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 class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, par value $.01 per share
| HTBI | The 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. | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
Item 2. | | |
| | | |
Item 3. | | |
| | | |
Item 4. | | |
| | | |
| |
| | | |
Item 1. | | |
| | | |
Item 1A. | | |
| | | |
Item 2. | | |
| | | |
Item 3. | | |
| | | |
Item 4. | | |
| | | |
Item 5 | | |
| | | |
Item 6. | | |
| | | |
| |
| | | |
| |
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.
| | | | | | | | |
Term | | Definition |
ACL | | Allowance for Credit Losses |
AFS | | Available-For-Sale |
ASC | | Accounting Standard Codification |
ASU | | Accounting Standard Update |
| | |
TermBOLI | | Definition |
AFS | | Available-For-Sale |
ASC | | Accounting Standard Codification |
ASU | | Accounting Standard Update |
BOLI | | Bank Owned Life Insurance |
CARES Act | | Coronavirus Aid, Relief, and Economic Security Act of 2020 |
CD | | Certificates of Deposit |
CET1CDA | | Collateral Dependent Asset |
CECL | | Current Expected Credit Losses |
CET1 | | Common Equity Tier 1 |
COVID-19 | | Coronavirus Disease 2019 |
CPI | | Consumer Price Index |
EPSDCF | | Discounted Cash Flow |
ECL | | Expected Credit Losses |
EPS | | Earnings Per Share |
ESOP | | Employee Stock Ownership Plan |
FASB | | Financial Accounting Standards Board |
FDIC | | Federal Deposit Insurance Corporation |
FHLB | | Federal Home Loan Bank |
FRB | | Federal Reserve Bank of Richmond |
GAAP | | Generally Accepted Accounting Principles in the United States |
GSE | | Government-Sponsored Enterprises |
HELOC | | Home Equity Line of Credit |
MBSLIBOR | | London Interbank Offered Rate |
MBS | | Mortgage-Backed Security |
NCCOB | | North Carolina Office of the Commissioner of Banks |
PCIOTTI | | Other Than Temporary Impairment |
PCD | | Purchased Credit Deteriorated |
PCI | | Purchase Credit Impaired |
PPP | | Paycheck Protection Program |
PPPLFREO | | Paycheck Protection Program Liquidity Facility |
REO | | Real Estate Owned |
ROU | | Right of Use |
SEC | | Securities and Exchange Commission |
SBA | | Small Business Administration |
SBIC | | Small Business Investment Companies |
TDR | | Troubled Debt Restructuring |
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 deposits | 40,855 |
| | 30,134 |
| Interest-bearing deposits | 198,979 | | | 89,714 | |
Cash and cash equivalents | 82,061 |
| | 71,043 |
| Cash and cash equivalents | 226,344 | | | 121,622 | |
Commercial paper | 281,955 |
| | 241,446 |
| |
Commercial paper, net | | Commercial paper, net | 183,778 | | | 304,967 | |
Certificates of deposit in other banks | 57,544 |
| | 52,005 |
| Certificates of deposit in other banks | 48,637 | | | 55,689 | |
Debt securities available for sale, at fair value | 158,621 |
| | 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 cost | 41,201 |
| | 45,378 |
| Other investments, at cost | 39,572 | | | 38,946 | |
Loans held for sale | 38,682 |
| | 18,175 |
| Loans held for sale | 118,439 | | | 77,177 | |
Total loans, net of deferred loan costs | 2,663,524 |
| | 2,705,190 |
| Total loans, net of deferred loan costs | 2,678,624 | | | 2,769,119 | |
Allowance for loan losses | (26,850 | ) | | (21,429 | ) | |
Allowance for credit losses | | Allowance for credit losses | (39,844) | | | (28,072) | |
Net loans | 2,636,674 |
| | 2,683,761 |
| Net loans | 2,638,780 | | | 2,741,047 | |
Premises and equipment, net | 58,738 |
| | 61,051 |
| Premises and equipment, net | 70,104 | | | 58,462 | |
Accrued interest receivable | 9,501 |
| | 10,533 |
| Accrued interest receivable | 9,796 | | | 12,312 | |
REO | 1,075 |
| | 2,929 |
| REO | 252 | | | 337 | |
Deferred income taxes | 21,750 |
| | 26,523 |
| Deferred income taxes | 18,626 | | | 16,334 | |
BOLI | 91,612 |
| | 90,254 |
| BOLI | 93,326 | | | 92,187 | |
Goodwill | 25,638 |
| | 25,638 |
| Goodwill | 25,638 | | | 25,638 | |
Core deposit intangibles | 1,381 |
| | 2,499 |
| Core deposit intangibles | 638 | | | 1,078 | |
Other assets | 41,600 |
| | 23,157 |
| Other assets | 52,501 | | | 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 | |
Borrowings | 535,000 |
| | 680,000 |
| Borrowings | 475,000 | | | 475,000 | |
| Other liabilities | 52,806 |
| | 60,025 |
| Other liabilities | 56,978 | | | 53,833 | |
Total liabilities | 3,142,593 |
| | 3,067,282 |
| Total liabilities | 3,275,247 | | | 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 capital | 170,368 |
| | 190,315 |
| Additional paid in capital | 166,352 | | | 169,648 | |
Retained earnings | 240,325 |
| | 224,545 |
| Retained earnings | 242,182 | | | 242,776 | |
Unearned ESOP shares | (6,480 | ) | | (6,877 | ) | Unearned ESOP shares | (6,083) | | | (6,348) | |
Accumulated other comprehensive income | 1,056 |
| | 733 |
| Accumulated other comprehensive income | 2,105 | | | 2,017 | |
Total stockholders' equity | 405,440 |
| | 408,896 |
| Total stockholders' equity | 404,724 | | | 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.
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Income
(Dollars in thousands, except per share data)
| | | (Unaudited) | | (Unaudited) |
| Three Months Ended | | Nine Months Ended | | Three Months Ended | | Six Months Ended |
| March 31, | | March 31, | | December 31, | | December 31, |
| 2020 | | 2019 | | 2020 | | 2019 | | 2020 | | 2019 | | 2020 | | 2019 |
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 banks | 1,794 |
| | 2,283 |
| | 5,959 |
| | 6,106 |
| |
Commercial paper and interest-bearing deposits | | Commercial paper and interest-bearing deposits | 614 | | | 1,912 | | | 1,495 | | | 4,165 | |
Securities available for sale | 912 |
| | 850 |
| | 2,901 |
| | 2,582 |
| Securities available for sale | 504 | | | 1,093 | | | 1,032 | | | 1,989 | |
Other investments | 550 |
| | 811 |
| | 2,154 |
| | 2,664 |
| Other investments | 696 | | | 772 | | | 1,144 | | | 1,604 | |
Total interest and dividend income | 33,037 |
| | 34,714 |
| | 105,180 |
| | 101,394 |
| Total interest and dividend income | 30,157 | | | 35,896 | | | 60,606 | | | 72,143 | |
Interest Expense | |
| | |
| | |
| | |
| Interest Expense | | | | | | | |
Deposits | 5,971 |
| | 4,404 |
| | 18,145 |
| | 10,761 |
| Deposits | 2,347 | | | 6,321 | | | 5,600 | | | 12,174 | |
Borrowings | 1,757 |
| | 3,741 |
| | 7,619 |
| | 10,691 |
| Borrowings | 1,688 | | | 2,541 | | | 3,375 | | | 5,862 | |
Total interest expense | 7,728 |
| | 8,145 |
| | 25,764 |
| | 21,452 |
| Total interest expense | 4,035 | | | 8,862 | | | 8,975 | | | 18,036 | |
Net Interest Income | 25,309 |
| | 26,569 |
| | 79,416 |
| | 79,942 |
| Net Interest Income | 26,122 | | | 27,034 | | | 51,631 | | | 54,107 | |
Provision for Loan Losses | 5,400 |
| | 5,500 |
| | 5,800 |
| | 5,500 |
| |
Net Interest Income after Provision for Loan Losses | 19,909 |
| | 21,069 |
| | 73,616 |
| | 74,442 |
| |
Provision (Benefit) for Credit Losses | | Provision (Benefit) for Credit Losses | (3,030) | | | 400 | | | (2,080) | | | 400 | |
Net Interest Income after Provision (Benefit) for Credit Losses | | Net Interest Income after Provision (Benefit) for Credit Losses | 29,152 | | | 26,634 | | | 53,711 | | | 53,707 | |
Noninterest Income | |
| | |
| | |
| | |
| Noninterest Income | | | | | | | |
Service charges and fees on deposit accounts | 2,304 |
| | 2,265 |
| | 7,352 |
| | 7,243 |
| Service charges and fees on deposit accounts | 2,416 | | | 2,605 | | | 4,513 | | | 5,048 | |
Loan income and fees | 294 |
| | 134 |
| | 2,047 |
| | 757 |
| Loan income and fees | 569 | | | 871 | | | 1,043 | | | 1,753 | |
| Gain on sale of loans held for sale | 1,503 |
| | 1,472 |
| | 7,577 |
| | 4,086 |
| Gain on sale of loans held for sale | 3,704 | | | 3,775 | | | 7,048 | | | 6,074 | |
BOLI income | 518 |
| | 518 |
| | 1,724 |
| | 1,574 |
| BOLI income | 511 | | | 509 | | | 1,043 | | | 1,206 | |
| Other, net | 1,756 |
| | 1,007 |
| | 4,409 |
| | 2,434 |
| Other, net | 2,144 | | | 1,314 | | | 4,336 | | | 2,653 | |
Total noninterest income | 6,375 |
| | 5,396 |
| | 23,109 |
| | 16,094 |
| Total noninterest income | 9,344 | | | 9,074 | | | 17,983 | | | 16,734 | |
Noninterest Expense | |
| | |
| | |
| | |
| Noninterest Expense | | | | | | | |
Salaries and employee benefits | 14,455 |
| | 13,463 |
| | 42,537 |
| | 39,005 |
| Salaries and employee benefits | 15,700 | | | 14,170 | | | 30,907 | | | 28,082 | |
Net occupancy expense | 2,246 |
| | 2,294 |
| | 6,972 |
| | 7,046 |
| Net occupancy expense | 2,261 | | | 2,384 | | | 4,554 | | | 4,726 | |
Computer services | 2,023 |
| | 1,980 |
| | 6,032 |
| | 5,724 |
| Computer services | 2,220 | | | 1,985 | | | 4,527 | | | 4,009 | |
Telephone, postage, and supplies | 862 |
| | 698 |
| | 2,462 |
| | 2,210 |
| Telephone, postage, and supplies | 871 | | | 798 | | | 1,533 | | | 1,600 | |
Marketing and advertising | 396 |
| | 400 |
| | 1,716 |
| | 1,219 |
| Marketing and advertising | 327 | | | 641 | | | 652 | | | 1,320 | |
Deposit insurance premiums | 462 |
| | 320 |
| | 474 |
| | 959 |
| Deposit insurance premiums | 487 | | | 12 | | | 998 | | | 12 | |
Loss (gain) on sale and impairment of REO | (15 | ) | | 246 |
| | 88 |
| | 500 |
| Loss (gain) on sale and impairment of REO | 0 | | | 122 | | | (35) | | | 103 | |
REO expense | 250 |
| | 200 |
| | 746 |
| | 548 |
| REO expense | 165 | | | 238 | | | 413 | | | 496 | |
Core deposit intangible amortization | 334 |
| | 488 |
| | 1,118 |
| | 1,580 |
| Core deposit intangible amortization | 202 | | | 373 | | | 440 | | | 784 | |
| Other | 3,890 |
| | 2,889 |
| | 10,332 |
| | 7,928 |
| Other | 4,210 | | | 3,318 | | | 8,454 | | | 6,442 | |
Total noninterest expense | 24,903 |
| | 22,978 |
| | 72,477 |
| | 66,719 |
| Total noninterest expense | 26,443 | | | 24,041 | | | 52,443 | | | 47,574 | |
Income Before Income Taxes | 1,381 |
| | 3,487 |
| | 24,248 |
| | 23,817 |
| Income Before Income Taxes | 12,053 | | | 11,667 | | | 19,251 | | | 22,867 | |
Income Tax Expense | 188 |
| | 185 |
| | 5,060 |
| | 4,684 |
| Income Tax Expense | 2,592 | | | 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: | | | | | | | |
Basic | 16,688,646 |
| | 17,506,018 |
| | 16,898,391 |
| | 17,811,962 |
| Basic | 16,202,844 | | | 16,906,457 | | | 16,216,917 | | | 17,002,052 | |
Diluted | 17,258,428 |
| | 18,197,429 |
| | 17,524,252 |
| | 18,528,161 |
| Diluted | 16,563,359 | | | 17,567,680 | | | 16,514,831 | | | 17,660,687 | |
The accompanying notes are an integral part of these consolidated financial statements.
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 period | 395 |
| | 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 Ended | | Six Months Ended |
| December 31, | | December 31, |
| 2020 | | 2019 | | 2020 | | 2019 |
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.
