UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended ~~September 30,~~December 31, 2021

☐ 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 ☒ 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 ☒ 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 ☒

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 ☒

There were ~~16,316,211~~16,246,903 shares of common stock, par value of $.01 per share, issued and outstanding as of ~~November 3, 2021.~~February 2, 2022.

HOMETRUST BANCSHARES, INC. AND SUBSIDIARIES

10-Q

TABLE OF CONTENTS


			Page Number
PART I FINANCIAL INFORMATION

Item 1.	Financial Statements

		Consolidated Balance Sheets (Unaudited) at ~~September 30~~,December 31, 2021 and June 30, ~~202~~12021	3

		Consolidated Statements of Income (Unaudited) for the Three and Six Months Ended ~~September 30~~,December 31, 2021 and 2020	4

		Consolidated Statements of Comprehensive Income (Unaudited) for the Three and Six Months Ended ~~September~~,December, 2021 and 2020	5

		Consolidated Statements of Changes in Stockholders' Equity (Unaudited) for the Three and Six Months Ended ~~September 30~~,December 31, 2021 and 2020	6

		Consolidated Statements of Cash Flows (Unaudited) for the ~~Three~~Six Months Ended ~~September 30~~,December 31, 2021 and 2020	78

		Notes to Consolidated Financial Statements	910

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		3433

Item 3.	Quantitative and Qualitative Disclosures about Market Risk		46

Item 4.	Controls and Procedures		4647

PART II OTHER INFORMATION

Item 1.	Legal Proceedings		4647

Item 1A.	Risk Factors		4647

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		47

Item 3.	Defaults Upon Senior Securities		4748

Item 4.	Mine Safety Disclosures		4748

Item 5	Other Information		4748

Item 6.	Exhibits		48

SIGNATURES			50

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 Standards Codification
ASU						Accounting Standards Update

BOLI						Bank Owned Life Insurance
CARES Act						Coronavirus Aid, Relief, and Economic Security Act of 2020
CD						Certificate of Deposit
CDA						Collateral Dependent Asset
CECL						Current Expected Credit Losses
CET1						Common Equity Tier 1
COVID-19						Coronavirus Disease 2019
CPI						Consumer Price Index
DCF						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
LIBOR						London Interbank Offered Rate
MBS						Mortgage-Backed Securities
NCCOB						North Carolina Office of the Commissioner of Banks
OTTI						Other Than Temporary Impairment
PCD						Purchased Financial Assets with Credit Deterioration
PCI						Purchase Credit Impaired
PPP						Paycheck Protection Program
REO						Real Estate Owned
ROU						Right of Use
RSU						Restricted Stock Unit
SEC						Securities and Exchange Commission
SBA						U.S. 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)
September 30, 2021
June 30, 2021(1)
Assets
Cash $ 22,431 $ 22,312
Interest-bearing deposits 20,142 28,678
Cash and cash equivalents 42,573 50,990
Commercial paper 196,652 189,596
Certificates of deposit in other banks 35,495 40,122
Debt securities available for sale, at fair value (amortized cost of $122,915 and $154,493 at September 30, 2021 and June 30, 2021, respectively) 124,576 156,459
Other investments, at cost 20,891 23,710
Loans held for sale 105,161 93,539
Total loans, net of deferred loan fees and costs 2,719,642 2,733,267
Allowance for credit losses (34,406) (35,468)
Net loans 2,685,236 2,697,799
Premises and equipment, net 68,568 70,909
Accrued interest receivable 8,429 7,933
Real Estate Owned ("REO") 45 188
Deferred income taxes 15,722 16,901
Bank Owned Life Insurance ("BOLI") 93,679 93,108
Goodwill 25,638 25,638
Core deposit intangibles 250 343
Other assets 58,445 57,488
Total Assets $ 3,481,360 $ 3,524,723
Liabilities and stockholders' equity
Liabilities
Deposits $ 2,987,284 $ 2,955,541
Borrowings 40,000 115,000
Other liabilities 57,565 57,663
Total liabilities 3,084,849 3,128,204
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, 16,307,658 shares
issued and outstanding at September 30, 2021; 16,636,483 at June 30, 2021
163 167
Additional paid in capital 151,425 160,582
Retained earnings 249,331 240,075
Unearned Employee Stock Ownership Plan ("ESOP") shares (5,687) (5,819)
Accumulated other comprehensive income 1,279 1,514
Total stockholders' equity 396,511 396,519
Total liabilities and stockholders' equity $ 3,481,360 $ 3,524,723

~~(1) Derived from audited financial statements.~~


	(Unaudited)
	December 31, 2021		June 30, 2021
Assets
Cash	$	20,586	$	22,312
Interest-bearing deposits	14,240		28,678
Cash and cash equivalents	34,826		50,990
Commercial paper	254,157		189,596
Certificates of deposit in other banks	34,002		40,122
Debt securities available for sale, at fair value (amortized cost of $121,071 and $154,493 at December 31, 2021 and June 30, 2021, respectively)	121,851		156,459
Other investments, at cost	22,117		23,710
Loans held for sale	102,070		93,539
Total loans, net of deferred loan fees and costs	2,696,072		2,733,267
Allowance for credit losses on loans	(30,933)		(35,468)
Loans, net	2,665,139		2,697,799
Premises and equipment, net	69,461		70,909
Accrued interest receivable	8,200		7,933
REO	45		188
Deferred income taxes, net	12,019		16,901
BOLI	94,209		93,108
Goodwill	25,638		25,638
Core deposit intangibles, net	185		343
Other assets	58,900		57,488
Total Assets	$	3,502,819	$	3,524,723
Liabilities and stockholders' equity
Liabilities
Deposits	$	2,998,691	$	2,955,541
Borrowings	48,000		115,000

Other liabilities	54,382		57,663
Total liabilities	3,101,073		3,128,204
Commitments and Contingencies - See Note 9
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, 16,303,461 shares issued and outstanding at December 31, 2021; 16,636,483 at June 30, 2021	163		167
Additional paid in capital	147,552		160,582
Retained earnings	258,986		240,075
Unearned ESOP shares	(5,555)		(5,819)
Accumulated other comprehensive income	600		1,514
Total stockholders' equity	401,746		396,519
Total liabilities and stockholders' equity	$	3,502,819	$	3,524,723

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			Three Months Ended						Six Months Ended
		September 30,			December 31,						December 31,
			2021			2020			2021		2020		2021		2020
Interest and dividend income	Interest and dividend income							Interest and dividend income
Loans	Loans		$	27,895		$	28,592	Loans	$	26,929	$	28,343	$	54,824	$	56,935
Commercial paper and interest-bearing deposits	Commercial paper and interest-bearing deposits		331			881		Commercial paper and interest-bearing deposits	468		614		799		1,495
Debt securities available for sale	Debt securities available for sale		524			528		Debt securities available for sale	411		504		935		1,032
Other investments	Other investments		555			448		Other investments	680		696		1,235		1,144
Total interest and dividend income	Total interest and dividend income		29,305			30,449		Total interest and dividend income	28,488		30,157		57,793		60,606
Interest expense	Interest expense							Interest expense
Deposits	Deposits		1,572			3,253		Deposits	1,305		2,347		2,877		5,600
Borrowings	Borrowings		26			1,687		Borrowings	15		1,688		41		3,375
Total interest expense	Total interest expense		1,598			4,940		Total interest expense	1,320		4,035		2,918		8,975
Net interest income	Net interest income		27,707			25,509		Net interest income	27,168		26,122		54,875		51,631
Provision (benefit) for credit losses	Provision (benefit) for credit losses		(1,460)			950		Provision (benefit) for credit losses	(2,500)		(3,030)		(3,960)		(2,080)
Net interest income after provision (benefit) for credit losses	Net interest income after provision (benefit) for credit losses		29,167			24,559		Net interest income after provision (benefit) for credit losses	29,668		29,152		58,835		53,711
Noninterest income	Noninterest income							Noninterest income
Service charges and fees on deposit accounts	Service charges and fees on deposit accounts		2,372			2,097		Service charges and fees on deposit accounts	2,513		2,416		4,885		4,513
Loan income and fees	Loan income and fees		979			474		Loan income and fees	805		569		1,784		1,043
Gain on sale of loans held for sale	Gain on sale of loans held for sale		4,057			3,344		Gain on sale of loans held for sale	3,901		3,704		7,958		7,048
BOLI income	BOLI income		518			532		BOLI income	490		511		1,008		1,043

Operating lease income	Operating lease income		1,540			1,325		Operating lease income	1,718		1,349		3,258		2,675
Other, net			886			867
Other								Other	753		795		1,639		1,661
Total noninterest income	Total noninterest income		10,352			8,639		Total noninterest income	10,180		9,344		20,532		17,983
Noninterest expense	Noninterest expense							Noninterest expense
Salaries and employee benefits	Salaries and employee benefits		15,280			15,207		Salaries and employee benefits	14,872		15,700		30,152		30,907
Net occupancy expense			2,317			2,293
Occupancy expense, net								Occupancy expense, net	2,401		2,261		4,718		4,554
Computer services	Computer services		2,324			2,307		Computer services	2,369		2,220		4,693		4,527
Telephone, postage, and supplies	Telephone, postage, and supplies		712			662		Telephone, postage, and supplies	735		871		1,447		1,533
Marketing and advertising	Marketing and advertising		705			325		Marketing and advertising	832		327		1,537		652
Deposit insurance premiums	Deposit insurance premiums		566			511		Deposit insurance premiums	302		487		868		998

Gain on sale of REO								Gain on sale of REO	—		—		(3)		(35)
REO related expense	REO related expense		142			213		REO related expense	116		165		261		413
Core deposit intangible amortization	Core deposit intangible amortization		93			238		Core deposit intangible amortization	65		202		158		440

Other	Other		3,877			4,244		Other	4,217		4,210		8,094		8,454
Total noninterest expense	Total noninterest expense		26,016			26,000		Total noninterest expense	25,909		26,443		51,925		52,443
Income before income taxes			13,503			7,198
Net income before income taxes								Net income before income taxes	13,939		12,053		27,442		19,251
Income tax expense	Income tax expense		2,976			1,445		Income tax expense	2,861		2,592		5,837		4,037
Net income	Net income		$	10,527		$	5,753	Net income	$	11,078	$	9,461	$	21,605	$	15,214
Per share data:	Per share data:							Per share data:
Net income per common share:	Net income per common share:							Net income per common share:
Basic	Basic		$	0.66		$	0.35	Basic	$	0.70	$	0.58	$	1.36	$	0.93
Diluted	Diluted		$	0.65		$	0.35	Diluted	$	0.68	$	0.57	$	1.33	$	0.92

Average shares outstanding:	Average shares outstanding:							Average shares outstanding:
Basic	Basic		15,761,247			16,230,990		Basic	15,632,283		16,202,844		15,696,765		16,216,917
Diluted	Diluted		16,146,611			16,469,242		Diluted	15,989,606		16,563,359		16,057,607		16,514,831

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)						(Unaudited)
		Three Months Ended			Three Months Ended						Six Months Ended
		September 30,			December 31,						December 31,
			2021			2020			2021		2020		2021		2020
Net income	Net income		$	10,527		$	5,753	Net income	$	11,078	$	9,461	$	21,605	$	15,214
Other comprehensive income (loss)	Other comprehensive income (loss)							Other comprehensive income (loss)
Unrealized holding gains (losses) on debt securities available for sale	Unrealized holding gains (losses) on debt securities available for sale							Unrealized holding gains (losses) on debt securities available for sale
Gains (losses) arising during the period	Gains (losses) arising during the period		(305)			199		Gains (losses) arising during the period	(882)		(84)		(1,187)		114
Deferred income tax benefit (expense)	Deferred income tax benefit (expense)		70			(46)		Deferred income tax benefit (expense)	203		19		273		(26)

Total other comprehensive income (loss)	Total other comprehensive income (loss)		(235)			153		Total other comprehensive income (loss)	$	(679)	$	(65)	(914)		88
Comprehensive income	Comprehensive income		$	10,292		$	5,906	Comprehensive income	$	10,399	$	9,396	$	20,691	$	15,302

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, 2021
																		Common Stock					Additional Paid In Capital		Retained Earnings		Unearned ESOP Shares		Accumulated Other Comprehensive Income		Total Stockholders' Equity
						Shares			Amount			Additional Paid In Capital			Retained Earnings			Unearned ESOP Shares				Accumulated Other Comprehensive Income
Balance at September 30, 2021																							$	163	$	151,425	$	249,331	$	(5,687)	$	1,279	$	396,511
Net income																					Net income	—	—		—		11,078		—		—		11,078

Cash dividends declared on common stock, $0.09/ common share																					Cash dividends declared on common stock, $0.09/ common share	—	—��		—		(1,423)		—		—		(1,423)
Common stock repurchased																					Common stock repurchased	(299,397)	(3)		(8,967)		—		—		—		(8,970)
Forfeited restricted stock																					Forfeited restricted stock	(6,400)	—		—		—		—		—		—

Exercised stock options																					Exercised stock options	301,600	3		4,339		—		—		—		4,342
Share-based compensation expense																					Share-based compensation expense	—	—		485		—		—		—		485
ESOP compensation expense																					ESOP compensation expense	—	—		270		—		132		—		402
Other comprehensive loss																					Other comprehensive loss	—	—		—		—		—		(679)		(679)
Balance at December 31, 2021																					Balance at December 31, 2021	16,303,461	$	163	$	147,552	$	258,986	$	(5,555)	$	600	$	401,746

		(Unaudited)																				(Unaudited)
		Three Months Ended September 30, 2021																				Six Months Ended December 31, 2021
		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		Total Stockholders' Equity
		Shares		Amount																		Shares	Amount
Balance at June 30, 2021	Balance at June 30, 2021	16,636,483		$	167		$	160,582		$	240,075		$	(5,819)		$	1,514		$	396,519	Balance at June 30, 2021	16,636,483	$	167	$	160,582	$	240,075	$	(5,819)	$	1,514	$	396,519
Net income	Net income	—		—			—			10,527			—			—			10,527		Net income	—	—		—		21,605		—		—		21,605

Cash dividends declared on common stock, $0.08/common share		—		—			—			(1,271)			—			—			(1,271)
Stock repurchased		(376,435)		(4)			(10,429)			—			—			—			(10,433)
Cash dividends declared on common stock, $0.17/common share																					Cash dividends declared on common stock, $0.17/common share	—	—		—		(2,694)		—		—		(2,694)
Common stock repurchased																					Common stock repurchased	(675,832)	(7)		(19,396)		—		—		—		(19,403)
Forfeited restricted stock	Forfeited restricted stock	(3,000)		—			—			—			—			—			—		Forfeited restricted stock	(9,400)	—		—		—		—		—		—
Retired stock	Retired stock	(2,708)		—			(75)			—			—			—			(75)		Retired stock	(2,708)	—		(75)		—		—		—		(75)

Stock issued for RSUs	Stock issued for RSUs	7,118		—			—			—			—			—			—		Stock issued for RSUs	7,118	—		—		—		—		—		—
Exercised stock options	Exercised stock options	46,200		—			700			—			—			—			700		Exercised stock options	347,800	3		5,039		—		—		—		5,042
Stock option expense		—		—			159			—			—			—			159
Restricted stock expense		—		—			256			—			—			—			256
ESOP shares allocated		—		—			232			—			132			—			364
Share-based compensation expense																					Share-based compensation expense	—	—		900		—		—		—		900
ESOP compensation expense																					ESOP compensation expense	—	—		502		—		264		—		766
Other comprehensive loss	Other comprehensive loss	—		—			—			—			—			(235)			(235)		Other comprehensive loss	—	—		—		—		—		(914)		(914)
Balance at September 30, 2021		16,307,658		$	163		$	151,425		$	249,331		$	(5,687)		$	1,279		$	396,511
Balance at December 31, 2021																					Balance at December 31, 2021	16,303,461	$	163	$	147,552	$	258,986	$	(5,555)	$	600	$	401,746

(Unaudited)
Three Months Ended September 30, 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 — — — 5,753 — — 5,753
Cumulative-effect adjustment due to the adoption of ASU 2016-13 — — — (13,358) — — (13,358)
Cash dividends declared on common stock, $0.07/common share — — — (1,148) — — (1,148)
Retired stock (633) — (9) — — (9)
Stock option expense — — 164 — — — 164
Restricted stock expense — — 342 — — — 342
ESOP shares allocated — — 59 — 132 — 191
Other comprehensive income — — — — — 153 153
Balance at September 30, 2020 17,020,724 $ 170 $ 170,204 $ 234,023 $ (6,216) $ 2,170 $ 400,351

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		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)
Common stock repurchased	(277,122)	(3)		(5,176)		—		—		—		(5,179)
Forfeited restricted stock	(6,575)	—		—		—		—		—		—



Exercised stock options	54,000	1		775		—		—		—		776
Share-based compensation expense	—	—		454		—		—		—		454
ESOP compensation expense	—	—		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
Share-based compensation expense	—	—		960		—		—		—		960
ESOP compensation expense	—	—		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

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)					(Unaudited)
		Three Months Ended September 30,					Six Months Ended December 31,
		2021		2020			2021		2020
Operating activities:	Operating activities:					Operating activities:
Net income	Net income	$	10,527	$	5,753	Net income	$	21,605	$	15,214
Adjustments to reconcile net income to net cash used in operating activities:
Adjustments to reconcile net income to net cash provided by (used in) operating activities:						Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision (benefit) for credit losses	Provision (benefit) for credit losses	(1,460)		950		Provision (benefit) for credit losses	(3,960)		(2,080)
Depreciation		2,279		2,392
Depreciation and amortization						Depreciation and amortization	4,782		3,885
Deferred income tax expense	Deferred income tax expense	1,249		1,070		Deferred income tax expense	5,154		1,671
Net accretion of purchase accounting adjustments on loans						Net accretion of purchase accounting adjustments on loans	(784)		(864)
Net amortization and accretion	Net amortization and accretion	(34)		(442)		Net amortization and accretion	1,586		522

Gain on sale and impairment of REO		(3)		(35)
Impairment on assets held for sale						Impairment on assets held for sale	87		—
Gain on sale of REO						Gain on sale of REO	(3)		(35)
BOLI income	BOLI income	(518)		(532)		BOLI income	(1,008)		(1,043)
Gain on sale of loans held for sale	Gain on sale of loans held for sale	(4,057)		(3,344)		Gain on sale of loans held for sale	(7,958)		(7,048)
Origination of loans held for sale	Origination of loans held for sale	(140,625)		(221,404)		Origination of loans held for sale	(301,898)		(312,627)
Proceeds from sales of loans held for sale		129,679		158,185

Decrease in deferred loan fees, net		(1,562)		(1,753)
Decrease in accrued interest receivable and other assets		105		1,926
Proceeds from sale of loans held for sale						Proceeds from sale of loans held for sale	303,911		264,325
New deferred loan origination fees, net						New deferred loan origination fees, net	(273)		(316)
Decrease (increase) in accrued interest receivable and other assets						Decrease (increase) in accrued interest receivable and other assets	(2,321)		4,328
Core deposit intangible amortization	Core deposit intangible amortization	93		238		Core deposit intangible amortization	158		440
ESOP compensation expense	ESOP compensation expense	364		191		ESOP compensation expense	766		419
Restricted stock and stock option expense		415		506
Increase in other liabilities		27		516
Net cash used in operating activities		(3,521)		(55,783)
Share-based compensation expense						Share-based compensation expense	900		960
Increase (decrease) in other liabilities						Increase (decrease) in other liabilities	(3,391)		717
Net cash provided by (used in) operating activities						Net cash provided by (used in) operating activities	17,353		(31,532)
Investing activities:	Investing activities:					Investing activities:
Purchase of debt securities available for sale		(5,261)		(500)
Proceeds from maturities of debt securities available for sale		33,222		27,285
Purchases of debt securities available for sale						Purchases of debt securities available for sale	(7,011)		(73,690)
Proceeds from maturities, calls and paydowns of debt securities available for sale						Proceeds from maturities, calls and paydowns of debt securities available for sale	40,042		46,893
Purchases of commercial paper						Purchases of commercial paper	(291,652)		(338,567)
Proceeds from maturities and calls of commercial paper						Proceeds from maturities and calls of commercial paper	227,499		459,550
Purchases of CDs in other banks						Purchases of CDs in other banks	(996)		(1,245)
Proceeds from maturities of CDs in other banks						Proceeds from maturities of CDs in other banks	7,116		8,297

Net proceeds (purchases) of commercial paper		(6,901)		100,397
Purchase of certificates of deposit in other banks		(996)		(996)
Maturities of certificates of deposit in other banks		5,623		4,324
Principal repayments of mortgage-backed securities		3,003		4,635
Net redemptions (purchases) of other investments		2,819		(3)
Net redemptions (purchases) of other investments, cost						Net redemptions (purchases) of other investments, cost	1,593		(626)

Net decrease in loans		19,334		19,583
Net increase in loans						Net increase in loans	34,131		105,181
Purchase of BOLI	Purchase of BOLI	(53)		(56)		Purchase of BOLI	(93)		(96)

Purchase of equipment for operating leases and other assets		(879)		(2,918)
Proceeds from the sale of equipment for operating leases		1,165		—
Purchase of equipment for operating leases						Purchase of equipment for operating leases	(1,677)		(6,940)
Payoff of equipment for operating leases						Payoff of equipment for operating leases	1,558		—
Purchase of premises and equipment	Purchase of premises and equipment	(2,416)		(1,807)		Purchase of premises and equipment	(4,886)		(13,382)
Proceeds from sale of assets held for sale						Proceeds from sale of assets held for sale	1,693		—

Proceeds from sale of premises and equipment		634		—
Proceeds from sale of REO	Proceeds from sale of REO	146		228		Proceeds from sale of REO	146		228

Net cash provided by investing activities	Net cash provided by investing activities	49,440		150,172		Net cash provided by investing activities	7,463		185,603
Financing activities:	Financing activities:					Financing activities:
Net increase (decrease) in deposits	Net increase (decrease) in deposits	31,743		(43,710)		Net increase (decrease) in deposits	43,150		(42,487)
Net decrease in borrowings		(75,000)		—
Net decrease in short-term borrowings						Net decrease in short-term borrowings	(97,000)		—
Proceeds from long-term borrowings						Proceeds from long-term borrowings	30,000		—
Common stock repurchased	Common stock repurchased	(10,433)		—		Common stock repurchased	(19,403)		(5,179)
Cash dividends paid	Cash dividends paid	(1,271)		(1,148)		Cash dividends paid	(2,694)		(2,450)
Retired stock	Retired stock	(75)		(9)		Retired stock	(75)		(9)
Exercised stock options	Exercised stock options	700		—		Exercised stock options	5,042		776

Net cash used in financing activities	Net cash used in financing activities	(54,336)		(44,867)		Net cash used in financing activities	(40,980)		(49,349)
Net increase (decrease) in cash and cash equivalents	Net increase (decrease) in cash and cash equivalents	(8,417)		49,522		Net increase (decrease) in cash and cash equivalents	(16,164)		104,722
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	50,990		121,622		Cash and cash equivalents at beginning of period	50,990		121,622
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	42,573	$	171,144	Cash and cash equivalents at end of period	$	34,826	$	226,344

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows (continued)

(Dollars in thousands)


		(Unaudited)					(Unaudited)
		Three Months Ended September 30,					Six Months Ended December 31,
		2021		2020			2021		2020
Supplemental disclosures:	Supplemental disclosures:					Supplemental disclosures:
Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest	Interest	$	1,599	$	5,308	Interest	$	2,929	$	5,404
Income taxes	Income taxes	39		1,686		Income taxes	192		1,686
Noncash transactions:	Noncash transactions:					Noncash transactions:
Unrealized gain (loss) in value of debt securities available for sale, net of income taxes	Unrealized gain (loss) in value of debt securities available for sale, net of income taxes	(235)		153		Unrealized gain (loss) in value of debt securities available for sale, net of income taxes	(914)		88
Transfer of loans to REO						Transfer of loans to REO	—		108
Transfer of loans held for sale to loans held for investment						Transfer of loans held for sale to loans held for investment	11,629		10,496

Transfer of loans held for sale to total loans held for investment		4,094		17,754

Transfer of loans held for investment to loans held for sale						Transfer of loans held for investment to loans held for sale	12,827		—

ROU asset and lease liabilities for operating lease accounting	ROU asset and lease liabilities for operating lease accounting	959		533		ROU asset and lease liabilities for operating lease accounting	946		597

Transfer of premises and equipment to held for sale (included in other assets)		3,229		—
Transfer of premises and equipment to assets held for sale (included in other assets)						Transfer of premises and equipment to assets held for sale (included in other assets)	3,229		—

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

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, 2021 ("2021 Form 10-K") filed with the SEC on September 10, 2021. The results of operations for the ~~three~~six months ended ~~September 30,~~December 31, 2021 are not necessarily indicative of results that may be expected for the entire fiscal year ending June 30, 2022.

