For the quarter ended
- net income was
$13.7 million compared to$9.2 million ; - diluted earnings per share ("EPS") was
$0.90 compared to$0.60 ; - annualized return on assets ("ROA") was 1.54% compared to 1.02%;
- annualized return on equity ("ROE") was 13.37% compared to 9.25%;
- net interest income was
$37.5 million compared to$34.5 million ; - provision for credit losses was
$2.2 million compared to$4.0 million ; - noninterest income was
$8.5 million compared to$7.4 million ; - net loan growth was
$117.8 million , or 16.4% annualized, compared to$98.5 million , or 14.2% annualized; and - quarterly cash dividends increased
$0.01 per share, or 11.1%, to$0.10 per share totaling$1.5 million compared to$0.09 per share totaling$1.4 million .
For the six months ended
- net income was
$22.9 million compared to$21.6 million ; - diluted EPS was
$1.50 compared to$1.33 ; - annualized ROA was 1.28% compared to 1.21%;
- annualized ROE was 11.32% compared to 10.78%;
- net interest income was
$72.1 million compared to$54.9 million ; - provision for credit losses was
$6.2 million compared to a net benefit of$4.0 million ; - noninterest income was
$15.9 million compared to$20.4 million ; - net loan growth was
$216.3 million , or 15.6% annualized, compared to a net decrease of$37.2 million , or (1.4)% annualized; and - cash dividends of
$0.19 per share totaling$2.9 million compared to$0.17 per share totaling$2.7 million .
The Company also announced today that its Board of Directors declared a quarterly cash dividend of
“This was a great quarter for HomeTrust as we continued our margin momentum and double-digit loan growth, and we are pleased with the relative resiliency of our deposit base,” said
“From a strategic standpoint, the results of the quarter reflect the transition of our operating model and balance sheet over the last several years. I’m extremely proud of all our teammates and their collective hard work that delivered these strong quarterly results.
"Lastly, for the third year in a row,
WEBSITE: WWW.HTB.COM
Comparison of Results of Operations for the Three Months Ended
Net Income. Net income totaled
Net Interest Income. The following table presents the distribution of average assets, liabilities and equity, as well as interest income 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 | |||||||||||||||||||
2022 | 2022 | ||||||||||||||||||
(Dollars in thousands) | Average Balance Outstanding | Interest Earned / Paid(2) | Yield / Rate(2) | Average Balance Outstanding | Interest Earned / Paid(2) | Yield / Rate(2) | |||||||||||||
Assets | |||||||||||||||||||
Interest-earning assets | |||||||||||||||||||
Loans receivable(1) | $ | 2,999,207 | $ | 39,282 | 5.20 | % | $ | 2,880,148 | $ | 33,522 | 4.62 | % | |||||||
Commercial paper | 34,487 | 184 | 2.12 | 214,214 | 1,116 | 2.07 | |||||||||||||
Debt securities available for sale | 167,818 | 1,151 | 2.72 | 135,015 | 678 | 1.99 | |||||||||||||
Other interest-earning assets(3) | 86,430 | 1,072 | 4.92 | 113,821 | 888 | 3.10 | |||||||||||||
Total interest-earning assets | 3,287,942 | 41,689 | 5.03 | 3,343,198 | 36,204 | 4.30 | |||||||||||||
Other assets | 236,159 | 243,113 | |||||||||||||||||
Total assets | 3,524,101 | 3,586,311 | |||||||||||||||||
Liabilities and equity | |||||||||||||||||||
Interest-bearing liabilities | |||||||||||||||||||
Interest-bearing checking accounts | $ | 627,548 | $ | 571 | 0.36 | % | $ | 654,154 | $ | 268 | 0.16 | % | |||||||
Money market accounts | 954,007 | 1,935 | 0.80 | 968,084 | 521 | 0.21 | |||||||||||||
Savings accounts | 236,027 | 45 | 0.08 | 238,992 | 45 | 0.07 | |||||||||||||
Certificate accounts | 444,845 | 1,052 | 0.94 | 476,761 | 561 | 0.47 | |||||||||||||
Total interest-bearing deposits | 2,262,427 | 3,603 | 0.63 | 2,337,991 | 1,395 | 0.24 | |||||||||||||
Borrowings | 26,063 | 254 | 3.87 | 1,526 | 12 | 3.12 | |||||||||||||
Total interest-bearing liabilities | 2,288,490 | 3,857 | 0.67 | 2,339,517 | 1,407 | 0.24 | |||||||||||||
Noninterest-bearing deposits | 785,785 | 800,912 | |||||||||||||||||
Other liabilities | 44,333 | 51,485 | |||||||||||||||||
Total liabilities | 3,118,608 | 3,191,914 | |||||||||||||||||
Stockholders' equity | 405,493 | 394,397 | |||||||||||||||||
Total liabilities and stockholders' equity | 3,524,101 | 3,586,311 | |||||||||||||||||
Net earning assets | $ | 999,452 | $ | 1,003,681 | |||||||||||||||
Average interest-earning assets to average interest-bearing liabilities | 143.67 | % | 142.90 | % | |||||||||||||||
Tax-equivalent | |||||||||||||||||||
Net interest income | $ | 37,832 | $ | 34,797 | |||||||||||||||
Interest rate spread | 4.36 | % | 4.06 | % | |||||||||||||||
Net interest margin(4) | 4.56 | % | 4.13 | % | |||||||||||||||
Non-tax-equivalent | |||||||||||||||||||
Net interest income | $ | 37,545 | $ | 34,520 | |||||||||||||||
Interest rate spread | 4.33 | % | 4.02 | % | |||||||||||||||
Net interest margin(4) | 4.53 | % | 4.10 | % |
(1) | The average loans receivable balances include loans held for sale and nonaccruing loans. |
(2) | Interest income used in the average interest earned and yield calculation includes the tax equivalent adjustment of |
(3) | The average other interest-earning assets consist of FRB stock, FHLB stock, SBIC investments, and deposits in other banks. |
(4) | Net interest income divided by average interest-earning assets. |
Total interest and dividend income for the three months ended
Total interest expense for the three months ended
The following table shows the effects that changes in average balances (volume), including differences in the number of days in the periods compared, and average interest rates (rate) had on the interest earned on interest-earning assets and interest paid on interest-bearing liabilities:
(Dollars in thousands) | Increase / (Decrease) Due to | Total Increase / (Decrease) | ||||||||
Volume | Rate | |||||||||
Interest-earning assets | ||||||||||
Loans receivable | $ | 1,386 | $ | 4,374 | $ | 5,760 | ||||
Commercial paper | (936 | ) | 4 | (932 | ) | |||||
Debt securities available for sale | 165 | 308 | 473 | |||||||
Other interest-earning assets | (214 | ) | 398 | 184 | ||||||
Total interest-earning assets | 401 | 5,084 | 5,485 | |||||||
Interest-bearing liabilities | ||||||||||
Interest-bearing checking accounts | (11 | ) | 314 | 303 | ||||||
Money market accounts | (8 | ) | 1,422 | 1,414 | ||||||
Savings accounts | (1 | ) | 1 | — | ||||||
Certificate accounts | (38 | ) | 529 | 491 | ||||||
Borrowings | 193 | 49 | 242 | |||||||
Total interest-bearing liabilities | 135 | 2,315 | 2,450 | |||||||
Net increase in tax equivalent interest income | $ | 3,035 | ||||||||
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 ("CECL") model.
