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HomeTrust Bancshares, Inc. Reports Financial Results For The First Quarter Of Fiscal 2019

Company Release - 10/29/2018 9:00 AM ET

ASHEVILLE, N.C., Oct. 29, 2018 (GLOBE NEWSWIRE) -- HomeTrust Bancshares, Inc. (NASDAQ: HTBI) ("Company"), the holding company of HomeTrust Bank ("Bank"), today announced preliminary net income of $7.8 million for the quarter ended September 30, 2018, a $2.2 million, or 39.9% increase over net income of $5.6 million for the same period a year ago. The Company's diluted earnings per share increased $0.11, or 36.7% to $0.41 for the three months ended September 30, 2018 compared to $0.30 for the same period in fiscal 2018.

In addition to the almost 40% increase in earnings, highlights for the quarter ended September 30, 2018 compared to the corresponding quarter in the previous year include:

  • Return on assets increased to 0.94%, or 34.3% from 0.70%;
  • Net interest income increased $1.6 million, or 6.4% to $26.3 million from $24.7 million;
  • Noninterest income increased $1.4 million, or 31.7% to $5.6 million from $4.3 million;
  • Organic net loan growth, which excludes purchases of home equity lines of credit, was $76.8 million, or 13.0% annualized compared to $43.2 million, or 7.9% annualized for the same quarter last year; and
  • Resuming our stock buyback program with the repurchase of 128,300 shares of common stock at an average share price of $29.03.

"Record net income for the first quarter of fiscal 2019 reflects our continued momentum and the impact of our new lines of business. The gain on sale of SBA loans produced $898,000 of fee income and equipment finance originated almost $33 million in loans for the quarter," said Dana Stonestreet, Chairman, President, and Chief Executive Officer. “The cumulative impact of all that our team has accomplished, coupled with the addition of high performing revenue producers in our attractive markets, continues our inflection point for growth in revenue, earnings and shareholder value."

Income Statement Review

Net interest income increased to $26.3 million for the quarter ended September 30, 2018 compared to $24.7 million for the comparative quarter in fiscal 2018. The $1.6 million or 6.4% increase was primarily due to a $4.3 million increase in interest and dividend income driven by an increase in average interest-earning assets, which was partially offset by a $2.7 million increase in interest expense. Average interest-earning assets increased $156.9 million, or 5.4% to $3.1 billion for the quarter ended September 30, 2018 compared to $2.9 billion for the corresponding quarter in fiscal 2018. For the quarter ended September 30, 2018, the average balance of total loans receivable increased $196.4 million, or 8.3% primarily due to organic loan growth. The average balance of other interest-earning assets increased $62.8 million, or 30.1% primarily due to increases in commercial paper investments. These increases were mainly funded by the cumulative decrease of $102.3 million, or 29.3% in average interest-earning deposits in other banks and investment securities, and an increase in average interest-bearing liabilities of $102.8 million, or 4.3% as compared to the same quarter last year. Net interest margin (on a fully taxable-equivalent basis) for the three months ended September 30, 2018 increased slightly to 3.45% from 3.44% for the same period a year ago.

Total interest and dividend income increased $4.3 million, or 15.2% for the three months ended September 30, 2018 as compared to the same period last year, which was primarily driven by a $3.5 million, or 13.8% increase in loan interest income and a $688,000, or 58.9% increase in interest income from certificates of deposit and other interest-bearing deposits including commercial paper. The additional loan interest income was driven by the increase in the average balance of loans receivable and loan yields compared to the prior year quarter. Average loan yields increased 17 basis points to 4.54% for the quarter ended September 30, 2018 from 4.37% in the corresponding quarter from last year primarily due to the impact of the recent increases in the targeted federal funds rate. Partially offsetting the increase in loan interest income was a $404,000, or 52.1% decrease in the accretion of purchase discounts on acquired loans as a result of reduced prepayments as compared to the same quarter last year. For the quarters ended September 30, 2018 and 2017, the average loan yields included six and 13 basis points, respectively, from the accretion of purchase discounts on acquired loans.

