UNITED STATES SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


FORM 10-Q


[X]☒            QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended MarchDecember 31, 2020


[  ]☐            TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


For the transition period from _______ to ________


Commission file number:     001-35593


HOMETRUST BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Maryland
45-5055422
(State or other jurisdiction of incorporation of organization)(I.R.S. Employer Identification No.)


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


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


None
(Former name, former address and former fiscal year, if changed since last report)


Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $.01 per share


HTBIThe NASDAQ Stock Market LLC


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 and 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.        Yes [X]☒ No [  ]☐


Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X]☒ No [  ]☐


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [  ]☐      Accelerated filer [X]☒
Non-accelerated filer   [  ]☐Smaller reporting company [  ]☐
Emerging growth company [ ]☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.[ ]☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes [  ]☐ No [X]☒
There were 17,020,08116,686,601shares of common stock, par value of $.01 per share, issued and outstanding as of May 6, 2020.

February 3, 2021.



HOMETRUST BANCSHARES, INC. AND SUBSIDIARIES
10-Q
TABLE OF CONTENTS
Page

Number
Item 1. 
3
4
5
6
8
10
Item 2. 
3740
Item 3. 
5356
Item 4. 
5356
Item 1. 
5356
Item 1A. 
5356
Item 2. 
5556
Item 3. 
5657
Item 4. 
5657
Item 5 
5657
Item 6. 
5657
5960



1

Glossary of Defined Terms
The following items may be used throughout this Form 10-Q, including the Notes to Consolidated Financial Statements in Item 1 and Management's Discussion and Analysis of Financial Condition and Results of Operations in Item 2 of this Form 10-Q.
TermDefinition
ACLAllowance for Credit Losses
AFSAvailable-For-Sale
ASCAccounting Standard Codification
ASUAccounting Standard Update
TermBOLIDefinition
AFSAvailable-For-Sale
ASCAccounting Standard Codification
ASUAccounting Standard Update
BOLIBank Owned Life Insurance
CARES ActCoronavirus Aid, Relief, and Economic Security Act of 2020
CDCertificates of Deposit
CET1CDACollateral Dependent Asset
CECLCurrent Expected Credit Losses
CET1Common Equity Tier 1
COVID-19Coronavirus Disease 2019
CPIConsumer Price Index
EPSDCFDiscounted Cash Flow
ECLExpected Credit Losses
EPSEarnings Per Share
ESOPEmployee Stock Ownership Plan
FASBFinancial Accounting Standards Board
FDICFederal Deposit Insurance Corporation
FHLBFederal Home Loan Bank
FRBFederal Reserve Bank of Richmond
GAAPGenerally Accepted Accounting Principles in the United States
GSEGovernment-Sponsored Enterprises
HELOCHome Equity Line of Credit
MBSLIBORLondon Interbank Offered Rate
MBSMortgage-Backed Security
NCCOBNorth Carolina Office of the Commissioner of Banks
PCIOTTIOther Than Temporary Impairment
PCDPurchased Credit Deteriorated
PCIPurchase Credit Impaired
PPPPaycheck Protection Program
PPPLFREOPaycheck Protection Program Liquidity Facility
REOReal Estate Owned
ROURight of Use
SECSecurities and Exchange Commission
SBASmall Business Administration
SBICSmall Business Investment Companies
TDRTroubled Debt Restructuring



2

PART I.  FINANCIAL INFORMATION
Item 1.    Financial Statements
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
(Unaudited)  (Unaudited)
March 31, 2020 
June 30,
2019 (1)
December 31, 2020
June 30,
2020 (1)
Assets   Assets
Cash$41,206
 $40,909
Cash$27,365 $31,908 
Interest-bearing deposits40,855
 30,134
Interest-bearing deposits198,979 89,714 
Cash and cash equivalents82,061
 71,043
Cash and cash equivalents226,344 121,622 
Commercial paper281,955
 241,446
Commercial paper, netCommercial paper, net183,778 304,967 
Certificates of deposit in other banks57,544
 52,005
Certificates of deposit in other banks48,637 55,689 
Debt securities available for sale, at fair value158,621
 121,786
Debt securities available for sale, at fair value (amortized cost of $150,807 and $124,918 at December 31, 2020 and June 30, 2020, respectively)Debt securities available for sale, at fair value (amortized cost of $150,807 and $124,918 at December 31, 2020 and June 30, 2020, respectively)153,540 127,537 
Other investments, at cost41,201
 45,378
Other investments, at cost39,572 38,946 
Loans held for sale38,682
 18,175
Loans held for sale118,439 77,177 
Total loans, net of deferred loan costs2,663,524
 2,705,190
Total loans, net of deferred loan costs2,678,624 2,769,119 
Allowance for loan losses(26,850) (21,429)
Allowance for credit lossesAllowance for credit losses(39,844)(28,072)
Net loans2,636,674
 2,683,761
Net loans2,638,780 2,741,047 
Premises and equipment, net58,738
 61,051
Premises and equipment, net70,104 58,462 
Accrued interest receivable9,501
 10,533
Accrued interest receivable9,796 12,312 
REO1,075
 2,929
REO252 337 
Deferred income taxes21,750
 26,523
Deferred income taxes18,626 16,334 
BOLI91,612
 90,254
BOLI93,326 92,187 
Goodwill25,638
 25,638
Goodwill25,638 25,638 
Core deposit intangibles1,381
 2,499
Core deposit intangibles638 1,078 
Other assets41,600
 23,157
Other assets52,501 49,519 
Total Assets$3,548,033
 $3,476,178
Total Assets$3,679,971 $3,722,852 
Liabilities and Stockholders' Equity 
  
Liabilities and Stockholders' Equity  
Liabilities 
  
Liabilities  
Deposits$2,554,787
 $2,327,257
Deposits$2,743,269 $2,785,756 
Borrowings535,000
 680,000
Borrowings475,000 475,000 
Other liabilities52,806
 60,025
Other liabilities56,978 53,833 
Total liabilities3,142,593
 3,067,282
Total liabilities3,275,247 3,314,589 
Stockholders' Equity 
  
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, 17,101,954 shares
issued and outstanding at March 31, 2020; 17,984,105 at June 30, 2019
171
 180
Preferred stock, $0.01 par value, 10,000,000 shares authorized, NaN issued or
outstanding
Preferred stock, $0.01 par value, 10,000,000 shares authorized, NaN issued or
outstanding
0 0 
Common stock, $0.01 par value, 60,000,000 shares authorized, 16,791,027 shares
issued and outstanding at December 31, 2020; 17,021,357 at June 30, 2020
Common stock, $0.01 par value, 60,000,000 shares authorized, 16,791,027 shares
issued and outstanding at December 31, 2020; 17,021,357 at June 30, 2020
168 170 
Additional paid in capital170,368
 190,315
Additional paid in capital166,352 169,648 
Retained earnings240,325
 224,545
Retained earnings242,182 242,776 
Unearned ESOP shares(6,480) (6,877)Unearned ESOP shares(6,083)(6,348)
Accumulated other comprehensive income1,056
 733
Accumulated other comprehensive income2,105 2,017 
Total stockholders' equity405,440
 408,896
Total stockholders' equity404,724 408,263 
Total Liabilities and Stockholders' Equity$3,548,033
 $3,476,178
Total Liabilities and Stockholders' Equity$3,679,971 $3,722,852 
(1)    Derived from audited financial statements.
The accompanying notes are an integral part of these consolidated financial statements.

3


HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Income
(Dollars in thousands, except per share data)
(Unaudited)(Unaudited)
Three Months Ended Nine Months EndedThree Months EndedSix Months Ended
March 31, March 31,December 31,December 31,
2020 2019 2020 20192020201920202019
Interest and Dividend Income       Interest and Dividend Income
Loans$29,781
 $30,770
 $94,166
 $90,042
Loans$28,343 $32,119 $56,935 $64,385 
Commercial paper and interest-bearing deposits in other banks1,794
 2,283
 5,959
 6,106
Commercial paper and interest-bearing depositsCommercial paper and interest-bearing deposits614 1,912 1,495 4,165 
Securities available for sale912
 850
 2,901
 2,582
Securities available for sale504 1,093 1,032 1,989 
Other investments550
 811
 2,154
 2,664
Other investments696 772 1,144 1,604 
Total interest and dividend income33,037
 34,714
 105,180
 101,394
Total interest and dividend income30,157 35,896 60,606 72,143 
Interest Expense 
  
  
  
Interest Expense    
Deposits5,971
 4,404
 18,145
 10,761
Deposits2,347 6,321 5,600 12,174 
Borrowings1,757
 3,741
 7,619
 10,691
Borrowings1,688 2,541 3,375 5,862 
Total interest expense7,728
 8,145
 25,764
 21,452
Total interest expense4,035 8,862 8,975 18,036 
Net Interest Income25,309
 26,569
 79,416
 79,942
Net Interest Income26,122 27,034 51,631 54,107 
Provision for Loan Losses5,400
 5,500
 5,800
 5,500
Net Interest Income after Provision for Loan Losses19,909
 21,069
 73,616
 74,442
Provision (Benefit) for Credit LossesProvision (Benefit) for Credit Losses(3,030)400 (2,080)400 
Net Interest Income after Provision (Benefit) for Credit LossesNet Interest Income after Provision (Benefit) for Credit Losses29,152 26,634 53,711 53,707 
Noninterest Income 
  
  
  
Noninterest Income    
Service charges and fees on deposit accounts2,304
 2,265
 7,352
 7,243
Service charges and fees on deposit accounts2,416 2,605 4,513 5,048 
Loan income and fees294
 134
 2,047
 757
Loan income and fees569 871 1,043 1,753 
Gain on sale of loans held for sale1,503
 1,472
 7,577
 4,086
Gain on sale of loans held for sale3,704 3,775 7,048 6,074 
BOLI income518
 518
 1,724
 1,574
BOLI income511 509 1,043 1,206 
Other, net1,756
 1,007
 4,409
 2,434
Other, net2,144 1,314 4,336 2,653 
Total noninterest income6,375
 5,396
 23,109
 16,094
Total noninterest income9,344 9,074 17,983 16,734 
Noninterest Expense 
  
  
  
Noninterest Expense    
Salaries and employee benefits14,455
 13,463
 42,537
 39,005
Salaries and employee benefits15,700 14,170 30,907 28,082 
Net occupancy expense2,246
 2,294
 6,972
 7,046
Net occupancy expense2,261 2,384 4,554 4,726 
Computer services2,023
 1,980
 6,032
 5,724
Computer services2,220 1,985 4,527 4,009 
Telephone, postage, and supplies862
 698
 2,462
 2,210
Telephone, postage, and supplies871 798 1,533 1,600 
Marketing and advertising396
 400
 1,716
 1,219
Marketing and advertising327 641 652 1,320 
Deposit insurance premiums462
 320
 474
 959
Deposit insurance premiums487 12 998 12 
Loss (gain) on sale and impairment of REO(15) 246
 88
 500
Loss (gain) on sale and impairment of REO0 122 (35)103 
REO expense250
 200
 746
 548
REO expense165 238 413 496 
Core deposit intangible amortization334
 488
 1,118
 1,580
Core deposit intangible amortization202 373 440 784 
Other3,890
 2,889
 10,332
 7,928
Other4,210 3,318 8,454 6,442 
Total noninterest expense24,903
 22,978
 72,477
 66,719
Total noninterest expense26,443 24,041 52,443 47,574 
Income Before Income Taxes1,381
 3,487
 24,248
 23,817
Income Before Income Taxes12,053 11,667 19,251 22,867 
Income Tax Expense188
 185
 5,060
 4,684
Income Tax Expense2,592 2,476 4,037 4,872 
Net Income$1,193
 $3,302
 $19,188
 $19,133
Net Income$9,461 $9,191 $15,214 $17,995 
Per Share Data: 
  
  
  
Per Share Data:    
Net income per common share: 
  
  
  
Net income per common share:    
Basic$0.07
 $0.19
 $1.12
 $1.07
Basic$0.58 $0.54 $0.93 $1.05 
Diluted$0.07
 $0.18
 $1.08
 $1.02
Diluted$0.57 $0.52 $0.92 $1.01 
Average shares outstanding: 
  
  
  
Average shares outstanding:    
Basic16,688,646
 17,506,018
 16,898,391
 17,811,962
Basic16,202,844 16,906,457 16,216,917 17,002,052 
Diluted17,258,428
 18,197,429
 17,524,252
 18,528,161
Diluted16,563,359 17,567,680 16,514,831 17,660,687 
The accompanying notes are an integral part of these consolidated financial statements.

4


HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Comprehensive Income
(Dollars in thousands)
 (Unaudited)
 Three Months Ended Nine Months Ended
 March 31, March 31,
 2020 2019 2020 2019
Net Income$1,193
 $3,302
 $19,188
 $19,133
Other Comprehensive Income 
  
  
  
  Unrealized holding gains on securities available for sale 
  
  
  
Gains arising during the period395
 992
 419
 1,740
Deferred income tax expense(91) (228) (96) (400)
Total other comprehensive income$304
 $764
 $323
 $1,340
Comprehensive Income$1,497
 $4,066
 $19,511
 $20,473
(Unaudited)
Three Months EndedSix Months Ended
December 31,December 31,
 2020201920202019
Net Income$9,461 $9,191 $15,214 $17,995 
Other Comprehensive Income (Loss)    
  Unrealized holding gains (losses) on securities available for sale    
Gains (losses) arising during the period(84)(270)114 25 
Deferred income tax benefit (expense)19 62 (26)(6)
Total other comprehensive income (loss)$(65)$(208)$88 $19 
Comprehensive Income$9,396 $8,983 $15,302 $18,014 
The accompanying notes are an integral part of these consolidated financial statements.

5


HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders' Equity
(Dollars in thousands)

(Unaudited)
Three Months Ended December 31, 2020
Common StockAdditional
Paid In
Capital		Retained
Earnings		Unearned
ESOP
Shares		Accumulated
Other
Comprehensive
Income (loss)		Total
Stockholders'
Equity
SharesAmount
Balance at September 30, 202017,020,724 $170 $170,204 $234,023 $(6,216)$2,170 $400,351 
Net income— — — 9,461 — — 9,461 
Cash dividends declared on common stock, $0.08/common share— — — (1,302)— — (1,302)
Stock repurchased(277,122)(3)(5,176)— — — (5,179)
Forfeited restricted stock(6,575)— — — — — — 
Exercised stock options54,000 1 775 — — — 776 
Stock option expense— — 153 — — — 153 
Restricted stock expense— — 301 — — — 301 
ESOP shares allocated— — 95 — 133 — 228 
Other comprehensive loss— — — — — (65)(65)
Balance at December 31, 202016,791,027 $168 $166,352 $242,182 $(6,083)$2,105 $404,724 
(Unaudited)
Six Months Ended December 31, 2020
Common StockAdditional
Paid In
Capital		Retained
Earnings		Unearned
ESOP
Shares		Accumulated
Other
Comprehensive
Income		Total
Stockholders'
Equity
SharesAmount
Balance at June 30, 202017,021,357 $170 $169,648 $242,776 $(6,348)$2,017 $408,263 
Net income— — — 15,214 — — 15,214 
Cumulative-effect adjustment due to the adoption of ASU 2016-13— — — (13,358)— — (13,358)
Cash dividends declared on common stock, $0.15/common share— — — (2,450)— — (2,450)
Stock repurchased(277,122)(3)(5,176)— — — (5,179)
Forfeited restricted stock(6,575)— — — — — — 
Retired stock(633)— (9)— — — (9)
Exercised stock options54,000 1 775 — — — 776 
Stock option expense— — 317 — — — 317 
Restricted stock expense— — 643 — — — 643 
ESOP shares allocated— — 154 — 265 — 419 
Other comprehensive income— — — — — 88 88 
Balance at December 31, 202016,791,027 $168 $166,352 $242,182 $(6,083)$2,105 $404,724 







6
 Three Months Ended March 31, 2020
 Common Stock 
Additional
Paid In
Capital
 
Retained
Earnings
 
Unearned
ESOP
Shares
 Accumulated
Other
Comprehensive
Income		 
Total
Stockholders'
Equity
 Shares Amount
Balance at December 31, 201917,664,384
 $177
 $182,366
 $240,312
 $(6,612) $752
 $416,995
Net income—
 —
 —
 1,193
 —
 —
 1,193
Cash dividends declared on common stock, $0.07/common share—
 —
 —
 (1,180) —
 —
 (1,180)
Stock repurchased(635,800) (7) (12,996) —
 —
 —
 (13,003)
Retired stock(7,950) —
 (215) —
 —
 —
 (215)
Granted restricted stock41,306
 —
 —
 —
 —
 —
 —
Exercised stock options40,014
 1
 577
 —
 —
 —
 578
Stock option expense—
 —
 168
 —
 —
 —
 168
Restricted stock expense—
 —
 290
 —
 —
 —
 290
ESOP shares allocated—
 —
 178
 —
 132
 —
 310
Other comprehensive income—
 —
 —
 —
 —
 304
 304
Balance at March 31, 202017,101,954
 $171
 $170,368
 $240,325
 $(6,480) $1,056
 $405,440
              
              
 Nine Months Ended March 31, 2020
 Common Stock 
Additional
Paid In
Capital
 
Retained
Earnings
 
Unearned
ESOP
Shares
 
Accumulated
Other
Comprehensive
Income
 
Total
Stockholders'
Equity
 Shares Amount
Balance at June 30, 201917,984,105
 $180
 $190,315
 $224,545
 $(6,877) $733
 $408,896
Net income—
 —
 —
 19,188
 —
 —
 19,188
Cash dividends declared on common stock, $0.20/common share—
 —
 —
 (3,408) —
 —
 (3,408)
Stock repurchased(1,032,221) (11) (23,211) —
 —
 —
 (23,222)
Forfeited restricted stock(3,200) —
 —
 —
 —
 —
 —
Retired stock(7,950) —
 (215) —
 —
 —
 (215)
Granted restricted stock54,306
 —
 —
 —
 —
 —
 —
Exercised stock options106,914
 2
 1,539
 —
 —
 —
 1,541
Stock option expense—
 —
 556
 —
 —
 —
 556
Restricted stock expense—
 —
 785
 —
 —
 —
 785
ESOP shares allocated—
 —
 599
 —
 397
 —
 996
Other comprehensive income—
 —
 —
 —
 —
 323
 323
Balance at March 31, 202017,101,954
 $171
 $170,368
 $240,325
 $(6,480) $1,056
 $405,440





















HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders' Equity (Continued)(continued)
(Dollars in thousands)

(Unaudited)
Three Months Ended March 31, 2019Three Months Ended December 31, 2019
Common Stock 
Additional
Paid In
Capital
 
Retained
Earnings
 
Unearned
ESOP
Shares
 
Accumulated
Other
Comprehensive
Income (loss)
 
Total
Stockholders'
Equity
Common StockAdditional
Paid In
Capital		Retained
Earnings		Unearned
ESOP
Shares		Accumulated
Other
Comprehensive
Income (loss)		Total
Stockholders'
Equity
Shares AmountSharesAmount
Balance at December 31, 201818,520,825
 $185
 $203,660
 $215,289
 $(7,142) $(1,022) $410,970
Balance at September 30, 2019Balance at September 30, 201917,818,145 $178 $186,359 $232,315 $(6,744)$960 $413,068 
Net income—
 —
 —
 3,302
 —
 —
 3,302
Net income— — — 9,191 — — 9,191 
Cash dividends declared on common stock, $0.06/common share—
 —
 —
 (1,101) —
 —
 (1,101)
Cash dividends declared on common stock, $0.07/common shareCash dividends declared on common stock, $0.07/common share— — — (1,194)— — (1,194)
Stock repurchasedStock repurchased(207,261)(2)(5,417)— — — (5,419)
Exercised stock optionsExercised stock options53,500 1 768 — — — 769 
Stock option expenseStock option expense— — 190 — — — 190 
Restricted stock expenseRestricted stock expense— — 250 — — — 250 
ESOP shares allocatedESOP shares allocated— — 216 — 132 — 348 
Other comprehensive lossOther comprehensive loss— — — — — (208)(208)
Balance at December 31, 2019Balance at December 31, 201917,664,384 $177 $182,366 $240,312 $(6,612)$752 $416,995 
(Unaudited)
Six Months Ended December 31, 2019
Common StockAdditional
Paid In
Capital		Retained
Earnings		Unearned
ESOP
Shares		Accumulated
Other
Comprehensive
Income (loss)		Total
Stockholders'
Equity
SharesAmount
Balance at June 30, 2019Balance at June 30, 201917,984,105 $180 $190,315 $224,545 $(6,877)$733 $408,896 
Net incomeNet income— — — 17,995 — — 17,995 
Cash dividends declared on common stock, $0.13/common shareCash dividends declared on common stock, $0.13/common share— — — (2,228)— — (2,228)
Stock repurchased(297,400) (2) (7,673) —
 —
 —
 (7,675)Stock repurchased(396,421)(4)(10,215)— — — (10,219)
Forfeited restricted stock(1,600) —
 —
 —
 —
 —
 —
Forfeited restricted stock(3,200)— — — — — — 
Retired stock(6,826) —
 (188) —
 —
 —
 (188)
Granted restricted stock23,625
 —
 —
 —
 —
 —
 —
Granted restricted stock13,000 — — — — — 
Exercised stock options26,911
 —
 396
 —
 —
 —
 396
Exercised stock options66,900 1 962 — — — 963 
Stock option expense—
 —
 181
 —
 —
 —
 181
Stock option expense— — 388 — — — 388 
Restricted stock expense—
 —
 228
 —
 —
 —
 228
Restricted stock expense— — 495 — — — 495 
ESOP shares allocated—
 —
 220
 —
 133
 —
 353
ESOP shares allocated— — 421 — 265 — 686 
Other comprehensive income—
 —
 —
 —
 —
 764
 764
Other comprehensive income— — — — — 19 19 
Balance at March 31, 201918,265,535
 $183
 $196,824
 $217,490
 $(7,009) $(258) $407,230
             
             
Nine Months Ended March 31, 2019
Common Stock 
Additional
Paid In
Capital
 
Retained
Earnings
 
Unearned
ESOP
Shares
 
Accumulated
Other
Comprehensive
Income (loss)
 
Total
Stockholders'
Equity
Shares Amount
Balance at June 30, 201819,041,668
 $191
 $217,480
 $200,575
 $(7,406) $(1,598) $409,242
Net income—
 —
 —
 19,133
 —
 —
 19,133
Cash dividends declared on common stock, $0.12/common share—
 —
 —
 (2,218) —
 —
 (2,218)
Stock repurchased(857,155) (8) (23,313) —
 —
 —
 (23,321)
Forfeited restricted stock(4,300) —
 —
 —
 —
 —
 —
Retired stock(7,414) —
 (205) —
 —
   (205)
Granted restricted stock23,625
 —
 —
 —
 —
   —
Exercised stock options69,111
 —
 1,004
 —
 —
 —
 1,004
Stock option expense—
 —
 540
 —
 —
 —
 540
Restricted stock expense—
 —
 625
 —
 —
 —
 625
ESOP shares allocated—
 —
 693
 —
 397
 —
 1,090
Other comprehensive income—
 —
 —
 —
 —
 1,340
 1,340
Balance at March 31, 201918,265,535
 $183
 $196,824
 $217,490
 $(7,009) $(258) $407,230
Balance at December 31, 2019Balance at December 31, 201917,664,384 $177 $182,366 $240,312 $(6,612)$752 $416,995 

The accompanying notes are an integral part of these consolidated financial statements.




7

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Six Months Ended December 31,
 20202019
Operating Activities:
Net income$15,214 $17,995 
Adjustments to reconcile net income to net cash used in operating activities:  
Provision (benefit) for credit losses(2,080)400 
Depreciation3,885 2,564 
Deferred income tax expense1,671 4,451 
Net amortization and accretion(342)(2,991)
Gain (loss) on sale and impairment of REO(35)103 
Gain on sale of loans held for sale(7,048)(6,074)
Origination of loans held for sale(312,627)(156,416)
Proceeds from sales of loans held for sale264,325 138,457 
Increase in deferred loan costs, net(316)(1,082)
Decrease (increase) in accrued interest receivable and other assets4,328 (670)
Amortization of core deposit intangibles440 784 
BOLI income(1,043)(1,206)
ESOP compensation expense419 686 
Restricted stock and stock option expense960 883 
Increase (decrease) in other liabilities717 (4,853)
Net cash used in operating activities(31,532)(6,969)
Investing Activities:  
Purchase of securities available for sale(73,690)(56,430)
Proceeds from maturities of securities available for sale38,720 24,860 
Net proceeds (purchases) of commercial paper120,983 (9,187)
Purchase of certificates of deposit in other banks(1,245)(8,616)
Maturities of certificates of deposit in other banks8,297 12,993 
Principal repayments of mortgage-backed securities8,173 7,090 
Net redemptions (purchases) of other investments(626)8,480 
Proceeds from sale of loans not originated for sale0 154,870 
Net decrease (increase) in loans105,181 (78,731)
Purchase of BOLI(96)(65)
Proceeds from redemption of BOLI0 477 
Purchase of premises and equipment(13,382)(777)
Purchase of operating lease equipment(6,940)(5,569)
Proceeds from sale of REO228 1,421 
Net cash provided by investing activities185,603 50,816 
Financing Activities:  
Net increase (decrease) in deposits(42,487)230,512 
Net increase in other borrowings0 (245,000)
Common stock repurchased(5,179)(10,219)
Cash dividends paid(2,450)(2,228)
Retired stock(9)0 
Exercised stock options776 963 
Net cash used in financing activities(49,349)(25,972)
Net Increase in Cash and Cash Equivalents104,722 17,875 
Cash and Cash Equivalents at Beginning of Period121,622 71,043 
Cash and Cash Equivalents at End of Period$226,344 $88,918 
8
 (Unaudited)
 Nine Months Ended March 31,
 2020 2019
Operating Activities:   
Net income$19,188
 $19,133
Adjustments to reconcile net income to net cash provided by (used in) operating activities: 
  
Provision for loan losses5,800
 5,500
Depreciation4,137
 3,046
Deferred income tax expense4,677
 3,333
Net amortization and accretion(4,275) (5,648)
Loss on sale and impairment of REO88
 500
Gain on sale of loans held for sale(7,577) (4,086)
Origination of loans held for sale(226,834) (122,763)
Proceeds from sales of loans held for sale200,512
 114,010
Increase in deferred loan costs, net(1,017) (389)
Decrease in accrued interest receivable and other assets(571) (4,127)
Amortization of core deposit intangibles1,118
 1,580
BOLI income(1,724) (1,574)
ESOP compensation expense996
 1,090
Restricted stock and stock option expense1,341
 1,165
Decrease in other liabilities(12,515) (1,562)
Net cash provided by (used in) operating activities(16,656) 9,208
Investing Activities: 
  
Purchase of securities available for sale(75,530) (31,675)
Proceeds from maturities of securities available for sale27,823
 21,400
Net purchases of commercial paper(35,949) (12,986)
Purchase of certificates of deposit in other banks(24,200) (15,664)
Maturities of certificates of deposit in other banks18,661
 26,392
Principal repayments of mortgage-backed securities10,902
 27,144
Net redemptions (purchases) of other investments4,177
 (9,191)
Proceeds from sale of loans not originated for sale154,870
 —
Net increase in loans(99,116) (131,671)
Purchase of BOLI(111) (75)
Proceeds from redemption of BOLI477
 14
Purchase of premises and equipment(2,321) (1,068)
Purchase of operating lease equipment(11,047) (7,424)
Proceeds from sale of REO1,812
 759
Net cash used in investing activities(29,552) (134,045)
Financing Activities: 
  
Net increase in deposits227,530
 112,142
Net increase (decrease) in other borrowings(145,000) 45,000
Common stock repurchased(23,222) (23,321)
Cash dividends paid(3,408) (2,218)
Retired stock(215) (205)
Exercised stock options1,541
 1,004
Net cash provided by financing activities57,226
 132,402
Net Increase in Cash and Cash Equivalents11,018
 7,565
Cash and Cash Equivalents at Beginning of Period71,043
 70,746
Cash and Cash Equivalents at End of Period$82,061
 $78,311



HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows (continued)
(Dollars in thousands)
(Unaudited)(Unaudited)
Supplemental Disclosures:Nine Months Ended March 31,Supplemental Disclosures:Six Months Ended December 31,
2020 2019 20202019
Cash paid during the period for:   Cash paid during the period for:
Interest$26,708
 $19,907
Interest$5,404 $18,771 
Income taxes1,300
 455
Income taxes1,686 1,300 
Noncash transactions: 
  
Noncash transactions:  
Unrealized gain in value of securities available for sale, net of income taxes323
 1,340
Unrealized gain in value of securities available for sale, net of income taxes88 19 
Transfer of loans to REO46
 578
Transfer of loans to REO108 46 
Transfer of loans held for sale to total loans96,962
 5,794
Transfer of loans held for sale to total loans10,496 9,736 
Transfer of one-to-four family loans to held for sale240,453
 9,761
Transfer of one-to-four family loans to held for sale0 240,453 
Transfer of land from property and equipment to other assets for new finance lease accounting2,052
 —
Transfer of land from property and equipment to other assets for new finance lease accounting0 2,052 
New ROU asset and lease liabilities from adoption of new lease accounting standard5,296
 —
New ROU asset and lease liabilities for new operating lease accountingNew ROU asset and lease liabilities for new operating lease accounting597 5,296 
The accompanying notes are an integral part of these consolidated financial statements.