The following table presents a breakdown of the components of the provision for credit losses:
Three Months Ended | ||||||||||||||
2022 | 2022 | $ Change | % Change | |||||||||||
Provision for credit losses | ||||||||||||||
Loans | $ | 2,425 | $ | 3,694 | $ | (1,269 | ) | (34 | )% | |||||
Off-balance-sheet credit exposure | (85 | ) | 443 | (528 | ) | (119 | ) | |||||||
Commercial paper | (100 | ) | (150 | ) | 50 | 33 | ||||||||
Total provision for credit losses | $ | 2,240 | $ | 3,987 | $ | (1,747 | ) | (44 | )% | |||||
For the quarter ended
$1.6 million provision driven by loan growth and changes in the loan mix.$0.4 million provision due to changes in the projected economic forecast, specifically the national unemployment rate, and changes in qualitative adjustments.$1.5 million reduction of specific reserves on individually evaluated credits, which was tied to two relationships which were fully charged-off during the quarter.
For the quarter ended
$1.3 million provision specific to fintech portfolios which have a riskier credit profile than loans originated in-house. The elevated credit risk is offset by the higher yields earned on the portfolios.$1.3 million provision driven by loan growth and changes in the loan mix.$1.1 million provision due to a projected worsening of the economic forecast, specifically the national unemployment rate, and changes in qualitative adjustments.
For both periods presented, the change in the provision for credit losses for off-balance-sheet credit exposure was the result of changes in the balance of loan commitments as well as changes in the loan mix and changes in the projected economic forecast outlined above.
Noninterest Income. Noninterest income for the three months ended
Three Months Ended | |||||||||||||
2022 | 2022 | $ Change | % Change | ||||||||||
Noninterest income | |||||||||||||
Service charges and fees on deposit accounts | $ | 2,523 | $ | 2,338 | $ | 185 | 8 | % | |||||
Loan income and fees | 647 | 570 | 77 | 14 | |||||||||
Gain on sale of loans held for sale | 1,102 | 1,586 | (484 | ) | (31 | ) | |||||||
BOLI income | 494 | 527 | (33 | ) | (6 | ) | |||||||
Operating lease income | 1,156 | 1,585 | (429 | ) | (27 | ) | |||||||
Gain (loss) on sale of premises and equipment | 1,127 | (12 | ) | 1,139 | 9,492 | ||||||||
Other | 1,405 | 804 | 601 | 75 | |||||||||
Total noninterest income | $ | 8,454 | $ | 7,398 | $ | 1,056 | 14 | % | |||||
- Gain on sale of loans held for sale: The decrease in the gain on sale of loans held for sale was primarily driven by a decrease in volume of residential mortgage and SBA loans sold during the period as a result of rising interest rates. During the quarter ended
December 31, 2022 ,$7.3 million of residential mortgage loans originated for sale were sold with gains of$183,000 compared to$20.9 million sold with gains of$493,000 for the quarter endedSeptember 30, 2022 . There were$8.2 million of sales of the guaranteed portion of SBA commercial loans with gains of$568,000 in the current quarter compared to$12.1 million sold and gains of$891,000 in the prior quarter. There were$41.4 million of home equity lines of credit ("HELOCs") sold during the current quarter for a gain of$340,000 compared to$22.8 million sold and gains of$202,000 in the prior quarter. - Operating lease income: The decrease in operating lease income can be traced to lower contractual earnings as well as gains or losses incurred at the end of operating leases, where we recognized a net loss of
$337,000 for the quarter endedDecember 31, 2022 versus a net gain of$148,000 for the quarter endedSeptember 30, 2022 . - Gain (loss) on sale of premises and equipment: During the quarter ended
December 31, 2022 two properties were sold for a combined gain of$1.6 million , partially offset by additional impairment of$420,000 on premises and equipment associated with prior branch closures. - Other: The increase in other income was driven by a
$721,000 gain recognized on the sale of closely held equity securities which the Company obtained through a prior bank acquisition.