Total interest expense increased $2.7 million, or 81.2% for the quarter ended September 30, 2018 compared to the same period last year. The increase was driven by a $1.4 million, or 104.3% increase in deposit interest expense and a $1.3 million, or 65.5% increase in interest expense on borrowings. The additional deposit interest expense  was a result of our focus on increasing  deposits as the average balance of deposits increased $125.1 million along with a 28 basis point increase in the average cost of deposits for the quarter ended September 30, 2018 compared to the same quarter last year. The decrease in average borrowings was more than offset by the 84 basis point increase in the average cost of borrowings during the three months ended September 30, 2018 as compared to the same period last year, which drove the increase in interest expense. The overall average cost of funds increased 40 basis points to 0.95% for the current quarter as compared to the same quarter last year due primarily to the impact of the previously mentioned interest rate increases on our borrowings.

Noninterest income increased $1.4 million, or 31.7% to $5.6 million for the three months ended September 30, 2018 from $4.3 million for the same period in the previous year. The leading factors of the increase included a $557,000, or 30.2% increase in service charges on deposit accounts as a result of an increase in deposit accounts and related fees; an $896,000, or 81.3% increase in loan income and fees driven by an $883,000 increase in fees from the originations and sales of the guaranteed portion of U.S Small Business Administration (“SBA”) commercial loans; and an $88,000, or 14.9% increase in other noninterest income. Partially offsetting these increases was a $164,000 decline in gains from the sale of premises and equipment for the three months ended September 30, 2018 compared to the same period last year as there were no sales occurring during the current quarter.

Noninterest expense for the three months ended September 30, 2018 increased $997,000, or 4.8% to $21.9 million compared to $20.9 million for the three months ended September 30, 2017. The increase was primarily due to a $333,000, or 2.7% increase in salaries and employee benefits; a $304,000, or 19.7% increase in computer services; a $319,000, or 14.0% increase in other expenses, and a $259,000 increase in real estate owned ("REO") related expenses for the quarter ended September 30, 2018 compared to the quarter ended September 30, 2017. Partially offsetting these increases was the cumulative decrease of $192,000 or 5.5% in net occupancy expense; marketing and advertising; and core deposit amortization for the three months ended September 30, 2018 compared to the same period last year. Deposit insurance premiums decreased $110,000, or 26.6% due to reduced premiums as a result of higher levels of capital and lower nonaccrual loans. For the three months ended September 30, 2018, there was a $179,000 loss on REO sales compared to a $146,000 gain in the corresponding quarter last year offsetting the $66,000 decrease in REO expenses as a result of fewer REO properties held.

For the three months ended September 30, 2018, the Company's income tax expense declined to $2.2 million compared to $2.5 million for the three months ended September 30, 2017 despite the increase in pretax income. The Company’s federal income tax provision for the three months ended September 30, 2018 benefited from the impact of the Tax Cuts and Jobs Act enacted in December 2017 that lowered the corporate income tax rate from 34% to 21%.

Balance Sheet Review

Total assets increased $49.8 million, or 1.5% to $3.4 billion at September 30, 2018 from $3.3 billion at June 30, 2018. Total liabilities remained level at $2.9 billion at both September 30, 2018 and June 30, 2018. Deposit growth of $6.8 million, or 0.3%; a $40.0 million, or 6.3% increase in borrowings; and the cumulative decrease of $26.8 million, or 9.2% in cash and cash equivalents, certificates of deposit in other banks and investment securities were used to partially fund the $61.3 million, or 2.4% increase in total loans receivable, net of deferred loan fees and the $9.2 million, or 4.0% increase in commercial paper during the first three months of fiscal 2019. The increase in net loans receivable was driven by $76.8 million, or 13.0% annualized rate of organic loan growth partially offset by loan repayments. The $44.9 million, or 30.2% increase in commercial and industrial loans was driven by our new equipment finance line of business. The $4.9 million, or 83.4% increase in loans held for sale was due primarily to SBA loans originated during the period.