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 two 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 credit losses on loans ~~and (ii)~~as an accounting policy that, due to the ~~valuation of goodwill and other intangible assets. These policies and~~ judgments, estimates and assumptions ~~are~~inherent in this policy, is critical to an understanding of the Company's financial statements. This policy and the related judgments, estimates and assumptions is described in greater detail in the notes to the Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations (Critical Accounting Policies) in the ~~Company's~~ 2021 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~~this critical accounting ~~policies,~~policy, 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~~this estimate and the Company's financial condition and operating results in future periods.

~~Operating, Accounting and Reporting Considerations related to COVID-19~~

The COVID-19 pandemic has caused significant, unprecedented disruption around the world that has affected daily living and 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~~effects of the COVID-19 pandemic ~~and stimulate~~may meaningfully impact significant estimates such as 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~~allowance for ~~Loan Modifications - The CARES Act provides that a financial institution may elect to suspend (i) the requirements under GAAP for~~credit losses or certain loan modifications that would otherwise be categorized as a TDR and (ii) 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.

~~• PPP - The CARES Act established the 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 providing $900 billion in stimulus relief from the COVID-19 pandemic. The legislation extended certain relief provisionsconcentrations in the ~~CARES Act that were set to expire at the end of 2020. This new legislation extended the relief to financial institutions to suspend TDR assessment~~hospitality 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 included additional funding for businesses that did not receive PPP funds under the CARES Act, especially minority- and women-owned businesses. In addition, it allowed businesses another opportunity to borrow PPP funds if they can show losses of 25% or more in 2020 based on their 2020 revenue. As of June 30, 2021, the program’s funds were depleted and the Company ended its participation in the origination of loans under the program.

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 - A loan modification that does 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-

~~HOMETRUST BANCSHARES, INC. AND SUBSIDIARY~~

~~Notes to Consolidated Financial Statements~~

~~(Dollars in thousands, except per share data)~~

~~term (e.g., six months) modifications such as payment deferrals, fee waivers, extensions of repayment terms, or insignificant delays in payment.~~

• 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.

~~• 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.~~

healthcare industries. See "Note 6 –- Loans and Allowance for Credit Losses on Loans" for more information on loans that have been modified or are in deferral due to COVID-19.

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 or stockholders’ equity as previously reported.

2. Recent Accounting Pronouncements

~~In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the~~Adoption of New 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 did not have a material impact on the Company's Consolidated Financial Statements.~~Standards

~~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~~were 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 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 Company adopted the amendments related to issue iii, vi, and vii on July 1, 2020. The adoption did not have a material effect 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 contracts to qualify for the exception. 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 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 did not 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 affiliates 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 iswas permitted. The adoption of this ASU did not have a material impact on the Company's ~~Consolidated Financial Statements.~~consolidated financial statements.

Newly Issued but Not Yet Effective Accounting Standards

ASU 2021-05, "Leases (Topic 842): Lessors—Certain Leases with Variable Lease Payments." This ASU amends the lease classification requirements for lessors to classify as an operating lease any lease that would otherwise be classified as a sales-type or direct financing lease that would result in the recognition of a day-one loss at lease commencement, provided that the lease includes variable lease payments that do not depend on an index or rate. When a lease is classified as operating, the lessor does not recognize a net investment in the lease, does not derecognize the underlying asset and therefore, does not recognize a selling profit or loss. The amendments in this ASU are effective for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years and early adoption is permitted. The Company is currently evaluating the impact of adopting the new guidance on the consolidated financial statements.

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

3. Debt Securities

Debt securities available for sale consist of the following at the dates indicated:


		September 30, 2021									December 31, 2021
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. government agencies	U.S. government agencies	$	18,979	$	123	$	(1)	$	19,101	U.S. government agencies	$	18,984	$	85	$	(136)	$	18,933
Residential MBS of U.S. government agencies and GSEs		40,348		1,186		(76)		41,458
MBS, residential										MBS, residential	37,424		882		(121)		38,185
Municipal bonds	Municipal bonds	7,446		390		—		7,836		Municipal bonds	6,928		321		—		7,249
Corporate bonds	Corporate bonds	56,142		174		(135)		56,181		Corporate bonds	57,735		94		(345)		57,484

Total	Total	$	122,915	$	1,873	$	(212)	$	124,576	Total	$	121,071	$	1,382	$	(602)	$	121,851


		June 30, 2021									June 30, 2021
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
U.S. government agencies	U.S. government agencies	$	18,975	$	135	$	(37)	$	19,073	U.S. government agencies	$	18,975	$	135	$	(37)	$	19,073
Residential MBS of U.S. government agencies and GSEs		42,119		1,339		(54)		43,404
MBS, residential										MBS, residential	42,119		1,339		(54)		43,404
Municipal bonds	Municipal bonds	9,098		453		—		9,551		Municipal bonds	9,098		453		—		9,551
Corporate bonds	Corporate bonds	84,301		257		(127)		84,431		Corporate bonds	84,301		257		(127)		84,431

Total	Total	$	154,493	$	2,184	$	(218)	$	156,459	Total	$	154,493	$	2,184	$	(218)	$	156,459

Debt securities available for sale by contractual maturity at ~~September 30,~~December 31, 2021 and June 30, 2021 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.


		September 30, 2021					December 31, 2021
		Amortized Cost		Estimated Fair Value			Amortized Cost		Estimated Fair Value
Due within one year	Due within one year	$	29,684	$	29,790	Due within one year	$	36,079	$	36,230
Due after one year through five years	Due after one year through five years	48,816		49,103		Due after one year through five years	41,755		41,500
Due after five years through ten years	Due after five years through ten years	4,067		4,225		Due after five years through ten years	5,813		5,936
Due after ten years	Due after ten years	—		—		Due after ten years	—		—
Mortgage-backed securities		40,348		41,458
MBS, residential						MBS, residential	37,424		38,185
Total	Total	$	122,915	$	124,576	Total	$	121,071	$	121,851


		June 30, 2021				June 30, 2021
		Amortized Cost		Estimated Fair Value				Amortized Cost		Estimated Fair Value
Due within one year	Due within one year	$	34,615	$	34,684		Due within one year	$	34,615	$	34,684
Due after one year through five years	Due after one year through five years	73,249		73,633			Due after one year through five years	73,249		73,633
Due after five years through ten years	Due after five years through ten years	4,510		4,738			Due after five years through ten years	4,510		4,738
Due after ten years	Due after ten years	—		—			Due after ten years	—		—
Mortgage-backed securities		42,119		43,404
MBS, residential							MBS, residential	42,119		43,404
Total	Total	$	154,493	$	156,459		Total	$	154,493	$	156,459

The Company had no sales of debt securities available for sale during the three and six months ended ~~September 30,~~December 31, 2021 and 2020. There were no gross realized gains or losses for the three and six months ended ~~September 30,~~December 31, 2021 and 2020.

Debt securities available for sale with amortized costs totaling ~~$92,083~~$55,636 and ~~$97,603~~$52,603 and market values of ~~$93,142~~$56,267 and ~~$98,890~~$53,897 at ~~September 30,~~December 31, 2021 and June 30, 2021, respectively, were pledged as collateral to secure various public deposits and other borrowings.

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

The gross unrealized losses and the fair value for debt securities available for sale aggregated by the length of time that individual securities have been in a continuous unrealized loss position as of ~~September 30,~~December 31, 2021 and June 30, 2021 were as follows:


		September 30, 2021													December 31, 2021
		Less than 12 Months				12 Months or More				Total					Less than 12 Months				12 Months or More				Total
		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. government agencies	U.S. government agencies	$	4,999	$	(1)	$	—	$	—	$	4,999	$	(1)	U.S. government agencies	$	14,864	$	(136)	$	—	$	—	$	14,864	$	(136)
Residential MBS of U.S. government agencies and GSEs		8,616		(52)		1,171		(24)		9,787		(76)
MBS, residential														MBS, residential	9,344		(100)		1,132		(21)		10,476		(121)

Corporate bonds	Corporate bonds	23,865		(135)		—		—		23,865		(135)		Corporate bonds	43,619		(345)		—		—		43,619		(345)
Total	Total	$	37,480	$	(188)	$	1,171	$	(24)	$	38,651	$	(212)	Total	$	67,827	$	(581)	$	1,132	$	(21)	$	68,959	$	(602)


		June 30, 2021													June 30, 2021
		Less than 12 Months				12 Months or More				Total					Less than 12 Months				12 Months or More				Total
		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
U.S. government agencies	U.S. government agencies	$	14,963	$	(37)	$	—	$	—	$	14,963	$	(37)	U.S. government agencies	$	14,963	$	(37)	$	—	$	—	$	14,963	$	(37)
Residential MBS of U.S. government agencies and GSEs		5,212		(28)		1,205		(26)		6,417		(54)
MBS, residential														MBS, residential	5,212		(28)		1,205		(26)		6,417		(54)

Corporate bonds	Corporate bonds	19,873		(127)		—		—		19,873		(127)		Corporate bonds	19,873		(127)		—		—		19,873		(127)
Total	Total	$	40,048	$	(192)	$	1,205	$	(26)	$	41,253	$	(218)	Total	$	40,048	$	(192)	$	1,205	$	(26)	$	41,253	$	(218)

The total number of securities with unrealized losses at ~~September 30,~~December 31, 2021 and June 30, 2021 were 3139 and 28, respectively.

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 ~~September 30,~~December 31, 2021 continue to perform as scheduled and management does not believe that there is a credit loss or that a provision for credit losses is 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 within the portfolio and it is not more-likely-than-not that securities will be required to be sold. See "Note 1 – Summary of Significant Account Policies" in our 2021 Form 10-K for further discussion.

Management continues to monitor all of its securities with 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 provision for credit losses in such periods.

Management excludes the accrued 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 ~~September 30,~~December 31, 2021, the accrued interest receivable for debt securities available for sale was ~~$611.~~$529.

4. Other Investments

Other investments, at cost, consist of the following at the dates indicated:


		September 30, 2021		June 30, 2021			December 31, 2021		June 30, 2021
FHLB of Atlanta stock	FHLB of Atlanta stock	$	2,965	$	6,153	FHLB of Atlanta stock	$	2,965	$	6,153
FRB stock	FRB stock	7,395		7,386		FRB stock	7,403		7,386
SBIC investments	SBIC investments	10,531		10,171		SBIC investments	11,749		10,171

Total	Total	$	20,891	$	23,710	Total	$	22,117	$	23,710

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, or cost, 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 and are recorded at cost.

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

5. Loans Held For Sale

Loans held for sale as of the dates indicated consist of the following:


		September 30, 2021		June 30, 2021			December 31, 2021		June 30, 2021
One-to-four family	One-to-four family	$	39,049	$	31,873	One-to-four family	$	19,246	$	31,873
SBA	SBA	6,662		4,160		SBA	8,220		4,160
HELOCs		59,450		57,506
HELOCs - originated						HELOCs - originated	74,604		57,506

Total	Total	$	105,161	$	93,539	Total	$	102,070	$	93,539

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:


		September 30, 2021		June 30, 2021			December 31, 2021		June 30, 2021
Commercial loans:	Commercial loans:					Commercial loans:
Commercial real estate	Commercial real estate	$	1,132,764	$	1,142,276	Commercial real estate	$	1,113,330	$	1,142,276
Construction and development	Construction and development	187,900		179,427		Construction and development	226,439		179,427
Commercial and industrial	Commercial and industrial	153,612		141,341		Commercial and industrial	162,396		141,341
Equipment finance	Equipment finance	341,995		317,920		Equipment finance	367,008		317,920
Municipal finance	Municipal finance	142,100		140,421		Municipal finance	131,078		140,421
PPP loans	PPP loans	28,762		46,650		PPP loans	19,044		46,650
Total commercial loans	Total commercial loans	1,987,133		1,968,035		Total commercial loans	2,019,295		1,968,035
Retail consumer loans:	Retail consumer loans:					Retail consumer loans:
One-to-four family	One-to-four family	384,901		406,549		One-to-four family	356,850		406,549
HELOCs - originated	HELOCs - originated	129,791		130,225		HELOCs - originated	128,189		130,225
HELOCs - purchased	HELOCs - purchased	33,943		38,976		HELOCs - purchased	30,795		38,976
Construction and land/lots	Construction and land/lots	69,835		66,027		Construction and land/lots	69,253		66,027
Indirect auto finance	Indirect auto finance	106,184		115,093		Indirect auto finance	84,581		115,093
Consumer	Consumer	7,855		8,362		Consumer	7,109		8,362
Total retail consumer loans	Total retail consumer loans	732,509		765,232		Total retail consumer loans	676,777		765,232
Total loans		2,719,642		2,733,267
Total loans, net of deferred loan fees and costs						Total loans, net of deferred loan fees and costs	2,696,072		2,733,267

Allowance for credit losses		(34,406)		(35,468)
Net loans		$	2,685,236	$	2,697,799
Allowance for credit losses on loans						Allowance for credit losses on loans	(30,933)		(35,468)
Loans, net						Loans, net	$	2,665,139	$	2,697,799

_________________________________________________________________

(1) At ~~September 30,~~December 31, 2021 and June 30, 2021 accrued interest receivable of ~~$7,818~~$7,560 and $7,339 was accounted for separately from the amortized cost basis.

All qualifying one-to-four family first mortgage loans, HELOCs, commercial real estate loans, and FHLB of 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 indicators represent the rating for loans as of the date 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.

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

The following table presents the credit risk profile by risk grade for commercial loans by origination year:


		Term Loans By Origination Fiscal Year																	Term Loans By Origination Fiscal Year
September 30,		2022		2021		2020		2019		2018		Prior		Revolving		Total
December 31, 2021																		December 31, 2021	2022		2021		2020		2019		2018		Prior		Revolving		Total
Commercial real estate	Commercial real estate																	Commercial real estate
Risk rating:	Risk rating:																	Risk rating:
Pass	Pass	$	41,037	$	232,436	$	169,932	$	139,212	$	151,001	$	346,044	$	26,018	$	1,105,680	Pass	$	83,972	$	221,764	$	171,332	$	125,455	$	141,325	$	313,297	$	21,312	$	1,078,457
Special mention	Special mention	753		—		—		—		16,886		3,619		—		21,258		Special mention	741		—		—		—		15,442		13,248		—		29,431
Substandard	Substandard	—		—		—		—		621		4,807		398		5,826		Substandard	—		—		—		—		608		4,436		398		5,442
Doubtful	Doubtful	—		—		—		—		—		—		—		—		Doubtful	—		—		—		—		—		—		—		—
Loss	Loss	—		—		—		—		—		—		—		—		Loss	—		—		—		—		—		—		—		—
Total commercial real estate	Total commercial real estate	$	41,790	$	232,436	$	169,932	$	139,212	$	168,508	$	354,470	$	26,416	$	1,132,764	Total commercial real estate	$	84,713	$	221,764	$	171,332	$	125,455	$	157,375	$	330,981	$	21,710	$	1,113,330

Construction and development	Construction and development																	Construction and development
Risk rating:	Risk rating:																	Risk rating:
Pass	Pass	$	6,647	$	24,896	$	2,543	$	4,207	$	4,615	$	8,331	$	132,184	$	183,423	Pass	$	18,603	$	18,270	$	5,511	$	2,847	$	4,573	$	7,606	$	163,684	$	221,094
Special mention	Special mention	—		—		—		—		—		257		3,832		4,089		Special mention	—		—		—		—		—		237		4,753		4,990
Substandard	Substandard	—		—		—		—		—		388		—		388		Substandard	—		—		—		—		—		355		—		355
Doubtful	Doubtful	—		—		—		—		—		—		—		—		Doubtful	—		—		—		—		—		—		—		—
Loss	Loss	—		—		—		—		—		—		—		—		Loss	—		—		—		—		—		—		—		—
Total construction and development	Total construction and development	$	6,647	$	24,896	$	2,543	$	4,207	$	4,615	$	8,976	$	136,016	$	187,900	Total construction and development	$	18,603	$	18,270	$	5,511	$	2,847	$	4,573	$	8,198	$	168,437	$	226,439

Commercial and industrial	Commercial and industrial																	Commercial and industrial
Risk rating:	Risk rating:																	Risk rating:
Pass	Pass	$	17,402	$	29,495	$	16,467	$	15,930	$	9,562	$	24,732	$	34,015	$	147,603	Pass	$	35,007	$	24,658	$	14,293	$	12,733	$	7,932	$	22,767	$	38,283	$	155,673
Special mention	Special mention	—		—		—		431		108		116		37		692		Special mention	—		—		—		412		—		110		37		559
Substandard	Substandard	—		31		558		371		4,300		57		—		5,317		Substandard	—		670		350		860		—		54		4,230		6,164
Doubtful	Doubtful	—		—		—		—		—		—		—		—		Doubtful	—		—		—		—		—		—		—		—
Loss	Loss	—		—		—		—		—		—		—		—		Loss	—		—		—		—		—		—		—		—
Total commercial and industrial	Total commercial and industrial	$	17,402	$	29,526	$	17,025	$	16,732	$	13,970	$	24,905	$	34,052	$	153,612	Total commercial and industrial	$	35,007	$	25,328	$	14,643	$	14,005	$	7,932	$	22,931	$	42,550	$	162,396

Equipment finance	Equipment finance																	Equipment finance
Risk rating:	Risk rating:																	Risk rating:
Pass	Pass	$	52,310	$	145,255	$	94,454	$	46,014	$	3,578	$	—	$	—	$	341,611	Pass	$	104,196	$	134,807	$	85,693	$	38,388	$	2,918	$	—	$	—	$	366,002
Special mention	Special mention	—		94		—		—		—		—		—		94		Special mention	—		84		364		277		—		—		—		725
Substandard	Substandard	—		—		32		—		—		—		—		32		Substandard	—		—		31		—		—		—		—		31
Doubtful	Doubtful	—		—		—		258		—		—		—		258		Doubtful	—		—		—		250		—		—		—		250
Loss	Loss	—		—		—		—		—		—		—		—		Loss	—		—		—		—		—		—		—		—
Total equipment finance	Total equipment finance	$	52,310	$	145,349	$	94,486	$	46,272	$	3,578	$	—	$	—	$	341,995	Total equipment finance	$	104,196	$	134,891	$	86,088	$	38,915	$	2,918	$	—	$	—	$	367,008

Municipal leases	Municipal leases																	Municipal leases
Risk rating:	Risk rating:																	Risk rating:
Pass	Pass	$	5,191	$	23,137	$	21,330	$	13,038	$	15,994	$	49,260	$	13,893	$	141,843	Pass	$	10,555	$	24,390	$	9,216	$	12,272	$	15,071	$	46,184	$	13,096	$	130,784
Special mention	Special mention	—		—		—		—		—		257		—		257		Special mention	—		—		—		—		—		257		—		257
Substandard	Substandard	—		—		—		—		—		—		—		—		Substandard	—		37		—		—		—		—		—		37
Doubtful	Doubtful	—		—		—		—		—		—		—		—		Doubtful	—		—		—		—		—		—		—		—
Loss	Loss	—		—		—		—		—		—		—		—		Loss	—		—		—		—		—		—		—		—
Total municipal leases	Total municipal leases	$	5,191	$	23,137	$	21,330	$	13,038	$	15,994	$	49,517	$	13,893	$	142,100	Total municipal leases	$	10,555	$	24,427	$	9,216	$	12,272	$	15,071	$	46,441	$	13,096	$	131,078

PPP loans	PPP loans																	PPP loans
Risk rating:	Risk rating:																	Risk rating:
Pass	Pass	$	11	$	20,799	$	7,952	$	—	$	—	$	—	$	—	$	28,762	Pass	$	10	$	12,115	$	6,919	$	—	$	—	$	—	$	—	$	19,044
Special mention	Special mention	—		—		—		—		—		—		—		—		Special mention	—		—		—		—		—		—		—		—
Substandard	Substandard	—		—		—		—		—		—		—		—		Substandard	—		—		—		—		—		—		—		—
Doubtful	Doubtful	—		—		—		—		—		—		—		—		Doubtful	—		—		—		—		—		—		—		—
Loss	Loss	—		—		—		—		—		—		—		—		Loss	—		—		—		—		—		—		—		—
Total PPP loans	Total PPP loans	$	11	$	20,799	$	7,952	$	—	$	—	$	—	$	—	$	28,762	Total PPP loans	$	10	$	12,115	$	6,919	$	—	$	—	$	—	$	—	$	19,044

Total commercial loans	Total commercial loans																	Total commercial loans
Risk rating:	Risk rating:																	Risk rating:
Pass	Pass	$	122,598	$	476,018	$	312,678	$	218,401	$	184,750	$	428,367	$	206,110	$	1,948,922	Pass	$	252,343	$	436,004	$	292,964	$	191,695	$	171,819	$	389,854	$	236,375	$	1,971,054
Special mention	Special mention	753		94		—		431		16,994		4,249		3,869		26,390		Special mention	741		84		364		689		15,442		13,852		4,790		35,962
Substandard	Substandard	—		31		590		371		4,921		5,252		398		11,563		Substandard	—		707		381		860		608		4,845		4,628		12,029
Doubtful	Doubtful	—		—		—		258		—		—		—		258		Doubtful	—		—		—		250		—		—		—		250
Loss	Loss	—		—		—		—		—		—		—		—		Loss	—		—		—		—		—		—		—		—
Total commercial loans	Total commercial loans	$	123,351	$	476,143	$	313,268	$	219,461	$	206,665	$	437,868	$	210,377	$	1,987,133	Total commercial loans	$	253,084	$	436,795	$	293,709	$	193,494	$	187,869	$	408,551	$	245,793	$	2,019,295