Noninterest Expense. Noninterest expense for the three months ended
Three Months Ended | ||||||||||||
2022 | 2022 | $ Change | % Change | |||||||||
Noninterest expense | ||||||||||||
Salaries and employee benefits | $ | 14,484 | $ | 14,815 | $ | (331 | ) | (2 | )% | |||
Occupancy expense, net | 2,428 | 2,396 | 32 | 1 | ||||||||
Computer services | 2,796 | 2,763 | 33 | 1 | ||||||||
Telephone, postage and supplies | 575 | 603 | (28 | ) | (5 | ) | ||||||
Marketing and advertising | 481 | 590 | (109 | ) | (18 | ) | ||||||
Deposit insurance premiums | 546 | 542 | 4 | 1 | ||||||||
Core deposit intangible amortization | 26 | 34 | (8 | ) | (24 | ) | ||||||
Merger-related expenses | 250 | 474 | (224 | ) | (47 | ) | ||||||
Other | 4,490 | 3,872 | 618 | 16 | ||||||||
Total noninterest expense | $ | 26,076 | $ | 26,089 | $ | (13 | ) | — | % | |||
- Salaries and employee benefits: The decrease in salaries and employee benefits expense is primarily the result of lower mortgage banking incentive pay as a result of the reduction in the volume of originations due to rising interest rates.
- Merger-related expenses: On
July 24, 2022 , the Company entered into an Agreement and Plan of Merger withQuantum Capital Corp. The expense for both periods are costs incurred related to due diligence and legal work performed associated with the transaction, in addition to ongoing costs incurred in preparation for the transaction. - Other: During the quarter ended
December 31, 2022 the Company wrote off$350,000 in previously capitalized costs associated with a technology project which the Company is no longer pursuing. No such expense was incurred in the prior quarter.
Income Taxes. The amount of income tax expense is influenced by the amount of pre-tax income, the amount of tax-exempt income, changes in the statutory rate, and the effect of changes in valuation allowances maintained against deferred tax benefits. Income tax expense for the three months ended
Comparison of Results of Operations for the Six Months Ended
Net Income. Net income totaled
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.
Six Months Ended | |||||||||||||||||||
2022 | 2021 | ||||||||||||||||||
(Dollars in thousands) | Average Balance Outstanding | Interest Earned / Paid(2) | Yield / Rate(2) | Average Balance Outstanding | Interest Earned / Paid(2) | Yield / Rate(2) | |||||||||||||
Assets | |||||||||||||||||||
Interest-earning assets | |||||||||||||||||||
Loans receivable(1) | $ | 2,939,677 | $ | 72,814 | 4.91 | % | $ | 2,819,482 | $ | 55,441 | 3.90 | % | |||||||
Commercial paper | 124,351 | 1,300 | 2.07 | 191,712 | 458 | 0.47 | |||||||||||||
Debt securities available for sale | 151,417 | 1,829 | 2.40 | 130,143 | 935 | 1.43 | |||||||||||||
Other interest-earning assets(3) | 100,125 | 1,960 | 3.88 | 126,054 | 1,576 | 2.48 | |||||||||||||
Total interest-earning assets | 3,315,570 | 77,903 | 4.66 | 3,267,391 | 58,410 | 3.55 | |||||||||||||
Other assets | 239,636 | 260,288 | |||||||||||||||||
Total assets | 3,555,206 | 3,527,679 | |||||||||||||||||
Liabilities and equity | |||||||||||||||||||
Interest-bearing liabilities | |||||||||||||||||||
Interest-bearing checking accounts | $ | 640,851 | $ | 838 | 0.26 | % | $ | 635,362 | $ | 728 | 0.23 | % | |||||||
Money market accounts | 961,045 | 2,456 | 0.51 | 993,643 | 716 | 0.14 | |||||||||||||
Savings accounts | 237,509 | 89 | 0.07 | 223,061 | 81 | 0.07 | |||||||||||||
Certificate accounts | 460,803 | 1,615 | 0.70 | 450,706 | 1,352 | 0.60 | |||||||||||||
Total interest-bearing deposits | 2,300,208 | 4,998 | 0.43 | 2,302,772 | 2,877 | 0.25 | |||||||||||||
Borrowings | 13,795 | 266 | 3.83 | 56,356 | 41 | 0.15 | |||||||||||||
Total interest-bearing liabilities | 2,314,003 | 5,264 | 0.45 | 2,359,128 | 2,918 | 0.25 | |||||||||||||
Noninterest-bearing deposits | 793,349 | 722,432 | |||||||||||||||||
Other liabilities | 46,501 | 48,393 | |||||||||||||||||
Total liabilities | 3,153,853 | 3,129,953 | |||||||||||||||||
Stockholders' equity | 401,353 | 397,726 | |||||||||||||||||
Total liabilities and stockholders' equity | 3,555,206 | 3,527,679 | |||||||||||||||||
Net earning assets | $ | 1,001,567 | $ | 908,263 | |||||||||||||||
Average interest-earning assets to average interest-bearing liabilities | 143.28 | % | 138.50 | % | |||||||||||||||
Tax-equivalent | |||||||||||||||||||
Net interest income | $ | 72,639 | $ | 55,492 | |||||||||||||||
Interest rate spread | 4.21 | % | 3.30 | % | |||||||||||||||
Net interest margin(4) | 4.35 | % | 3.37 | % | |||||||||||||||
Non-tax-equivalent | |||||||||||||||||||
Net interest income | $ | 72,065 | $ | 54,875 | |||||||||||||||
Interest rate spread | 4.18 | % | 3.26 | % | |||||||||||||||
Net interest margin(4) | 4.31 | % | 3.33 | % |
(1) | The average loans receivable balances include loans held for sale and nonaccruing loans. |
(2) | Interest income used in the average interest earned and yield calculation includes the tax equivalent adjustment of |
(3) | The average other interest-earning assets consist of FRB stock, FHLB stock, SBIC investments, and deposits in other banks. |
(4) | Net interest income divided by average interest-earning assets. |
Total interest and dividend income for the six months ended
Total interest expense for the six months ended
The following table shows the effects that changes in average balances (volume), including differences in the number of days in the periods compared, and average interest rates (rate) had on the interest earned on interest-earning assets and interest paid on interest-bearing liabilities:
