Junior subordinated debt |
|
10,054 |
|
|
|
705 |
|
9.37 |
|
|
|
8,428 |
|
|
|
563 |
|
8.93 |
|
| Borrowings |
|
76,823 |
|
|
|
3,550 |
|
6.17 |
|
|
|
158,965 |
|
|
|
6,634 |
|
5.58 |
|
| Total interest-bearing liabilities |
|
3,089,197 |
|
|
|
69,948 |
|
3.02 |
|
|
|
2,869,150 |
|
|
|
44,152 |
|
2.06 |
|
| Noninterest-bearing deposits |
|
766,110 |
|
|
|
|
|
|
|
857,315 |
|
|
|
|
|
| Other liabilities |
|
55,217 |
|
|
|
|
|
|
|
54,513 |
|
|
|
|
|
| Total liabilities |
|
3,910,524 |
|
|
|
|
|
|
|
3,780,978 |
|
|
|
|
|
| Stockholders’ equity |
|
521,767 |
|
|
|
|
|
|
|
463,356 |
|
|
|
|
|
| Total liabilities and stockholders’ equity |
$ |
4,432,291 |
|
|
|
|
|
|
$ |
4,244,334 |
|
|
|
|
|
| Net earning assets |
$ |
1,066,578 |
|
|
|
|
|
|
$ |
1,108,317 |
|
|
|
|
|
| Average interest-earning assets to average interest-bearing liabilities |
|
134.53 |
% |
|
|
|
|
|
|
138.63 |
% |
|
|
|
|
| Non-tax-equivalent |
|
|
|
|
|
|
|
|
|
|
|
| Net interest income |
|
|
$ |
125,470 |
|
|
|
|
|
$ |
127,510 |
|
|
| Interest rate spread |
|
|
|
|
3.26 |
% |
|
|
|
|
|
3.71 |
% |
| Net interest margin(3) |
|
|
|
|
4.03 |
% |
|
|
|
|
|
4.29 |
% |
| Tax-equivalent |
|
|
|
|
|
|
|
|
|
|
|
| Net interest income |
|
|
$ |
126,542 |
|
|
|
|
|
$ |
128,413 |
|
|
| Interest rate spread |
|
|
|
|
3.30 |
% |
|
|
|
|
|
3.74 |
% |
| Net interest margin(3) |
|
|
|
|
4.07 |
% |
|
|
|
|
|
4.32 |
% |
(1) Average loans receivable balances include loans held for sale and nonaccruing loans.
(2) Average other interest-earning assets consist of FRB stock, FHLB stock, SBIC investments and deposits in other banks.
(3) Net interest income divided by average interest-earning assets.
(4) Tax-equivalent results include adjustments to interest income of $1,072 and $903 for the nine months ended September 30, 2024 and September 30, 2023, respectively, calculated based on a combined federal and state tax rate of 24%.
Total interest and dividend income for the nine months ended September 30, 2024 increased $23.8 million, or 13.8%, compared to the nine months ended September 30, 2023, which was driven by a $22.9 million, or 14.1%, increase in interest income on loans. Accretion income on acquired loans of $2.0 million and $1.7 million was recognized during the same periods, respectively, and was included in interest income on loans. The overall increase in average yield on interest-earning assets was the result of both higher average balances and rising interest rates.
Total interest expense for the nine months ended September 30, 2024 increased $25.8 million, or 58.4%, compared to the nine months ended September 30, 2023. The change was primarily the result of increases in the cost of funds across all funding sources driven by higher market interest rates and increases in the average balances of money market and certificate accounts, partially offset by a decline in average borrowings outstanding.
The following table shows the effects that changes in average balances (volume), including the difference in the number of days in the periods compared, and average interest rates (rate) had on the interest earned on interest-earning assets and interest paid on interest-bearing liabilities:
| |
Increase / (Decrease)
Due to |
|
Total
Increase /
(Decrease) |
| (Dollars in thousands) |
Volume |
|
Rate |
|
| Interest-earning assets |
|
|
|
|
|
| Loans receivable |
$ |
8,927 |
|
|
$ |
13,965 |
|
|
$ |
22,892 |
|
| Debt securities available for sale |
|
(532 |
) |
|
|
1,176 |
|
|
|
644 |
|
| Other interest-earning assets |
|
79 |
|
|
|
141 |
|
|
|
220 |
|
| Total interest-earning assets |
|
8,474 |
|
|
|
15,282 |
|
|
|
23,756 |
|
| Interest-bearing liabilities |
|
|
|
|
|
| Interest-bearing checking accounts |
|
(266 |
) |
|
|
1,174 |
|
|
|
908 |
|
| Money market accounts |
|
1,557 |
|
|
|
10,481 |
|
|
|
12,038 |
|
| Savings accounts |
|
(20 |
) |
|
|
1 |
|
|
|
(19 |
) |
| Certificate accounts |
|
6,592 |
|
|
|
9,219 |
|
|
|
15,811 |
|
| Junior subordinated debt |
|
109 |
|
|
|
33 |
|
|
|
142 |
|
| Borrowings |
|
(3,425 |
) |
|
|
341 |
|
|
|
(3,084 |
) |
| Total interest-bearing liabilities |
|
4,547 |
|
|
|
21,249 |
|
|
|
25,796 |
|
| Decrease in net interest income |
|
|
|
|
$ |
(2,040 |
) |
Provision for Credit Losses. The following table presents a breakdown of the components of the provision for credit losses:
| |
Nine Months Ended |
|
|
|
| (Dollars in thousands) |
September 30, 2024 |
|
September 30, 2023 |
|
$ Change |
|
% Change |
| Provision for credit losses |
|
|
|
|
|
|
|
|
| Loans |
$ |
8,435 |
|
|
$ |
12,120 |
|
|
$ |
(3,685 |
) |
|
(30 |
)% |
| Off-balance-sheet credit exposure |
|
(35 |
) |
|
|
(385 |
) |
|
|
350 |
|
|
91 |
|
| Total provision for credit losses |
$ |
8,400 |
|
|
$ |
11,735 |
|
|
$ |
(3,335 |
) |
|
(28 |
)% |
For the nine months ended September 30, 2024, the “loans” portion of the provision for credit losses was the result of net charge-offs of $8.9 million during the period, partially offset by a $0.4 million benefit due to changes in the loan mix.