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

The following table presents the credit risk profile by risk grade for retail consumer loans by origination year:
Term Loans By Origination Fiscal Year
September 30, 2022 2021 2020 2019 2018 Prior Revolving Total
One-to-four family
Risk rating:
Pass $ 9,624 $ 69,855 $ 56,443 $ 37,245 $ 35,835 $ 163,570 $ 4,367 $ 376,939
Special mention — — — — — 1,091 — 1,091
Substandard — 243 972 — 215 4,939 — 6,369
Doubtful — — — — — 188 — 188
Loss — — — — — 314 — 314
Total one-to-four family $ 9,624 $ 70,098 $ 57,415 $ 37,245 $ 36,050 $ 170,102 $ 4,367 $ 384,901
HELOCs - originated
Risk rating:
Pass $ 297 $ 1,578 $ 365 $ 1,366 $ 242 $ 9,309 $ 115,486 $ 128,643
Special mention — — — — — 11 — 11
Substandard — — — 159 — 926 52 1,137
Doubtful — — — — — — — —
Loss — — — — — — — —
Total HELOCs - originated $ 297 $ 1,578 $ 365 $ 1,525 $ 242 $ 10,246 $ 115,538 $ 129,791
HELOCs - purchased
Risk rating:
Pass $ — $ — $ — $ — $ — $ — $ 33,490 $ 33,490
Special mention — — — — — — — —
Substandard — — — — 0 — — 453 453
Doubtful — — — — — — — —
Loss — — — — — — — —
Total HELOCs - purchased $ — $ — $ — $ — $ — $ — $ 33,943 $ 33,943
Construction and land/lots
Risk rating:
Pass $ 431 $ 8,096 $ 8,454 $ 747 $ — $ 2,781 $ 48,920 $ 69,429
Special mention — — — — — — — —
Substandard — — — — — 406 — 406
Doubtful — — — — — — — —
Loss — — — — — — — —
Total construction and land/lots $ 431 $ 8,096 $ 8,454 $ 747 $ — $ 3,187 $ 48,920 $ 69,835
Indirect auto finance
Risk rating:
Pass $ 8,103 $ 37,082 $ 23,730 $ 13,635 $ 15,561 $ 7,222 $ — $ 105,333
Special mention — 0 — — — — — — —
Substandard — 12 353 120 208 157 — 850
Doubtful — — — — — — — —
Loss — 1 — — — — — 1
Total indirect auto finance $ 8,103 $ 37,095 $ 24,083 $ 13,755 $ 15,769 $ 7,379 $ — $ 106,184
Total consumer loans
Risk rating:
Pass $ 303 $ 1,170 $ 861 $ 4,828 $ 201 $ 153 $ 271 $ 7,787
Special mention — — — — 14 — — 14
Substandard — — 3 17 3 14 16 53
Doubtful — — — — — — — —
Loss — — — 1 — — — 1
Total consumer loans $ 303 $ 1,170 $ 864 $ 4,846 $ 218 $ 167 $ 287 $ 7,855
Total retail consumer loans
Risk rating:
Pass $ 18,758 $ 117,781 $ 89,853 $ 57,821 $ 51,839 $ 183,035 $ 202,534 $ 721,621
Special mention — — — — 14 1,102 — 1,116
Substandard — 255 1,328 296 426 6,442 521 9,268
Doubtful — — — — — 188 — 188
Loss — 1 — 1 — 314 — 316
Total retail consumer loans $ 18,758 $ 118,037 $ 91,181 $ 58,118 $ 52,279 $ 191,081 $ 203,055 $ 732,509


	Term Loans By Origination Fiscal Year
December 31, 2021	2022			2021		2020		2019			2018		Prior		Revolving		Total
One-to-four family
Risk rating:
Pass	$	18,078		$	68,642	$	53,075	$	34,164		$	32,376	$	139,793	$	2,913	$	349,041
Special mention	—			—		—		—			—		987		—		987
Substandard	—			—		963		540			212		4,639		—		6,354
Doubtful	—			—		—		—			—		158		—		158
Loss	—			—		—		—			—		310		—		310
Total one-to-four family	$	18,078		$	68,642	$	54,038	$	34,704		$	32,588	$	145,887	$	2,913	$	356,850

HELOCs - originated
Risk rating:
Pass	$	941		$	1,400	$	373	$	1,602		$	147	$	8,662	$	113,937	$	127,062
Special mention	—			—		—		—			—		10		—		10
Substandard	—			—		—		158			—		908		51		1,117
Doubtful	—			—		—		—			—		—		—		—
Loss	—			—		—		—			—		—		—		—
Total HELOCs - originated	$	941		$	1,400	$	373	$	1,760		$	147	$	9,580	$	113,988	$	128,189

HELOCs - purchased
Risk rating:
Pass	$	—		$	—	$	—	$	—		$	—	$	—	$	30,342	$	30,342
Special mention	—			—		—		—			—		—		—		—
Substandard	—			—		—		—		0	—		—		453		453
Doubtful	—			—		—		—			—		—		—		—
Loss	—			—		—		—			—		—		—		—
Total HELOCs - purchased	$	—		$	—	$	—	$	—		$	—	$	—	$	30,795	$	30,795

Construction and land/lots
Risk rating:
Pass	$	1,006		$	9,148	$	2,723	$	53		$	—	$	2,474	$	53,454	$	68,858
Special mention	—			—		—		—			—		—		—		—
Substandard	—			—		—		—			—		395		—		395
Doubtful	—			—		—		—			—		—		—		—
Loss	—			—		—		—			—		—		—		—
Total construction and land/lots	$	1,006		$	9,148	$	2,723	$	53		$	—	$	2,869	$	53,454	$	69,253

Indirect auto finance
Risk rating:
Pass	$	9,174		$	24,932	$	20,364	$	11,420		$	12,664	$	5,146	$	—	$	83,700
Special mention	—		0	—		—		—			—		—		—		—
Substandard	—			52		327		126			243		133		—		881
Doubtful	—			—		—		—			—		—		—		—
Loss	—			—		—		—			—		—		—		—
Total indirect auto finance	$	9,174		$	24,984	$	20,691	$	11,546		$	12,907	$	5,279	$	—	$	84,581

Total consumer
Risk rating:
Pass	$	382		$	1,048	$	743	$	4,323		$	154	$	102	$	308	$	7,060
Special mention	—			—		—		—			—		—		—		—
Substandard	—			—		—		16			—		4		28		48
Doubtful	—			—		—		—			—		—		—		—
Loss	—			—		—		1			—		—		—		1
Total consumer	$	382		$	1,048	$	743	$	4,340		$	154	$	106	$	336	$	7,109

Total retail consumer loans
Risk rating:
Pass	$	29,581		$	105,170	$	77,278	$	51,562		$	45,341	$	156,177	$	200,954	$	666,063
Special mention	—			—		—		—			—		997		—		997
Substandard	—			52		1,290		840			455		6,079		532		9,248
Doubtful	—			—		—		—			—		158		—		158
Loss	—			—		—		1			—		310		—		311
Total retail consumer loans	$	29,581		$	105,222	$	78,568	$	52,403		$	45,796	$	163,721	$	201,486	$	676,777

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

The following table presents the credit risk profile by risk grade for commercial loans by origination year:


		Term Loans By Origination Fiscal Year																	Term Loans By Origination Fiscal Year
June 30,		2021		2020		2019		2018		2017		Prior		Revolving		Total
June 30, 2021																		June 30, 2021	2021		2020		2019		2018		2017		Prior		Revolving		Total
Commercial real estate	Commercial real estate																	Commercial real estate
Risk rating:	Risk rating:																	Risk rating:
Pass	Pass	$	227,850	$	177,691	$	142,407	$	158,147	$	158,525	$	220,834	$	25,860	$	1,111,314	Pass	$	227,850	$	177,691	$	142,407	$	158,147	$	158,525	$	220,834	$	25,860	$	1,111,314
Special mention	Special mention	—		—		—		16,951		1,256		3,092		—		21,299		Special mention	—		—		—		16,951		1,256		3,092		—		21,299
Substandard	Substandard	—		—		—		630		4,993		3,642		398		9,663		Substandard	—		—		—		630		4,993		3,642		398		9,663
Doubtful	Doubtful	—		—		—		—		—		—		—		—		Doubtful	—		—		—		—		—		—		—		—
Loss	Loss	—		—		—		—		—		—		—		—		Loss	—		—		—		—		—		—		—		—
Total commercial real estate	Total commercial real estate	$	227,850	$	177,691	$	142,407	$	175,728	$	164,774	$	227,568	$	26,258	$	1,142,276	Total commercial real estate	$	227,850	$	177,691	$	142,407	$	175,728	$	164,774	$	227,568	$	26,258	$	1,142,276

Construction and development	Construction and development																	Construction and development
Risk rating:	Risk rating:																	Risk rating:
Pass	Pass	18,262		6,523		10,349		6,008		2,693		7,153		123,843		$	174,831	Pass	18,262		6,523		10,349		6,008		2,693		7,153		123,843		$	174,831
Special mention	Special mention	—		—		—		—		—		286		3,827		4,113		Special mention	—		—		—		—		—		286		3,827		4,113
Substandard	Substandard	—		—		—		—		—		482		—		482		Substandard	—		—		—		—		—		482		—		482
Doubtful	Doubtful	—		—		—		—		—		—		—		—		Doubtful	—		—		—		—		—		—		—		—
Loss	Loss	—		—		—		—		—		1		—		1		Loss	—		—		—		—		—		1		—		1
Total construction and development	Total construction and development	$	18,262	$	6,523	$	10,349	$	6,008	$	2,693	$	7,922	$	127,670	$	179,427	Total construction and development	$	18,262	$	6,523	$	10,349	$	6,008	$	2,693	$	7,922	$	127,670	$	179,427

Commercial and industrial	Commercial and industrial																	Commercial and industrial
Risk rating:	Risk rating:																	Risk rating:
Pass	Pass	29,606		14,010		18,826		10,759		15,346		10,589		36,165		$	135,301	Pass	29,606		14,010		18,826		10,759		15,346		10,589		36,165		$	135,301
Special mention	Special mention	—		21		438		110		32		125		37		763		Special mention	—		21		438		110		32		125		37		763
Substandard	Substandard	31		33		300		—		—		83		4,829		5,276		Substandard	31		33		300		—		—		83		4,829		5,276
Doubtful	Doubtful	—		—		—		—		—		—		—		—		Doubtful	—		—		—		—		—		—		—		—
Loss	Loss	—		—		—		—		—		1		—		1		Loss	—		—		—		—		—		1		—		1
Total commercial and industrial	Total commercial and industrial	$	29,637	$	14,064	$	19,564	$	10,869	$	15,378	$	10,798	$	41,031	$	141,341	Total commercial and industrial	$	29,637	$	14,064	$	19,564	$	10,869	$	15,378	$	10,798	$	41,031	$	141,341

Equipment finance	Equipment finance																	Equipment finance
Risk rating:	Risk rating:																	Risk rating:
Pass	Pass	154,685		104,681		53,178		4,773		—		—		—		$	317,317	Pass	154,685		104,681		53,178		4,773		—		—		—		$	317,317
Special mention	Special mention	—		—		0		—		—		—		—		—		Special mention	—		—		—		—		—		—		—		—
Substandard	Substandard	—		—		323		—		—		—		—		323		Substandard	—		—		323		—		—		—		—		323
Doubtful	Doubtful	—		—		280		—		—		—		—		280		Doubtful	—		—		280		—		—		—		—		280
Loss	Loss	—		—		—		—		—		—		—		—		Loss	—		—		—		—		—		—		—		—
Total equipment finance	Total equipment finance	$	154,685	$	104,681	$	53,781	$	4,773	$	—	$	—	$	—	$	317,920	Total equipment finance	$	154,685	$	104,681	$	53,781	$	4,773	$	—	$	—	$	—	$	317,920

Municipal leases	Municipal leases																	Municipal leases
Risk rating:	Risk rating:																	Risk rating:
Pass	Pass	23,358		19,240		14,005		17,979		9,738		47,144		8,700		$	140,164	Pass	23,358		19,240		14,005		17,979		9,738		47,144		8,700		$	140,164
Special mention	Special mention	—		—		—		—		—		257		—		257		Special mention	—		—		—		—		—		257		—		257
Substandard	Substandard	—		—		—		—		—		—		—		—		Substandard	—		—		—		—		—		—		—		—
Doubtful	Doubtful	—		—		—		—		—		—		—		—		Doubtful	—		—		—		—		—		—		—		—
Loss	Loss	0		—		—		—		—		—		—		—		Loss	—		—		—		—		—		—		—		—
Total municipal leases	Total municipal leases	$	23,358	$	19,240	$	14,005	$	17,979	$	9,738	$	47,401	$	8,700	$	140,421	Total municipal leases	$	23,358	$	19,240	$	14,005	$	17,979	$	9,738	$	47,401	$	8,700	$	140,421

PPP loans	PPP loans																	PPP loans
Risk rating:	Risk rating:																	Risk rating:
Pass	Pass	29,667		16,983		—		—		—		—		—		$	46,650	Pass	29,667		16,983		—		—		—		—		—		$	46,650
Special mention	Special mention	—		—		—		—		—		—		—		—		Special mention	—		—		—		—		—		—		—		—
Substandard	Substandard	—		—		—		—		—		—		—		—		Substandard	—		—		—		—		—		—		—		—
Doubtful	Doubtful	—		—		—		—		—		—		—		—		Doubtful	—		—		—		—		—		—		—		—
Loss	Loss	—		—		—		—		—		—		—		—		Loss	—		—		—		—		—		—		—		—
Total PPP loans	Total PPP loans	$	29,667	$	16,983	$	—	$	—	$	—	$	—	$	—	$	46,650	Total PPP loans	$	29,667	$	16,983	$	—	$	—	$	—	$	—	$	—	$	46,650

Total commercial loans	Total commercial loans																	Total commercial loans
Risk rating:	Risk rating:																	Risk rating:
Pass	Pass	$	483,428	$	339,128	$	238,765	$	197,666	$	186,302	$	285,720	$	194,568	$	1,925,577	Pass	$	483,428	$	339,128	$	238,765	$	197,666	$	186,302	$	285,720	$	194,568	$	1,925,577
Special mention	Special mention	—		21		438		17,061		1,288		3,760		3,864		26,432		Special mention	—		21		438		17,061		1,288		3,760		3,864		26,432
Substandard	Substandard	31		33		623		630		4,993		4,207		5,227		15,744		Substandard	31		33		623		630		4,993		4,207		5,227		15,744
Doubtful	Doubtful	—		—		280		—		—		—		—		280		Doubtful	—		—		280		—		—		—		—		280
Loss	Loss	—		—		—		—		—		2		—		2		Loss	—		—		—		—		—		2		—		2
Total commercial loans	Total commercial loans	$	483,459	$	339,182	$	240,106	$	215,357	$	192,583	$	293,689	$	203,659	$	1,968,035	Total commercial loans	$	483,459	$	339,182	$	240,106	$	215,357	$	192,583	$	293,689	$	203,659	$	1,968,035

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

The following table presents the credit risk profile by risk grade for retail consumer loans by origination year:
Term Loans By Origination Fiscal Year
June 30, 2021 2020 2019 2018 2017 Prior Revolving Total
One-to-four family
Risk rating:
Pass $ 72,723 $ 52,987 $ 46,958 $ 40,461 $ 37,361 $ 143,531 $ 4,345 $ 398,366
Special mention — — — — 27 1,084 — 1,111
Substandard 246 981 — 216 86 5,037 — 6,566
Doubtful — — — — — 191 — 191
Loss — — — — — 315 — 315
Total one-to-four family $ 72,969 $ 53,968 $ 46,958 $ 40,677 $ 37,474 $ 150,158 $ 4,345 $ 406,549
HELOCs - originated
Risk rating:
Pass 2,767 465 1,294 217 716 9,469 114,048 $ 128,976
Special mention — — — — — 12 — 12
Substandard — — 159 — 38 935 105 1,237
Doubtful — — — — — — — —
Loss — — — — — — — —
Total HELOCs - originated $ 2,767 $ 465 $ 1,453 $ 217 $ 754 $ 10,416 $ 114,153 $ 130,225
HELOCs - purchased
Risk rating:
Pass — — — — — — 38,523 $ 38,523
Special mention — — — — — — — —
Substandard — — — — — — 453 453
Doubtful — — — — — — — —
Loss — — — — — — — —
Total HELOCs - purchased $ — $ — $ — $ — $ — $ — $ 38,976 $ 38,976
Construction and land/lots
Risk rating:
Pass 4,244 12,133 2,357 956 — 3,558 42,267 $ 65,515
Special mention — — — — — — — —
Substandard — — — 96 — 416 — 512
Doubtful — — — — — — — —
Loss — — — — — — — —
Total construction and land/lots $ 4,244 $ 12,133 $ 2,357 $ 1,052 $ — $ 3,974 $ 42,267 $ 66,027
Indirect auto finance
Risk rating:
Pass 42,128 27,134 16,224 18,853 7,561 2,061 — $ 113,961
Special mention — — — — — — — —
Substandard 29 415 195 273 143 75 — 1,130
Doubtful — — — — — — — —
Loss 2 — — — — — — 2
Total indirect auto finance $ 42,159 $ 27,549 $ 16,419 $ 19,126 $ 7,704 $ 2,136 $ — $ 115,093
Consumer loans
Risk rating:
Pass 1,344 1,019 5,204 252 90 91 288 $ 8,288
Special mention — — — 14 — — — 14
Substandard — 3 19 11 4 10 11 58
Doubtful — — — — — — — —
Loss — 1 1 — — — — 2
Total consumer loans $ 1,344 $ 1,023 $ 5,224 $ 277 $ 94 $ 101 $ 299 $ 8,362
Total retail consumer loans
Risk rating:
Pass $ 123,206 $ 93,738 $ 72,037 $ 60,739 $ 45,728 $ 158,710 $ 199,471 $ 753,629
Special mention — — — 14 27 1,096 — 1,137
Substandard 275 1,399 373 596 271 6,473 569 9,956
Doubtful — — — — — 191 — 191
Loss 2 1 1 — — 315 — 319
Total retail consumer loans $ 123,483 $ 95,138 $ 72,411 $ 61,349 $ 46,026 $ 166,785 $ 200,040 $ 765,232


	Term Loans By Origination Fiscal Year
June 30, 2021	2021		2020		2019		2018		2017		Prior		Revolving		Total
One-to-four family
Risk rating:
Pass	$	72,723	$	52,987	$	46,958	$	40,461	$	37,361	$	143,531	$	4,345	$	398,366
Special mention	—		—		—		—		27		1,084		—		1,111
Substandard	246		981		—		216		86		5,037		—		6,566
Doubtful	—		—		—		—		—		191		—		191
Loss	—		—		—		—		—		315		—		315
Total one-to-four family	$	72,969	$	53,968	$	46,958	$	40,677	$	37,474	$	150,158	$	4,345	$	406,549

HELOCs - originated
Risk rating:
Pass	2,767		465		1,294		217		716		9,469		114,048		$	128,976
Special mention	—		—		—		—		—		12		—		12
Substandard	—		—		159		—		38		935		105		1,237
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total HELOCs - originated	$	2,767	$	465	$	1,453	$	217	$	754	$	10,416	$	114,153	$	130,225

HELOCs - purchased
Risk rating:
Pass	—		—		—		—		—		—		38,523		$	38,523
Special mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		453		453
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total HELOCs - purchased	$	—	$	—	$	—	$	—	$	—	$	—	$	38,976	$	38,976

Construction and land/lots
Risk rating:
Pass	4,244		12,133		2,357		956		—		3,558		42,267		$	65,515
Special mention	—		—		—		—		—		—		—		—
Substandard	—		—		—		96		—		416		—		512
Doubtful	—		—		—		—		—		—		—		—
Loss	—		—		—		—		—		—		—		—
Total construction and land/lots	$	4,244	$	12,133	$	2,357	$	1,052	$	—	$	3,974	$	42,267	$	66,027

Indirect auto finance
Risk rating:
Pass	42,128		27,134		16,224		18,853		7,561		2,061		—		$	113,961
Special mention	—		—		—		—		—		—		—		—
Substandard	29		415		195		273		143		75		—		1,130
Doubtful	—		—		—		—		—		—		—		—
Loss	2		—		—		—		—		—		—		2
Total indirect auto finance	$	42,159	$	27,549	$	16,419	$	19,126	$	7,704	$	2,136	$	—	$	115,093

Consumer
Risk rating:
Pass	1,344		1,019		5,204		252		90		91		288		$	8,288
Special mention	—		—		—		14		—		—		—		14
Substandard	—		3		19		11		4		10		11		58
Doubtful	—		—		—		—		—		—		—		—
Loss	—		1		1		—		—		—		—		2
Total consumer	$	1,344	$	1,023	$	5,224	$	277	$	94	$	101	$	299	$	8,362

Total retail consumer loans
Risk rating:
Pass	$	123,206	$	93,738	$	72,037	$	60,739	$	45,728	$	158,710	$	199,471	$	753,629
Special mention	—		—		—		14		27		1,096		—		1,137
Substandard	275		1,399		373		596		271		6,473		569		9,956
Doubtful	—		—		—		—		—		191		—		191
Loss	2		1		1		—		—		315		—		319
Total retail consumer loans	$	123,483	$	95,138	$	72,411	$	61,349	$	46,026	$	166,785	$	200,040	$	765,232

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

The following tables present aging analysis of past due loans (includes nonaccrual loans) by segment and class for the periods indicated below:


		Past Due								Total			Past Due								Total
		30-89 Days		90 Days+		Total		Current		Loans			30-89 Days		90 Days+		Total		Current		Loans
September 30, 2021
December 31, 2021												December 31, 2021
Commercial loans:	Commercial loans:											Commercial loans:
Commercial real estate	Commercial real estate	$	—	$	114	$	114	$	1,132,650	$	1,132,764	Commercial real estate	$	56	$	242	$	298	$	1,113,032	$	1,113,330
Construction and development	Construction and development	216		37		253		187,647		187,900		Construction and development	—		253		253		226,186		226,439
Commercial and industrial	Commercial and industrial	67		562		629		152,983		153,612		Commercial and industrial	345		560		905		161,491		162,396
Equipment finance	Equipment finance	52		256		308		341,687		341,995		Equipment finance	90		93		183		366,825		367,008
Municipal finance	Municipal finance	405		—		405		141,695		142,100		Municipal finance	—		—		—		131,078		131,078
PPP loans	PPP loans	—		—		—		28,762		28,762		PPP loans	20		—		20		19,024		19,044
Retail consumer loans:	Retail consumer loans:											Retail consumer loans:
One-to-four family	One-to-four family	1,159		1,227		2,386		382,515		384,901		One-to-four family	1,007		1,493		2,500		354,350		356,850
HELOCs - originated	HELOCs - originated	65		317		382		129,409		129,791		HELOCs - originated	86		272		358		127,831		128,189
HELOCs - purchased	HELOCs - purchased	200		—		200		33,743		33,943		HELOCs - purchased	346		—		346		30,449		30,795
Construction and land/lots	Construction and land/lots	126		22		148		69,687		69,835		Construction and land/lots	123		22		145		69,108		69,253
Indirect auto finance	Indirect auto finance	170		139		309		105,875		106,184		Indirect auto finance	346		110		456		84,125		84,581
Consumer	Consumer	425		43		468		7,387		7,855		Consumer	337		41		378		6,731		7,109
Total loans	Total loans	$	2,885	$	2,717	$	5,602	$	2,714,040	$	2,719,642	Total loans	$	2,756	$	3,086	$	5,842	$	2,690,230	$	2,696,072


	Past Due								Total
	30-89 Days		90 Days+		Total		Current		Loans
June 30, 2021
Commercial loans:
Commercial real estate	$	396	$	1,680	$	2,076	$	1,140,200	$	1,142,276
Construction and development	—		37		37		179,390		179,427
Commercial and industrial	634		19		653		140,688		141,341
Equipment finance	—		347		347		317,573		317,920
Municipal finance	—		—		—		140,421		140,421
PPP loans	—		—		—		46,650		46,650
Retail consumer loans:
One-to-four family	1,112		1,124		2,236		404,313		406,549
HELOCs - originated	290		186		476		129,749		130,225
HELOCs - purchased	198		79		277		38,699		38,976
Construction and land/lots	6		35		41		65,986		66,027
Indirect auto finance	299		259		558		114,535		115,093
Consumer	378		36		414		7,948		8,362
Total loans	$	3,313	$	3,802	$	7,115	$	2,726,152	$	2,733,267

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 ~~three~~six months ended ~~September 30,~~December 31, 2021.