(Dollars in thousands) | Increase / (Decrease) Due to | Total Increase / (Decrease) | |||||||
Volume | Rate | ||||||||
Interest-earning assets | |||||||||
Loans receivable | $ | 2,363 | $ | 15,010 | $ | 17,373 | |||
Commercial paper | (161 | ) | 1,003 | 842 | |||||
Debt securities available for sale | 153 | 741 | 894 | ||||||
Other interest-earning assets | (324 | ) | 708 | 384 | |||||
Total interest-earning assets | 2,031 | 17,462 | 19,493 | ||||||
Interest-bearing liabilities | |||||||||
Interest-bearing checking accounts | 6 | 104 | 110 | ||||||
Money market accounts | (23 | ) | 1,763 | 1,740 | |||||
Savings accounts | 5 | 3 | 8 | ||||||
Certificate accounts | 30 | 233 | 263 | ||||||
Borrowings | (31 | ) | 256 | 225 | |||||
Total interest-bearing liabilities | (13 | ) | 2,359 | 2,346 | |||||
Net increase in tax equivalent interest income | $ | 17,147 | |||||||
Provision (Benefit) for Credit Losses. The following table presents a breakdown of the components of the provision (benefit) for credit losses:
Six Months Ended | ||||||||||||||
2022 | 2021 | $ Change | % Change | |||||||||||
Provision (benefit) for credit losses | ||||||||||||||
Loans | $ | 6,119 | $ | (3,775 | ) | $ | 9,894 | 262 | % | |||||
Off-balance-sheet credit exposure | 358 | (235 | ) | 593 | 252 | |||||||||
Commercial paper | (250 | ) | 50 | (300 | ) | (600 | ) | |||||||
Total provision (benefit) for credit losses | $ | 6,227 | $ | (3,960 | ) | $ | 10,187 | 257 | % | |||||
For the six months ended
$1.3 million provision specific to fintech portfolios which have a riskier credit profile than loans originated in-house. The elevated credit risk is offset by the higher yields earned on the portfolios.$2.9 million provision driven by loan growth and changes in the loan mix.$1.5 million provision due to changes in the projected economic forecast, specifically the national unemployment rate, and changes in qualitative adjustments.$1.5 million reduction of specific reserves on individually evaluated credits, which was tied to two relationships which were fully charged-off during the period.
For the six months ended
For both periods presented, the change in the provision for credit losses for off-balance-sheet credit exposure was the result of changes in the balance of loan commitments as well as changes in the loan mix and changes in the projected economic forecast outlined above.
Noninterest Income. Noninterest income for the six months ended
Six Months Ended | |||||||||||||
2022 | 2021 | $ Change | % Change | ||||||||||
Noninterest income | |||||||||||||
Service charges and fees on deposit accounts | $ | 4,861 | $ | 4,885 | $ | (24 | ) | — | % | ||||
Loan income and fees | 1,217 | 1,784 | (567 | ) | (32 | ) | |||||||
Gain on sale of loans held for sale | 2,688 | 7,958 | (5,270 | ) | (66 | ) | |||||||
BOLI income | 1,021 | 1,008 | 13 | 1 | |||||||||
Operating lease income | 2,741 | 3,258 | (517 | ) | (16 | ) | |||||||
Gain (loss) on sale of premises and equipment | 1,115 | (87 | ) | 1,202 | 1,382 | ||||||||
Other | 2,209 | 1,639 | 570 | 35 | |||||||||
Total noninterest income | $ | 15,852 | $ | 20,445 | $ | (4,593 | ) | (22 | )% | ||||
- Loan income and fees: The decrease in loan income and fees was driven by lower underwriting fees, interest rate swap fees, and prepayment penalties in the current period compared to the same period last year, all of which were impacted by rising interest rates.
- Gain on sale of loans held for sale: The decrease in the gain on sale of loans held for sale was primarily driven by a decrease in volume of residential mortgage and SBA loans sold during the period as a result of rising interest rates. During the six months ended
December 31, 2022 ,$28.2 million of residential mortgage loans originated for sale were sold with gains of$676,000 compared to$150.7 million sold with gains of$4.3 million for the corresponding period in the prior year. There were$20.3 million of sales of the guaranteed portion of SBA commercial loans with gains of$1.5 million in the current period compared to$27.0 million sold and gains of$3.1 million for the corresponding period in the prior year. There were$64.2 million of HELOCs sold during the current period for a gain of$542,000 compared to$72.2 million sold and gains of$426,000 for the corresponding period in the prior year. Lastly,$11.5 million of indirect auto finance loans were sold out of the held for investment portfolio during the six months endedDecember 31, 2021 for a gain of$205,000 . No such sales occurred in the same period in the current year. - Operating lease income: The decrease in operating lease income can be traced to lower contractual earnings as well as gains or losses incurred at the end of operating leases, where we recognized a net loss of
$189,000 for the six months endedDecember 31, 2022 versus a net loss of$92,000 in the same period last year. - Gain (loss) on sale of premises and equipment: During the six months ended
December 31, 2022 two properties were sold for a combined gain of$1.6 million , partially offset by additional impairment of$420,000 on premises and equipment associated with prior branch closures. No such sales occurred in the same period in the prior year. - Other: The increase in other income was driven by a
$721,000 gain recognized on the sale of closely held equity securities which the Company obtained through a prior bank acquisition. No such sales occurred in the same period in the prior year.