For the nine months ended September 30, 2023, the “loans” portion of the provision for credit losses was the result of the following, in addition to net charge-offs of $3.9 million during the period:
- $4.9 million provision to establish an allowance on Quantum’s loan portfolio.
- $3.0 million provision due to changes in the projected economic forecast, specifically the national unemployment rate, and changes in qualitative adjustments.
- $0.3 million increase in specific reserves on individually evaluated credits.
For the nine months ended September 30, 2024 and September 30, 2023, the amounts recorded for off-balance-sheet credit exposure were the result of changes in the balance of loan commitments, loan mix and projected economic forecast as outlined above.
Noninterest Income. Noninterest income for the nine months ended September 30, 2024 increased $1.4 million, or 5.8%, when compared to the same period last year. Changes in the components of noninterest income are discussed below:
| |
Nine Months Ended |
|
|
| (Dollars in thousands) |
September 30, 2024 |
|
September 30, 2023 |
|
$ Change |
|
% Change |
| Noninterest income |
|
|
|
|
|
|
|
| Service charges and fees on deposit accounts |
$ |
6,839 |
|
|
$ |
6,967 |
|
|
$ |
(128 |
) |
|
(2 |
)% |
| Loan income and fees |
|
2,009 |
|
|
|
1,913 |
|
|
|
96 |
|
|
5 |
|
| Gain on sale of loans held for sale |
|
5,185 |
|
|
|
4,213 |
|
|
|
972 |
|
|
23 |
|
| BOLI income |
|
3,470 |
|
|
|
2,844 |
|
|
|
626 |
|
|
22 |
|
| Operating lease income |
|
5,087 |
|
|
|
4,515 |
|
|
|
572 |
|
|
13 |
|
| Gain (loss) on sale of premises and equipment |
|
(9 |
) |
|
|
982 |
|
|
|
(991 |
) |
|
(101 |
) |
| Other |
|
2,625 |
|
|
|
2,391 |
|
|
|
234 |
|
|
10 |
|
| Total noninterest income |
$ |
25,206 |
|
|
$ |
23,825 |
|
|
$ |
1,381 |
|
|
6 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Gain on sale of loans held for sale: The increase in the gain on sale of loans held for sale was primarily driven by residential mortgage and SBA loans sold during the period. During the nine months ended September 30, 2024, there were $58.3 million of residential mortgage loans originated for sale which were sold with gains of $1.1 million compared to $48.7 million sold with gains of $633,000 for the corresponding period in the prior year, with the improvement in profitability due to movement in interest rates. There were $38.5 million of sales of the guaranteed portion of SBA commercial loans with gains of $3.1 million compared to $41.1 million sold and gains of $2.6 million for the corresponding period in the prior year. There were $95.4 million of HELOCs sold during the current period for a gain of $887,000 compared to $66.4 million sold and gains of $552,000 for the corresponding period in the prior year. Our hedging of mandatory commitments on the residential mortgage loan pipeline resulted in a gain of $15,000 for the nine months ended September 30, 2024 versus a gain of $426,000 for the nine months ended September 30, 2023.
- BOLI income: The increase was due to higher yielding policies as a result of restructuring the portfolio at the end of the prior calendar year.
- Operating lease income: The increase in operating lease income was the result of $1.7 million in additional contractual earnings on a higher average outstanding balance of the associated contracts, partially offset by losses incurred on previously leased equipment, where we recognized a net loss of $1.3 million for the nine months ended September 30, 2024 versus a net loss of $210,000 in the same period last year.
- Gain (loss) on sale of premises and equipment: During the nine months ended September 30, 2023, two properties were sold for a combined gain of $982,000. No material disposal activity occurred during the nine months ended September 30, 2024.
Noninterest Expense. Noninterest expense for the nine months ended September 30, 2024 decreased $2.6 million, or 2.8%, when compared to the same period last year. Changes in the components of noninterest expense are discussed below:
| |
Nine Months Ended |
|
|
| (Dollars in thousands) |
September 30, 2024 |
|
September 30, 2023 |
|
$ Change |
|
% Change |
| Noninterest expense |
|
|
|
|
|
|
|
| Salaries and employee benefits |
$ |
50,666 |
|
|
$ |
49,436 |
|
|
$ |
1,230 |
|
|
2 |
% |
| Occupancy expense, net |
|
7,292 |
|
|
|
7,556 |
|
|
|
(264 |
) |
|
(3 |
) |
| Computer services |
|
9,396 |
|
|
|
9,386 |
|
|
|
10 |
|
|
— |
|
| Telephone, postage and supplies |
|
1,712 |
|
|
|
1,942 |
|
|
|
(230 |
) |
|
(12 |
) |
| Marketing and advertising |
|
1,659 |
|
|
|
1,555 |
|
|
|
104 |
|
|
7 |
|
| Deposit insurance premiums |
|
1,674 |
|
|
|
1,878 |
|
|
|
(204 |
) |
|
(11 |
) |
| Core deposit intangible amortization |
|
1,896 |
|
|
|
2,324 |
|
|
|
(428 |
) |
|
(18 |
) |
| Merger-related expenses |
|
— |
|
|
|
4,741 |
|
|
|
(4,741 |
) |
|
(100 |
) |
| Other |
|
16,364 |
|
|
|
14,490 |
|
|
|
1,874 |
|
|
13 |
|
| Total noninterest expense |
$ |
90,659 |
|
|
$ |
93,308 |
|
|
$ |
(2,649 |
) |
|
(3 |
)% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
- Salaries and employee benefits: The increase was primarily the result of pay increases, partially offset by reductions in incentive pay.