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders' Equity
(Dollars in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (Unaudited) |
| Three Months Ended December 31, 2020 |
| Common Stock | | Additional Paid In Capital | | Retained Earnings | | Unearned ESOP Shares | | Accumulated Other Comprehensive Income (loss) | | Total Stockholders' Equity |
| Shares | | Amount |
Balance at September 30, 2020 | 17,020,724 | | | $ | 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 options | 54,000 | | | 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, 2020 | 16,791,027 | | | $ | 168 | | | $ | 166,352 | | | $ | 242,182 | | | $ | (6,083) | | | $ | 2,105 | | | $ | 404,724 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| (Unaudited) |
| Six Months Ended December 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, 2020 | 17,021,357 | | | $ | 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 options | 54,000 | | | 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, 2020 | 16,791,027 | | | $ | 168 | | | $ | 166,352 | | | $ | 242,182 | | | $ | (6,083) | | | $ | 2,105 | | | $ | 404,724 | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| 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, 2019 | 17,664,384 |
| | $ | 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 stock | 41,306 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Exercised stock options | 40,014 |
| | 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, 2020 | 17,101,954 |
| | $ | 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, 2019 | 17,984,105 |
| | $ | 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 stock | 54,306 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
|
Exercised stock options | 106,914 |
| | 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, 2020 | 17,101,954 |
| | $ | 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, 2019 | | Three 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 Stock | | Additional Paid In Capital | | Retained Earnings | | Unearned ESOP Shares | | Accumulated Other Comprehensive Income (loss) | | Total Stockholders' Equity |
| Shares | | Amount | | Shares | | Amount |
Balance at December 31, 2018 | 18,520,825 |
| | $ | 185 |
| | $ | 203,660 |
| | $ | 215,289 |
| | $ | (7,142 | ) | | $ | (1,022 | ) | | $ | 410,970 |
| |
Balance at September 30, 2019 | | Balance at September 30, 2019 | 17,818,145 | | | $ | 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 share | | Cash dividends declared on common stock, $0.07/common share | — | | | — | | | — | | | (1,194) | | | — | | | — | | | (1,194) | |
Stock repurchased | | Stock repurchased | (207,261) | | | (2) | | | (5,417) | | | — | | | — | | | — | | | (5,419) | |
| Exercised stock options | | Exercised stock options | 53,500 | | | 1 | | | 768 | | | — | | | — | | | — | | | 769 | |
Stock option expense | | Stock option expense | — | | | — | | | 190 | | | — | | | — | | | — | | | 190 | |
Restricted stock expense | | Restricted stock expense | — | | | — | | | 250 | | | — | | | — | | | — | | | 250 | |
ESOP shares allocated | | ESOP shares allocated | — | | | — | | | 216 | | | — | | | 132 | | | — | | | 348 | |
Other comprehensive loss | | Other comprehensive loss | — | | | — | | | — | | | — | | | — | | | (208) | | | (208) | |
Balance at December 31, 2019 | | Balance at December 31, 2019 | 17,664,384 | | | $ | 177 | | | $ | 182,366 | | | $ | 240,312 | | | $ | (6,612) | | | $ | 752 | | | $ | 416,995 | |
| | | | | (Unaudited) |
| | | Six Months Ended December 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, 2019 | | Balance at June 30, 2019 | 17,984,105 | | | $ | 180 | | | $ | 190,315 | | | $ | 224,545 | | | $ | (6,877) | | | $ | 733 | | | $ | 408,896 | |
Net income | | Net income | — | | | — | | | — | | | 17,995 | | | — | | | — | | | 17,995 | |
| Cash dividends declared on common stock, $0.13/common share | | Cash 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 stock | 23,625 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| Granted restricted stock | 13,000 | | | — | | | — | | | — | | | — | | | — | |
Exercised stock options | 26,911 |
| | — |
| | 396 |
| | — |
| | — |
| | — |
| | 396 |
| Exercised stock options | 66,900 | | | 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, 2019 | 18,265,535 |
| | $ | 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, 2018 | 19,041,668 |
| | $ | 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 stock | 23,625 |
| | — |
| | — |
| | — |
| | — |
| | | | — |
| |
Exercised stock options | 69,111 |
| | — |
| | 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, 2019 | 18,265,535 |
| | $ | 183 |
| | $ | 196,824 |
| | $ | 217,490 |
| | $ | (7,009 | ) | | $ | (258 | ) | | $ | 407,230 |
| |
Balance at December 31, 2019 | | Balance at December 31, 2019 | 17,664,384 | | | $ | 177 | | | $ | 182,366 | | | $ | 240,312 | | | $ | (6,612) | | | $ | 752 | | | $ | 416,995 | |
The accompanying notes are an integral part of these consolidated financial statements.
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Dollars in thousands) | | | | | | | | | | | |
| (Unaudited) |
| Six Months Ended December 31, |
| 2020 | | 2019 |
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 | |
Depreciation | 3,885 | | | 2,564 | |
Deferred income tax expense | 1,671 | | | 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 sale | 264,325 | | | 138,457 | |
| | | |
Increase in deferred loan costs, net | (316) | | | (1,082) | |
Decrease (increase) in accrued interest receivable and other assets | 4,328 | | | (670) | |
Amortization of core deposit intangibles | 440 | | | 784 | |
BOLI income | (1,043) | | | (1,206) | |
ESOP compensation expense | 419 | | | 686 | |
Restricted stock and stock option expense | 960 | | | 883 | |
Increase (decrease) in other liabilities | 717 | | | (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 sale | 38,720 | | | 24,860 | |
| | | |
Net proceeds (purchases) of commercial paper | 120,983 | | | (9,187) | |
Purchase of certificates of deposit in other banks | (1,245) | | | (8,616) | |
Maturities of certificates of deposit in other banks | 8,297 | | | 12,993 | |
Principal repayments of mortgage-backed securities | 8,173 | | | 7,090 | |
Net redemptions (purchases) of other investments | (626) | | | 8,480 | |
Proceeds from sale of loans not originated for sale | 0 | | | 154,870 | |
Net decrease (increase) in loans | 105,181 | | | (78,731) | |
Purchase of BOLI | (96) | | | (65) | |
Proceeds from redemption of BOLI | 0 | | | 477 | |
Purchase of premises and equipment | (13,382) | | | (777) | |
Purchase of operating lease equipment | (6,940) | | | (5,569) | |
| | | |
| | | |
Proceeds from sale of REO | 228 | | | 1,421 | |
| | | |
| | | |
| | | |
Net cash provided by investing activities | 185,603 | | | 50,816 | |
Financing Activities: | | | |
Net increase (decrease) in deposits | (42,487) | | | 230,512 | |
Net increase in other borrowings | 0 | | | (245,000) | |
Common stock repurchased | (5,179) | | | (10,219) | |
Cash dividends paid | (2,450) | | | (2,228) | |
Retired stock | (9) | | | 0 | |
Exercised stock options | 776 | | | 963 | |
| | | |
Net cash used in financing activities | (49,349) | | | (25,972) | |
Net Increase in Cash and Cash Equivalents | 104,722 | | | 17,875 | |
Cash and Cash Equivalents at Beginning of Period | 121,622 | | | 71,043 | |
Cash and Cash Equivalents at End of Period | $ | 226,344 | | | $ | 88,918 | |
|
| | | | | | | |
| (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 losses | 5,800 |
| | 5,500 |
|
Depreciation | 4,137 |
| | 3,046 |
|
Deferred income tax expense | 4,677 |
| | 3,333 |
|
Net amortization and accretion | (4,275 | ) | | (5,648 | ) |
Loss on sale and impairment of REO | 88 |
| | 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 sale | 200,512 |
| | 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 intangibles | 1,118 |
| | 1,580 |
|
BOLI income | (1,724 | ) | | (1,574 | ) |
ESOP compensation expense | 996 |
| | 1,090 |
|
Restricted stock and stock option expense | 1,341 |
| | 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 sale | 27,823 |
| | 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 banks | 18,661 |
| | 26,392 |
|
Principal repayments of mortgage-backed securities | 10,902 |
| | 27,144 |
|
Net redemptions (purchases) of other investments | 4,177 |
| | (9,191 | ) |
Proceeds from sale of loans not originated for sale | 154,870 |
| | — |
|
Net increase in loans | (99,116 | ) | | (131,671 | ) |
Purchase of BOLI | (111 | ) | | (75 | ) |
Proceeds from redemption of BOLI | 477 |
| | 14 |
|
Purchase of premises and equipment | (2,321 | ) | | (1,068 | ) |
Purchase of operating lease equipment | (11,047 | ) | | (7,424 | ) |
Proceeds from sale of REO | 1,812 |
| | 759 |
|
Net cash used in investing activities | (29,552 | ) | | (134,045 | ) |
Financing Activities: | |
| | |
|
Net increase in deposits | 227,530 |
| | 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 options | 1,541 |
| | 1,004 |
|
Net cash provided by financing activities | 57,226 |
| | 132,402 |
|
Net Increase in Cash and Cash Equivalents | 11,018 |
| | 7,565 |
|
Cash and Cash Equivalents at Beginning of Period | 71,043 |
| | 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 | | 2020 | | 2019 |
Cash paid during the period for: | | | | Cash paid during the period for: | | | |
Interest | $ | 26,708 |
| | $ | 19,907 |
| Interest | $ | 5,404 | | | $ | 18,771 | |
Income taxes | 1,300 |
| | 455 |
| Income taxes | 1,686 | | | 1,300 | |
Noncash transactions: | |
| | |
| Noncash transactions: | | | |
Unrealized gain in value of securities available for sale, net of income taxes | 323 |
| | 1,340 |
| Unrealized gain in value of securities available for sale, net of income taxes | 88 | | | 19 | |
Transfer of loans to REO | 46 |
| | 578 |
| Transfer of loans to REO | 108 | | | 46 | |
Transfer of loans held for sale to total loans | 96,962 |
| | 5,794 |
| Transfer of loans held for sale to total loans | 10,496 | | | 9,736 | |
| Transfer of one-to-four family loans to held for sale | 240,453 |
| | 9,761 |
| Transfer of one-to-four family loans to held for sale | 0 | | | 240,453 | |
Transfer of land from property and equipment to other assets for new finance lease accounting | 2,052 |
| | — |
| Transfer of land from property and equipment to other assets for new finance lease accounting | 0 | | | 2,052 | |
New ROU asset and lease liabilities from adoption of new lease accounting standard | 5,296 |
| | — |
| |
New ROU asset and lease liabilities for new operating lease accounting | | New ROU asset and lease liabilities for new operating lease accounting | 597 | | | 5,296 | |
|
The accompanying notes are an integral part of these consolidated financial statements.
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.
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
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 326 | | Pre-ASC 326 Adoption | | Impact 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.
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
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.
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.
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 GSEs | 39,357 | | | 1,693 | | | (37) | | | 41,013 | |
Municipal bonds | 10,333 | | | 566 | | | 0 | | | 10,899 | |
Corporate bonds | 82,151 | | | 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 GSEs | 50,290 |
| | 1,561 |
| | (99 | ) | | 51,752 |
|
Municipal Bonds | 21,208 |
| | 503 |
| | (8 | ) | | 21,703 |
|
Corporate Bonds | 79,107 |
| | 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 GSEs | 74,778 |
| | 586 |
| | (184 | ) | | 75,180 |
|
Municipal Bonds | 24,896 |
| | 423 |
| | (7 | ) | | 25,312 |
|
Corporate Bonds | 6,061 |
| | 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 GSEs | 46,629 | | | 1,776 | | | (50) | | | 48,355 | |
Municipal bonds | 16,090 | | | 541 | | | 0 | | | 16,631 | |
Corporate bonds | 58,242 | | | 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 years | 59,538 |
| | 59,464 |
| Due after one year through five years | 80,252 | | | 81,016 | |
Due after five years through ten years | 4,292 |
| | 4,445 |
| Due after five years through ten years | 2,020 | | | 2,261 | |
Due after ten years | 2,074 |
| | 2,077 |
| Due after ten years | 0 | | | 0 | |
Mortgage-backed securities | 50,290 |
| | 51,752 |
| Mortgage-backed securities | 39,357 | | | 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 Months | | 12 Months or More | | Total |
| 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 GSEs | 115 | | | (7) | | | 1,922 | | | (30) | | | 2,037 | | | (37) | |
| | | | | | | | | | | |
Corporate bonds | 16,941 | | | (3) | | | 0 | | | 0 | | | 16,941 | | | (3) | |
Total | $ | 32,052 | | | $ | (14) | | | $ | 1,922 | | | $ | (30) | | | $ | 33,974 | | | $ | (44) | |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| 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 Bonds | 1,744 |
| | (8 | ) | | — |
| | — |
| | 1,744 |
| | (8 | ) |
Corporate Bonds | 61,782 |
| | (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 GSEs | 1,144 |
| | (3 | ) | | 24,242 |
| | (181 | ) | | 25,386 |
| | (184 | ) |
Municipal Bonds | — |
| | — |
| | 4,895 |
| | (7 | ) | | 4,895 |
| | (7 | ) |
Corporate Bonds | 393 |
| | (5 | ) | | 3,630 |
| | (15 | ) | | 4,023 |
| | (20 | ) |
Total | $ | 1,537 |
| | $ | (8 | ) | | $ | 39,755 |
| | $ | (214 | ) | | $ | 41,292 |
| | $ | (222 | ) |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 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 | $ | 227 | | | $ | (10) | | | $ | 2,435 | | | $ | (40) | | | $ | 2,662 | | | $ | (50) | |
| | | | | | | | | | | |
Corporate bonds | 11,779 | | | (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
Other investments, at cost consist of the following at the dates indicated:
| | | March 31, 2020 | | June 30, 2019 | | December 31, 2020 | | June 30, 2020 |
FHLB of Atlanta stock | $ | 25,859 |
| | $ | 31,969 |
| FHLB of Atlanta stock | $ | 23,309 | | | $ | 23,309 | |
FRB stock | 7,353 |
| | 7,335 |
| FRB stock | 7,374 | | | 7,368 | |
SBIC investments | 7,989 |
| | 6,074 |
| SBIC investments | 8,889 | | | 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, 2020 | | June 30, 2020 |
One-to-four family | $ | 45,998 | | | $ | 28,152 | |
SBA | 8,319 | | | 1,240 | |
HELOCs | 64,122 | | | 47,785 | |
| | | |
Total | $ | 118,439 | | | $ | 77,177 | |
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
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 development | 172,892 | | | 215,934 | |
Commercial and industrial | 138,761 | | | 154,825 | |
Equipment finance | 272,761 | | | 229,239 | |
Municipal finance | 128,549 | | | 127,987 | |
PPP | 64,845 | | | 80,697 | |
Total commercial loans | 1,834,779 | | | 1,861,588 | |
Retail consumer loans: | | | |
One-to-four family | 452,421 | | | 473,693 | |
HELOCs - originated | 125,397 | | | 137,447 | |
HELOCs - purchased | 58,640 | | | 71,781 | |
Construction and land/lots | 75,108 | | | 81,859 | |
Indirect auto finance | 122,947 | | | 132,303 | |
Consumer | 9,332 | | | 10,259 | |
Total retail consumer loans | 843,845 | | | 907,342 | |
Total loans | 2,678,624 | | | 2,768,930 | |
Deferred loan costs, net (2) | 0 | | | 189 | |
Total loans, net of deferred loan costs | 2,678,624 | | | 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 - originated | 144,804 |
| | 139,435 |
|
HELOCs - purchased | 82,232 |
| | 116,972 |
|
Construction and land/lots | 80,765 |
| | 80,602 |
|
Indirect auto finance | 135,449 |
| | 153,448 |
|
Consumer | 11,576 |
| | 11,416 |
|
Total retail consumer loans | 942,603 |
| | 1,162,464 |
|
Commercial loans: | | | |
Commercial real estate | 990,693 |
| | 927,261 |
|
Construction and development | 249,714 |
| | 210,916 |
|
Commercial and industrial | 164,539 |
| | 160,471 |
|
Equipment finance | 198,962 |
| | 132,058 |
|
Municipal finance | 115,992 |
| | 112,016 |
|
Total commercial loans | 1,719,900 |
| | 1,542,722 |
|
Total loans | 2,662,503 |
| | 2,705,186 |
|
Deferred loan costs, net | 1,021 |
| | 4 |
|
Total loans, net of deferred loan costs | 2,663,524 |
| | 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.