Noninterest Expense. Noninterest expense for the six months ended
Six Months Ended | ||||||||||||
2022 | 2021 | $ Change | % Change | |||||||||
Noninterest expense | ||||||||||||
Salaries and employee benefits | $ | 29,299 | $ | 30,152 | $ | (853 | ) | (3 | )% | |||
Occupancy expense, net | 4,824 | 4,718 | 106 | 2 | ||||||||
Computer services | 5,559 | 5,130 | 429 | 8 | ||||||||
Telephone, postage and supplies | 1,178 | 1,322 | (144 | ) | (11 | ) | ||||||
Marketing and advertising | 1,071 | 1,537 | (466 | ) | (30 | ) | ||||||
Deposit insurance premiums | 1,088 | 868 | 220 | 25 | ||||||||
Core deposit intangible amortization | 60 | 158 | (98 | ) | (62 | ) | ||||||
Merger-related expenses | 724 | — | 724 | 100 | ||||||||
Other | 8,362 | 7,953 | 409 | 5 | ||||||||
Total noninterest expense | $ | 52,165 | $ | 51,838 | $ | 327 | 1 | % | ||||
- Salaries and employee benefits: The decrease in salaries and employee benefits expense in the current period compared to the same period last year is primarily the result of branch closures and lower mortgage banking incentive pay as a result of the reduction in the volume of originations due to rising interest rates.
- Computer services: The increase in expense between periods is due to continued investments in technology as well as increases in the cost of services provided by third parties.
- Marketing and advertising: The decrease in expense between periods is partially due to timing differences when expenses are incurred and paid as well as lower projected marketing expenses for the current fiscal year versus the prior period.
- Deposit insurance premiums: The rates the Company is charged for deposit insurance have increased year-over-year.
- Merger-related expenses: On
July 24, 2022 , the Company entered into an Agreement and Plan of Merger withQuantum Capital Corp. The expense for the six months endedDecember 31, 2022 are costs incurred related to due diligence and legal work performed associated with the transaction, in addition to ongoing costs incurred in preparation for the transaction. No such expense was incurred in the prior period. - Other: During the six months ended
December 31, 2022 the Company wrote off$350,000 in previously capitalized costs associated with a technology project which the Company is no longer pursuing. No such expense was incurred in the prior period.
Income Taxes. The amount of income tax expense is influenced by the amount of pre-tax income, the amount of tax-exempt income, changes in the statutory rate, and the effect of changes in valuation allowances maintained against deferred tax benefits. Income tax expense for the six months ended
Balance Sheet Review
Total assets increased by
Stockholders' equity increased
Asset Quality
The ACL on loans was
Net loan charge-offs totaled
Nonperforming assets increased by
The ratio of classified assets to total assets decreased to 0.50% at
About
Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements often include words such as "believe," "expect," "anticipate," "estimate," and "intend" or future or conditional verbs such as "will," "would," "should," "could," or "may." Forward-looking statements are not historical facts but instead represent management's current expectations and forecasts regarding future events, many of which are inherently uncertain and outside of the Company's control. Actual results may differ, possibly materially, from those currently expected or projected in these forward-looking statements. Factors that could cause the Company's actual results to differ materially from those described in the forward-looking statements include: the remaining effect of the COVID-19 pandemic, including on the Company's credit quality and business operations, as well as its impact on general economic and financial market conditions and other uncertainties resulting from the COVID-19 pandemic, such as the extent and remaining duration of the impact on public health, the
Consolidated Balance Sheets (Unaudited)
(Dollars in thousands) | 2022 | 2022 | 2022(1) | 2022 | 2021 | ||||||||||||||
Assets | |||||||||||||||||||
Cash | $ | 15,825 | $ | 18,026 | $ | 20,910 | $ | 19,783 | $ | 20,586 | |||||||||
Interest-bearing deposits | 149,209 | 76,133 | 84,209 | 32,267 | 14,240 | ||||||||||||||
Cash and cash equivalents | 165,034 | 94,159 | 105,119 | 52,050 | 34,826 | ||||||||||||||
Commercial paper, net | — | 85,296 | 194,427 | 312,918 | 254,157 | ||||||||||||||
Certificates of deposit in other banks | 29,371 | 27,535 | 23,551 | 28,125 | 34,002 | ||||||||||||||
Debt securities available for sale, at fair value | 147,942 | 161,741 | 126,978 | 106,315 | 121,851 | ||||||||||||||
FHLB and FRB stock | 13,661 | 9,404 | 9,326 | 10,451 | 10,368 | ||||||||||||||