		September 30, 2021		June 30, 2021		90 Days + & still accruing as of September 30, 2021		Nonaccrual with no allowance as of September 30, 2021		Interest income recognized			December 31, 2021		June 30, 2021		90 Days + & still accruing as of December 31, 2021		Nonaccrual with no allowance as of December 31, 2021		Interest income recognized
Commercial loans:	Commercial loans:											Commercial loans:
Commercial real estate	Commercial real estate	$	1,576	$	7,015	$	—	$	—	$	12	Commercial real estate	$	1,244	$	7,015	$	—	$	—	$	24
Construction and development	Construction and development	388		482		—		—		2		Construction and development	355		482		—		—		4
Commercial and industrial	Commercial and industrial	1,488		49		—		418		12		Commercial and industrial	923		49		—		67		17
Equipment finance	Equipment finance	334		630		—		255		—		Equipment finance	328		630		—		—		1
Municipal finance												Municipal finance	38		—		—		—		2

Retail consumer loans:	Retail consumer loans:											Retail consumer loans:
One-to-four family	One-to-four family	1,710		2,625		—		—		11		One-to-four family	2,127		2,625		—		540		27
HELOCs - originated	HELOCs - originated	445		476		—		—		2		HELOCs - originated	352		476		—		—		3
HELOCs - purchased	HELOCs - purchased	453		453		—		—		8		HELOCs - purchased	452		453		—		359		11
Construction and land/lots	Construction and land/lots	22		22		—		—		—		Construction and land/lots	22		22		—		—		—
Indirect auto finance	Indirect auto finance	274		438		—		—		2		Indirect auto finance	272		438		—		—		5
Consumer	Consumer	48		416		—		—		—		Consumer	45		416		—		—		2

Total loans	Total loans	$	6,738	$	12,606	$	—	$	673	$	49	Total loans	$	6,158	$	12,606	$	—	$	966	$	96

The decrease in the nonaccrual balance in the above schedule, compared to June 30, 2021, is mainly due to the payoff of 2 commercial real estate loan relationships totaling $5.1 million.

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.

The ~~Company’s loans~~above table excludes $11,048 and $11,088 of TDRs that were performing under ~~the~~their restructured payment terms as of ~~TDRs that were excluded from nonaccruing loans above at the dates~~

~~indicated follows:~~

September 30, 2021 June 30, 2021
Performing TDRs $ 11,341 $ 11,088

December 31, 2021 and June 30, 2021, respectively.

The following table presents a breakdown of the provision (benefit) for credit losses included in our Consolidated Statements of Income:


			Three Months Ended						Three Months Ended				Six Months Ended
		September 30,				December 31,					December 31,
				2021			2020				2021		2020		2021		2020
Provision (benefit) for credit losses:	Provision (benefit) for credit losses:									Provision (benefit) for credit losses:
Loans	Loans			$	(1,335)		$	950		Loans	$	(2,440)	$	(3,350)	$	(3,775)	$	(2,400)
Off-balance-sheet credit exposure	Off-balance-sheet credit exposure			(125)			—			Off-balance-sheet credit exposure	(110)		140		(235)		140

Commercial paper										Commercial paper	50		180		50		180
Total provision (benefit) for credit losses	Total provision (benefit) for credit losses			$	(1,460)		$	950		Total provision (benefit) for credit losses	$	(2,500)	$	(3,030)	$	(3,960)	$	(2,080)

The following tables present analysis of the ACL on loans by segment for the periods indicated below:


		Three Months Ended					Three Months Ended								Six Months Ended
		September 30, 2021					December 31, 2021								December 31, 2021
			Commercial		Retail Consumer			Total			Commercial		Retail Consumer		Total		Commercial		Retail Consumer		Total
Balance at beginning of period	Balance at beginning of period		$	24,746	$	10,722		$	35,468	Balance at beginning of period	$	24,204	$	10,202	$	34,406	$	24,746	$	10,722	$	35,468

Benefit for credit losses	Benefit for credit losses		(623)		(712)			(1,335)		Benefit for credit losses	(140)		(2,300)		(2,440)		(763)		(3,012)		(3,775)
Charge-offs	Charge-offs		(619)		(90)			(709)		Charge-offs	(1,131)		(16)		(1,147)		(1,750)		(106)		(1,856)
Recoveries	Recoveries		700		282			982		Recoveries	35		79		114		735		361		1,096
Net recoveries			81		192			273
Net (charge-offs) recoveries										Net (charge-offs) recoveries	(1,096)		63		(1,033)		(1,015)		255		(760)
Balance at end of period	Balance at end of period		$	24,204	$	10,202		$	34,406	Balance at end of period	$	22,968	$	7,965	$	30,933	$	22,968	$	7,965	$	30,933

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

Three Months Ended
September 30, 2020
Commercial Retail
Consumer Total
Balance at beginning of period $ 21,116 $ 6,956 $ 28,072
Impact of adoption ASU 2016-13 4,073 10,736 14,809
Provision for credit losses 292 658 950
Charge-offs (1,095) (682) (1,777)
Recoveries 813 265 1,078
Net charge-offs (282) (417) (699)
Balance at end of period $ 25,199 $ 17,933 43,132


	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	—		—		—		4,073		10,736		14,809
Provision (benefit) for credit losses	(292)		(3,058)		(3,350)		—		(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) recoveries	(8)		70		62		(290)		(347)		(637)
Balance at end of period	$	24,899	$	14,945	39,844		$	24,899	$	14,945	$	39,844

The following tables present ending balances of loans and the related ACL, by segment and class for the periods indicated below:


		Allowance for Credit Losses						Total Loans Receivable							Allowance for Credit Losses						Total Loans Receivable
		Loans Individually Evaluated		Loans Collectively Evaluated		Total		Loans Individually Evaluated		Loans Collectively Evaluated		Total			Loans Individually Evaluated		Loans Collectively Evaluated		Total		Loans Individually Evaluated		Loans Collectively Evaluated		Total
September 30, 2021
December 31, 2021														December 31, 2021
Commercial loans:	Commercial loans:													Commercial loans:
Commercial real estate	Commercial real estate	$	9	$	12,209	$	12,218	$	299	$	1,132,465	$	1,132,764	Commercial real estate	$	2	$	11,065	$	11,067	$	580	$	1,112,750	$	1,113,330
Construction and development	Construction and development	—		1,776		1,776		—		187,900		187,900		Construction and development	—		1,684		1,684		—		226,439		226,439
Commercial and industrial	Commercial and industrial	525		2,682		3,207		2,048		151,564		153,612		Commercial and industrial	674		2,566		3,240		2,172		160,224		162,396
Equipment finance	Equipment finance	—		6,714		6,714		255		341,740		341,995		Equipment finance	—		6,520		6,520		—		367,008		367,008
Municipal finance	Municipal finance	—		289		289		—		142,100		142,100		Municipal finance	—		457		457		—		131,078		131,078
PPP loans	PPP loans	—		—		—		—		28,762		28,762		PPP loans	—		—		—		—		19,044		19,044
Retail consumer loans:	Retail consumer loans:													Retail consumer loans:
One-to-four family	One-to-four family	3		5,018		5,021		1,969		382,932		384,901		One-to-four family	2		3,632		3,634		2,500		354,350		356,850
HELOCs - originated	HELOCs - originated	—		1,430		1,430		—		129,791		129,791		HELOCs - originated	—		1,272		1,272		—		128,189		128,189
HELOCs - purchased	HELOCs - purchased	—		374		374		—		33,943		33,943		HELOCs - purchased	—		306		306		—		30,795		30,795
Construction and land/lots	Construction and land/lots	—		776		776		—		69,835		69,835		Construction and land/lots	—		705		705		—		69,253		69,253
Indirect auto finance	Indirect auto finance	—		2,444		2,444		—		106,184		106,184		Indirect auto finance	—		1,929		1,929		—		84,581		84,581
Consumer	Consumer	—		157		157		—		7,855		7,855		Consumer	—		119		119		—		7,109		7,109
Total	Total	$	537	$	33,869	$	34,406	$	4,571	$	2,715,071	$	2,719,642	Total	$	678	$	30,255	$	30,933	$	5,252	$	2,690,820	$	2,696,072

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)


	Allowance for Loan Losses						Total Loans Receivable
	Loans Individually Evaluated		Loans Collectively Evaluated		Total		Loans Individually Evaluated		Loans Collectively Evaluated		Total
June 30, 2021
Commercial loans:
Commercial real estate	$	456	$	12,826	$	13,282	$	5,729	$	1,136,547	$	1,142,276
Construction and development	—		1,801		1,801		80		179,347		179,427
Commercial and industrial	9		2,583		2,592		760		140,581		141,341
Equipment finance	—		6,537		6,537		275		317,645		317,920
Municipal finance	—		534		534		—		140,421		140,421
PPP loans	—		—		—		—		46,650		46,650
Retail consumer loans:
One-to-four family	2		5,407		5,409		1,977		404,572		406,549
HELOCs - originated	—		1,512		1,512		—		130,225		130,225
HELOCs - purchased	—		452		452		—		38,976		38,976
Construction and land/lots	—		812		812		—		66,027		66,027
Indirect auto finance	—		2,367		2,367		—		115,093		115,093
Consumer	—		170		170		—		8,362		8,362
Total	$	467	$	35,001	$	35,468	$	8,821	$	2,724,446	$	2,733,267

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 tables provide 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 for the periods indicated below:


		Type of Collateral and Extent to Which Collateral Secures Financial Assets										Type of Collateral and Extent to Which Collateral Secures Financial Assets
September 30, 2021		Residential Property		Investment Property		Commercial Property		Business Assets		Financial Assets Not Considered Collateral Dependent			Total
December 31, 2021															December 31, 2021	Residential Property		Investment Property		Commercial Property		Business Assets		Financial Assets Not Considered Collateral Dependent		Total

Commercial loans:	Commercial loans:														Commercial loans:
Commercial real estate	Commercial real estate	$	—	$	—	$	299	$	—	$	1,132,465		$	1,132,764	Commercial real estate	$	—	$	—	$	578	$	—	$	1,112,752	$	1,113,330
Construction and development	Construction and development	—		—		—		—		187,900			187,900		Construction and development	—		—		—		—		226,439		226,439
Commercial and industrial	Commercial and industrial	—		—		—		494		153,118			153,612		Commercial and industrial	—		—		—		650		161,746		162,396
Equipment finance	Equipment finance	—		—		—		—		341,995			341,995		Equipment finance	—		—		—		—		367,008		367,008
Municipal finance	Municipal finance	—		—		—		—		142,100			142,100		Municipal finance	—		—		—		—		131,078		131,078
PPP loans	PPP loans	—		—		—		—		28,762			28,762		PPP loans	—		—		—		—		19,044		19,044
Retail consumer loans:	Retail consumer loans:														Retail consumer loans:
One-to-four family	One-to-four family	799		—		—		—		384,102			384,901		One-to-four family	1,335		—		—		—		355,515		356,850
HELOCs - originated	HELOCs - originated	—		—		—		—		129,791			129,791		HELOCs - originated	—		—		—		—		128,189		128,189
HELOCs - purchased	HELOCs - purchased	—		—		—		—		33,943			33,943		HELOCs - purchased	—		—		—		—		30,795		30,795
Construction and land/lots	Construction and land/lots	—		—		—		—		69,835			69,835		Construction and land/lots	—		—		—		—		69,253		69,253
Indirect auto finance	Indirect auto finance	—		—		—		—		106,184			106,184		Indirect auto finance	—		—		—		—		84,581		84,581
Consumer	Consumer	—		—		—		—		7,855			7,855		Consumer	—		—		—		—		7,109		7,109
Total	Total	$	799	$	—	$	299	$	494	$	2,718,050		$	2,719,642	Total	$	1,335	$	—	$	578	$	650	$	2,693,509	$	2,696,072
Total Collateral Value	Total Collateral Value	$	1,160	$	—	$	288	$	—						Total Collateral Value	$	1,825	$	—	$	1,044	$	—

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)


	Type of Collateral and Extent to Which Collateral Secures Financial Assets
June 30, 2021	Residential Property		Investment Property		Commercial Property		Business Assets		Financial Assets Not Considered Collateral Dependent		Total

Commercial loans:
Commercial real estate	$	—	$	3,421	$	2,308	$	—	$	1,136,547	$	1,142,276
Construction and development	—		80		—		—		179,347		179,427
Commercial and industrial	—		—		—		25		141,316		141,341
Equipment finance	—		—		—		—		317,920		317,920
Municipal finance	—		—		—		—		140,421		140,421
PPP loans	—		—		—		—		46,650		46,650
Retail consumer loans:
One-to-four family	807		—		—		—		405,742		406,549
HELOCs - originated	—		—		—		—		130,225		130,225
HELOCs - purchased	—		—		—		—		38,976		38,976
Construction and land/lots	—		—		—		—		66,027		66,027
Indirect auto finance	—		—		—		—		115,093		115,093
Consumer	—		—		—		—		8,362		8,362
Total	$	807	$	3,501	$	2,308	$	25	$	2,726,626	$	2,733,267
Total Collateral Value	$	1,160	$	3,602	$	2,723	$	26

The following table presents a breakdown of the types of concessions made on TDRs by loan class for the period indicated below:

Three Months Ended September 30,
2021 2020
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
Other TDRs:
Commercial:
Commercial and industrial — — — 1 4,407 3,800
Retail consumer:
HELOCs - originated 1 18 18 — — —
Indirect auto finance 5 84 83 6 105 78
Total 6 $ 102 $ 101 7 $ 4,512 $ 3,878



	Three Months Ended December 31,
	2021					2020
	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


















Other TDRs:





Retail consumer:
One-to-four family	3	215		212		1	19		16
HELOCs - originated	1	51		51		—	—		—
Construction and land/lots	—	—		—		1	225		223
Indirect auto finance	—	—		—		3	45		43

Total	4	$	266	$	263	5	$	289	$	282


	Six Months Ended December 31,
	2021					2020
	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


















Other TDRs:
Commercial:
Commercial real estate	—	—		—		1	4,408		3,800


Retail consumer:
One-to-four family	3	215		212		1	19		16
HELOCs - originated	2	68		70		—	—		—
Construction and land/lots	—	—		—		1	225		223
Indirect auto finance	5	84		80		9	141		109


Total	10	$	367	$	362	12	$	4,793	$	4,148

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

The following table presents loans that were modified as TDRs within the previous 12 months and for which there was a payment default during the periods indicated below:


											Three Months Ended December 31,
		Three Months Ended September 30, 2021		Three Months Ended September 30, 2020					2021			2020
			Number of Loans	Recorded Investment		Number of Loans	Recorded Investment				Number of Loans	Recorded Investment		Number of Loans	Recorded Investment

Other TDRs:	Other TDRs:									Other TDRs:
Retail consumer:	Retail consumer:									Retail consumer:

Indirect auto finance	Indirect auto finance		2	44		1	11			Indirect auto finance	—	$	—	1	$	1

Total	Total		2	$	44	—	$	11		Total	—	$	—	1	$	1


	Six Months Ended December 31,
	2021			2020
	Number of Loans	Recorded Investment		Number of Loans	Recorded Investment








Other TDRs:
Retail consumer:


Indirect auto finance	2	44		2	$	12




Total	2	$	44	2	$	12

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)~~

In determining the ACL, management considers TDRs for all loan classes, and the subsequent nonperformance in accordance with their modified terms, by measuring a 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 on off-balance-sheet credit exposures, including unfunded loan commitments, which is included in other liabilities on the consolidated balance sheet. The reserve for credit losses on off-balance-sheet credit exposures is adjusted as a provision for credit losses in the consolidated statement 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 ~~September 30,~~December 31, 2021, the ~~liability~~allowance for credit losses on off-balance-sheet credit exposures included in other liabilities was ~~$2,198.~~$2,088.

Modifications in Response to COVID-19

Beginning 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~~were not considered ~~TDRs.~~TDRs; however, the relief offered by the CARES Act ended December 31, 2021.

The Bank ~~is offering~~offered payment and financial relief programs for borrowers impacted by COVID-19. These programs ~~include~~included loan payment deferrals for up to 90 days (which ~~can~~could be renewed for another 90 days under certain circumstances), waived late fees, and suspension of foreclosure proceedings and repossessions. Since March 2020, 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.

As of ~~September 30,~~December 31, 2021, the Company had ~~$1,003~~$652 in loans with full principal and interest payment deferrals related to COVID-19 compared to $107 at June 30, 2021. Substantially all loans placed on full payment deferral during the pandemic have come out of deferral and borrowers are either making regular loan payments or interest-only ~~payments through the end of calendar year 2021.~~payments. As of ~~September 30,~~December 31, 2021, the Company had ~~$67,810~~$15,604 in commercial loan deferrals on interest-only payments compared to $78,850 at June 30, 2021.

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

7. Net Income per Share

The following is a reconciliation of the numerator and denominator of basic and diluted net income per share of common stock as of the dates indicated:


		Three Months Ended September 30,			Three Months Ended December 31,						Six Months Ended December 31,
			2021			2020			2021		2020		2021		2020
Numerator:	Numerator:							Numerator:
Net income	Net income		$	10,527		$	5,753	Net income	$	11,078	$	9,461	$	21,605	$	15,214
Allocation of earnings to participating securities	Allocation of earnings to participating securities		(92)			(50)		Allocation of earnings to participating securities	(94)		(77)		(182)		(124)
Numerator for basic EPS - Net income available to common stockholders	Numerator for basic EPS - Net income available to common stockholders		$	10,435		$	5,703	Numerator for basic EPS - Net income available to common stockholders	$	10,984	$	9,384	$	21,423	$	15,090
Effect of dilutive securities:	Effect of dilutive securities:							Effect of dilutive securities:
Dilutive effect to participating securities			2			6
Dilutive effect of participating securities								Dilutive effect of participating securities	2		1		4		2
Numerator for diluted EPS	Numerator for diluted EPS		$	10,437		$	5,709	Numerator for diluted EPS	$	10,986	$	9,385	$	21,427	$	15,092
Denominator:	Denominator:							Denominator:
Weighted-average common shares outstanding - basic	Weighted-average common shares outstanding - basic		15,761,247			16,230,990		Weighted-average common shares outstanding - basic	15,632,283		16,202,844		15,696,765		16,216,917
Effect of dilutive shares			385,364			238,252
Dilutive effect of assumed exercises of stock options								Dilutive effect of assumed exercises of stock options	357,323		360,515		360,842		297,914
Weighted-average common shares outstanding - diluted	Weighted-average common shares outstanding - diluted		16,146,611			16,469,242		Weighted-average common shares outstanding - diluted	15,989,606		16,563,359		16,057,607		16,514,831
Net income per share - basic	Net income per share - basic		$	0.66		$	0.35	Net income per share - basic	$	0.70	$	0.58	$	1.36	$	0.93
Net income per share - diluted	Net income per share - diluted		$	0.65		$	0.35	Net income per share - diluted	$	0.68	$	0.57	$	1.33	$	0.92

Potential dilutive shares are excluded from the computation of earnings per share if their effect is anti-dilutive. There were ~~446,250~~41,000 and 56,000 stock options that were anti-dilutive for the three and six months ended ~~September 30,~~December 31, 2021, respectively. There were ~~573,900~~512,200 and 547,200 stock options that were anti-dilutive for the three and six months ended ~~September 30,~~December 31, 2020, respectively.

8. 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 plan would be issued out of authorized but unissued shares, some or all of which may be repurchased shares. The Company repurchased ~~all 846,400~~a number of shares on the open market ~~for issuance~~sufficient to cover awards of restricted stock and restricted stock units available to be granted under the 2013 Omnibus Incentive Plan, for $13,297, at an average cost of $15.71 per share during the year ended June 30, 2013.

The table below presents share-based compensation expense and the estimated related tax benefit for stock options and restricted stock for the three and six months ended ~~September 30,~~December 31, 2021 and 2020, respectively:


		Three Months Ended September 30,			Three Months Ended December 31,						Six Months Ended December 31,
			2021			2020			2021		2020		2021		2020
Share-based compensation expense	Share-based compensation expense		$	415		$	506	Share-based compensation expense	$	485	$	454	$	900	$	960
Tax benefit	Tax benefit		$	98		$	119	Tax benefit	114		107		212		226

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

The table below presents stock option activity and related ~~information:~~information for the six months ended December 31, 2021 and 2020:

Options Weighted-
Average
Exercise
Price Remaining
Contractual
Life
(Years) Aggregate
Intrinsic
Value
Options outstanding at June 30, 2020 1,615,500 $ 18.12 4.4 $ 1,711
Forfeited 200 24.95 — —
Options outstanding at September 30, 2020 1,615,300 $ 18.12 4.1 $ —
Exercisable at September 30, 2020 1,303,000 $ 16.31 3.3 $ —
Non-vested at September 30, 2020 312,300 $ 25.68 7.6 $ —
Options outstanding at June 30, 2021 1,319,456 $ 19.07 3.9 $ 11,657
Exercised 46,200 15.16 — —
Forfeited 2,600 25.42 — —
Options outstanding at September 30, 2021 1,270,656 $ 19.19 3.7 $ 11,164
Exercisable at September 30, 2021 1,030,506 $ 17.75 2.9 $ 10,546
Non-vested at September 30, 2021 240,150 $ 25.41 7.3 $ 617


	Options	Weighted- Average Exercise Price		Remaining Contractual Life (Years)	Aggregate Intrinsic Value
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 outstanding at June 30, 2021	1,319,456	$	19.07	3.9	$	11,657


Exercised	347,800	14.50		—	—
Forfeited	18,600	23.06		—	—

Options outstanding at December 31, 2021	953,056	$	20.65	4.1	$	9,840
Exercisable at December 31, 2021	727,506	$	19.12	3.2	$	8,631
Non-vested at December 31, 2021	225,550	$	25.62	6.9	$	1,210

There were no options granted during the ~~three~~six months ended ~~September 30,~~December 31, 2021 and 2020.