9


HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
1.Summary of Significant Accounting Policies
1.    Summary of Significant Accounting Policies
The consolidated financial statements presented in this report include the accounts of HomeTrust Bancshares, Inc., a Maryland corporation ("HomeTrust"), and its wholly-owned subsidiary, HomeTrust Bank (the "Bank"). As used throughout this report, the term the "Company" refers to HomeTrust and the Bank, its consolidated subsidiary, unless the context otherwise requires.
The accompanying unaudited consolidated financial statements have been prepared in accordance with GAAP for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the SEC. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position and results of operations for the periods presented have been included. It is recommended that these unaudited interim consolidated financial statements be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended June 30, 20192020 ("20192020 Form 10-K") filed with the SEC on September 13, 2019.11, 2020. The results of operations for the three and nine months ended MarchDecember 31, 2020 are not necessarily indicative of results that may be expected for the entire fiscal year ending June 30, 2020.2021.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements. Various elements of the Company's accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions, and other subjective assessments. In particular, management has identified several accounting policies that, due to the judgments, estimates and assumptions inherent in those policies, are critical to an understanding of the Company's financial statements. These policies relate to (i) the determination of the provision and the allowance for loancredit losses on loans and (ii) the valuation of goodwill and other intangible assets, and (iii) the valuation of or recognition of deferred tax assets and liabilities.assets. These policies and judgments, estimates and assumptions are described in greater detail in notes to the Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations (Critical Accounting Policies) in our 2019the Company's 2020 Form 10-K. Management believes that the judgments, estimates and assumptions used in the preparation of the financial statements are appropriate based on the factual circumstances at the time. However, given the sensitivity of the financial statements to these critical accounting policies, the use of other judgments, estimates and assumptions could result in material differences in the Company's results of operations or financial condition. Further, subsequent changes in economic or market conditions could have a material impact on these estimates and the Company's financial condition and operating results in future periods.
Certain amounts reported in prior periods' consolidated financial statements have been reclassified to conform to the current presentation. Such reclassifications had no effect on previously reported cash flows, stockholders' equity or net income.
Operating, Accounting and Reporting Considerations related to COVID-19
The COVID-19 pandemic has negatively impacted the global economy. In response to this crisis, the CARES Act was passed by Congress and signed into law on March 27, 2020. The CARES Act provides an estimated $2.2 trillion to fight the COVID-19 pandemic and stimulate the economy by supporting individuals and businesses through loans, grants, tax changes, and other types of relief. Some of the provisions applicable to the Company include, but are not limited to:
• Accounting for Loan Modifications - The CARES Act provides that a financial institution may elect to suspend (1) the requirements under GAAP for certain loan modifications that would otherwise be categorized as a TDR and (2) any determination that such loan modifications would be considered a TDR, including the related impairment for accounting purposes. The Bank has elected this as a policy change.
• Paycheck Protection ProgramPPP - The CARES Act established the Paycheck Protection Program,PPP, an expansion of the SBA's 7(a) loan program and the Economic Injury Disaster Loan Program, administered directly by the SBA.
On December 27, 2020, the 2021 Consolidated Appropriations Act was signed into law combining $900 billion in stimulus relief for the COVID-19 pandemic. The legislation extends certain relief provisions from the March CARES Act that were set to expire at the end of 2020. This new legislation extends the relief to financial institutions to suspend TDR assessment and reporting requirements under GAAP for loan modifications to the earlier of 60 days after the national emergency termination date or January 1, 2022. The legislation includes additional funding for businesses that did not receive PPP funds under the CARES Act, especially minority- and women-owned businesses. In addition, it allows businesses another opportunity to borrow PPP funds if they can show losses of 25% or more in 2020 based on their 2019 revenue. The Company expects a smaller number of applications to be made by its customers for these additional PPP funds.
Also in response to the COVID-19 pandemic, the Board of Governors of the Federal Reserve System, the FDIC, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Consumer Financial Protection Bureau, in consultation with the state financial regulators (collectively, the “agencies”) issued a joint interagency statement (issued March 22, 2020; revised statement issued April 7, 2020). Some of the provisions applicable to the Company include, but are not limited to:
• Accounting for Loan Modifications - Loan modificationsA loan modification that dodoes not meet the conditions of the CARES Act may still qualify as a modification that does not need to be accounted for as a TDR. The agencies confirmed with FASB staff that short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not TDRs. This includes short-term (e.g., six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or insignificant delays in payment.
10
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
• Past Due Reporting - With regard to loans not otherwise reportable as past due, financial institutions are not expected to designate loans with deferrals granted due to COVID-19 as past due because of the deferral. A loan’s payment date is governed by the due date stipulated in the legal agreement. If a financial institution agrees to a payment deferral, these loans would not be considered past due during the period of the deferral.
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

• Nonaccrual Status and Charge-offs - While short-term COVID-19 modifications are in effect, these loans generally should not be reported as nonaccrual or as classified.
See Note 6 Loans for more information on COVID-19 specific loans that have been modified or in deferral.
Adoption of Lease Accounting StandardCECL standard
On July 1, 2019,2020, the Company adopted ASU 2016-02, Leases (“No. 2016-13, "Financial Instruments-Credit Losses ("Topic 842”326"): Measurement of Credit Losses on Financial Instruments", sometimes referred to herein as ASU 2016-13. Topic 326 was subsequently amended by ASU No. 2019-11, Codification Improvements to Topic 326, Financial Instruments-Credit Losses; ASU No. 2019-05, Codification Improvements to Topic 326, Financial Instruments-Credit Losses; and subsequent related ASUs. The new leasingASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. This standard modifies the accounting, presentation,applies to all financial assets measured at amortized cost and disclosures for both lesseesoff balance sheet credit exposures, including loans, investment securities and lessors.unfunded commitments. The Company electedapplied the standard’s provisions using the modified retrospective transition option which allows for application of the Topic 842 guidance at the adoption date. Therefore, comparative prior period financial information was not adjusted and will continue to be reported under the previous accounting guidance of ASC 840, Leases (“ASC 840”). No cumulative-effectmethod as a cumulative effect adjustment to retained earnings as of July 1, 2019 was necessary as2020. With this transition method, the Company did not have to restate comparative prior periods presented in the financial statements related to Topic 326, but will present comparative prior period disclosures using the previous accounting guidance for the allowance for loan losses. This adoption method is considered a change in accounting principle requiring additional disclosure regarding the nature of and reason for the change, which is solely a result of adopting the newadoption of the required standard.
ACL – Investment Securities
Management uses a systematic methodology to determine its ACL for investment securities held to maturity. The ACL is a valuation account that is deducted from the amortized cost basis to present the net amount expected to be collected on the held-to-maturity portfolio. Management considers the effects of past events, current conditions, and reasonable and supportable forecasts on the collectability of the portfolio. The Company’s estimate of its ACL involves a high degree of judgment; therefore, management’s process for determining expected credit losses may result in a range of expected credit losses. Management monitors the held-to-maturity portfolio to determine whether a valuation account would need to be recorded. The Company electedcurrently has no investment securities held to maturity.
Management excludes the “packageaccrued interest receivable balance from the amortized cost basis in measuring expected credit losses on investment securities and does not record an allowance for credit losses on accrued interest receivable. As of practical expedients” permitted underDecember 31, 2020, the transition guidance which allowsaccrued interest receivable for investment securities available for sale was $926.
The Company’s estimate of expected credit losses includes a measure of the expected risk of credit loss even if that risk is remote. However, the Company does not measure expected credit losses on an investment security in which historical credit loss information adjusted for current conditions and reasonable and supportable forecast results in an expectation that nonpayment of the amortized cost basis is zero. Management does not expect nonpayment of the amortized cost basis to reassessbe zero solely on the basis of the current value of collateral securing the security but, instead, also considers the nature of the collateral, potential future changes in collateral values, default rates, delinquency rates, third-party guarantees, credit ratings, interest rate changes since purchase, volatility of the security’s fair value and historical loss information for financial assets secured with similar collateral. The Company performed an analysis that determined that the following securities have a zero expected credit loss: U.S. government agencies, residential MBS of U.S. government agencies and GSEs, and municipal bonds. All of the U.S. government agencies and U.S. government agency backed securities have the full faith and credit backing of the United States Government or one of its prior conclusions regarding lease identification, classificationagencies. Municipal bonds that do not have a zero expected credit loss will be evaluated quarterly to determine whether there is a credit loss associated with a decline in fair value.
Management no longer evaluates securities for OTTI, as ASC Subtopic 326-30, "Financial Instruments—Credit Losses—Available-for-Sale Debt Securities," changes the accounting for recognizing impairment on available-for-sale debt securities. Each quarter management evaluates impairment where there has been a decline in fair value below the amortized cost basis of existing leases, and treatment of initial direct costs on existing leases. Any lease arrangements and significant modifications entered into subsequenta security to the adoption date are accounted for in accordancedetermine whether there is a credit loss associated with the new standard.
Lessee Topic 842 Accounting
The new leasing standard requires recognitiondecline in fair value. Management considers the nature of operating leases on the consolidated balance sheets as ROUcollateral, potential future changes in collateral values, default rates, delinquency rates, third-party guarantees, credit ratings, interest rate changes since purchase, volatility of the security’s fair value and historical loss information for financial assets and lease liabilities. ROU assets represent our right to use underlying assets for the lease terms and lease liabilities represent our obligation to make lease payments arising from the leases. ROU assets and lease liabilitiessecured with similar collateral among other factors. Credit losses are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. We use our estimated incremental borrowing rate in determiningcalculated individually, rather than collectively, using a DCF method, whereby management compares the present value of lease paymentsexpected cash flows with the amortized cost basis of the security. The credit loss component would be recognized through the provision for operating leases and the implicit ratecredit losses in the lease for our one finance lease.Consolidated Statements of Income.
For operatingACL - Loans and leases
The ACL reflects management’s estimate of losses that will result from the Company recognized lease liabilities, with corresponding ROU assets, based on the present value of unpaid lease payments for existing operating leases longer than twelve months as of July 1, 2019. The ROU assets were adjusted per Topic 842 transition guidance for existing lease-related balances of accrued and prepaid rent, and unamortized lease incentives provided by lessors. As a result, the Company recognized ROU assets of approximately $5.3 million in other assets and corresponding lease liabilities of approximately $5.3 million in other liabilities as of July 1, 2019. The July 1, 2019 incremental borrowing rates determined on a collateralized basis for the remaining lease terms were utilized when determining the present value of lease payments at the date of initial adoption.
For our finance lease, the Company leases land for oneinability of its retail locations. Uponborrowers to make required loan payments. The Company established the incremental increase in the ACL at adoption of Topic 842, the Company reclassed $2.1 million from landCECL standard through the cumulative effect adjustment to ROU assets in other assets. In addition,equity and subsequent adjustments will be made through a provision for credit losses charged against earnings. Management records loans charged off against the corresponding liability of $1.9 million, which was disclosed separately onACL and subsequent recoveries, if any, increase the balance sheet was reclassified to other liabilities.ACL when they are recognized.
The Company elected the lessee practical expedient to not separate lease and non-lease components. The Company also elected the short-term lease recognition exemption and will not recognize ROU assets or lease liabilities for leases with a term less than 12 months.
11
Operating lease cost is recognized as a single lease cost on a straight-line basis over the lease term and is recorded in net occupancy expense. Variable lease payments for common area maintenance, property taxes and other operating expenses are recognized as expense in the period when the changes in facts and circumstances on which the variable lease payments are based occur.
Finance lease cost is recognized as a single lease cost using the effective interest method and is recorded in net occupancy expense.
Lessee Accounting Prior to Adoption of Topic 842
Prior to the adoption of ASC 842, the Company applied the guidance of ASC 840. Under ASC 840, operating lease arrangements were off-balance sheet and ROU assets and lease liabilities were not recognized. Operating lease rent expense was recognized on a straight-line basis over the lease term and recorded in net occupancy expense. Common area maintenance, property taxes, and other operating expenses related to leased premises were also recognized in net occupancy expenses, consistent with similar costs for owned locations.
Lessor Topic 842 Accounting
Prior to the adoption of Topic 842, we determined the lease classification at commencement date. Leases not classified as sales-type or direct financing leases are classified as operating leases. The primary accounting criteria we use for  lease classification are (i) review to determine if the lease transfers ownership of the underlying asset to the lessee by the end of the lease term, ii) review to determine if the lease grants the lessee a purchase option that the lessee is reasonably certain to exercise, (iii) determine if the lease term is for a major part of the remaining economic life of the underlying asset and (iv) determine if the present value of the sum of the lease payments and any residual value guarantees equals or exceeds substantially all of the fair value of the underlying asset. We do not lease equipment of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term.
The Company elected a lessor accounting policy to exclude from revenue and expenses sales taxes and other similar taxes assessed by a governmental authority on lease revenue-producing transactions and collected by the lessor from a lessee.
Operating Leases - Assets leased under an operating lease are carried at cost less accumulated depreciation. These assets are depreciated to their estimated residual value using the straight-line method over the lesser of the lease term or estimated useful life of the asset. Assets received at the end of the lease, which are intended to be sold, are marked to the lower of cost or fair value less selling costs with the adjustment recorded in other noninterest income.
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

Management uses a systematic methodology to determine its ACL for loans held for investment and certain off-balance-sheet credit exposures. The ACL is a valuation account that is deducted from the amortized cost basis to present the net amount expected to be collected on the loan portfolio. Management considers the effects of past events, current conditions, and reasonable and supportable forecasts on the collectability of the loan portfolio. The Company’s estimate of its ACL involves a high degree of judgment; therefore, management’s process for determining expected credit losses may result in a range of expected credit losses. The Company’s ACL recorded in the balance sheet reflects management’s best estimate within the range of expected credit losses. The Company recognizes in net income the amount needed to adjust the ACL for management’s current estimate of expected credit losses. The Company’s ACL is calculated using collectively evaluated and individually evaluated loans.
AtThe Company collectively evaluates loans that share similar risk characteristics. In general, management has segmented loans by regulatory call code category and collectively evaluates loans within the inceptionretail and commercial categories. Loans within the retail consumer category include: 1-4 family, HELOCs - originated, HELOCs - purchased, construction and land/lots, indirect auto finance, and consumer. Loans within the commercial category include: commercial real estate, construction and development, commercial and industrial, equipment finance, and municipal leases.
For collectively evaluated loans, the Company uses a DCF method for each loan in a pool, and the results are aggregated at the pool level. A periodic tendency to default and absolute loss given default are applied to a projective model of the loan’s cash flow while considering prepayment and principal curtailment effects. The analysis produces expected cash flows for each operating lease, we record a residual valueinstrument in the pool by pairing loan-level term information (maturity date, payment amount, interest rate, etc.) with top-down pool assumptions (default rates, prepayment speeds). The Company has identified the following portfolio segments for the leasedcurrent calculation: 1-4 family construction, 1-4 family mortgage – jr. lien, 1-4 family mortgage – sr. lien, commercial and industrial, commercial leases, construction – multi-family, construction – non-owner occupied, construction – owner occupied, consumer – auto, consumer – other, consumer – revolving, farmland, land and lot, multifamily, municipal leases, non-owner occupied CRE, owner occupied CRE, and HELOCs. PPP loans are fully guaranteed by the SBA; therefore, management estimates a zero reserve for PPP loans within its allowance for credit losses.
Management has determined that the peer loss experience provides the best basis for its assessment of expected credit losses to determine the ACL. The Company utilized peer call report data to measure historical credit loss experience with similar risk characteristics within the segments over an economic cycle. Management reviewed the historical loss information to appropriately adjust for differences in current asset specific risk characteristics. Management also considered further adjustments to historical loss information for current conditions and reasonable and supportable forecasts that differ from the conditions that existed for the period over which historical information was evaluated. For all segment models for collectively evaluated loans (except for HELOCs), the Company incorporated one macroeconomic driver using a statistical regression modeling methodology. The HELOC segment incorporated two macroeconomic drivers. Due to the low loss rates of municipal leases and the expectation of them remaining low, management has elected to separately pool these loans. Management has elected to use readily available municipal default rates and loss given defaults in order to calculate expected credit losses.
Management considers forward-looking information in estimating expected credit losses. The Company uses the Fannie Mae quarterly economic forecast which is a baseline outlook for the United States economy. Management has evaluated the appropriateness of the reasonable and supportable forecast for the current period along with the inputs used in the estimation of expected credit losses. For the contractual term that extends beyond the reasonable and supportable forecast period, the Company reverts to historical loss information within four quarters using a straight-line approach. Management may apply different reversion techniques depending on the economic environment for the financial asset portfolio and as of the current period has utilized a linear reversion technique. Management has evaluated the appropriateness of a reversion period for the current period and noted that it was reasonable.
Included in its systematic methodology to determine its ACL for loans held for investment and certain off-balance-sheet credit exposures, management considers the need to qualitatively adjust expected credit losses for information not already captured in the loss estimation process. These qualitative adjustments can either increase or decrease the quantitative model estimation (i.e. formulaic model results). Each period the Company considers qualitative factors that are relevant within the qualitative framework that include the following: 1) lending policies and procedures, 2) credit review function, 3) experience and depth of management and staff, 4) external factors, and 5) actual and expected changes in economic and business conditions.
When a loan no longer shares similar risk characteristics with its segment, the asset is assessed to determine whether it should be included in another pool or should be individually evaluated. For these individually evaluated loans, the Company maintains specific book balance thresholds for retail or consumer loans, commercial loans, municipal and equipment leases, and unsecured commercial loans. Management would adjust these thresholds if future analysis suggests a change is needed based on our estimatethe credit environment at that time. Generally, individually evaluated loans other than TDRs are on nonaccrual status. Based on the thresholds above, financial assets will generally remain in pools unless they meet the dollar threshold or foreclosure is probable. The expected credit losses on individually evaluated loans will be estimated based on DCF analysis unless the loan meets the criteria for use of the futurefair value of collateral, either by virtue of an expected foreclosure or through meeting the equipment atdefinition of collateral dependent. Financial assets that have been individually evaluated can be returned to a pool for purposes of estimating the end ofexpected credit loss insofar as their credit profile improves and that the lease term or end ofrepayment terms are not considered to be unique to the equipment’s estimated useful life as indicated by industry data. Operating leases have higher risk because a smaller percentage of the equipment's value is covered by contractual cash flowsasset.
Management measures expected credit losses over the contractual term of the lease. Ifloans. When determining the market valuecontractual term, the Company considers expected prepayments but is precluded from considering expected extensions, renewals, or modifications, unless the Company reasonably expects it will execute a TDR with a borrower. In the event of leased equipment under operating leases decreases at a rate greater than we projected, whether due to rapid technological or economic obsolescence, unusual wear and tear onreasonably-expected TDR, the equipment, excessive use ofCompany factors the equipment, recession or other adverse economic conditions, or other factors, it could adversely affectreasonably-expected TDR into the current values or the residual valuesexpected credit losses estimate. The effects of such equipment.a TDR are recorded when an individual asset is specifically
12
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
identified as a reasonably-expected TDR. The Company seeksidentifies the point at which it offers the modification to mitigate these risks by maintaining a relatively young fleet of leased assets with wide operator bases, which can facilitate attractive lease and utilization rates. The Company manages and evaluates residual values by performing periodic reviews of estimated residual values and monitoring levels of residual realizations. A change in estimated operating lease residual values would result in a change in future depreciation expense. Any impairments are recognized at the time a change is identified.
Rental revenue on operating leases is recognized on a straight-line basis over the lease term and is included in other noninterest income.
Finance Leases - The Company’s finance leases are classified as direct financing leases under ASC 842. The Company’s finance lease activity primarily relates to leasing of new equipment with the equipment purchase price equal to fair value and therefore there is no selling profit or loss at lease commencement. When there is no selling profit or loss, initial direct costs are deferred at the commencement date and included in the measurement of the net investment in the lease.  
A lease receivable is recorded for finance leases at present value discounted using the rate implicit in the lease. The lease receivable includes lease payments not yet paid and the guarantee of the residual value by the lessee or unrelated third party, as applicable. Interest income is recognized over the lease term at a constant periodic discount rate on the remaining balance of the lease net investment using the rate implicit in the lease. After the commencement date, lease payments collected are applied to reduce net investment and recognize interest income.
The recognition of interest income is suspended, and an account is placed on non-accrual status when, in the opinion of management, full collection of all principal and interest due is doubtful. All future interest income accruals, as well as amortization of deferred fees, costs, and purchase premiums or discounts are suspended. Subsequent lease payments received are applied to the outstanding net investment balance until such time as the account is collected, charged-off or returned to accrual status. Finance leases that are nonaccrual do not accrue interest income; however, payments designated by the borrower as the point at which the TDR is reasonably expected for both commercial and consumer loans. The Company uses a DCF methodology to calculate the effect of the concession provided to the borrower in TDR within the ACL.
PCD assets are defined as acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that, as of the date of acquisition, have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by the Company’s assessment. The Company records acquired PCD loans by adding the expected credit losses (i.e., ACL) to the purchase price of the financial assets rather than recording through the provision for credit losses in the income statement. The expected credit loss, as of the acquisition day, of a PCD loan is added to the ACL. The non-credit discount or premium is the difference between the unpaid principal balance and the amortized cost basis as of the acquisition date. Subsequent to the acquisition date, the change in the ACL on PCD loans is recognized through the provision for credit losses. The non-credit discount or premium is accreted or amortized, respectively, into interest payments mayincome over the remaining life of the PCD loan on a level-yield basis. In accordance with the transition requirements within the standard, the Company’s PCI loans were treated as PCD loans.
The Company follows its nonaccrual policy by reversing contractual interest income in the income statement when the Company places a loan on nonaccrual status. Therefore, management excludes the accrued interest receivable balance from the amortized cost basis in measuring expected credit losses on the portfolio and does not record an ACL on accrued interest receivable. As of December 31, 2020, the accrued interest receivable for loans was $8,612.
The Company has a variety of assets that have a component that qualifies as an off-balance sheet exposure. These primarily include undrawn portions of revolving lines of credit and standby letters of credit. The expected losses associated with these exposures within the unfunded portion of the expected credit loss will be recorded as interest income. To qualifya liability on the balance sheet with an offset to the provision for this treatment,credit losses. Management has determined that a majority of the remaining recorded investmentCompany’s off-balance-sheet credit exposures are not unconditionally cancellable. See "Note 6 - Loans" for additional details related to the Company's off-balance-sheet credit exposure. The current adjustment to the ACL for unfunded commitments would be recognized through the provision for credit losses in the lease must be deemed fully collectible.Statement of Income.
The recognition of interest income on finance leases is suspended, and all previously accrued but uncollected revenue is reversed, when lease payments are contractually delinquent for 90 days or more. Accounts, including accounts that have been modified, are returned to accrual status when, in the opinion of management, collection of remaining lease receivables are reasonably assured, and there is a sustained period of repayment performance, generally for a minimum of six months.
Certain finance leases also have residual values at the inception of the lease which are based on our estimate of the future value of the equipment at the end of the lease term or end of the equipment’s estimated useful life as indicated by industry data. Finance leases bear the least risk because contractual payments usually cover approximately 90% of the equipment's cost at the inception of the lease. A change in estimated finance lease residual values during the lease term may impact the loss allowance as a decrease in the residual value may cause an impairment to be recorded on the finance lease.
Lessor2.    Recent Accounting Prior to Adoption of Topic 842Pronouncements
Lessor accounting was not fundamentally changed by Topic 842 and remains similar to the prior accounting model, with updates to align with certain changes to the lessee model (e.g., certain definitions, such as initial direct costs, have been updated) and the new revenue recognition standard. The new rules did not have a significant impact on our classification of leases as finance or operating. The new lease guidance has a narrower definition of initial direct costs that may be capitalized and allocated internal costs and professional fees to negotiate and arrange the lease agreement that would have been incurred regardless of lease execution no longer qualify as initial direct cost.
2.Recent Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." The ASU significantly changes the impairment model for most financial assets that are measured at amortized cost and certain other instruments from an incurred loss model to an expected loss model. This ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted for all entities beginning after December 15, 2018, including interim periods within those fiscal years. The Company has selected a third-party vendor to provide ongoing support under the new methodology. The Bank's project team is evaluating our current expected loss methodology of its loan and investment portfolios to identify the necessary modifications in accordance with this standard and expects a change in the processes and procedures to calculate the allowance for loan losses, including changes in assumptions and estimates to consider expected credit losses over the life of the loan versus the current accounting practice that utilizes the incurred loss model. The Bank has compiled and uploaded all historical data that will be used to calculate expected credit losses on its loan portfolio and intends to run parallel models during the fourth quarter of 2020 to ensure it is fully compliant with the ASU at the adoption date. The team continues to work with the third-party vendor and is finalizing documentation on the methodologies utilized as well as the controls, processes, policies, and disclosures in preparation for performing the full end-to-end parallel run. A valuation adjustment to our allowance for loan losses or investment portfolio that is identified in this process will be reflected as a one-time adjustment in equity rather than earnings. Once adopted, the Company expects its allowance for loan losses to increase; however, until its evaluation is complete the magnitude of the increase will be unknown.
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

In August 2017, FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." This ASU improves the transparency and understandability of disclosures in the financial statements regarding the entities risk management activities and reduces the complexity of hedge accounting. The amendments in this ASU permit hedge accounting for hedging relationships involving nonfinancial risk and interest rate risk by removing certain limitations in cash flow and fair value hedging relationships. In addition, the ASU requires an entity to present the earnings effect of the hedging instrument in the same income statement line item in which the earnings effect of the hedged item is reported. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018 and early adoption is permitted. The Company adopted this ASU on July 1, 2019.2020, applying the modified-retrospective method. Related to the implementation of this ASU, the Company recorded additional ACL on financial instruments of $15,059, additional deferred tax assets of $3,989, additional reserve for unfunded commitments of $2,288, and a reduction to retained earnings of $13,358. The adoption of this ASU did not have a materialan effect on AFS debt securities. See "Note 1 - Summary of Significant Accounting Policies" and "Note 6 - Loans" for additional details related to the adoption of this ASU.
See table below for impact of this ASU on the Company's Consolidated Financial Statements.consolidated balance sheet:
July 1, 2020
As Reported Under ASC 326Pre-ASC 326 AdoptionImpact of ASC 326 Adoption
Assets:
ACL on commercial paper$(250)$0 $(250)
ACL on loans:
Retail consumer loans$(17,692)$(6,956)$(10,736)
Commercial loans(25,189)(21,116)(4,073)
Total ACL on loans$(42,881)$(28,072)$(14,809)
Deferred income taxes$20,323 $16,334 $3,989 
Liabilities:
Liability for credit losses on off-balance sheet credit exposures$2,288 $0 $2,288 
Equity:
Retained earnings$229,418 $242,776 $(13,358)
In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement." The amendments in this ASU remove, modify, and add certain disclosure requirements related to fair value measurements in ASC 820. The amendments inCompany adopted this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019 and early adoption is permitted.on July 1, 2020. The adoption of ASU No. 2018-13 isdid not expected to have a material impacteffect on the Company's Consolidated Financial Statements.
13
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
In November 2018, the FASB issued ASU 2018-19, "Codification Improvements to Topic 326, Financial Instruments—Credit Losses." This update clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. The effective date and transition requirements for this ASU are the same as ASU 2016-13. The adoption of ASU No. 2018-19 is not expected to have a material impact on the Company's Consolidated Financial Statements.
In December 2018, the FASB issued ASU 2018-20, "Leases (Topic 842): Narrow-Scope Improvements for Lessors." The amendments in this update permit lessors, as an accounting policy election, to not evaluate whether certain sales taxes and other similar taxes are lessor costs or lessee costs. Instead, those lessors will account for those costs as if they are lessee costs. A lessor making this election will exclude from the consideration in the contract and from variable payments not included in the consideration in the contract all collections from lessees of taxes within the scope of the election and will provide certain disclosures. For certain lessor costs, the lessor must exclude from variable payments, and therefore revenue, lessor costs paid by lessees directly to third parties from variable payments. In addition, the lessor must account for costs excluded from the consideration of a contract that are paid by the lessor and reimbursed by the lessee as variable payments. A lessor will record those reimbursed costs as revenue. The amendments in this ASU related to recognizing variable payments for contracts with lease and nonlease components require lessors to allocate (rather than recognize as currently required) certain variable payments to the lease and nonlease components when the changes in facts and circumstances on which the variable payment is based occur. After the allocation, the amount of variable payments allocated to the lease components will be recognized as income in profit or loss in accordance with Topic 842, while the amount of variable payments allocated to nonlease components will be recognized in accordance with other Topics, such as Topic 606. The Company adopted this ASU on July 1, 2019.2020. The adoption did not have a material effect on the Company's Consolidated Financial Statements.
In March 2019, the FASB issued ASU 2019-01, "Leases (Topic 842): Codification Improvements." The amendments in this update include the following items: i) determining the fair value of the underlying asset by lessors that are not manufacturers or dealers; ii) requiring cash received from lessors from sales-type and direct financing leases to be presented in the cash flow statement within investing activities; and iii) clarifying interim disclosure requirements. The Company adopted this ASU on July 1, 2019. The adoption did not have a material effect on the Company's Consolidated Financial Statements.
In April 2019, the FASB issued ASU 2019-04, "Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments." The amendments in this update are part of the FASB's ongoing project to improve codification and correcting unintended application. The items within this ASU are not expected to have a significant effect on current accounting practice. The effective date and transition requirements forCompany adopted the amendments to Financial Instruments (ASU 2016-01) are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019 and early adoption is permitted. on July 1, 2020. The effective date and transition requirements forCompany adopted the amendments to Financial Instruments-Credit Losses (ASU 2016-13) are the same as ASU 2016-13 noted above. on July 1, 2020. The effective date and transition requirements forCompany adopted the amendments to Derivatives and Hedging (ASU 2017-12) are the same as ASU 2017-12 noted above.The on July 1, 2019. The adoption of ASU No. 2019-04 isdid not expected to have a material impacteffect on the Company's Consolidated Financial Statements.
In May 2019, the FASB issued ASU 2019-05, "Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief." The amendments in this update allow companies to irrevocably elect, upon the adoption of ASU 2016-13, the fair value option for financial instruments that i) were previously recorded at amortized cost and ii) are within the scope of the credit losses guidance in ASC 326-20, iii) are eligible for the fair value option under ASC 825-10, and iv) are not held-to-maturity debt securities. The effective date and transition requirements forCompany adopted this ASU is the same as ASU 2016-13. The adoption of ASU No. 2019-05 is not expected to have a material impact on the Company's Consolidated Financial Statements.
In July 2019, the FASB issued ASU 2019-07, "Codification Updates to SEC Sections." This ASU amends certain paragraphs in the ASC to reflect the issuance of SEC final rules on Disclosure Update and Simplification and Investment Company Reporting Modernization and other miscellaneous updates. The amendments became effective upon issuance. 1, 2020. The adoption did not have a material effect on the Company's Consolidated Financial Statements.
In November 2019, the FASB issued ASU 2019-11, "Codification Improvements to Topic 326, Financial Instruments-Credit Losses." This ASU clarifies certain aspects of the amendments in ASU 2016-13 and is part of the FASB's ongoing project to improve codification and correcting
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

unintended application. The items within this ASU are not expected to have a significant effect on current accounting practice. The effective date and transition requirements forCompany adopted this ASU is the same as ASU 2016-13.on July 1, 2020. The adoption of ASU No. 2019-11 isdid not expected to have a material impacteffect on the Company's Consolidated Financial Statements.
In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." This ASU is part of the FASB's simplification initiative to reduce complexity in accounting standards. The items within this ASU are not expected to have a significant effect on current accounting practice. The effective date and transition requirements for the first and second items of this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2020 and early adoption is permitted. The adoption of ASU No. 2019-12 is not expected to have a material impact on the Company's Consolidated Financial Statements.
In January 2020, the FASB issued ASU 2020-01, "Investment—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815." This ASU clarified the interaction of the accounting for equity securities under Topic 321 and investments accounted for under the equity method of accounting in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2021 and early adoption is permitted. The adoption of this ASU No. 2020-01 is not expected to have a material impact on the Company's Consolidated Financial Statements.
In March 2020, the FASB issued ASU 2020-03, "Codification Improvements to Financial Instruments." This ASU makes certain narrow-scope amendments to the following: i) clarified that all entities are required to provide fair value option disclosures; ii) clarified the applicability of the portfolio exception in ASC 820 to nonfinancial items; iii) aligned disclosures for depository and lending institutions (Topic 942) with guidance in Topic 320; iv) added cross-references to guidance in ASC 470-50 on line-of-credit or revolving-debt arrangements; v) added cross-references to net asset value practical expedient in ASC 820-10; vi) clarified the interaction between ASC 842 and ASC 326; and vii) clarified the interaction between ASC 326 and ASC 860-20. The amendments for issues i, ii, iv, and v became effective upon issuance and did not have a material effect on the Company's Consolidated Financial Statements. The amendmentCompany adopted the amendments related to issue iii, has the same effective datevi, and transition requirements as ASU 2019-04 and isvii on July 1, 2020. The adoption did not expected to have a material impacteffect on the Company's Consolidated Financial Statements.
In September 2020, the FASB issued ASU 2020-06, "Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40)." This ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity's own equity. Specifically the ASU removes: i) major separation models required under GAAP and ii) certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contract to qualify for the exception. The amendments related to issues viin this ASU are effective for annual periods, and vii have the same effective dateinterim periods within those annual periods, beginning after December 15, 2021 and transition requirements asearly adoption is permitted.The adoption of this ASU 2016-13 and is not expected to have a material impact on the Company's Consolidated Financial Statements.

In October 2020, the FASB issued ASU 2020-08, "Codification Improvements to Subtopic 310-20, Receivables—Nonrefundable Fees and Other Costs." This ASU clarified that entities should reevaluate whether a callable debt security is within the scope of paragraph 310-20-35-33 for each reporting period. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2020. The adoption of this ASU is not expected to have a material impact on the Company's Consolidated Financial Statements.
In October 2020, the FASB issued ASU 2020-09, "Debt (Topic 470): Amendments to SEC Paragraphs Pursuant to SEC Release No. 33-10762." This ASU updates financial disclosure requirements for subsidiary issuers and guarantors of registered debt securities and
14
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

affinities whose securities are pledged as collateral for registered securities. The amendments in this ASU are effective January 4, 2021.The adoption did not have an effect on the Company's Consolidated Financial Statements.
3.Debt Securities
In October 2020, the FASB issued ASU 2020-10, "Codification Improvements." The amendments in this update are part of the FASB's ongoing project to improve codification and correcting unintended application. This ASU, i) removes references to various FASB Concepts Statements, ii) situates all disclosure guidance in the appropriate disclosure section of the Codification, and iii) makes other improvements and technical corrections to the Codification. The items within this ASU are not expected to have a significant effect on current accounting practice. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2020 and early adoption is permitted. The adoption of this ASU is not expected to have a material impact on the Company's Consolidated Financial Statements.
15
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
3.    Debt Securities
Securities available for sale consist of the following at the dates indicated:
December 31, 2020
Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Estimated
Fair
Value
U.S. government agencies$18,966 $176 $(4)$19,138 
Residential MBS of U.S. government agencies and GSEs39,357 1,693 (37)41,013 
Municipal bonds10,333 566 0 10,899 
Corporate bonds82,151 342 (3)82,490 
Total$150,807 $2,777 $(44)$153,540 
 March 31, 2020
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
U.S. Government Agencies$6,645
 $197
 $—
 $6,842
Residential MBS of U.S. Government Agencies and GSEs50,290
 1,561
 (99) 51,752
Municipal Bonds21,208
 503
 (8) 21,703
Corporate Bonds79,107
 37
 (820) 78,324
Total$157,250
 $2,298
 $(927) $158,621
 June 30, 2019
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
U.S. Government Agencies$15,099
 $122
 $(11) $15,210
Residential MBS of U.S. Government Agencies and GSEs74,778
 586
 (184) 75,180
Municipal Bonds24,896
 423
 (7) 25,312
Corporate Bonds6,061
 43
 (20) 6,084
Total$120,834
 $1,174
 $(222) $121,786
June 30, 2020
Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Estimated
Fair
Value
U.S. government agencies$3,957 $216 $0 $4,173 
Residential MBS of U.S. government agencies and GSEs46,629 1,776 (50)48,355 
Municipal bonds16,090 541 0 16,631 
Corporate bonds58,242 270 (134)58,378 
Total$124,918 $2,803 $(184)$127,537 
Debt securities available for sale by contractual maturity at MarchDecember 31, 2020 are shown below. MBS are not included in the maturity categories because the borrowers in the underlying pools may prepay without penalty; therefore, it is unlikely that the securities will pay at their stated maturity schedule.
March 31, 2020 December 31, 2020
Amortized
Cost
 
Estimated
Fair Value
Amortized
Cost		Estimated
Fair Value
Due within one year$41,056
 $40,883
Due within one year$29,178 $29,250 
Due after one year through five years59,538
 59,464
Due after one year through five years80,252 81,016 
Due after five years through ten years4,292
 4,445
Due after five years through ten years2,020 2,261 
Due after ten years2,074
 2,077
Due after ten years0 0 
Mortgage-backed securities50,290
 51,752
Mortgage-backed securities39,357 41,013 
Total$157,250
 $158,621
Total$150,807 $153,540 
The Company had no0 sales of securities available for sale during the three and ninesix months ended MarchDecember 31, 2020 and 2019. There were no0 gross realized gains or losses for the three and ninesix months ended MarchDecember 31, 2020 and 2019.