|
| | | | | | | | | | | | | | | | | | | | | | | |
| 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 - originated | 142,630 |
| | 833 |
| | 1,341 |
| | — |
| | — |
| | 144,804 |
|
HELOCs - purchased | 81,712 |
| | — |
| | 520 |
| | — |
| | — |
| | 82,232 |
|
Construction and land/lots | 80,276 |
| | 3 |
| | 147 |
| | — |
| | — |
| | 80,426 |
|
Indirect auto finance | 134,382 |
| | — |
| | 1,067 |
| | — |
| | — |
| | 135,449 |
|
Consumer | 11,058 |
| | 5 |
| | 513 |
| | — |
| | — |
| | 11,576 |
|
Commercial loans: | |
| | |
| | |
| | |
| | |
| | |
Commercial real estate | 963,953 |
| | 8,191 |
| | 12,631 |
| | — |
| | 30 |
| | 984,805 |
|
Construction and development | 244,801 |
| | 4,055 |
| | 249 |
| | 1 |
| | — |
| | 249,106 |
|
Commercial and industrial | 154,215 |
| | 6,139 |
| | 2,637 |
| | — |
| | 1 |
| | 162,992 |
|
Equipment finance | 197,651 |
| | 559 |
| | 752 |
| | — |
| | — |
| | 198,962 |
|
Municipal finance | 115,709 |
| | 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 - originated | 137,001 |
| | 766 |
| | 1,434 |
| | — |
| | 9 |
| | 139,210 |
|
HELOCs - purchased | 116,306 |
| | — |
| | 666 |
| | — |
| | — |
| | 116,972 |
|
Construction and land/lots | 79,995 |
| | 71 |
| | 164 |
| | — |
| | — |
| | 80,230 |
|
Indirect auto finance | 152,393 |
| | 13 |
| | 1,042 |
| | — |
| | — |
| | 153,448 |
|
Consumer | 11,375 |
| | 1 |
| | 33 |
| | 3 |
| | 4 |
| | 11,416 |
|
Commercial loans: | |
| | |
| | |
| | |
| | |
| | |
|
Commercial real estate | 901,183 |
| | 8,066 |
| | 10,306 |
| | — |
| | — |
| | 919,555 |
|
Construction and development | 207,827 |
| | 790 |
| | 1,357 |
| | 1 |
| | — |
| | 209,975 |
|
Commercial and industrial | 157,325 |
| | 877 |
| | 600 |
| | — |
| | — |
| | 158,802 |
|
Equipment finance | 131,674 |
| | — |
| | 384 |
| | — |
| | — |
| | 132,058 |
|
Municipal finance | 111,721 |
| | 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, 2020 | 2021 | | 2020 | | 2019 | | 2018 | | 2017 | | Prior | | Revolving | | Total |
Commercial real estate | | | | | | | | | | | | | | | |
Risk rating: | | | | | | | | | | | | | | | |
Pass | $ | 84,992 | | | $ | 180,257 | | | $ | 146,108 | | | $ | 175,521 | | | $ | 166,606 | | | $ | 241,865 | | | $ | 32,112 | | | $ | 1,027,461 | |
Special mention | 0 | | | 0 | | | 0 | | | 14,407 | | | 1,281 | | | 3,245 | | | 295 | | | 19,228 | |
Substandard | 0 | | | 0 | | | 0 | | | 653 | | | 5,412 | | | 4,206 | | | 0 | | | 10,271 | |
Doubtful | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
Loss | 0 | | | 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 mention | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 534 | | | 2,133 | | | 2,667 | |
Substandard | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 537 | | | 0 | | | 537 | |
Doubtful | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
Loss | 0 | | | 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 mention | 0 | | | 0 | | | 794 | | | 0 | | | 952 | | | 171 | | | 5,656 | | | 7,573 | |
Substandard | 0 | | | 0 | | | 299 | | | 117 | | | 64 | | | 86 | | | 0 | | | 566 | |
Doubtful | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
Loss | 0 | | | 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 mention | 0 | | | 440 | | | 78 | | | 0 | | | 0 | | | 0 | | | 0 | | | 518 | |
Substandard | 0 | | | 0 | | | 46 | | | 0 | | | 0 | | | 0 | | | 0 | | | 46 | |
Doubtful | 0 | | | 0 | | | 296 | | | 0 | | | 0 | | | 0 | | | 0 | | | 296 | |
Loss | 0 | | | 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 mention | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 271 | | | 0 | | | 271 | |
Substandard | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 348 | | | 0 | | | 348 | |
Doubtful | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
Loss | 0 | | | 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 mention | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
Substandard | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
Doubtful | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
Loss | 0 | | | 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 mention | 0 | | | 440 | | | 872 | | | 14,407 | | | 2,233 | | | 4,221 | | | 8,084 | | | 30,257 | |
Substandard | 0 | | | 0 | | | 345 | | | 770 | | | 5,476 | | | 5,177 | | | 0 | | | 11,768 | |
Doubtful | 0 | | | 0 | | | 296 | | | 0 | | | 0 | | | 0 | | | 0 | | | 296 | |
Loss | 0 | | | 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 | |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| 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/lots | 108 |
| | — |
| | 231 |
| | — |
| | — |
| | 339 |
|
Commercial loans: | |
| | |
| | |
| | |
| | |
| | |
|
Commercial real estate | 3,191 |
| | 1,790 |
| | 907 |
| | — |
| | — |
| | 5,888 |
|
Construction and development | 277 |
| | — |
| | 331 |
| | — |
| | — |
| | 608 |
|
Commercial and industrial | 1,544 |
| | — |
| | — |
| | — |
| | 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 - originated | 225 |
| | — |
| | — |
| | — |
| | — |
| | 225 |
|
Construction and land/lots | 142 |
| | — |
| | 230 |
| | — |
| | — |
| | 372 |
|
Commercial loans: | |
| | |
| | |
| | |
| | |
| | |
|
Commercial real estate | 4,503 |
| | 1,903 |
| | 1,300 |
| | — |
| | — |
| | 7,706 |
|
Construction and development | 453 |
| | — |
| | 488 |
| | — |
| | — |
| | 941 |
|
Commercial and industrial | 1,666 |
| | — |
| | — |
| | — |
| | 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, 2020 | 2021 | | 2020 | | 2019 | | 2018 | | 2017 | | Prior | | Revolving | | Total |
One-to-four family | | | | | | | | | | | | | | | |
Risk rating: | | | | | | | | | | | | | | | |
Pass | $ | 43,718 | | | $ | 55,592 | | | $ | 61,576 | | | $ | 55,305 | | | $ | 46,841 | | | $ | 175,540 | | | $ | 2,464 | | | $ | 441,036 | |
Special mention | 0 | | | 0 | | | 0 | | | 0 | | | 29 | | | 1,523 | | | 0 | | | 1,552 | |
Substandard | 0 | | | 999 | | | 0 | | | 218 | | | 201 | | | 8,217 | | | 0 | | | 9,635 | |
Doubtful | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 197 | | | 0 | | | 197 | |
Loss | 0 | | | 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 mention | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 769 | | | 0 | | | 769 | |
Substandard | 0 | | | 0 | | | 0 | | | 0 | | | 38 | | | 1,603 | | | 199 | | | 1,840 | |
Doubtful | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
Loss | 0 | | | 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 mention | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
Substandard | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 841 | | | 841 | |
Doubtful | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
Loss | 0 | | | 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 mention | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
Substandard | 0 | | | 0 | | | 0 | | | 102 | | | 0 | | | 505 | | | 0 | | | 607 | |
Doubtful | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
Loss | 0 | | | 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 mention | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
Substandard | 8 | | | 208 | | | 386 | | | 436 | | | 217 | | | 147 | | | 0 | | | 1,402 | |
Doubtful | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
Loss | 0 | | | 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 mention | 0 | | | 0 | | | 0 | | | 4 | | | 0 | | | 0 | | | 0 | | | 4 | |
Substandard | 243 | | | 16 | | | 11 | | | 7 | | | 0 | | | 18 | | | 20 | | | 315 | |
Doubtful | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | |
Loss | 0 | | | 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 mention | 0 | | | 0 | | | 0 | | | 4 | | | 29 | | | 2,292 | | | 0 | | | 2,325 | |
Substandard | 251 | | | 1,223 | | | 397 | | | 763 | | | 456 | | | 10,490 | | | 1,060 | | | 14,640 | |
Doubtful | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 197 | | | 0 | | | 197 | |
Loss | 0 | | | 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 | |
|
| | | | | | | | | | | | | | | | | | | |
| 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 - originated | 438 |
| | 275 |
| | 713 |
| | 144,091 |
| | 144,804 |
|
HELOCs - purchased | 761 |
| | 47 |
| | 808 |
| | 81,424 |
| | 82,232 |
|
Construction and land/lots | — |
| | 242 |
| | 242 |
| | 80,523 |
| | 80,765 |
|
Indirect auto finance | 378 |
| | 284 |
| | 662 |
| | 134,787 |
| | 135,449 |
|
Consumer | 17 |
| | 21 |
| | 38 |
| | 11,538 |
| | 11,576 |
|
Commercial loans: | | | | | | | | | |
Commercial real estate | 1,854 |
| | 1,160 |
| | 3,014 |
| | 987,679 |
| | 990,693 |
|
Construction and development | 217 |
| | 125 |
| | 342 |
| | 249,372 |
| | 249,714 |
|
Commercial and industrial | 65 |
| | 27 |
| | 92 |
| | 164,447 |
| | 164,539 |
|
Equipment finance | 1,364 |
| | 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 - originated | 226 |
| | 231 |
| | 457 |
| | 138,978 |
| | 139,435 |
|
HELOCs - purchased | — |
| | 485 |
| | 485 |
| | 116,487 |
| | 116,972 |
|
Construction and land/lots | 138 |
| | 6 |
| | 144 |
| | 80,458 |
| | 80,602 |
|
Indirect auto finance | 459 |
| | 237 |
| | 696 |
| | 152,752 |
| | 153,448 |
|
Consumer | 6 |
| | 8 |
| | 14 |
| | 11,402 |
| | 11,416 |
|
Commercial loans: | |
| | |
| | |
| | |
| | |
|
Commercial real estate | 2,279 |
| | 516 |
| | 2,795 |
| | 924,466 |
| | 927,261 |
|
Construction and development | — |
| | 1,133 |
| | 1,133 |
| | 209,783 |
| | 210,916 |
|
Commercial and industrial | 207 |
| | 99 |
| | 306 |
| | 160,165 |
| | 160,471 |
|
Equipment finance | 649 |
| | 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 - originated | 431 |
| | — |
| | 372 |
| | — |
|
HELOCs - purchased | 520 |
| | — |
| | 666 |
| | — |
|
Construction and land/lots | 19 |
| | — |
| | 6 |
| | — |
|
Indirect auto finance | 623 |
| | — |
| | 463 |
| | — |
|
Consumer | 27 |
| | — |
| | 21 |
| | — |
|
Commercial loans: | |
| | |
| | |
| | |
|
Commercial real estate | 9,253 |
| | — |
| | 3,559 |
| | — |
|
Construction and development | 250 |
| | — |
| | 1,357 |
| | — |
|
Commercial and industrial | 269 |
| | — |
| | 307 |
| | — |
|
Equipment finance | 410 |
| | — |
| | 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:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pass | | Special Mention | | Substandard | | Doubtful | | Loss | | Total |
June 30, 2020 | | | | | | | | | | | |
Commercial loans: | | | | | | | | | | | |
Commercial real estate | $ | 1,028,709 | | | $ | 7,580 | | | $ | 10,779 | | | $ | 0 | | | $ | 16 | | | $ | 1,047,084 | |
Construction and development | 212,370 | | | 2,723 | | | 250 | | | 1 | | | 0 | | | 215,344 | |
Commercial and industrial | 130,202 | | | 20,439 | | | 2,622 | | | 0 | | | 0 | | | 153,263 | |
Equipment finance | 228,288 | | | 150 | | | 801 | | | 0 | | | 0 | | | 229,239 | |
Municipal finance | 127,706 | | | 281 | | | 0 | | | 0 | | | 0 | | | 127,987 | |
PPP | 80,697 | | | 0 | | | 0 | | | 0 | | | 0 | | | 80,697 | |
Retail consumer loans: | | | | | | | | | | | |
One-to-four family | 458,248 | | | 1,724 | | | 9,042 | | | 206 | | | 0 | | | 469,220 | |