Stockholders' equity at September 30, 2018 increased $4.9 million, or 1.2% to $414.2 million from $409.2 million at June 30, 2018. The increase was due to $7.8 million in net income and $768,000 in stock-based compensation, partially offset by 128,300 shares of common stock repurchased at an average cost of $29.03, or approximately $3.7 million in total and a $291,000 decrease in other comprehensive income representing unrealized losses on investment securities, net of tax. As of September 30, 2018, HomeTrust Bank was considered "well capitalized" in accordance with its regulatory capital guidelines and exceeded all regulatory capital requirements with Common Equity Tier 1, Tier 1 Risk-Based, Total Risk-Based, and Tier 1 Leverage capital ratios of 11.72%, 11.72%, 12.44%, and 10.52%, respectively.  In addition, the Company exceeded all regulatory capital requirements as of that date.

Asset Quality

The allowance for loan losses was $20.9 million, or 0.81% of total loans, at September 30, 2018 compared to $21.1 million, or 0.83% of total loans, at June 30, 2018. The allowance for loan losses to total gross loans excluding acquired loans was 0.88% at September 30, 2018, compared to 0.91% at June 30, 2018.

There was no provision for losses on loans for the three months ended September 30, 2018 and 2017 reflecting the decline in nonaccruing and classified loans offset by loan growth. Net loan charge-offs totaled $128,000 for the three months ended September 30, 2018, compared to net loan recoveries of $846,000 for the same period in fiscal 2018. Net charge-offs as a percentage of average loans increased to 0.02% for the three months ended September 30, 2018 from net recoveries of (0.14)% for the same period last year.

Nonperforming assets decreased $1.2 million, or 8.2% to $13.4 million, or 0.40% of total assets, at September 30, 2018 compared to $14.6 million, or 0.44% of total assets at June 30, 2018. Nonperforming assets included $10.1 million in nonaccruing loans and $3.3 million in REO at September 30, 2018, compared to $10.9 million and $3.7 million, in nonaccruing loans and REO, respectively, at June 30, 2018. Included in nonperforming loans are $4.0 million of loans restructured from their original terms of which $2.3 million were current at September 30, 2018, with respect to their modified payment terms. At September 30, 2018, $5.5 million, or 54.4% of nonaccruing loans were current on their required loan payments. Purchased impaired loans aggregating $2.9 million obtained through prior acquisitions are excluded from nonaccruing loans due to the accretion of discounts established in accordance with the acquisition method of accounting for business combinations. Nonperforming loans to total loans was 0.39% at September 30, 2018 compared to 0.43% at June 30, 2018.

The ratio of classified assets to total assets decreased to 0.93% at September 30, 2018 from 1.00% at June 30, 2018. Classified assets decreased 6.1% to $31.0 million at September 30, 2018 compared to $33.1 million at June 30, 2018. Our overall asset quality metrics continue to demonstrate our commitment to growing and maintaining a loan portfolio with a moderate risk profile.

About HomeTrust Bancshares, Inc.

HomeTrust Bancshares, Inc. is the holding company for HomeTrust Bank. As of September 30, 2018, the Company had assets of $3.4 billion. The Bank, founded in 1926, is a North Carolina state chartered, community-focused financial institution committed to providing value added relationship banking through 43 locations as well as online/mobile channels. Locations include: North Carolina (including the Asheville metropolitan area, the "Piedmont" region, Charlotte, and Raleigh/Cary), Upstate South Carolina (Greenville), East Tennessee (including Kingsport/Johnson City/Bristol, Knoxville, and Morristown) and Southwest Virginia (including the Roanoke Valley). The Bank is the 2nd largest community bank headquartered in North Carolina.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements often include words such as "believe," "expect," "anticipate," "estimate," and "intend" or future or conditional verbs such as "will," "would," "should," "could," or "may." Forward-looking statements are not historical facts but instead represent management's current expectations and forecasts regarding future events, many of which are inherently uncertain and outside of our control. Actual results may differ, possibly materially, from those currently expected or projected in these forward-looking statements. Factors that could cause our actual results to differ materially from those described in the forward-looking statements, include expected cost savings, synergies and other financial benefits from our acquisitions  might not be realized within the expected time frames or at all, and costs or difficulties relating to integration matters might be greater than expected; increased competitive pressures; changes in the interest rate environment; changes in general economic conditions and conditions within the securities markets; legislative and regulatory changes; and other factors described in HomeTrust's latest annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other documents filed with or furnished to the Securities and Exchange Commission - which are available on our website at www.htb.com and on the SEC's website at www.sec.gov. Any of the forward-looking statements that we make in this press release or the documents we file with or furnish to the SEC are based upon management's beliefs and assumptions at the time they are made and may turn out to be wrong because of inaccurate assumptions we might make, because of the factors described above or because of other factors that we cannot foresee. We do not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These risks could cause our actual results for fiscal 2019 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, us and could negatively affect our operating and stock performance.