Securities available for sale with costs totaling $80,593$53,433 and $94,337$82,888 and market values of $82,028$54,780 and $94,876$84,456 at MarchDecember 31, 2020 and June 30, 2019,2020, respectively, were pledged as collateral to secure various public deposits and other borrowings.
The gross unrealized losses and the fair value for securities available for sale aggregated by the length of time that individual securities have been in a continuous unrealized loss position as of MarchDecember 31, 2020 and June 30, 20192020 were as follows:
December 31, 2020
Less than 12 Months12 Months or MoreTotal
Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses
U.S. government agencies$14,996 $(4)$0 $0 $14,996 $(4)
Residential MBS of U.S. government agencies and GSEs115 (7)1,922 (30)2,037 (37)
Corporate bonds16,941 (3)0 0 16,941 (3)
Total$32,052 $(14)$1,922 $(30)$33,974 $(44)
16
 March 31, 2020
 Less than 12 Months 12 Months or More Total
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
Residential MBS of U.S. Government Agencies and GSEs$5,308
 $(58) $1,982
 $(41) $7,290
 $(99)
Municipal Bonds1,744
 (8) —
 —
 1,744
 (8)
Corporate Bonds61,782
 (820) —
 —
 61,782
 (820)
Total$68,834
 $(886) $1,982
 $(41) $70,816
 $(927)
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

 June 30, 2019
 Less than 12 Months 12 Months or More Total
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
U.S. Government Agencies$—
 $—
 $6,988
 $(11) $6,988
 $(11)
Residential MBS of U.S. Government Agencies and GSEs1,144
 (3) 24,242
 (181) 25,386
 (184)
Municipal Bonds—
 —
 4,895
 (7) 4,895
 (7)
Corporate Bonds393
 (5) 3,630
 (15) 4,023
 (20)
Total$1,537
 $(8) $39,755
 $(214) $41,292
 $(222)
June 30, 2020
Less than 12 Months12 Months or MoreTotal
Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses
Residential MBS of U.S. government agencies and GSEs$227 $(10)$2,435 $(40)$2,662 $(50)
Corporate bonds11,779 (134)0 0 11,779 (134)
Total$12,006 $(144)$2,435 $(40)$14,441 $(184)
The total number of securities with unrealized losses at MarchDecember 31, 2020, and June 30, 20192020 were 4821 and 100,24, respectively. Unrealized
Management evaluates securities for impairment where there has been a decline in fair value below the amortized cost basis of a security to determine whether there is a credit loss associated with the decline in fair value on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. All debt securities available for sale in an unrealized loss position as of December 31, 2020 continue to perform as scheduled and management does not believe that there is a credit loss or that a provision for credit losses on securities have not been recognized in income because management has theis necessary. Also, as part of management's evaluation of its intent and ability to hold investments for a period of time sufficient to allow for any anticipated recovery in the market, management considers its investment strategy, cash flow needs, liquidity position, capital adequacy and interest rate risk position. Management does not currently intend to sell the securities forwithin the foreseeable future,portfolio and has determined that it is not more likely than notmore-likely-than-not that the Companysecurities will be required to sell thebe sold. See Note 1 – Summary of Significant Account Policies for further discussion.
Management continues to monitor all of its securities priorwith a high degree of scrutiny. There can be no assurance that management will not conclude in future periods that conditions existing at that time indicate some or all of its securities may be sold or would require a charge to earnings as a recoveryprovision for credit losses in value. The decline in fair value was largely due to increases in market interest rates subsequent to the purchase dates of the securities. The Company had no other-than-temporary impairment losses during the nine months ended March 31, 2020.such periods.
4.Other Investments
4.    Other Investments
Other investments, at cost consist of the following at the dates indicated:
March 31, 2020 June 30, 2019December 31, 2020June 30, 2020
FHLB of Atlanta stock$25,859
 $31,969
FHLB of Atlanta stock$23,309 $23,309 
FRB stock7,353
 7,335
FRB stock7,374 7,368 
SBIC investments7,989
 6,074
SBIC investments8,889 8,269 
Total$41,201
 $45,378
Total$39,572 $38,946 
As a requirement for membership, the Bank invests in the stock of both the FHLB of Atlanta and the FRB. No ready market exists for these securities so carrying value approximates their fair value based on the redemption provisions of the FHLB of Atlanta and the FRB, respectively. SBIC investments are equity securities without a readily determinable fair value.
5.    Loans Held For Sale
Loans held for sale as of the dates indicated consist of the following:
December 31, 2020June 30, 2020
One-to-four family$45,998 $28,152 
SBA8,319 1,240 
HELOCs64,122 47,785 
Total$118,439 $77,177 
17
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

6.    Loans and Allowance for Credit Losses on Loans
5.Loans
Loans consist of the following at the dates indicated:
December 31, 2020
June 30,
2020 (1)
Commercial loans:
Commercial real estate$1,056,971 $1,052,906 
Construction and development172,892 215,934 
Commercial and industrial138,761 154,825 
Equipment finance272,761 229,239 
Municipal finance128,549 127,987 
PPP64,845 80,697 
Total commercial loans1,834,779 1,861,588 
Retail consumer loans:
One-to-four family452,421 473,693 
HELOCs - originated125,397 137,447 
HELOCs - purchased58,640 71,781 
Construction and land/lots75,108 81,859 
Indirect auto finance122,947 132,303 
Consumer9,332 10,259 
Total retail consumer loans843,845 907,342 
Total loans2,678,624 2,768,930 
Deferred loan costs, net (2)
0 189 
Total loans, net of deferred loan costs2,678,624 2,769,119 
Allowance for credit losses(39,844)(28,072)
Loans, net$2,638,780 $2,741,047 
___________
 March 31, 2020 June 30, 2019
Retail consumer loans:   
One-to-four family$487,777
 $660,591
HELOCs - originated144,804
 139,435
HELOCs - purchased82,232
 116,972
Construction and land/lots80,765
 80,602
Indirect auto finance135,449
 153,448
Consumer11,576
 11,416
Total retail consumer loans942,603
 1,162,464
Commercial loans:   
Commercial real estate990,693
 927,261
Construction and development249,714
 210,916
Commercial and industrial164,539
 160,471
Equipment finance198,962
 132,058
Municipal finance115,992
 112,016
Total commercial loans1,719,900
 1,542,722
Total loans2,662,503
 2,705,186
Deferred loan costs, net1,021
 4
Total loans, net of deferred loan costs2,663,524
 2,705,190
Allowance for loan losses(26,850) (21,429)
Loans, net$2,636,674
 $2,683,761
(1) The June 30, 2020 information in the above table reflects the loan portfolio prior to the adoption of ASU 2016-13. This information was reported as shown in the below tables under "Loans and Allowance for Loan Losses - Pre ASU 2016-13", with the acquired loans being net of earned income and related discounts, which includes the credit discount on the acquired credit impaired loans.
(2) In accordance with the adoption of ASU 2016-13, the loan portfolio is shown at the amortized cost basis as of December 31, 2020, to include net deferred cost of $1,941 and unamortized discount total related to loans acquired of $5,126. Accrued interest receivable at December 31, 2020 of $8,612 is accounted for separately from the amortized cost basis. The ACL at June 30, 2020 includes the valuation allowance on PCI loans of $182.
All qualifying one-to-four family first mortgage loans, HELOCs, commercial real estate loans, and FHLB Stockof Atlanta stock are pledged as collateral by a blanket pledge to secure any outstanding FHLB advances.
Loans are monitored for credit quality on a recurring basis and the composition of the loans outstanding by credit quality indicator is provided below. Loan credit quality indicators are developed through review of individual borrowers on an ongoing basis. Generally, loans are monitored for performance on a quarterly basis with the credit quality indicators adjusted as needed. The Company's total non-purchased and purchased performingindicators represent the rating for loans by segment, class, and risk grade atas of the dates indicateddate presented based on the most recent assessment performed. These credit quality indicators are defined as follows:
Pass—A pass rated asset is not adversely classified because it does not display any of the characteristics for adverse classification.
Special Mention—A special mention asset has potential weaknesses that deserve management’s close attention. If left uncorrected, such potential weaknesses may result in deterioration of the repayment prospects or collateral position at some future date. Special mention assets are not adversely classified and do not warrant adverse classification.
Substandard—A substandard asset is inadequately protected by the current net worth and paying capacity of the obligor, or of the collateral pledged, if any. Assets classified as substandard generally have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. These assets are characterized by the distinct possibility of loss if the deficiencies are not corrected.
Doubtful—An asset classified doubtful has all the weaknesses inherent in an asset classified substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable, on the basis of currently existing facts, conditions, and values.
Loss—Assets classified loss are considered uncollectible and of such little value that their continuing to be carried as an asset is not warranted. This classification is not necessarily equivalent to no potential for recovery or salvage value, but rather that it is not appropriate to defer a full write-off even though partial recovery may be effected in the future.
18
 Pass 
Special
Mention
 Substandard Doubtful Loss Total
March 31, 2020           
Retail consumer loans:           
One-to-four family$473,723
 $1,974
 $6,984
 $258
 $—
 $482,939
HELOCs - originated142,630
 833
 1,341
 —
 —
 144,804
HELOCs - purchased81,712
 —
 520
 —
 —
 82,232
Construction and land/lots80,276
 3
 147
 —
 —
 80,426
Indirect auto finance134,382
 —
 1,067
 —
 —
 135,449
Consumer11,058
 5
 513
 —
 —
 11,576
Commercial loans: 
  
  
  
  
  
Commercial real estate963,953
 8,191
 12,631
 —
 30
 984,805
Construction and development244,801
 4,055
 249
 1
 —
 249,106
Commercial and industrial154,215
 6,139
 2,637
 —
 1
 162,992
Equipment finance197,651
 559
 752
 —
 —
 198,962
Municipal finance115,709
 283
 —
 —
 —
 115,992
Total loans$2,600,110
 $22,042
 $26,841
 $259
 $31
 $2,649,283
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

 Pass 
Special
Mention
 Substandard Doubtful Loss Total
June 30, 2019           
Retail consumer loans:           
One-to-four family$644,159
 $2,089
 $8,072
 $384
 $19
 $654,723
HELOCs - originated137,001
 766
 1,434
 —
 9
 139,210
HELOCs - purchased116,306
 —
 666
 —
 —
 116,972
Construction and land/lots79,995
 71
 164
 —
 —
 80,230
Indirect auto finance152,393
 13
 1,042
 —
 —
 153,448
Consumer11,375
 1
 33
 3
 4
 11,416
Commercial loans: 
  
  
  
  
  
Commercial real estate901,183
 8,066
 10,306
 —
 —
 919,555
Construction and development207,827
 790
 1,357
 1
 —
 209,975
Commercial and industrial157,325
 877
 600
 —
 —
 158,802
Equipment finance131,674
 —
 384
 —
 —
 132,058
Municipal finance111,721
 295
 —
 —
 —
 112,016
Total loans$2,650,959
 $12,968
 $24,058
 $388
 $32
 $2,688,405
The Company's total purchasedfollowing table presents the credit impaired ("PCI")risk profile by risk grade for commercial loans by segment, class, and risk grade at the dates indicated follows:origination year:
Term Loans By Origination Year
December 31, 202020212020201920182017PriorRevolvingTotal
Commercial real estate
Risk rating:
Pass$84,992 $180,257 $146,108 $175,521 $166,606 $241,865 $32,112 $1,027,461 
Special mention0 0 0 14,407 1,281 3,245 295 19,228 
Substandard0 0 0 653 5,412 4,206 0 10,271 
Doubtful0 0 0 0 0 0 0 0 
Loss0 11 0 0 0 0 0 11 
Total commercial real estate$84,992 $180,268 $146,108 $190,581 $173,299 $249,316 $32,407 $1,056,971 
Construction and development
Risk rating:
Pass$8,366 $17,695 $10,527 $8,345 $1,621 $8,164 $114,970 $169,688 
Special mention0 0 0 0 0 534 2,133 2,667 
Substandard0 0 0 0 0 537 0 537 
Doubtful0 0 0 0 0 0 0 0 
Loss0 0 0 0 0 0 0 0 
Total construction and development$8,366 $17,695 $10,527 $8,345 $1,621 $9,235 $117,103 $172,892 
Commercial and industrial
Risk rating:
Pass$12,949 $14,603 $22,120 $17,797 $17,448 $12,347 $33,356 $130,620 
Special mention0 0 794 0 952 171 5,656 7,573 
Substandard0 0 299 117 64 86 0 566 
Doubtful0 0 0 0 0 0 0 0 
Loss0 1 0 0 0 1 0 2 
Total commercial and industrial$12,949 $14,604 $23,213 $17,914 $18,464 $12,605 $39,012 $138,761 
Equipment finance
Risk rating:
Pass$73,835 $121,829 $69,830 $6,407 $0 $0 $0 $271,901 
Special mention0 440 78 0 0 0 0 518 
Substandard0 0 46 0 0 0 0 46 
Doubtful0 0 296 0 0 0 0 296 
Loss0 0 0 0 0 0 0 0 
Total equipment finance$73,835 $122,269 $70,250 $6,407 $0 $0 $0 $272,761 
Municipal leases
Risk rating:
Pass$1,178 $21,158 $14,812 $19,662 $10,411 $54,947 $5,762 $127,930 
Special mention0 0 0 0 0 271 0 271 
Substandard0 0 0 0 0 348 0 348 
Doubtful0 0 0 0 0 0 0 0 
Loss0 0 0 0 0 0 0 0 
Total municipal leases$1,178 $21,158 $14,812 $19,662 $10,411 $55,566 $5,762 $128,549 
PPP
Risk rating:
Pass$0 $64,845 $0 $0 $0 $0 $0 $64,845 
Special mention0 0 0 0 0 0 0 0 
Substandard0 0 0 0 0 0 0 0 
Doubtful0 0 0 0 0 0 0 0 
Loss0 0 0 0 0 0 0 0 
Total PPP$0 $64,845 $0 $0 $0 $0 $0 $64,845 
Total commercial loans
Risk rating:
Pass$181,320 $420,387 $263,397 $227,732 $196,086 $317,323 $186,200 $1,792,445 
Special mention0 440 872 14,407 2,233 4,221 8,084 30,257 
Substandard0 0 345 770 5,476 5,177 0 11,768 
Doubtful0 0 296 0 0 0 0 296 
Loss0 12 0 0 0 1 0 13 
Total commercial loans$181,320 $420,839 $264,910 $242,909 $203,795 $326,722 $194,284 $1,834,779 
19
 Pass 
Special
Mention
 Substandard Doubtful Loss Total
March 31, 2020           
Retail consumer loans:           
One-to-four family$3,368
 $463
 $1,007
 $—
 $—
 $4,838
Construction and land/lots108
 —
 231
 —
 —
 339
Commercial loans: 
  
  
  
  
  
Commercial real estate3,191
 1,790
 907
 —
 —
 5,888
Construction and development277
 —
 331
 —
 —
 608
Commercial and industrial1,544
 —
 —
 —
 3
 1,547
Total loans$8,488
 $2,253
 $2,476
 $—
 $3
 $13,220
 Pass 
Special
Mention
 Substandard Doubtful Loss Total
June 30, 2019           
Retail consumer loans:           
One-to-four family$4,124
 $248
 $1,496
 $—
 $—
 $5,868
HELOCs - originated225
 —
 —
 —
 —
 225
Construction and land/lots142
 —
 230
 —
 —
 372
Commercial loans: 
  
  
  
  
  
Commercial real estate4,503
 1,903
 1,300
 —
 —
 7,706
Construction and development453
 —
 488
 —
 —
 941
Commercial and industrial1,666
 —
 —
 —
 3
 1,669
Total loans$11,113
 $2,151
 $3,514
 $—
 $3
 $16,781
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

The Company's totalfollowing table presents the credit risk profile by risk grade for consumer loans by segment, class, and delinquency status at the dates indicated follows:origination year:
Term Loans By Origination Year
December 31, 202020212020201920182017PriorRevolvingTotal
One-to-four family
Risk rating:
Pass$43,718 $55,592 $61,576 $55,305 $46,841 $175,540 $2,464 $441,036 
Special mention0 0 0 0 29 1,523 0 1,552 
Substandard0 999 0 218 201 8,217 0 9,635 
Doubtful0 0 0 0 0 197 0 197 
Loss0 0 0 1 0 0 0 1 
Total one-to-four family$43,718 $56,591 $61,576 $55,524 $47,071 $185,477 $2,464 $452,421 
HELOCs - originated
Risk rating:
Pass$1,654 $1,066 $1,495 $455 $671 $8,619 $108,828 $122,788 
Special mention0 0 0 0 0 769 0 769 
Substandard0 0 0 0 38 1,603 199 1,840 
Doubtful0 0 0 0 0 0 0 0 
Loss0 0 0 0 0 0 0 0 
Total HELOCs - originated$1,654 $1,066 $1,495 $455 $709 $10,991 $109,027 $125,397 
HELOCs - purchased
Risk rating:
Pass$0 $0 $0 $0 $0 $0 $57,799 $57,799 
Special mention0 0 0 0 0 0 0 0 
Substandard0 0 0 0 0 0 841 841 
Doubtful0 0 0 0 0 0 0 0 
Loss0 0 0 0 0 0 0 0 
Total HELOCs - purchased$0 $0 $0 $0 $0 $0 $58,640 $58,640 
Construction and land/lots
Risk rating:
Pass$428 $23,130 $8,311 $1,270 $0 $4,948 $36,414 $74,501 
Special mention0 0 0 0 0 0 0 0 
Substandard0 0 0 102 0 505 0 607 
Doubtful0 0 0 0 0 0 0 0 
Loss0 0 0 0 0 0 0 0 
Total construction and land/lots$428 $23,130 $8,311 $1,372 $0 $5,453 $36,414 $75,108 
Indirect auto finance
Risk rating:
Pass$22,171 $34,993 $21,944 $26,196 $11,684 $4,554 $0 $121,542 
Special mention0 0 0 0 0 0 0 0 
Substandard8 208 386 436 217 147 0 1,402 
Doubtful0 0 0 0 0 0 0 0 
Loss0 2 1 0 0 0 0 3 
Total indirect auto finance$22,179 $35,203 $22,331 $26,632 $11,901 $4,701 $0 $122,947 
Total consumer loans
Risk rating:
Pass$740 $1,213 $5,952 $363 $157 $159 $429 $9,013 
Special mention0 0 0 4 0 0 0 4 
Substandard243 16 11 7 0 18 20 315 
Doubtful0 0 0 0 0 0 0 0 
Loss0 0 0 0 0 0 0 0 
Total consumer loans$983 $1,229 $5,963 $374 $157 $177 $449 $9,332 
Total retail consumer loans
Risk rating:
Pass$68,711 $115,994 $99,278 $83,589 $59,353 $193,820 $205,934 $826,679 
Special mention0 0 0 4 29 2,292 0 2,325 
Substandard251 1,223 397 763 456 10,490 1,060 14,640 
Doubtful0 0 0 0 0 197 0 197 
Loss0 2 1 1 0 0 0 4 
Total retail consumer loans$68,962 $117,219 $99,676 $84,357 $59,838 $206,799 $206,994 $843,845 
20
 Past Due   Total
 30-89 Days 90 Days+ Total Current Loans
March 31, 2020         
Retail consumer loans:         
One-to-four family$996
 $2,732
 $3,728
 $484,049
 $487,777
HELOCs - originated438
 275
 713
 144,091
 144,804
HELOCs - purchased761
 47
 808
 81,424
 82,232
Construction and land/lots—
 242
 242
 80,523
 80,765
Indirect auto finance378
 284
 662
 134,787
 135,449
Consumer17
 21
 38
 11,538
 11,576
Commercial loans:         
Commercial real estate1,854
 1,160
 3,014
 987,679
 990,693
Construction and development217
 125
 342
 249,372
 249,714
Commercial and industrial65
 27
 92
 164,447
 164,539
Equipment finance1,364
 689
 2,053
 196,909
 198,962
Municipal finance—
 —
 —
 115,992
 115,992
Total loans$6,090
 $5,602
 $11,692
 $2,650,811
 $2,662,503
 Past Due   Total
 30-89 Days 90 Days+ Total Current Loans
June 30, 2019         
Retail consumer loans:         
One-to-four family$1,615
 $1,389
 $3,004
 $657,587
 $660,591
HELOCs - originated226
 231
 457
 138,978
 139,435
HELOCs - purchased—
 485
 485
 116,487
 116,972
Construction and land/lots138
 6
 144
 80,458
 80,602
Indirect auto finance459
 237
 696
 152,752
 153,448
Consumer6
 8
 14
 11,402
 11,416
Commercial loans: 
  
  
  
  
Commercial real estate2,279
 516
 2,795
 924,466
 927,261
Construction and development—
 1,133
 1,133
 209,783
 210,916
Commercial and industrial207
 99
 306
 160,165
 160,471
Equipment finance649
 384
 1,033
 131,025
 132,058
Municipal finance—
 —
 —
 112,016
 112,016
Total loans$5,579
 $4,488
 $10,067
 $2,695,119
 $2,705,186

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

The Company's recorded investment infollowing table presents the credit risk profile by risk grade for total non-purchased and purchased performing consumer and commercial loans, by segment and class, that are not accruing interest or are 90 days or more past due and still accruing interest at the dates indicated follows:
 March 31, 2020 June 30, 2019
 Nonaccruing 
90 Days + &
still accruing
 Nonaccruing 
90 Days + &
still accruing
Retail consumer loans:       
One-to-four family$3,863
 $—
 $3,223
 $—
HELOCs - originated431
 —
 372
 —
HELOCs - purchased520
 —
 666
 —
Construction and land/lots19
 —
 6
 —
Indirect auto finance623
 —
 463
 —
Consumer27
 —
 21
 —
Commercial loans: 
  
  
  
Commercial real estate9,253
 —
 3,559
 —
Construction and development250
 —
 1,357
 —
Commercial and industrial269
 —
 307
 —
Equipment finance410
 —
 384
 —
Total loans$15,665
 $—
 $10,358
 $—
PCI loans totaling $1,018 at March 31, 2020 and $1,344 at June 30, 2019 are excluded from nonaccruing loans dueprior to the accretionadoption of discounts established in accordance withASU 2016-13:
PassSpecial
Mention		SubstandardDoubtfulLossTotal
June 30, 2020
Commercial loans:
Commercial real estate$1,028,709 $7,580 $10,779 $0 $16 $1,047,084 
Construction and development212,370 2,723 250 1 0 215,344 
Commercial and industrial130,202 20,439 2,622 0 0 153,263 
Equipment finance228,288 150 801 0 0 229,239 
Municipal finance127,706 281 0 0 0 127,987 
PPP80,697 0 0 0 0 80,697 
Retail consumer loans:
One-to-four family458,248 1,724 9,042 206 0 469,220 
HELOCs - originated134,697 902 1,848 0 0 137,447 
HELOCs - purchased71,119 0 662 0 0 71,781 
Construction and land/lots81,112 0 402 0 0 81,514 
Indirect auto finance130,975 0 1,328 0 0 132,303 
Consumer9,894 4 361 0 0 10,259 
Total loans$2,694,017 $33,803 $28,095 $207 $16 $2,756,138 
The following table presents the acquisition methodcredit risk profile by risk grade for PCI consumer and commercial loans, prior to the adoption of accounting for business combinations.ASU 2016-13:
TDRs are loans which have renegotiated loan terms to assist borrowers who are unable to meet the original terms of their loans. Such modifications to loan terms may include a lower interest rate, a reduction in principal, or a longer term to maturity. Additionally, all TDRs are considered impaired. The Company had no commitments to lend additional funds on these TDR loans at March 31, 2020.
The Company's loans that were performing under the payment terms of TDRs that were excluded from nonaccruing loans above at the dates indicated follows:
PassSpecial
Mention		SubstandardDoubtfulLossTotal
June 30, 2020
Commercial loans:
Commercial real estate$3,181 $1,742 $899 $0 $0 $5,822 
Construction and development271 0 319 0 0 590 
Commercial and industrial1,556 0 3 0 3 1,562 
Retail consumer loans:
One-to-four family2,994 465 1,014 0 0 4,473 
Construction and land/lots108 0 237 0 0 345 
Total loans$8,110 $2,207 $2,472 $0 $3 $12,792 
21
 March 31, 2020 June 30, 2019
Performing TDRs included in impaired loans$14,732
 $23,116
An analysis of the allowance for loan losses by segment for the periods shown is as follows:
 Three Months Ended March 31, 2020 Three Months Ended March 31, 2019
 PCI 
Retail
Consumer
 Commercial Total PCI 
Retail
Consumer
 Commercial Total
Balance at beginning of period$152
 $5,400
 $16,479
 $22,031
 $199
 $7,236
 $13,984
 $21,419
Provision for (recovery of) loan losses30
 1,519
 3,851
 5,400
 2
 (818) 6,316
 5,500
Charge-offs—
 (295) (706) (1,001) —
 (288) (2,648) (2,936)
Recoveries—
 359
 61
 420
 —
 331
 102
 433
Balance at end of period$182
 $6,983
 $19,685
 $26,850
 $201
 $6,461
 $17,754
 $24,416
 Nine Months Ended March 31, 2020 Nine Months Ended March 31, 2019
 PCI 
Retail
Consumer
 Commercial Total PCI 
Retail
Consumer
 Commercial Total
Balance at beginning of period$201
 $6,419
 $14,809
 $21,429
 $483
 $7,527
 $13,050
 $21,060
Provision for (recovery of) loan losses(19) (80) 5,899
 5,800
 (282) (1,223) 7,005
 5,500
Charge-offs—
 (678) (1,448) (2,126) —
 (881) (2,728) (3,609)
Recoveries—
 1,322
 425
 1,747
 —
 1,038
 427
 1,465
Balance at end of period$182
 $6,983
 $19,685
 $26,850
 $201
 $6,461
 $17,754
 $24,416
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

The following table presents an aging analysis of past due loans (includes nonaccrual loans) by segment and class:
Past DueTotal
30-89 Days90 Days+TotalCurrentLoans
December 31, 2020
Commercial loans:
Commercial real estate$45 $2,060 $2,105 $1,054,866 $1,056,971 
Construction and development0 361 361 172,531 172,892 
Commercial and industrial0 91 91 138,670 138,761 
Equipment finance286 68 354 272,407 272,761 
Municipal finance0 352 352 128,197 128,549 
PPP0 0 0 64,845 64,845 
Retail consumer loans:
One-to-four family1,431 2,874 4,305 448,116 452,421 
HELOCs - originated98 248 346 125,051 125,397 
HELOCs - purchased147 145 292 58,348 58,640 
Construction and land/lots0 22 22 75,086 75,108 
Indirect auto finance395 405 800 122,147 122,947 
Consumer256 17 273 9,059 9,332 
Total loans$2,658 $6,643 $9,301 $2,669,323 $2,678,624 
The Company'sfollowing table presents an aging analysis of past due loans by segment and class, prior to the adoption of ASU 2016-13:
Past DueTotal
30-89 Days90 Days+TotalCurrentLoans
June 30, 2020
Commercial loans:
Commercial real estate$4,528 $2,892 $7,420 $1,045,486 $1,052,906 
Construction and development293 341 634 215,300 215,934 
Commercial and industrial0 91 91 154,734 154,825 
Equipment finance303 498 801 228,438 229,239 
Municipal finance0 0 0 127,987 127,987 
PPP0 0 0 80,697 80,697 
Retail consumer loans:
One-to-four family1,679 3,147 4,826 468,867 473,693 
HELOCs - originated442 310 752 136,695 137,447 
HELOCs - purchased214 47 261 71,520 71,781 
Construction and land/lots0 252 252 81,607 81,859 
Indirect auto finance756 285 1,041 131,262 132,303 
Consumer30 25 55 10,204 10,259 
Total loans$8,245 $7,888 $16,133 $2,752,797 $2,768,930 

22
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
The following table presents recorded investment in loans on nonaccrual status, by segment and class, including restructured loans. It also includes interest income recognized on nonaccrual loans for the six months ended December 31, 2020.
December 31, 2020June 30, 202090 Days + &
still accruing as of December 31, 2020		Nonaccrual with no allowance as of December 31, 2020Interest income recognized
Commercial loans:
Commercial real estate$7,751 $8,869 $0 $4,576 $290 
Construction and development537 465 0 80 39 
Commercial and industrial234 259 0 92 62 
Equipment finance354 801 0 293 14 
Municipal finance352 0 0352 0 
Retail consumer loans:
One-to-four family3,425 3,582 0 1,085 129 
HELOCs - originated344 531 0 0 34 
HELOCs - purchased841 662 0 0 12 
Construction and land/lots22 37 0 0 0 
Indirect auto finance661 668 0 0 56 
Consumer18 49 0 0 6 
Total loans$14,539 $15,923 $0 $6,478 $642 
The decrease in the nonaccrual balance in the above schedule, compared to June 30, 2020, is mainly due to one large commercial nonaccrual loan paying off partially offset by the addition to nonaccrual loans of $486 of PCI loans, formerly accounted for as credit impaired loans, prior to the adoption of ASU 2016-13. These loans were previously excluded from nonaccrual loans. The adoption of CECL resulted in the discontinuation of the pool-level accounting for acquired credit impaired loans which was replaced with a loan-level evaluation for nonaccrual status.
The following table presents a breakdown of the provision (benefit) for credit losses included in our Consolidated Statements of Income:
Three Months EndedSix Months Ended
December 31,December 31,
2020201920202019
Provision (benefit) for credit losses:
Loans$(3,350)$400 $(2,400)$400 
Off-balance-sheet credit exposure140 0 140 0 
Commercial paper180 0 180 0 
Total provision (benefit) for credit losses$(3,030)$400 $(2,080)$400 
The following table presents an analysis of the ACL on loans by segment:
Three Months EndedSix Months Ended
December 31, 2020December 31, 2020
CommercialRetail
Consumer		TotalCommercialRetail
Consumer		Total
Balance at beginning of period$25,199 $17,933 $43,132 $21,116 $6,956 $28,072 
Impact of adoption ASU 2016-130 0 0 4,073 10,736 14,809 
Provision (benefit) for credit losses(292)(3,058)(3,350)0 (2,400)(2,400)
Charge-offs(308)(253)(561)(1,403)(935)(2,338)
Recoveries300 323 623 1,113 588 1,701 
Net charge-offs(8)70 62 (290)(347)(637)
Balance at end of period$24,899 $14,945 $39,844 $24,899 $14,945 $39,844 


23
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
The following table presents an analysis of the allowance for loan losses by segment, prior to the adoption of ASU 2016-13:
Three Months EndedSix Months Ended
December 31, 2019December 31, 2019
PCICommercialRetail
Consumer		TotalPCICommercialRetail
Consumer		Total
Balance at beginning of period$194 $15,392 $5,728 $21,314 $201 $14,809 $6,419 $21,429 
Provision for (recovery of) loan losses(42)1,485 (1,043)400 (49)2,048 (1,599)400 
Charge-offs0 (599)(96)(695)0 (742)(383)(1,125)
Recoveries0 201 811 1,012 0 364 963 1,327 
Balance at end of period$152 $16,479 $5,400 $22,031 $152 $16,479 $5,400 $22,031 
The following table presents ending balances of loans and the related ACL, by segment and class:
Allowance for Credit LossesTotal Loans Receivable
Loans
individually
evaluated		Loans
collectively
evaluated		TotalLoans
individually
evaluated		Loans
collectively
evaluated		Total
December 31, 2020
Commercial loans:
Commercial real estate$86 $12,841 $12,927 $6,463 $1,050,508 $1,056,971 
Construction and development0 2,385 2,385 80 172,812 172,892 
Commercial and industrial16 2,874 2,890 887 137,874 138,761 
Equipment finance76 6,179 6,255 373 272,388 272,761 
Municipal finance0 442 442 352 128,197 128,549 
PPP0 0 0 0 64,845 64,845 
Retail consumer loans:
One-to-four family11 7,800 7,811 3,266 449,155 452,421 
HELOCs - originated0 1,680 1,680 0 125,397 125,397 
HELOCs - purchased0 784 784 0 58,640 58,640 
Construction and land/lots0 1,456 1,456 0 75,108 75,108 
Indirect auto finance0 2,978 2,978 0 122,947 122,947 
Consumer0 236 236 0 9,332 9,332 
Total$189 $39,655 $39,844 $11,421 $2,667,203 $2,678,624 
24
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
The following table presents ending balances of loans and the related allowance, by segment and class, atprior to the dates indicated follows:adoption of ASU 2016-13:
Allowance for Loan LossesTotal Loans Receivable
PCILoans
individually
evaluated for
impairment		Loans
collectively
evaluated		TotalPCILoans
individually
evaluated for
impairment		Loans
collectively
evaluated		Total
June 30, 2020
Commercial loans:
Commercial real estate$113 $961 $10,731 $11,805 $5,822 $7,924 $1,039,160 $1,052,906 
Construction and development4 5 3,599 3,608 590 299 215,045 215,934 
Commercial and industrial15 31 2,153 2,199 1,562 852 152,411 154,825 
Equipment finance0 209 2,598 2,807 0 801 228,438 229,239 
Municipal finance0 0 697 697 0 0 127,987 127,987 
PPP0 0 0 0 0 0 80,697 80,697 
Retail consumer loans:
One-to-four family17 52 2,400 2,469 4,473 4,304 464,916 473,693 
HELOCs - originated0 0 1,344 1,344 0 0 137,447 137,447 
HELOCs - purchased0 0 430 430 0 0 71,781 71,781 
Construction and land/lots33 0 1,409 1,442 345 296 81,218 81,859 
Indirect auto finance0 0 1,136 1,136 0 10 132,293 132,303 
Consumer0 0 135 135 0 0 10,259 10,259 
Total$182 $1,258 $26,632 $28,072 $12,792 $14,486 $2,741,652 $2,768,930 
 Allowance for Loan Losses Total Loans Receivable
 PCI 
Loans
individually
evaluated for
impairment
 
Loans
collectively
evaluated
 Total PCI 
Loans
individually
evaluated for
impairment
 
Loans
collectively
evaluated
 Total
March 31, 2020               
Retail consumer loans:               
One-to-four family$17
 $5
 $2,427
 $2,449
 $4,838
 $4,313
 $478,626
 $487,777
HELOCs - originated—
 —
 1,384
 1,384
 —
 —
 144,804
 144,804
HELOCs - purchased—
 —
 485
 485
 —
 —
 82,232
 82,232
Construction and land/lots33
 —
 1,387
 1,420
 339
 303
 80,123
 80,765
Indirect auto finance—
 —
 1,145
 1,145
 —
 10
 135,439
 135,449
Consumer—
 —
 150
 150
 —
 —
 11,576
 11,576
Commercial loans: 
  
  
  
  
  
  
  
Commercial real estate113
 772
 9,574
 10,459
 5,888
 7,114
 977,691
 990,693
Construction and development4
 5
 4,147
 4,156
 608
 310
 248,796
 249,714
Commercial and industrial15
 1
 2,384
 2,400
 1,547
 28
 162,964
 164,539
Equipment finance—
 —
 2,182
 2,182
 —
 411
 198,551
 198,962
Municipal finance—
 —
 620
 620
 —
 —
 115,992
 115,992
Total$182
 $783
 $25,885
 $26,850
 $13,220
 $12,489
 $2,636,794
 $2,662,503
June 30, 2019 
  
  
  
  
  
  
  
Retail consumer loans: 
  
  
  
  
  
  
  
One-to-four family$62
 $74
 $2,375
 $2,511
 $5,868
 $5,318
 $649,405
 $660,591
HELOCs - originated—
 7
 1,060
 1,067
 225
 7
 139,203
 139,435
HELOCs - purchased—
 —
 518
 518
 —
 —
 116,972
 116,972
Construction and land/lots—
 —
 1,265
 1,265
 372
 323
 79,907
 80,602
Indirect auto finance—
 —
 927
 927
 —
 —
 153,448
 153,448
Consumer—
 4
 189
 193
 —
 4
 11,412
 11,416
Commercial loans: 
  
  
  
  
  
  
  