HELOCs - originated | 134,697 | | | 902 | | | 1,848 | | | 0 | | | 0 | | | 137,447 | |
HELOCs - purchased | 71,119 | | | 0 | | | 662 | | | 0 | | | 0 | | | 71,781 | |
Construction and land/lots | 81,112 | | | 0 | | | 402 | | | 0 | | | 0 | | | 81,514 | |
Indirect auto finance | 130,975 | | | 0 | | | 1,328 | | | 0 | | | 0 | | | 132,303 | |
Consumer | 9,894 | | | 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: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Pass | | Special Mention | | Substandard | | Doubtful | | Loss | | Total |
June 30, 2020 | | | | | | | | | | | |
Commercial loans: | | | | | | | | | | | |
Commercial real estate | $ | 3,181 | | | $ | 1,742 | | | $ | 899 | | | $ | 0 | | | $ | 0 | | | $ | 5,822 | |
Construction and development | 271 | | | 0 | | | 319 | | | 0 | | | 0 | | | 590 | |
Commercial and industrial | 1,556 | | | 0 | | | 3 | | | 0 | | | 3 | | | 1,562 | |
Retail consumer loans: | | | | | | | | | | | |
One-to-four family | 2,994 | | | 465 | | | 1,014 | | | 0 | | | 0 | | | 4,473 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Construction and land/lots | 108 | | | 0 | | | 237 | | | 0 | | | 0 | | | 345 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Total loans | $ | 8,110 | | | $ | 2,207 | | | $ | 2,472 | | | $ | 0 | | | $ | 3 | | | $ | 12,792 | |
|
| | | | | | | |
| 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 losses | 30 |
| | 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 Due | | | | Total | | |
| 30-89 Days | | 90 Days+ | | Total | | Current | | Loans | | |
December 31, 2020 | | | | | | | | | | | |
Commercial loans: | | | | | | | | | | | |
Commercial real estate | $ | 45 | | | $ | 2,060 | | | $ | 2,105 | | | $ | 1,054,866 | | | $ | 1,056,971 | | | |
Construction and development | 0 | | | 361 | | | 361 | | | 172,531 | | | 172,892 | | | |
Commercial and industrial | 0 | | | 91 | | | 91 | | | 138,670 | | | 138,761 | | | |
Equipment finance | 286 | | | 68 | | | 354 | | | 272,407 | | | 272,761 | | | |
Municipal finance | 0 | | | 352 | | | 352 | | | 128,197 | | | 128,549 | | | |
PPP | 0 | | | 0 | | | 0 | | | 64,845 | | | 64,845 | | | |
Retail consumer loans: | | | | | | | | | | | |
One-to-four family | 1,431 | | | 2,874 | | | 4,305 | | | 448,116 | | | 452,421 | | | |
HELOCs - originated | 98 | | | 248 | | | 346 | | | 125,051 | | | 125,397 | | | |
HELOCs - purchased | 147 | | | 145 | | | 292 | | | 58,348 | | | 58,640 | | | |
Construction and land/lots | 0 | | | 22 | | | 22 | | | 75,086 | | | 75,108 | | | |
Indirect auto finance | 395 | | | 405 | | | 800 | | | 122,147 | | | 122,947 | | | |
Consumer | 256 | | | 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 Due | | | | Total |
| 30-89 Days | | 90 Days+ | | Total | | Current | | Loans |
June 30, 2020 | | | | | | | | | |
Commercial loans: | | | | | | | | | |
Commercial real estate | $ | 4,528 | | | $ | 2,892 | | | $ | 7,420 | | | $ | 1,045,486 | | | $ | 1,052,906 | |
Construction and development | 293 | | | 341 | | | 634 | | | 215,300 | | | 215,934 | |
Commercial and industrial | 0 | | | 91 | | | 91 | | | 154,734 | | | 154,825 | |
Equipment finance | 303 | | | 498 | | | 801 | | | 228,438 | | | 229,239 | |
Municipal finance | 0 | | | 0 | | | 0 | | | 127,987 | | | 127,987 | |
PPP | 0 | | | 0 | | | 0 | | | 80,697 | | | 80,697 | |
Retail consumer loans: | | | | | | | | | |
One-to-four family | 1,679 | | | 3,147 | | | 4,826 | | | 468,867 | | | 473,693 | |
HELOCs - originated | 442 | | | 310 | | | 752 | | | 136,695 | | | 137,447 | |
HELOCs - purchased | 214 | | | 47 | | | 261 | | | 71,520 | | | 71,781 | |
Construction and land/lots | 0 | | | 252 | | | 252 | | | 81,607 | | | 81,859 | |
Indirect auto finance | 756 | | | 285 | | | 1,041 | | | 131,262 | | | 132,303 | |
Consumer | 30 | | | 25 | | | 55 | | | 10,204 | | | 10,259 | |
Total loans | $ | 8,245 | | | $ | 7,888 | | | $ | 16,133 | | | $ | 2,752,797 | | | $ | 2,768,930 | |
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, 2020 | | June 30, 2020 | | | | 90 Days + & still accruing as of December 31, 2020 | | Nonaccrual with no allowance as of December 31, 2020 | | Interest income recognized | | |
Commercial loans: | | | | | | | | | | | | | | |
Commercial real estate | | $ | 7,751 | | | $ | 8,869 | | | | | $ | 0 | | | $ | 4,576 | | | $ | 290 | | | |
Construction and development | | 537 | | | 465 | | | | | 0 | | | 80 | | | 39 | | | |
Commercial and industrial | | 234 | | | 259 | | | | | 0 | | | 92 | | | 62 | | | |
Equipment finance | | 354 | | | 801 | | | | | 0 | | | 293 | | | 14 | | | |
Municipal finance | | 352 | | | 0 | | | | | 0 | | 352 | | | 0 | | | |
Retail consumer loans: | | | | | | | | | | | | | | |
One-to-four family | | 3,425 | | | 3,582 | | | | | 0 | | | 1,085 | | | 129 | | | |
HELOCs - originated | | 344 | | | 531 | | | | | 0 | | | 0 | | | 34 | | | |
HELOCs - purchased | | 841 | | | 662 | | | | | 0 | | | 0 | | | 12 | | | |
Construction and land/lots | | 22 | | | 37 | | | | | 0 | | | 0 | | | 0 | | | |
Indirect auto finance | | 661 | | | 668 | | | | | 0 | | | 0 | | | 56 | | | |
Consumer | | 18 | | | 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 Ended | | Six Months Ended |
| | December 31, | December 31, |
| | 2020 | | 2019 | | 2020 | | 2019 |
Provision (benefit) for credit losses: | | | | | | | | |
Loans | | $ | (3,350) | | | $ | 400 | | | $ | (2,400) | | | $ | 400 | |
Off-balance-sheet credit exposure | | 140 | | | 0 | | | 140 | | | 0 | |
Commercial paper | | 180 | | | 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 Ended | | | | Six Months Ended |
| | | December 31, 2020 | | | | December 31, 2020 |
| | | Commercial | | Retail Consumer | | Total | | | | Commercial | | Retail Consumer | | Total |
Balance at beginning of period | | | $ | 25,199 | | | $ | 17,933 | | | $ | 43,132 | | | | | $ | 21,116 | | | $ | 6,956 | | | $ | 28,072 | |
Impact of adoption ASU 2016-13 | | | 0 | | | 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) | |
Recoveries | | | 300 | | | 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 | |
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 Ended | | Six Months Ended |
| December 31, 2019 | | December 31, 2019 |
| PCI | | Commercial | | Retail Consumer | | Total | | PCI | | Commercial | | Retail 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-offs | 0 | | | (599) | | | (96) | | | (695) | | | 0 | | | (742) | | | (383) | | | (1,125) | |
Recoveries | 0 | | | 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 Losses | | | | Total Loans Receivable |
| Loans individually evaluated | | Loans collectively evaluated | | Total | | | | Loans 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 development | 0 | | | 2,385 | | | 2,385 | | | | | 80 | | | 172,812 | | | 172,892 | |
Commercial and industrial | 16 | | | 2,874 | | | 2,890 | | | | | 887 | | | 137,874 | | | 138,761 | |
Equipment finance | 76 | | | 6,179 | | | 6,255 | | | | | 373 | | | 272,388 | | | 272,761 | |
Municipal finance | 0 | | | 442 | | | 442 | | | | | 352 | | | 128,197 | | | 128,549 | |
PPP | 0 | | | 0 | | | 0 | | | | | 0 | | | 64,845 | | | 64,845 | |
Retail consumer loans: | | | | | | | | | | | | | |
One-to-four family | 11 | | | 7,800 | | | 7,811 | | | | | 3,266 | | | 449,155 | | | 452,421 | |
HELOCs - originated | 0 | | | 1,680 | | | 1,680 | | | | | 0 | | | 125,397 | | | 125,397 | |
HELOCs - purchased | 0 | | | 784 | | | 784 | | | | | 0 | | | 58,640 | | | 58,640 | |
Construction and land/lots | 0 | | | 1,456 | | | 1,456 | | | | | 0 | | | 75,108 | | | 75,108 | |
Indirect auto finance | 0 | | | 2,978 | | | 2,978 | | | | | 0 | | | 122,947 | | | 122,947 | |
Consumer | 0 | | | 236 | | | 236 | | | | | 0 | | | 9,332 | | | 9,332 | |
Total | $ | 189 | | | $ | 39,655 | | | $ | 39,844 | | | | | $ | 11,421 | | | $ | 2,667,203 | | | $ | 2,678,624 | |
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 Losses | | Total Loans Receivable |
| PCI | | Loans individually evaluated for impairment | | Loans collectively evaluated | | Total | | PCI | | Loans 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 development | 4 | | | 5 | | | 3,599 | | | 3,608 | | | 590 | | | 299 | | | 215,045 | | | 215,934 | |
Commercial and industrial | 15 | | | 31 | | | 2,153 | | | 2,199 | | | 1,562 | | | 852 | | | 152,411 | | | 154,825 | |
Equipment finance | 0 | | | 209 | | | 2,598 | | | 2,807 | | | 0 | | | 801 | | | 228,438 | | | 229,239 | |
Municipal finance | 0 | | | 0 | | | 697 | | | 697 | | | 0 | | | 0 | | | 127,987 | | | 127,987 | |
PPP | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 0 | | | 80,697 | | | 80,697 | |
Retail consumer loans: | | | | | | | | | | | | | | | |
One-to-four family | 17 | | | 52 | | | 2,400 | | | 2,469 | | | 4,473 | | | 4,304 | | | 464,916 | | | 473,693 | |
HELOCs - originated | 0 | | | 0 | | | 1,344 | | | 1,344 | | | 0 | | | 0 | | | 137,447 | | | 137,447 | |
HELOCs - purchased | 0 | | | 0 | | | 430 | | | 430 | | | 0 | | | 0 | | | 71,781 | | | 71,781 | |
Construction and land/lots | 33 | | | 0 | | | 1,409 | | | 1,442 | | | 345 | | | 296 | | | 81,218 | | | 81,859 | |
Indirect auto finance | 0 | | | 0 | | | 1,136 | | | 1,136 | | | 0 | | | 10 | | | 132,293 | | | 132,303 | |
Consumer | 0 | | | 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/lots | 33 |
| | — |
| | 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 estate | 113 |
| | 772 |
| | 9,574 |
| | 10,459 |
| | 5,888 |
| | 7,114 |
| | 977,691 |
| | 990,693 |
|
Construction and development | 4 |
| | 5 |
| | 4,147 |
| | 4,156 |
| | 608 |
| | 310 |
| | 248,796 |
| | 249,714 |
|
Commercial and industrial | 15 |
| | 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 estate | 118 |
| | 28 |
| | 7,890 |
| | 8,036 |
| | 7,706 |
| | 8,692 |
| | 910,863 |
| | 927,261 |
|
Construction and development | 4 |
| | 5 |
| | 3,187 |
| | 3,196 |
| | 941 |
| | 1,397 |
| | 208,578 |
| | 210,916 |
|
Commercial and industrial | 17 |
| | 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 | | Total | | Related Recorded Allowance |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
| | | | | | | | | |
June 30, 2020 | | | | | | | | | |
Commercial loans: | | | | | | | | | |
Commercial real estate | $ | 10,401 | | | $ | 8,062 | | | $ | 1,068 | | | $ | 9,130 | | | $ | 976 | |
Construction and development | 1,785 | | | 818 | | | 80 | | | 898 | | | 11 | |
Commercial and industrial | 9,782 | | | 1,058 | | | 26 | | | 1,084 | | | 34 | |
Equipment finance | 2,631 | | | 303 | | | 498 | | | 801 | | | 209 | |
Retail consumer loans: | | | | | | | | | |
One-to-four family | 16,560 | | | 10,805 | | | 3,374 | | | 14,179 | | | 412 | |
HELOCs - originated | 2,087 | | | 1,585 | | | 53 | | | 1,638 | | | 43 | |
HELOCs - purchased | 662 | | | 662 | | | 0 | | | 662 | | | 3 | |
Construction and land/lots | 1,585 | | | 749 | | | 296 | | | 1,045 | | | 13 | |
Indirect auto finance | 1,075 | | | 486 | | | 241 | | | 727 | | | 5 | |
Consumer | 297 | | | 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.