WEBSITE: WWW.HOMETRUSTBANCSHARES.COM

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

Consolidated Balance Sheets (Unaudited)

(Dollars in thousands)September 30,
2018
 June 30,
2018(2)
 March 31, 
2018
 December 31, 
2017
 September 30,
2017
Assets         
Cash$39,872  $45,222  $38,100  $46,743  $38,162 
Interest-bearing deposits18,896  25,524  41,296  51,922  40,809 
Cash and cash equivalents58,768  70,746  79,396  98,665  78,971 
Commercial paper238,224  229,070  239,435  199,722  199,774 
Certificates of deposit in other banks58,384  66,937  84,218  100,349  110,454 
Securities available for sale, at fair value148,704  154,993  160,971  167,669  182,053 
Other investments, at cost43,996  41,931  41,405  43,319  42,307 
Loans held for sale10,773  5,873  6,071  7,072  7,793 
Total loans, net of deferred loan fees2,587,106  2,525,852  2,445,755  2,418,014  2,394,755 
Allowance for loan losses(20,932) (21,060) (21,472) (21,090) (21,997)
Net loans2,566,174  2,504,792  2,424,283  2,396,924  2,372,758 
Premises and equipment, net62,681  62,537  62,725  62,435  62,614 
Accrued interest receivable10,252  9,344  9,216  9,371  9,340 
Real estate owned ("REO")3,286  3,684  5,053  4,818  5,941 
Deferred income taxes30,942  32,565  34,311  36,526  55,653 
Bank owned life insurance ("BOLI")88,581  88,028  87,532  86,984  86,561 
Goodwill25,638  25,638  25,638  25,638  25,938 
Core deposit intangibles3,963  4,528  5,131  5,773  6,454 
Other assets3,593  3,503  5,478  5,323  3,687 
Total Assets$3,353,959  $3,304,169  $3,270,863  $3,250,588  $3,249,998 
Liabilities and Stockholders' Equity         
Liabilities         
Deposits$2,203,044  $2,196,253  $2,180,324  $2,108,208  $2,100,310 
Borrowings675,000  635,000  625,000  685,000  679,800 
Capital lease obligations1,905  1,914  1,920  1,925  1,931 
Other liabilities59,815  61,760  62,066  60,094  62,458 
Total liabilities2,939,764  2,894,927  2,869,310  2,855,227  2,844,499 
Stockholders' Equity         
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued or outstanding         
Common stock, $0.01 par value, 60,000,000 shares authorized (1)190  191  190  190  190 
Additional paid in capital214,803  217,480  216,712  215,928  214,827 
Retained earnings208,365  200,575  193,368  187,241  197,907 
Unearned Employee Stock Ownership Plan ("ESOP") shares(7,274) (7,406) (7,538) (7,670) (7,803)
Accumulated other comprehensive income (loss)(1,889) (1,598) (1,179) (328) 378 
Total stockholders' equity414,195  409,242  401,553  395,361  405,499 
Total Liabilities and Stockholders' Equity$3,353,959  $3,304,169  $3,270,863  $3,250,588  $3,249,998 

_________________________________

  1. Shares of common stock issued and outstanding were 18,939,280 at September 30, 2018; 19,041,668 at June 30, 2018; 19,034,868 at March 31, 2018; 18,967,175 at December 31, 2017; and 18,968,675 at September 30, 2017.
  2. Derived from audited financial statements.