- Core deposit intangible amortization: The intangible recorded associated with the Quantum merger is being amortized on an accelerated basis, so the rate of amortization slowed year-over-year.
- Merger-related expenses: The prior period included expenses associated with the Company’s merger with Quantum. No such expenses were incurred in the nine months ended September 30, 2024.
- Other: The increase period-over-period was primarily driven by $1.7 million of additional depreciation expense on equipment subject to operating leases.
Income Taxes. The amount of income tax expense is influenced by the amount of pre-tax income, tax-exempt income, changes in the statutory rate and the effect of changes in valuation allowances maintained against deferred tax benefits. The effective tax rates for the nine months ended September 30, 2024 and September 30, 2023 were 21.3% and 21.0%, respectively.
Balance Sheet Review
Total assets decreased by $35.3 million to $4.6 billion and total liabilities decreased by $75.5 million to $4.1 billion, respectively, at September 30, 2024 as compared to December 31, 2023. The majority of these changes were the result of an increase in deposits, which, combined with the collection of BOLI redemption proceeds and cash and cash equivalents, were used to fund growth in loans and pay down borrowings.
Stockholders’ equity increased $40.1 million to $540.0 million at September 30, 2024 as compared to December 31, 2023. Activity within stockholders’ equity included $40.6 million in net income and $4.5 million in stock-based compensation and stock option exercises, partially offset by $5.6 million in cash dividends declared. In addition, the improvement in the accumulated other comprehensive income was driven by a $1.6 million reduction of the unrealized loss on available for sale securities as a result of a decrease in market interest rates.
As of September 30, 2024, the Bank was considered “well capitalized” in accordance with its regulatory capital guidelines and exceeded all regulatory capital requirements.
Asset Quality
The ACL on loans was $48.1 million, or 1.30% of total loans, at September 30, 2024 compared to $48.6 million, or 1.34% of total loans, at December 31, 2023. The drivers of this change are discussed in the “Comparison of Results of Operations for the Nine Months Ended September 30, 2024 and September 30, 2023 – Provision for Credit Losses” section above.
Net loan charge-offs totaled $8.9 million for the nine months ended September 30, 2024 compared to $3.9 million for the same period last year. As discussed in previous quarters, the increase in net charge-offs has been concentrated in our equipment finance portfolio, primarily smaller over-the-road truck loans, with net charge-offs of $5.1 million during the nine months ended September 30, 2024. In response, during the first quarter of calendar year 2024 the Company elected to cease further originations within the transportation sector of equipment finance loans. In spite of the increase, annualized net charge-offs as a percentage of average assets for the loan portfolio as a whole were 0.31% for the nine months ended September 30, 2024, in line with the Company’s historical experience, as compared to 0.14% for the nine months ended September 30, 2023.
Nonperforming assets, made up of nonaccrual loans and repossessed assets, increased by $10.4 million, or 54.0%, to $29.8 million, or 0.64% of total assets, at September 30, 2024 compared to $19.3 million, or 0.41% of total assets, at December 31, 2023. Consistent with the change in net charge-offs, equipment finance loans made up the largest portion of nonperforming assets at $8.5 million and $6.5 million, respectively, at these same dates. In addition, owner occupied commercial real estate totaled $7.2 million and $912,000, respectively, at these same dates. These increases were mainly the result of a $3.1 million medical equipment relationship and $5.1 million owner occupied commercial real estate (OO CRE) relationship; however, in both cases losses are not currently anticipated. The ratio of nonperforming loans to total loans was 0.78% at September 30, 2024 compared to 0.53% at December 31, 2023.
The ratio of classified assets to total assets increased to 0.99% at September 30, 2024 from 0.90% at December 31, 2023 as classified assets increased $4.1 million, or 9.8%, to $46.1 million at September 30, 2024 compared to $42.0 million at December 31, 2023. The largest portfolios of classified assets at September 30, 2024 included $11.7 million of non-owner occupied commercial real estate loans, $8.4 million of equipment finance loans, $7.1 million of SBA loans, $6.0 million of 1-4 family residential real estate loans, and $6.0 million of OO CRE loans.
About HomeTrust Bancshares, Inc.
HomeTrust Bancshares, Inc. is the holding company for the Bank. As of September 30, 2024, the Company had assets of $4.6 billion. The Bank, founded in 1926, is a North Carolina state chartered, community-focused financial institution committed to providing value added relationship banking with over 30 locations as well as online/mobile channels. Locations include: North Carolina (the Asheville metropolitan area, the “Piedmont” region, Charlotte and Raleigh/Cary), South Carolina (Greenville and Charleston), East Tennessee (Kingsport/Johnson City, Knoxville and Morristown), Southwest Virginia (the Roanoke Valley) and Georgia (Greater Atlanta).