Commercial real estate118
 28
 7,890
 8,036
 7,706
 8,692
 910,863
 927,261
Construction and development4
 5
 3,187
 3,196
 941
 1,397
 208,578
 210,916
Commercial and industrial17
 2
 1,957
 1,976
 1,669
 2
 158,800
 160,471
Equipment finance—
 —
 1,305
 1,305
 —
 —
 132,058
 132,058
Municipal finance—
 —
 435
 435
 —
 —
 112,016
 112,016
Total$201
 $120
 $21,108
 $21,429
 $16,781
 $15,743
 $2,672,662
 $2,705,186
LoansPrior to the adoption of ASU 2016-13, loans acquired through acquisitions arewere initially excluded from the allowance for loan losses in accordance with the acquisition method of accounting for business combinations. The Company recordsrecorded these loans at fair value, which includes a credit discount,discount; therefore, no allowance for loan losses iswas established for these acquired loans at acquisition. A provision for loan losses iswas recorded for any further deterioration in these acquired loans subsequent to the acquisition.
The following table presents impaired loans and the related allowance, by segment and class, excluding PCI loans, prior to the adoption of ASU 2016-13:
 Total Impaired Loans
Unpaid
Principal
Balance		Recorded
Investment
With a
Recorded
Allowance		Recorded
Investment
With No
Recorded
Allowance		TotalRelated
Recorded
Allowance
June 30, 2020     
Commercial loans:
Commercial real estate$10,401 $8,062 $1,068 $9,130 $976 
Construction and development1,785 818 80 898 11 
Commercial and industrial9,782 1,058 26 1,084 34 
Equipment finance2,631 303 498 801 209 
Retail consumer loans:     
One-to-four family16,560 10,805 3,374 14,179 412 
HELOCs - originated2,087 1,585 53 1,638 43 
HELOCs - purchased662 662 0 662 3 
Construction and land/lots1,585 749 296 1,045 13 
Indirect auto finance1,075 486 241 727 5 
Consumer297 38 27 65 2 
Total impaired loans$46,865 $24,566 $5,663 $30,229 $1,708 
The table above includes $15,743, of impaired loans that were not individually evaluated because these loans did not meet the Company's threshold for individual impairment evaluation. The recorded allowance above includes $450 related to these loans that were not individually evaluated.
25
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

The Company'sfollowing table presents average recorded investments in impaired loans and interest income recognized on impaired loans, prior to the related allowance, by segment and class, excludingadoption of ASU 2016-13:
Three Months EndedSix Months Ended
December 31, 2019December 31, 2019
Average
Recorded
Investment		Interest
Income
Recognized		Average
Recorded
Investment		Interest
Income
Recognized
Commercial loans:
Commercial real estate$8,665 $76 $8,419 $144 
Construction and development1,181 11 1,527 26 
Commercial and industrial742 14 710 90 
Equipment finance1,032 0 643 3 
Retail consumer loans:
One-to-four family14,276 192 15,085 378 
HELOCs - originated1,862 26 1,700 53 
HELOCs - purchased476 3 540 6 
Construction and land/lots1,117 20 1,201 44 
Indirect auto finance483 6 467 15 
Consumer53 3 288 6 
Total loans$29,887 $351 $30,580 $765 
The following table presents a summary of changes in the accretable yield for PCI loans, atprior to the dates indicated follows:adoption of ASU 2016-13:
 Three Months EndedSix Months Ended
December 31, 2019December 31, 2019
Accretable yield, beginning of period$4,916 $5,259 
Reclass from nonaccretable yield (1)
135 250 
Other changes, net (2)
(295)(309)
Interest income(401)(845)
Accretable yield, end of period$4,355 $4,355 
______________________________________
(1)    Represents changes attributable to expected loss assumptions.
(2)    Represents changes in cash flows expected to be collected due to the impact of modifications, changes in prepayment assumptions, and changes in interest rates.
26
 Total Impaired Loans
 
Unpaid
Principal
Balance
 
Recorded
Investment
With a
Recorded
Allowance
 
Recorded
Investment
With No
Recorded
Allowance
 Total 
Related
Recorded
Allowance
March 31, 2020         
Retail consumer loans:         
One-to-four family$18,211
 $10,914
 $3,975
 $14,889
 $383
HELOCs - originated1,724
 1,636
 52
 1,688
 42
HELOCs - purchased474
 474
 —
 474
 2
Construction and land/lots1,547
 756
 303
 1,059
 22
Indirect auto finance1,003
 392
 299
 691
 4
Consumer53
 16
 28
 44
 2
Commercial loans: 
  
  
  
  
Commercial real estate10,078
 7,669
 1,847
 9,516
 803
Construction and development1,591
 621
 80
 701
 8
Commercial and industrial9,823
 246
 853
 1,099
 4
Equipment finance1,466
 —
 411
 411
 —
Total impaired loans$45,970
 $22,724
 $7,848
 $30,572
 $1,270
June 30, 2019 
  
  
  
  
Retail consumer loans: 
  
  
  
  
One-to-four family$18,302
 $12,461
 $3,152
 $15,613
 $472
HELOCs - originated2,410
 564
 1,219
 1,783
 46
HELOCs - purchased666
 —
 666
 666
 —
Construction and land/lots1,917
 957
 323
 1,280
 26
Indirect auto finance601
 353
 137
 490
 2
Consumer379
 7
 41
 48
 6
Commercial loans: 
  
  
  
  
Commercial real estate10,127
 6,434
 3,404
 9,838
 36
Construction and development2,574
 940
 791
 1,731
 7
Commercial and industrial10,173
 354
 768
 1,122
 6
Equipment finance462
 —
 384
 384
 —
Total impaired loans$47,611
 $22,070
 $10,885
 $32,955
 $601
The table above includes $18,083 and $17,212, of impaired loans that were not individually evaluated at March 31, 2020 and June 30, 2019, respectively, because these loans did not meet the Company's threshold for individual impairment evaluation. The recorded allowance above includes $487 and $481 related to these loans that were not individually evaluated at March 31, 2020 and June 30, 2019, respectively.
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

In estimating ECL, ASC 326 prescribes that if foreclosure is probable, a CDA is required to be measured at the fair value of collateral, but as a practical expedient, if foreclosure is not probable, fair value measurement is optional. For those CDA loans measured at the fair value of collateral, a credit loss expense is recorded for loan amounts in excess of fair value. The following table provides a breakdown between loans identified as CDAs and non-CDAs, by segment and class, and securing collateral, as well as collateral coverage for those loans at December 31, 2020:
The Company's average recorded investment in impaired loans and interest income recognized on impaired loans for the three and nine months ended March 31, 2020 and 2019 follows:
Type of Collateral and Extent to Which Collateral Secures Financial Assets
Three Months EndedResidential PropertyInvestment PropertyCommercial PropertyBusiness AssetsFinancial Assets Not Considered Collateral DependentTotal
March 31, 2020 March 31, 2019
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Retail consumer loans:       
One-to-four family$14,189
 $175
 $16,499
 $237
HELOCs - originated1,724
 23
 957
 18
HELOC - purchased474
 30
 333
 3
Construction and land/lots1,091
 19
 1,356
 24
Indirect auto finance625
 8
 361
 6
Consumer53
 3
 1,580
 17
Commercial loans: 
  
  
  
Commercial loans:
Commercial real estate8,728
 59
 4,116
 123
Commercial real estate$0 $3,800 $2,460 $0 $1,050,711 $1,056,971 
Construction and development712
 10
 1,696
 16
Construction and development0 80 0 0 172,812 172,892 
Commercial and industrial1,119
 11
 188
 80
Commercial and industrial0 0 0 90 138,671 138,761 
Equipment finance$727
 3
 $—
 $—
Equipment finance0 0 0 87 272,674 272,761 
Total loans$29,442
 $341
 $27,086
 $524
Municipal financeMunicipal finance0 0 0 352 128,197 128,549 
PPPPPP0 0 0 0 64,845 64,845 
Retail consumer loans:Retail consumer loans:
One-to-four familyOne-to-four family1,085 0 0 0 451,336 452,421 
HELOCs - originatedHELOCs - originated0 0 0 0 125,397 125,397 
HELOCs - purchasedHELOCs - purchased0 0 0 0 58,640 58,640 
Construction and land/lotsConstruction and land/lots0 0 0 0 75,108 75,108 
Indirect auto financeIndirect auto finance0 0 0 0 122,947 122,947 
ConsumerConsumer0 0 0 0 9,332 9,332 
TotalTotal$1,085 $3,880 $2,460 $529 $2,670,670 $2,678,624 
Total Collateral ValueTotal Collateral Value$1,257 $3,924 $2,732 $2,506 
 Nine Months Ended
 March 31, 2020 March 31, 2019
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Retail consumer loans:       
One-to-four family$14,861
 $560
 $17,878
 $699
HELOCs - originated1,706
 76
 1,067
 52
HELOCs - purchased524
 37
 235
 10
Construction and land/lots1,174
 63
 1,491
 75
Indirect auto finance506
 42
 341
 19
Consumer229
 9
 1,335
 58
Commercial loans: 
  
  
  
Commercial real estate8,496
 237
 4,376
 313
Construction and development1,323
 36
 1,800
 51
Commercial and industrial812
 103
 201
 222
Equipment finance664
 6
 —
 —
Total loans$30,295
 $1,169
 $28,724
 $1,499
27
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

A summary of changes in the accretable yield for PCI loans for the three and nine months ended March 31, 2020 and 2019 follows:
 Three Months Ended
 March 31, 2020 March 31, 2019
Accretable yield, beginning of period$4,355
 $5,232
Reclass from nonaccretable yield (1)
171
 118
Other changes, net (2)
(23) 528
Interest income(378) (412)
Accretable yield, end of period$4,125
 $5,466
 Nine Months Ended
 March 31, 2020 March 31, 2019
Accretable yield, beginning of period$5,259
 $5,734
Reclass from nonaccretable yield (1)
421
 542
Other changes, net (2)
(332) 863
Interest income(1,223) (1,673)
Accretable yield, end of period$4,125
 $5,466

(1)Represents changes attributable to expected loss assumptions.
(2)Represents changes in cash flows expected to be collected due to the impact of modifications, changes in prepayment assumptions, and changes in interest rates.
For the three and ninesix months ended MarchDecember 31, 2020 and 2019, the following tables presenttable presents a breakdown of the types of concessions made on TDRs by loan class:
 Three Months Ended March 31, 2020 Three Months Ended March 31, 2019
 
Number
of
Loans
 
Pre
Modification
Outstanding
Recorded
Investment
 
Post
Modification
Outstanding
Recorded
Investment
 
Number
of
Loans
 
Pre
Modification
Outstanding
Recorded
Investment
 
Post
Modification
Outstanding
Recorded
Investment
Below market interest rate:           
Retail consumer:           
One-to-four family—
 $—
 $—
 2
 $15
 $15
Home equity lines of credit—
 —
 —
 1
 212
 212
Total—
 $—
 $—
 3
 $227
 $227
Other TDRs: 
  
  
  
  
  
Retail consumer: 
  
  
  
  
  
One-to-four family2
 $319
 $317
 2
 $335
 $334
Construction and land/lots—
 —
 —
 1
 29
 28
Commercial:           
Commercial real estate1
 30
 30
 2
 5,424
 5,423
Construction and development—
 —
 —
 1
 182
 182
Total3
 $349
 $347
 6
 $5,970
 $5,967
Total3
 $349
 $347
 9
 $6,197
 $6,194
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

 Nine Months Ended March 31, 2020 Nine Months Ended March 31, 2019
 
Number
of
Loans
 
Pre
Modification
Outstanding
Recorded
Investment
 
Post
Modification
Outstanding
Recorded
Investment
 
Number
of
Loans
 
Pre
Modification Outstanding Recorded
Investment
 
Post
Modification
Outstanding
Recorded
Investment
Below market interest rate:           
Retail consumer:           
One-to-four family—
 $—
 $—
 1
 $85
 $84
Commercial:           
Commercial real estate1
 88
 87
 —
 —
 —
Total1
 $88
 $87
 1
 $85
 $84
Extended payment terms: 
  
  
  
  
  
Retail consumer: 
  
  
  
  
  
One-to-four family2
 $70
 $67
 2
 $212
 $212
HELOCs - originated—
 —
 —
 1
 15
 15
Commercial:           
Commercial and industrial1
 826
 826
 —
 —
 —
Total3
 $896
 $893
 3
 $227
 $227
Other TDRs: 
  
  
  
  
  
Retail consumer: 
  
  
  
  
  
One-to-four family4
 $353
 $348
 10
 $841
 $829
Construction and land/lots—
 —
 —
 1
 29
 28
Indirect auto finance4
 68
 57
 1
 33
 29
Consumer—
 —
 —
 1
 2
 2
Commercial:           
Commercial real estate1
 30
 30
 2
 5,424
 5,423
Construction and development1
 182
 79
 1
 182
 182
Total10
 $633
 $514
 16
 $6,511
 $6,493
Total14
 $1,617
 $1,494
 20
 $6,823
 $6,804
Three Months Ended December 31, 2020Three Months Ended December 31, 2019
Number
of
Loans		Pre
Modification
Outstanding
Recorded
Investment		Post
Modification
Outstanding
Recorded
Investment		Number
of
Loans		Pre
Modification
Outstanding
Recorded
Investment		Post
Modification
Outstanding
Recorded
Investment
Below market interest rate:
Commercial:
Commercial real estate0 $0 $0 1 $88 $88 
Extended payment terms:      
Commercial:
Commercial and industrial0 0 0 1 826 826 
Retail consumer:      
One-to-four family0 0 0 1 56 53 
Other TDRs:      
Commercial:
Construction and development0 0 0 1 182 79 
Retail consumer:      
One-to-four family1 19 16 2 11 10 
Construction and land/lots1 225 223 0 0 0 
Indirect auto finance3 45 43 0 0 0 
Total5 $289 $282 6 $1,163 $1,056 
Six Months Ended December 31, 2020Six Months Ended December 31, 2019
Number
of
Loans		Pre
Modification
Outstanding
Recorded
Investment		Post
Modification
Outstanding
Recorded
Investment		Number
of
Loans		Pre
Modification Outstanding Recorded
Investment		Post
Modification
Outstanding
Recorded
Investment
Below market interest rate:
Commercial:
Commercial real estate0 $0 $0 1 $88 $88 
Extended payment terms:      
Commercial:
Commercial and industrial0 0 0 1 826 826 
Retail consumer:      
One-to-four family0 0 0 2 70 67 
Other TDRs:      
Commercial:
Commercial real estate1 4,408 3,800 0 0 0 
Construction and development0 0 0 1 182 79 
Retail consumer:      
One-to-four family1 19 16 3 45 43 
Construction and land/lots1 225 223 0 0 0 
Indirect auto finance9 141 109 4 68 61 
Total12 $4,793 $4,148 12 $1,279 $1,164 
Other TDRs include TDRs that have a below market interest rate and extended payment terms. The Company does not typically forgive principal when restructuring troubled debt.
28
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

The following tables presenttable presents loans that were modified as TDRs within the previous 12 months and for which there was a payment default during the three and ninesix months ended MarchDecember 31, 2020 and 2019:
Three Months Ended December 31, 2020Three Months Ended December 31, 2019
Number of
Loans		Recorded
Investment		Number of
Loans		Recorded
Investment
Other TDRs:    
Retail consumer:    
Indirect auto finance1 $1 0 $0 
Total1 $1 0 $0 
 Three Months Ended March 31, 2020 Three Months Ended March 31, 2019
 
Number of
Loans
 
Recorded
Investment
 
Number of
Loans
 
Recorded
Investment
Retail consumer: 
  
  
  
One-to-four family—
 $—
 2
 $184
Consumer—
 —
 1
 2
Total—
 $—
 3
 $186
Total—
 $—
 3
 $186
Six Months Ended December 31, 2020Six Months Ended December 31, 2019
Number of
Loans		Recorded
Investment		Number of
Loans		Recorded
Investment
Nine Months Ended March 31, 2020 Nine Months Ended March 31, 2019
Number of
Loans
 
Recorded
Investment
 
Number of
Loans
 
Recorded
Investment
Other TDRs: 
  
  
  
Other TDRs:    
Retail consumer: 
  
  
  
Retail consumer:    
One-to-four family2
 $49
 2
 $184
One-to-four family0 $0 2 $50 
Consumer—
 —
 1
 2
Indirect auto financeIndirect auto finance2 12 0 0 
Total2
 $49
 3
 $186
Total2 $12 2 $50 
Total2
 $49
 3
 $186
In the determination of the allowance for loan losses,ACL, management considers TDRs for all loan classes, and the subsequent nonperformance in accordance with their modified terms, by measuring impairmenta reserve on a loan-by-loan basis based on either the value of the loan's expected future cash flows discounted at the loan's original effective interest rate or on the collateral value, net of the estimated costs of disposal, if the loan is collateral dependent.
Off-Balance-Sheet Credit Exposure
The Company maintains a separate reserve for credit losses from off-balance-sheet credit exposures, including unfunded loan commitments, which is included in other liabilities on the consolidated balance sheets. The reserve for credit losses on off-balance-sheet credit exposures is adjusted as a provision for credit losses in the consolidated statements of income. The estimate includes consideration of the likelihood that funding will occur and an estimate of ECLs on commitments expected to be funded over its estimated life, utilizing the same models and approaches for the Company's other loan portfolio segments described above, as these unfunded commitments share similar risk characteristics as its loan portfolio segments. The Company has identified the unfunded portion of certain lines of credit as unconditionally cancellable credit exposures, meaning the Company can cancel the unfunded commitment at any time. No credit loss estimate is reported for off-balance-sheet credit exposures that are unconditionally cancellable by the Company or for undrawn amounts under such arrangements that may be drawn prior to the cancellation of the arrangement. At December 31, 2020, the liability for credit losses on off-balance-sheet credit exposures included in other liabilities was $2,428.
Modifications in responseResponse to COVID-19
TheBeginning in March 2020, the Company began offering short-term loan modifications to assist borrowers during the COVID-19 pandemic. The CARES Act along with a joint agency statement issued by banking agencies and confirmed by FASB staff that short-term modifications made in response to COVID-19 are not TDRs. Accordingly, the Company does not account for such loan modifications as TDRs. As of MarchDecember 31, 2020, modifications totaling $14.3 million$1,654 and $162.4 million$82,035 had been granted in retail consumer loans and commercial loans, respectively. See Note 1 Summary
The Bank is offering payment and financial relief programs for borrowers impacted by COVID-19. These programs include loan payment deferrals for up to 90 days (which can be renewed for another 90 days under certain circumstances) waived late fees, and suspension of Significant Accounting Policiesforeclosure proceedings and Noterepossessions. Since March, the Company has received numerous requests from borrowers for some type of payment relief; however, the majority of these payment deferrals have ended and borrowers are again making regular loan payments. The breakout of loans deferred by loan type as of the dates indicated is as follows:
29
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
Principal and Interest Payment Deferrals by Loan Types (1) (2)
December 31, 2020June 30, 2020
DeferralPercent of Total Loan PortfolioDeferralPercent of Total Loan Portfolio
Lodging$0 0 %$108,171 4.0 %
Other commercial real estate, construction and development, and commercial and industrial4,018 0.2 367,443 13.7 
Equipment finance2,196 0.1 33,693 1.3 
One-to-four family822 0 36,821 1.4 
Other consumer loans832 0 5,203 0.2 
     Total$7,868 0.3 %$551,331 20.6 %
__________________________
(1)    Modified loans are not included in classified assets or nonperforming assets.
(2)    Principal and interest is being deferred

A majority of loans placed on principal and interest payment deferral during the pandemic came out of deferral as of December 31, 2020. However, the Company has allowed for continued relief to borrowers in the form of interest-only payments for certain loans recently coming out of full deferral. At December 31, 2020, the Company had $75,821 in commercial loans on interest-only payments for a period of time no greater than 12 Subsequent Events for more information.months before being required to return to their original contractual payments.
30
6.Real Estate Owned
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
7.    Real Estate Owned
The activity within REO for the periods shown is as follows:
 Three Months Ended March 31, Nine Months Ended March 31,
 2020 2019 2020 2019
Balance at beginning of period$1,451
 $2,955
 $2,929
 $3,684
Transfers from loans—
 482
 46
 578
Sales, net of gain or loss(376) (397) (1,722) (971)
Writedowns—
 (37) (178) (288)
Balance at end of period$1,075
 $3,003
 $1,075
 $3,003
Three Months Ended December 31,Six Months Ended December 31,
2020201920202019
Balance at beginning of period$144 $2,582 $337 $2,929 
Transfers from loans108 0 108 46 
Sales, net of gain or loss0 (965)(193)(1,346)
Writedowns0 (166)0 (178)
Balance at end of period$252 $1,451 $252 $1,451 
At MarchDecember 31, 2020 and June 30, 2019,2020, the Bank had $205$0 and $1,018,$97, respectively, of foreclosed residential real estate property in REO. The recorded investment in consumer mortgage loans collateralized by residential real estate in the process of foreclosure totaled $61$447 and $243$1,318 at MarchDecember 31, 2020 and June 30, 2019,2020, respectively.
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements8.    Net Income per Share
(Dollars in thousands, except per share data)

7.Net Income per Share
The following is a reconciliation of the numerator and denominator of basic and diluted net income per share of common stock as of the dates indicated:
 Three Months Ended March 31, Nine Months Ended March 31,
 2020 2019 2020 2019
Numerator:       
Net income$1,193
 $3,302
 $19,188
 $19,133
Allocation of earnings to participating securities(11) (23) (167) (132)
Numerator for basic EPS - Net income available to common stockholders$1,182
 $3,279
 $19,021
 $19,001
Effect of dilutive securities:       
Dilutive effect to participating securities2
 3
 6
 5
Numerator for diluted EPS$1,184
 $3,282
 $19,027
 $19,006
Denominator: 
  
  
  
Weighted-average common shares outstanding - basic16,688,646
 17,506,018
 16,898,391
 17,811,962
Effect of dilutive shares569,782
 691,411
 625,861
 716,199
Weighted-average common shares outstanding - diluted17,258,428
 18,197,429
 17,524,252
 18,528,161
Net income per share - basic$0.07
 $0.19
 $1.12
 $1.07
Net income per share - diluted$0.07
 $0.18
 $1.08
 $1.02
Three Months Ended December 31,Six Months Ended December 31,
2020201920202019
Numerator:
Net income$9,461 $9,191 $15,214 $17,995 
Allocation of earnings to participating securities(77)(72)(124)(140)
Numerator for basic EPS - Net income available to common stockholders$9,384 $9,119 $15,090 $17,855 
Effect of dilutive securities:
Dilutive effect to participating securities1 8 2 5 
Numerator for diluted EPS$9,385 $9,127 $15,092 $17,860 
Denominator:    
Weighted-average common shares outstanding - basic16,202,844 16,906,457 16,216,917 17,002,052 
Effect of dilutive shares360,515 661,223 297,914 658,635 
Weighted-average common shares outstanding - diluted16,563,359 17,567,680 16,514,831 17,660,687 
Net income per share - basic$0.58 $0.54 $0.93 $1.05 
Net income per share - diluted$0.57 $0.52 $0.92 $1.01 
Potential dilutive shares are excluded from the computation of earnings per share if their effect is anti-dilutive. There were 506,800512,200 and 547,200 stock options that were anti-dilutive for the three and ninesix months ended MarchDecember 31, 2020.2020, respectively. There were 434,400459,400 and 445,800470,800 stock options that were anti-dilutive for the three and ninesix months ended MarchDecember 31, 2019, respectively.
8.Equity Incentive Plan
9.    Equity Incentive Plan
The Company provides stock-based awards through the 2013 Omnibus Incentive Plan, which provides for awards of restricted stock, restricted stock units, stock options, stock appreciation rights and cash awards to directors, directors emeritus, officers, employees and advisory directors. The cost of equity-based awards under the 2013 Omnibus Incentive Plan generally is based on the fair value of the awards on their grant date. The maximum number of shares that may be utilized for awards under the plan is 2,962,400, including 2,116,000 for stock options and stock appreciation rights and 846,400 for awards of restricted stock and restricted stock units.
Shares of common stock issued under the 2013 Omnibus Incentive Planplan may be authorized but unissued shares or in the case of restricted stock awards, may be repurchased shares.
The table below presents share-based compensation expense and the estimated related tax benefit for stock options and restricted stock for the three and ninesix months ended MarchDecember 31, 2020 and 2019, respectively:
Three Months Ended December 31,Six Months Ended December 31,
2020201920202019
Share-based compensation expense$454 $440 $960 $883 
Tax benefit$107 $103 $226 $208 
31
 Three Months Ended March 31, Nine Months Ended March 31,
 2020 2019 2020 2019
Share-based compensation expense$458
 $409
 $1,341
 $1,165
Tax benefit$108
 $96
 $315
 $274
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

The table below presents stock option activity for the ninesix months ended MarchDecember 31, 2020 and 2019:
OptionsWeighted-
average
exercise
price		Remaining
contractual
life
(years)		Aggregate
Intrinsic
Value
Options outstanding at June 30, 20191,657,214 $17.59 5.0$12,909 
Granted25,000 25.37 — — 
Exercised66,900 14.40 — — 
Forfeited800 17.35 — — 
Options outstanding at December 31, 20191,614,514 $17.84 4.7$14,538 
Exercisable at December 31, 20191,212,714 $15.45 3.5$13,805 
Non-vested at December 31, 2019401,800 $25.07 7.9$733 
Options outstanding at June 30, 20201,615,500 $18.12 4.4$1,711 
Exercised54,000 14.37 — — 
Forfeited26,900 25.77 — — 
Options outstanding at December 31, 20201,534,600 $18.12 3.8$5,070 
Exercisable at December 31, 20201,243,700 $16.35 3.0$5,027 
Non-vested at December 31, 2020290,900 $25.67 7.3$42 
 Options Weighted-
average
exercise
price		 Remaining
contractual
life
(years)		 Aggregate
Intrinsic
Value
Options outstanding at June 30, 20181,718,270
 $17.29
 5.9
 $18,664
Granted40,500
 27.51
 —
 —
Exercised69,111
 14.53
 —
 —
Forfeited20,300
 23.39
 —
 —
Expired945
 23.82
 —
 —
Options outstanding at March 31, 20191,668,414
 $17.57
 5.3
 $13,098
Exercisable at March 31, 20191,290,814
 $15.39
 4.4
 $12,733
Non-vested at March 31, 2019377,600
 $25.04
 8.5
 $365
        
Options outstanding at June 30, 20191,657,214
 $17.59
 5.0
 $12,909
Granted61,000
 26.40
 —
 —
Exercised106,914
 14.41
 —
 —
Forfeited800
 17.35
 —
 —
Options outstanding at March 31, 20201,610,500
 $18.13
 4.6
 $1,617
Exercisable at March 31, 20201,298,000
 $15.45
 3.7
 $1,617
Non-vested at March 31, 2020312,500
 $25.86
 8.2
 $—
There were no options granted during the six months ended December 31, 2020. Assumptions used in estimating the fair value of options granted during the ninesix months ended MarchDecember 31, 2020 and 2019 are presented below:
December 31,
2019
Weighted-average volatility17.84 %
Expected dividend yield0.95 %
Risk-free interest rate1.55 %
Expected life (years)6.5
Weighted-average fair value of options granted$4.67 
 March 31, March 31,
 2020 2019
Weighted-average volatility17.77% 17.84%
Expected dividend yield0.98% 0.87%
Risk-free interest rate1.50% 2.54%
Expected life (years)6.5
 6.5
Weighted-average fair value of options granted$4.79
 $5.88
At MarchDecember 31, 2020, the Company had $1,853$1,297 of unrecognized compensation expense related to 312,500290,900 stock options originally scheduled to vest over a five-year vesting period. The weighted average period over which compensation cost related to non-vested awards expected to be recognized was 2.01.3 years at MarchDecember 31, 2020. At MarchDecember 31, 2019, the Company had $2,326$1,854 of unrecognized compensation expense related to 377,600401,800 stock options originally scheduled to vest over five-five- and seven-year vesting periods. The weighted average period over which compensation cost related to non-vested awards expected to be recognized was 2.11.4 years at MarchDecember 31, 2019.
The table below presents restricted stock award activity for the ninesix months ended MarchDecember 31, 2020 and 2019:
Restricted
stock awards		Weighted-
average grant
date fair value		Aggregate
Intrinsic
Value
Non-vested at June 30, 2019123,800 $24.65 $2,258 
Granted13,000 25.37 — 
Vested400 19.02 — 
Forfeited3,200 20.62 — 
Non-vested at December 31, 2019133,200 $24.83 $3,574 
Non-vested at June 30, 2020144,046 $25.89 $2,305 
Vested2,600 25.37 — 
Forfeited7,650 25.65 — 
Non-vested at December 31, 2020133,796 $25.91 $2,584 
The table above includes non-vested performance-based restrictive stock units totaling 15,565 and 10,375 at December 31, 2020 and 2019, respectively. Each issuance of these stock units is scheduled to vest over 3.0 years assuming certain performance metrics are met.
32
 
Restricted
stock awards
 
Weighted-
average grant
date fair value
 
Aggregate
Intrinsic
Value
Non-vested at June 30, 2018133,410
 $22.85
 $3,755
Granted34,000
 27.51
 —
Vested39,310
 21.64
 —
Forfeited4,300
 19.22
 —
Non-vested at March 31, 2019123,800
 $24.64
 $2,263
      
Non-vested at June 30, 2019123,800
 $24.65
 $3,322
Granted65,556
 26.76
 —
Vested37,425
 22.90
 —
Forfeited3,200
 20.62
 —
Non-vested at March 31, 2020148,731
 $26.11
 $2,638
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

The table above includes nonvested performance-based restrictive stock units totaling 21,625 and 10,375 at March 31, 2020 and 2019, respectively. Each issuance of these stock units are scheduled to vest over 3.0 years assuming certain performance metrics are met.
At MarchDecember 31, 2020, unrecognized compensation expense was $3,736$2,250 related to 148,731133,796 shares of restricted stock originally scheduled to vest over three-three- and five-year vesting periods. The weighted average period over which compensation cost related to non-vested awards is expected to be recognized was 2.01.4 years at MarchDecember 31, 2020. At MarchDecember 31, 2019, unrecognized compensation expense was $2,790$2,325 related to 123,800133,200 shares of restricted stock originally scheduled to vest over five-three-, five-, and seven-year vesting periods. The weighted average period over which compensation cost related to non-vested awards is expected to be recognized was 2.11.5 years at MarchDecember 31, 2019.
9.Commitments and Contingencies
10.    Commitments and Contingencies
Loan Commitments – Legally binding commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. In the normal course of business, there are various outstanding commitments to extend credit that are not reflected in the consolidated financial statements. At MarchDecember 31, 2020 and June 30, 2019,2020, respectively, loan commitments (excluding $161,655$146,181 and $181,477$141,557 of undisbursed portions of construction loans) totaled $54,884$86,648 and $93,432$57,798 of which $13,013$17,468 and $34,631$10,678 were variable rate commitments and $41,871$69,180 and $58,801$47,120 were fixed rate commitments. The fixed rate loans had interest rates ranging from 1.69%1.09% to 8.53%8.28% at MarchDecember 31, 2020 and 2.69%1.74% to 8.59%8.54% at June 30, 2019,2020, and terms ranging from three to 30 years. Pre-approved but unused lines of credit (principally second mortgage home equity loans and overdraft protection loans) totaled $374,401$465,200 and $353,663$398,781 at MarchDecember 31, 2020 and June 30, 2019,2020, respectively. These amounts represent the Company's exposure to credit risk, and in the opinion of management have no more than the normal lending risk that the Company commits to its borrowers. The Company has two types of commitments related to certain one-to-four family loans held for sale: rate lock commitments and forward loan commitments. Rate lock commitments are commitments to extend credit to a customer that has an interest rate lock and are considered derivative instruments. The rate lock commitments do not qualify for hedge accounting. In order to mitigate the risk from interest rate fluctuations, we enterthe Company enters into forward loan sale commitments on a “best efforts” basis, which do not meet the definition of a derivative instrument. The fair value of these interest rate lock commitments was not material at MarchDecember 31, 2020 or June 30, 2019.2020.
The Company grants construction and permanent loans collateralized primarily by residential and commercial real estate to customers throughout its primary market areas. In addition, the Company grants equipment financing throughout the eastern United States and municipal financing to customers throughout North and South Carolina. The Company’s loan portfolio can be affected by the general economic conditions within these market areas. Management believes that the Company has no significant concentration of credit in the loan portfolio.
Restrictions on Cash – In response to COVID-19, the FRB reduced the reserve requirements to zero on March 15, 2020. Prior to this change the Bank was required by regulation to maintain a varying cash reserve balance with the FRB. The daily average calculated cash reserve required as of March 31, 2020 and June 30, 2019 was $0, and $2,633, respectively, which was satisfied by vault cash and balances held at the FRB.
Guarantees – Standby letters of credit obligate the Company to meet certain financial obligations of its customers, if, under the contractual terms of the agreement, the customers are unable to do so. The financial standby letters of credit issued by the Company are irrevocable and payment is only guaranteed upon the borrower's failure to perform its obligations to the beneficiary. Total commitments under standby letters of credit as of MarchDecember 31, 2020 and June 30, 20192020 were $6,833$7,936 and $9,460,$7,766, respectively. There was no liability recorded for these letters of credit at MarchDecember 31, 2020 or June 30, 2019,2020, respectively.
Litigation –From time to time, the Company is involved in litigation matters in the ordinary course of business. These proceedings and the associated legal claims are often contested, and the outcome of individual matters is not always predictable. These claims and counter claims typically arise during the course of collection efforts on problem loans or with respect to actions to enforce liens on properties in which the Company holds a security interest. The Company is not a party to any pending legal proceedings that management believes would have a material adverse effect on the Company’s financial condition or results of operations.
10.Fair Value of Financial Instruments
11.    Fair Value of Financial Instruments
The Company utilizes fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. Securities available for sale are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets on a nonrecurring basis, such as impaired loans. These nonrecurring fair value adjustments typically involve application of lower of cost or market accounting or write-downs of individual assets. The fair value of financial instruments presented in this note are based on the same methodology as presented in Note 21 of the Notes to Consolidated Financial Statements contained in the Company’s 20192020 Form 10-K.
Fair Value Hierarchy
The Company groups assets at fair value in three levels, based on the markets in which the assets are traded and the reliability of the assumptions used to determine fair value. These levels are:
Level 1:Valuation is based upon quoted prices for identical instruments traded in active markets.
Level 2:Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
Level 1:    Valuation is based upon quoted prices for identical instruments traded in active markets.
Level 2:    Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
33
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