Consolidated Statement of Income (Unaudited)

 Three Months Ended
 September 30, June 30, September 30,
(Dollars in thousands)2018 2018 2017
Interest and Dividend Income     
Loans$28,728  $27,337  $25,250 
Securities available for sale856  877  971 
Certificates of deposit and other interest-bearing deposits1,857  1,969  1,169 
Other investments839  510  626 
Total interest and dividend income32,280  30,693  28,016 
Interest Expense     
Deposits2,750  2,249  1,346 
Borrowings3,258  2,854  1,969 
Total interest expense6,008  5,103  3,315 
Net Interest Income26,272  25,590  24,701 
Provision for Loan Losses     
Net Interest Income after Provision for Loan Losses26,272  25,590  24,701 
Noninterest Income     
Service charges and fees on deposit accounts2,401  2,208  1,844 
Loan income and fees1,998  1,579  1,102 
BOLI income536  501  562 
Gain from sale of premises and equipment    164 
Other, net678  926  590 
Total noninterest income5,613  5,214  4,262 
Noninterest Expense     
Salaries and employee benefits12,685  11,918  12,352 
Net occupancy expense2,347  2,478  2,349 
Marketing and advertising417  372  453 
Telephone, postage, and supplies769  777  685 
Deposit insurance premiums304  373  414 
Computer services1,849  1,700  1,545 
Loss (gain) on sale and impairment of REO179  (25) (146)
REO expense175  308  241 
Core deposit intangible amortization565  603  719 
Other2,593  3,082  2,274 
Total noninterest expense21,883  21,586  20,886 
Income Before Income Taxes10,002  9,218  8,077 
Income Tax Expense2,212  2,011  2,510 
Net Income$7,790  $7,207  $5,567 
            


Per Share Data

 Three months ended
 September 30, June 30, September 30,
 2018 2018 2017
Net income per common share:(1)     
Basic$0.43  $0.40  $0.31 
Diluted$0.41  $0.38  $0.30 
Adjusted net income per common share:(2)     
Basic$0.43  $0.38  $0.31 
Diluted$0.41  $0.36  $0.30 
      
Average shares outstanding:     
Basic18,125,637  18,121,690  17,966,994 
Diluted18,880,476  18,847,279  18,616,452 
Book value per share at end of period$21.87  $21.49  $21.38 
Tangible book value per share at end of period (2)$20.35  $19.96  $19.81 
Total shares outstanding at end of period18,939,280  19,041,668  18,968,675 

__________________________________________________

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


Selected Financial Ratios and Other Data

  Three Months Ended
  September 30, June 30, September 30,
  2018 2018 2017
Performance ratios: (1)      
Return on assets (ratio of net income to average total assets) 0.94% 0.88% 0.70%
Return on assets - adjusted(2) 0.94  0.83  0.70 
Return on equity (ratio of net income to average equity) 7.55  7.12  5.55 
Return on equity - adjusted(2) 7.55  6.75  5.58 
Tax equivalent yield on earning assets(3) 4.23  4.10  3.90 
Rate paid on interest-bearing liabilities 0.95  0.82  0.54 
Tax equivalent average interest rate spread (3) 3.28  3.28  3.36 
Tax equivalent net interest margin(3) (4) 3.45  3.43  3.44 
Average interest-earning assets to average interest-bearing liabilities 121.97  121.27  120.67 
Operating expense to average total assets 2.64  2.62  2.61 
Efficiency ratio 68.63  70.08  72.11 
Efficiency ratio - adjusted (2) 68.03  69.20  71.17 

_____________________________

  1. Ratios are annualized where appropriate.
  2. See Non-GAAP reconciliation tables below for adjustments.
  3. For the three months ended September 30, 2018, June 30, 2018, and September 30, 2017, the weighted average rate for municipal leases is adjusted for a 24%, 30%, and 37% combined federal and state tax rate, respectively since the interest from these leases is tax exempt.
  4. Net interest income divided by average interest-earning assets.
  