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 Ended | | Six Months Ended |
| December 31, 2019 | | December 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 development | 1,181 | | | 11 | | | 1,527 | | | 26 | |
Commercial and industrial | 742 | | | 14 | | | 710 | | | 90 | |
Equipment finance | 1,032 | | | 0 | | | 643 | | | 3 | |
Retail consumer loans: | | | | | | | |
One-to-four family | 14,276 | | | 192 | | | 15,085 | | | 378 | |
HELOCs - originated | 1,862 | | | 26 | | | 1,700 | | | 53 | |
HELOCs - purchased | 476 | | | 3 | | | 540 | | | 6 | |
Construction and land/lots | 1,117 | | | 20 | | | 1,201 | | | 44 | |
Indirect auto finance | 483 | | | 6 | | | 467 | | | 15 | |
Consumer | 53 | | | 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 Ended | | Six Months Ended |
| December 31, 2019 | | December 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.
|
| | | | | | | | | | | | | | | | | | | |
| 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 - originated | 1,724 |
| | 1,636 |
| | 52 |
| | 1,688 |
| | 42 |
|
HELOCs - purchased | 474 |
| | 474 |
| | — |
| | 474 |
| | 2 |
|
Construction and land/lots | 1,547 |
| | 756 |
| | 303 |
| | 1,059 |
| | 22 |
|
Indirect auto finance | 1,003 |
| | 392 |
| | 299 |
| | 691 |
| | 4 |
|
Consumer | 53 |
| | 16 |
| | 28 |
| | 44 |
| | 2 |
|
Commercial loans: | |
| | |
| | |
| | |
| | |
|
Commercial real estate | 10,078 |
| | 7,669 |
| | 1,847 |
| | 9,516 |
| | 803 |
|
Construction and development | 1,591 |
| | 621 |
| | 80 |
| | 701 |
| | 8 |
|
Commercial and industrial | 9,823 |
| | 246 |
| | 853 |
| | 1,099 |
| | 4 |
|
Equipment finance | 1,466 |
| | — |
| | 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 - originated | 2,410 |
| | 564 |
| | 1,219 |
| | 1,783 |
| | 46 |
|
HELOCs - purchased | 666 |
| | — |
| | 666 |
| | 666 |
| | — |
|
Construction and land/lots | 1,917 |
| | 957 |
| | 323 |
| | 1,280 |
| | 26 |
|
Indirect auto finance | 601 |
| | 353 |
| | 137 |
| | 490 |
| | 2 |
|
Consumer | 379 |
| | 7 |
| | 41 |
| | 48 |
| | 6 |
|
Commercial loans: | |
| | |
| | |
| | |
| | |
|
Commercial real estate | 10,127 |
| | 6,434 |
| | 3,404 |
| | 9,838 |
| | 36 |
|
Construction and development | 2,574 |
| | 940 |
| | 791 |
| | 1,731 |
| | 7 |
|
Commercial and industrial | 10,173 |
| | 354 |
| | 768 |
| | 1,122 |
| | 6 |
|
Equipment finance | 462 |
| | — |
| | 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 Ended | | Residential Property | | Investment Property | | Commercial Property | | Business Assets | | | Financial Assets Not Considered Collateral Dependent | | Total |
| 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 - originated | 1,724 |
| | 23 |
| | 957 |
| | 18 |
| |
HELOC - purchased | 474 |
| | 30 |
| | 333 |
| | 3 |
| |
Construction and land/lots | 1,091 |
| | 19 |
| | 1,356 |
| | 24 |
| |
Indirect auto finance | 625 |
| | 8 |
| | 361 |
| | 6 |
| |
Consumer | 53 |
| | 3 |
| | 1,580 |
| | 17 |
| |
Commercial loans: | |
| | |
| | |
| | |
| Commercial loans: | | | | | | | | | | | | |
Commercial real estate | 8,728 |
| | 59 |
| | 4,116 |
| | 123 |
| Commercial real estate | $ | 0 | | | $ | 3,800 | | | $ | 2,460 | | | $ | 0 | | | | $ | 1,050,711 | | | $ | 1,056,971 | |
Construction and development | 712 |
| | 10 |
| | 1,696 |
| | 16 |
| Construction and development | 0 | | | 80 | | | 0 | | | 0 | | | | 172,812 | | | 172,892 | |
Commercial and industrial | 1,119 |
| | 11 |
| | 188 |
| | 80 |
| Commercial and industrial | 0 | | | 0 | | | 0 | | | 90 | | | | 138,671 | | | 138,761 | |
Equipment finance | $ | 727 |
| | 3 |
| | $ | — |
| | $ | — |
| Equipment finance | 0 | | | 0 | | | 0 | | | 87 | | | | 272,674 | | | 272,761 | |
Total loans | $ | 29,442 |
| | $ | 341 |
| | $ | 27,086 |
| | $ | 524 |
| |
Municipal finance | | Municipal finance | 0 | | | 0 | | | 0 | | | 352 | | | | 128,197 | | | 128,549 | |
PPP | | PPP | 0 | | | 0 | | | 0 | | | 0 | | | | 64,845 | | | 64,845 | |
Retail consumer loans: | | Retail consumer loans: | | | |
One-to-four family | | One-to-four family | 1,085 | | | 0 | | | 0 | | | 0 | | | | 451,336 | | | 452,421 | |
HELOCs - originated | | HELOCs - originated | 0 | | | 0 | | | 0 | | | 0 | | | | 125,397 | | | 125,397 | |
HELOCs - purchased | | HELOCs - purchased | 0 | | | 0 | | | 0 | | | 0 | | | | 58,640 | | | 58,640 | |
Construction and land/lots | | Construction and land/lots | 0 | | | 0 | | | 0 | | | 0 | | | | 75,108 | | | 75,108 | |
Indirect auto finance | | Indirect auto finance | 0 | | | 0 | | | 0 | | | 0 | | | | 122,947 | | | 122,947 | |
Consumer | | Consumer | 0 | | | 0 | | | 0 | | | 0 | | | | 9,332 | | | 9,332 | |
Total | | Total | $ | 1,085 | | | $ | 3,880 | | | $ | 2,460 | | | $ | 529 | | | | $ | 2,670,670 | | | $ | 2,678,624 | |
Total Collateral Value | | Total 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 - originated | 1,706 |
| | 76 |
| | 1,067 |
| | 52 |
|
HELOCs - purchased | 524 |
| | 37 |
| | 235 |
| | 10 |
|
Construction and land/lots | 1,174 |
| | 63 |
| | 1,491 |
| | 75 |
|
Indirect auto finance | 506 |
| | 42 |
| | 341 |
| | 19 |
|
Consumer | 229 |
| | 9 |
| | 1,335 |
| | 58 |
|
Commercial loans: | |
| | |
| | |
| | |
|
Commercial real estate | 8,496 |
| | 237 |
| | 4,376 |
| | 313 |
|
Construction and development | 1,323 |
| | 36 |
| | 1,800 |
| | 51 |
|
Commercial and industrial | 812 |
| | 103 |
| | 201 |
| | 222 |
|
Equipment finance | 664 |
| | 6 |
| | — |
| | — |
|
Total loans | $ | 30,295 |
| | $ | 1,169 |
| | $ | 28,724 |
| | $ | 1,499 |
|
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 family | 2 |
| | $ | 319 |
| | $ | 317 |
| | 2 |
| | $ | 335 |
| | $ | 334 |
|
Construction and land/lots | — |
| | — |
| | — |
| | 1 |
| | 29 |
| | 28 |
|
Commercial: | | | | | | | | | | | |
Commercial real estate | 1 |
| | 30 |
| | 30 |
| | 2 |
| | 5,424 |
| | 5,423 |
|
Construction and development | — |
| | — |
| | — |
| | 1 |
| | 182 |
| | 182 |
|
Total | 3 |
| | $ | 349 |
| | $ | 347 |
| | 6 |
| | $ | 5,970 |
| | $ | 5,967 |
|
Total | 3 |
| | $ | 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 estate | 1 |
| | 88 |
| | 87 |
| | — |
| | — |
| | — |
|
Total | 1 |
| | $ | 88 |
| | $ | 87 |
| | 1 |
| | $ | 85 |
| | $ | 84 |
|
Extended payment terms: | |
| | |
| | |
| | |
| | |
| | |
|
Retail consumer: | |
| | |
| | |
| | |
| | |
| | |
|
One-to-four family | 2 |
| | $ | 70 |
| | $ | 67 |
| | 2 |
| | $ | 212 |
| | $ | 212 |
|
HELOCs - originated | — |
| | — |
| | — |
| | 1 |
| | 15 |
| | 15 |
|
Commercial: | | | | | | | | | | | |
Commercial and industrial | 1 |
| | 826 |
| | 826 |
| | — |
| | — |
| | — |
|
Total | 3 |
| | $ | 896 |
| | $ | 893 |
| | 3 |
| | $ | 227 |
| | $ | 227 |
|
Other TDRs: | |
| | |
| | |
| | |
| | |
| | |
|
Retail consumer: | |
| | |
| | |
| | |
| | |
| | |
|
One-to-four family | 4 |
| | $ | 353 |
| | $ | 348 |
| | 10 |
| | $ | 841 |
| | $ | 829 |
|
Construction and land/lots | — |
| | — |
| | — |
| | 1 |
| | 29 |
| | 28 |
|
Indirect auto finance | 4 |
| | 68 |
| | 57 |
| | 1 |
| | 33 |
| | 29 |
|
Consumer | — |
| | — |
| | — |
| | 1 |
| | 2 |
| | 2 |
|
Commercial: | | | | | | | | | | | |
Commercial real estate | 1 |
| | 30 |
| | 30 |
| | 2 |
| | 5,424 |
| | 5,423 |
|
Construction and development | 1 |
| | 182 |
| | 79 |
| | 1 |
| | 182 |
| | 182 |
|
Total | 10 |
| | $ | 633 |
| | $ | 514 |
| | 16 |
| | $ | 6,511 |
| | $ | 6,493 |
|
Total | 14 |
| | $ | 1,617 |
| | $ | 1,494 |
| | 20 |
| | $ | 6,823 |
| | $ | 6,804 |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
| Three Months Ended December 31, 2020 | | Three 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 estate | 0 | | | $ | 0 | | | $ | 0 | | | 1 | | | $ | 88 | | | $ | 88 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Extended payment terms: | | | | | | | | | | | |
Commercial: | | | | | | | | | | | |
| | | | | | | | | | | |
Commercial and industrial | 0 | | | 0 | | | 0 | | | 1 | | | 826 | | | 826 | |
| | | | | | | | | | | |
Retail consumer: | | | | | | | | | | | |
One-to-four family | 0 | | | 0 | | | 0 | | | 1 | | | 56 | | | 53 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Other TDRs: | | | | | | | | | | | |
Commercial: | | | | | | | | | | | |
| | | | | | | | | | | |
Construction and development | 0 | | | 0 | | | 0 | | | 1 | | | 182 | | | 79 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Retail consumer: | | | | | | | | | | | |
One-to-four family | 1 | | | 19 | | | 16 | | | 2 | | | 11 | | | 10 | |
| | | | | | | | | | | |
Construction and land/lots | 1 | | | 225 | | | 223 | | | 0 | | | 0 | | | 0 | |
Indirect auto finance | 3 | | | 45 | | | 43 | | | 0 | | | 0 | | | 0 | |
| | | | | | | | | | | |
Total | 5 | | | $ | 289 | | | $ | 282 | | | 6 | | | $ | 1,163 | | | $ | 1,056 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Six Months Ended December 31, 2020 | | Six 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 estate | 0 | | | $ | 0 | | | $ | 0 | | | 1 | | | $ | 88 | | | $ | 88 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Extended payment terms: | | | | | | | | | | | |
Commercial: | | | | | | | | | | | |
| | | | | | | | | | | |
Commercial and industrial | 0 | | | 0 | | | 0 | | | 1 | | | 826 | | | 826 | |
Retail consumer: | | | | | | | | | | | |
One-to-four family | 0 | | | 0 | | | 0 | | | 2 | | | 70 | | | 67 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Other TDRs: | | | | | | | | | | | |
Commercial: | | | | | | | | | | | |
Commercial real estate | 1 | | | 4,408 | | | 3,800 | | | 0 | | | 0 | | | 0 | |
Construction and development | 0 | | | 0 | | | 0 | | | 1 | | | 182 | | | 79 | |
| | | | | | | | | | | |
Retail consumer: | | | | | | | | | | | |
One-to-four family | 1 | | | 19 | | | 16 | | | 3 | | | 45 | | | 43 | |
| | | | | | | | | | | |
Construction and land/lots | 1 | | | 225 | | | 223 | | | 0 | | | 0 | | | 0 | |
Indirect auto finance | 9 | | | 141 | | | 109 | | | 4 | | | 68 | | | 61 | |
| | | | | | | | | | | |
| | | | | | | | | | | |
Total | 12 | | | $ | 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.
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, 2020 | | Three Months Ended December 31, 2019 |
| Number of Loans | | Recorded Investment | | Number of Loans | | Recorded Investment |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Other TDRs: | | | | | | | |
Retail consumer: | | | | | | | |
| | | | | | | |
| | | | | | | |
Indirect auto finance | 1 | | | $ | 1 | | | 0 | | | $ | 0 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
Total | 1 | | | $ | 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, 2020 | | Six 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 family | 2 |
| | $ | 49 |
| | 2 |
| | $ | 184 |
| One-to-four family | 0 | | | $ | 0 | | | 2 | | | $ | 50 | |
Consumer | — |
| | — |
| | 1 |
| | 2 |
| |
| Indirect auto finance | | Indirect auto finance | 2 | | | 12 | | | 0 | | | 0 | |
| Total | 2 |
| | $ | 49 |
| | 3 |
| | $ | 186 |
| Total | 2 | | | $ | 12 | | | 2 | | | $ | 50 | |
Total | 2 |
| | $ | 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:
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, 2020 | | | | June 30, 2020 | | |
| | Deferral | | Percent of Total Loan Portfolio | | | | | | Deferral | | Percent of Total Loan Portfolio | | | | |
Lodging | | $ | 0 | | | 0 | % | | | | | | $ | 108,171 | | | 4.0 | % | | | | |
Other commercial real estate, construction and development, and commercial and industrial | | 4,018 | | | 0.2 | | | | | | | 367,443 | | | 13.7 | | | | | |
Equipment finance | | 2,196 | | | 0.1 | | | | | | | 33,693 | | | 1.3 | | | | | |
One-to-four family | | 822 | | | 0 | | | | | | | 36,821 | | | 1.4 | | | | | |
Other consumer loans | | 832 | | | 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.