Level 3:    Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.
Level 3:Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.
Following is a description of valuation methodologies used for assets recorded at fair value. The Company does not have any liabilities recorded at fair value.
Investment Securities Available for Sale
Securities available for sale are valued on a recurring basis at quoted market prices where available. If quoted market prices are not available, fair values are based on quoted prices of comparable securities. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange or U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include mortgage-backed securities and debentures issued by government sponsored enterprises, municipal bonds, and corporate debt securities. The Company has no Level 3 securities.
ImpairedLoans Held for Sale
Loans held for sale are adjusted to lower of cost or fair value.  Fair value is based on commitments on hand from investors or, if commitments have not yet been obtained, what investors are currently offering for loans with similar characteristics. The Company considers all loans held for sale carried at fair value as nonrecurring Level 3.
Individually Evaluated Loans
The Company does not record loans at fair value on a recurring basis. From time to time, however, a loan is considered impairedindividually evaluated and an allowance for loan lossescredit loss is established. Loans for which it is probable that payment of interestprincipal and principalinterest will not be made in accordance with the contractual terms of the loan agreement are considered impaired.individually evaluated. Once a loan is identified, the fair value is estimated using one of two ways, which include collateral value and discounted cash flows. The Company reviews all impairedindividually evaluated loans each quarter to determine if an allowance is necessary. Those impairedindividually evaluated loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans.
Once a loan is identified as individually impaired, the fair value is estimated using one of two methods, which include collateral value and discounted cash flows. Loans are considered collateral dependent if repayment is expected solely from the collateral. For these collateral dependent impaired loans, the Company obtains updated appraisals at least annually. These appraisals are reviewed for appropriateness and then discounted for estimated closing costs to determine if an allowance is necessary. As part of the quarterly review of impairedindividually evaluated loans, the Company reviews these appraisals to determine if any additional discounts to the fair value are necessary. If a current appraisal is not obtained, the Company determines whether a discount is needed to the value from the original appraisal based on the decline in value of similar properties with recent appraisals. For loans that are not collateral dependent, estimated fair value is based on the present value of expected future cash flows using the interest rate implicit in the original agreement. ImpairedIndividually evaluated loans where a charge-off has occurred or an allowance is established during the period being reported require classification in the fair value hierarchy. The Company records such impaired loans as a nonrecurring Level 3 in the fair value hierarchy.
Loans Held for Sale
Loans held for sale are adjusted to lower of cost or fair value.  Fair value is based on commitments on hand from investors or, if commitments have not yet been obtained, what investors are currently offering for loans with similar characteristics. The Company considers all loans held for sale carried at fair value as nonrecurring Level 3.
Real Estate Owned
REO is considered held for sale and is adjusted to fair value less estimated selling costs upon transfer of the loan to foreclosed assets.  Fair value is based upon independent market prices, appraised value of the collateral or management's estimation of the value of the collateral. The Company considers all REO that has been charged off or received an allowance during the period as nonrecurring Level 3.
34
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

Financial Assets Recorded at Fair Value on a Recurring Basis
The following table presents financial assets measured at fair value on a recurring basis at the dates indicated:
December 31, 2020
DescriptionTotalLevel 1Level 2Level 3
U.S government agencies$19,138 $0 $19,138 $0 
Residential MBS of U.S. government agencies and GSEs41,013 0 41,013 0 
Municipal bonds10,899 0 10,899 0 
Corporate bonds82,490 0 82,490 0 
Total$153,540 $0 $153,540 $0 
 March 31, 2020
DescriptionTotal Level 1 Level 2 Level 3
U.S Government Agencies$6,842
 $—
 $6,842
 $—
Residential MBS of U.S. Government Agencies and GSEs51,752
 —
 51,752
 —
Municipal Bonds21,703
 —
 21,703
 —
Corporate Bonds78,324
 —
 78,324
 —
Total$158,621
 $—
 $158,621
 $—
 June 30, 2019
DescriptionTotal Level 1 Level 2 Level 3
U.S Government Agencies$15,210
 $—
 $15,210
 $—
Residential MBS of U.S. Government Agencies and GSEs
75,180
 —
 75,180
 —
Municipal Bonds25,312
 —
 25,312
 —
Corporate Bonds6,084
 —
 6,084
 —
Total$121,786
 $—
 $121,786
 $—
June 30, 2020
DescriptionTotalLevel 1Level 2Level 3
U.S government agencies$4,173 $0 $4,173 $0 
Residential MBS of U.S. government agencies and GSEs48,355 0 48,355 0 
Municipal bonds16,631 0 16,631 0 
Corporate bonds58,378 0 58,378 0 
Total$127,537 $0 $127,537 $0 
There were no transfers between levels during the ninesix months ended MarchDecember 31, 2020.
The following table presents financial assets measured at fair value on a non-recurring basis at the dates indicated:
December 31, 2020
DescriptionTotalLevel 1Level 2Level 3
Individually evaluated loans$5,230 $0 $0 $5,230 
 March 31, 2020
DescriptionTotal Level 1 Level 2 Level 3
Impaired loans$6,099
 $—
 $—
 $6,099
REO493
 —
 —
 493
Total$6,592
 $—
 $—
 $6,592
June 30, 2019June 30, 2020
DescriptionTotal Level 1 Level 2 Level 3DescriptionTotalLevel 1Level 2Level 3
Impaired loans$9,071
 $—
 $—
 $9,071
Individually evaluated loansIndividually evaluated loans$9,168 $0 $0 $9,168 
REO1,804
 —
 —
 1,804
REO97 0 0 97 
Total$10,875
 $—
 $—
 $10,875
Total$9,265 $0 $0 $9,265 
Quantitative information about Level 3 fair value measurements during the period ended MarchDecember 31, 2020 is shown in the table below:
Nonrecurring measurements:Fair Value at December 31, 2020Valuation
Techniques		Unobservable
Input		RangeWeighted
Average
Individually evaluated loans$5,230 Discounted appraisals and discounted cash flowsCollateral discounts
and discount spread
      0% - 53%

     2% - 3%
13%
35
 Fair Value at March 31, 2020 
Valuation
Techniques
 
Unobservable
Input
 Range 
Weighted
Average
Nonrecurring measurements:         
Impaired loans, net$6,099
 Discounted appraisals and discounted cash flows Collateral discounts
and discount spread		 0% - 63% 0% - 3% 20%
REO$493
 Discounted appraisals Collateral discounts 8% - 25% 12%
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

The stated carrying value and estimated fair value amounts of financial instruments as of MarchDecember 31, 2020 and June 30, 2019,2020, are summarized below:
 December 31, 2020
Carrying
Value		Fair
Value		Level 1Level 2Level 3
Assets:
Cash and interest-bearing deposits$226,344 $226,344 $226,344 $0 $0 
Commercial paper183,778 183,778 183,778 0 0 
Certificates of deposit in other banks48,637 48,637 0 48,637 0 
Securities available for sale153,540 153,540 0 153,540 0 
Loans, net2,638,780 2,608,848 0 0 2,608,848 
Loans held for sale118,439 120,254 0 0 120,254 
FHLB stock23,309 23,309 23,309 0 0 
FRB stock7,374 7,374 7,374 0 0 
SBIC investments8,889 8,889 0 0 8,889 
Accrued interest receivable9,796 9,796 0 1,184 8,612 
Liabilities:
Noninterest-bearing and NOW deposits1,124,958 1,124,958 0 1,124,958 0 
Money market accounts882,366 882,366 0 882,366 0 
Savings accounts209,699 209,699 0 209,699 0 
Certificates of deposit526,246 529,661 0 529,661 0 
Borrowings475,000 504,734 0 504,734 0 
Accrued interest payable623 623 0 623 0 
 March 31, 2020
 
Carrying
Value
 
Fair
Value
 Level 1 Level 2 Level 3
Assets:         
Cash and interest-bearing deposits$82,061
 $82,061
 $82,061
 $—
 $—
Commercial paper281,955
 281,955
 281,955
 —
 —
Certificates of deposit in other banks57,544
 57,544
 —
 57,544
 —
Securities available for sale158,621
 158,621
 —
 158,621
 —
Loans, net2,636,674
 2,637,208
 —
 —
 2,637,208
Loans held for sale38,682
 39,359
 —
 —
 39,359
FHLB stock25,859
 25,859
 25,859
 —
 —
FRB stock7,353
 7,353
 7,353
 —
 —
SBIC investments7,989
 7,989
 —
 —
 7,989
Accrued interest receivable9,501
 9,501
 —
 1,002
 8,499
Liabilities:         
Noninterest-bearing and NOW deposits819,373
 819,373
 —
 819,373
 —
Money market accounts801,424
 801,424
 —
 801,424
 —
Savings accounts169,792
 169,792
 —
 169,792
 —
Certificates of deposit764,198
 771,440
 —
 771,440
 —
Borrowings535,000
 569,850
 —
 569,850
 —
Accrued interest payable1,308
 1,308
 —
 1,308
 —
June 30, 2019 June 30, 2020
Carrying
Value
 
Fair
Value
 Level 1 Level 2 Level 3Carrying
Value		Fair
Value		Level 1Level 2Level 3
Assets:         Assets:
Cash and interest-bearing deposits$71,043
 $71,043
 $71,043
 $—
 $—
Cash and interest-bearing deposits$121,622 $121,622 $121,622 $0 $0 
Commercial paper241,446
 241,446
 241,446
 —
 —
Commercial paper304,967 304,967 304,967 0 0 
Certificates of deposit in other banks52,005
 52,005
 —
 52,005
 —
Certificates of deposit in other banks55,689 55,689 0 55,689 0 
Securities available for sale121,786
 121,786
 —
 121,786
 —
Securities available for sale127,537 127,537 0 127,537 0 
Loans, net2,683,761
 2,604,827
 —
 —
 2,604,827
Loans, net2,741,047 2,692,265 0 0 2,692,265 
Loans held for sale18,175
 18,591
 —
 —
 18,591
Loans held for sale77,177 78,129 0 0 78,129 
FHLB stock31,969
 31,969
 31,969
 —
 —
FHLB stock23,309 23,309 23,309 0 0 
FRB stock7,335
 7,335
 7,335
 —
 —
FRB stock7,368 7,368 7,368 0 0 
SBIC investments6,074
 6,074
 —
 —
 6,074
SBIC investments8,269 8,269 0 0 8,269 
Accrued interest receivable10,533
 10,533
 350
 750
 9,433
Accrued interest receivable12,312 12,312 208 744 11,360 
Liabilities:         Liabilities:
Noninterest-bearing and NOW deposits746,617
 746,617
 —
 746,617
 —
Noninterest-bearing and NOW deposits1,012,200 1,012,200 0 1,012,200 0 
Money market accounts691,172
 691,172
 —
 691,172
 —
Money market accounts836,738 836,738 0 836,738 0 
Savings accounts177,278
 177,278
 —
 177,278
 —
Savings accounts197,676 197,676 0 197,676 0 
Certificates of deposit712,190
 712,485
 —
 712,485
 —
Certificates of deposit739,142 745,078 0 745,078 0 
Borrowings680,000
 688,418
 —
 688,418
 —
Borrowings475,000 511,529 0 511,529 0 
Accrued interest payable2,252
 2,252
 —
 2,252
 —
Accrued interest payable1,087 1,087 0 1,087 0 
The Company had off-balance sheet financial commitments, which included approximately $590,940$698,029 and $628,572$598,136 of commitments to originate loans, undisbursed portions of interim construction loans, and unused lines of credit at MarchDecember 31, 2020 and June 30, 2019,2020, respectively (see Note 9)10). Since these commitments are based on current rates, the carrying amount approximates the fair value.
Estimated fair values were determined using the following methods and assumptions:
Cash and interest-bearing deposits – The stated amounts approximate fair values as maturities are less than 90 days.
Commercial paper – The stated amounts approximate fair value due to the short-term nature of these investments.
36
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

Commercial paperCertificates of deposit in other banks – The stated amounts approximate fair value due to the short-term nature of these investments.values.
Certificates of deposit in other banks – The stated amounts approximate fair values.
Securities available for sale – Fair values are based on quoted market prices where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments.
Loans held for sale – The fair value of mortgage loans held for sale is determined by outstanding commitments from investors on a "best efforts" basis or current investor yield requirements, calculated on the aggregate loan basis. The fair value of SBA loans and HELOCs held for sale is based on what investors are currently offering for loans with similar characteristics.
Loans, net – Fair values for loans are estimated by segregating the portfolio by type of loan and discounting scheduled cash flows using current market interest rates for loans with similar terms and credit quality. A prepayment assumption is used as an estimate of the portion of loans that will be repaid prior to their scheduled maturity. A liquidity premium assumption is used as an estimate for the additional return required by an investor of assets that are potentially considered illiquid.
FHLB and FRB stock– No ready market exists for these stocks and they have no quoted market value. However, redemptions of these securities have historically been at par value. Accordingly, cost is deemed to be a reasonable estimate of fair value.
SBIC investments– No ready market exists for these investments and they have no quoted market value. SBIC investments are valued at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions of identical or similar investments. Accordingly, cost is deemed to be a reasonable estimate of fair value.
Deposits– Fair values for demand deposits, money market accounts, and savings accounts are the amounts payable on demand. The fair value of certificates of deposit is estimated by discounting the contractual cash flows using current market interest rates for accounts with similar maturities.
Borrowings – The fair value of advances from the FHLB is estimated based on current rates for borrowings with similar terms.
Accrued interest receivable and payable – The stated amounts of accrued interest receivable and payable approximate the fair value.
Limitations – Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company's financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on-and-off balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. For example, a significant asset not considered a financial asset is premises and equipment. In addition, tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the estimates.
11.Leases
12.    Leases
As Lessee - Operating Leases
CompanyThe Company's operating leases primarily include office space and bank branches. Certain leases include one or more options to renew, with renewal terms that can extend the lease term up to 15 additional years. The exercise of lease renewal options is at ourmanagement's sole discretion. When it is reasonably certain that wethe Company will exercise ourits option to renew or extend the lease term, that option is included in estimating the value of the ROU and lease liability. At MarchDecember 31, 2020, wethe Company did not have any leases that had not yet commenced for which weit had created a ROU asset and a lease liability. OurThe Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. Most of ourthe Company's lease agreements include periodic rate adjustments for inflation. The depreciable life of ROU assets and leasehold improvements are limited to the shorter of the useful life or the expected lease term. Leases with an initial term of 12 months or less are not recorded on ourthe Company's Consolidated Balance Sheets; we recognizeSheets. The Company recognizes lease expenses for these leases over the lease term.
37
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

The following tables presenttable presents supplemental balance sheet information related to operating leases. ROU assets are included in other assets and lease liabilities are included in other liabilities.
Supplemental Balance Sheet Information:March 31, 2020Supplemental Balance Sheet Information:December 31, 2020June 30, 2020
ROU assets$4,585
ROU assets$4,546$4,601
Lease liabilities4,576
Lease liabilities4,5614,590
Weighted-average remaining lease terms5.09
Weighted-average remaining lease terms4.565.02
Weighted-average discount rate2.68%Weighted-average discount rate2.81 %2.97 %
The following schedule summarizes aggregate future minimum lease payments under these operating leases at MarchDecember 31, 2020:
Fiscal year ending June 30: Fiscal year ending June 30:
Remaining 2020$336
20211,130
Remaining 2021Remaining 2021$663 
20221,034
20221,248 
2023997
20231,200 
2022526
20242024735 
20252025349 
Thereafter896
Thereafter676 
Total of future minimum payments$4,919
Total of future minimum payments$4,871 
The following table presents components of operating lease expense for the three and ninesix months ended MarchDecember 31, 2020:2020 and 2019:
Three Months Ended December 31,Six Months Ended December 31,
Three Months Ended March 31, 2020 Nine Months Ended March 31, 20202020201920202019
Operating lease cost (included in occupancy expense)$436
 $1,368
Operating lease cost (included in occupancy expense)$452 $459 $891 $932 
Sublease income (included in other, net noninterest income)(61) (181)Sublease income (included in other, net noninterest income)(61)(56)(122)(120)
Total operating lease expense, net375
 1,187
Total operating lease expense, net$391 $403 $769 $812 
As Lessee - Finance Lease
The Company currently leases land for one of its branch office locations under a finance lease. The ROU asset for the finance lease totaled $2,052 at MarchDecember 31, 2020 and June 30, 2020 and is included in other assets. The amount was previously recorded in premises and equipment, net. The corresponding lease liability totaled $1,852$1,823 and $1,843 at MarchDecember 31, 2020 and June 30, 2020, respectively, and is included in other liabilities. For the three and ninesix months ended MarchDecember 31, 2020, interest expense on the lease liability totaled $24 and $73,$48, respectively. TheFor the three and six months ended December 31, 2019, interest expense on the lease liability totaled $24 and $48, respectively.The finance lease has a maturity date of July 2028 and a discount rate of 5.18%. Upon adoption of ASC 842, the capital lease obligation for June 30, 2019 was also reclassified to other liabilities.
The following schedule summarizes aggregate future minimum lease payments under this finance lease obligation at MarchDecember 31, 2020:
Fiscal year ending June 30: Fiscal year ending June 30:
Remaining 2020$34
2021134
Remaining 2021Remaining 2021$66 
2022134
2022134 
2023134
2023134 
2023145
20242024145 
20252025146 
Thereafter1,993
Thereafter1,848 
Total minimum lease payments2,574
Total minimum lease payments2,473 
Less: amount representing interest(722)Less: amount representing interest(650)
Present value of net minimum lease payments$1,852
Present value of net minimum lease payments$1,823 
Supplemental lease cash flow information for the ninesix months ended MarchDecember 31, 2020:2020 and 2019:
20202019
ROU assets - noncash additions (operating leases)$597 $5,296 
ROU assets - noncash addition (finance lease)0 2,052 
Cash paid for amounts included in the measurement of lease liabilities (operating leases)1,055 1,091 
Cash paid for amounts included in the measurement of lease liabilities (finance leases)67 67 
38
ROU assets - noncash additions (operating leases)$5,296
ROU assets - noncash addition (finance lease)2,052
Cash paid for amounts included in the measurement of lease liabilities (operating leases)1,609
Cash paid for amounts included in the measurement of lease liabilities (finance leases)67
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

As Lessor - General
The Company leases equipment to commercial end users under operating and finance lease arrangements. OurThe Company's equipment finance leases consist mainly of transportation, medical, and agricultural equipment. Many of ourits operating and finance leases offer the lessee the option to purchase the equipment at fair value or for a nominal fixed purchase option; and most of the leases that do not have a nominal purchase option include renewal provisions resulting in some leases continuing beyond initial contractual terms. OurThe Company's leases do not include early termination options, and continued rent payments are due if leased equipment is not returned at the end of the lease.
As Lessor - Operating Leases
Operating lease income is recognized as a component of noninterest income on a straight-line basis over the lease term. Lease terms range from 1 to 5 years. Assets related to operating leases are included in other assets and the corresponding depreciation expense is recorded on a straight-line basis as a component of other noninterest expense. LeasedThe net book value of leased assets totaled $19,403$25,293 and $21,595 with a residual value of $10,971$15,364 and $12,370 as of MarchDecember 31, 2020. For the three2020 and nine months ended March 31,June 30, 2020, respectively.
The following table presents total equipment finance operating lease income totaled $989 and $2,215, respectively. Fordepreciation expense for the three and ninesix months ended MarchDecember 31, 2020 depreciation expense totaled $746 and $1,554, respectively.2019:
Three Months Ended December 31,Six Months Ended December 31,
2020201920202019
Operating lease income$1,349 $658 $2,675 $1,226 
Depreciation expense1,413 459 2,954 808 
The following schedule summarizes aggregate future minimum operating lease payments to be received at MarchDecember 31, 2020:
Fiscal year ending June 30: Fiscal year ending June 30:
Remaining 2020$1,136
20217,729
Remaining 2021Remaining 2021$2,902 
20227,172
20225,038 
20232,865
20233,192 
20222,187
202420241,123 
20252025320 
Thereafter135
Thereafter48 
Total of future minimum payments$21,224
Total of future minimum payments$12,623 
As Lessor - Finance Leases
Finance lease income is recognized as a component of loan interest income over the lease term. The finance leases are included as a component of the equipment finance class of financing receivables under the commercial loan segment. For the three and nine months ended MarchDecember 31, 2020 and 2019, total interest income on equipment finance leases totaled $420$570 and 1,121,$459, respectively. For the six months ended December 31, 2020 and 2019, total interest income on equipment finance leases totaled $1,099 and $808, respectively.
The following table presents components of finance lease net investment included within equipment finance class of financing receivables:
 March 31, 2020
Lease receivables$34,282
December 31, 2020June 30, 2020
Lease receivables$54,024 $44,927 
The following schedule summarizes aggregate future minimum finance lease payments to be received at MarchDecember 31, 2020:
Fiscal year ending June 30:
Remaining 2021$6,452 
202214,628 
202314,205 
202412,073 
20258,358 
Thereafter3,813 
Total minimum payments59,529 
Less: amount representing interest(5,505)
Total$54,024 

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Fiscal year ending June 30: 
Remaining 2020$1,928
20219,374
20228,340
20238,195
20247,237
Thereafter2,990
Total minimum payments38,064
Less: amount representing interest(3,782)
Total$34,282
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

12.Subsequent Event
On March 11, 2020, the World Health Organization declared the outbreak of COVID-19 as a global pandemic. The COVID-19 pandemic has adversely affected, and continues to adversely affect, economic activity globally, nationally and locally. Actions taken around the world to help mitigate the spread of COVID-19 include restrictions on travel, quarantines in certain areas, and forced closures for certain types of public places and businesses. COVID-19 and actions taken to mitigate the spread of it have had and are expected to continue to have an adverse impact on the economies and financial markets of many countries, including the U.S. and the geographical area in which the Company operates. Due to the COVID-19 pandemic, market interest rates have declined significantly, with the 10-year Treasury bond falling below 1.00 percent on March 3, 2020 for the first time as well as the targeted federal funds interest rate being reduced to 0 percent to 0.25 percent on March 16, 2020. These reductions in interest rates and other effects of the COVID-19 pandemic may adversely affect the Company's financial condition and results of operations in future periods. It is unknown how long the adverse conditions associated with the COVID-19 pandemic will last and what the complete financial effect will be to the Company. It is reasonably possible that estimates made in the financial statements could be materially and adversely impacted in the near term as a result of these conditions, including expected credit losses on loans and the fair value of financial instruments that are carried at fair value.
The recently enacted CARES Act, among other things, temporarily added the PPP product SBA 7(a) Loan Program. The CARES Act provides for forgiveness of up to the full principal amount of qualifying loans guaranteed under the PPP. The PPP and loan forgiveness are intended to provide economic relief to small businesses nationwide adversely impacted by the COVID-19 pandemic. As a result, subsequent to March 31, 2020 the Company generated over 318 PPP loan applications for a total loan amount of approximately $93.3 million in the SBA system through May 5, 2020. In addition, in an effort to provide relief to Bank customers affected by the COVID-19, the Company began offering various mitigation efforts, including a loan payment deferral program. The standard program offers a 90-day payment deferral. As of May 5, 2020, the Company has approved or processed loan deferrals for a total loan book balance, before loan discounts or premiums, of approximately $526.9 million. These modifications were not classified as TDRs in accordance with the guidance of the CARES Act.


Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
Certain matters in this Form 10-Q constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to our financial condition, results of operations, plans, objectives, future performance or business. Forward-looking statements are not statements of historical fact, are based on certain assumptions and are generally identified by use of the words "believes," "expects," "anticipates," "estimates," "forecasts," "intends," "plans," "targets," "potentially," "probably," "projects," "outlook" or similar expressions or future or conditional verbs such as "may," "will," "should," "would," and "could." Forward-looking statements include statements with respect to our 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 our forward-looking statements, including, but not limited to: the effect of the COVID-19 pandemic, including on the Company’ credit quality and business operations, as well as its impact on general economic and financial market conditions and other uncertainties resulting from the COVID-19 pandemic, such as the extent and duration of the impact on public health, the U.S. and global economies, and consumer and corporate customers, including economic activity, employment levels and market liquidity; the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write offs and changes in our allowance for loancredit losses and provision for loancredit losses that may be impacted by deterioration in the housing and commercial real estate markets; changes in general economic conditions, either nationally or in our market areas; changes in the levels of general interest rates, and the relative differences between short and long term interest rates, deposit interest rates, our net interest margin and funding sources; uncertainty regarding the future of the London Interbank Offered Rate ("LIBOR"),LIBOR, and the potential transition away from LIBOR toward new interest rate benchmarks; fluctuations in the demand for loans, the number of unsold homes, land and other properties and fluctuations in real estate values in our market areas; decreases in the secondary market for the sale of loans that we originate;the Company originates; results of examinations of us by the Board of Governors of the Federal Reserve System (“Federal Reserve”), the NCCOB, or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our allowance for loancredit losses, write-down assets, change our regulatory capital position or affect our ability to borrow funds or maintain or increase deposits, which could adversely affect our liquidity and earnings; legislative or regulatory changes that adversely affect our business including the effect of Dodd-Frank Wall Street Reform and Consumer Protection Act, changes in laws or regulations, changes in regulatory policies and principles or the application or interpretation of laws and regulations by regulatory agencies and tax authorities, including changes in deferred tax asset and liability activity, or the interpretation of regulatory capital or other rules, including as a result of Basel III; our ability to attract and retain deposits; management's assumptions in determining the adequacy of the allowance for loancredit losses; our ability to control operating costs and expenses, especially costs associated with our operation as a public company; the use of estimates in determining fair value of certain assets, which estimates may prove to be incorrect and result in significant declines in valuation; difficulties in reducing risks associated with the loans on our balance sheet; staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our workforce and potential associated charges; disruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on the third-party vendors who perform several of our critical processing functions; our ability to retain key members of our senior management team; costs and effects of litigation, including settlements and judgments; our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel wethe Company may in the future acquire into ourits operations and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto; increased competitive pressures among financial services companies; changes in consumer spending, borrowing and savings habits; the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions; adverse changes in the securities markets; inability of key third-party providers to perform their obligations to us; changes in accounting principles, policies or guidelines and practices, as may be adopted by the financial institution regulatory agencies, the Public Company Accounting Oversight Board or the Financial Accounting Standards Board; and other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services including the CARES Act; and the other risks detailed from time to time in our filings with the SEC, including our 20192020 Form 10-K.
Many of the forward-looking statements are based upon management's beliefs and assumptions at the time they are made. We undertakeThe Company undertakes no obligation to publicly update or revise any forward-looking statements included in this report or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this report might not occur and you should not put undue reliance on any forward-looking statements.
As used throughout this report, the terms "we", "our", "us", "HomeTrust Bancshares" or the "Company" refer to HomeTrust Bancshares, Inc. and its consolidated subsidiary, including HomeTrust Bank (the "Bank") unless the context indicates otherwise.
Overview
HomeTrust Bancshares, Inc., a Maryland corporation, was formed for the purpose of becoming the holding company for HomeTrust Bank in connection with HomeTrust Bank’s conversion from mutual to stock form, which was completed on July 10, 2012 (the “Conversion”). As a bank holding company and financial holding company, HomeTrust Bancshares, Inc. is regulated by the Federal Reserve. As a North Carolina state-chartered bank, and member of the FRB, the Bank's primary regulators are the NCCOB and the Federal Reserve. The Bank's deposits are federally insured up to applicable limits by the FDIC. The Bank is a member of the FHLB of Atlanta, which is one of the 12 regional banks in the FHLB System. Our headquarters is located in Asheville, North Carolina.
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Our principal business consists of attracting deposits from the general public and investing those funds, along with borrowed funds, in loans secured by first and second mortgages on one-to-four family residences, including home equity loans and construction and land/lot loans,


commercial real estate loans, construction and development loans, commercial and industrial loans, SBA loans, equipment finance leases, indirect automobile loans, and municipal finance agreements. WeThe Company also workworks with a third party to originate HELOCs which are pooled and sold. In addition, we purchasethe Company purchases investment securities consisting primarily of securities issued by United States Government agencies and government-sponsored enterprises,GSEs, as well as corporate bonds, commercial paper, and FDIC insured certificates of deposit.
We offerThe Company offers a variety of deposit accounts for individuals, businesses, and nonprofit organizations. Deposits and borrowings are our primary source of funds for our lending and investing activities.
We areThe Company is significantly affected by prevailing economic conditions, as well as government policies and regulations concerning, among other things, monetary and fiscal affairs, housing and financial institutions. Deposit flows are influenced by a number of factors, including interest rates paid on competing time deposits, other investments, account maturities, and the overall level of personal income and savings. Lending activities are influenced by the demand for funds, the number and quality of lenders, and regional economic cycles.
Our primary source of pre-tax income is net interest income. Net interest income is the difference between interest income, which is the income that we earnthe Company earns on ourits loans and investments, and interest expense, which is the interest that we payis paid on our deposits and borrowings. Changes in levels of interest rates affect our net interest income. Because the length of the COVID-19 pandemic and the efficacy of the extraordinary measures being put in place to address its economic consequences are unknown, including the recent 150 basis point reductionsreduction in the targeted federal funds rate during 2020, until the pandemic subsides, the Company expects its net interest income and net interest margin will be adversely affected in 2020throughout fiscal 2021 and possibly longer.
A secondary source of income is noninterest income, which includes revenue we receive from providing products and services, including service charges on deposit accounts, loan income and fees, lease income, gain on sale of loans, and gains and losses from sales of securities.
An offset to net interest income is the provision for loancredit losses which is required to establish the allowanceACL. Under the new CECL standard allfinancial assets measured at amortized cost and off balance sheet credit exposures, including loans, investment securities and unfunded commitments are evaluated for loan losses at a level that adequately providescredit losses. See Note 1 – Summary of Significant Accounting Policies for probable losses inherent in our loan portfolio. As a loan's risk rating improves, property values increase, or recoveries of amounts previously charged off are received, a recapture of previously recognized provision for loan losses may be added to net interest income.further discussion.
Our noninterest expenses consist primarily of salaries and employee benefits, expenses for occupancy, marketing and computer services, and FDIC deposit insurance premiums. Salaries and benefits consist primarily of the salaries and wages paid to our employees, payroll taxes, expenses for retirement and other employee benefits. Occupancy expenses, which are the fixed and variable costs of buildings and equipment, consist primarily of lease payments, property taxes, depreciation charges, maintenance and costs of utilities.
In recent years, we have expanded ourOur geographic footprint intoincludes seven additional markets obtained through numerous strategic acquisitions as well as two de novo commercial loan offices and one de novo branch office.offices. Looking forward, we believethe Company believes opportunities currently exist within our market areas to grow our franchise. We anticipate organicWhile COVID-19 has dampened our growth activities, the Company believes as the local economies and loan demand strengthen,global economy returns to normalcy it remains in a position to create organic growth through our marketing efforts and as a result of the opportunities being created as a result of the consolidation of financial institutions occurring in our market areas. Weefforts. The Company may also seek to expand ourits franchise through the selective acquisition of individual branches, loan purchases and, to a lesser degree, whole bank transactions that meet our investment and market objectives. WeThe Company will continue to be disciplined as it pertains to future expansion focusing primarily on organic growth in our current market areas.
At MarchDecember 31, 2020, wethe Company had 41 locations in 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).
Critical Accounting Policies and Estimates
Certain of our accounting policies are important to the portrayal of our financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates associated with these policies are susceptible to material changes as a result of changes in facts and circumstances. Facts and circumstances which could affect these judgments include, but are not limited to, changes in interest rates, changes in the performance of the economy, and changes in the financial condition of borrowers. These policies relate to (i) the determination of the provision for credit losses and the allowance for loan losses,ACL, and (ii) the valuation of goodwill and other intangible assets,assets. The ACL reflects management’s estimate of losses that will result from the inability of our borrowers to make required loan payments. Management uses a systematic methodology to determine its ACL for loans held for investment and (iii)certain off-balance-sheet credit exposures. Management considers the effects of past events, current conditions, and reasonable and supportable forecasts on the collectability of the loan portfolio. The Company’s estimate of its ACL involves a high degree of judgment; therefore, management’s process for determining expected credit losses may result in a range of expected credit losses. It is possible that others, given the same information, may at any point in time reach a different reasonable conclusion. The Company’s ACL recorded in the balance sheet reflects management’s best estimate within the range of expected credit losses. The Company recognizes in net income the amount needed to adjust the ACL for management’s estimate of current expected credit losses. See Note 1 — Summary of Significant Accounting Policies and Note 6 — Loans and Allowance for Credit Losses on Loans in this Quarterly Report on Form 10-Q for further detailed descriptions of our estimation process and methodology related to the ACL. The valuation of or recognition of deferred taxgoodwill and other intangible assets and liabilities. These policies and estimates arepolicy is described in further detail in Part II, Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 1, Summary of Significant Accounting Policies in the Company's 2019 Form 10-K. There have not been any material changes in the Company's critical accounting policies and estimates during the nine months ended March 31, 2020 as compared to the disclosure contained in the Company's 2019 Form 10-K.
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Reclassifications and corrections. To maintain consistency and comparability, certain amounts from prior periods have been reclassified to conform to current period presentation with no effect on net income, shareholders’ equity, or cash flows as previously reported.
Recent Accounting Pronouncements. See Note 2 of Notes to Consolidated Financial Statements under Item 1 of this report for a description of recent accounting pronouncements including the respective dates of adoption and effects on results of operations and financial condition.


Non-GAAP Financial Measures


In addition to results presented in accordance with GAAP, this report contains certain non-GAAP financial measures, which include: tangible book value; tangible book value per share, tangible equity to tangible assets ratio; and the ratio of the allowance for loan lossesACL to total loans excluding acquiredPPP loans. Management has presented the non-GAAP financial measures in this discussion and analysis because it believes including these items is more indicative of and provides useful and comparative information to assess trends in our core operations while facilitating comparison of the quality and composition of the Company’s earnings over time and in comparison to its competitors. However, these non-GAAP financial measures are supplemental, are not audited and are not a substitute for operating results or any analysis determined in accordance with GAAP. Where applicable, we havethe Company has also presented comparable earnings information using GAAP financial measures. Because not all companies use the same calculations, our presentation may not be comparable to other similarly titled measures as calculated by other companies. See “Comparison of Results of Operations for the Three Months and NineSix Months Ended MarchDecember 31, 2020 and 2019” for more detailed information about our financial performance.