  
 At or For the Three Months Ended
 September 30, June 30, March 31, December 31, September 30,
 2018 2018 2018 2017 2017
Asset quality ratios:         
Nonperforming assets to total assets(1)0.40% 0.44% 0.54% 0.59% 0.62%
Nonperforming loans to total loans(1)0.39  0.43  0.52  0.59  0.59 
Total classified assets to total assets0.93  1.00  1.29  1.39  1.50 
Allowance for loan losses to nonperforming loans(1)207.06  192.96  169.71  146.79  156.17 
Allowance for loan losses to total loans0.81  0.83  0.88  0.87  0.92 
Allowance for loan losses to total gross loans excluding acquired loans(2)0.88  0.91  0.97  0.97  1.01 
Net charge-offs (recoveries) to average loans (annualized)0.02  0.07  (0.06) 0.15  (0.14)
Capital ratios:         
Equity to total assets at end of period12.35% 12.39% 12.28% 12.16% 12.48%
Tangible equity to total tangible assets(2)11.59  11.61  11.48  11.34  11.67 
Average equity to average assets12.43  12.31  12.30  12.49  12.55 

__________________________________________

  1. Nonperforming assets include nonaccruing loans, consisting of certain restructured loans, and REO. There were no accruing loans more than 90 days past due at the dates indicated. At September 30, 2018, there were $4.0 million of restructured loans included in nonaccruing loans and $5.5 million, or 54.4% of nonaccruing loans were current on their loan payments. Purchased impaired loans acquired through bank acquisitions are excluded from nonaccruing loans due to the accretion of discounts in accordance with the acquisition method of accounting for business combinations.
  2. See Non-GAAP reconciliation tables below for adjustments.


Average Balance Sheet Data

 For the Three Months Ended September 30,
 2018 2017
 Average
Balance
Outstanding
 Interest
Earned/
Paid(2)
 Yield/
Rate(2)
 Average
Balance
Outstanding
 Interest
Earned/
Paid(2)
 Yield/
Rate(2)
(Dollars in thousands) 
Assets:           
Interest-earning assets:           
Loans receivable(1)$2,557,970  $29,010  4.54% $2,361,522  $25,798  4.37%
Deposits in other banks92,514  415  1.80% 159,152  536  1.35%
Investment securities154,249  856  2.22% 189,920  972  2.05%
Other interest-earning assets(3)271,223  2,280  3.36% 208,422  1,138  2.18%
Total interest-earning assets3,075,956  32,561  4.23% 2,919,016  28,444  3.90%
Other assets245,855      278,869     
Total assets3,321,811      3,197,885     
Liabilities and equity:           
Interest-bearing deposits:           
Interest-bearing checking accounts459,895  270  0.23% 462,928  216  0.19%
Money market accounts677,329  957  0.57% 605,261  477  0.31%
Savings accounts208,289  68  0.13% 232,940  78  0.13%
Certificate accounts530,507  1,455  1.10% 449,839  575  0.51%
Total interest-bearing deposits1,876,020  2,750  0.59% 1,750,968  1,346  0.31%
Borrowings645,859  3,258  2.02% 668,091  1,969  1.18%
Total interest-bearing liabilities2,521,879  6,008  0.95% 2,419,059  3,315  0.55%
Noninterest-bearing deposits323,781      310,596     
Other liabilities63,282      66,808     
Total liabilities2,908,943      2,796,463     
Stockholders' equity412,868      401,422     
Total liabilities and stockholders' equity$3,321,811      $3,197,885     
            
Net earning assets$554,077      $499,957     
Average interest-earning assets to           
average interest-bearing liabilities121.97%     120.67%    
Tax-equivalent:           
Net interest income  $26,553      $25,129   
Interest rate spread    3.28%     3.35%
Net interest margin(4)    3.45%     3.44%
Non-tax-equivalent:           
Net interest income  $26,272      $24,581   
Interest rate spread    3.25%     3.27%
Net interest margin(4)    3.42%     3.37%

__________________

  1. The average loans receivable, net balances include loans held for sale and nonaccruing loans.
  2. Interest income used in the average interest earned and yield calculation includes the tax equivalent adjustment of $281 and $548 for the three months ended September 30, 2018 and 2017, respectively, calculated based on a combined federal and state tax rate of 24% and 37%, respectively.
  3. The average other interest-earning assets consists of FRB stock, FHLB stock, Small Business Investment Company ("SBIC") investments, and commercial paper.
  4. Net interest income divided by average interest-earning assets.