At ~~September 30,~~December 31, 2021, the Company had ~~$1,083~~$894 of unrecognized compensation expense related to ~~240,150~~225,550 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 ~~1.4~~1.1 years at ~~September 30,~~December 31, 2021. At ~~September 30,~~December 31, 2020, the Company had ~~$1,535~~$1,297 of unrecognized compensation expense related to ~~312,300~~290,900 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 ~~1.5~~1.3 years at ~~September 30,~~December 31, 2020.

The table below presents restricted stock award activity and related information:


		Restricted Stock Awards	Weighted- Average Grant Date Fair Value		Aggregate Intrinsic Value			Restricted Stock Awards	Weighted- Average Grant Date Fair Value		Aggregate Intrinsic Value
Non-vested at June 30, 2020	Non-vested at June 30, 2020	144,046	$	25.89	$	2,305	Non-vested at June 30, 2020	144,046	$	25.89	$	2,305

Vested	Vested	2,600	25.37		—		Vested	2,600	25.37		—
Forfeited	Forfeited	200	24.95		—		Forfeited	7,650	25.65		—
Non-vested at September 30, 2020		141,246	$	25.90	$	1,918
Non-vested at December 31, 2020							Non-vested at December 31, 2020	133,796	$	25.91	$	2,584

Non-vested at June 30, 2021	Non-vested at June 30, 2021	151,575	$	25.06	$	4,229	Non-vested at June 30, 2021	151,575	$	25.06	$	4,229

Vested	Vested	8,918	26.93		—		Vested	8,918	26.93		—
Forfeited	Forfeited	3,000	26.31		—		Forfeited	9,400	24.57		—
Non-vested at September 30, 2021		139,657	$	25.00	$	3,908
Non-vested at December 31, 2021							Non-vested at December 31, 2021	133,257	$	25.06	$	4,128

The table above includes non-vested performance-based restricted stock units totaling 23,662 and ~~16,440~~15,565 at ~~September 30,~~December 31, 2021 and 2020, respectively. Each issuance of these stock units is scheduled to vest over 3.0 years assuming ~~certain performance metrics~~the applicable dilutive EPS goals are met. ~~In addition, the 8,918 vested shares reflected above includes a total of 7,118 performance-based restricted stock units which vested during the three months ended September 30, 2021.~~

At ~~September 30,~~December 31, 2021, unrecognized compensation expense was ~~$2,483~~$2,043 related to ~~139,657~~133,257 shares of restricted stock originally scheduled to vest over 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 ~~1.5~~1.3 years at ~~September 30,~~December 31, 2021. At ~~September 30,~~December 31, 2020, unrecognized compensation expense was ~~$2,715~~$2,250 related to ~~141,246~~133,796 shares of restricted stock originally scheduled to vest over 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 ~~1.6~~1.4 years at ~~September 30,~~December 31, 2020.

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

9. 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 ~~September 30,~~December 31, 2021 and June 30, 2021, respectively, loan commitments (excluding ~~$205,848~~$201,032 and $277,600 of undisbursed portions of construction loans) totaled ~~$83,616~~$78,875 and $123,463 of which ~~$12,636~~$22,199 and $45,270 were variable rate commitments and ~~$70,980~~$56,676 and $78,193 were fixed rate commitments. The fixed rate loans had interest rates ranging from ~~1.41%~~1.08% to ~~9.75%~~8.56% at ~~September 30,~~December 31, 2021 and 2.50% to 8.36% at June 30, 2021, 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 ~~$571,362~~$539,778 and $530,505 at ~~September 30,~~December 31, 2021 and June 30, 2021, 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, the 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 ~~September 30,~~December 31, 2021 or June 30, 2021.

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 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.

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 ~~September 30,~~December 31, 2021 and June 30, 2021 were ~~$9,671~~$9,496 and $8,681, respectively. There was no liability recorded for these letters of credit at ~~September 30,~~December 31, 2021 or June 30, 2021, respectively.

Litigation – From time to time, thethe 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

The Company utilizes fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. Debt 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 Company measures the fair value of loans receivable under the exit price notion. The fair value of nonperforming loans is based on the underlying value of the collateral.

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 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.

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

~~Following is a description~~The methods of ~~valuation methodologies used for assets recorded at fair value. The Company does not have any liabilities recorded at fair value.~~

~~Debt Securities Available for Sale~~

Debt 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 MBS and debentures issued by GSEs, municipal bonds, and corporate debt securities. The Company has no Level 3 securities.

~~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.

~~Individually Evaluated Loans~~

The Company does not record loans at fair value on a recurring basis. From time to time, however, a loan is individually evaluated and an allowance for credit loss is established. Loans for which it is expected that payment of principal and interest will not be made in accordance with the contractual terms of the loan agreement are 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 individually evaluated loans each quarter to determine if an allowance is necessary. Those individually evaluated loans not requiring an allowance represent loans for whichdetermining the fair value of assets and liabilities presented in this note are consistent with the ~~expected repayments or collateral exceed the recorded investments~~methodologies disclosed in ~~such loans.~~

Loans are considered collateral dependent if repayment is expected solely from the collateral. For these collateral dependent 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 partNote 20 of the quarterly review of individually 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. Individually 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 loans as a nonrecurring Level 3 in the fair value hierarchy.

~~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 3.2021 Form 10-K.

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:


		September 30, 2021									December 31, 2021
		Total		Level 1		Level 2		Level 3			Total		Level 1		Level 2		Level 3
U.S government agencies	U.S government agencies	$	19,101	$	—	$	19,101	$	—	U.S government agencies	$	18,933	$	—	$	18,933	$	—
Residential MBS of U.S. government agencies and GSEs		41,458		—		41,458		—
MBS, residential										MBS, residential	38,185		—		38,185		—
Municipal bonds	Municipal bonds	7,836		—		7,836		—		Municipal bonds	7,249		—		7,249		—
Corporate bonds	Corporate bonds	56,181		—		56,181		—		Corporate bonds	57,484		—		57,484		—

Total	Total	$	124,576	$	—	$	124,576	$	—	Total	$	121,851	$	—	$	121,851	$	—


		June 30, 2021									June 30, 2021
		Total		Level 1		Level 2		Level 3			Total		Level 1		Level 2		Level 3
U.S government agencies	U.S government agencies	$	19,073	$	—	$	19,073	$	—	U.S government agencies	$	19,073	$	—	$	19,073	$	—
Residential MBS of U.S. government agencies and GSEs		43,404		—		43,404		—
MBS, residential										MBS, residential	43,404		—		43,404		—
Municipal bonds	Municipal bonds	9,551		—		9,551		—		Municipal bonds	9,551		—		9,551		—
Corporate bonds	Corporate bonds	84,431		—		84,431		—		Corporate bonds	84,431		—		84,431		—

Total	Total	$	156,459	$	—	$	156,459	$	—	Total	$	156,459	$	—	$	156,459	$	—

There were no transfers between levels during the ~~three~~six months ended ~~September 30,~~December 31, 2021 and 2020.

The following table presents financial assets measured at fair value on a non-recurring basis at the dates indicated:


	December 31, 2021
	Total		Level 1		Level 2		Level 3
Collateral dependent loans:
Commercial real estate	$	288	$	—	$	—	$	288
Commercial and industrial	—		—		—		—
Total	$	288	$	—	$	—	$	288


	June 30, 2021
	Total		Level 1		Level 2		Level 3
Collateral dependent loans:
Commercial real estate	$	4,841	$	—	$	—	$	4,841
Equipment finance	275		—		—		275
Total	$	5,116	$	—	$	—	$	5,116

A loan is considered to be collateral dependent when, based on current information and events, the Company expects repayment of the financial assets to be provided substantially through the operation or sale of the collateral and the Company has determined that the borrower is experiencing financial difficulty as of the measurement date. For real estate loans, the fair value of the loan's collateral is determined by a third party appraisal, which is then adjusted for the estimated selling and closing costs related to liquidation of the collateral (typically ranging from 8% to 12% of the appraised value). For this asset class, the actual valuation methods (income, sales comparable, or cost) vary based on the status of the project or property. Additional discounts of 5% to 15% may be applied depending on the age of the appraisals. The unobservable inputs may vary depending on the individual asset with no one of the three methods being the predominant approach. For non-real estate loans, the fair value of the loan's collateral may be determined using an appraisal, net book value per the borrower's financial statements, or aging reports, adjusted or discounted based on management's historical knowledge, changes in market conditions from the time of the valuation, and management's expertise and knowledge of the customer and customer's business.

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

The ~~following table presents financial assets measured at fair value on a non-recurring basis at the dates indicated:~~

September 30, 2021
Total Level 1 Level 2 Level 3
Individually evaluated loans $ 4,034 $ — $ — $ 4,034

June 30, 2021
Total Level 1 Level 2 Level 3
Individually evaluated loans $ 8,354 $ — $ — $ 8,354

~~Quantitative information about Level 3 fair value measurements during the periods ended September 30, 2021 and June 30, 2021 is shown in the tables below:~~

Fair Value at September 30, 2021 Valuation
Techniques Unobservable
Input Range Weighted
Average
Nonrecurring measurements:
Individually evaluated loans $ 4,034 Discounted appraisals and discounted cash flows Collateral discounts: Discount spread:
6% - 100%
0%
13 %

Fair Value at June 30, 2021 Valuation
Techniques Unobservable
Input Range Weighted
Average
Nonrecurring measurements:
Individually evaluated loans $ 8,354 Discounted appraisals and discounted cash flows Collateral discounts: Discount spread:
0% - 52%
0% - 7%
6 %

~~The~~ stated carrying value and estimated fair value amounts of financial instruments as of ~~September 30,~~December 31, 2021 and June 30, 2021, are summarized below:


		September 30, 2021											December 31, 2021
		Carrying Value		Fair Value		Level 1		Level 2		Level 3			Carrying Value		Fair Value		Level 1		Level 2		Level 3
Assets:	Assets:											Assets:
Cash and cash equivalents	Cash and cash equivalents	$	42,573	$	42,573	$	42,573	$	—	$	—	Cash and cash equivalents	$	34,826	$	34,826	$	34,826	$	—	$	—
Commercial paper	Commercial paper	196,652		196,652		196,652		—		—		Commercial paper	254,157		254,157		254,157		—		—
Certificates of deposit in other banks	Certificates of deposit in other banks	35,495		35,495		—		35,495		—		Certificates of deposit in other banks	34,002		34,002		—		34,002		—
Debt securities available for sale	Debt securities available for sale	124,576		124,576		—		124,576		—		Debt securities available for sale	121,851		121,851		—		121,851		—
Loans held for sale	Loans held for sale	105,161		107,972		—		—		107,972		Loans held for sale	102,070		103,317		—		—		103,317
Loans, net	Loans, net	2,685,236		2,656,263		—		—		2,656,263		Loans, net	2,665,139		2,625,236		—		—		2,625,236
FHLB stock	FHLB stock	2,965		2,965		2,965		—		—		FHLB stock	2,965		N/A		N/A		N/A		N/A
FRB stock	FRB stock	7,395		7,395		7,395		—		—		FRB stock	7,403		N/A		N/A		N/A		N/A
SBIC investments	SBIC investments	10,531		10,531		—		—		10,531		SBIC investments	11,749		11,749		—		—		11,749
Accrued interest receivable	Accrued interest receivable	8,429		8,429		—		611		7,818		Accrued interest receivable	8,200		8,200		—		640		7,560
Liabilities:	Liabilities:											Liabilities:
Noninterest-bearing and NOW deposits		1,333,439		1,333,439		—		1,333,439		—
Noninterest-bearing and NOW accounts												Noninterest-bearing and NOW accounts	1,321,502		1,321,502		—		1,321,502		—
Money market accounts	Money market accounts	987,650		621,675		—		621,675		—		Money market accounts	1,010,901		1,010,901		—		1,010,901		—
Savings accounts	Savings accounts	220,614		220,614		—		220,614		—		Savings accounts	224,474		224,474		—		224,474		—
Certificates of deposit	Certificates of deposit	445,581		446,540		—		446,540		—		Certificates of deposit	441,814		441,568		—		441,568		—
Borrowings	Borrowings	40,000		40,000		—		40,000		—		Borrowings	48,000		47,998		—		47,998		—
Accrued interest payable	Accrued interest payable	50		50		—		50		—		Accrued interest payable	42		42		—		42		—

~~HOMETRUST BANCSHARES, INC. AND SUBSIDIARY~~

~~Notes to Consolidated Financial Statements~~

~~(Dollars in thousands, except per share data)~~


		June 30, 2021											June 30, 2021
		Carrying Value		Fair Value		Level 1		Level 2		Level 3			Carrying Value		Fair Value		Level 1		Level 2		Level 3
Assets:	Assets:											Assets:
Cash and cash equivalents	Cash and cash equivalents	$	50,990	$	50,990	$	50,990	$	—	$	—	Cash and cash equivalents	$	50,990	$	50,990	$	50,990	$	—	$	—
Commercial paper	Commercial paper	189,596		189,596		189,596		—		—		Commercial paper	189,596		189,596		189,596		—		—
Certificates of deposit in other banks	Certificates of deposit in other banks	40,122		40,122		—		40,122		—		Certificates of deposit in other banks	40,122		40,122		—		40,122		—
Debt securities available for sale	Debt securities available for sale	156,459		156,459		—		156,459		—		Debt securities available for sale	156,459		156,459		—		156,459		—
Loans held for sale	Loans held for sale	93,539		94,779		—		—		94,779		Loans held for sale	93,539		94,779		—		—		94,779
Loans, net	Loans, net	2,697,799		2,668,570		—		—		2,668,570		Loans, net	2,697,799		2,668,570		—		—		2,668,570
FHLB stock	FHLB stock	6,153		6,153		6,153		—		—		FHLB stock	6,153		N/A		N/A		N/A		N/A
FRB stock	FRB stock	7,386		7,386		7,386		—		—		FRB stock	7,386		N/A		N/A		N/A		N/A
SBIC investments	SBIC investments	10,171		10,171		—		—		10,171		SBIC investments	10,171		10,171		—		—		10,171
Accrued interest receivable	Accrued interest receivable	7,933		7,933		52		542		7,339		Accrued interest receivable	7,933		7,933		52		542		7,339
Liabilities:	Liabilities:											Liabilities:
Noninterest-bearing and NOW deposits		1,281,372		1,281,372		—		1,281,372		—
Noninterest-bearing and NOW accounts												Noninterest-bearing and NOW accounts	1,281,372		1,281,372		—		1,281,372		—
Money market accounts	Money market accounts	975,001		975,001		—		975,001		—		Money market accounts	975,001		975,001		—		975,001		—
Savings accounts	Savings accounts	226,391		226,391		—		226,391		—		Savings accounts	226,391		226,391		—		226,391		—
Certificates of deposit	Certificates of deposit	472,777		474,397		—		474,397		—		Certificates of deposit	472,777		474,397		—		474,397		—
Borrowings	Borrowings	115,000		115,000		—		115,000		—		Borrowings	115,000		115,000		—		115,000		—
Accrued interest payable	Accrued interest payable	52		52		—		52		—		Accrued interest payable	52		52		—		52		—

The Company had off-balance sheet financial commitments, which included approximately ~~$860,826~~$829,181 and ~~$931,568~~$940,249 of commitments to originate loans, undisbursed portions of interim construction loans, ~~and~~ unused lines of credit, and standby letters of credit at ~~September 30,~~December 31, 2021 and June 30, 2021, respectively (see "Note 9 – Commitments and Contingencies"). 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.~~

~~Certificates of deposit in other banks~~ ~~– The stated amounts approximate fair values.~~

~~Debt 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 stocks 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 as of September 30, 2021 and June 30, 2021. 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.~~

3029

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

~~Limitations~~ – Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company's financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Fair value estimates are based on existing on-and-off balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. For example, a significant asset not considered a financial asset is premises and equipment. In addition, tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the estimates.

11. Leases

As Lessee - Operating Leases

The 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 management's sole discretion. When it is reasonably certain that the Company will exercise its option to renew or extend the lease term, that option is included in estimating the value of the ROU and lease liability. ~~At September 30, 2021, there were no leases awaiting commencement.~~ The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. Most of the 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 the Company's Consolidated Balance ~~Sheets.~~Sheet. The Company recognizes lease expenses for these leases over the lease term.

The following table 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:	Supplemental Balance Sheet Information:	September 30, 2021			June 30, 2021			Supplemental Balance Sheet Information:	December 31, 2021			June 30, 2021
ROU assets	ROU assets	$	6,103		$	5,498		ROU assets	$	5,178		$	5,498

Lease liabilities	Lease liabilities	$	6,852		$	5,926		Lease liabilities	5,941			5,926

Weighted-average remaining lease terms (years)	Weighted-average remaining lease terms (years)	9.70			9.49			Weighted-average remaining lease terms (years)	10.49			9.49
Weighted-average discount rate	Weighted-average discount rate	3.15		%	3.18		%	Weighted-average discount rate	3.21		%	3.18		%

The following schedule summarizes aggregate future minimum lease payments under these operating leases at ~~September 30,~~December 31, 2021:


Fiscal year ending September 30:
Fiscal year ending June 30:				Fiscal year ending June 30:
Remaining 2022	Remaining 2022	$	1,100	Remaining 2022	$	592
2023	2023	1,479		2023	1,166
2024	2024	1,010		2024	854
2025	2025	630		2025	630
2026	2026	512		2026	512
Thereafter	Thereafter	3,218		Thereafter	3,216
Total of future minimum payments		$	7,949
Total undiscounted minimum lease payments				Total undiscounted minimum lease payments	6,970
Less: amount representing interest				Less: amount representing interest	(1,029)
Total lease liability				Total lease liability	$	5,941

The following table presents components of operating lease expense for the three and six months ended ~~September 30,~~December 31, 2021 and 2020:

Three Months Ended September 30,
2021 2020
Operating lease cost (included in occupancy expense) $ 484 $ 439
Sublease income (included in other, net noninterest income) (51) (61)
Total operating lease expense, net $ 433 $ 378


	Three Months Ended December 31,				Six Months Ended December 31,
	2021		2020		2021		2020
Operating lease cost (included in occupancy expense, net)	$	328	$	342	$	723	$	681
Variable lease cost (included in occupancy expense, net)	55		61		116		122
Sublease income (included in other, noninterest income)	(47)		(57)		(94)		(114)
Total operating lease expense, net	$	336	$	346	$	745	$	689

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 ~~September 30,~~December 31, 2021 and June 30, 2021 and is included in other assets. The corresponding lease liability totaled ~~$1,793~~$1,783 and $1,804 at ~~September 30,~~December 31, 2021 and June 30, 2021, respectively, and is included in other liabilities. For the three and six months ended ~~September 30,~~December 31, 2021 and ~~September 30,~~ 2020, interest expense on the lease liability totaled ~~$23~~$24 and ~~$24,~~$48, respectively. The finance lease has a maturity date of July 2028 and a discount rate of 5.18%.

3130

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

The following schedule summarizes aggregate future minimum lease payments under this finance lease obligation at ~~September 30,~~December 31, 2021:


Fiscal year ending September 30:
Fiscal year ending June 30:				Fiscal year ending June 30:
Remaining 2022	Remaining 2022	$	100	Remaining 2022	$	67
2023	2023	134		2023	134
2024	2024	145		2024	145
2025	2025	146		2025	146
2026	2026	146		2026	146
Thereafter	Thereafter	1,702		Thereafter	1,702
Total minimum lease payments		2,373
Total undiscounted minimum lease payments				Total undiscounted minimum lease payments	2,340
Less: amount representing interest	Less: amount representing interest	(580)		Less: amount representing interest	(557)
Present value of net minimum lease payments		$	1,793
Total lease liability				Total lease liability	$	1,783

Supplemental lease cash flow information for the ~~three~~six months ended ~~September 30,~~December 31, 2021 and 2020:


		Three Months Ended September 30,					Six Months Ended December 31,
		2021		2020			2021		2020
ROU assets - noncash additions (operating leases)	ROU assets - noncash additions (operating leases)	$	959	$	533	ROU assets - noncash additions (operating leases)	$	946	$	597

Cash paid for amounts included in the measurement of lease liabilities (operating leases)	Cash paid for amounts included in the measurement of lease liabilities (operating leases)	628		524		Cash paid for amounts included in the measurement of lease liabilities (operating leases)	797		1,055
Cash paid for amounts included in the measurement of lease liabilities (finance leases)	Cash paid for amounts included in the measurement of lease liabilities (finance leases)	33		33		Cash paid for amounts included in the measurement of lease liabilities (finance leases)	67		67

As Lessor - General

The Company leases equipment to commercial end users under operating and finance lease arrangements. The Company's equipment finance leases consist mainly of construction, transportation, medical, and manufacturing equipment. Many of its 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. The 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 1one to 5five 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. The net book value of leased assets totaled ~~$24,821~~$23,869 and $25,932 with a residual value of ~~$14,693~~$14,800 and $15,330 as of ~~September 30,~~December 31, 2021 and June 30, 2021, respectively.

The following table presents total equipment finance operating lease income and depreciation expense for the three and six months ended December 31, 2021 and 2020:


	Three Months Ended December 31,				Six Months Ended December 31,
	2021		2020		2021		2020
Operating lease income	$	1,718	$	1,349	$	3,258	$	2,675
Depreciation expense	1,497		1,413		2,882		2,954

The following schedule summarizes aggregate future minimum ~~operating~~ lease payments to be received at ~~September 30,~~December 31, 2021:


Fiscal year ending September 30:
Fiscal year ending June 30:				Fiscal year ending June 30:
Remaining 2022	Remaining 2022	$	4,734	Remaining 2022	$	3,022
2023	2023	4,671		2023	4,825
2024	2024	2,569		2024	2,732
2025	2025	722		2025	778
2026	2026	246		2026	246
Thereafter	Thereafter	13		Thereafter	13
Total of future minimum payments		$	12,955
Total of future minimum lease payments				Total of future minimum lease payments	$	11,616

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY

Notes to Consolidated Financial Statements

(Dollars in thousands, except per share data)

As Lessor - ~~Finance~~Direct Financing 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.~~segment of the loan portfolio. For the three months ended ~~September 30,~~December 31, 2021 and 2020, total interest income on equipment finance leases totaled ~~$759~~$753 and ~~$530,~~$570, respectively.