Set forth below is a reconciliation to GAAP of tangible book value and tangible book value per share:
As of
December 31,September 30,December 31,
(Dollars in thousands, except per share data)202020202019
Total stockholders' equity$404,724 $400,351 $416,995 
Less: goodwill, core deposit intangibles, net of taxes26,130 26,285 26,959 
Tangible book value (1)
$378,594 $374,066 $390,036 
Common shares outstanding16,791,027 17,020,724 17,664,384 
Tangible book value per share$22.55 $21.98 $22.08 
Book value per share$24.10 $23.52 $23.61 
  As of
  March 31, June 30, March 31,
(Dollars in thousands, except per share data) 2020 2019 2019
Total stockholders' equity $405,440
 $408,896
 $407,230
Less: goodwill, core deposit intangibles, net of taxes 26,701
 27,562
 27,908
Tangible book value (1)
 $378,739
 $381,334
 $379,322
Common shares outstanding 17,101,954
 17,984,105
 18,265,535
Tangible book value per share $22.15
 $21.20
 $20.77
Book value per share $23.71
 $22.74
 $22.29


Set forth below is a reconciliation to GAAP of tangible equity to tangible assets:
 As ofAs of
 March 31, June 30, March 31,December 31,September 30,December 31,
(Dollars in thousands) 2020 2019 2019(Dollars in thousands)202020202019
Tangible book value (1)
 $378,739
 $381,334
 $379,322
Tangible book value (1)
$378,594 $374,066 $390,036 
Total assets 3,548,033
 3,476,178
 3,457,737
Total assets3,679,971 3,674,034 3,470,232 
Less: goodwill, core deposit intangibles, net of taxes 26,701
 27,562
 27,908
Less: goodwill, core deposit intangibles, net of taxes26,130 26,285 26,959 
Total tangible assets(2)
 $3,521,332
 $3,448,616
 $3,429,829
Total tangible assets(2)
$3,653,841 $3,647,749 $3,443,273 
Tangible equity to tangible assets 10.76% 11.06% 11.06%Tangible equity to tangible assets10.36 %10.25 %11.33 %

(1)    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.
(1)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 the allowance for loan lossesACL to total loans (excluding net deferred loan costs) and the allowance for loancredit losses as adjusted to exclude acquiredPPP loans:
As of
(Dollars in thousands)December 31,September 30,December 31,
202020202019
Total gross loans receivable (GAAP)$2,678,624 $2,769,396 $2,553,455 
Less: PPP loans (1)
64,845 80,816 — 
Adjusted gross loans (non-GAAP)$2,613,779 $2,688,580 $2,553,455 
ACL$39,844 $43,132 $22,031 
ACL / Adjusted gross loans (non-GAAP)1.52 %1.60 %0.86 %

(1)    PPP loans are fully guaranteed loans by the U.S, government and became available with the CARES Act.
42
 As of
(Dollars in thousands)March 31, June 30, March 31,
 2020 2019 2019
Total gross loans receivable (GAAP)$2,662,503
 $2,705,186
 $2,661,019
Less: acquired loans176,971
 214,046
 223,101
Adjusted gross loans (non-GAAP)$2,485,532
 $2,491,140
 $2,437,918
      
Allowance for loan losses (GAAP)$26,850
 $21,429
 $24,416
Less: allowance for loan losses on acquired loans182
 201
 201
Adjusted allowance for loan losses (non-GAAP)$26,668
 $21,228
 $24,215
Adjusted allowance for loan losses / Adjusted gross loans (non-GAAP)1.07% 0.85% 0.99%




Recent Developments: COVID-19, the CARES Act, and Our Response
The COVID-19 pandemic has caused economic and social disruption on an unprecedented scale. While some industries have been impacted more severely than others, all businesses have been impacted to some degree. This disruption has resulted in business closures across the country, significant job loss, and aggressive measures by the federal government.
Congress, the President, and the Federal Reserve have taken several actions designed to cushion the economic fallout. Most notably, the CARES Act was signed into law on March 27, 2020 as a $2.2 trillion legislative package. The goal of the CARES Act is to prevent a severe economic downturn through various measures, including direct financial aid to families and economic stimulus to significantly impacted industry sectors. The package also includes extensive emergency funding for hospitals and healthcare providers. In addition to the general impact of COVID-19, certain provisions of the CARES Act as well as other recent legislative and regulatory relief efforts are expected to have a material impact on our operations. While it is not possible to know the full extent of these impacts as of the date of this filing, we arethe Company is disclosing potentially material items of which we areit is aware.
On December 27, 2020, the 2021 Consolidated Appropriations Act was signed into law including $900 billion in stimulus relief for the COVID-19 pandemic. The legislation extends certain relief provisions from the March CARES Act that were set to expire at the end of 2020. This new legislation extends the relief to financial institutions to suspend TDR assessment and reporting requirements under GAAP for loan modifications to the earlier of 60 days after the national emergency termination date or January 1, 2022. The legislation includes additional funding for businesses that did not receive PPP funds under the CARES Act, especially minority- and women-owned businesses. In addition, it allows businesses another opportunity to borrow PPP funds if they can show losses of 25% or more in 2020 based on their 2019 revenue. The Company expects a smaller number of applications to be made by its customers for these additional PPP funds.
In response to the COVID-19 pandemic, the Company is offering a variety of relief options designed to support our customers and communities we serve.served.
Paycheck Protection Program Participation. The CARES Act authorized the SBA to temporarily guarantee loans under the new PPP loan program. The goal of the PPP iswas to avoid as many layoffs as possible, and to encourage small businesses to maintain payrolls. As a qualified SBA lender, the Company was automatically authorized to originate PPP loans upon commencement of the program in April 2020. PPP loans have: (a) an interest rate of 1.0%, (b) a two-year loan term to maturity; and (c) principal and interest payments deferred for six months from the date of disbursement. The SBA guarantees 100% of the PPP loans made to eligible borrowers. The entire principal amount of the borrower’s PPP loan, including any accrued interest, is eligible to be forgiven and repaid by the SBA so long as employee and compensation levels of the business are maintained and 75%60% of the loan proceeds are used for payroll expenses, with the remaining 25%40% of the loan proceeds used for other qualifying expenses.
As of May 5,December 31, 2020, wethe Company had receivedoriginated $80.8 million of PPP applications totaling $93.3 million with confirmed allocation from the SBAloans for 284 applications totaling $86.7 million. Net290 customers. Total net origination fees deferred on these loans arewere approximately $2.2$2.1 million which will be deferred and amortizedare being accreted into interest income over the life of the loans. For the three months ended December 31, 2020, the Company earned $488,000 in fees through accretion including some accelerated accretion resulting from loan forgiveness. At December 31, 2020 the Company had $1.1 million of deferred PPP loan fees remaining which are expected to be recognized over the next several quarters as theloan forgiveness accelerates. Additional PPP loans are repaid or forgiven. Duewere processed and funded through a third party provider due to demand exceeding ourthe Bank's capacity, on April 9, 2020 we partnered with a third party to process and fund additional PPP applications for our customers and communities. With the recent approval by Congress of additional funds for this program, applications will continue to be processed through our third party relationship. We intend to utilize the FRB's PPPLF, pursuant to which, the Company will pledge its PPP loans as collateral to obtain FRB non-recourse loans. The PPPLF will take the PPP loans as collateral at face value.
Allowance for Loan Losses and Loan Modifications. The Company recorded a provision of $5.4 million for the third quarter of fiscal 2020 due primarily to the impact of COVID-19 on the economy. As of March 31, 2020, HomeTrust Bank had modified 362 loans totaling $176.7 million due to COVID-19 related issues. These modifications were not classified as TDRs at March 31, 2020 in accordance with the guidance of the CARES Act. The CARES Act provided that the short-term modification of loans as a result of the COVID-19 pandemic, made on a good faith basis to borrowers who were current as defined under the CARES Act prior to any relief, are not TDRs. This includes short-term (e.g. six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or other delays in payment that are insignificant. Borrowers are considered current under the CARES Act if they are less than 30 days past due on their contractual payments as of December 31, 2019.
2020 totaled $32.1 million for almost 1,000 customers. The Company isalso continues to work with its clients to assist them with accessing other borrowing options, including other government sponsored lending programs, as appropriate. The Bank originated $12.5 million under the Main Street Lending Program before the program ended on January 8, 2021.
Loan Modifications.The Company continues to closely monitoringmonitor the effects of COVID-19 on ourits loan portfolio and will continue to monitor all the associated risks to minimize any potential losses. We have received, and continue to receive, inquiries and requests from borrowers for some type of payment relief due to the COVID 19-pandemic. In response, HomeTrust Bank is offering payment and financial relief programs for borrowers impacted by COVID-19. These programs include loan payment deferrals for up to 90 days, waived late fees, and suspension of foreclosure proceedings and repossessions.For the quarter ended December 31, 2020, the Bank experienced a significant decline in requests by borrowers for payment and financial relief programs; however, it will continue to work with individual borrowers in order to minimize the impact to both the Bank and its customers.
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The breakout of loans deferred by loan type as of the dates indicated is as follows:
Principal and Interest Payment Deferrals by Loan Types (1) (2)
December 31, 2020September 30, 2020June 30, 2020
DeferralPercent of Total Loan PortfolioDeferralPercent of Total Loan PortfolioDeferralPercent of Total Loan Portfolio
Lodging$— — %$60,782 2.2 %$108,171 4.0 %
Other commercial real estate, construction and development, and commercial and industrial4,018 0.2 27,169 1.0 367,443 13.7 
Equipment finance2,196 0.1 2,187 0.1 33,693 1.3 
One-to-four family822 — 684 — 36,821 1.4 
Other consumer loans832 — 422 — 5,203 0.2 
     Total$7,868 0.3 %$91,244 3.3 %$551,331 20.6 %
__________________________
(1)    Modified loans are not included in classified assets or nonperforming assets.
(2)    Principal and interest is being deferred

A majority of loans placed on principal and interest payment deferral during the pandemic came out of deferral as of December 31, 2020. However, the Company has allowed for continued relief to borrowers in the form of interest-only payments for certain loans recently coming out of full deferral. At December 31, 2020, the Company had $75.8 million in commercial loans on interest-only payments for a period of time no greater than 12 months before being required to return to their original contractual payments.
All loans modified due to COVID-19 will beare separately monitored and any request for continuation of relief beyond the initial modification will be reassessed at that time to determine if a further modification should be granted and if a downgrade in risk rating is appropriate.
Payment Deferrals by Loan Types as of May 5, 2020    
(dollars in thousands)    
  Outstanding Loan Balance Percent of Total Loan Portfolio
Commercial real estate, construction and development, and commercial and industrial $425,656
 16.0%
Equipment finance 39,906
 1.5%
One-to-four family 48,463
 1.8%
Other consumer loans 12,865
 0.5%
Total $526,890
 19.8%

The deferrals are short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current as of December 31, 2019 and are not to be considered TDRs.


After the deferral period, normal loan payments will continue, however, payments will be applied first to interest until the deferred interest is repaid and thereafter applied to both principal and interest with any deficiency in amortized principal payments added to the balloon payment due at maturity. We believeThe Company believes the steps we areit has taken and is taking are necessary to effectively manage ourthe loan portfolio and assist our clientscustomers through the ongoing uncertainty surrounding the duration, impact and government response to the COVID-19 pandemic. In addition, the Company will continue to work with its customers to determine the best option for repayment of accrued interest on the deferred payments.
See "Risk Factors" under Part II, Item 1A for additional risks related to COVID-19.
Branch Operations and Additional Client Support We haveOperations. Since the beginning of the pandemic, the Company has taken various steps to ensure the safety of our customers and our team members by limiting branch activities to appointment only and use of our drive-up facilities, and by encouraging the use of our digital and electronic banking channels, all the while adjusting for evolving State and Federal guidelines. ManyOn October 13, 2020, the Company reopened the lobbies of our employees are working remotely or have flexible work schedules, and we have establishedall its branches across its four state footprint with appropriate protective measures within our offices to help ensure the safety of those employees who must work on-site.its customers and retail banking employees.
For customers that may need access to funds in their certificate of deposits to assist with living expenses during the COVID-19 pandemic, we are waiving early withdrawal penalties for withdrawals up to $25,000. Overdraft and fee reversals are waived on a case-by-case basis.
Comparison of Financial Condition at MarchDecember 31, 2020 and June 30, 20192020
General.  Total assets and liabilities remained relatively level at $3.5$3.7 billion and $3.1$3.3 billion, respectively, at MarchDecember 31, 2020 as compared to June 30, 2019. As previously reported in the first quarter2020. The cumulative increase of the fiscal year, the Company marketed for sale $256.8 million in one-to-four family loans, of which $154.9 million were sold during the second quarter resulting in a $958,000 after-tax gain. The funds received from the $154.9 million in one-to-four family loans sold and deposit growth of $227.5$130.7 million, or 9.8% were used to pay down $145.0 million, or 21.3% of borrowings, fund the $114.4 million, or 22.7% net increase52.5% in cash and cash equivalents and securities held for sale was offset by the cumulative decrease of $128.2 million, or 35.6% in commercial paper certificates of depositand deposits in other banks securities available for sale,as the Company repositioned its liquidity due to maturities and lower short-term rates during the period. The $41.3 million, or 53.5% increase in loans held for sale primarily relates to additional 1-4 family and home equity loans originated for sale during the first nine months of fiscal 2020.period.
As ofOn July 1, 2019,2020, the Company adopted the new leaseCECL accounting standard which drove several changesin accordance with ASU 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." The cumulative effect adjustment from this change in accounting standard resulted in an increase in our ACL for loans of $14.8 million, additional deferred tax assets of $3.9 million, additional reserve for unfunded loan commitments of $2.3 million, and a reduction to retained earnings of $13.2 million. In addition, an ACL for commercial paper was established for $250,000 with a deferred tax asset of $58,000. The adoption of this ASU did not have an effect on available for sale debt securities for the balance sheet. Land totaling $2.1 million related to the Company's one finance lease (f/k/a capital lease) was reclassed from premises and equipment, net to other assets as a ROU asset and the corresponding liability was reclassed from a separate line on the balance sheet to other liabilities as a lease liability. The Company's operating leases led to approximately $4.6 million in ROU assets and corresponding lease liabilities, which are maintained in other assets and other liabilities, respectively.six months ended December 31, 2020.
Cash, cash equivalents, and commercial paper.  Total cash and cash equivalents increased $11.0$104.7 million, or 15.5%86.1%, to $82.1$226.3 million at MarchDecember 31, 2020 from $71.0$121.6 million at June 30, 2019.2020. Commercial paper increased $40.5decreased $121.2 million, or 16.8%39.7% to $282.0$183.8 million at MarchDecember 31, 2020 from $241.4$305.0 million at June 30, 2019.2020 as a result of the lower interest rate environment. Our investments in commercial paper have short-term maturities and limited exposure of $15.0 million or less per each highly-rated company.
Investments. Debt securities available for sale increased $36.8$26.0 million, or 30.2%20.4%, to $158.6$153.5 million at MarchDecember 31, 2020 from $121.8$127.5 million at June 30, 2019.2020. During the ninesix months ended MarchDecember 31, 2020, $75.5$73.7 million of securities were purchased, (primarily shorter term corporate bonds) partially offset by $27.8$38.7 million of securities which matured, and $10.9$8.2 million of MBS principal payments which were received. The overall increase in shorter-term corporate bonds provides the Company with higher yields compared to MBS and agency securities while remaining within our investment policy. At MarchDecember 31, 2020, certificates of deposit in other banks increased $5.5decreased $7.1 million, or 10.7%12.7% to $57.5$48.6 million compared to $52.0$55.7 million at June 30, 2019.2020. The increasedecrease in certificates of deposit in other banks was due to $24.2$8.3 million in CD purchasesmaturities partially offset by $18.7$1.2 million in maturities.purchases. All certificates of deposit in other banks are fully
44

insured by the FDIC. We evaluate individual investmentManagement evaluates securities for impairment where there has been a decline in fair value below the amortized cost basis of a security to determine whether there is a credit loss associated with the decline in fair value on at least a quarterly for other-than-temporary declines inbasis, and more frequently when economic or market value. We doconcerns warrant such evaluation. Management does not believe that there were any other-than-temporary impairmentscredit losses at MarchDecember 31, 2020; therefore, no impairment losses were recorded during the first ninesix months of fiscal 2020.2021. Other investments at cost decreased $4.2 million,increased $626,000, or 9.2%1.6%, to $41.2$39.6 million at MarchDecember 31, 2020 from $45.4$38.9 million at June 30, 2019.2020. Other investments at cost included FHLB stock, FRB stock, and SBIC investments totaling $25.9$23.3 million, $7.4 million, and $8.0$8.9 million, respectively. The overall decrease was driven by a $6.1 million, or 19.1% reduction in FHLB stock as a result of $145.0 million in borrowings paid down during the first nine months of fiscal 2020.
Loans held for sale. Loans held for sale increased to $38.7$118.4 million at MarchDecember 31, 2020 from $18.2$77.2 million at June 30, 2019. Approximately $85.62020. The increase was primarily driven by a $16.3 million, one-to-four family loans being marketedor 34.2% increase in HELOCs originated for sale, at December 31, 2019 were moved fromas well as a 63.4% increase in mortgage loans originated for sale of $17.8 million and an increase in SBA loans held for sale and back into the loan portfolio during the current quarter as market conditions changed management's intent to sell these loans. The $20.5of $7.1 million, increase was primarily from HELOCs originated for sale.or 570.8% increase.
Loans.  Net  Total loans receivable decreased $47.1$90.5 million, or 1.8%,3.3% to $2.7 billion at MarchDecember 31, 2020 to $2.6from $2.8 billion fromat June 30, 2019 due to2020. The decrease was driven by two large commercial relationship payoffs totaling $52.8 million, PPP loan forgiveness of $15.9 million, and the previously mentioned one-to-four loans moved to held for salecontinued payoff of purchased HELOCs of $13.1 million.
Commercial and sold, which was partially offset by $147.9 million, or 7.6% annualized rate of organic loan growth.


Retailretail consumer and commercial loans consist of the following at the dates indicated:
As ofPercent of total
December 31,June 30,ChangeDecember 31,June 30,
(Dollars in thousands)20202020$%20202020
Commercial loans:
Commercial real estate$1,056,971 $1,052,906 $4,065 0.4 %39.5 %38.0 %
Construction and development172,892 215,934 (43,042)(19.9)6.5 7.8 
Commercial and industrial138,761 154,825 (16,064)(10.4)5.2 5.6 
Equipment finance272,761 229,239 43,522 19.0 10.2 8.3 
Municipal leases128,549 127,987 562 0.4 4.8 4.6 
PPP loans64,845 80,697 (15,852)(19.6)2.4 2.9 
Total commercial loans1,834,779 1,861,588 (26,809)(1.4)68.6 67.2 
Retail consumer loans:
One-to-four family452,421 473,693 (21,272)(4.5)16.9 17.1 
HELOCs - originated125,397 137,447 (12,050)(8.8)4.7 5.0 
HELOCs - purchased58,640 71,781 (13,141)(18.3)2.2 2.6 
Construction and land/lots75,108 81,859 (6,751)(8.2)2.8 3.0 
Indirect auto finance122,947 132,303 (9,356)(7.1)4.6 4.8 
Consumer9,332 10,259 (927)(9.0)0.3 0.4 
Total retail consumer loans843,845 907,342 (63,497)(7.0)31.4 32.8 
Total loans$2,678,624 $2,768,930 $(90,306)(3.3)%100.0 %100.0 %
 As of     Percent of total
 March 31, June 30, Change March 31, June 30,
(Dollars in thousands)2020 2019 $ % 2020 2019
Retail consumer loans:           
One-to-four family$487,777
 $660,591
 $(172,814) (26.2)% 18.3% 24.4%
HELOCs - originated144,804
 139,435
 5,369
 3.9
 5.4
 5.2
HELOCs - purchased82,232
 116,972
 (34,740) (29.7) 3.1
 4.3
Construction and land/lots80,765
 80,602
 163
 0.2
 3.0
 3.0
Indirect auto finance135,449
 153,448
 (17,999) (11.7) 5.1
 5.7
Consumer11,576
 11,416
 160
 1.4
 0.4
 0.4
Total retail consumer loans942,603
 1,162,464
 (219,861) (18.9) 35.3
 43.0
Commercial loans: 
  
        
Commercial real estate990,693
 927,261
 63,432
 6.8
 37.2
 34.3
Construction and development249,714
 210,916
 38,798
 18.4
 9.4
 7.8
Commercial and industrial164,539
 160,471
 4,068
 2.5
 6.2
 5.9
Equipment finance198,962
 132,058
 66,904
 50.7
 7.5
 4.9
Municipal leases115,992
 112,016
 3,976
 3.5
 4.4
 4.1
Total commercial loans1,719,900
 1,542,722
 177,178
 11.5
 64.7
 57.0
Total loans$2,662,503
 $2,705,186
 $(42,683) (1.6)% 100.0% 100.0%
Total equipment finance loans at March 31, 2019, were $199.0 million, an increase of $66.9 million from June 30, 2019. Our Equipment Finance line of business first began operations in May 2018 and offers companies that are purchasing equipment for their business flexible and customizable repayment terms while managing related tax and accounting issues. These products are primarily made up of commercial finance agreements and commercial loans for transportation, construction, and manufacturing equipment. The loans have terms ranging from 24 to 84 months, with an average of five years and are secured by the financed equipment. Typical transaction sizes range from $25,000 to $1.0 million, with an average size of approximately $200,000.
Asset Quality. Our overall asset quality metrics continue to demonstrate our commitment to growing and maintaining a loan portfolio with a moderate risk profile,profile; however, wethe Company will remain diligent in ourits review of the portfolio and overall economy as we continueit continues to maneuver through the uncertainty surrounding COVID-19. See "Recent Developments: COVID-19, the CARES Act, and Our Response" on page 44 for additional information regarding our response to COVID-19.
Nonperforming assets increaseddecreased by $3.4$1.5 million, or 25.6%9.2% to $16.7$14.8 million, or 0.47%0.40% of total assets at MarchDecember 31, 2020 from $13.3$16.3 million, or 0.38%0.44% of total assets at June 30, 2019.2020. Nonperforming assets included $15.6$14.5 million in nonaccruing loans and $1.1 million$252,000 in REO at MarchDecember 31, 2020, compared to $10.4$15.9 million and $2.9 million,$337,000 in nonaccruing loans and REO, respectively, at June 30, 2019. The increase in nonperforming assets was mainly driven by one large commercial real estate loan relationship that was moved to nonaccrual during the second quarter.2020. Included in nonperforming loans at MarchDecember 31, 2020 are $7.2$5.9 million of TDR loans of which $5.8$4.1 million were current with respect to their modified payment terms. At MarchDecember 31, 2020, $7.7$7.0 million, or 49.3%48.3%, of nonaccruing loans were current on their loan payments. PCI loans aggregating $1.0 million obtained through prior acquisitions were excluded from nonaccruing loans due to the accretionThe ratio of discounts established in accordance with the acquisition method of accounting for business combinations. Nonperformingnonperforming loans to total loans was 0.59%0.54% at MarchDecember 31, 2020 and 0.38%0.58% at June 30, 2019.2020.
The ratio of classified assets to total assets decreased to 0.86%0.74% at MarchDecember 31, 2020 from 0.89%0.84% at June 30, 2019.2020. Classified assets decreased to $30.7$27.2 million at MarchDecember 31, 2020 compared to $30.9$31.1 million at June 30, 2019. Delinquent loans (loans delinquent 30 days or more) increased2020 primarily due to $11.7$3.1 million at Marchin payoffs and $1.5 million in charge-offs during the six month period ended December 31, 2020, from $10.1 million at June 30, 2019 which was driven by a $1.0 million increase in equipment finance contracts.2020.
As of March 31, 2020, we had identified $30.6 million of impaired loans compared to $33.0 million at June 30, 2019. Our impairedindividually evaluated loans are comprised of loans meeting certain thresholds, on nonaccrual status, and all TDRs, whether performing or on nonaccrual status under their restructured terms. ImpairedIndividually evaluated loans may be evaluated for reserve purposes using either a specific impairment analysisthe cash flow or on a collective basis as part of homogeneous pools.the collateral valuation method. As of MarchDecember 31, 2020, there were $12.5$11.4 million loans individually evaluated for impairment and $18.1 million were collectively evaluated. For more information on these impairedindividually evaluated loans, see Note 56 of the Notes to Consolidated Financial Statements under Item 1 of this report.
45

Allowance for loancredit losses.  We establish an allowance  On July 1, 2020, the Company adopted the CECL accounting standard in accordance with ASU 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." See "Note 1 - Summary of Significant Accounting Policies" and "Note 6 - Loans" for loan losses by charging amountsadditional details related to the loan loss provision at a level required to reflect estimated credit losses in the loan portfolio. In evaluating the leveladoption of the allowance for loan losses, management considers, among other factors, historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations that may affect borrowers' ability to repay, estimated value of any underlying collateral, prevailing economic conditions and current risk factors specifically related to each loan type.


CECL.
The allowance for loan lossesACL was $26.9$39.8 million, or 1.49% of total loans at December 31, 2020 compared to $28.1 million, or 1.01% of total loans at MarchJune 30, 2020. The ACL to gross loans excluding PPP loans was 1.52% at December 31, 2020, compared to $21.4 million, or 0.79% of total loans,1.04% at June 30, 2019.2020. The overall increase was driven by the additional allowance stemming from the Company's adoption of the new CECL accounting standard.
There was a net benefit of $2.1 million for loanthe provision for credit losses to gross loans excluding acquired loans was 1.07% at Marchfor the six months ended December 31, 2020, compared to 0.85% at June 30, 2019. The overall increase was primarily driven by additional allowance stemming from our initial assessment of COVID-19 on the loan portfolio. The allowance for our acquired loans at March 31, 2020 was $182,000 compared to $201,000 at June 30, 2019.
There was a $5.8 million$400,000 provision for loan losses for the nine months ended March 31, 2020, compared to $5.5 million for the corresponding period in fiscal year 2019.2020. The current yearnet benefit of provision included significant adjustments relating to COVID-19 as a result ofwas primarily driven by changes in qualitative factors based on our perceived increasethe economic forecast which improved in at risk loan sub-categories, which include: lodging, restaurants, shopping centers, other retail businesses,outlook since the adoption of the standard and equipment finance. The provisiona decline in the corresponding period in the prior year related to one commercial loan relationship.balance of total loans. Net loan charge offscharge-offs totaled $379,000$637,000 for the ninesix months ended MarchDecember 31, 2020, compared to $2.1 millionnet recoveries of $202,000 for the same period in fiscal year 2019.last year. Net charge offscharge-offs as a percentage of average loans were 0.02% and 0.11%0.04% for the ninesix months ended MarchDecember 31, 2020 and 2019, respectively.compared to net recoveries of (0.01)% for the corresponding period in fiscal year 2020.
The allowance as a percentage of nonaccruing loans decreasedincreased to 171.40%274.05% at MarchDecember 31, 2020 from 206.90%176.30% at June 30, 2019.2020.
We believe thatManagement believes the allowance for loan lossesACL as of MarchDecember 31, 2020 was adequate to absorb the known and inherent risks of lossestimated losses in the loan portfolio at that date. While we believemanagement believes the estimates and assumptions used in our determination of the adequacy of the allowance are reasonable, there can be no assurance that such estimates and assumptions will not be proven incorrect in the future, or that the actual amount of future provisions will not exceed the amount of past provisions or that any increased provisions that may be required will not adversely impact our financial condition and results of operations. In addition, the determination of the amount of the allowance for loan lossesACL is subject to review by bank regulators as part of the routine examination process, which may result in the establishment of additional reserves based upon their judgment of information available to them at the time of their examination. The adoption of ASU 2016-03, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" will significantly change the Company's accounting for the allowance for loan losses. For more information on this ASU, See Note 2 - Recent Accounting Pronouncements of the Notes to Consolidated Financial Statements under Item 1 of this report. Lastly, a further decline in national and local economic conditions, as a result of the COVID-19 pandemic or other factors, could result in a material increase in the allowance for loan lossesACL and may adversely affect the Company’s financial condition and results of operations.
Real estate owned. REO decreased $1.9 million,$85,000, or 63.3%25.2% to $1.1 million$252,000 at MarchDecember 31, 2020 due to $1.8 million$193,000 in REO sales partially offset by $108,000 in transfers from loans during the ninesix months ended MarchDecember 31, 2020. The total balance of REO at March 31, 2020 included $205,000 in single-family homes, $435,000 in commercial real estate,and $435,000 in unimproved land.
Deferred income taxes. Deferred income taxes decreased $4.8increased $2.3 million, or 18.0%14.0%, to $21.8$18.6 million at MarchDecember 31, 2020 from $26.5$16.3 million at June 30, 2019.2020. The decreaseincrease was primarily driven by the the adoption of the CECL standard which resulted in an increase of $3.9 million, which was partially offset by the realization of net operating losses through increaseslosses.
Premises and equipment, net. Premises and equipment, net increased $11.6 million, or 19.9% to $70.1 million at December 31, 2020 from $58.5 million at June 30, 2020. The increase was a result of the purchase of an office building in taxable income.Charlotte, N.C. for use as a future branch location and other Bank office space.
Goodwill. Goodwill remained unchanged at $25.6 million at both MarchDecember 31, 2020 and June 30, 2019.2020.
Other assets. Other assets increased $18.4$3.0 million, or 79.6%6.0%, to $41.6$52.5 million at MarchDecember 31, 2020 from $23.2$49.5 million at June 30, 2019.2020. The increase was primarily driven by the previously mentioned ROU assets on our finance and operating leases and a $9.4 million increase in operating leases from our newer equipment finance line of business.
Deposits. Deposits increased $227.5decreased $42.5 million, or 9.8%1.5% during the ninesix months ended MarchDecember 31, 2020 to $2.6$2.7 billion from $2.3$2.8 billion at June 30, 2019 primarily due2020 which was driven by our focused effort to realign the deposit growth initiatives which ledmix. As part of a managed runoff, certificates of deposit and brokered deposits decreased $212.9 million, or 28.8% to a $175.5$526.2 million at December 31, 2020. This decrease was partially offset by successful efforts to increase in core deposits as well as a $52.0which increased $170.4 million, increase in certificates of deposit.8.3%.
The following table sets forth our deposits by type of deposit account as of the dates indicated:
As ofPercent of total
December 31,June 30,ChangeDecember 31,June 30,
(Dollars in thousands)20202020$%20202020
Core deposits:
     Noninterest-bearing accounts$469,998 $429,901 $40,097 9.3 %17.1 %15.4 %
     NOW accounts654,960 582,299 72,661 12.5 %23.9 %20.9 %
     Money market accounts882,366 836,738 45,628 5.5 %32.2 %30.0 %
     Savings accounts209,699 197,676 12,023 6.1 %7.7 %7.1 %
Core deposits2,217,023 2,046,614 170,409 8.3 %80.8 %73.5 %
Certificates of deposit526,246 739,142 (212,896)(28.8)%19.2 %26.5 %
Total$2,743,269 $2,785,756 $(42,487)(1.5)%100.0 %100.0 %
46

 As of   Percent of total
 March 31, June 30, Change March 31, June 30,
(Dollars in thousands)2020 2019 $ % 2020 2019
Core deposits:           
     Noninterest-bearing accounts$322,812
 $294,322
 $28,490
 9.7 % 12.6% 12.6%
     NOW accounts496,561
 452,295
 44,266
 9.8 % 19.4% 19.4%
     Money market accounts801,424
 691,172
 110,252
 16.0 % 31.4% 29.7%
     Savings accounts169,792
 177,278
 (7,486) (4.2)% 6.7% 7.6%
Core deposits1,790,589
 1,615,067
 175,522
 10.9 % 70.1% 69.4%
Certificates of deposit764,198
 712,190
 52,008
 7.3 % 29.9% 30.6%
Total$2,554,787
 $2,327,257
 $227,530
 9.8 % 100.0% 100.0%
Borrowings. Borrowings decreased to $535.0remained at $475.0 million at MarchDecember 31, 2020 from $680.0 million atcompared to June 30, 2019. A total of $60.0 million of these2020. At December 31, 2020 all FHLB advances havehad maturities of seven years or more (but were callable in less than 30 days and $475.0 million consist of convertible FHLB advances with maturities greater than nine years; togethertwo years) with a weighted average interest rate of 1.30% at March 31, 2020.1.39%.


Equity.  Stockholders' equity at MarchDecember 31, 2020 decreased $3.5 million, or 0.8%0.9% to $405.4$404.7 million from $408.9$408.3 million at June 30, 2019.2020. Changes within stockholders' equity included $19.2$15.2 million in net income and $2.3$2.2 million in stock-based compensation, ESOP shares allocated, and stock option exercises, offset by 1,032,221$13.4 million related to the adoption of the new CECL accounting standard, 277,122 shares of common stock being repurchased at an average cost of $22.50,$18.69 per share, or approximately $23.2$5.2 million in total, and $3.4$2.5 million related to cash dividends declared.

As of December 31, 2020, the Bank and the Company were considered "well capitalized" in accordance with their regulatory capital guidelines and exceeded all regulatory capital requirements.