Forward-Looking Statements
This press release includes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical fact, but instead are based on certain assumptions including statements with respect to the Company’s beliefs, plans, objectives, goals, expectations, assumptions and statements about future economic performance and projections of financial items. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated or implied by forward-looking statements. The factors that could result in material differentiation include, but are not limited to, the impact of bank failures or adverse developments involving other banks and related negative press about the banking industry in general on investor and depositor sentiment; the remaining effects of the COVID-19 pandemic on general economic and financial market conditions and on public health, both nationally and in the Company’s market areas; natural disasters, including the effects of Hurricane Helene; expected revenues, cost savings, synergies and other benefits from merger and acquisition activities might not be realized to the extent anticipated, within the anticipated time frames, or at all, costs or difficulties relating to integration matters, including but not limited to customer and employee retention, might be greater than expected, and goodwill impairment charges might be incurred; increased competitive pressures among financial services companies; changes in the interest rate environment; changes in general economic conditions, both nationally and in our market areas; legislative and regulatory changes; and the effects of inflation, a potential recession, and other factors described in the Company’s latest Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other documents filed with or furnished to the Securities and Exchange Commission – which are available on the Company’s website at www.htb.com and on the SEC’s website at www.sec.gov. Any of the forward-looking statements that the Company makes in this press release or in the documents the Company files with or furnishes to the SEC are based upon management’s beliefs and assumptions at the time they are made and may turn out to be wrong because of inaccurate assumptions, the factors described above or other factors that management cannot foresee. The Company does not undertake, and specifically disclaims any obligation, to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.
Consolidated Balance Sheets (Unaudited)
| (Dollars in thousands) |
September 30,
2024 |
|
June 30,
2024 |
|
March 31,
2024 |
|
December 31,
2023(1) |
|
September 30,
2023 |
| Assets |
|
|
|
|
|
|
|
|
|
| Cash |
$ |
18,980 |
|
|
$ |
18,382 |
|
|
$ |
16,134 |
|
|
$ |
18,307 |
|
|
$ |
18,090 |
|
| Interest-bearing deposits |
|
274,497 |
|
|
|
275,808 |
|
|
|
364,359 |
|
|
|
328,833 |
|
|
|
306,924 |
|
| Cash and cash equivalents |
|
293,477 |
|
|
|
294,190 |
|
|
|
380,493 |
|
|
|
347,140 |
|
|
|
325,014 |
|
| Certificates of deposit in other banks |
|
29,290 |
|
|
|
32,131 |
|
|
|
33,625 |
|
|
|
34,722 |
|
|
|
35,380 |
|
| Debt securities available for sale, at fair value |
|
140,552 |
|
|
|
134,135 |
|
|
|
120,807 |
|
|
|
126,950 |
|
|
|
134,348 |
|
| FHLB and FRB stock |
|
18,384 |
|
|
|
19,637 |
|
|
|
13,691 |
|
|
|
18,393 |
|
|
|
19,612 |
|
| SBIC investments, at cost |
|
15,489 |
|
|
|
15,462 |
|
|
|
14,568 |
|
|
|
13,789 |
|
|
|
14,586 |
|
| Loans held for sale, at fair value |
|
2,968 |
|
|
|
1,614 |
|
|
|
2,764 |
|
|
|
3,359 |
|
|
|
4,616 |
|
| Loans held for sale, at the lower of cost or fair value |
|
189,722 |
|
|
|
224,976 |
|
|
|
220,699 |
|
|
|
198,433 |
|
|
|
200,834 |
|
| Total loans, net of deferred loan fees and costs |
|
3,698,892 |
|
|
|
3,701,454 |
|
|
|
3,648,152 |
|
|
|
3,640,022 |
|
|
|
3,659,914 |
|
| Allowance for credit losses – loans |
|
(48,131 |
) |
|
|
(49,223 |
) |
|
|
(47,502 |
) |
|
|
(48,641 |
) |
|
|
(47,417 |
) |
| Loans, net |
|
3,650,761 |
|
|
|
3,652,231 |
|
|
|
3,600,650 |
|
|
|
3,591,381 |
|
|
|
3,612,497 |
|
| Premises and equipment, net |
|
69,603 |
|
|
|
69,880 |
|
|
|
70,588 |
|
|
|
70,937 |
|
|
|
72,463 |
|
| Accrued interest receivable |
|
17,523 |
|
|
|
18,412 |
|
|
|
16,944 |
|
|
|
16,902 |
|
|
|
16,513 |
|
| Deferred income taxes, net |
|
10,100 |
|
|
|
10,512 |
|
|
|
11,222 |
|
|
|
11,796 |
|
|
|
9,569 |
|
| BOLI |
|
90,021 |
|
|
|
89,176 |
|
|
|
88,369 |
|
|
|
88,257 |
|
|
|
106,059 |
|
| Goodwill |
|
34,111 |
|
|
|
34,111 |
|
|
|
34,111 |
|
|
|
34,111 |
|
|
|
34,111 |
|