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, |
| 2020 | | 2019 | | 2020 | | 2019 |
Balance at beginning of period | $ | 144 | | | $ | 2,582 | | | $ | 337 | | | $ | 2,929 | |
Transfers from loans | 108 | | | 0 | | | 108 | | | 46 | |
| | | | | | | |
Sales, net of gain or loss | 0 | | | (965) | | | (193) | | | (1,346) | |
Writedowns | 0 | | | (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)
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 securities | 2 |
| | 3 |
| | 6 |
| | 5 |
|
Numerator for diluted EPS | $ | 1,184 |
| | $ | 3,282 |
| | $ | 19,027 |
| | $ | 19,006 |
|
Denominator: | |
| | |
| | |
| | |
|
Weighted-average common shares outstanding - basic | 16,688,646 |
| | 17,506,018 |
| | 16,898,391 |
| | 17,811,962 |
|
Effect of dilutive shares | 569,782 |
| | 691,411 |
| | 625,861 |
| | 716,199 |
|
Weighted-average common shares outstanding - diluted | 17,258,428 |
| | 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, |
| 2020 | | 2019 | | 2020 | | 2019 |
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 securities | 1 | | | 8 | | | 2 | | | 5 | |
Numerator for diluted EPS | $ | 9,385 | | | $ | 9,127 | | | $ | 15,092 | | | $ | 17,860 | |
Denominator: | | | | | | | |
Weighted-average common shares outstanding - basic | 16,202,844 | | | 16,906,457 | | | 16,216,917 | | | 17,002,052 | |
Effect of dilutive shares | 360,515 | | | 661,223 | | | 297,914 | | | 658,635 | |
Weighted-average common shares outstanding - diluted | 16,563,359 | | | 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.
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, |
| 2020 | | 2019 | | 2020 | | 2019 |
Share-based compensation expense | $ | 454 | | | $ | 440 | | | $ | 960 | | | $ | 883 | |
Tax benefit | $ | 107 | | | $ | 103 | | | $ | 226 | | | $ | 208 | |
|
| | | | | | | | | | | | | | | |
| 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:
| | | | | | | | | | | | | | | | | | | | | | | |
| Options | | Weighted- average exercise price | | Remaining contractual life (years) | | Aggregate Intrinsic Value |
Options outstanding at June 30, 2019 | 1,657,214 | | | $ | 17.59 | | | 5.0 | | $ | 12,909 | |
Granted | 25,000 | | | 25.37 | | | — | | | — | |
| | | | | | | |
Exercised | 66,900 | | | 14.40 | | | — | | | — | |
Forfeited | 800 | | | 17.35 | | | — | | | — | |
| | | | | | | |
Options outstanding at December 31, 2019 | 1,614,514 | | | $ | 17.84 | | | 4.7 | | $ | 14,538 | |
Exercisable at December 31, 2019 | 1,212,714 | | | $ | 15.45 | | | 3.5 | | $ | 13,805 | |
Non-vested at December 31, 2019 | 401,800 | | | $ | 25.07 | | | 7.9 | | $ | 733 | |
| | | | | | | |
Options outstanding at June 30, 2020 | 1,615,500 | | | $ | 18.12 | | | 4.4 | | $ | 1,711 | |
| | | | | | | |
| | | | | | | |
Exercised | 54,000 | | | 14.37 | | | — | | | — | |
Forfeited | 26,900 | | | 25.77 | | | — | | | — | |
| | | | | | | |
Options outstanding at December 31, 2020 | 1,534,600 | | | $ | 18.12 | | | 3.8 | | $ | 5,070 | |
Exercisable at December 31, 2020 | 1,243,700 | | | $ | 16.35 | | | 3.0 | | $ | 5,027 | |
Non-vested at December 31, 2020 | 290,900 | | | $ | 25.67 | | | 7.3 | | $ | 42 | |
|
| | | | | | | | | | | | | |
| Options | | Weighted- average exercise price | | Remaining contractual life (years) | | Aggregate Intrinsic Value |
Options outstanding at June 30, 2018 | 1,718,270 |
| | $ | 17.29 |
| | 5.9 |
| | $ | 18,664 |
|
Granted | 40,500 |
| | 27.51 |
| | — |
| | — |
|
Exercised | 69,111 |
| | 14.53 |
| | — |
| | — |
|
Forfeited | 20,300 |
| | 23.39 |
| | — |
| | — |
|
Expired | 945 |
| | 23.82 |
| | — |
| | — |
|
Options outstanding at March 31, 2019 | 1,668,414 |
| | $ | 17.57 |
| | 5.3 |
| | $ | 13,098 |
|
Exercisable at March 31, 2019 | 1,290,814 |
| | $ | 15.39 |
| | 4.4 |
| | $ | 12,733 |
|
Non-vested at March 31, 2019 | 377,600 |
| | $ | 25.04 |
| | 8.5 |
| | $ | 365 |
|
| | | | | | | |
Options outstanding at June 30, 2019 | 1,657,214 |
| | $ | 17.59 |
| | 5.0 |
| | $ | 12,909 |
|
Granted | 61,000 |
| | 26.40 |
| | — |
| | — |
|
Exercised | 106,914 |
| | 14.41 |
| | — |
| | — |
|
Forfeited | 800 |
| | 17.35 |
| | — |
| | — |
|
Options outstanding at March 31, 2020 | 1,610,500 |
| | $ | 18.13 |
| | 4.6 |
| | $ | 1,617 |
|
Exercisable at March 31, 2020 | 1,298,000 |
| | $ | 15.45 |
| | 3.7 |
| | $ | 1,617 |
|
Non-vested at March 31, 2020 | 312,500 |
| | $ | 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 volatility | | | 17.84 | % | | | | | | |
Expected dividend yield | | | 0.95 | % | | | | | | |
Risk-free interest rate | | | 1.55 | % | | | | | | |
Expected life (years) | | | 6.5 | | | | | | |
Weighted-average fair value of options granted | | | $ | 4.67 | | | | | | | |
|
| | | | | | | |
| March 31, | | March 31, |
| 2020 | | 2019 |
Weighted-average volatility | 17.77 | % | | 17.84 | % |
Expected dividend yield | 0.98 | % | | 0.87 | % |
Risk-free interest rate | 1.50 | % | | 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, 2019 | 123,800 | | | $ | 24.65 | | | $ | 2,258 | |
Granted | 13,000 | | | 25.37 | | | — | |
Vested | 400 | | | 19.02 | | | — | |
Forfeited | 3,200 | | | 20.62 | | | — | |
Non-vested at December 31, 2019 | 133,200 | | | $ | 24.83 | | | $ | 3,574 | |
| | | | | |
Non-vested at June 30, 2020 | 144,046 | | | $ | 25.89 | | | $ | 2,305 | |
| | | | | |
Vested | 2,600 | | | 25.37 | | | — | |
Forfeited | 7,650 | | | 25.65 | | | — | |
Non-vested at December 31, 2020 | 133,796 | | | $ | 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.
|
| | | | | | | | | | |
| Restricted stock awards | | Weighted- average grant date fair value | | Aggregate Intrinsic Value |
Non-vested at June 30, 2018 | 133,410 |
| | $ | 22.85 |
| | $ | 3,755 |
|
Granted | 34,000 |
| | 27.51 |
| | — |
|
Vested | 39,310 |
| | 21.64 |
| | — |
|
Forfeited | 4,300 |
| | 19.22 |
| | — |
|
Non-vested at March 31, 2019 | 123,800 |
| | $ | 24.64 |
| | $ | 2,263 |
|
| | | | | |
Non-vested at June 30, 2019 | 123,800 |
| | $ | 24.65 |
| | $ | 3,322 |
|
Granted | 65,556 |
| | 26.76 |
| | — |
|
Vested | 37,425 |
| | 22.90 |
| | — |
|
Forfeited | 3,200 |
| | 20.62 |
| | — |
|
Non-vested at March 31, 2020 | 148,731 |
| | $ | 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.
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.
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 |
Description | Total | | Level 1 | | Level 2 | | Level 3 |
U.S government agencies | $ | 19,138 | | | $ | 0 | | | $ | 19,138 | | | $ | 0 | |
Residential MBS of U.S. government agencies and GSEs | 41,013 | | | 0 | | | 41,013 | | | 0 | |
Municipal bonds | 10,899 | | | 0 | | | 10,899 | | | 0 | |
Corporate bonds | 82,490 | | | 0 | | | 82,490 | | | 0 | |
| | | | | | | |
Total | $ | 153,540 | | | $ | 0 | | | $ | 153,540 | | | $ | 0 | |
|
| | | | | | | | | | | | | | | |
| March 31, 2020 |
Description | Total | | Level 1 | | Level 2 | | Level 3 |
U.S Government Agencies | $ | 6,842 |
| | $ | — |
| | $ | 6,842 |
| | $ | — |
|
Residential MBS of U.S. Government Agencies and GSEs | 51,752 |
| | — |
| | 51,752 |
| | — |
|
Municipal Bonds | 21,703 |
| | — |
| | 21,703 |
| | — |
|
Corporate Bonds | 78,324 |
| | — |
| | 78,324 |
| | — |
|
Total | $ | 158,621 |
| | $ | — |
| | $ | 158,621 |
| | $ | — |
|
|
| | | | | | | | | | | | | | | |
| June 30, 2019 |
Description | Total | | 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 Bonds | 25,312 |
| | — |
| | 25,312 |
| | — |
|
Corporate Bonds | 6,084 |
| | — |
| | 6,084 |
| | — |
|
Total | $ | 121,786 |
| | $ | — |
| | $ | 121,786 |
| | $ | — |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| June 30, 2020 |
Description | Total | | Level 1 | | Level 2 | | Level 3 |
U.S government agencies | $ | 4,173 | | | $ | 0 | | | $ | 4,173 | | | $ | 0 | |
Residential MBS of U.S. government agencies and GSEs | 48,355 | | | 0 | | | 48,355 | | | 0 | |
Municipal bonds | 16,631 | | | 0 | | | 16,631 | | | 0 | |
Corporate bonds | 58,378 | | | 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 |
Description | Total | | Level 1 | | Level 2 | | Level 3 |
Individually evaluated loans | $ | 5,230 | | | $ | 0 | | | $ | 0 | | | $ | 5,230 | |
| | | | | | | |
| | | | | | | |
|
| | | | | | | | | | | | | | | |
| March 31, 2020 |
Description | Total | | Level 1 | | Level 2 | | Level 3 |
Impaired loans | $ | 6,099 |
| | $ | — |
| | $ | — |
| | $ | 6,099 |
|
REO | 493 |
| | — |
| | — |
| | 493 |
|
Total | $ | 6,592 |
| | $ | — |
| | $ | — |
| | $ | 6,592 |
|
| | | June 30, 2019 | | June 30, 2020 |
Description | Total | | Level 1 | | Level 2 | | Level 3 | Description | Total | | Level 1 | | Level 2 | | Level 3 |
Impaired loans | $ | 9,071 |
| | $ | — |
| | $ | — |
| | $ | 9,071 |
| |
Individually evaluated loans | | Individually evaluated loans | $ | 9,168 | | | $ | 0 | | | $ | 0 | | | $ | 9,168 | |
REO | 1,804 |
| | — |
| | — |
| | 1,804 |
| REO | 97 | | | 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, 2020 | | Valuation Techniques | | Unobservable Input | | Range | | Weighted Average |
| | | | | | | | | |
Individually evaluated loans | $ | 5,230 | | | Discounted appraisals and discounted cash flows | | Collateral discounts and discount spread | | 0% - 53%
2% - 3% | | 13% |
| | | | | | | | | |
|
| | | | | | | | | | | |
| 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 1 | | Level 2 | | Level 3 |
Assets: | | | | | | | | | |
Cash and interest-bearing deposits | $ | 226,344 | | | $ | 226,344 | | | $ | 226,344 | | | $ | 0 | | | $ | 0 | |
Commercial paper | 183,778 | | | 183,778 | | | 183,778 | | | 0 | | | 0 | |
Certificates of deposit in other banks | 48,637 | | | 48,637 | | | 0 | | | 48,637 | | | 0 | |
Securities available for sale | 153,540 | | | 153,540 | | | 0 | | | 153,540 | | | 0 | |
Loans, net | 2,638,780 | | | 2,608,848 | | | 0 | | | 0 | | | 2,608,848 | |
Loans held for sale | 118,439 | | | 120,254 | | | 0 | | | 0 | | | 120,254 | |
FHLB stock | 23,309 | | | 23,309 | | | 23,309 | | | 0 | | | 0 | |
FRB stock | 7,374 | | | 7,374 | | | 7,374 | | | 0 | | | 0 | |
SBIC investments | 8,889 | | | 8,889 | | | 0 | | | 0 | | | 8,889 | |
Accrued interest receivable | 9,796 | | | 9,796 | | | 0 | | | 1,184 | | | 8,612 | |
Liabilities: | | | | | | | | | |
Noninterest-bearing and NOW deposits | 1,124,958 | | | 1,124,958 | | | 0 | | | 1,124,958 | | | 0 | |
Money market accounts | 882,366 | | | 882,366 | | | 0 | | | 882,366 | | | 0 | |
Savings accounts | 209,699 | | | 209,699 | | | 0 | | | 209,699 | | | 0 | |
Certificates of deposit | 526,246 | | | 529,661 | | | 0 | | | 529,661 | | | 0 | |
Borrowings | 475,000 | | | 504,734 | | | 0 | | | 504,734 | | | 0 | |
Accrued interest payable | 623 | | | 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 paper | 281,955 |
| | 281,955 |
| | 281,955 |
| | — |
| | — |
|
Certificates of deposit in other banks | 57,544 |
| | 57,544 |
| | — |
| | 57,544 |
| | — |
|
Securities available for sale | 158,621 |
| | 158,621 |
| | — |
| | 158,621 |
| | — |
|
Loans, net | 2,636,674 |
| | 2,637,208 |
| | — |
| | — |
| | 2,637,208 |
|
Loans held for sale | 38,682 |
| | 39,359 |
| | — |
| | — |
| | 39,359 |
|
FHLB stock | 25,859 |
| | 25,859 |
| | 25,859 |
| | — |
| | — |
|
FRB stock | 7,353 |
| | 7,353 |
| | 7,353 |
| | — |
| | — |
|
SBIC investments | 7,989 |
| | 7,989 |
| | — |
| | — |
| | 7,989 |
|
Accrued interest receivable | 9,501 |
| | 9,501 |
| | — |
| | 1,002 |
| | 8,499 |
|
Liabilities: | | | | | | | | | |
Noninterest-bearing and NOW deposits | 819,373 |
| | 819,373 |
| | — |
| | 819,373 |
| | — |
|
Money market accounts | 801,424 |
| | 801,424 |
| | — |
| | 801,424 |
| | — |
|
Savings accounts | 169,792 |
| | 169,792 |
| | — |
| | 169,792 |
| | — |
|
Certificates of deposit | 764,198 |
| | 771,440 |
| | — |
| | 771,440 |
| | — |
|
Borrowings | 535,000 |
| | 569,850 |
| | — |
| | 569,850 |
| | — |
|
Accrued interest payable | 1,308 |
| | 1,308 |
| | — |
| | 1,308 |
| | — |
|
| | | June 30, 2019 | | June 30, 2020 |
| Carrying Value | | Fair Value | | Level 1 | | Level 2 | | Level 3 | | Carrying Value | | Fair Value | | Level 1 | | Level 2 | | Level 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 paper | 241,446 |
| | 241,446 |
| | 241,446 |
| | — |
| | — |
| Commercial paper | 304,967 | | | 304,967 | | | 304,967 | | | 0 | | | 0 | |
Certificates of deposit in other banks | 52,005 |
| | 52,005 |
| | — |
| | 52,005 |
| | — |
| Certificates of deposit in other banks | 55,689 | | | 55,689 | | | 0 | | | 55,689 | | | 0 | |
Securities available for sale | 121,786 |
| | 121,786 |
| | — |
| | 121,786 |
| | — |
| Securities available for sale | 127,537 | | | 127,537 | | | 0 | | | 127,537 | | | 0 | |
Loans, net | 2,683,761 |
| | 2,604,827 |
| | — |
| | — |
| | 2,604,827 |
| Loans, net | 2,741,047 | | | 2,692,265 | | | 0 | | | 0 | | | 2,692,265 | |
Loans held for sale | 18,175 |
| | 18,591 |
| | — |
| | — |
| | 18,591 |
| Loans held for sale | 77,177 | | | 78,129 | | | 0 | | | 0 | | | 78,129 | |
FHLB stock | 31,969 |
| | 31,969 |
| | 31,969 |
| | — |
| | — |
| FHLB stock | 23,309 | | | 23,309 | | | 23,309 | | | 0 | | | 0 | |
FRB stock | 7,335 |
| | 7,335 |
| | 7,335 |
| | — |
| | — |
| FRB stock | 7,368 | | | 7,368 | | | 7,368 | | | 0 | | | 0 | |
SBIC investments | 6,074 |
| | 6,074 |
| | — |
| | — |
| | 6,074 |
| SBIC investments | 8,269 | | | 8,269 | | | 0 | | | 0 | | | 8,269 | |
Accrued interest receivable | 10,533 |
| | 10,533 |
| | 350 |
| | 750 |
| | 9,433 |
| Accrued interest receivable | 12,312 | | | 12,312 | | | 208 | | | 744 | | | 11,360 | |
Liabilities: | | | | | | | | | | Liabilities: | |
Noninterest-bearing and NOW deposits | 746,617 |
| | 746,617 |
| | — |
| | 746,617 |
| | — |
| Noninterest-bearing and NOW deposits | 1,012,200 | | | 1,012,200 | | | 0 | | | 1,012,200 | | | 0 | |
Money market accounts | 691,172 |
| | 691,172 |
| | — |
| | 691,172 |
| | — |
| Money market accounts | 836,738 | | | 836,738 | | | 0 | | | 836,738 | | | 0 | |
Savings accounts | 177,278 |
| | 177,278 |
| | — |
| | 177,278 |
| | — |
| Savings accounts | 197,676 | | | 197,676 | | | 0 | | | 197,676 | | | 0 | |
Certificates of deposit | 712,190 |
| | 712,485 |
| | — |
| | 712,485 |
| | — |
| Certificates of deposit | 739,142 | | | 745,078 | | | 0 | | | 745,078 | | | 0 | |
Borrowings | 680,000 |
| | 688,418 |
| | — |
| | 688,418 |
| | — |
| Borrowings | 475,000 | | | 511,529 | | | 0 | | | 511,529 | | | 0 | |
Accrued interest payable | 2,252 |
| | 2,252 |
| | — |
| | 2,252 |
| | — |
| Accrued interest payable | 1,087 | | | 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.