~~HOMETRUST BANCSHARES, INC. AND SUBSIDIARY~~

~~Notes to Consolidated Financial Statements~~

~~(Dollars in thousands, except per share data)~~

For the six months ended December 31, 2021 and 2020, total interest income on equipment finance leases totaled $1,512 and $1,099, respectively.

The ~~following table presents components~~lease receivable component of finance lease net investment included within equipment finance class of financing ~~receivables:~~receivables was $62.9 million and $63.3 million at December 31 and June 30, 2021, respectively.

September 30, 2021 June 30, 2021
Lease receivables $ 63,741 $ 63,279

The following schedule summarizes aggregate future minimum finance lease payments to be received at ~~September 30,~~December 31, 2021:


Fiscal year ending September 30:
Fiscal year ending June 30:				Fiscal year ending June 30:
Remaining 2022	Remaining 2022	$	14,928	Remaining 2022	$	9,609
2023	2023	19,076		2023	20,469
2024	2024	16,036		2024	17,393
2025	2025	10,862		2025	12,141
2026	2026	6,437		2026	7,546
Thereafter	Thereafter	2,791		Thereafter	3,437
Total minimum payments		70,130
Total undiscounted minimum lease payments				Total undiscounted minimum lease payments	70,595
Less: amount representing interest	Less: amount representing interest	(6,389)		Less: amount representing interest	(7,740)
Total		$	63,741
Total lease receivable				Total lease receivable	$	62,855

3332

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, but instead 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.

The factors that could result in material differentiation include, but are not limited to:

•the effect of the COVID-19 pandemic, including on our 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 credit losses and provision for credit 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 limited future of LIBOR, and the ~~potential~~expected 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;

•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 credit 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 credit 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 we may in the future acquire into our 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 2021 Form 10-K.

Many of the forward-looking statements are based upon management's beliefs and assumptions at the time they are made. We undertake 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" orand the "Company" refer to HomeTrust Bancshares, Inc. and its consolidated subsidiary, 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 the 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, we are 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 commercial real estate loans, construction and development loans, commercial and industrial loans, equipment finance leases, municipal leases, loans secured by first and second mortgages on one-to-four family residences including home equity loans, construction and land/lot loans, indirect automobile loans, and other consumer loans. We also originate one-to-four family loans, SBA loans, and HELOCs to sell to third parties. In addition, we invest in debt securities issued by United States Government agencies and GSEs, corporate bonds, commercial paper and certificates of deposit in other banks insured by the FDIC.

We offer 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 are 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 earn on our loans and investments, and interest expense, which is the interest that is 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 put in place to address its economic consequences are unknown, including the 150 basis point reduction in the targeted federal funds rate during 2020, until the pandemic subsides, we expect our net interest income and net interest margin to be adversely affected throughout fiscal 2022 and possibly longer.

A secondary source of income is noninterest income, which includes revenue we receive from providing products and services, including service charges and fees on deposit accounts, loan income and fees, lease income, gain on the sale of loans held for sale, and gains and losses from sales of debt securities.

An offset to net interest income is the provision for credit losses which is required to establish and maintain the ACL. All financial assets measured at amortized cost and off balance sheet credit exposures, including loans, investment securities and unfunded commitments are evaluated for credit losses. See "Note 1 – Summary of Significant Accounting Policies" in Item 1 of our 2021 Form 10-K for further discussion.

Our noninterest expenses consist primarily of salaries and employee benefits, occupancy expense, and computer services. 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.

Our geographic footprint includes seven markets obtained through numerous strategic acquisitions as well as two de novo commercial loan offices. Looking forward, we believe opportunities currently exist within our market areas to grow our franchise. While COVID-19 has dampened our growth activities, we believe as the local and global ~~economy returns~~economies return to normalcy itthe Company remains in a position to create ~~organic growth through marketing efforts.~~growth. We may also seek to expand our 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. We will continue to be disciplined as it pertains to future expansion focusing primarily on ~~organic~~ growth in our current market areas.

At ~~September 30,~~December 31, 2021, we ~~have~~had over 30 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, Knoxville, and Morristown) and Southwest Virginia (including the Roanoke Valley). During the quarter ended September 30, 2021, we closed nine branches located in North Carolina, Tennessee, and Virginia.

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.

The following ~~represent~~represents our critical accounting ~~policies:~~policy:

Allowance for Credit Losses, or ~~ACL.~~ACL, on Loans. The ACL reflects our estimate of credit losses that will result from the inability of our borrowers to make required loan payments. We ~~record~~charge off loans ~~charged off~~ against the ACL and subsequent recoveries, if any, increase the ACL when they are recognized. We use a systematic methodology to determine our 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. We consider the effects of past events, current conditions, and reasonable and supportable forecasts on the collectability of the loan portfolio. The estimate of our ACL involves a high degree of judgment; therefore, our process for determining expected credit losses may result in a range of expected credit losses. Our ACL recorded in the balance sheet reflects our best estimate within the range of expected credit losses. We recognize in net income the amount needed to adjust the ACL for management’s current estimate of expected credit losses. Our ACL is calculated using collectively evaluated and individually evaluated loans.

~~Goodwill and Intangibles.~~ We review goodwill for potential impairment on an annual basis during the fourth quarter, or more often if events or circumstances indicate there may be impairment. In testing goodwill for impairment, we have the option to assess either qualitative or quantitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of a reporting unit is less than its carrying amount. If we elect to perform a qualitative assessment and determine that an impairment is more likely than not, we are then required to perform a quantitative impairment test, otherwise no further analysis is required. Under the quantitative impairment test, the evaluation involves comparing the current fair value of each reporting unit to its carrying value, including goodwill. If the estimated fair value of a reporting unit exceeds its carrying value, goodwill is considered not to be impaired. If the carrying value exceeds estimated fair value an impairment charge is recognized for the difference, but limited by the amount of goodwill allocated to that reporting unit. Other identifiable intangible assets are evaluated for impairment if events or changes in circumstances indicate a possible impairment.

~~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, stockholders’ equity, or cash flows as previously reported.

~~Recent Accounting Pronouncements.~~ See "Note 2 – Recent Accounting Pronouncements" in this Quarterly Report on Form 10-Q 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 ACL to total loans excluding PPP loans. Management has presented the non-GAAP financial measures in this discussion and analysis because it believes including these items provides useful and comparative information to assess trends in our core operations while facilitating the comparison of the quality and composition of our earnings over time and in comparison to our 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 have 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 Ended September 30, 2021 and 2020”~~Operations" for more detailed information about our financial ~~performance.~~performance for the three and six months ended December 31, 2021 and 2020.

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

As of
(Dollars in thousands, except per share data) September 30, June 30, September 30,
2021 2021 2020
Total stockholders' equity $ 396,511 $ 396,519 $ 400,351
Less: goodwill, core deposit intangibles, net of taxes 25,830 25,902 26,285
Tangible book value (1)
$ 370,681 $ 370,617 $ 374,066
Common shares outstanding 16,307,658 16,636,483 17,020,724
Tangible book value per share $ 22.73 $ 22.28 $ 21.98
Book value per share $ 24.31 $ 23.83 $ 23.52

~~(1) Tangible book value is equal to total stockholders' equity less goodwill and core deposit intangibles, net of related deferred tax liabilities.~~


	As of
(Dollars in thousands, except per share data)	December 31,		September 30,		December 31,
	2021		2021		2020
Total stockholders' equity	$	401,746	$	396,511	$	404,724
Less: goodwill, core deposit intangibles, net of taxes	25,780		25,830		26,130
Tangible book value	$	375,966	$	370,681	$	378,594
Common shares outstanding	16,303,461		16,307,658		16,791,027
Tangible book value per share	$	23.06	$	22.73	$	22.55
Book value per share	$	24.64	$	24.31	$	24.10

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

As of
(Dollars in thousands) September 30, June 30, September 30,
2021 2021 2020
Tangible equity (1)
$ 370,681 $ 370,617 $ 374,066
Total assets 3,481,360 3,524,723 3,674,034
Less: goodwill, core deposit intangibles, net of taxes 25,830 25,902 26,285
Total tangible assets(2)
$ 3,455,530 $ 3,498,821 $ 3,647,749
Tangible equity to tangible assets 10.73 % 10.59 % 10.25 %


	As of
(Dollars in thousands)	December 31,			September 30,			December 31,
	2021			2021			2020
Tangible equity (1)	$	375,966		$	370,681		$	378,594
Total assets	3,502,819			3,481,360			3,679,971
Less: goodwill, core deposit intangibles, net of taxes	25,780			25,830			26,130
Total tangible assets	$	3,477,039		$	3,455,530		$	3,653,841
Tangible equity to tangible assets	10.81		%	10.73		%	10.36		%

(1) Tangible equity (or tangible book value) is equal to total stockholders' equity ~~less goodwill and core deposit intangibles, net of related deferred tax liabilities.~~

~~(2) Total tangible assets is equal to total assets~~ less goodwill and core deposit intangibles, net of related deferred tax liabilities.

Set forth below is a reconciliation to GAAP of the ACL to total loans and the ~~allowance for credit losses~~ACL as adjusted to exclude PPP loans:

(Dollars in thousands) September 30, June 30, September 30,
2021 2021 2020
Total loans receivable (GAAP) $ 2,719,642 $ 2,733,267 $ 2,769,396
Less: PPP loans (1)
28,762 46,650 80,816
Adjusted loans (non-GAAP) $ 2,690,880 $ 2,686,617 $ 2,688,580
Allowance for credit losses (GAAP) $ 34,406 $ 35,468 $ 43,132
Allowance for credit losses / Adjusted loans (non-GAAP) 1.28 % 1.32 % 1.60 %


(Dollars in thousands)	December 31,			September 30,			December 31,
	2021			2021			2020
Total gross loans receivable	$	2,696,072		$	2,719,642		$	2,678,624
Less: PPP loans	19,044			28,762			64,845
Adjusted loans	$	2,677,028		$	2,690,880		$	2,613,779

ACL	$	30,933		$	34,406		$	39,844
ACL / Adjusted loans	1.16		%	1.28		%	1.52		%

~~(1) PPP~~

Comparison of Financial Condition at December 31, 2021 and June 30, 2021

General. Total assets and liabilities decreased by $21.9 million and $27.1 million down to $3.5 billion and $3.1 billion, respectively, at December 31, 2021 as compared to June 30, 2021. The decrease in assets was primarily driven by a combined decrease of $56.9 million, or 23.0%, in cash and cash equivalents, certificates of deposit in other banks, and debt securities available for sale, and a $37.2 million, or 1.4%, decrease in loans receivable as the Company redirected its excess liquidity to continue paying down borrowings during the period. These decreases were partially offset by a $64.6 million, or 34.1%, increase in commercial paper and a $8.5 million, or 9.1%, increase in loans held for sale.

Cash and cash equivalents and commercial paper. Total cash and cash equivalents decreased $16.2 million, or 31.7%, to $34.8 million at December 31, 2021 from $51.0 million at June 30, 2021. Commercial paper increased $64.6 million, or 34.1%, to $254.2 million at December 31, 2021 from $189.6 million at June 30, 2021 which was funded by excess interest-earning deposits and a decrease in debt securities available for sale.

Debt securities available for sale and other investments. Debt securities available for sale decreased $34.6 million, or 22.1%, to $121.9 million at December 31, 2021 from $156.5 million at June 30, 2021. At December 31, 2021, certificates of deposit in other banks decreased $6.1 million, or 15.3%, to $34.0 million compared to $40.1 million at June 30, 2021. The decrease in certificates of deposit in other banks was due to $7.1 million in maturities partially offset by $1.0 million in purchases. All certificates of deposit in other banks are fully ~~guaranteed loans~~insured by the ~~U.S. government.~~

~~Recent Developments: COVID-19, the CARES Act,~~FDIC. Other investments at cost decreased $1.6 million, or 6.7%, to $22.1 million at December 31, 2021 from $23.7 million at June 30, 2021. Other investments at cost included SBIC investments, FRB stock, and ~~Our Response~~

FHLB stock totaling $11.7 million, $7.4 million, and $3.0 million, respectively. 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 resultedoverall decrease was driven by a $3.2 million, or 51.8%, reduction 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 (Coronavirus Aid, Relief, and Economic Security Act of 2020) was signed into law on March 27, 2020FHLB stock as a ~~$2.2 trillion legislative package. The purpose~~result of the ~~CARES Act~~paydowns in borrowings during the current period.

Loans held for sale. Loans held for sale increased $8.6 million, or 9.1%, to $102.1 million at December 31, 2021 from $93.5 million at June 30, 2021. The increase was primarily driven by a $17.1 million, or 29.7%, increase in HELOCs originated for sale, a $12.6 million, or 39.6%, decrease in mortgage loans held for sale, and a $4.1 million, or 97.6%, increase in SBA loans held for sale.

Loans, net of deferred loan fees and costs. Total loans decreased $37.2 million, or 1.4%, to ~~prevent~~$2.7 billion at December 31, 2021 from the balance at June 30, 2021. The decrease was driven by a ~~severe economic downturn through various measures, including direct financial aid to families~~$88.5 million, or 11.6%, decrease in retail consumer loans resulting from a reduction in one-to-four family loans and economic stimulus to significantly impacted industry sectors. The package also included extensive emergency funding for hospitals and healthcare providers. On December 27, 2020, the 2021 Consolidated Appropriations Act was signed into law providing an additional $900 billion in stimulus relief. Effective February 24, 2021, the Biden Administration extended the national emergency declaration for one year due to COVID-19. In addition to the general impact of COVID-19, certain provisionsindirect auto finance loans, partially as a result of the ~~CARES Act as well~~sale of $11.5 million of these loans in November 2021. This decrease was partially offset by a $78.9 million, or 4.1%, increase in commercial loans (excluding PPP loans) as the ~~Consolidated Appropriations Act and regulatory relief efforts have had a material impact~~Company continues its focus on ~~our operations.~~

~~In response to~~ the COVID-19 pandemic, we offered a variety of relief options designed to support our customers and the communities we serve. As businesses reopened and the economy started to improve, we began to see our markets return to some normalcy; however, we continue to monitor the impact of the Delta variant of COVID-19 which has prompted many public health officials and municipalities to reinstate mask mandates and reconsider lifting pandemic restrictions. While it is not possible to know the full extent of the impact as of the dategrowth of this ~~filing, set forth (below) are potentially material items of which we are aware.~~loan segment.

3736

~~Paycheck Protection Program Participation.~~ ~~The CARES Act authorized the SBA to temporarily guarantee~~Commercial and retail consumer loans ~~under the new PPP loan program. The goal~~consist of the ~~PPP was~~following at the dates indicated:


	As of								Percent of total
(Dollars in thousands)	December 31,		June 30,		Change				December 31,		June 30,
	2021		2021		$		%		2021		2021
Commercial loans:
Commercial real estate	$	1,113,330	$	1,142,276	$	(28,946)	(2.5)	%	41.3	%	41.8	%
Construction and development	226,439		179,427		47,012		26.2		8.4		6.6
Commercial and industrial	162,396		141,341		21,055		14.9		6.0		5.2
Equipment finance	367,008		317,920		49,088		15.4		13.6		11.6
Municipal leases	131,078		140,421		(9,343)		(6.7)		4.9		5.1
PPP loans	19,044		46,650		(27,606)		(59.2)		0.7		1.7
Total commercial loans	2,019,295		1,968,035		51,260		2.6		74.9		72.0

Retail consumer loans:
One-to-four family	356,850		406,549		(49,699)		(12.2)		13.2		14.9
HELOCs - originated	128,189		130,225		(2,036)		(1.6)		4.8		4.8
HELOCs - purchased	30,795		38,976		(8,181)		(21.0)		1.1		1.4
Construction and land/lots	69,253		66,027		3,226		4.9		2.6		2.4
Indirect auto finance	84,581		115,093		(30,512)		(26.5)		3.1		4.2
Consumer	7,109		8,362		(1,253)		(15.0)		0.3		0.3
Total retail consumer loans	676,777		765,232		(88,455)		(11.6)		25.1		28.0
Total loans	$	2,696,072	$	2,733,267	$	(37,195)	(1.4)	%	100.0	%	100.0	%

Asset quality. Nonperforming assets decreased by $6.6 million, or 51.4%, to ~~avoid as many layoffs as possible, and~~$6.2 million, or 0.18%, of total assets at December 31, 2021 compared to ~~encourage small businesses to maintain payrolls. As a qualified SBA lender, we were automatically authorized to originate PPP loans upon commencement~~$12.8 million, or 0.36% 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~~total assets at June 30, 2021. The significant decrease 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 60% of the loan proceeds are used for payroll expenses, with the remaining 40% of the loan proceeds used for other qualifying expenses.

~~During the previous quarter ended~~ June 30, 2021 we completed our origination participation in the SBA PPP as the program came to an end. As of September 30, 2021, PPP loans totaled $28.8 million, which included $611,000 in net deferred fees that will be accreted into interest income over the remaining lifewas primarily a result of the loans. If the loans are forgiven, these fees will be accelerated into income at that time. For the three months ended September 30, 2021, we earned $424,000 in fees through accretion, including accelerated accretion resulting frompayoff of two commercial real estate loan ~~forgiveness. During the quarter ended September 30, 2021, $18.3 million in PPP loans were forgiven as compared to $28.3~~relationships totaling $5.1 million in the prior ~~period. We have worked with the SBA to forgive a total of $82.5~~quarter. Nonperforming assets included $6.2 million in ~~PPP~~nonaccruing loans ~~for our customers during our participation~~and $45,000 in ~~the program.~~REO at December 31, 2021, compared to $12.6 million and $188,000 in nonaccruing loans and REO, respectively, at June 30, 2021. Nonperforming loans to total loans was 0.23% at December 31, 2021 and 0.46% at June 30, 2021.

~~Loan Modifications~~.As of ~~September 30,~~December 31, 2021, we had ~~$1.0 million~~$652,000 in loans with full principal and interest payment deferrals related to COVID-19 compared to $107,000 at June 30, 2021. ~~The increase from June 30, 2021 resulted from small balance loans in the equipment finance and retail consumer loan categories.~~ Substantially all loans placed on full payment deferral during the pandemic have come out of deferral and borrowers are either making regular loan payments or interest-only ~~payments through the end of calendar year 2021.~~payments. As of ~~September 30,~~December 31, 2021, we had ~~$67.8~~$15.6 million in commercial loan deferrals on interest-only payments compared to $78.9 million at June 30, 2021.

We believe the steps we have taken and continue to take are necessary to effectively manage our portfolio and assist our customers through the ongoing uncertainty surrounding the duration, impact and government response to the COVID-19 pandemic. In addition, we will continue to work with our customers to determine the best option for repayment of accrued interest on the deferred payments.

~~Branch Operations and Support Personnel.~~Throughout the pandemic we have provided banking services with a focus on the health and safety of our customers and employees. We continue to monitor the effects of customer behavior specific to in-person branch transactions and have experienced meaningful increases in digital banking activity and online deposit account openings. Partially in response to these changes, we closed nine branches in North Carolina, Tennessee, and Virginia during the three months ended September 30, 2021. We continue to respond to the banking needs of our customers whether through physical branch locations and/or digital banking services.

~~Comparison of Financial Condition at September 30, 2021 and June 30, 2021~~

~~General~~. Total assets and liabilities both decreased by $43.4 million down to $3.5 billion and $3.1 billion, respectively, at September 30, 2021 as compared to June 30, 2021. The decrease in assets was primarily driven by a cumulative decrease of $44.9 million, or 18.1% in cash and cash equivalents, certificates of deposit in other banks, and debt securities available for sale, and a $13.6 million, or 0.5% decrease in loans receivable as the Company redirected its excess liquidity to continue paying down borrowings during the period. These decreases were partially offset by an $11.6 million, or 12.4% increase in loans held for sale primarily related to additional SBA commercial loans, one-to-four family residential mortgage loans and home equity loans originated for sale during the period, and a $7.1 million, or 3.7% increase in commercial paper.

~~Cash, cash equivalents, and commercial paper.~~ Total cash and cash equivalents decreased $8.4 million, or 16.5% to $42.6 million at September 30, 2021 from $51.0 million at June 30, 2021. Commercial paper increased $7.1 million, or 3.7% to $196.7 million at September 30, 2021 from $189.6 million at June 30, 2021 as a result of the decline in debt securities available for sale during the period.

~~Investments.~~ Debt securities available for sale decreased $31.9 million, or 20.4%, to $124.6 million at September 30, 2021 from $156.5 million at June 30, 2021. During the three months ended September 30, 2021, $5.3 million of securities were purchased, $33.2 million of securities matured, and $3.0 million of MBS principal payments were received. At September 30, 2021, certificates of deposit in other banks decreased $4.6 million, or 11.5% to $35.5 million compared to $40.1 million at June 30, 2021. The decrease in certificates of deposit in other banks was due to $5.6 million in maturities partially offset by $1.0 million in purchases. All certificates of deposit in other banks are fully insured by the FDIC. 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. Management does not believe that there were any credit losses at September 30, 2021; therefore, no impairment losses were recorded during the first three months of fiscal 2022. Other investments at cost decreased $2.8 million, or 11.9%, to $20.9 million at September 30, 2021 from $23.7 million at June 30, 2021. Other investments at cost included SBIC investments, FRB stock, and FHLB stock totaling $10.5 million, $7.4 million, and $3.0 million, respectively. The overall decrease was driven by a $3.2 million, or 51.8% reduction in FHLB stock as a result of the paydowns in borrowings during the current period.

~~Loans held for sale.~~ Loans held for sale increased $11.6 million, or 12.4% to $105.2 million at September 30, 2021 from $93.5 million at June 30, 2021. The increase was primarily driven by a $7.2 million, or 22.5% increase in mortgage loans held for sale, a $2.5 million, or 60.2% increase in SBA loans held for sale, and a $1.9 million, or 25.9% increase in HELOCs originated for sale.

~~Loans.~~ Total loans receivable decreased $13.6 million, or 0.5% to $2.7 billion at September 30, 2021 from the balance at June 30, 2021. The decrease was driven by PPP loan forgiveness of $18.3 million and a $32.7 million, or 4.3% decrease in retail consumer loans resulting from a reduction in one-to-four family loans and indirect auto finance loans. This decrease was partially offset by a $37.0 million, or 1.9% increase in commercial loans (excluding PPP loans) as the Company continues its focus on the growth of this loan segment.