| Core deposit intangibles, net |
|
7,162 |
|
|
|
7,730 |
|
|
|
8,297 |
|
|
|
9,059 |
|
|
|
9,918 |
|
| Other assets |
|
68,130 |
|
|
|
66,667 |
|
|
|
67,183 |
|
|
|
107,404 |
|
|
|
56,477 |
|
| Total assets |
$ |
4,637,293 |
|
|
$ |
4,670,864 |
|
|
$ |
4,684,011 |
|
|
$ |
4,672,633 |
|
|
$ |
4,651,997 |
|
| Liabilities and stockholders’ equity |
|
|
|
|
|
|
|
|
|
| Liabilities |
|
|
|
|
|
|
|
|
|
| Deposits |
$ |
3,761,588 |
|
|
$ |
3,707,779 |
|
|
$ |
3,799,807 |
|
|
$ |
3,661,373 |
|
|
$ |
3,640,961 |
|
| Junior subordinated debt |
|
10,096 |
|
|
|
10,070 |
|
|
|
10,045 |
|
|
|
10,021 |
|
|
|
9,995 |
|
| Borrowings |
|
260,013 |
|
|
|
364,513 |
|
|
|
291,513 |
|
|
|
433,763 |
|
|
|
452,263 |
|
| Other liabilities |
|
65,592 |
|
|
|
64,874 |
|
|
|
69,473 |
|
|
|
67,583 |
|
|
|
64,367 |
|
| Total liabilities |
|
4,097,289 |
|
|
|
4,147,236 |
|
|
|
4,170,838 |
|
|
|
4,172,740 |
|
|
|
4,167,586 |
|
| Stockholders’ equity |
|
|
|
|
|
|
|
|
|
| Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued or outstanding |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Common stock, $0.01 par value, 60,000,000 shares authorized(2) |
|
175 |
|
|
|
175 |
|
|
|
175 |
|
|
|
174 |
|
|
|
174 |
|
| Additional paid in capital |
|
175,495 |
|
|
|
172,907 |
|
|
|
172,919 |
|
|
|
172,366 |
|
|
|
171,663 |
|
| Retained earnings |
|
368,383 |
|
|
|
357,147 |
|
|
|
346,598 |
|
|
|
333,401 |
|
|
|
321,799 |
|
| Unearned Employee Stock Ownership Plan (“ESOP”) shares |
|
(4,099 |
) |
|
|
(4,232 |
) |
|
|
(4,364 |
) |
|
|
(4,497 |
) |
|
|
(4,629 |
) |
| Accumulated other comprehensive income (loss) |
|
50 |
|
|
|
(2,369 |
) |
|
|
(2,155 |
) |
|
|
(1,551 |
) |
|
|
(4,596 |
) |
| Total stockholders’ equity |
|
540,004 |
|
|
|
523,628 |
|
|
|
513,173 |
|
|
|
499,893 |
|
|
|
484,411 |
|
| Total liabilities and stockholders’ equity |
$ |
4,637,293 |
|
|
$ |
4,670,864 |
|
|
$ |
4,684,011 |
|
|
$ |
4,672,633 |
|
|
$ |
4,651,997 |
|
(1) Derived from audited financial statements.
(2) Shares of common stock issued and outstanding were 17,514,922 at September 30, 2024; 17,437,326 at June 30, 2024; 17,444,787 at March 31, 2024; 17,387,069 at December 31, 2023; and 17,380,307 at September 30, 2023.
Consolidated Statements of Income (Unaudited)
| |
Three Months Ended |
|
Nine Months Ended |
| (Dollars in thousands) |
September 30,
2024 |
|
June 30,
2024 |
|
September 30,
2024 |
|
September 30,
2023 |
| Interest and dividend income |
|
|
|
|
|
|
|
| Loans |
$ |
63,305 |
|
|
$ |
62,161 |
|
|
$ |
185,418 |
|
|
$ |
162,526 |
|
| Debt securities available for sale |
|
1,616 |
|
|
|
1,495 |
|
|
|
4,424 |
|
|
|
3,780 |
|
| Other investments and interest-bearing deposits |
|
1,728 |
|
|
|
1,758 |
|
|
|
5,576 |
|
|
|
5,356 |
|
| Total interest and dividend income |
|
66,649 |
|
|
|
65,414 |
|
|
|
195,418 |
|
|
|
171,662 |
|
| Interest expense |
|
|
|
|
|
|
|
| Deposits |
|
23,692 |
|
|
|
21,683 |
|
|
|
65,693 |
|
|
|
36,955 |
|
| Junior subordinated debt |
|
235 |
|
|
|
234 |
|
|
|
705 |
|
|
|
563 |
|
| Borrowings |
|
648 |
|
|
|
1,331 |
|
|
|
3,550 |
|
|
|
6,634 |
|
| Total interest expense |
|
24,575 |
|
|
|
23,248 |
|
|
|
69,948 |
|
|
|
44,152 |
|
| Net interest income |
|
42,074 |
|
|
|
42,166 |
|
|
|
125,470 |
|
|
|
127,510 |
|
| Provision for credit losses |
|
2,975 |
|
|
|
4,260 |
|
|
|
8,400 |
|
|
|
11,735 |
|
| Net interest income after provision for credit losses |
|
39,099 |
|
|
|
37,906 |
|
|
|
117,070 |
|
|
|
115,775 |
|
| Noninterest income |
|
|
|
|
|
|
|
| Service charges and fees on deposit accounts |
|
2,336 |
|
|
|
2,354 |
|
|
|
6,839 |
|
|
|
6,967 |
|
| Loan income and fees |
|
684 |
|
|
|
647 |
|
|
|
2,009 |
|
|
|
1,913 |
|
| Gain on sale of loans held for sale |
|
1,900 |
|
|
|
1,828 |
|
|
|
5,185 |
|
|
|
4,213 |
|
| BOLI income |
|
828 |
|
|
|
807 |
|
|
|
3,470 |
|
|
|
2,844 |
|
| Operating lease income |
|
1,637 |
|
|
|
1,591 |
|
|
|
5,087 |
|
|
|
4,515 |
|
| Gain (loss) on sale of premises and equipment |
|
— |
|
|
|
— |
|
|
|
(9 |
) |
|
|
982 |
|
| Other |
|
897 |
|
|
|
886 |
|
|
|
2,625 |
|
|
|
2,391 |
|
| Total noninterest income |
|
8,282 |
|
|
|
8,113 |
|
|
|
25,206 |
|
|
|
23,825 |
|
| Noninterest expense |
|
|
|
|
|
|
|
| Salaries and employee benefits |
|
17,082 |
|
|
|
16,608 |
|
|
|
50,666 |
|
|
|
49,436 |
|
| Occupancy expense, net |
|
2,436 |
|
|
|
2,419 |
|
|
|
7,292 |
|
|
|
7,556 |
|
| Computer services |
|
3,192 |
|
|
|
3,116 |
|
|
|
9,396 |
|
|
|
9,386 |
|
| Telephone, postage and supplies |
|
547 |
|
|
|
580 |
|