SBIC investments, at cost | 12,414 | 12,235 | 12,758 | 12,589 | 11,749 | ||||||||||||||
Loans held for sale, at fair value | 518 | — | — | — | — | ||||||||||||||
Loans held for sale, at the lower of cost or fair value | 72,777 | 76,252 | 79,307 | 85,263 | 102,070 | ||||||||||||||
Total loans, net of deferred loan fees and costs | 2,985,623 | 2,867,783 | 2,769,295 | 2,699,538 | 2,696,072 | ||||||||||||||
Allowance for credit losses – loans | (38,859 | ) | (38,301 | ) | (34,690 | ) | (31,034 | ) | (30,933 | ) | |||||||||
Loans, net | 2,946,764 | 2,829,482 | 2,734,605 | 2,668,504 | 2,665,139 | ||||||||||||||
Premises and equipment, net | 65,216 | 68,705 | 69,094 | 69,629 | 69,461 | ||||||||||||||
Accrued interest receivable | 11,076 | 9,667 | 8,573 | 7,980 | 8,200 | ||||||||||||||
Deferred income taxes, net | 11,319 | 11,838 | 11,487 | 12,494 | 12,019 | ||||||||||||||
Bank owned life insurance ("BOLI") | 96,335 | 95,837 | 95,281 | 94,740 | 94,209 | ||||||||||||||
25,638 | 25,638 | 25,638 | 25,638 | 25,638 | |||||||||||||||
Core deposit intangibles, net | 32 | 58 | 93 | 135 | 185 | ||||||||||||||
Other assets | 48,918 | 47,339 | 52,967 | 54,954 | 58,945 | ||||||||||||||
Total assets | $ | 3,647,015 | $ | 3,555,186 | $ | 3,549,204 | $ | 3,541,785 | $ | 3,502,819 | |||||||||
Liabilities and stockholders' equity | |||||||||||||||||||
Liabilities | |||||||||||||||||||
Deposits | $ | 3,048,020 | $ | 3,102,668 | $ | 3,099,761 | $ | 3,059,157 | $ | 2,998,691 | |||||||||
Borrowings | 130,000 | — | — | 30,000 | 48,000 | ||||||||||||||
Other liabilities | 58,840 | 56,296 | 60,598 | 57,497 | 54,382 | ||||||||||||||
Total liabilities | 3,236,860 | 3,158,964 | 3,160,359 | 3,146,654 | 3,101,073 | ||||||||||||||
Stockholders' equity | |||||||||||||||||||
Preferred stock, | — | — | — | — | — | ||||||||||||||
Common stock, | 157 | 156 | 156 | 160 | 163 | ||||||||||||||
Additional paid in capital | 128,486 | 127,153 | 126,106 | 136,181 | 147,552 | ||||||||||||||
Retained earnings | 290,271 | 278,120 | 270,276 | 265,609 | 258,986 | ||||||||||||||
Unearned Employee Stock Ownership Plan ("ESOP") shares | (5,026 | ) | (5,158 | ) | (5,290 | ) | (5,422 | ) | (5,555 | ) | |||||||||
Accumulated other comprehensive income (loss) | (3,733 | ) | (4,049 | ) | (2,403 | ) | (1,397 | ) | 600 | ||||||||||
Total stockholders' equity | 410,155 | 396,222 | 388,845 | 395,131 | 401,746 | ||||||||||||||
Total liabilities and stockholders' equity | $ | 3,647,015 | $ | 3,555,186 | $ | 3,549,204 | $ | 3,541,785 | $ | 3,502,819 |
(1) | Derived from audited financial statements. |
(2) | Shares of common stock issued and outstanding were 15,673,595 at |
Consolidated Statements of Income (Unaudited)
Three Months Ended | Six Months Ended | ||||||||||||
(Dollars in thousands) | 2022 | 2022 | 2022 | 2021 | |||||||||
Interest and dividend income | |||||||||||||
Loans | $ | 38,995 | $ | 33,245 | $ | 72,240 | $ | 54,824 | |||||
Commercial paper | 184 | 1,116 | 1,300 | 458 | |||||||||
Debt securities available for sale | 1,151 | 678 | 1,829 | 935 | |||||||||
Other investments and interest-bearing deposits | 1,072 | 888 | 1,960 | 1,576 | |||||||||
Total interest and dividend income | 41,402 | 35,927 | 77,329 | 57,793 | |||||||||
Interest expense | |||||||||||||
Deposits | 3,603 | 1,395 | 4,998 | 2,877 | |||||||||
Borrowings | 254 | 12 | 266 | 41 | |||||||||
Total interest expense | 3,857 | 1,407 | 5,264 | 2,918 | |||||||||
Net interest income | 37,545 | 34,520 | 72,065 | 54,875 | |||||||||
Provision (benefit) for credit losses | 2,240 | 3,987 | 6,227 | (3,960 | ) | ||||||||
Net interest income after provision (benefit) for credit losses | 35,305 | 30,533 | 65,838 | 58,835 | |||||||||
Noninterest income | |||||||||||||
Service charges and fees on deposit accounts | 2,523 | 2,338 | 4,861 | 4,885 | |||||||||
Loan income and fees | 647 | 570 | 1,217 | 1,784 | |||||||||
Gain on sale of loans held for sale | 1,102 | 1,586 | 2,688 | 7,958 | |||||||||
BOLI income | 494 | 527 | 1,021 | 1,008 | |||||||||
Operating lease income | 1,156 | 1,585 | 2,741 | 3,258 | |||||||||
Gain (loss) on sale of premises and equipment | 1,127 | (12 | ) | 1,115 | (87 | ) | |||||||
Other | 1,405 | 804 | 2,209 | 1,639 | |||||||||
Total noninterest income | 8,454 | 7,398 | 15,852 | 20,445 | |||||||||
Noninterest expense | |||||||||||||
Salaries and employee benefits | 14,484 | 14,815 | 29,299 | 30,152 | |||||||||
Occupancy expense, net | 2,428 | 2,396 | 4,824 | 4,718 | |||||||||
Computer services | 2,796 | 2,763 | 5,559 | 5,130 | |||||||||
Telephone, postage, and supplies | 575 | 603 | 1,178 | 1,322 | |||||||||
Marketing and advertising | 481 | 590 | 1,071 | 1,537 | |||||||||
Deposit insurance premiums | 546 | 542 | 1,088 | 868 | |||||||||