~~Commercial and retail consumer loans consist of the following at the dates indicated:~~

As of Percent of total
(Dollars in thousands) September 30, June 30, Change September 30, June 30,
2021 2021 $ % 2021 2021
Commercial loans:
Commercial real estate $ 1,132,764 $ 1,142,276 $ (9,512) (0.8) % 41.7 % 41.8 %
Construction and development 187,900 179,427 8,473 4.7 6.9 6.6
Commercial and industrial 153,612 141,341 12,271 8.7 5.6 5.2
Equipment finance 341,995 317,920 24,075 7.6 12.6 11.6
Municipal leases 142,100 140,421 1,679 1.2 5.2 5.1
PPP loans 28,762 46,650 (17,888) (38.3) 1.1 1.7
Total commercial loans 1,987,133 1,968,035 19,098 1.0 73.1 72.0
Retail consumer loans:
One-to-four family 384,901 406,549 (21,648) (5.3) 14.2 14.9
HELOCs - originated 129,791 130,225 (434) (0.3) 4.8 4.8
HELOCs - purchased 33,943 38,976 (5,033) (12.9) 1.2 1.4
Construction and land/lots 69,835 66,027 3,808 5.8 2.6 2.4
Indirect auto finance 106,184 115,093 (8,909) (7.7) 3.9 4.2
Consumer 7,855 8,362 (507) (6.1) 0.3 0.3
Total retail consumer loans 732,509 765,232 (32,723) (4.3) 26.9 28.0
Total loans $ 2,719,642 $ 2,733,267 $ (13,625) (0.5) % 100.0 % 100.0 %

~~Asset Quality.~~ Our overall asset quality metrics continue to demonstrate our commitment to growing and maintaining a loan portfolio with a moderate risk profile; however, we will remain diligent in our review of the portfolio and overall economy as we continue to maneuver through the uncertainty surrounding COVID-19. See "~~Recent Developments: COVID-19, the CARES Act, and Our Response" above for additional information regarding our response to COVID-19.~~

Nonperforming assets decreased by $6.0 million, or 47.0% to $6.8 million, or 0.19% of total assets at September 30, 2021 from $12.8 million, or 0.36% of total assets at June 30, 2021. The significant decrease from June 30, 2021 was primarily a result of the payoff of two commercial real estate loan relationships totaling $5.1 million. Nonperforming assets included $6.7 million in nonaccruing loans and $45,000 in REO at September 30, 2021, compared to $12.6 million and $188,000 in nonaccruing loans and REO, respectively, at June 30, 2021. Included in nonperforming loans at September 30, 2021 are $930,000 of TDR loans of which $186,000 was current with respect to their modified payment terms. At September 30, 2021, $3.4 million, or 51.2%, of nonaccruing loans were current on their loan payments. The ratio of nonperforming loans to total loans was 0.25% at September 30, 2021 and 0.46% at June 30, 2021. Performing TDRs that were excluded from nonaccruing loans totaled $11.3 million and $11.1 million at September 30, 2021 and June 30, 2021, respectively.

The ratio of classified assets to total assets decreased to 0.65% at ~~September 30,~~December 31, 2021 from 0.76% at June 30, 2021. Classified assets decreased $3.8 million, or 14.2%, to ~~$22.5~~$22.9 million at ~~September 30,~~December 31, 2021 compared to $26.7 million at June 30, 2021 primarily due to the payoff of ~~the~~ two commercial real estate ~~loans~~loan relationships discussed above. The Company's overall asset quality metrics continue to demonstrate its commitment to growing and maintaining a loan portfolio with a moderate risk profile; however, the Company will remain diligent in its monitoring of the portfolio during these uncertain times.

Our individually evaluated loans ~~are comprised of loans meeting certain thresholds,~~include loans on nonaccrual status and all TDRs, whether performing or on nonaccrual status under their restructured terms. Individually evaluated loans may be evaluated for reserve purposes using either the discounted cash flow or the collateral valuation method. As of ~~September 30,~~December 31, 2021, there were ~~$4.6~~$5.3 million in loans individually evaluated. For more information on these individually evaluated loans, see "Note 6 - Loans and Allowance for Credit Losses on Loans" in this Quarterly Report on Form 10-Q.

Allowance for credit losses. The ACL on loans was ~~$34.4~~$30.9 million, or ~~1.27%~~1.15%, of total loans at ~~September 30,~~December 31, 2021 compared to $35.5 million, or 1.30%, of total loans ~~at June 30, 2021. The ACL to total gross loans excluding PPP loans was 1.28% at September 30, 2021, compared to 1.32%~~ at June 30, 2021. The overall decrease was driven by lower expected credit losses estimated by management based on an improving economic outlook.

There was a net benefit for credit losses of ~~$1.5~~$4.0 million for the ~~three~~six months ended ~~September 30,~~December 31, 2021, compared to a ~~$950,000 provision~~$2.1 million net benefit for the corresponding period in fiscal year 2021. Net loan ~~recoveries~~charge-offs totaled ~~$273,000~~$760,000 for the ~~three~~six months ended ~~September 30,~~December 31, 2021, compared to net charge-offs of ~~$699,000~~$637,000 for the same period last year. Net ~~recoveries~~charge-offs as a percentage of average loans were ~~(0.04)%~~0.05% for the ~~three~~six months ended ~~September 30,~~December 31, 2021 compared to net charge-offs of ~~0.10%~~0.04% for the corresponding ~~quarter~~period last year.

The allowance as a percentage of nonaccruing loans increased to ~~510.63%~~500.70% at ~~September 30,~~December 31, 2021 from 281.38% at June 30, 2021.

Management believes the ACL as of September 30, 2021 was adequate to absorb the estimated losses in the loan portfolio at that date. While management 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 ACL 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. Lastly, inflation and 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 ACL and may adversely affect our financial condition and results of operations.

~~Real estate owned.~~
~~REO decreased $143,000, or 76.1% to $45,000 at September 30, 2021 entirely related to REO sales during the three months endedSeptember 30, 2021.~~

Deferred income taxes. Deferred income taxes decreased ~~$1.2~~$4.9 million, or ~~7.0%~~28.9%, to ~~$15.7~~$12.0 million at ~~September 30,~~December 31, 2021 from $16.9 million at June 30, 2021. The decrease was primarily ~~driven by the utilization~~a result of ~~net operating losses~~a release and reduction of the ~~ACL.~~

~~Premises~~ACL, depreciation on new equipment finance leases, and ~~equipment, net.~~ Premises and equipment, net decreased $2.3 million, or 3.3% to $68.6 million at September 30, 2021 from $70.9 million at June 30, 2021. The decrease was a result of the nine branch closures that occurred mid-September.

~~Goodwill.~~ ~~Goodwill remained unchanged at $25.6 million at September 30, 2021 and June 30, 2021.~~bonus tax depreciation on new premises.

Other assets. Other assets increased ~~$957,000,~~$1.4 million, or ~~1.7%~~2.5%, to ~~$58.4~~$58.9 million at ~~September 30,~~December 31, 2021 from $57.5 million at June 30, 2021. The increase was primarily driven by a reclassification of assets held for sale from premises and equipment related to the nine branch closures, partially offset by lower net operating lease assets and lower current taxes receivable.

Deposits. Deposits increased ~~$31.7~~$43.2 million, or ~~1.1%~~1.5%, during the ~~three~~six months ended ~~September 30,~~December 31, 2021 to $3.0 billion, ~~which was~~ driven by ~~a $58.9 million, or 2.4% increase as a result of~~ our successful efforts to increase core ~~deposits. As part~~deposits which increased $74.1 million, or 3.0%. Partially offsetting this deposit increase was a decrease of ~~a managed runoff,~~$31.0 million, or 6.5%, in certificates of deposit ~~decreased $27.2 million, or 5.8% to $445.6 million atSeptember 30, 2021.~~as part of our managed runoff of the portfolio.

The following table sets forth our deposits by type of deposit account as of the dates indicated:


		As of								Percent of total					As of								Percent of total
(Dollars in thousands)	(Dollars in thousands)	September 30,		June 30,		Change				September 30,		June 30,		(Dollars in thousands)	December 31,		June 30,		Change				December 31,		June 30,
		2021		2021		$		%		2021		2021			2021		2021		$		%		2021		2021
Core deposits:	Core deposits:													Core deposits:
Noninterest-bearing accounts	Noninterest-bearing accounts	$	711,764	$	636,414	$	75,350	11.8	%	23.8	%	21.5	%	Noninterest-bearing accounts	$	677,159	$	636,414	$	40,745	6.4	%	22.6	%	21.5	%
NOW accounts	NOW accounts	621,675		644,958		(23,283)		(3.6)	%	20.8	%	21.8	%	NOW accounts	644,343		644,958		(615)		(0.1)		21.5		21.8
Money market accounts	Money market accounts	987,650		975,001		12,649		1.3	%	33.1	%	33.0	%	Money market accounts	1,010,901		975,001		35,900		3.7		33.7		33.0
Savings accounts	Savings accounts	220,614		226,391		(5,777)		(2.6)	%	7.4	%	7.7	%	Savings accounts	224,474		226,391		(1,917)		(0.8)		7.5		7.7
Core deposits	Core deposits	2,541,703		2,482,764		58,939		2.4	%	85.1	%	84.0	%	Core deposits	2,556,877		2,482,764		74,113		3.0		85.3		84.0
Certificates of deposit	Certificates of deposit	445,581		472,777		(27,196)		(5.8)	%	14.9	%	16.0	%	Certificates of deposit	441,814		472,777		(30,963)		(6.5)		14.7		16.0
Total	Total	$	2,987,284	$	2,955,541	$	31,743	1.1	%	100.0	%	100.0	%	Total	$	2,998,691	$	2,955,541	$	43,150	1.5	%	100.0	%	100.0	%

Borrowings. Borrowings decreased ~~$75.0~~$67.0 million, or ~~65.2%~~58.3%, to ~~$40.0~~$48.0 million at ~~September 30,~~December 31, 2021 compared to $115.0 million at June 30, 2021 as excess liquidity was used to pay down borrowings. ~~At September 30, 2021, borrowings had maturities of 30 days or less.~~

~~Equity~~Other liabilities. ~~. Stockholders' equity remained at $396.5~~Other liabilities decreased $3.3 million, or 5.7%, to $54.4 million at ~~September 30,~~December 31, 2021 as compared to $57.7 million at June 30, 2021. ~~Increases within stockholders' equity including $10.5~~The decrease was primarily a result of a $1.7 million, or 48.3%, reduction in ~~net income,~~accrued profit sharing expenses and ~~$1.1 million~~a $902,000, or 99.1% decrease in stock-based compensation and stock option exercises were offset by repurchases of 376,435 shares of common stock at an average cost of $27.71 per share, or approximately $10.4 million and $1.3 million related to cash dividends declared. As of~~September 30, 2021, the Company and the Bank were both considered "well capitalized" in accordance with the regulatory capital guidelines and exceeded all regulatory capital requirements.~~commercial loan suspense.

Average Balances, Interest and Average ~~Yields/~~Yield/Cost

Our operating results depend primarily on our net interest income, which is the difference between interest income on interest-earning assets, including loans and securities, and interest expense incurred on interest-bearing liabilities, including deposits and other borrowed funds. Interest rate fluctuations, as well as changes in the amount and type of interest-earning assets and interest-bearing liabilities, combine to affect net interest income. Our net interest income is affected by changes in the amount and mix of interest-earning assets and interest-bearing liabilities, referred to as a "volume change". It is also affected by changes in yields earned on interest-earning assets and rates paid on interest-bearing liabilities, referred to as a "rate change".

The following table ~~sets forth for~~presents the ~~periods indicated, information regarding~~distribution of average ~~balances of~~ assets, liabilities and ~~liabilities~~equity, as well as ~~the total dollar amounts of~~ interest income ~~from~~on average interest-earning assets and interest expense paid 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 September 30,
2021 2020
(Dollars in thousands) Average
Balance
Outstanding
Interest
Earned/
Paid(2)
Yield/
Rate(2)
Average
Balance
Outstanding
Interest
Earned/
Paid(2)
Yield/
Rate(2)
Assets:
Interest-earning assets:
Loans receivable(1)
$ 2,819,716 $ 28,205 3.97 % $ 2,875,432 $ 28,902 4.02 %
Commercial paper and deposits in other banks 277,564 331 0.47 % 424,170 881 0.83 %
Securities available for sale 138,435 524 1.50 % 106,268 528 1.99 %
Other interest-earning assets(3)
21,731 555 10.13 % 38,946 448 4.61 %
Total interest-earning assets 3,257,446 29,615 3.61 % 3,444,816 30,759 3.57 %
Other assets 260,976 251,648
Total assets $ 3,518,422 $ 3,696,464
Liabilities and equity:
Interest-bearing deposits:
Interest-bearing checking accounts $ 635,456 $ 397 0.25 % $ 560,481 $ 397 0.28 %
Money market accounts 988,990 367 0.15 % 825,545 550 0.27 %
Savings accounts 223,658 41 0.07 % 200,543 37 0.07 %
Certificate accounts 457,865 767 0.67 % 689,709 2,269 1.32 %
Total interest-bearing deposits 2,305,969 1,572 0.27 % 2,276,278 3,253 0.57 %
Borrowings 55,464 26 0.18 % 475,000 1,687 1.42 %
Total interest-bearing liabilities 2,361,433 1,598 0.27 % 2,751,278 4,940 0.72 %
Noninterest-bearing deposits 708,219 484,336
Other liabilities 52,305 59,935
Total liabilities 3,121,957 3,295,549
Stockholders' equity 396,465 400,915
Total liabilities and stockholders' equity $ 3,518,422 $ 3,696,464
Net earning assets $ 896,013 $ 693,538
Average interest-earning assets to
average interest-bearing liabilities 137.94 % 125.21 %
Tax-equivalent:
Net interest income $ 28,017 $ 25,819
Interest rate spread 3.34 % 2.85 %
Net interest margin(4)
3.41 % 3.00 %
Non-tax-equivalent:
Net interest income $ 27,707 $ 25,509
Interest rate spread 3.30 % 2.82 %
Net interest margin(4)
3.37 % 2.96 %

The following table presents the distribution of average assets, liabilities and equity, as well as interest income and fees on average interest-earning assets and interest expense and interest-bearing liabilities:


	For the Three Months Ended December 31,
	2021							2020
(Dollars in thousands)	Average Balance Outstanding			Interest Earned/ Paid		Yield/ Rate		Average Balance Outstanding			Interest Earned/ Paid		Yield/ Rate

Assets:
Interest-earning assets:
Loans receivable(1)(2)	$	2,819,262		$	27,236	3.83	%	$	2,826,133		$	28,648	4.02	%
Commercial paper and deposits in other banks	313,882			468		0.59		417,401			614		0.58
Debt securities available for sale	121,987			411		1.34		133,856			504		1.50
Other interest-earning assets(3)	22,327			680		12.09		39,290			696		7.03
Total interest-earning assets	3,277,458			28,795		3.49		3,416,680			30,462		3.54
Other assets	259,591							257,572
Total assets	$	3,537,049						$	3,674,252
Liabilities and equity:
Interest-bearing deposits:
Interest-bearing checking accounts	$	635,268		$	331	0.21	%	$	584,530		$	353	0.24	%
Money market accounts	998,297			349		0.14		848,760			414		0.19
Savings accounts	222,464			40		0.07		206,205			38		0.07
Certificate accounts	443,546			585		0.52		576,078			1,542		1.06
Total interest-bearing deposits	2,299,575			1,305		0.23		2,215,573			2,347		0.42
Borrowings	57,248			15		0.11		475,000			1,688		1.41
Total interest-bearing liabilities	2,356,823			1,320		0.22		2,690,573			4,035		0.59
Noninterest-bearing deposits	736,271							523,488
Other liabilities	44,974							57,813
Total liabilities	3,138,068							3,271,874
Stockholders' equity	398,981							402,378
Total liabilities and stockholders' equity	$	3,537,049						$	3,674,252

Net earning assets	$	920,635						$	726,107
Average interest-earning assets to
average interest-bearing liabilities	139.06		%					126.99		%
Tax-equivalent:
Net interest income				$	27,475						$	26,427
Interest rate spread						3.27	%						2.95	%
Net interest margin(4)						3.33	%						3.07	%
Non-tax-equivalent:
Net interest income				$	27,168						$	26,122
Interest rate spread						3.23	%						2.91	%
Net interest margin(4)						3.29	%						3.03	%

(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 ~~$310~~$307 and $305 for the three months ended ~~September 30,~~December 31, 2021

and 2020, 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.

4139



	For the Six Months Ended December 31,
	2021							2020
(Dollars in thousands)	Average Balance Outstanding			Interest Earned/ Paid		Yield/ Rate		Average Balance Outstanding			Interest Earned/ Paid		Yield/ Rate

Assets:
Interest-earning assets:
Loans receivable(1)(2)	$	2,819,482		$	55,441	3.90	%	$	2,850,783		$	57,550	4.00	%
Commercial paper and deposits in other banks	295,746			799		0.54		420,785			1,495		0.70
Debt securities available for sale	130,143			935		1.43		120,062			1,032		1.71
Other interest-earning assets(3)	22,020			1,235		11.13		39,118			1,144		5.80
Total interest-earning assets	3,267,391			58,410		3.55		3,430,748			61,221		3.54
Other assets	260,288							254,610
Total assets	$	3,527,679						$	3,685,358
Liabilities and equity:
Interest-bearing liabilities:
Interest-bearing checking accounts	$	635,362		728		0.23	%	$	572,505		750		0.26	%
Money market accounts	993,643			716		0.14		837,153			964		0.23
Savings accounts	223,061			81		0.07		203,374			75		0.07
Certificate accounts	450,706			1,352		0.60		632,894			3,811		1.19
Total interest-bearing deposits	2,302,772			2,877		0.25		2,245,926			5,600		0.49
Borrowings	56,356			41		0.15		475,000			3,375		1.41
Total interest-bearing liabilities	2,359,128			2,918		0.25		2,720,926			8,975		0.65
Noninterest-bearing deposits	722,432							507,087
Other liabilities	48,393							55,699
Total liabilities	3,129,953							3,283,712
Stockholders' equity	397,726							401,646
Total liabilities and stockholders' equity	$	3,527,679						$	3,685,358

Net earning assets	$	908,263						$	709,822
Average interest-earning assets to
average interest-bearing liabilities	138.50		%					126.09		%
Tax-equivalent:
Net interest income				$	55,492						$	52,246
Interest rate spread						3.30	%						2.89	%
Net interest margin(4)						3.37	%						3.02	%
Non-tax-equivalent:
Net interest income				$	54,875						$	51,631
Interest rate spread						3.26	%						2.85	%
Net interest margin(4)						3.33	%						2.99	%

(1)The average loans receivable balances include loans held for sale and nonaccruing loans.

(2)Interest income used in the average interest earned and yield calculation includes the tax equivalent adjustment of $617 and $615 for the six months ended December 31, 2021 and 2020, 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~~shows the ~~dollar amount of~~effects that changes in average balances (volume) and average interest ~~income and~~rates (rate) had on the interest ~~expense for major components of~~earned on our 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.liabilities:


		Three Months Ended September 30, 2021							Three Months Ended December 31, 2021
		Compared to							Compared to
		Three Months Ended September 30, 2020							Three Months Ended December 31, 2020
(Dollars in thousands)	(Dollars in thousands)	Increase/ (decrease) due to				Total increase/(decrease)		(Dollars in thousands)	Increase/ (Decrease) due to				Total Increase/(Decrease)
		Volume		Rate					Volume		Rate
Interest-earning assets:	Interest-earning assets:							Interest-earning assets:
Loans receivable(1)	Loans receivable(1)	$	(554)	$	(143)	$	(697)	Loans receivable(1)	$	(70)	$	(1,342)	$	(1,412)
Commercial paper and deposits in other banks	Commercial paper and deposits in other banks	(305)		(245)		(550)		Commercial paper and deposits in other banks	(152)		6		(146)
Debt securities available for sale	Debt securities available for sale	160		(164)		(4)		Debt securities available for sale	(45)		(48)		(93)
Other		(198)		305		107
Other interest-earning assets								Other interest-earning assets	(300)		284		(16)
Total interest-earning assets	Total interest-earning assets	$	(897)	$	(247)	$	(1,144)	Total interest-earning assets	(567)		(1,100)		(1,667)
Interest-bearing liabilities:	Interest-bearing liabilities:							Interest-bearing liabilities:
Interest-bearing checking accounts	Interest-bearing checking accounts	$	53	$	(53)	$	—	Interest-bearing checking accounts	31		(53)		(22)
Money market accounts	Money market accounts	109		(292)		(183)		Money market accounts	73		(138)		(65)
Savings accounts	Savings accounts	4		—		4		Savings accounts	3		(1)		2
Certificate accounts	Certificate accounts	(763)		(739)		(1,502)		Certificate accounts	(355)		(602)		(957)
Total interest-bearing deposits								Total interest-bearing deposits	(248)		(794)		(1,042)
Borrowings	Borrowings	(1,490)		(171)		(1,661)		Borrowings	(1,484)		(189)		(1,673)
Total interest-bearing liabilities	Total interest-bearing liabilities	(2,087)		(1,255)		(3,342)		Total interest-bearing liabilities	(1,732)		(983)		(2,715)
Net increase (decrease) in tax equivalent interest income	Net increase (decrease) in tax equivalent interest income	$	1,190	$	1,008	$	2,198	Net increase (decrease) in tax equivalent interest income	$	1,165	$	(117)	$	1,048




	Six Months Ended December 31, 2021
	Compared to
	Six Months Ended December 31, 2020
(Dollars in thousands)	Increase/ (Decrease) due to				Total Increase/(Decrease)
	Volume		Rate
Interest-earning assets:
Loans receivable(1)	$	(632)	$	(1,477)	$	(2,109)
Commercial paper and deposits in other banks	(444)		(252)		(696)
Debt securities available for sale	87		(184)		(97)
Other interest-earning assets	(500)		591		91
Total interest-earning assets	(1,489)		(1,322)		(2,811)
Interest-bearing liabilities:
Interest-bearing checking accounts	82		(104)		(22)
Money market accounts	180		(428)		(248)
Savings accounts	7		(1)		6
Certificate accounts	(1,097)		(1,362)		(2,459)
Total interest-bearing deposits	(828)		(1,895)		(2,723)
Borrowings	(2,974)		(360)		(3,334)
Total interest-bearing liabilities	(3,802)		(2,255)		(6,057)
Net increase (decrease) in tax equivalent interest income	$	2,313	$	933	$	3,246

_________________________________________________________________

(1) Interest income used in the average interest earned and yield calculation includes the tax equivalent adjustment of ~~$310~~$307 and $305 for the three months ended ~~September 30,~~December 31, 2021 and 2020, 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 $617 and $615 for the six months ended December 31, 2021 and 2020, respectively, calculated based on a combined federal and state income tax rate of 24%.

Comparison of Results of Operations for the Three Months Ended ~~September 30,~~December 31, 2021 and 2020

General. During the three months ended ~~September 30,~~December 31, 2021, net income increased ~~$4.8~~$1.6 million, or ~~83.0%~~17.1% to ~~$10.5~~$11.1 million compared to ~~$5.8~~$9.5 million for the three months ended ~~September 30, 2020. Our~~December 31, 2020, while our diluted earnings per share increased to ~~$0.65 for the three months ended September 30, 2021~~$0.68 compared to ~~$0.35~~$0.57 for the same period in fiscal 2021. ~~First~~Second quarter of fiscal 2022 earnings were positively impacted by a ~~$2.2~~$2.5 million net benefit for credit losses, a $1.0 million increase in net interest income driven by lower borrowing costs, and a ~~$1.7~~$0.8 million increase in noninterest ~~income, and a $1.5 million net benefit for credit losses.~~income.