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.
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.
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, 2020 | Supplemental Balance Sheet Information: | December 31, 2020 | | June 30, 2020 |
ROU assets | $ | 4,585 |
| ROU assets | $ | 4,546 | | $ | 4,601 |
| Lease liabilities | 4,576 |
| Lease liabilities | 4,561 | | 4,590 |
| Weighted-average remaining lease terms | 5.09 |
| Weighted-average remaining lease terms | 4.56 | | 5.02 |
Weighted-average discount rate | 2.68 | % | Weighted-average discount rate | 2.81 | % | | 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 |
| |
2021 | 1,130 |
| |
Remaining 2021 | | Remaining 2021 | $ | 663 | |
2022 | 1,034 |
| 2022 | 1,248 | |
2023 | 997 |
| 2023 | 1,200 | |
2022 | 526 |
| |
2024 | | 2024 | 735 | |
2025 | | 2025 | 349 | |
Thereafter | 896 |
| Thereafter | 676 | |
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, 2020 | | 2020 | | 2019 | | 2020 | | 2019 |
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, net | 375 |
| | 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 |
| |
2021 | 134 |
| |
Remaining 2021 | | Remaining 2021 | $ | 66 | |
2022 | 134 |
| 2022 | 134 | |
2023 | 134 |
| 2023 | 134 | |
2023 | 145 |
| |
2024 | | 2024 | 145 | |
2025 | | 2025 | 146 | |
Thereafter | 1,993 |
| Thereafter | 1,848 | |
Total minimum lease payments | 2,574 |
| Total minimum lease payments | 2,473 | |
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:
| | | | | | | | | | | |
| 2020 | | 2019 |
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 | |
|
| | | |
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, |
| 2020 | | 2019 | | 2020 | | 2019 |
Operating lease income | $ | 1,349 | | | $ | 658 | | | $ | 2,675 | | | $ | 1,226 | |
Depreciation expense | 1,413 | | | 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 |
| |
2021 | 7,729 |
| |
Remaining 2021 | | Remaining 2021 | $ | 2,902 | |
2022 | 7,172 |
| 2022 | 5,038 | |
2023 | 2,865 |
| 2023 | 3,192 | |
2022 | 2,187 |
| |
2024 | | 2024 | 1,123 | |
2025 | | 2025 | 320 | |
Thereafter | 135 |
| Thereafter | 48 | |
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, 2020 | | June 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 | |
2022 | 14,628 | |
2023 | 14,205 | |
2024 | 12,073 | |
2025 | 8,358 | |
Thereafter | 3,813 | |
Total minimum payments | 59,529 | |
Less: amount representing interest | (5,505) | |
Total | $ | 54,024 | |
|
| | | |
Fiscal year ending June 30: | |
Remaining 2020 | $ | 1,928 |
|
2021 | 9,374 |
|
2022 | 8,340 |
|
2023 | 8,195 |
|
2024 | 7,237 |
|
Thereafter | 2,990 |
|
Total minimum payments | 38,064 |
|
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)
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.
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.
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) | | 2020 | | 2020 | | 2019 |
Total stockholders' equity | | $ | 404,724 | | | $ | 400,351 | | | $ | 416,995 | |
Less: goodwill, core deposit intangibles, net of taxes | | 26,130 | | | 26,285 | | | 26,959 | |
Tangible book value (1) | | $ | 378,594 | | | $ | 374,066 | | | $ | 390,036 | |
Common shares outstanding | | 16,791,027 | | | 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 of | | As of |
| | March 31, | | June 30, | | March 31, | | December 31, | | | September 30, | | December 31, | |
(Dollars in thousands) | | 2020 | | 2019 | | 2019 | (Dollars in thousands) | | 2020 | | | 2020 | | 2019 | |
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 assets | | 3,679,971 | | | | 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 taxes | | 26,130 | | | | 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 assets | | 10.36 | % | | | 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, |
| 2020 | | | | | | 2020 | | 2019 |
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.
|
| | | | | | | | | | | |
| 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 loans | 176,971 |
| | 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 loans | 182 |
| | 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.
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, 2020 | | September 30, 2020 | | June 30, 2020 | | |
| | Deferral | | Percent of Total Loan Portfolio | | Deferral | | Percent of Total Loan Portfolio | | Deferral | | Percent of Total Loan Portfolio | | | | |
Lodging | | $ | — | | | — | % | | $ | 60,782 | | | 2.2 | % | | $ | 108,171 | | | 4.0 | % | | | | |
Other commercial real estate, construction and development, and commercial and industrial | | 4,018 | | | 0.2 | | | 27,169 | | | 1.0 | | | 367,443 | | | 13.7 | | | | | |
Equipment finance | | 2,196 | | | 0.1 | | | 2,187 | | | 0.1 | | | 33,693 | | | 1.3 | | | | | |
One-to-four family | | 822 | | | — | | | 684 | | | — | | | 36,821 | | | 1.4 | | | | | |
Other consumer loans | | 832 | | | — | | | 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
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 of | | | | | | Percent of total |
| December 31, | | June 30, | | Change | | December 31, | | June 30, |
(Dollars in thousands) | 2020 | | 2020 | | $ | | % | | 2020 | | 2020 |
Commercial loans: | | | | | | | | | | | |
Commercial real estate | $ | 1,056,971 | | | $ | 1,052,906 | | | $ | 4,065 | | | 0.4 | % | | 39.5 | % | | 38.0 | % |
Construction and development | 172,892 | | | 215,934 | | | (43,042) | | | (19.9) | | | 6.5 | | | 7.8 | |
Commercial and industrial | 138,761 | | | 154,825 | | | (16,064) | | | (10.4) | | | 5.2 | | | 5.6 | |
Equipment finance | 272,761 | | | 229,239 | | | 43,522 | | | 19.0 | | | 10.2 | | | 8.3 | |
Municipal leases | 128,549 | | | 127,987 | | | 562 | | | 0.4 | | | 4.8 | | | 4.6 | |
PPP loans | 64,845 | | | 80,697 | | | (15,852) | | | (19.6) | | | 2.4 | | | 2.9 | |
Total commercial loans | 1,834,779 | | | 1,861,588 | | | (26,809) | | | (1.4) | | | 68.6 | | | 67.2 | |
| | | | | | | | | | | |
Retail consumer loans: | | | | | | | | | | | |
One-to-four family | 452,421 | | | 473,693 | | | (21,272) | | | (4.5) | | | 16.9 | | | 17.1 | |
HELOCs - originated | 125,397 | | | 137,447 | | | (12,050) | | | (8.8) | | | 4.7 | | | 5.0 | |
HELOCs - purchased | 58,640 | | | 71,781 | | | (13,141) | | | (18.3) | | | 2.2 | | | 2.6 | |
Construction and land/lots | 75,108 | | | 81,859 | | | (6,751) | | | (8.2) | | | 2.8 | | | 3.0 | |
Indirect auto finance | 122,947 | | | 132,303 | | | (9,356) | | | (7.1) | | | 4.6 | | | 4.8 | |
Consumer | 9,332 | | | 10,259 | | | (927) | | | (9.0) | | | 0.3 | | | 0.4 | |
Total retail consumer loans | 843,845 | | | 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 - originated | 144,804 |
| | 139,435 |
| | 5,369 |
| | 3.9 |
| | 5.4 |
| | 5.2 |
|
HELOCs - purchased | 82,232 |
| | 116,972 |
| | (34,740 | ) | | (29.7 | ) | | 3.1 |
| | 4.3 |
|
Construction and land/lots | 80,765 |
| | 80,602 |
| | 163 |
| | 0.2 |
| | 3.0 |
| | 3.0 |
|
Indirect auto finance | 135,449 |
| | 153,448 |
| | (17,999 | ) | | (11.7 | ) | | 5.1 |
| | 5.7 |
|
Consumer | 11,576 |
| | 11,416 |
| | 160 |
| | 1.4 |
| | 0.4 |
| | 0.4 |
|
Total retail consumer loans | 942,603 |
| | 1,162,464 |
| | (219,861 | ) | | (18.9 | ) | | 35.3 |
| | 43.0 |
|
Commercial loans: | |
| | |
| | | | | | | | |
Commercial real estate | 990,693 |
| | 927,261 |
| | 63,432 |
| | 6.8 |
| | 37.2 |
| | 34.3 |
|
Construction and development | 249,714 |
| | 210,916 |
| | 38,798 |
| | 18.4 |
| | 9.4 |
| | 7.8 |
|
Commercial and industrial | 164,539 |
| | 160,471 |
| | 4,068 |
| | 2.5 |
| | 6.2 |
| | 5.9 |
|
Equipment finance | 198,962 |
| | 132,058 |
| | 66,904 |
| | 50.7 |
| | 7.5 |
| | 4.9 |
|
Municipal leases | 115,992 |
| | 112,016 |
| | 3,976 |
| | 3.5 |
| | 4.4 |
| | 4.1 |
|
Total commercial loans | 1,719,900 |
| | 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.
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 of | | | | Percent of total |
| December 31, | | June 30, | | Change | | December 31, | | June 30, |
(Dollars in thousands) | 2020 | | 2020 | | $ | | % | | 2020 | | 2020 |
Core deposits: | | | | | | | | | | | |
Noninterest-bearing accounts | $ | 469,998 | | | $ | 429,901 | | | $ | 40,097 | | | 9.3 | % | | 17.1 | % | | 15.4 | % |
NOW accounts | 654,960 | | | 582,299 | | | 72,661 | | | 12.5 | % | | 23.9 | % | | 20.9 | % |
Money market accounts | 882,366 | | | 836,738 | | | 45,628 | | | 5.5 | % | | 32.2 | % | | 30.0 | % |
Savings accounts | 209,699 | | | 197,676 | | | 12,023 | | | 6.1 | % | | 7.7 | % | | 7.1 | % |
Core deposits | 2,217,023 | | | 2,046,614 | | | 170,409 | | | 8.3 | % | | 80.8 | % | | 73.5 | % |
Certificates of deposit | 526,246 | | | 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 | % |
| | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | |
| 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 accounts | 496,561 |
| | 452,295 |
| | 44,266 |
| | 9.8 | % | | 19.4 | % | | 19.4 | % |
Money market accounts | 801,424 |
| | 691,172 |
| | 110,252 |
| | 16.0 | % | | 31.4 | % | | 29.7 | % |
Savings accounts | 169,792 |
| | 177,278 |
| | (7,486 | ) | | (4.2 | )% | | 6.7 | % | | 7.6 | % |
Core deposits | 1,790,589 |
| | 1,615,067 |
| | 175,522 |
| | 10.9 | % | | 70.1 | % | | 69.4 | % |
Certificates of deposit | 764,198 |
| | 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.