|
|
1,712 |
|
|
|
1,942 |
|
| Marketing and advertising |
|
408 |
|
|
|
606 |
|
|
|
1,659 |
|
|
|
1,555 |
|
| Deposit insurance premiums |
|
589 |
|
|
|
531 |
|
|
|
1,674 |
|
|
|
1,878 |
|
| Core deposit intangible amortization |
|
567 |
|
|
|
567 |
|
|
|
1,896 |
|
|
|
2,324 |
|
| Merger-related expenses |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,741 |
|
| Other |
|
5,764 |
|
|
|
5,783 |
|
|
|
16,364 |
|
|
|
14,490 |
|
| Total noninterest expense |
|
30,585 |
|
|
|
30,210 |
|
|
|
90,659 |
|
|
|
93,308 |
|
| Income before income taxes |
|
16,796 |
|
|
|
15,809 |
|
|
|
51,617 |
|
|
|
46,292 |
|
| Income tax expense |
|
3,684 |
|
|
|
3,391 |
|
|
|
11,020 |
|
|
|
9,712 |
|
| Net income |
$ |
13,112 |
|
|
$ |
12,418 |
|
|
$ |
40,597 |
|
|
$ |
36,580 |
|
Per Share Data
| |
|
Three Months Ended |
|
Nine Months Ended |
| |
|
September 30,
2024 |
|
June 30,
2024 |
|
September 30,
2024 |
|
September 30,
2023 |
| Net income per common share(1) |
|
|
|
|
|
|
|
|
| Basic |
|
$ |
0.77 |
|
|
$ |
0.73 |
|
|
$ |
2.38 |
|
|
$ |
2.19 |
|
| Diluted |
|
$ |
0.76 |
|
|
$ |
0.73 |
|
|
$ |
2.37 |
|
|
$ |
2.18 |
|
| Average shares outstanding |
|
|
|
|
|
|
|
|
| Basic |
|
|
16,931,793 |
|
|
|
16,883,028 |
|
|
|
16,891,619 |
|
|
|
16,532,335 |
|
| Diluted |
|
|
17,027,824 |
|
|
|
16,904,098 |
|
|
|
16,938,328 |
|
|
|
16,553,319 |
|
| Book value per share at end of period |
|
$ |
30.83 |
|
|
$ |
30.03 |
|
|
$ |
30.83 |
|
|
$ |
27.87 |
|
| Tangible book value per share at end of period(2) |
|
$ |
28.57 |
|
|
$ |
27.73 |
|
|
$ |
28.57 |
|
|
$ |
25.47 |
|
| Cash dividends declared per common share |
|
$ |
0.11 |
|
|
$ |
0.11 |
|
|
$ |
0.33 |
|
|
$ |
0.30 |
|
| Total shares outstanding at end of period |
|
|
17,514,922 |
|
|
|
17,437,326 |
|
|
|
17,514,922 |
|
|
|
17,380,307 |
|
(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 |
|
Nine Months Ended |
| |
September 30,
2024 |
|
June 30,
2024 |
|
September 30,
2024 |
|
September 30,
2023 |
| Performance ratios(1) |
|
|
|
|
|
| Return on assets (ratio of net income to average total assets) |
1.17 |
% |
|
1.13 |
% |
|
1.22 |
% |
|
1.15 |
% |
| Return on equity (ratio of net income to average equity) |
9.76 |
|
|
9.58 |
|
|
10.39 |
|
|
10.56 |
|
| Yield on earning assets |
6.34 |
|
|
6.32 |
|
|
6.28 |
|
|
5.77 |
|
| Rate paid on interest-bearing liabilities |
3.12 |
|
|
3.04 |
|
|
3.02 |
|
|
2.06 |
|
| Average interest rate spread |
3.22 |
|
|
3.28 |
|
|
3.26 |
|
|
3.71 |
|
| Net interest margin(2) |
4.00 |
|
|
4.08 |
|
|
4.03 |
|
|
4.29 |
|
| Average interest-earning assets to average interest-bearing liabilities |
133.71 |
|
|
135.38 |
|
|
134.53 |
|
|
138.63 |
|
| Noninterest expense to average total assets |
2.73 |
|
|
2.74 |
|
|
2.73 |
|
|
2.94 |
|
| Efficiency ratio |
60.74 |
|
|
60.08 |
|
|
60.17 |
|
|
61.66 |
|
| Efficiency ratio – adjusted(3) |
60.30 |
|
|
59.66 |
|
|
60.19 |
|
|
58.98 |
|
(1) Ratios are annualized where appropriate.
(2) Net interest income divided by average interest-earning assets.
(3) See Non-GAAP reconciliations below for adjustments.
| |
At or For the Three Months Ended |
| |
September 30,
2024 |
|
June 30,
2024 |
|
March 31,
2024 |
|
December 31,
2023 |
|
September 30,
2023 |
| Asset quality ratios |
|
|
|
|
|
|
|
|
|
| Nonperforming assets to total assets(1) |
0.64 |
% |
|
0.54 |
% |
|
0.43 |
% |
|
0.41 |
% |
|
0.25 |
% |
| Nonperforming loans to total loans(1) |
0.78 |
|
|
0.68 |
|
|
0.55 |
|
|
0.53 |
|
|
0.32 |
|
| Total classified assets to total assets |
0.99 |
|
|
0.91 |
|
|
0.80 |
|
|
0.90 |
|
|
0.76 |
|
| Allowance for credit losses to nonperforming loans(1) |
166.51 |
|
|
194.80 |
|
|
235.18 |
|
|
251.60 |
|
|
400.41 |
|
| Allowance for credit losses to total loans |
1.30 |
|
|
1.33 |
|
|
1.30 |
|
|
1.34 |
|
|
1.30 |
|
| Net charge-offs to average loans (annualized) |
0.42 |
|
|
0.27 |
|
|
0.24 |
|
|
0.29 |
|
|
0.27 |
|
| Capital ratios |
|
|
|
|
|
|
|
|
|
| Equity to total assets at end of period |
11.64 |
% |
|
11.21 |
% |
|
10.96 |
% |
|
10.70 |
% |
|
10.41 |
% |
| Tangible equity to total tangible assets(2) |
10.88 |
|
|
10.44 |
|
|
10.18 |
|
|
9.91 |
|
|
9.60 |
|
| Average equity to average assets |
12.02 |
|
|
11.78 |
|
|
11.51 |
|
|
11.03 |
|
|
10.84 |
|
(1) Nonperforming assets include nonaccruing loans and repossessed assets. There were no accruing loans more than 90 days past due at the dates indicated. At September 30, 2024, $8.7 million, or 30.4%, of nonaccruing loans were current on their loan payments as of that date.