Loans

(Dollars in thousands)September 30,
2018
 June 30,
2018
 March 31,
2018
 December 31,
2017
 September 30,
2017
Retail consumer loans:         
One-to-four family$656,011  $664,289  $670,036  $686,229  $684,956 
HELOCs - originated135,512  137,564  143,049  150,084  152,979 
HELOCs - purchased150,733  166,276  165,680  162,181  162,518 
Construction and land/lots75,433  65,601  68,121  60,805  54,969 
Indirect auto finance173,305  173,095  160,664  150,042  142,915 
Consumer13,139  12,379  11,317  9,699  8,814 
Total retail consumer loans1,204,133  1,219,204  1,218,867  1,219,040  1,207,151 
Commercial loans:         
Commercial real estate879,184  857,315  810,332  786,381  753,857 
Construction and development198,809  192,102  184,179  185,921  209,672 
Commercial and industrial193,739  148,823  132,337  127,709  124,722 
Municipal leases111,951  109,172  101,108  100,205  100,638 
Total commercial loans1,383,683  1,307,412  1,227,956  1,200,216  1,188,889 
Total loans2,587,816  2,526,616  2,446,823  2,419,256  2,396,040 
Deferred loan fees, net(710) (764) (1,068) (1,242) (1,285)
Total loans, net of deferred loan fees2,587,106  2,525,852  2,445,755  2,418,014  2,394,755 
Allowance for loan losses(20,932) (21,060) (21,472) (21,090) (21,997)
Loans, net$2,566,174  $2,504,792  $2,424,283  $2,396,924  $2,372,758 
                    

Deposits

(Dollars in thousands)September 30,
2018
 June 30,
2018
 March 31,
2018
 December 31,
2017
 September 30,
2017
Core deposits:         
Noninterest-bearing accounts$313,110  $317,822  $303,875  $313,493  $304,144 
NOW accounts462,694  471,364  496,934  489,668  464,992 
Money market accounts687,148  677,665  659,791  638,259  642,351 
Savings accounts203,372  213,250  220,497  224,732  230,944 
Total core deposits1,666,324  1,680,101  1,681,097  1,666,152  1,642,431 
Certificates of deposit536,720  516,152  499,227  442,056  457,879 
Total$2,203,044  $2,196,253  $2,180,324  $2,108,208  $2,100,310 
                    

Non-GAAP Reconciliations

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

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

   
  Three Months Ended
(Dollars in thousands) September 30, June 30, September 30,
  2018 2018 2017
Noninterest expense $21,883  $21,586  $20,886 
       
Net interest income $26,272  $25,590  $24,701 
Plus noninterest income 5,613  5,214  4,262 
Plus tax equivalent adjustment 281  390  548 
Less gain on sale of premises and equipment     164 
Net interest income plus noninterest income – as adjusted $32,166  $31,194  $29,347 
Efficiency ratio 68.03% 69.20% 71.17%
Efficiency ratio (without adjustments) 68.63% 70.08% 72.11%
          

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

   
  As of
(Dollars in thousands, except per share data) September 30, June 30, March 31, December 31, September 30,
  2018 2018 2018 2017 2017
Total stockholders' equity $414,195  $409,242  $401,553  $395,361  $405,499 
Less: goodwill, core deposit intangibles, net of taxes 28,690  29,125  29,589  30,083  29,704 
Tangible book value (1) $385,505  $380,117  $371,964  $365,278  $375,795 
Common shares outstanding 18,939,280  19,041,668  19,034,868  18,967,175  18,968,675 
Tangible book value per share $20.35  $19.96  $19.54  $19.26  $19.81 
Book value per share $21.87  $21.49  $21.10  $20.84  $21.38 
  1. Tangible book value is equal to total stockholders' equity less goodwill and core deposit intangibles, net of related deferred tax liabilities.