Core deposit intangible amortization | 26 | 34 | 60 | 158 | |||||||||
Merger-related expenses | 250 | 474 | 724 | — | |||||||||
Other | 4,490 | 3,872 | 8,362 | 7,953 | |||||||||
Total noninterest expense | 26,076 | 26,089 | 52,165 | 51,838 | |||||||||
Income before income taxes | 17,683 | 11,842 | 29,525 | 27,442 | |||||||||
Income tax expense | 4,025 | 2,643 | 6,668 | 5,837 | |||||||||
Net income | $ | 13,658 | $ | 9,199 | $ | 22,857 | $ | 21,605 | |||||
Per Share Data
Three Months Ended | Six Months Ended | |||||||||||
2022 | 2022 | 2022 | 2021 | |||||||||
Net income per common share(1) | ||||||||||||
Basic | $ | 0.90 | $ | 0.61 | $ | 1.51 | $ | 1.36 | ||||
Diluted | $ | 0.90 | $ | 0.60 | $ | 1.50 | $ | 1.33 | ||||
Average shares outstanding | ||||||||||||
Basic | 15,028,179 | 14,988,006 | 15,008,092 | 15,696,765 | ||||||||
Diluted | 15,161,153 | 15,130,762 | 15,145,701 | 16,057,607 | ||||||||
Book value per share at end of period | $ | 26.17 | $ | 25.35 | $ | 26.17 | $ | 24.64 | ||||
Tangible book value per share at end of period(2) | $ | 24.53 | $ | 23.70 | $ | 24.53 | $ | 23.06 | ||||
Cash dividends declared per common share | $ | 0.10 | $ | 0.09 | $ | 0.19 | $ | 0.17 | ||||
Total shares outstanding at end of period | 15,673,595 | 15,632,348 | 15,673,595 | 16,303,461 |
(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 | Six Months Ended | |||||||||||
2022 | 2022 | 2022 | 2021 | |||||||||
Performance ratios(1) | ||||||||||||
Return on assets (ratio of net income to average total assets) | 1.54 | % | 1.02 | % | 1.28 | % | 1.21 | % | ||||
Return on equity (ratio of net income to average equity) | 13.37 | 9.25 | 11.32 | 10.78 | ||||||||
Tax equivalent yield on earning assets(2) | 5.03 | 4.30 | 4.66 | 3.55 | ||||||||
Rate paid on interest-bearing liabilities | 0.67 | 0.24 | 0.45 | 0.25 | ||||||||
Tax equivalent average interest rate spread(2) | 4.36 | 4.06 | 4.21 | 3.30 | ||||||||
Tax equivalent net interest margin(2) (3) | 4.56 | 4.13 | 4.35 | 3.37 | ||||||||
Average interest-earning assets to average interest-bearing liabilities | 143.67 | 142.90 | 143.28 | 138.50 | ||||||||
Noninterest expense to average total assets | 2.94 | 2.89 | 2.91 | 2.92 | ||||||||
Efficiency ratio | 56.69 | 62.24 | 59.33 | 68.82 | ||||||||
Efficiency ratio – adjusted(4) | 58.12 | 60.69 | 59.36 | 68.19 |
(1) | Ratios are annualized where appropriate. |
(2) | The weighted average rate for municipal leases is adjusted for a 24% combined federal and state tax rate since the interest from these leases is tax exempt. |
(3) | Net interest income divided by average interest-earning assets. |
(4) | See Non-GAAP reconciliations below for adjustments. |
At or For the Three Months Ended | |||||||||||||||
2022 | 2022 | 2022 | 2022 | 2021 | |||||||||||
Asset quality ratios | |||||||||||||||
Nonperforming assets to total assets(1) | 0.17 | % | 0.20 | % | 0.18 | % | 0.16 | % | 0.18 | % | |||||
Nonperforming loans to total loans(1) | 0.21 | 0.24 | 0.22 | 0.22 | 0.23 | ||||||||||
Total classified assets to total assets | 0.50 | 0.54 | 0.61 | 0.61 | 0.65 | ||||||||||
Allowance for credit losses to nonperforming loans(1) | 629.40 | 561.10 | 566.83 | 534.06 | 500.70 | ||||||||||
Allowance for credit losses to total loans | 1.30 | 1.34 | 1.25 | 1.15 | 1.15 | ||||||||||
Net charge-offs (recoveries) to average loans (annualized) | 0.25 | 0.01 | (0.10 | ) | (0.11 | ) | 0.15 | ||||||||
Capital ratios | |||||||||||||||
Equity to total assets at end of period | 11.25 | % | 11.14 | % | 10.96 | % | 11.16 | % | 11.47 | % | |||||
Tangible equity to total tangible assets(2) | 10.62 | 10.50 | 10.31 | 10.51 | 10.81 | ||||||||||
Average equity to average assets | 11.50 | 11.00 | 10.93 | 11.32 | 11.28 |
(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 |
(2) | See Non-GAAP reconciliations below for adjustments. |
Loans
(Dollars in thousands) | 2022 | 2022 | 2022 | 2022 | 2021 | ||||||||||||||
Commercial real estate loans | |||||||||||||||||||
Construction and land development | $ | 328,253 | $ | 310,985 | $ | 291,202 | 251,668 | 226,439 | |||||||||||
Commercial real estate – owner occupied | 340,824 | 336,456 | 335,658 | 332,078 | 323,434 | ||||||||||||||
Commercial real estate – non-owner occupied | 690,241 | 661,644 | 662,159 | 688,071 | 709,825 | ||||||||||||||
Multifamily | 69,156 | 79,082 | 81,086 | 82,035 | 80,071 | ||||||||||||||
Total commercial real estate loans | 1,428,474 | 1,388,167 | 1,370,105 | 1,353,852 | 1,339,769 | ||||||||||||||
Commercial loans | |||||||||||||||||||
Commercial and industrial | 194,465 | 205,606 | 192,652 | 167,342 | 162,396 | ||||||||||||||
Equipment finance | 426,507 | 411,012 | 394,541 | 378,629 | 367,008 | ||||||||||||||
Municipal leases | 135,922 | 130,777 | 129,766 | 130,260 | 131,078 | ||||||||||||||