(2) See Non-GAAP reconciliations below for adjustments.
Loans
| (Dollars in thousands) |
September 30,
2024 |
|
June 30,
2024 |
|
March 31,
2024 |
|
December 31,
2023 |
|
September 30,
2023 |
| Commercial real estate loans |
|
|
|
|
|
|
|
|
|
| Construction and land development |
$ |
300,905 |
|
|
$ |
316,050 |
|
|
$ |
304,727 |
|
|
$ |
305,269 |
|
|
$ |
352,143 |
|
| Commercial real estate – owner occupied |
|
544,689 |
|
|
|
545,631 |
|
|
|
532,547 |
|
|
|
536,545 |
|
|
|
526,534 |
|
| Commercial real estate – non-owner occupied |
|
881,340 |
|
|
|
892,653 |
|
|
|
881,143 |
|
|
|
875,694 |
|
|
|
880,348 |
|
| Multifamily |
|
114,155 |
|
|
|
92,292 |
|
|
|
89,692 |
|
|
|
88,623 |
|
|
|
83,430 |
|
| Total commercial real estate loans |
|
1,841,089 |
|
|
|
1,846,626 |
|
|
|
1,808,109 |
|
|
|
1,806,131 |
|
|
|
1,842,455 |
|
| Commercial loans |
|
|
|
|
|
|
|
|
|
| Commercial and industrial |
|
286,809 |
|
|
|
266,136 |
|
|
|
243,732 |
|
|
|
237,255 |
|
|
|
237,366 |
|
| Equipment finance |
|
443,033 |
|
|
|
461,010 |
|
|
|
462,649 |
|
|
|
465,573 |
|
|
|
470,387 |
|
| Municipal leases |
|
158,560 |
|
|
|
152,509 |
|
|
|
151,894 |
|
|
|
150,292 |
|
|
|
147,821 |
|
| Total commercial loans |
|
888,402 |
|
|
|
879,655 |
|
|
|
858,275 |
|
|
|
853,120 |
|
|
|
855,574 |
|
| Residential real estate loans |
|
|
|
|
|
|
|
|
|
| Construction and land development |
|
63,016 |
|
|
|
70,679 |
|
|
|
85,840 |
|
|
|
96,646 |
|
|
|
103,381 |
|
| One-to-four family |
|
627,845 |
|
|
|
621,196 |
|
|
|
605,570 |
|
|
|
584,405 |
|
|
|
560,399 |
|
| HELOCs |
|
194,909 |
|
|
|
188,465 |
|
|
|
184,274 |
|
|
|
185,878 |
|
|
|
185,289 |
|
| Total residential real estate loans |
|
885,770 |
|
|
|
880,340 |
|
|
|
875,684 |
|
|
|
866,929 |
|
|
|
849,069 |
|
| Consumer loans |
|
83,631 |
|
|
|
94,833 |
|
|
|
106,084 |
|
|
|
113,842 |
|
|
|
112,816 |
|
| Total loans, net of deferred loan fees and costs |
|
3,698,892 |
|
|
|
3,701,454 |
|
|
|
3,648,152 |
|
|
|
3,640,022 |
|
|
|
3,659,914 |
|
| Allowance for credit losses – loans |
|
(48,131 |
) |
|
|
(49,223 |
) |
|
|
(47,502 |
) |
|
|
(48,641 |
) |
|
|
(47,417 |
) |
| Loans, net |
$ |
3,650,761 |
|
|
$ |
3,652,231 |
|
|
$ |
3,600,650 |
|
|
$ |
3,591,381 |
|
|
$ |
3,612,497 |
|
Deposits
| (Dollars in thousands) |
September 30,
2024 |
|
June 30,
2024 |
|
March 31,
2024 |
|
December 31,
2023 |
|
September 30,
2023 |
| Core deposits |
|
|
|
|
|
|
|
|
|
| Noninterest-bearing accounts |
$ |
684,501 |
|
|
$ |
683,346 |
|
|
$ |
773,901 |
|
|
$ |
784,950 |
|
|
$ |
827,362 |
|
| NOW accounts |
|
534,517 |
|
|
|
561,789 |
|
|
|
600,561 |
|
|
|
591,270 |
|
|
|
602,804 |
|
| Money market accounts |
|
1,345,289 |
|
|
|
1,311,940 |
|
|
|
1,308,467 |
|
|
|
1,246,807 |
|
|
|
1,195,482 |
|
| Savings accounts |
|
179,762 |
|
|
|
185,499 |
|
|
|
191,302 |
|
|
|
194,486 |
|
|
|
202,971 |
|
| Total core deposits |
|
2,744,069 |
|
|
|
2,742,574 |
|
|
|
2,874,231 |
|
|
|
2,817,513 |
|
|
|
2,828,619 |
|
| Certificates of deposit |
|
1,017,519 |
|
|
|
965,205 |
|
|
|
925,576 |
|
|
|
843,860 |
|
|
|
812,342 |
|
| Total |
$ |
3,761,588 |
|
|
$ |
3,707,779 |
|
|
$ |
3,799,807 |
|
|
$ |
3,661,373 |
|
|
$ |
3,640,961 |
|
Non-GAAP Reconciliations
In addition to results presented in accordance with generally accepted accounting principles utilized in the United States (“GAAP”), this earnings release contains certain non-GAAP financial measures, which include: the efficiency ratio, tangible book value, tangible book value per share and the tangible equity to tangible assets ratio. The Company believes these non-GAAP financial measures and ratios as presented are useful for both investors and management to understand the effects of certain items and provide an alternative view of its performance over time and in comparison to its competitors. These non-GAAP measures have inherent limitations, are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for total stockholders’ equity or operating results determined in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.