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

   
  As of
  September 30, June 30, March 31, December 31, September 30,
  2018 2018 2018 2017 2017
  (Dollars in thousands)
Tangible equity(1) $385,505  $380,117  $371,964  $365,278  $375,795 
Total assets 3,353,959  3,304,169  3,270,863  3,250,588  3,249,998 
Less: goodwill, core deposit intangibles, net of taxes 28,690  29,125  29,589  30,083  29,704 
Total tangible assets(2) $3,325,269  $3,275,044  $3,241,274  $3,220,505  $3,220,294 
Tangible equity to tangible assets 11.59% 11.61% 11.48% 11.34% 11.67%
  1. Tangible equity (or tangible book value) is equal to total stockholders' equity less goodwill and core deposit intangibles, net of related deferred tax liabilities.
  2. Total tangible assets is equal to total assets less goodwill and core deposit intangibles, net of related deferred tax liabilities.


Set forth below is a reconciliation to GAAP of net income and earnings per share (EPS) as adjusted to exclude state tax expense rate change, federal tax law rate change, and gain from sale of premises and equipment:

  Three Months Ended
(Dollars in thousands, except per share data) September 30, June 30, September 30,
  2018 2018 2017
State tax expense adjustment (1)   (275) 133 
Change in federal tax law adjustment (2)   (103)  
Gain from sale of premises and equipment     (164)
Total adjustments   (378) (31)
Tax effect     59 
Total adjustments, net of tax   (378) 28 
       
Net income (GAAP) 7,790  7,207  5,567 
       
Net income (non-GAAP) $7,790  $6,829  $5,595 
       
Per Share Data      
Average shares outstanding - basic 18,125,637  18,121,690  17,966,994 
Average shares outstanding - diluted 18,880,476  18,847,279  18,616,452 
       
Basic EPS      
EPS (GAAP) $0.43  $0.40  $0.31 
Non-GAAP adjustment   (0.02)  
EPS (non-GAAP) $0.43  $0.38  $0.31 
       
Diluted EPS      
EPS (GAAP) $0.41  $0.38  $0.30 
Non-GAAP adjustment   (0.02)  
EPS (non-GAAP) $0.41  $0.36  $0.30 
       
Average Balances      
Average assets $3,321,811  $3,289,437  $3,197,885 
Average equity 412,868  404,832  401,422 
       
ROA      
ROA (GAAP) 0.94% 0.88% 0.70%
Non-GAAP adjustment % (0.05)% %
ROA (non-GAAP) 0.94% 0.83% 0.70%
       
ROE      
ROE (GAAP) 7.55% 7.12% 5.55%
Non-GAAP adjustment % (0.37)% 0.03%
ROE (non-GAAP) 7.55% 6.75% 5.58%
  1. State tax adjustment is a result of various revaluations of state deferred tax assets.
  2. Revaluation and related adjustments of net deferred tax assets due to the Tax Cuts and Jobs Act.


Set forth below is a reconciliation to GAAP of the allowance for loan losses to total loans and the allowance for loan losses as adjusted to exclude acquired loans:

   
  As of
(Dollars in thousands) September 30, June 30, March 31, December 31, September 30,
  2018 2018 2018 2017 2017
Total gross loans receivable (GAAP) $2,587,816  $2,526,616  $2,446,823  $2,419,256  $2,396,040 
Less: acquired loans 253,695  271,801  288,847  311,508  338,933 
Adjusted loans (non-GAAP) $2,334,121  $2,254,815  $2,157,976  $2,107,748  $2,057,107 
           
Allowance for loan losses (GAAP) $20,932  $21,060  $21,472  $21,090  $21,997 
Less: allowance for loan losses on acquired loans 295  483  459  566  1,197 
Adjusted allowance for loan losses $20,637  $20,577  $21,013  $20,524  $20,800 
Adjusted allowance for loan losses / Adjusted loans (non-GAAP) 0.88% 0.91% 0.97% 0.97% 1.01%
                

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Source: HomeTrust Bancshares, Inc.