47

Average Balances, Interest and Average Yields/Cost
The following table sets forth for the periods indicated, information regarding average balances of assets and liabilities as well as the total dollar amounts of interest income from average interest-earning assets and interest expense on average interest-bearing liabilities, resultant yields, interest rate spread, net interest margin (otherwise known as net yield on interest-earning assets), and the ratio of average interest-earning assets to 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.
For the Three Months Ended December 31,
For the Three Months Ended March 31,20202019
2020 2019Average
Balance
Outstanding
Interest
Earned/
Paid(2)
Yield/
Rate(2)
Average
Balance
Outstanding
Interest
Earned/
Paid(2)
Yield/
Rate(2)
Average
Balance
Outstanding
 
Interest
Earned/
Paid(2)
 
Yield/
Rate(2)
 
Average
Balance
Outstanding
 
Interest
Earned/
Paid(2)
 
Yield/
Rate(2)
(Dollars in thousands)
(Dollars in thousands)(Dollars in thousands)
Assets:           Assets:
Interest-earning assets:           Interest-earning assets:
Loans receivable(1)
$2,669,796
 $30,086
 4.51% $2,650,155
 $31,083
 4.69%
Loans receivable(1)
$2,826,133 $28,648 4.05 %$2,782,412 $32,409 4.66 %
Commercial paper and deposits in other banks378,296
 1,794
 1.90% 337,522
 2,283
 2.71%Commercial paper and deposits in other banks417,401 614 0.59 %346,376 1,912 2.21 %
Securities available for sale154,108
 912
 2.37% 139,898
 850
 2.43%Securities available for sale133,856 504 1.50 %165,577 1,093 2.64 %
Other interest-earning assets(3)
37,877
 550
 5.81% 46,756
 811
 6.94%
Other interest-earning assets(3)
39,290 696 7.08 %44,398 772 6.95 %
Total interest-earning assets3,240,077
 33,342
 4.12% 3,174,331
 35,027
 4.42%Total interest-earning assets3,416,680 30,462 3.57 %3,338,763 36,186 4.34 %
Other assets265,139
     246,858
    Other assets257,572 269,679 
Total assets3,505,216
     3,421,189
    Total assets$3,674,252 $3,608,442 
Liabilities and equity:           Liabilities and equity:
Interest-bearing deposits:           Interest-bearing deposits:
Interest-bearing checking accounts451,335
 412
 0.36% 463,807
 332
 0.29%Interest-bearing checking accounts$584,530 $353 0.24 %$455,747 $375 0.33 %
Money market accounts792,313
 1,916
 0.97% 701,692
 1,408
 0.80%Money market accounts848,760 414 0.20 %785,374 2,083 1.06 %
Savings accounts159,641
 50
 0.12% 188,848
 58
 0.12%Savings accounts206,205 38 0.07 %168,022 50 0.12 %
Certificate accounts783,758
 3,593
 1.83% 627,444
 2,606
 1.66%Certificate accounts576,078 1,542 1.07 %778,664 3,813 1.96 %
Total interest-bearing deposits2,187,047
 5,971
 1.09% 1,981,791
 4,404
 0.89%Total interest-bearing deposits2,215,573 2,347 0.42 %2,187,807 6,321 1.16 %
Borrowings473,319
 1,757
 1.48% 670,142
 3,741
 2.23%Borrowings475,000 1,688 1.42 %605,489 2,541 1.68 %
Total interest-bearing liabilities2,660,366
 7,728
 1.16% 2,651,933
 8,145
 1.23% Total interest-bearing liabilities2,690,573 4,035 0.60 %2,793,296 8,862 1.27 %
Noninterest-bearing deposits342,581
     298,118
    Noninterest-bearing deposits523,488 334,732 
Other liabilities88,725
     63,015
    Other liabilities57,813 65,812 
Total liabilities3,091,672
     3,013,066
    Total liabilities3,271,874 3,193,840 
Stockholders' equity413,544
     408,123
    Stockholders' equity402,378 414,602 
Total liabilities and stockholders' equity$3,505,216
     $3,421,189
    Total liabilities and stockholders' equity$3,674,252 $3,608,442 
           
Net earning assets$579,711
  
   $522,398
    Net earning assets$726,107  $545,467 
Average interest-earning assets to           Average interest-earning assets to
average interest-bearing liabilities121.79%     119.70%    average interest-bearing liabilities126.99 %119.53 %
Tax-equivalent:           Tax-equivalent:
Net interest income  $25,614
     $26,882
  Net interest income$26,427 $27,324 
Interest rate spread    2.96%     3.19%Interest rate spread2.97 %3.07 %
Net interest margin(4)
    3.16%     3.39%
Net interest margin(4)
3.09 %3.27 %
Non-tax-equivalent:           Non-tax-equivalent:
Net interest income  $25,309
     $26,569
  Net interest income$26,122 $27,034 
Interest rate spread    2.92%     3.14%Interest rate spread2.93 %3.03 %
Net interest margin(4)
    3.12%     3.35%
Net interest margin(4)
3.06 %3.24 %
(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 $305 and $313$290 for the three months ended MarchDecember 31, 2020
and 2019, respectively, calculated based on a combined federal and state tax rate of 24%.
(3) The average other interest-earning assets consist of FRB stock, FHLB stock, and SBIC investments.
(4) Net interest income divided by average interest-earning assets.



48

For the Six Months Ended December 31,
For the Nine Months Ended March 31,20202019
2020 2019Average
Balance
Outstanding
Interest
Earned/
Paid(2)
Yield/
Rate(2)
Average
Balance
Outstanding
Interest
Earned/
Paid(2)
Yield/
Rate(2)
(Dollars in thousands)
Average
Balance
Outstanding
 
Interest
Earned/
Paid(2)
 
Yield/
Rate(2)
 
Average
Balance
Outstanding
 
Interest
Earned/
Paid(2)
 
Yield/
Rate(2)
(Dollars in thousands)
Assets:           Assets:
Interest-earning assets:           Interest-earning assets:
Loans receivable(1)
$2,734,249
 $95,045
 4.63% $2,608,485
 $90,918
 4.65%
Loans receivable(1)
$2,850,783 $57,550 4.04 %$2,766,022 $64,960 4.70 %
Commercial paper and deposits in other banks362,598
 5,959
 2.19% 323,966
 6,106
 2.51%Commercial paper and deposits in other banks420,785 1,495 0.71 %354,750 4,165 2.35 %
Securities available for sale152,798
 2,901
 2.53% 148,645
 2,582
 2.32%Securities available for sale120,062 1,032 1.72 %152,143 1,989 2.61 %
Other interest-earning assets(3)
42,662
 2,154
 6.73% 44,453
 2,664
 8.02%
Other interest-earning assets(3)
39,118 1,144 5.85 %45,054 1,604 7.12 %
Total interest-earning assets3,292,307
 106,059
 4.30% 3,125,549
 102,270
 4.36%Total interest-earning assets3,430,748 61,221 3.57 %3,317,969 72,718 4.38 %
Other assets266,097
     245,360
    Other assets254,610 267,028 
Total assets$3,558,404
     $3,370,909
    Total assets$3,685,358 $3,584,997 
Liabilities and equity:           Liabilities and equity:
Interest-bearing liabilities:           Interest-bearing liabilities:
Interest-bearing checking accounts449,560
 1,105
 0.33% 463,035
 903
 0.26%Interest-bearing checking accounts$572,505 $750 0.26 %$448,636 $694 0.31 %
Money market accounts765,492
 5,760
 1.00% 689,363
 3,630
 0.70%Money market accounts837,153 964 0.23 %752,178 3,844 1.02 %
Savings accounts166,711
 153
 0.12% 197,929
 189
 0.13%Savings accounts203,374 75 0.07 %170,207 103 0.12 %
Certificate accounts769,073
 11,127
 1.93% 573,647
 6,039
 1.40%Certificate accounts632,894 3,811 1.20 %761,810 7,533 1.98 %
Total interest-bearing deposits2,150,836
 18,145
 1.12% 1,923,974
 10,761
 0.89%Total interest-bearing deposits2,245,926 5,600 0.50 %2,132,831 12,174 1.14 %
Borrowings587,822
 7,619
 1.73% 663,156
 10,691
 2.15%Borrowings475,000 3,375 1.42 %644,451 5,862 1.82 %
Total interest-bearing liabilities2,738,658
 25,764
 1.25% 2,587,130
 21,452
 1.11%Total interest-bearing liabilities2,720,926 8,975 0.66 %2,777,282 18,036 1.30 %
Noninterest-bearing deposits336,496
     310,304
    Noninterest-bearing deposits507,087 330,418 
Other liabilities70,175
     62,830
    Other liabilities55,699 64,456 
Total liabilities3,145,329
     2,960,264
    Total liabilities3,283,712 3,172,156 
Stockholders' equity413,075
     410,645
    Stockholders' equity401,646 412,841 
Total liabilities and stockholders' equity$3,558,404
     $3,370,909
    Total liabilities and stockholders' equity$3,685,358 $3,584,997 
           
Net earning assets$553,649
     $538,419
    Net earning assets$709,822 $540,687 
Average interest-earning assets to           Average interest-earning assets to
average interest-bearing liabilities120.22%     120.81%    average interest-bearing liabilities126.09 %119.47 %
Tax-equivalent:           Tax-equivalent:
Net interest income  $80,295
     $80,818
  Net interest income$52,246 $54,682 
Interest rate spread    3.05%     3.25%Interest rate spread2.91 %3.08 %
Net interest margin(4)
    3.25%     3.45%
Net interest margin(4)
3.05 %3.30 %
Non-tax-equivalent:           Non-tax-equivalent:
Net interest income  $79,416
     $79,942
  Net interest income$51,631 $54,107 
Interest rate spread   
 3.01%     3.22%Interest rate spread 2.87 %3.05 %
Net interest margin(4)
    3.22%     3.41%
Net interest margin(4)
3.01 %3.26 %
(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 $879$615 and $876$575 for the ninesix months ended MarchDecember 31, 2020
and 2019, respectively, calculated based on a combined federal and state tax rate of 24%.
(3) The average other interest-earning assets consist of FRB stock, FHLB stock, and SBIC investments.
(4) Net interest income divided by average interest-earning assets.

49


Rate/Volume Analysis
The following table presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities. It distinguishes between the changes related to outstanding balances and that due to the changes in interest rates. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (i) changes in volume (i.e., changes in volume multiplied by old rate) and (ii) changes in rate (i.e., changes in rate multiplied by old volume). For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately to the change due to volume and the change due to rate.
Three Months Ended December 31, 2020
Compared to
Three Months Ended December 31, 2019
Increase/
(decrease)
due to		Total
increase/(decrease)
(Dollars in thousands)VolumeRate
Interest-earning assets:
 Loans receivable(1)
$508 $(4,269)$(3,761)
Commercial paper and deposits in other banks392 (1,690)(1,298)
Securities available for sale(209)(380)(589)
 Other interest-earning assets(89)13 (76)
    Total interest-earning assets$602 $(6,326)$(5,724)
Interest-bearing liabilities:
 Interest-bearing checking accounts$106 $(128)$(22)
 Money market accounts168 (1,837)(1,669)
 Savings accounts 
12 (24)(12)
 Certificate accounts(992)(1,279)(2,271)
 Borrowings(548)(305)(853)
    Total interest-bearing liabilities(1,254)(3,573)(4,827)
Net increase (decrease) in tax equivalent interest income$1,856 $(2,753)$(897)
 Three Months Ended March 31, 2020
 Compared to
 Three Months Ended March 31, 2019
 
Increase/
(decrease)
due to
 Total
increase/(decrease)
(Dollars in thousands)Volume Rate 
Interest-earning assets:     
 Loans receivable(1)
$229
 $(1,226) $(997)
Commercial paper and deposits in other banks276
 (765) (489)
Securities available for sale87
 (25) 62
 Other interest-earning assets(154) (107) (261)
    Total interest-earning assets$438
 $(2,123) $(1,685)
Interest-bearing liabilities:     
 Interest-bearing checking accounts$(8) $88
 $80
 Money market accounts182
 326
 508
 Savings accounts 
(9) 1
 (8)
 Certificate accounts649
 338
 987
 Borrowings(1,099) (885) (1,984)
    Total interest-bearing liabilities(285) (132) (417)
Net increase (decrease) in tax equivalent interest income$723
 $(1,991) $(1,268)

 Nine Months Ended March 31, 2020
 Compared to
 Nine Months Ended March 31, 2019
 
Increase/
(decrease)
due to
 
Total
increase/(decrease)
(Dollars in thousands)Volume Rate 
Interest-earning assets:     
 Loans receivable(1)
$4,383
 $(256) $4,127
Commercial paper and deposits in other banks728
 (875) (147)
Securities available for sale72
 247
 319
 Other interest-earning assets(108) (402) (510)
    Total interest-earning assets5,075
 (1,286) 3,789
Interest-bearing liabilities:     
 Interest-bearing checking accounts 
$(26) $228
 $202
 Money market accounts401
 1,729
 2,130
 Savings accounts(29) (7) (36)
 Certificate accounts2,057
 3,031
 5,088
 Borrowings(1,214) (1,858) (3,072)
    Total interest-bearing liabilities1,189
 3,123
 4,312
Net increase (decrease) in tax equivalent interest income$3,886
 $(4,409) $(523)
_____________
Six Months Ended December 31, 2020
Compared to
Six Months Ended December 31, 2019
Increase/
(decrease)
due to		Total
increase/(decrease)
(Dollars in thousands)VolumeRate
Interest-earning assets:
 Loans receivable(1)
$1,991 $(9,401)$(7,410)
Commercial paper and deposits in other banks775 (3,445)(2,670)
Securities available for sale(419)(538)(957)
 Other interest-earning assets(212)(248)(460)
    Total interest-earning assets$2,135 $(13,632)$(11,497)
Interest-bearing liabilities:
 Interest-bearing checking accounts 
$191 $(135)$56 
 Money market accounts434 (3,314)(2,880)
 Savings accounts20 (48)(28)
 Certificate accounts(1,275)(2,447)(3,722)
 Borrowings(1,540)(947)(2,487)
    Total interest-bearing liabilities(2,170)(6,891)(9,061)
Net increase (decrease) in tax equivalent interest income$4,305 $(6,741)$(2,436)
__________
(1) Interest income used in the average interest earned and yield calculation includes the tax equivalent adjustment of $305 and $313$290 for the three months ended MarchDecember 31, 2020 and 2019, respectively, calculated based on a combined federal and state income tax rate of 24%. Interest income used in the average interest earned and yield calculation includes the tax equivalent adjustment of $879$615 and $876$575 for the ninesix months ended MarchDecember 31, 2020 and 2019, respectively, calculated based on a combined federal and state income tax rate of 24%.

50


Comparison of Results of OperationOperations for the Three Months Ended MarchDecember 31, 2020 and 2019
General.  During the three months ended MarchDecember 31, 2020, net income decreased 63.9%increased 2.9% to $1.2$9.5 million compared to $3.3$9.2 million for the three months ended MarchDecember 31, 2019. The Company's diluted earnings per share decreasedincreased to $0.07$0.57 for the three months ended MarchDecember 31, 2020 compared to $0.18$0.52 for the same period in fiscal 2019. As previously discussed,2020. First quarter earnings continue to be negatively impacted by an economy weakened by COVID-19 as well as a lower interest rate margin due to the decrease in interest rates over the past year. Despite the lower net interest income for the quarter, the increase in earnings for the three months ended MarchDecember 31, 2020 and 2019 includedas compared to the same period a significantyear ago was driven by a net benefit in the provision for loancredit losses due to improvement in the economic forecast since adoption of $5.4 million and $5.5 million, respectively.the new accounting standard to measure current expected credit losses.
Net Interest Income. NetNet interest income decreased by $1.3 million, or 4.7% to $25.3$26.1 million for the quarter ended MarchDecember 31, 2020, compared to $26.6$27.0 million for the corresponding periodcomparative quarter in fiscal 2019.2020. The $912,000, or 3.4% decrease in net interest income for the quarter ended March 31, 2020 was primarily due to a $1.7$5.7 million decrease in interest and dividend income, primarily driven by lower rates on loans and commercial paper as a result of lower federal funds and other market interest rates, whichrates. This decrease was partially offset by a $417,000$4.8 million decrease in interest expense.
Average interest-earning assets increased $65.7$77.9 million, or 2.1%2.3% to $3.2$3.4 billion for the quarter ended MarchDecember 31, 2020. The average balance of total loans receivable increased by $19.6$43.7 million, or 0.7%1.6% compared to the same quarter last year due to organic loan growth offset by the previously disclosed one-to-four family loans sold in December 2019.and PPP loan originations. The average balance of commercial paper and deposits in other banks increased $40.8$71.0 million, or 12.1% between the periods20.5% driven by increases in commercial paper investments. Ourinvestments as a result of the Company's increased liquidity between the periods. The Company's investments in commercial paper have short-term maturities and limited exposure of $15.0 million or less per each highly-rated company. The average balanceoverall increase in securities available for sale increased $14.2 million, or 10.2%, whichinterest-earning assets was primarily driven by the purchase of shorter-term corporate bonds. These increases were partially funded by a cumulative $52.9$188.8 million, or 1.8%56.4% increase in average interest-bearing liabilities and noninterest bearingnoninterest-bearing deposits and the $8.9partially offset by a $102.7 million, or 19.0%3.7% decrease in other interest earning assetsaverage interest-bearing liabilities as compared to the same quarter last year. Net interest margin (on a fully taxable-equivalent basis) for the three months ended MarchDecember 31, 2020 decreased to 3.16%3.09% from 3.39%3.27% for the same period a year ago.
Total interest and dividend income decreased $1.7$5.7 million, or 4.8%16.0% for the three months ended MarchDecember 31, 2020 as compared to the same period last year, which was primarily driven by a $1.0$3.8 million, or 3.2%11.8% decrease in loan interest income, a $489,000,$1.3 million, or 21.4%67.9% decrease in interest income from commercial paper and deposits in other banks, and a $261,000,$589,000, or 32.2%53.9% decrease in other investment income which was partially offset by a $62,000, or 7.3% increase in interest income fromon securities available for sale. The lower interest income in each category was driven by the decrease in yields caused by the significant reduction in current market rates compared to the same quarter last year. Average loan yields decreased 61 basis points to 4.05% for the quarter ended December 31, 2020 from loans and4.66% in the corresponding quarter last year. Average yields on commercial paper and deposits in other banks was primarily driven by the decrease in yields. Average loan yields decreased 18162 basis points to 4.51%0.59% for the quarter ended MarchDecember 31, 2020 from 4.69%2.21% in the corresponding quarter last year. Accretable incomeAverage yields on acquired loans stems fromsecurities available for sale decreased 114 basis points to 1.50% for the discount established at the time these loan portfolios were acquired and the related impact of prepayments on purchased loans. Each quarter the Company analyzes the cash flow assumptions on the acquired loan pools and, at least semi-annually, the Company updates loss estimates, prepayment speeds and other variables when analyzing cash flows. In addition to this accretion income, which is recognized over the estimated life of the loan pools, if a loan is removed from a pool due to payoff or foreclosure, the unaccreted discount in excess of losses is recognized as an accretion gain in interest income. As a result, income from acquired loan pools can be volatile from quarter to quarter, however the incremental accretion is expected to decrease over time as the balance of the purchase discount for acquired loans decreases. For the quarters ended MarchDecember 31, 2020 and 2019, average loan yields included six and seven basis points, respectively, from 2.64% in the accretion of purchase discounts on acquired loans. The total purchase discount for acquired loans was $5.5 million at March 31, 2020, compared to $6.7 million at June 30, 2019, and $7.1 million at March 31, 2019.corresponding quarter last year.
Total interest expense decreased $417,000,$4.8 million, or 5.1%54.5% for the quarter ended MarchDecember 31, 2020 compared to the same period last year. The decrease was driven by a $2.0$4.0 million, or 53.0%62.9% decrease in interest expense on borrowings partially offset bydeposits and a $1.6 million,$853,000, or 35.6% increase33.6% decrease in interest expense on deposits. The additional deposit interest expense was a result of our continued focus on increasing deposits as the average balance of interest-bearing deposits increased $205.3 million, or 10.4% along with a 20 basis point increase in the average cost ofborrowings. Average interest-bearing deposits for the quarter ended MarchDecember 31, 2020 increased $27.8 million, or 1.3%, but was more than offset by the 74 basis point decrease in cost of deposits, down to 0.42% compared to 1.16% in the same quarter last year.period in fiscal 2020. Average borrowings for the quarter ended MarchDecember 31, 2020 decreased $196.8$130.5 million, or 29.4%21.6% along with a 7526 basis point decrease in the average cost of borrowings compared to the same period last year. The increase in average deposits (interest and noninterest-bearing) was due to successful deposit gathering campaigns and funds from PPP loans and other government stimulus. The decrease in the average cost of borrowing was driven by the lower federal funds rate during the current quarter compared to the prior year. The overall average cost of funds decreased seven67 basis points to 1.16%0.60% for the current quarter compared to 1.23%1.27% in the same quarter last year due primarily to the impact of the lower amount of borrowings and lower interest rates.
Provision (Benefit) for LoanCredit Losses. During the three months ended MarchDecember 31, 2020 there was a $5.4$3.0 million net benefit of the provision for loancredit losses compared to a $5.5 million$400,000 provision for the corresponding quarter of fiscal 2019. 2020. The current yearnet benefit of provision included significant adjustments relatingrelates to COVID-19 compared to prior year's provision which was primarily driven by one commercial loan relationship.the previously discussed changes in the economic forecast since September 30, 2020 and the decline in the balance of total loans. Net loan charge-offsrecoveries totaled $581,000$62,000 for the three months ended MarchDecember 31, 2020, compared to $2.5 million$317,000 for the same period in fiscal 2019. Annualized net charge-offslast year. Net recoveries as a percentage of average loans was 0.09%were 0.01% and 0.05% for the three monthsquarter ended MarchDecember 31, 2020 compared to 0.38% for the same period in fiscal 2019.and 2019, respectively.
See "Comparison of Financial Condition - Asset Quality" for additional details.
Noninterest Income.  Noninterest Noninterest income increased $1.0 million,$270,000, or 18.1%3.0% to $6.4$9.3 million for the three months ended MarchDecember 31, 2020 from $5.4$9.1 million for the same period in the previous year primarily due to a $160,000,$830,000, or 119.4%63.2% increase in other noninterest income, partially offset by a $302,000, or 34.7% decrease in loan income and fees, a $189,000, or 7.3% decrease in service charges and fees on deposit accounts, and a $749,000,$71,000, or 74.4% increase1.9% decrease in other noninterest income. The $160,000 increase for the quarter in loan income and fees is primarily a resultgain of our adjustable rate conversion program and prepayment fees on equipment financesale of loans. The $749,000 increase in other noninterest income primarily related to operating lease income from the newcontinued growth in the equipment finance line of business. The decrease in loan income and fees is primarily a result of lower fees from our adjustable rate conversion program and servicing fees. The decrease in service charges on deposit accounts was a result of fewer transactions as customers have decreased spending during the pandemic. The decrease in gain on the sale of loans was driven by a decrease in gains from the sale of SBA loans, partially offset by an increase in sales of mortgage loans and home equity loans. During the quarter ended December 31, 2020, $9.3 million of the guaranteed portion of SBA commercial loans were sold with gains of $778,000 compared to $16.5 million sold and gains of $1.0 million in the corresponding quarter in the prior year. There were $32.2$108.9 million of residential mortgage loans originated for sale which were sold with gains of $852,000$2.8 million compared to $24.7$57.8 million sold and gains of $628,000$1.4
51

million in the corresponding quarter in the prior year. During the quarter ended March 31, 2020, $6.8 million of the guaranteed portion of SBA commercial loans were sold with gains of $469,000 compared to $11.5 million sold and gains of $843,000 in the corresponding quarterIncluded in the prior year.year's gain on sale of loans was an additional $1.3 million non-recurring gain related to one-to-four family loans of $154.9 million that were sold during the quarter. In addition, $18.0$23.2 million of home equity loans were sold during the quarter ended December 31, 2020 for a gain of $183,000.$158,000.


Noninterest Expense. Noninterest expense for the three months ended MarchDecember 31, 2020 increased $1.9$2.4 million, or 8.4%10.0% to $24.9$26.4 million compared to $23.0$24.0 million for the three months ended MarchDecember 31, 2019. The increase was primarily due to a $1.0$1.5 million, or 7.4%10.8% increase in salaries and employee benefits as a result of new positions, mortgage loan origination incentives, and annual salary increases; a $1.0 million,$892,000, or 34.6%26.9% increase in other expenses, mainly driven by depreciation from our equipment finance line of business and expenses related to our recent core system conversion;business; a $164,000, or 23.5% increase in telephone, postage, and supplies as a result of our core conversion; and a $142,000, or 44.4%$475,000 increase in deposit insurance premiums as a result of our growthcredits issued by the FDIC being utilized in the prior year period, and changing loan portfolio mix.a $235,000, or 11.8% increase in computer services. Partially offsetting these increases was a cumulative decrease of $365,000,$608,000, or 39.1%17.9% in REO-related expensesnet occupancy expense; marketing and advertising expense; and core deposit intangible amortization for the three months ended MarchDecember 31, 2020 compared to the same period last yearyear. In addition, there was a $195,000, 54.2% decrease in REO-related expenses as a result of gains on the sale of REO during the current quarter compared to a loss in the corresponding quarter in fiscal 2019.fewer properties held and no post-foreclosure writedowns.
Income Taxes. The Company's income tax expense for the three months ended MarchDecember 31, 2020 increased $3,000,$116,000, or 1.6%4.7% to $188,000$2.6 million from $185,000.$2.5 million. The effective tax rate for the three months ended MarchDecember 31, 2020 and 2019 was 13.6%21.5% and 5.3%21.2%, respectively. These lower rates were due to the effects of $1.0 million in each quarter of tax-free income from municipal leases in the Company's loan portfolio and a $325,000 valuation adjustment in 2019 related to the Tax Cut and Jobs Act.
Comparison of Results of OperationOperations for the NineSix Months Ended MarchDecember 31, 2020 and 2019
General.  During the ninesix months ended MarchDecember 31, 2020, net income increaseddecreased by $55,000,$2.8 million, or 0.3%15.5% to $19.2$15.2 million from $19.1$18.0 million for the ninesix months ended MarchDecember 31, 2019. Diluted earnings per share increased 5.9%decreased to $1.08$0.92 for the first ninesix months of fiscal yearended December 31, 2020 compared to $1.02$1.01 in the same period in fiscal 2019 primarily2020. Offsetting the decrease in net income for the six months ended December 31, 2020 as compared to the prior comparable six-month period was a resultnet benefit in the provision for credit losses due to improvement in the economic forecast since adoption of continued stock buybacks.the new accounting standard to measure current expected credit losses. The net benefit in the provision nearly offset the decline in net interest income for the period as compared to the same period ended December 31, 2019. The overall decline in net income resulted from an increase in total noninterest expense.
Net Interest Income. Net interest income decreased $526,000, or 0.7% to $79.4$51.6 million for the ninesix months ended MarchDecember 31, 2020, compared to $79.9$54.1 million for the nine months ended March 31, 2019. Thiscomparative period in fiscal 2020. The $2.5 million, or 4.6% decrease in net interest income was driven bydue to a $3.8$11.5 million increasedecrease in interest and dividend income primarily driven by an increase in average interest-earning assets, which waspartially offset by a $4.3$9.1 million increasedecrease in interest expense.expense, both of which were driven by the lower rate environment in the current period.
Average interest-earning assets increased $166.8$112.8 million, or 5.3%3.4% to $3.3$3.4 billion for the ninesix months ended MarchDecember 31, 2020 compared to $3.1$3.3 billion forin the corresponding period in fiscal 2019. For the nine months ended March 31, 2020, theprior period. The average balance of total loans receivable increased $125.8by $84.8 million, or 4.8%3.1% compared to the same period last year primarily due to organic loan growth.year. The average balance of commercial paper and deposits in other banks increased $38.6$66.0 million, or 11.9%18.6% between the periods driven by increases in commercial paper investments.periods. These increases were primarily funded by the $151.5a $32.1 million, or 5.9%21.1% decrease in securities available for sale and a $176.7 million, or 53.5% increase in average noninterest-bearing deposits partially offset by a $56.4 million, or 2.0% decrease in average interest-bearing liabilities as compared to the same nine-month period last year. Net interest margin (on a fully taxable-equivalent basis) for the ninesix months ended MarchDecember 31, 2020 decreased to 3.25%3.05% from 3.45%3.30% for the same period a year ago.
Total interest and dividend income increased $3.8decreased $11.5 million, or 3.7%16.0% for the ninesix months ended MarchDecember 31, 2020 as compared to the same period last year, which was primarily driven by a $4.1$7.5 million, or 4.6% increase11.6% decrease in loan interest income, and a $319,000,$2.7 million, or 12.4% increase in interest income from securities available for sale, which was partially offset by a $147,000, or 2.4%64.1% decrease in interest income from commercial paper and interest-bearing deposits in other banks, a $957,000, or 48.1% decrease in interest income on securities available for sale, and a $510,000,$460,000, or 19.1%28.7% decrease in interest income on other investment income.interest-earning assets. The additional loanlower interest income was driven by the increasedecrease in the average balance of loans receivablemarket yields compared to the prior year.year period. Average loan yields decreased by two66 basis points to 4.63%4.04% for the ninesix months ended MarchDecember 31, 2020 from 4.65%4.70% in the corresponding period last year. ForAverage yields on commercial paper and deposits in other banks decreased 164 basis points to 0.71% for the ninesix months ended MarchDecember 31, 2020 and 2019, average loanfrom 2.35% in the corresponding period last year. Average yields included six and eighton securities available for sale decreased 89 basis points respectively,to 1.72% for the six months ended December 31, 2020 from 2.61% in the accretion of purchase discounts on acquired loans.corresponding period last year.
Total interest expense increased $4.3decreased $9.1 million, or 20.1%50.2% for the ninesix months ended MarchDecember 31, 2020 compared to the same period last year. The increasedecrease was driven by a $7.4$6.6 million, or 68.6% increase54.0% decrease in deposit interest expense partially offset byon deposits and a $3.1$2.5 million, or 28.7%42.4% decrease in interest expense on borrowings. The additional deposit interest expense was a result of a $226.9$113.1 million, or 11.8%5.3% increase in the average balance of interest-bearing deposits along with a 37 basis point increase in the average cost of those deposits for the ninesix months ended MarchDecember 31, 2020 aswas more than offset by the 64 basis point decrease down to 0.50% in the corresponding cost of funds compared to the same period last year.1.14%. Average borrowings for the ninesix months ended MarchDecember 31, 2020 decreased $75.3$169.5 million, or 11.4%26.3% along with a 4240 basis point decrease in the average cost of borrowings compared to the same period last year. The overall average cost of funds increased 14decreased 64 basis points to 1.25%0.66% for the ninesix month period compared to 1.30% in the same period last year due primarily to the impact of the lower amount of borrowings and rates.
Provision (Benefit) for Loan Losses.  During the six months ended MarchDecember 31, 2020 there was a $2.1 million net benefit of the provision for credit losses compared to a $400,000 provision for the corresponding period of fiscal 2020. The net benefit of provision relates to the previously discussed changes in the economic forecast since the adoption of CECL and the decline in the balance of total loans. Net loan charge-offs totaled $637,000 for the six months ended December 31, 2020, compared to 1.11% in the corresponding period last year.

Provision for Loan Losses.  There was a $5.8 million provision for loan losses for the nine months ended March 31, 2020 compared to $5.5 million for the corresponding period in fiscal 2019. The fiscal 2020 and 2019 provisions for loan losses relate primarily to the previously discussed COVID-19 and commercial lending relationship, respectively. Net loan charge-offs totaled $379,000 for the nine months ended March 31, 2020, compared to $2.1 millionnet recoveries of $202,000 for the same period in fiscal 2019. Annualized netlast year. Net charge-offs as a percentage of average loans were 0.02%0.04% and (0.01%) for the ninesix months ended MarchDecember 31, 2020 compared to 0.11% for the same period last fiscal year.and 2019, respectively.
See "Comparison of Financial Condition - Asset Quality" for additional details.
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Noninterest Income.  Noninterest income increased $7.0$1.2 million, or 43.6%7.5%, to $23.1$18.0 million for the ninesix months ended MarchDecember 31, 2020 from $16.1$16.7 million for the ninesix months ended MarchDecember 31, 2019, primarily due to a $3.5$1.7 million, or 85.4%63.4% increase in theother noninterest income and a $974,000, or 16.0% increase in gain onof sale of loans, held for sale,partially offset by a $1.3 million,$710,000, or 170.4% increase40.5% decrease in loan income and fees and a $2.0 million,$535,000, or 81.1%10.6% decrease in service charges and fees on deposit accounts. The increase in other noninterest income.income primarily related to an increase in operating lease income from the equipment finance line of business. The increase in the gain on the sale of loans held forwas driven by an increase in sales of mortgage loans and home equity loans, partially offset by a decrease in gains from the sale was a result of the previously discussed one-to-four family loans sold during the period which resulted in a non-recurring $1.3 million gain. In addition to this non-recurring gain, $135.4SBA loans. There were $190.7 million of residential mortgage loans originated for sale which were sold with gains of $3.6$5.0 million for the nine months ended March 31, 2020, compared to $81.3$103.2 million sold and gains of $2.0$2.7 million in the corresponding period in the prior year. As previously mentioned, the prior period's gain on sale of loans included an additional $1.3 million non-recurring gain related to one-to-four family loans. During the ninesix months ended MarchDecember 31, 2020, $36.0$39.7 million of the guaranteed portion of SBA commercial loans were sold with recorded gains of $2.5$1.8 million compared to $28.7$29.2 million sold and gains of $2.0$2.1 million in the corresponding period in the prior year. In addition, $42.1 million of home equity loans were sold during the six months ended December 31, 2020 for a gain of $258,000. The increasedecrease in loan income and fees is


primarily a result of lower fees from our adjustable rate conversion program and prepayment feesother loan servicing fees. The decrease in service charges on equipment finance loans. The $2.0 million increase in other noninterest income primarily related to operating lease income fromdeposit accounts was a result of fewer transactions as customers have decreased spending during the equipment finance line of business.pandemic.
Noninterest Expense. Noninterest expense for the ninesix months ended MarchDecember 31, 2020 increased $5.8$4.9 million, or 8.6%10.2%, to $72.5$52.4 million compared to $66.7$47.6 million for the ninesix months ended MarchDecember 31, 2019. The increase was primarily due to a $3.5$2.8 million, or 9.1%10.1% increase in salaries and employee benefits; a $2.4$2.0 million, or 30.3%31.2% increase in other expenses, mainly driven by depreciation from our equipment finance line of business and expenses related to our core conversion;business; a $497,000, or 40.8%$986,000 increase in marketingdeposit insurance premiums, and advertising expense; a $308,000,$518,000, or 5.4%12.9% increase in computer services; and a $252,000, or 11.4% increase in telephone, postage, and supplies.services. Partially offsetting these increases was a cumulative decrease of $485,000,$1.5 million, or 50.6%16.3% in deposit insurance premiums related to credit from the Federal Deposit Insurance Corporation in the firstnet occupancy expense; marketing and second quarter; a $462,000, or 29.2% decrease inadvertising expense; telephone, postage and supplies, core deposit intangible amortization;amortization, and a $214,000, or 20.4% decrease in REO relatedREO-related expenses for the ninesix months ended MarchDecember 31, 2020 compared to the same period last year.
Income Taxes.  For the ninesix months ended MarchDecember 31, 2020, the Company's income tax expense increased $376,000,decreased $835,000, or 8.0%17.1% to $5.1$4.0 million from $4.7$4.9 million for the nine months ended March 31, 2019 as a result of higher pretaxlower taxable income. The effective tax rate for the ninesix months ended MarchDecember 31, 2020 and 2019 was 20.9%21.0% and 19.7%21.3%, respectively.
Liquidity
Management maintains a liquidity position that it believes will adequately provide funding for loan demand and deposit run-off that may occur in the normal course of business. We relyThe Company relies on a number of different sources in order to meet ourits potential liquidity demands. The primary sources are increases in deposit accounts, cash flows from loan payments, commercial paper, and the securities portfolio.
In addition to these primary sources of funds, management has several secondary sources available to meet potential funding requirements. As of MarchDecember 31, 2020, the Bank had an available borrowing capacity of $109.9$66.1 million with the FHLB of Atlanta, a $112.3$99.7 million line of credit with the FRB and a line of credit with each of three unaffiliated banks totaling $70.0$100.0 million. At MarchDecember 31, 2020, wethe Company had $535.0$475.0 million in FHLB advances outstanding and nothing outstanding under our other lines of credit. Additionally, the Company classifies its securities portfolio as available for sale, providing an additional source of liquidity. Management believes that our security portfolio is of high quality and the securities would therefore be marketable. In addition, we havethe Company has historically sold longer term fixed-rate mortgage loans in the secondary market to reduce interest rate risk and to create still another source of liquidity. From time to time wethe Company also utilizeutilizes brokered time deposits to supplement ourits other sources of funds. Brokered time deposits are obtained by utilizing an outside broker that is paid a fee. This funding requires advance notification to structure the type of deposit desired by us. Brokered deposits can vary in term from one month to several years and have the benefit of being a source of longer-term funding. WeThe Company also utilizeutilizes brokered deposits to help manage interest rate risk by extending the term to repricing of our liabilities, enhance our liquidity and fund asset growth. Brokered deposits are typically from outside our primary market areas, and our brokered deposit levels may vary from time to time depending on competitive interest rate conditions and other factors. At MarchDecember 31, 2020 brokered deposits totaled $151.7$4.6 million, or 5.9%0.2% of total deposits compared to $176.8$143.2 million, or 7.6%5.1% of total deposits at June 30, 2019. We also intend to utilize the FRB's PPPLF to supplement our liquidity pursuant to which the Company will pledge its PPP loans as collateral to obtain FRB non-recourse loans. The PPPLF will take the PPP loans as collateral at face value.2020.
Liquidity management is both a daily and long-term function of business management. Excess liquidity is generally invested in short-term investments, such as overnight deposits, federal funds, and commercial paper. On a longer term basis, we maintainthe Company maintains a strategy of investing in various lending products and investment securities, including mortgage-backed securities. HomeTrust Bancshares on a stand-alone level is a separate legal entity from the Bank and must provide for its own liquidity and pay its own operating expenses. The Company'sIts primary source of funds consists of the net proceeds retained from the Conversion. The CompanyIt also has the ability to receive dividends or capital distributions from the Bank, although there are regulatory restrictions on the ability of the Bank to pay dividends. At MarchDecember 31, 2020, the Company (on an unconsolidated basis)HomeTrust Bancshares on a stand-alone level had liquid assets of $2.0$5.0 million.
We use ourThe Company uses its sources of funds primarily to meet ourits ongoing commitments, pay maturing deposits and fund withdrawals, and to fund loan commitments. At MarchDecember 31, 2020, the total approved loan commitments and unused lines of credit outstanding amounted to $216.5$232.8 million and $374.4$465.2 million, respectively, as compared to $274.9$199.4 million and $353.7$398.8 million, respectively, as of June 30, 2019.2020. Certificates of deposit scheduled to mature in one year or less at MarchDecember 31, 2020, totaled $588.2$460.6 million. It is management's policy to manage deposit rates that are competitive with other local financial institutions. Based on this management strategy, we believe that a majority of our maturing deposits will remain with us.
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During the first ninesix months of fiscal 2020,2021, cash and cash equivalents increased $11.0$104.7 million, or 15.5%86.1%, to $82.1$226.3 million as of MarchDecember 31, 2020 from $71.0$121.6 million as of June 30, 2019.2020. Cash provided by financinginvesting activities was $57.2$185.6 million while cash used in financing and operating activities and investing activities was $16.7$49.3 million and $29.6$31.5 million, respectively. Primary sources of cash for the ninesix months ended MarchDecember 31, 2020 included a $227.5 million increase in deposits, $154.9$121.0 million in loans not initially originated for sale were sold, $27.8net principal repayments of commercial paper, $38.7 million in maturing securities available for sale, $10.9a decrease in loans of $105.2 million, $8.2 million in principal repayments from mortgage-backed securities, and $4.2$7.0 million in maturities of certificates of deposit in other banks, net redemptions of other investments.purchases. Primary uses of cash during the period included a $145.0$73.7 million decrease in borrowings, an increase in loans of $99.1 million, a net increase in commercial paper of $35.9 million, $75.5 million of purchases of debt securities available for sale, $5.5$41.3 million increase in loans held for sale, $42.5 million decrease in deposits, $13.4 million in purchases of certificates of deposit in other banks, net of maturities, $11.0premises and equipment, $6.9 million in purchases of operating lease equipment, $3.4$5.2 million in shares repurchased, and $2.5 million in cash dividends, and $23.2 million in common stock repurchases.dividends. All sources and uses of cash reflect our cash management strategy to increase our higher yielding investments and loans by increasing lower costing borrowings and reducing our holdings of lower yielding investments.