Set forth below is a reconciliation to GAAP of the Company’s efficiency ratio:
| |
|
Three Months Ended |
|
Nine Months Ended |
| (Dollars in thousands) |
|
September 30,
2024 |
|
June 30,
2024 |
|
September 30,
2024 |
|
September 30,
2023 |
| Noninterest expense |
|
$ |
30,585 |
|
|
$ |
30,210 |
|
|
$ |
90,659 |
|
|
$ |
93,308 |
|
| Less: merger expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,741 |
|
| Noninterest expense – adjusted |
|
$ |
30,585 |
|
|
$ |
30,210 |
|
|
$ |
90,659 |
|
|
$ |
88,567 |
|
| |
|
|
|
|
|
|
|
|
| Net interest income |
|
$ |
42,074 |
|
|
$ |
42,166 |
|
|
$ |
125,470 |
|
|
$ |
127,510 |
|
| Plus: tax-equivalent adjustment |
|
|
368 |
|
|
|
354 |
|
|
|
1,072 |
|
|
|
903 |
|
| Plus: noninterest income |
|
|
8,282 |
|
|
|
8,113 |
|
|
|
25,206 |
|
|
|
23,825 |
|
| Less: BOLI death benefit proceeds in excess of cash surrender value |
|
|
— |
|
|
|
— |
|
|
|
1,143 |
|
|
|
1,092 |
|
| Less: loss (gain) on sale of premises and equipment |
|
|
— |
|
|
|
— |
|
|
|
(9 |
) |
|
|
982 |
|
| Net interest income plus noninterest income – adjusted |
|
$ |
50,724 |
|
|
$ |
50,633 |
|
|
$ |
150,614 |
|
|
$ |
150,164 |
|
| Efficiency ratio |
|
60.74 |
% |
|
60.08 |
% |
|
60.17 |
% |
|
61.66 |
% |
| Efficiency ratio – adjusted |
|
60.30 |
% |
|
59.66 |
% |
|
60.19 |
% |
|
58.98 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
Set forth below is a reconciliation to GAAP of tangible book value and tangible book value per share:
| |
|
As of |
| (Dollars in thousands, except per share data) |
|
September 30,
2024 |
|
June 30,
2024 |
|
March 31,
2024 |
|
December 31,
2023 |
|
September 30,
2023 |
| Total stockholders’ equity |
|
$ |
540,004 |
|
|
$ |
523,628 |
|
|
$ |
513,173 |
|
|
$ |
499,893 |
|
|
$ |
484,411 |
|
| Less: goodwill, core deposit intangibles, net of taxes |
|
|
39,626 |
|
|
|
40,063 |
|
|
|
40,500 |
|
|
|
41,086 |
|
|
|
41,748 |
|
| Tangible book value |
|
$ |
500,378 |
|
|
$ |
483,565 |
|
|
$ |
472,673 |
|
|
$ |
458,807 |
|
|
$ |
442,663 |
|
| Common shares outstanding |
|
|
17,514,922 |
|
|
|
17,437,326 |
|
|
|
17,444,787 |
|
|
|
17,387,069 |
|
|
|
17,380,307 |
|
| Book value per share |
|
$ |
30.83 |
|
|
$ |
30.03 |
|
|
$ |
29.42 |
|
|
$ |
28.75 |
|
|
$ |
27.87 |
|
| Tangible book value per share |
|
$ |
28.57 |
|
|
$ |
27.73 |
|
|
$ |
27.10 |
|
|
$ |
26.39 |
|
|
$ |
25.47 |
|
Set forth below is a reconciliation to GAAP of tangible equity to tangible assets:
| |
|
As of |
| (Dollars in thousands) |
|
September 30,
2024 |
|
June 30,
2024 |
|
March 31,
2024 |
|
December 31,
2023 |
|
September 30,
2023 |
| Tangible equity(1) |
|
$ |
500,378 |
|
|
$ |
483,565 |
|
|
$ |
472,673 |
|
|
$ |
458,807 |
|
|
$ |
442,663 |
|
| Total assets |
|
|
4,637,293 |
|
|
|
4,670,864 |
|
|
|
4,684,011 |
|
|
|
4,672,633 |
|
|
|
4,651,997 |
|
| Less: goodwill, core deposit intangibles, net of taxes |
|
|
39,626 |
|
|
|
40,063 |
|
|
|
40,500 |
|
|
|
41,086 |
|
|
|
41,748 |
|
| Total tangible assets |
|
$ |
4,597,667 |
|
|
$ |
4,630,801 |
|
|
$ |
4,643,511 |
|
|
$ |
4,631,547 |
|
|
$ |
4,610,249 |
|
| Tangible equity to tangible assets |
|
10.88 |
% |
|
10.44 |
% |
|
10.18 |
% |
|
9.91 |
% |
|
9.60 |
% |
(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.
The MIL Network –