PPP loans | 214 | 238 | 661 | 2,756 | 19,044 | ||||||||||||||
Total commercial loans | 757,108 | 747,633 | 717,620 | 678,987 | 679,526 | ||||||||||||||
Residential real estate loans | |||||||||||||||||||
Construction and land development | 100,002 | 91,488 | 81,847 | 72,735 | 69,253 | ||||||||||||||
One-to-four family | 400,595 | 374,849 | 354,203 | 347,945 | 356,850 | ||||||||||||||
HELOCs | 194,296 | 164,701 | 160,137 | 155,356 | 158,984 | ||||||||||||||
Total residential real estate loans | 694,893 | 631,038 | 596,187 | 576,036 | 585,087 | ||||||||||||||
Consumer loans | 105,148 | 100,945 | 85,383 | 90,663 | 91,690 | ||||||||||||||
Total loans, net of deferred loan fees and costs | 2,985,623 | 2,867,783 | 2,769,295 | 2,699,538 | 2,696,072 | ||||||||||||||
Allowance for credit losses – loans | (38,859 | ) | (38,301 | ) | (34,690 | ) | (31,034 | ) | (30,933 | ) | |||||||||
Loans, net | $ | 2,946,764 | $ | 2,829,482 | $ | 2,734,605 | $ | 2,668,504 | $ | 2,665,139 | |||||||||
As of
Deposits
(Dollars in thousands) | 2022 | 2022 | 2022 | 2022 | 2021 | |||||||||
Core deposits | ||||||||||||||
Noninterest-bearing accounts | $ | 726,416 | $ | 794,242 | $ | 745,746 | $ | 704,344 | $ | 677,159 | ||||
NOW accounts | 638,896 | 636,859 | 654,981 | 652,577 | 644,343 | |||||||||
Money market accounts | 992,083 | 960,150 | 969,661 | 1,026,595 | 1,010,901 | |||||||||
Savings accounts | 230,896 | 240,412 | 238,197 | 232,831 | 224,474 | |||||||||
Total core deposits | 2,588,291 | 2,631,663 | 2,608,585 | 2,616,347 | 2,556,877 | |||||||||
Certificates of deposit | 459,729 | 471,005 | 491,176 | 442,810 | 441,814 | |||||||||
Total | $ | 3,048,020 | $ | 3,102,668 | $ | 3,099,761 | $ | 3,059,157 | $ | 2,998,691 | ||||
Non-GAAP Reconciliations
In addition to results presented in accordance with generally accepted accounting principles utilized in
Set forth below is a reconciliation to GAAP of the Company's efficiency ratio:
Three Months Ended | Six Months Ended | |||||||||||||||
(Dollars in thousands) | 2022 | 2022 | 2022 | 2021 | ||||||||||||
Noninterest expense | $ | 26,076 | $ | 26,089 | $ | 52,165 | $ | 51,838 | ||||||||
Less: merger expense | 250 | 474 | 724 | — | ||||||||||||
Noninterest expense – adjusted | $ | 25,826 | $ | 25,615 | $ | 51,441 | $ | 51,838 | ||||||||
Net interest income | $ | 37,545 | $ | 34,520 | $ | 72,065 | $ | 54,875 | ||||||||
Plus: tax equivalent adjustment | 287 | 277 | 574 | 617 | ||||||||||||
Plus: noninterest income | 8,454 | 7,398 | 15,852 | 20,445 | ||||||||||||
Less: gain on sale of equity securities | 721 | — | 721 | — | ||||||||||||
Less: gain (loss) on sale of premises and equipment | 1,127 | (12 | ) | 1,115 | (87 | ) | ||||||||||
Net interest income plus noninterest income – adjusted | $ | 44,438 | $ | 42,207 | $ | 86,655 | $ | 76,024 | ||||||||
Efficiency ratio | 56.69 | % | 62.24 | % | 59.33 | % | 68.82 | % | ||||||||
Efficiency ratio – adjusted | 58.12 | % | 60.69 | % | 59.36 | % | 68.19 | % | ||||||||
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) | 2022 | 2022 | 2022 | 2022 | 2021 | ||||||||||
Total stockholders' equity | $ | 410,155 | $ | 396,222 | $ | 388,845 | $ | 395,131 | $ | 401,746 | |||||
Less: goodwill, core deposit intangibles, net of taxes | 25,663 | 25,683 | 25,710 | 25,742 | 25,780 | ||||||||||
Tangible book value | $ | 384,492 | $ | 370,539 | $ | 363,135 | $ | 369,389 | $ | 375,966 | |||||
Common shares outstanding | 15,673,595 | 15,632,348 | 15,591,466 | 15,978,262 | 16,303,461 | ||||||||||
Book value per share at end of period | $ | 26.17 | $ | 25.35 | $ | 24.94 | $ | 24.73 | $ | 24.64 | |||||
Tangible book value per share at end of period | $ | 24.53 | $ | 23.70 | $ | 23.29 | $ | 23.12 | $ | 23.06 | |||||
Set forth below is a reconciliation to GAAP of tangible equity to tangible assets:
As of | ||||||||||||||||||||
(Dollars in thousands) | 2022 | 2022 | 2022 | 2022 | 2021 | |||||||||||||||
Tangible equity(1) | $ | 384,492 | $ | 370,539 | $ | 363,135 | $ | 369,389 | $ | 375,966 | ||||||||||
Total assets | 3,647,015 | 3,555,186 | 3,549,204 | 3,541,785 | 3,502,819 | |||||||||||||||
Less: goodwill and core deposit intangibles, net of taxes | 25,663 | 25,683 | 25,710 | 25,742 | 25,780 | |||||||||||||||
Total tangible assets | $ | 3,621,352 | $ | 3,529,503 | $ | 3,523,494 | $ | 3,516,043 | $ | 3,477,039 | ||||||||||
Tangible equity to tangible assets | 10.62 | % | 10.50 | % | 10.31 | % | 10.51 | % | 10.81 | % |
(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. |
Contact:C. Hunter Westbrook – President and Chief Executive OfficerTony J. VunCannon – Executive Vice President, Chief Financial Officer, Corporate Secretary and Treasurer 828-259-3939
Source:
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