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, | | 2020 | | 2019 |
| 2020 | | 2019 | | 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) | | 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 banks | 378,296 |
| | 1,794 |
| | 1.90 | % | | 337,522 |
| | 2,283 |
| | 2.71 | % | Commercial paper and deposits in other banks | 417,401 | | | 614 | | | 0.59 | % | | 346,376 | | | 1,912 | | | 2.21 | % |
Securities available for sale | 154,108 |
| | 912 |
| | 2.37 | % | | 139,898 |
| | 850 |
| | 2.43 | % | Securities available for sale | 133,856 | | | 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 assets | 3,240,077 |
| | 33,342 |
| | 4.12 | % | | 3,174,331 |
| | 35,027 |
| | 4.42 | % | Total interest-earning assets | 3,416,680 | | | 30,462 | | | 3.57 | % | | 3,338,763 | | | 36,186 | | | 4.34 | % |
Other assets | 265,139 |
| | | | | | 246,858 |
| | | | | Other assets | 257,572 | | | 269,679 | | |
Total assets | 3,505,216 |
| | | | | | 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 accounts | 451,335 |
| | 412 |
| | 0.36 | % | | 463,807 |
| | 332 |
| | 0.29 | % | Interest-bearing checking accounts | $ | 584,530 | | | $ | 353 | | | 0.24 | % | | $ | 455,747 | | | $ | 375 | | | 0.33 | % |
Money market accounts | 792,313 |
| | 1,916 |
| | 0.97 | % | | 701,692 |
| | 1,408 |
| | 0.80 | % | Money market accounts | 848,760 | | | 414 | | | 0.20 | % | | 785,374 | | | 2,083 | | | 1.06 | % |
Savings accounts | 159,641 |
| | 50 |
| | 0.12 | % | | 188,848 |
| | 58 |
| | 0.12 | % | Savings accounts | 206,205 | | | 38 | | | 0.07 | % | | 168,022 | | | 50 | | | 0.12 | % |
Certificate accounts | 783,758 |
| | 3,593 |
| | 1.83 | % | | 627,444 |
| | 2,606 |
| | 1.66 | % | Certificate accounts | 576,078 | | | 1,542 | | | 1.07 | % | | 778,664 | | | 3,813 | | | 1.96 | % |
Total interest-bearing deposits | 2,187,047 |
| | 5,971 |
| | 1.09 | % | | 1,981,791 |
| | 4,404 |
| | 0.89 | % | Total interest-bearing deposits | 2,215,573 | | | 2,347 | | | 0.42 | % | | 2,187,807 | | | 6,321 | | | 1.16 | % |
Borrowings | 473,319 |
| | 1,757 |
| | 1.48 | % | | 670,142 |
| | 3,741 |
| | 2.23 | % | Borrowings | 475,000 | | | 1,688 | | | 1.42 | % | | 605,489 | | | 2,541 | | | 1.68 | % |
Total interest-bearing liabilities | 2,660,366 |
| | 7,728 |
| | 1.16 | % | | 2,651,933 |
| | 8,145 |
| | 1.23 | % | Total interest-bearing liabilities | 2,690,573 | | | 4,035 | | | 0.60 | % | | 2,793,296 | | | 8,862 | | | 1.27 | % |
Noninterest-bearing deposits | 342,581 |
| | | | | | 298,118 |
| | | | | Noninterest-bearing deposits | 523,488 | | | 334,732 | | |
Other liabilities | 88,725 |
| | | | | | 63,015 |
| | | | | Other liabilities | 57,813 | | | 65,812 | | |
Total liabilities | 3,091,672 |
| | | | | | 3,013,066 |
| | | | | Total liabilities | 3,271,874 | | | 3,193,840 | | |
Stockholders' equity | 413,544 |
| | | | | | 408,123 |
| | | | | Stockholders' equity | 402,378 | | | 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 liabilities | 121.79 | % | | | | | | 119.70 | % | | | | | average interest-bearing liabilities | 126.99 | % | | 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 spread | | | | 2.97 | % | | | | 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 spread | | | | 2.93 | % | | | | 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.
| | | | | | | | | | | | | | | | | For the Six Months Ended December 31, |
| For the Nine Months Ended March 31, | | 2020 | | 2019 |
| 2020 | | 2019 | | Average 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 banks | 362,598 |
| | 5,959 |
| | 2.19 | % | | 323,966 |
| | 6,106 |
| | 2.51 | % | Commercial paper and deposits in other banks | 420,785 | | | 1,495 | | | 0.71 | % | | 354,750 | | | 4,165 | | | 2.35 | % |
Securities available for sale | 152,798 |
| | 2,901 |
| | 2.53 | % | | 148,645 |
| | 2,582 |
| | 2.32 | % | Securities available for sale | 120,062 | | | 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 assets | 3,292,307 |
| | 106,059 |
| | 4.30 | % | | 3,125,549 |
| | 102,270 |
| | 4.36 | % | Total interest-earning assets | 3,430,748 | | | 61,221 | | | 3.57 | % | | 3,317,969 | | | 72,718 | | | 4.38 | % |
Other assets | 266,097 |
| | | | | | 245,360 |
| | | | | Other assets | 254,610 | | | 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 accounts | 449,560 |
| | 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 accounts | 765,492 |
| | 5,760 |
| | 1.00 | % | | 689,363 |
| | 3,630 |
| | 0.70 | % | Money market accounts | 837,153 | | | 964 | | | 0.23 | % | | 752,178 | | | 3,844 | | | 1.02 | % |
Savings accounts | 166,711 |
| | 153 |
| | 0.12 | % | | 197,929 |
| | 189 |
| | 0.13 | % | Savings accounts | 203,374 | | | 75 | | | 0.07 | % | | 170,207 | | | 103 | | | 0.12 | % |
Certificate accounts | 769,073 |
| | 11,127 |
| | 1.93 | % | | 573,647 |
| | 6,039 |
| | 1.40 | % | Certificate accounts | 632,894 | | | 3,811 | | | 1.20 | % | | 761,810 | | | 7,533 | | | 1.98 | % |
Total interest-bearing deposits | 2,150,836 |
| | 18,145 |
| | 1.12 | % | | 1,923,974 |
| | 10,761 |
| | 0.89 | % | Total interest-bearing deposits | 2,245,926 | | | 5,600 | | | 0.50 | % | | 2,132,831 | | | 12,174 | | | 1.14 | % |
Borrowings | 587,822 |
| | 7,619 |
| | 1.73 | % | | 663,156 |
| | 10,691 |
| | 2.15 | % | Borrowings | 475,000 | | | 3,375 | | | 1.42 | % | | 644,451 | | | 5,862 | | | 1.82 | % |
Total interest-bearing liabilities | 2,738,658 |
| | 25,764 |
| | 1.25 | % | | 2,587,130 |
| | 21,452 |
| | 1.11 | % | Total interest-bearing liabilities | 2,720,926 | | | 8,975 | | | 0.66 | % | | 2,777,282 | | | 18,036 | | | 1.30 | % |
Noninterest-bearing deposits | 336,496 |
| | | | | | 310,304 |
| | | | | Noninterest-bearing deposits | 507,087 | | | 330,418 | | |
Other liabilities | 70,175 |
| | | | | | 62,830 |
| | | | | Other liabilities | 55,699 | | | 64,456 | | |
Total liabilities | 3,145,329 |
| | | | | | 2,960,264 |
| | | | | Total liabilities | 3,283,712 | | | 3,172,156 | | |
Stockholders' equity | 413,075 |
| | | | | | 410,645 |
| | | | | Stockholders' equity | 401,646 | | | 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 liabilities | 120.22 | % | | | | | | 120.81 | % | | | | | average interest-bearing liabilities | 126.09 | % | | 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 spread | | | | 2.91 | % | | | | 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.
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) | Volume | | Rate | |
Interest-earning assets: | | | | | |
Loans receivable(1) | $ | 508 | | | $ | (4,269) | | | $ | (3,761) | |
Commercial paper and deposits in other banks | 392 | | | (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 accounts | 168 | | | (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 banks | 276 |
| | (765 | ) | | (489 | ) |
Securities available for sale | 87 |
| | (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 accounts | 182 |
| | 326 |
| | 508 |
|
Savings accounts | (9 | ) | | 1 |
| | (8 | ) |
Certificate accounts | 649 |
| | 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 banks | 728 |
| | (875 | ) | | (147 | ) |
Securities available for sale | 72 |
| | 247 |
| | 319 |
|
Other interest-earning assets | (108 | ) | | (402 | ) | | (510 | ) |
Total interest-earning assets | 5,075 |
| | (1,286 | ) | | 3,789 |
|
Interest-bearing liabilities: | | | | | |
Interest-bearing checking accounts | $ | (26 | ) | | $ | 228 |
| | $ | 202 |
|
Money market accounts | 401 |
| | 1,729 |
| | 2,130 |
|
Savings accounts | (29 | ) | | (7 | ) | | (36 | ) |
Certificate accounts | 2,057 |
| | 3,031 |
| | 5,088 |
|
Borrowings | (1,214 | ) | | (1,858 | ) | | (3,072 | ) |
Total interest-bearing liabilities | 1,189 |
| | 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) | Volume | | Rate | |
Interest-earning assets: | | | | | |
Loans receivable(1) | $ | 1,991 | | | $ | (9,401) | | | $ | (7,410) | |
Commercial paper and deposits in other banks | 775 | | | (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 accounts | 434 | | | (3,314) | | | (2,880) | |
Savings accounts | 20 | | | (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%.
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
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.
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.
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 loans | 86,648 | |
Unused lines of credit | 465,200 | |
Unused letters of credit | 7,936 | |
Total loan commitments | $ | 705,965 | |
|
| | | |
Undisbursed portion of construction loans | $ | 161,655 |
|
Commitments to make loans | 54,884 |
|
Unused lines of credit | 374,401 |
|
Unused letters of credit | 6,833 |
|
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.
HomeTrust Bancshares, Inc. and the Bank's actual and required minimum capital amounts and ratiosare as follows (dollars in thousands):
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Regulatory Requirements |
| Actual | | Minimum for Capital Adequacy Purposes | | Minimum to Be Well Capitalized |
| Amount | | Ratio | | Amount | | Ratio | | Amount | | Ratio |
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.
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.
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 | | | | | | | | | | | | | | | | | | | | | | | |
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 |
October 1 - October 31, 2020 | — | | | $ | — | | | — | | | 851,004 | |
November 1 - November 30, 2020 | 48,242 | | | 18.36 | | | 48,242 | | | 802,762 | |
December 1 - December 31, 2020 | 228,880 | | | 18.76 | | | 228,880 | | | 573,882 | |
Total | 277,122 | | | $ | 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, 2020 | 134,400 |
| | $ | 26.55 |
| | 134,400 |
| | 583,273 |
|
February 1 - February 29, 2020 | 78,200 |
| | 26.57 |
| | 78,200 |
| | 505,073 |
|
March 1 - March 31, 2020 | 423,200 |
| | 17.38 |
| | 423,200 |
| | 81,873 |
|
Total | 635,800 |
| | $ | 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.
| |
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
Nothing to report.
| | | | | | | | |
Regulation S-K Exhibit Number | Document | Reference 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) |
10.1 | | 10.1 |
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) |
|
| | |
Regulation S-K Exhibit Number | Document | Reference to Prior Filing or Exhibit Number Attached Hereto |
| | |
3.1 | | (b) |
3.2 | | (c) |
3.3 | | (p) |
4.1 | | (c) |
4.2 | | (l) |
4.3 |
| (o) |
10.1 | | (v) |
10.2 | | (q) |
10.3 |
| (q) |
10.3A | | (s) |
10.4 |
| (q) |
10.5 | | (q) |
10.6 | | (b) |
10.7 | | (b) |
10.7A | | (b) |
10.7B | | (b) |
10.7C | | (b) |
10.7D | | (b) |
10.7E |
| (b) |
10.7F | | (b) |
10.7G | | (b) |
10.7H | | (b) |
10.7I | | (f) |
10.8 | | (b) |
10.8A | | (b) |
10.8B | | (b) |
10.8C | | (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) |
10.18 | Reserved | |
10.19 | Reserved | |
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) |
31.1 | | 31.1 |
31.2 | | 31.2 |
32 | | 32.0 |
101 | The 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.
|
| | |
10.8D | | (b) |
10.8E | | (b) |
10.8F | | (b) |
10.8G | | (b) |
10.9 | | (b) |
10.10 | | (b) |
10.11 | | (b) |
10.12 | | (g) |
10.13 | | (h) |
10.14 | | (h) |
10.15 | | (h) |
10.16 | | (h) |
10.17 | | (h) |
10.18 | Reserved | |
10.19 | Reserved | |
10.20 | | (k) |
10.21 | | (k) |
10.22 | | (k) |
10.23 | | (k) |
10.24 | | (k) |
10.25 | | (k) |
10.26 |
| (m) |
10.27 | | (i) |
10.28 | | (q) |
10.29 | | (r) |
10.30 | | (u) |
31.1 | | 31.1 |
31.2 | | 31.2 |
32 | | 32.0 |
101 | The 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 |
| |
(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). |
| |
(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).
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, 2021 | HomeTrust Bancshares, Inc. |
By: | | |
| | |
Date: May 8, 2020 | By: | /s/ Dana L. Stonestreet |
| | Dana L. Stonestreet |
| | Chairman, President and CEO |
| | (Duly Authorized Officer) |
| | |
Date: May 8, 2020February 5, 2021 | By: | /s/ Tony J. VunCannon |
| | Tony J. VunCannon |
| | Executive Vice President, CFO, Corporate Secretary and Treasurer |
| | (Principal Financial and Accounting Officer) |
| | |
| | |