Off-Balance Sheet Activities
In the normal course of operations, we engagethe Company engages in a variety of financial transactions that are not recorded in our financial statements. These transactions involve varying degrees of off-balance sheet credit, interest rate and liquidity risks. These transactions are used primarily to manage customers' requests for funding and take the form of loan commitments and lines of credit. For the ninesix months ended MarchDecember 31, 2020, wethe Company engaged in no off-balance sheet transactions likely to have a material effect on ourits financial condition, results of operations or cash flows.
A summary of our off-balance sheet commitments to extend credit at MarchDecember 31, 2020, is as follows (in thousands):
Undisbursed portion of construction loans$146,181 
Commitments to make loans86,648 
Unused lines of credit465,200 
Unused letters of credit7,936 
Total loan commitments$705,965 
Undisbursed portion of construction loans$161,655
Commitments to make loans54,884
Unused lines of credit374,401
Unused letters of credit6,833
Total loan commitments$597,773
Capital Resources
At MarchDecember 31, 2020, stockholders' equity totaled $405.4$404.7 million. HomeTrust Bancshares, Inc. is a bank holding company and a financial holding company subject to regulation by the Federal Reserve. As a bank holding company, we arethe Company is subject to capital adequacy requirements of the Federal Reserve under the Bank Holding Company Act of 1956, as amended and the regulations of the Federal Reserve. Our subsidiary, the Bank, an FDIC-insured, North Carolina state-chartered bank and a member of the Federal Reserve, is supervised and regulated by the Federal Reserve and the NCCOB and is subject to minimum capital requirements applicable to state member banks established by the Federal Reserve that are calculated in a manner similar to those applicable to bank holding companies.
Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.
HomeTrust Bancshares, Inc. and the Bank each exceeded all regulatory capital requirements as of MarchDecember 31, 2020. Consistent with our goals to operate a sound and profitable organization, our policy is for the Bank to maintain a “well-capitalized” status under the regulatory capital categories of the Federal Reserve. The Bank was categorized as "well-capitalized" at MarchDecember 31, 2020 under applicable regulatory requirements.

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HomeTrust Bancshares, Inc. and the Bank's actual and required minimum capital amounts and ratiosare as follows (dollars in thousands):
 Regulatory Requirements
ActualMinimum for Capital
Adequacy Purposes		Minimum to Be
Well Capitalized
 AmountRatioAmountRatioAmountRatio
HomeTrust Bancshares, Inc.
As of December 31, 2020
Common Equity Tier I Capital to Risk-Weighted Assets$384,255 11.86 %$145,826 4.50 %$210,638 6.50 %
Tier I Capital (to Total Adjusted Assets)$384,255 10.52 %$146,128 4.00 %$182,660 5.00 %
Tier I Capital (to Risk-weighted Assets)$384,255 11.86 %$194,435 6.00 %$259,246 8.00 %
Total Risk-based Capital (to Risk-weighted Assets)$410,744 12.68 %$259,246 8.00 %$324,058 10.00 %
As of June 30, 2020      
Common Equity Tier I Capital to Risk-Weighted Assets$374,437 11.26 %$149,614 4.50 %$216,109 6.50 %
Tier I Capital (to Total Adjusted Assets)$374,437 10.26 %$146,047 4.00 %$182,559 5.00 %
Tier I Capital (to Risk-weighted Assets)$374,437 11.26 %$199,485 6.00 %$265,980 8.00 %
Total Risk-based Capital (to Risk-weighted Assets)$402,964 12.12 %$265,980 8.00 %$332,476 10.00 %
HomeTrust Bank      
As of December 31, 2020      
Common Equity Tier I Capital to Risk-Weighted Assets$371,075 11.45 %$145,820 4.50 %$210,629 6.50 %
Tier I Capital (to Total Adjusted Assets)$371,075 10.16 %$146,144 4.00 %$182,680 5.00 %
Tier I Capital (to Risk-weighted Assets)$371,075 11.45 %$194,427 6.00 %$259,236 8.00 %
Total Risk-based Capital (to Risk-weighted Assets)$397,564 12.27 %$259,236 8.00 %$324,045 10.00 %
As of June 30, 2020      
Common Equity Tier I Capital to Risk-Weighted Assets$362,841 10.91 %$149,608 4.50 %$216,100 6.50 %
Tier I Capital (to Total Adjusted Assets)$362,841 9.94 %$146,010 4.00 %$182,512 5.00 %
Tier I Capital (to Risk-weighted Assets)$362,841 10.91 %$199,477 6.00 %$265,969 8.00 %
Total Risk-based Capital (to Risk-weighted Assets)$391,368 11.77 %$265,969 8.00 %$332,461 10.00 %
   Regulatory Requirements
 Actual 
Minimum for Capital
Adequacy Purposes
 
Minimum to Be
Well Capitalized
 Amount Ratio Amount Ratio Amount Ratio
HomeTrust Bancshares, Inc.           
            
As of March 31, 2020           
Common Equity Tier I Capital to Risk-Weighted Assets$372,175
 11.42% $146,656
 4.50% $211,837
 6.50%
Tier I Capital (to Total Adjusted Assets)$372,175
 10.72% $138,853
 4.00% $173,566
 5.00%
Tier I Capital (to Risk-weighted Assets)$372,175
 11.42% $195,542
 6.00% $260,723
 8.00%
Total Risk-based Capital (to Risk-weighted Assets)$399,480
 12.26% $260,723
 8.00% $325,903
 10.00%
            
As of June 30, 2019 
  
  
  
  
  
Common Equity Tier I Capital to Risk-Weighted Assets$374,729
 12.20% $138,226
 4.50% $199,659
 6.50%
Tier I Capital (to Total Adjusted Assets)$374,729
 10.89% $137,649
 4.00% $172,062
 5.00%
Tier I Capital (to Risk-weighted Assets)$374,729
 12.20% $184,301
 6.00% $245,734
 8.00%
Total Risk-based Capital (to Risk-weighted Assets)$396,613
 12.91% $245,734
 8.00% $307,168
 10.00%
            
HomeTrust Bank: 
  
  
  
  
  
            
As of March 31, 2020 
  
  
  
  
  
Common Equity Tier I Capital to Risk-Weighted Assets$361,674
 11.10% $146,636
 4.50% $211,807
 6.50%
Tier I Capital (to Total Adjusted Assets)$361,674
 10.42% $138,881
 4.00% $173,601
 5.00%
Tier I Capital (to Risk-weighted Assets)$361,674
 11.10% $195,514
 6.00% $260,686
 8.00%
Total Risk-based Capital (to Risk-weighted Assets)$388,976
 11.94% $260,686
 8.00% $325,857
 10.00%
            
As of June 30, 2019 
  
  
  
  
  
Common Equity Tier I Capital to Risk-Weighted Assets$355,759
 11.59% $138,153
 4.50% $199,555
 6.50%
Tier I Capital (to Total Adjusted Assets)$355,759
 10.34% $137,590
 4.00% $171,988
 5.00%
Tier I Capital (to Risk-weighted Assets)$355,759
 11.59% $184,204
 6.00% $245,606
 8.00%
Total Risk-based Capital (to Risk-weighted Assets)$377,639
 12.30% $245,606
 8.00% $307,007
 10.00%
In addition to the minimum CET1, Tier 1 and total risk-based capital ratios, both HomeTrust Bancshares, Inc. and the Bank have to maintain a capital conservation buffer consisting of additional CET1 capital of more than 2.5% above the required minimum levels in order to avoid limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses based on percentages of eligible retained income that could be utilized for such actions. At MarchDecember 31, 2020, the conservation buffer was 4.26%4.68% and 3.94% 4.27%for HomeTrust Bancshares, Inc. and the Bank, respectively.
Impact of Inflation
The effects of price changes and inflation can vary substantially for most financial institutions. While management believes that inflation affects the growth of total assets, it believes that it is difficult to assess the overall impact. Management believes this to be the case due to the fact that generally neither the timing nor the magnitude of the inflationary changes in the CPI coincides with changes in interest rates. The price of one or more of the components of the CPI may fluctuate considerably and thereby influence the overall CPI without having a corresponding effect on interest rates or upon the cost of those goods and services normally purchased by the Company. In years of high inflation and high interest rates, intermediate and long-term interest rates tend to increase, thereby adversely impacting the market values of investment securities, mortgage loans and other long-term fixed rate loans. In addition, higher short-term interest rates caused by inflation tend to increase the cost of funds. In other years, the opposite may occur.

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Item 3.      Quantitative and Qualitative Disclosure About Market Risk
There has not been any material change in the market risk disclosures contained in our 20192020 Form 10-K.
Item 4.Controls and Procedures
An evaluation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the "Act")) as of MarchDecember 31, 2020, was carried out under the supervision and with the participation of the Company's Chief Executive Officer, Chief Financial Officerand several other members of the Company's senior management.The Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures in effect as of MarchDecember 31, 2020, were effective in ensuring that the information required to be disclosed by the Company in the reports it files or submits under the Act is: (i) accumulated and communicated to the Company's management (including the Chief Executive Officer and Chief Financial Officer) in a timely manner and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. In addition, there have beenon July 1, 2020, the Company adopted the CECL accounting standard. In connection with the adoption of CECL, the Company implemented relevant changes and enhancements to its internal control environment and processes related to estimating credit losses in accordance with the standard. There were no other changes in ourthe Company's internal control over financial reporting (as defined in Rule 13a-15(f) of the Act) that occurred during the quartersix months ended MarchDecember 31, 2020 that have materially affected, or are reasonably likely to materially affect, ourthe Company’s internal control over financial reporting.
The Company does not expect that its disclosure controls and procedures and internal control over financial reporting will prevent all errors and all fraud. A control procedure, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control procedure are met. Because of the inherent limitations in all control procedures, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls may be circumvented by the individual acts of some persons, by collusion of two or more people, or by override of the control. The design of any control procedure also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control procedure, misstatements due to error or fraud may occur and not be detected.
PART II.  OTHER INFORMATION
Item 1.Legal Proceedings
The "Litigation" section of Note 910 to the Consolidated Financial Statements included in Part I, Item 1 is incorporated herein by reference.
Item 1A.Risk Factors
In light of recent developments relating to COVID-19,Item 1A.    Risk Factors
There have been no material changes in the Company is supplementing its risk factors containedRisk Factors previously disclosed in Item 1A of its Annual Report onthe Company's 2020 Form 10-K for the year ended June 30, 2019, as filed with the10-K.
Item 2.Unregistered Sales of Equity Securities and Exchange Commission on September 13, 2019. The following risk factor should be read in conjunction with the risk factors described in the 2019 Form 10-K.
The COVID-19 pandemic has adversely impacted our ability to conduct business and is expected to adversely impact our financial results and thoseUse of our customers. The ultimate impact will depend on future developments, which are highly uncertain and cannot be predicted, including the scope and duration of the pandemic and actions taken by governmental authorities in response to the pandemic.Proceeds
The COVID-19 pandemic has significantly adversely affected our operations and the way we provide banking services to businesses and individuals, most of whom are currently under government issued stay-at-home orders. As an essential business, we continue to provide banking and financial services to our customers with drive-thru access available at the majority of our branch locations and in-person services available by appointment. In addition, we continue to provide access to banking and financial services through online banking, ATMs and by telephone. If the COVID-19 pandemic worsens it could limit or disrupt our ability to provide banking and financial services to our customers.
In response to the stay-at-home orders, many of our employees currently are working remotely to enable us to continue to provide banking services to our customers. Heightened cybersecurity, information security and operational risks may result from these remote work-from-home arrangements. We also could be adversely affected if key personnel or a significant number of employees were to become unavailable due to the effects and restrictions of the COVID-19 pandemic. We also rely upon our third-party vendors to conduct business and to process, record and monitor transactions. If any of these vendors are unable to continue to provide us with these services, it could negatively impact our ability to serve our customers. Although we have business continuity plans and other safeguards in place, there is no assurance that such plans and safeguards will be effective.



There is pervasive uncertainty surrounding the future economic conditions that will emerge in the months and years following the start of the pandemic. As a result, management is confronted with a significant and unfamiliar degree of uncertainty in estimating the impact of the pandemic on credit quality, revenues and asset values. To date, the COVID-19 pandemic has resulted in declines in loan demand and loan originations (other than through government sponsored programs such as the Payroll Protection Program), deposit availability, market interest rates and negatively impacted many of our business and consumer borrower’s ability to make their loan payments. Because the length of the pandemic and the efficacy of the extraordinary measures being put in place to address its economic consequences are unknown, including recent reductions in the targeted federal funds rate, until the pandemic subsides, we expect our net interest income and net interest margin will be adversely affected in the near term, if not longer. Many of our borrowers have become unemployed or may face unemployment, and certain businesses are at risk of insolvency as their revenues decline precipitously, especially in businesses related to travel, hospitality, leisure and physical personal services. Businesses may ultimately not reopen as there is a significant level of uncertainty regarding the level of economic activity that will return to our markets over time, the impact of governmental assistance, the speed of economic recovery, the resurgence of COVID-19 in subsequent seasons and changes to demographic and social norms that will take place.
The impact of the pandemic is expected to continue to adversely affect us during 2020 and possibly longer as the ability of many of our customers to make loan payments has been significantly affected. Although the Company makes estimates of loan losses related to the pandemic as part of its evaluation of the allowance for loan losses, such estimates involve significant judgment and are made in the context of significant uncertainty as to the impact the pandemic will have on the credit quality of our loan portfolio. It is likely that increased loan delinquencies, adversely classified loans and loan charge-offs will increase in the future as a result of the pandemic. Consistent with guidance provided by banking regulators, we have modified loans by providing various loan payment deferral options to our borrowers affected by the COVID-19 pandemic. Notwithstanding these modifications, these borrowers may not be able to resume making full payments on their loans once the COVID-19 pandemic is resolved. Any increases in the allowance for credit losses will result in a decrease in net income and, most likely, capital, and may have a material negative effect on our financial condition and results of operations.
The PPP loans made by the Bank are guaranteed by the SBA and, if used by the borrower for authorized purposes, may be fully forgiven. However, in the event of a loss resulting from a default on a PPP loan and a determination by the SBA that there was a deficiency in the manner in which the PPP loan was originated, funded or serviced by the Bank, the SBA may deny its liability under the guaranty, reduce the amount of the guaranty or, if it has already made payment under the guaranty, seek recovery of any loss related to the deficiency from the Bank. In addition, since the commencement of the PPP, several larger banks have been subject to litigation regarding their processing of PPP loan applications. The Bank may be exposed to the risk of similar litigation, from both customers and non-customers that approached the Bank seeking PPP loans. PPP lenders, including the Bank, may also be subject to the risk of litigation in connection with other aspects of the PPP, including but not limited to borrowers seeking forgiveness of their loans. If any such litigation is filed against the Bank, it may result in significant financial or reputational harm to us.
In accordance with GAAP, we record assets acquired and liabilities assumed at their fair value with the excess of the purchase consideration over the net assets acquired resulting in the recognition of goodwill. If adverse economic conditions or the recent decrease in our stock price and market capitalization as a result of the pandemic were to be deemed sustained rather than temporary, it may significantly affect the fair value of our goodwill and may trigger impairment charges. Any impairment charge could have a material adverse effect on our results of operations and financial condition.
Even after the COVID-19 pandemic subsides, the U.S. economy will likely require some time to recover from its effects, the length of which is unknown, and during which we may experience a recession. As a result, we anticipate our business may be materially and adversely affected during this recovery. To the extent the effects of the COVID-19 pandemic adversely impact our business, financial condition, liquidity or results of operations, it may also have the effect of heightening many of the other risks described in the section entitled "Risk Factors" in our 2019 Annual Report on Form 10-K and any subsequent Quarterly Reports on Form 10-Q.


Item 2.Unregistered Sales of Equity Securities and use of Proceeds
(a) Not applicable
(b) Not applicable
(c) The following table provides information about repurchases of common stock by the Company during the quarter ended March 31, 2020:Not applicable
PeriodTotal Number
Of Shares Purchased		Average
Price Paid per Share		Total Number Of Shares Purchased as Part of Publicly Announced PlansMaximum
Number of
Shares that May
Yet Be Purchased Under Publicly Announced Plans
October 1 - October 31, 2020— $— — 851,004 
November 1 - November 30, 202048,242 18.36 48,242 802,762 
December 1 - December 31, 2020228,880 18.76 228,880 573,882 
Total277,122 $18.69 277,122 573,882 
Period
Total Number
Of Shares Purchased
 
Average
Price Paid per Share
 Total Number Of Shares Purchased as Part of Publicly Announced Plans 
Maximum
Number of
Shares that May
Yet Be Purchased Under Publicly Announced Plans
January 1 - January 31, 2020134,400
 $26.55
 134,400
 583,273
February 1 - February 29, 202078,200
 26.57
 78,200
 505,073
March 1 - March 31, 2020423,200
 17.38
 423,200
 81,873
Total635,800
 $20.45
 635,800
 81,873
Subsequent to March 31, 2020, the remaining shares under the Company's then-outstanding plan were repurchased and onOn April 2, 2020, the Company announced that its Board of Directors had authorized the repurchase of up to an additional 889,123851,004 shares of the Company's common stock, representing 5% of the Company's outstanding shares at the time of the announcement. The shares may be purchased in the open market or in privately negotiated transactions, from time to time depending upon market conditions and other factors.

56

Item 3.Defaults Upon Senior Securities

Item 3.     Defaults Upon Senior Securities
Nothing to report.
Item 4.Mine Safety Disclosures
Item 4.     Mine Safety Disclosures
Not applicable.
Item 5.Other Information
Item 5.     Other Information
Nothing to report.
Item 6.Exhibits
Item 6.     Exhibits
Regulation S-K Exhibit NumberDocumentReference to Prior Filing or Exhibit Number Attached Hereto
  
3.1(a)
3.2(b)
3.3(c)
4.1(b)
4.2(d)
4.3

(e)
10.110.1
10.2(g)
10.3(g)
10.3A(h)
10.3B(i)
10.4

(g)
10.5(g)
10.6(a)
10.7(a)
10.7A(a)
10.7B(a)
10.7C(a)
10.7D(a)
10.7E

(a)
10.7F(a)
10.7G(a)
10.7H(a)
10.7I(j)
10.8(a)
10.8A(a)
57

Regulation S-K Exhibit NumberDocumentReference to Prior Filing or Exhibit Number Attached Hereto
3.1
Charter of HomeTrust Bancshares, Inc.
(b)
3.2
Articles Supplementary to the Charter of HomeTrust Bancshares, Inc. for HomeTrust Bancshares, Inc.'s Junior Participating Preferred Stock, Series A
(c)
3.3
Amended and Restated Bylaws of HomeTrust Bancshares, Inc.
(p)
4.1
Tax Benefits Preservation Plan, dated as of September 25, 2012, between HomeTrust Bancshares, Inc. and Registrar and Transfer Company, as Rights Agent
(c)
4.2
Amendment No. 1, dated as of August 31, 2015, to Tax Benefit Preservation Plan, dated as of September 25, 2012, between HomeTrust Bancshares, Inc. and Computershare Trust Company, N.A., as successor rights agent to Registrar and Transfer Company
(l)
4.3
Amendment No. 2, dated as of August 21, 2018, to Tax Benefits Preservation Plan, dated as ofSeptember 25, 2012, between HomeTrust Bancshares, Inc. and Computershare Trust Company,N.A., as successor rights agent to Registrar and Transfer Company

(o)
10.1
HomeTrust Bancshares, Inc. Strategic Operating Committee Incentive Plan
(v)
10.2
Amended and Restated Employment Agreement entered into between HomeTrust Bancshares, Inc. and Dana L. Stonestreet
(q)
10.3
Amended and Restated Employment Agreement entered into between HomeTrust Bancshares,Inc. and C. Hunter Westbrook

(q)
10.3A
Amendment No. 1 to Amended and Restated Employment Agreement entered into between HomeTrust Bancshares, Inc. and C. Hunter Westbrook
(s)
10.4
Amended and Restated Employment Agreement entered into between HomeTrust Bancshares,Inc. and Tony J. VunCannon

(q)
10.5
Employment Agreement between HomeTrust Bancshares, Inc. and Howard L. Sellinger
(q)
10.6
Employment Agreement between HomeTrust Bank and Sidney A. Biesecker
(b)
10.7
HomeTrust Bank Executive Supplemental Retirement Income Master Agreement ("SERP")
(b)
10.7A
SERP Joinder Agreement for F. Edward Broadwell, Jr.
(b)
10.7B
SERP Joinder Agreement for Dana L. Stonestreet
(b)
10.7C
SERP Joinder Agreement for Tony J. VunCannon
(b)
10.7D
SERP Joinder Agreement for Howard L. Sellinger
(b)
10.7E
SERP Joinder Agreement for Stan Allen

(b)
10.7F
SERP Joinder Agreement for Sidney A. Biesecker
(b)
10.7G
SERP Joinder Agreement for Peggy C. Melville
(b)
10.7H
SERP Joinder Agreement for William T. Flynt
(b)
10.7I
Amended and Restated Supplemental Income Agreement between HomeTrust Bank, as successor to Industrial Federal Savings Bank, and Sidney Biesecker
(f)
10.8
HomeTrust Bank Director Emeritus Plan ("Director Emeritus Plan")
(b)
10.8A
Director Emeritus Plan Joinder Agreement for William T. Flynt
(b)
10.8B
Director Emeritus Plan Joinder Agreement for J. Steven Goforth
(b)
10.8C
Director Emeritus Plan Joinder Agreement for Craig C. Koontz
(b)
10.8B(a)
10.8C(a)
10.8D(a)
10.8E(a)
10.8F(a)
10.8G(a)
10.9(a)
10.10(a)
10.11(a)
10.12(k)
10.13(l)
10.14(l)
10.15(l)
10.16(l)
10.17(l)
10.18Reserved
10.19Reserved
10.20(m)
10.21(m)
10.22(m)
10.23(m)
10.24(m)
10.25(m)
10.26

(n)
10.27(o)
10.28(g)
10.29(p)
31.131.1
31.231.2
3232.0
101The following materials from HomeTrust Bancshares' Quarterly Report on Form 10-Q for the quarter ended December 31, 2020, formatted in Extensible Business Reporting Language (XBRL): (a) Consolidated Balance Sheets; (b) Consolidated Statements of Income; (c) Consolidated Statements of Comprehensive Income; (d) Consolidated Statements of Changes in Stockholders' Equity; (e) Consolidated Statements of Cash Flows; and (f) Notes to Consolidated Financial Statements.101

(a)Filed as an exhibit to HomeTrust Bancshares's Registration Statement on Form S-1 (File No. 333-178817) filed on December 29, 2011.

(b)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on September 25, 2012 (File No. 001-35593).
(c)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on May 1, 2018 (File No. 001-35593).
(d)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on August 31, 2015 (File No. 001-35593).
(e)Filed as an exhibit to HomeTrust Bancshares’s Current Report on Form 8-K filed on August 21, 2018 (File No. 001-35593).
(f)Reserved
(g)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on September 11, 2018 (File No. 001-35593).
(h)Filed as an exhibit to HomeTrust Bancshares’s Current Report on Form 8-K filed on September 25, 2018 (File No. 001-35593.
58

10.8D
Director Emeritus Plan Joinder Agreement for Larry S. McDevitt
(b)
10.8E
Director Emeritus Plan Joinder Agreement for F.K. McFarland, III
(b)
10.8F
Director Emeritus Plan Joinder Agreement for Peggy C. Melville
(b)
10.8G
Director Emeritus Plan Joinder Agreement for Robert E. Shepherd, Sr.
(b)
10.9
HomeTrust Bank Defined Contribution Executive Medical Care Plan
(b)
10.10
HomeTrust Bank 2005 Deferred Compensation Plan
(b)
10.11
HomeTrust Bank Pre-2005 Deferred Compensation Plan
(b)
10.12
HomeTrust Bancshares, Inc. 2013 Omnibus Incentive Plan ("Omnibus Incentive Plan")
(g)
10.13
Form of Incentive Stock Option Award Agreement under Omnibus Incentive Plan
(h)
10.14
Form of Non-Qualified Stock Option Award Agreement under Omnibus Incentive Plan
(h)
10.15
Form of Stock Appreciation Right Award Agreement under Omnibus Incentive Plan
(h)
10.16
Form of Restricted Stock Award Agreement under Omnibus Incentive Plan
(h)
10.17
Form of Restricted Stock Unit Award Agreement under Omnibus Incentive Plan
(h)
10.18Reserved 
10.19Reserved 
10.20
Money Purchase Deferred Compensation Agreement, dated as of September 1, 1987, between HomeTrust Bank and F. Edward Broadwell, Jr.
(k)
10.21
Retirement Payment Agreement, dated as of September 1, 1987, between HomeTrust Bank and F. Edward Broadwell, Jr., as amended
(k)
10.22
Retirement Payment Agreement, dated as of September 1, 1987, between HomeTrust Bank and Larry S. McDevitt, as amended
(k)
10.23
Retirement Payment Agreement, dated as of September 1, 1987, between HomeTrust Bank and Peggy C. Melville, as amended
(k)
10.24
Retirement Payment Agreement, dated as of August 1, 1988, between HomeTrust Bank and Robert E. Shepherd, Sr., as amended
(k)
10.25
Retirement Payment Agreement, dated as of May 1, 1991, between HomeTrust Bank and William T. Flynt, as amended
(k)
10.26
Offer Letter between HomeTrust Bank and Keith J. Houghton

(m)
10.27
Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and Marty Caywood
(i)
10.28
Amended and Restated Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and Keith J. Houghton
(q)
10.29
Amended and Restated Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and R. Parrish Little
(r)
10.30
Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and Paula C. Labian
(u)
31.1
Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.1
31.2
Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2
32
Certificate of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.0
101The following materials from HomeTrust Bancshares' Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in Extensible Business Reporting Language (XBRL): (a) Consolidated Balance Sheets; (b) Consolidated Statements of Income; (c) Consolidated Statements of Comprehensive Income; (d) Consolidated Statements of Changes in Stockholders' Equity; (e) Consolidated Statements of Cash Flows; and (f) Notes to Consolidated Financial Statements.
101
(a)Reserved
(b)Filed as an exhibit to HomeTrust Bancshares's Registration Statement on Form S-1 (File No. 333-178817) filed on December 29, 2011.
(c)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on September 25, 2012 (File No. 001-35593).
(d)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on November 27, 2013 (File No. 001-35593).
(e)Filed as an exhibit to HomeTrust Bancshares's Annual Report on Form 10-K for the fiscal year ended June 30, 2012 (File No. 001-35593).
(f)Filed as an exhibit to Amendment No. One to HomeTrust Bancshares's Registration Statement on Form S-1 (File No. 333-178817) filed on March 9, 2012.
(g)Attached as Appendix A to HomeTrust Bancshares's definitive proxy statement filed on December 5, 2012 (File No. 001-35593).
(h)Filed as an exhibit to HomeTrust Bancshares's Registration Statement on Form S-8 (File No. 333-186666) filed on February 13, 2013.

(i)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on October 28, 2020 (File No. 001-35593).

(i)Filed as an exhibit to HomeTrust Bancshares's Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 (File No. 001-35593).
(j)Filed as an exhibit to Jefferson Bancshares, Inc.'s Quarterly Report on Form 10-Q for the quarter ended December 31, 2008 (File No. 000-50347).
(k)Filed as an exhibit to HomeTrust Bancshares's Annual Report on Form 10-K for the fiscal year ended June 30, 2014 (File No. 001-35593).
(l)Reserved.
(m)Filed as an exhibit to HomeTrust Bancshares's Annual Report on Form 10-K for the fiscal year ended June 30, 2015 (File No. 001-35593).
(n)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on January 29, 2016 (File No. 001-35593).
(o)Filed as an exhibit to HomeTrust Bancshares’s Current Report on Form 8-K filed on August 21, 2018 (File No. 001-35593).
(p)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on May 1, 2018 (File No. 001-35593).
(q)Filed as an exhibit to HomeTrust Bancshares’s Current Report on Form 8-K filed on September 11, 2018 (File No. 001-35593).
(r)Filed as an exhibit to HomeTrust Bancshares's Annual Report on Form 10-K for the fiscal year ended June 30, 2018 (File No. 001-35593).
(s)Filed as an exhibit to HomeTrust Bancshares’s Current Report on Form 8-K filed on September 25, 2018 (File No. 001-35593.
(t)Filed as an exhibit to HomeTrust Bancshares's Quarterly Report on Form 10-Q for the quarter ended September 30, 2018 (File No. 001-35593).
(u)Filed as an exhibit to HomeTrust Bancshares's Quarterly Report on Form 10-Q for the quarter ended December 31, 2018 (File No. 001-35593).
(v)Filed as an exhibit to HomeTrust Bancshares's Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 (File No. 001-35593).

(j)Filed as an exhibit to Amendment No. One to HomeTrust Bancshares's Registration Statement on Form S-1 (File No. 333-178817) filed on March 9, 2012.

(k)Attached as Appendix A to HomeTrust Bancshares's definitive proxy statement filed on December 5, 2012 (File No. 001-35593).
(l)Filed as an exhibit to HomeTrust Bancshares's Registration Statement on Form S-8 (File No. 333-186666) filed on February 13, 2013.
(m)Filed as an exhibit to HomeTrust Bancshares's Annual Report on Form 10-K for the fiscal year ended June 30, 2014 (File No. 001-35593).
(n)Filed as an exhibit to HomeTrust Bancshares's Annual Report on Form 10-K for the fiscal year ended June 30, 2015 (File No. 001-35593).
(o)Filed as an exhibit to HomeTrust Bancshares's Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 (File No. 001-35593).
(p)Filed as an exhibit to HomeTrust Bancshares's Annual Report on Form 10-K for the fiscal year ended June 30, 2018 (File No. 001-35593).


59

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
HomeTrust Bancshares, Inc.
Date: February 5, 2021HomeTrust Bancshares, Inc.
By:
Date: May 8, 2020By:/s/ Dana L. Stonestreet
Dana L. Stonestreet
Chairman, President and CEO
(Duly Authorized Officer)
Date: May 8, 2020February 5, 2021By:/s/ Tony J. VunCannon
Tony J. VunCannon
Executive Vice President, CFO, Corporate Secretary and Treasurer
(Principal Financial and Accounting Officer)


59
60