Net Interest Income. Net interest income increased ~~$2.2~~$1.1 million, or ~~8.6%~~4.0%, to ~~$27.7~~$27.2 million for the quarter ended ~~September 30,~~December 31, 2021, compared to ~~$25.5~~$26.1 million for the comparative quarter in fiscal 2021. Interest and dividend income decreased by ~~$1.1~~$1.7 million, or ~~3.8%~~5.5%, primarily driven by lower average balances on ~~loans and commercial paper~~interest-bearing assets combined with lower loan yields. This decrease was ~~more than~~partially offset by a ~~$3.3~~$2.7 million, or 67.3%, decrease in interest expense.

Average interest-earning assets decreased ~~$187.4~~$139.2 million, or ~~5.4%~~4.1%, to $3.3 billion for the quarter ended~~September 30,~~ December 31, 2021. The ~~average balance~~main drivers of ~~total loans receivable decreased by $55.7~~the change were decreases of $103.5 million, or ~~1.9% compared to~~24.8%, in the ~~same quarter last year primarily due to the decrease in PPP loans outstanding. The~~ average balance of commercial paper and deposits in other banks ~~decreased $146.6~~and $11.9 million, or ~~34.6%~~8.9%, in debt securities available for sale as ~~we used~~the Company continues to use excess liquidity to reduce borrowings, ~~between periods, primarily during the quarter ended June 30, 2021. The average balance of other interest-earning assets decreased $17.2~~which declined by $417.8 million, or ~~44.2% driven by a decrease in FHLB stock due~~88.0%, when compared to the ~~reduction in FHLB borrowings, and an increase in SBIC investments resulting in higher rates earned for the current~~prior period. Net interest margin (on a fully taxable-equivalent basis) for the three months ended ~~September 30,~~December 31, 2021 increased to ~~3.41%~~3.33% from ~~3.00%~~3.07% for the same period a year ago as all higher rate long-term borrowings were repaid during the quarter ended June 30, 2021.

Total interest and dividend income decreased ~~$1.1~~$1.7 million, or ~~3.8%~~5.5%, for the ~~three months~~quarter ended ~~September 30,~~December 31, 2021 as compared to the same ~~period~~quarter last year, which was primarily a result of a ~~$697,000,~~$1.4 million, or ~~2.4%~~5.0%, decrease in loan interest income, and a ~~$550,000,~~$146,000, or ~~62.4%~~23.8%, decrease in interest income from commercial paper and deposits in other ~~banks, partially offset by a $107,000, or 23.9% increase in other investment income.~~banks. The lower interest income in each category was mainly driven by the overall decrease in average balances as discussed ~~above. In~~above, in addition to declines in the average

yields on loans of 19 basis points, from 4.02% to 3.83%, and debt securities available for sale of 16 basis points, from 1.50% to 1.34%. Loan interest income for the quarter included the amortization of $286,000 of PPP loan ~~yields~~origination fees, a decline of $202,000 when compared to the $488,000 recognized in the prior year period. The overall average yield on interest-earning assets decreased 5 basis points to ~~3.97%~~3.49% for the current quarter ~~ended September 30, 2021 from 4.02%~~compared to 3.54% in the ~~corresponding quarter last year. Average yields on commercial paper and deposits in other banks decreased 36 basis points to 0.47% for the quarter ended~~September 30, 2021 from 0.83% in the corresponding quarter last year. Average yields on securities available for sale decreased 49 basis points to 1.50% for the quarter ended September 30, 2021 from 1.99% in the corresponding quarter last year. Average yields on total interest-earning assets increased four basis points to 3.61% for the quarter ended September 30, 2021 from 3.57% in the correspondingsame quarter last year primarily ~~as a result of~~due to the change in mix of interest-earning assets, as ~~a result of using~~ excess liquidity was used to repay long-term borrowings and reduce short-term interest-earning assets with lower yields.

Total interest expense decreased ~~$3.3~~$2.7 million, or ~~67.7%~~67.3%, for the ~~three months~~quarter ended ~~September 30,~~December 31, 2021 compared to the same period last year. The decrease was driven by a $1.7 million, or ~~51.7%~~99.1%, decrease in interest expense on ~~deposits~~borrowings as discussed above and a ~~$1.7~~$1.0 million, or ~~98.5%~~44.4%, decrease in interest expense on ~~borrowings. Average~~deposits. The average balance of total deposits increased by $296.8 million, or 10.8%, with noninterest-bearing deposits and interest-bearing deposits ~~for the quarter ended September 30, 2021 increased $29.7~~increasing $212.8 million and $84.0 million, respectively. The increase in interest-bearing deposits was driven by a $149.5 million, or ~~1.3%, which was more than~~17.6% increase in money market accounts, partially offset by ~~the 30 basis point~~a $132.5 million, or 23.0%, decrease in ~~the cost~~certificates of ~~deposits, down to 0.27% compared to 0.57% in the same period last year. Average~~deposit. As stated above, average borrowings for the quarter ended ~~September 30,~~December 31, 2021 decreased ~~$419.5~~$417.8 million, or ~~88.3%~~88.0%, along with a ~~124~~130 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 the effect of government stimulus. The decrease in the average cost of borrowings was primarily driven by the early retirement of long-term borrowings reducing the average balance and partially driven by a shift to short-term borrowings at lower rates.The overall average cost of funds decreased 37 basis points to 0.22% for the current quarter compared to 0.59% in the same quarter last year.

Provision (Benefit) for Credit Losses. During the three months ended December 31, 2021, there was a $2.5 million net benefit for credit losses compared to a $3.0 million net benefit for the corresponding quarter of fiscal 2021. Net loan charge-offs totaled $1.0 million for the three months ended December 31, 2021, compared to net recoveries of $62,000 for the same period last year. Annualized net charge-offs as a percentage of average loans were 0.15% for the quarter ended December 31, 2021 compared to recoveries of 0.01% for the corresponding quarter last year. See "Comparison of Financial Condition - Asset Quality" for additional details.

Noninterest Income. Noninterest income increased $836,000, or 8.9%, to $10.2 million for the quarter ended December 31, 2021 from $9.3 million for the same period in the previous year. This change was primarily due to a $369,000, or 27.3%, increase in operating lease income, a $236,000, or 41.5%, increase in loan income and fees, and a $197,000, or 5.3%, increase in gain on sale of loans. The increase in operating lease income was driven by increases in loan originations and higher outstanding lease balances during the period. The increase in loan income and fees was largely a result of transitioning SBA loan servicing processes in-house, which began July 1, 2021. During the quarter ended December 31, 2021, $86.9 million of residential mortgage loans originated for sale were sold with gains of $2.2 million compared to $108.9 million sold and gains of $2.8 million in the corresponding period in the prior year. There were $12.6 million of sales of the guaranteed portion of SBA commercial loans with gains of $1.3 million in the current quarter compared to $9.3 million sold and gains of $778,000 for the same period last year. The Company sold $24.8 million of home equity lines of credit (HELOC) during the quarter for a gain of $159,000 compared to $23.2 million sold and gains of $158,000 in the corresponding period last year. Lastly, $11.5 million of indirect auto finance loans were sold in the current quarter out of the held for investment portfolio for a gain of $205,000. No such sales occurred in the same period in the prior year.

Noninterest Expense. Noninterest expense decreased $534,000, or 2.0%, for the quarter ended December 31, 2021 as compared to the same period last year, which was primarily a result of a decrease of $828,000, or 5.3%, in salaries and benefits expense due to branch closures and lower mortgage banking incentive pay in the period, partially offset by an increase of $505,000, or 154.4%, in marketing and advertising expense driven by reduced media advertising in the prior period as a result of the pandemic.

Income Taxes. Our income tax expense for the three months ended December 31, 2021 increased $269,000, or 10.4%, to $2.9 million from $2.6 million for the three months ended December 31, 2020 as a result of higher taxable income. The effective tax rates for the quarters ended December 31, 2021 and 2020 were 20.5% and 21.5%, respectively.

Comparison of Results of Operations for the Six Months Ended December 31, 2021 and 2020

General. During the six months ended December 31, 2021, net income increased by $6.4 million, or 42.0%, to $21.6 million from $15.2 million for the six months ended December 31, 2020, while our diluted earnings per share increased to $1.33 for the six months ended December 31, 2021 compared to $0.92 in the same period in fiscal 2021. Year-to-date earnings were positively impacted by a $4.0 million net benefit in the provision for credit losses and a $6.1 million, or 67.5%, decrease in interest expense.

Net Interest Income. Net interest income increased by $3.2 million, or 6.3%, to $54.9 million for the six months ended December 31, 2021, compared to the same period last year. Interest and dividend income decreased by $2.8 million, or 4.6%, primarily driven by lower average balances on interest-bearing assets combined with lower loan yields.

Average interest-earning assets decreased $163.4 million, or 4.8%, to $3.3 billion for the six months ended December 31, 2021. The biggest reason for the change was a decrease of $125.0 million, or 29.7%, in commercial paper and deposits in other banks, as the Company used excess liquidity to reduce borrowings, where the average balance declined from $475.0 million to $56.4 million. Net interest margin (on a fully taxable-equivalent basis) for the six months ended December 31, 2021 increased to 3.37% from 3.02% for the same period a year ago as all higher rate long-term borrowings were repaid during the quarter ended June 30, 2021.

Total interest and dividend income decreased $2.8 million, or 4.6%, for the six months ended December 31, 2021 as compared to the same period last year, which was primarily a result of a $2.1 million, or 3.7%, decrease in loan interest income and a $696,000, or 46.6%, decrease in interest income from commercial paper and deposits in other banks. The lower interest income in each category was mainly driven by the decrease in average balances as discussed above. In addition, average loan yields decreased 10 basis points to 3.90% for the quarter ended December 31, 2021 from 4.00% in the corresponding quarter last year, average yields on debt securities available for sale decreased 28 basis points to 1.43% from 1.71%, and average yields on commercial paper and deposits in other banks decreased 16 basis points to 0.54% from 0.70%. Loan interest income for the six months included the amortization of $710,000 of PPP loan origination fees, a decline of $32,000 when compared to the $742,000 recognized in the prior year period. Despite the decrease in yield on loans and other assets discussed above, the overall average yield on interest-earning assets increased one basis point to 3.55% for the six months compared to 3.54% in the same period last year primarily due to the use of low yielding excess liquidity to repay long-term borrowings.

Total interest expense decreased $6.1 million, or 67.5%, for the six months ended December 31, 2021 compared to the same period last year. The decrease was driven by a $3.3 million, or 98.8%, decrease in interest expense on borrowings as discussed above and a $2.7 million, or 48.6%, decrease in interest expense on deposits. The average balance of total deposits increased by $272.2 million, or 9.9%, with noninterest-bearing deposits and interest-bearing deposits increasing $215.4 million and $56.8 million, respectively. The increase in interest-bearing deposits was driven by a $62.9 million, or 11.0%, increase in interest-bearing checking accounts and a $156.5 million, or 18.7%, increase in money market accounts, partially offset by a $182.2 million, or 28.8%, decrease in certificates of deposit. The increase in average deposits (interest and noninterest-bearing) was due to successful deposit gathering campaigns and the effect of government stimulus. As stated above, average borrowings for the six months ended December 31, 2021 decreased $418.6 million, or 88.1%, along with a 126 basis point decrease in the average cost of borrowings compared to the same period last year. The decrease in the average cost of borrowings was primarily driven by the early retirement of long-term borrowings reducing the average balance and partially driven by a shift to short-term borrowings at lower rates. The overall average cost of funds decreased 4540 basis points to ~~0.27%~~0.25% for the ~~current quarter~~six months compared to ~~0.72%~~0.65% in the same ~~quarter~~period last ~~year due primarily to the impact of lower rates.~~year.

Provision (Benefit) for ~~Credit~~Loan Losses. ~~During~~During the ~~three~~six months ended ~~September 30,~~December 31, 2021 there was a ~~$1.5~~$4.0 million net benefit for credit losses compared to a ~~$950,000 provision~~$2.1 million net benefit for credit losses for the corresponding ~~quarter~~period of fiscal 2021. Net loan ~~recoveries~~charge-offs totaled ~~$273,000~~$760,000 for the ~~three~~six months ended ~~September 30,~~December 31, 2021, compared to net loan charge-offs of ~~$699,000~~$637,000 for the same period last year. ~~Net recoveries~~Annualized net charge-offs as a percentage of average loans were ~~(0.04)%~~0.05% for the ~~quarter~~six months ended ~~September 30,~~December 31, 2021 compared to ~~net charge-offs of 0.10%~~0.04% for the ~~corresponding quarter last year.~~prior year period.

See "Comparison of Financial Condition - Asset Quality" for additional details.

Noninterest Income. Noninterest income increased ~~$1.7~~$2.5 million, or ~~19.8%~~14.2%, to ~~$10.4~~$20.5 million for the ~~three~~six months ended ~~September 30,~~December 31, 2021 from ~~$8.6~~$18.0 million for the same period in the previous ~~year primarily~~year. This change was due to a ~~$713,000,~~$910,000, or ~~21.3%~~12.9%, increase in the gain on sale of loans, a ~~$505,000,~~$741,000, or ~~106.5%~~71.0%, increase in loan income and fees, a ~~$275,000,~~$583,000, or ~~13.1%~~21.8%, increase in operating lease income, and a $372,000, or 8.2%, increase in service charges and fees on deposit accounts, and a $215,000, or 16.2% increase in operating lease income. The increase in gain on the sale of loans was driven by an increase in gains from sales of SBA loans in the current period as this line of business improves from the effects of the COVID-19 pandemic.accounts. During the ~~quarter~~six months ended ~~September 30,~~December 31, 2021, ~~$63.8~~$150.7 million of residential mortgage loans originated for sale ~~which~~ were sold with gains of ~~$2.1~~$4.3 million compared to ~~$96.0~~$190.7 million sold and gains of ~~$2.2~~$5.0 million in the corresponding ~~quarter~~period in the prior year. There were ~~$14.4~~$27.0 million of sales of the guaranteed portion of SBA commercial loans ~~sold~~ with gains of ~~$1.7~~$3.1 million in the ~~current quarter~~six months compared to ~~$15.1~~$24.5 million sold and gains of ~~$1.0~~$1.8 million infor the ~~corresponding quarter in the prior~~same period last year. ~~In addition, $47.4~~The Company sold $72.2 million of ~~home equity loans were sold~~HELOCs during the ~~quarter~~six months ended ~~September 30,~~December 31, 2021 for a gain of ~~$267,000~~$426,000 compared to ~~$20.0~~$42.1 million sold and gains of ~~$100,000~~$258,000 in the corresponding ~~quarter.~~period last year. Lastly, $11.5 million of indirect auto finance loans were sold out of the held for investment portfolio during the current period for a gain of $205,000. No such sales occurred in the same period in the prior year. The ~~$505,000,~~$741,000, or ~~106.5%~~71.0%, increase in loan income and fees was primarily a result of ~~$313,000~~$536,000 in additional loan servicing fees ~~from~~as a result of bringing ~~our~~the Company's SBA loan servicing process in-house, ~~beginning~~which began July 1, 2021, and ~~$257,000~~$279,000 in additional prepayment fee income from our equipment finance line of ~~business during the current quarter. Other increases~~business. The increase in ~~noninterest~~operating lease income ~~were~~was primarily driven by anincreases in loan originations and higher outstanding lease balances during the period. Lastly, the increase in ~~customer spending as a~~service charges on deposit accounts was the result of ~~economic recovery from the pandemic.~~a $290,000 increase in interchange income driven by higher debit card usage.

Noninterest Expense. Noninterest expense ~~of $26.0 million~~decreased $518,000, or 1.0%, for the ~~three~~six months ended ~~September 30,~~December 31, 2021 ~~was unchanged~~as compared to the same period last ~~year. An~~year, which was primarily a result of a decrease of $755,000, or 2.4%, in salaries and benefits expense due to branch closures and lower incentive pay in the period and a reduction of core deposit amortization expense of $282,000, or 64.1%, partially offset by an increase of ~~$380,000,~~$885,000, or ~~116.9%~~135.7%, in marketing and advertising ~~was partially offset by a decrease of $367,000, or 8.6% in other noninterest~~ expense ~~primarily~~ driven by ~~lower depreciation expense on operating lease equipment for~~reduced media advertising in the ~~three months ended September 30, 2021 compared to~~prior year period as a result of the ~~same period last year.~~pandemic.

Income Taxes. ~~Our~~For the six months ended December 31, 2021, the Company's income tax expense ~~for the three months ended September 30, 2021~~ increased ~~$1.6~~$1.8 million, or 44.6%, to ~~$3.0~~$5.8 million from ~~$1.4~~$4.0 million ~~for the three months ended September 30, 2020~~ as a result of higher ~~pre-tax book~~taxable income. The higher effective tax rate in the current period compared to the prior period was driven by a comparable amount of tax-exempt income in each period with higher pre-tax book income for the three months ended September 30, 2021. The effective tax ~~rate~~rates for ~~September 30,~~the six months ended December 31, 2021 and 2020 ~~was 22.0%~~were 21.3% and ~~20.1%~~21.0%, 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 rely on a number of different sources in order to meet our 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 ~~September 30,~~December 31, 2021, the Bank had an available borrowing capacity of ~~$278.7~~$285.1 million with the FHLB of Atlanta, a ~~$77.6~~$59.4 million line of credit with the FRB and a line of credit with ~~each of~~ three unaffiliated banks totaling $100.0 million. At ~~September 30,~~December 31, 2021, we had $30.0 million in FHLB advances outstanding, ~~$10.0~~$18.0 million in FRB ~~advances~~borrowings outstanding, and nothing outstanding under our other lines of credit. Additionally, we classify our securities portfolio as available for sale, providing an additional source of liquidity. Management believes that our ~~security~~securities portfolio is of high quality and the securities would therefore be marketable. ~~In addition, we~~We have 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 we also utilize brokered time deposits to supplement our 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. We also may utilize 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 ~~September 30,~~December 31, 2021 brokered deposits totaled $2.3 million, or 0.1%, of total deposits, compared to $4.3 million, or 0.2%, of total deposits, at June 30, 2021.

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 maintain a strategy of investing in various lending products and investment securities, including ~~mortgage-backed securities.~~MBS. HomeTrust Bancshares on a stand-alone level is a separate legal entity from the Bank and we must provide for our own liquidity and pay our own operating expenses. ~~Our primary source of funds consists of the net proceeds retained from the Conversion.~~ We ~~also~~ have 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 ~~September 30,~~December 31, 2021, HomeTrust Bancshares on a stand-alone basis had liquid assets of ~~$4.8~~$4.4 million.

We use our sources of funds primarily to meet our ongoing commitments, pay maturing deposits and fund withdrawals, and to fund loan commitments. At ~~September 30,~~December 31, 2021, the total approved loan commitments and unused lines of credit outstanding amounted to ~~$289.5~~$279.9 million and ~~$571.4~~$539.8 million, respectively, as compared to $401.1 million and $530.5 million, respectively, as of June 30, 2021. Certificates of deposit scheduled to mature in one year or less at ~~September 30,~~December 31, 2021, totaled ~~$386.2~~$381.3 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 a majority of our maturing deposits will continue to remain with us.

During the first ~~three~~six months of fiscal 2022, cash and cash equivalents decreased ~~$8.4~~$16.2 million, or ~~16.5%~~31.7%, to ~~$42.6~~$34.8 million as of ~~September 30,~~December 31, 2021 from $51.0 million as of June 30, 2021~~. Cash provided by investing activities~~ as excess liquidity was ~~$49.4 million, while cash~~ used in financing and operating activities was $54.3 million and $3.5 million, respectively. Primary sources of cash for the three months ended September 30, 2021 included $33.2 million in maturing securities available for sale, a $31.7 million increase in deposits, a $19.3 million decrease in loans, and a $5.6 million in maturities of certificates of deposit in other banks, net of purchases. Primary uses of cash during the period included a $75.0 million reduction in short-term borrowings, a $9.0 million increase in loans held for sale, $10.4 million in shares repurchased, $6.9 million in purchases of commercial paper, $5.3 million in purchases of debt securities available for sale, $2.4 million in purchases of premises and equipment, and $1.3 million in cash 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.~~pay down borrowings.

Off-Balance Sheet Activities

In the normal course of operations, we engage 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 ~~three~~six months ended ~~September 30,~~December 31, 2021, we did not engage in any off-balance sheet transactions likely to have a material effect on our financial condition, results of operations or cash flows.

A summary of our off-balance sheet commitments to extend credit at ~~September 30,~~December 31, 2021, is as follows:



(Dollars in thousands)

Undisbursed portion of construction loans	$	~~205,848~~201,032
Commitments to make loans	~~83,616~~78,875
Unused lines of credit	~~571,362~~539,778
Standby letters of credit	~~9,671~~9,496
Total loan commitments	$	~~870,497~~829,181

Capital Resources

At ~~September 30,~~December 31, 2021, stockholders' equity totaled ~~$396.5~~$401.7 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 are 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 ~~September 30,~~December 31, 2021. 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 ~~September 30,~~December 31, 2021 under applicable regulatory requirements.

HomeTrust Bancshares, Inc. and the Bank's actual and required minimum capital amounts and ratios are as follows:


						Regulatory Requirements													Regulatory Requirements
(Dollars in thousands)	(Dollars in thousands)	Actual				Minimum for Capital Adequacy Purposes				Minimum to Be Well Capitalized				(Dollars in thousands)	Actual				Minimum for Capital Adequacy Purposes				Minimum to Be Well Capitalized
		Amount		Ratio		Amount		Ratio		Amount		Ratio			Amount		Ratio		Amount		Ratio		Amount		Ratio
HomeTrust Bancshares, Inc.	HomeTrust Bancshares, Inc.													HomeTrust Bancshares, Inc.
September 30, 2021
December 31, 2021														December 31, 2021
CTE1 Capital (to risk-weighted assets)	CTE1 Capital (to risk-weighted assets)	$	375,799	11.25	%	$	150,258	4.50	%	$	217,040	6.50	%	CTE1 Capital (to risk-weighted assets)	$	380,835	11.16	%	$	153,538	4.50	%	$	221,777	6.50	%
Tier I Capital (to total adjusted assets)	Tier I Capital (to total adjusted assets)	$	375,799	10.75	%	$	139,873	4.00	%	$	174,841	5.00	%	Tier I Capital (to total adjusted assets)	380,835		10.83	%	140,618		4.00	%	175,773		5.00	%
Tier I Capital (to risk-weighted assets)	Tier I Capital (to risk-weighted assets)	$	375,799	11.25	%	$	200,344	6.00	%	$	267,126	8.00	%	Tier I Capital (to risk-weighted assets)	380,835		11.16	%	204,718		6.00	%	272,957		8.00	%
Total Risk-based Capital (to risk-weighted assets)	Total Risk-based Capital (to risk-weighted assets)	$	397,997	11.92	%	$	267,126	8.00	%	$	333,907	10.00	%	Total Risk-based Capital (to risk-weighted assets)	402,633		11.80	%	272,957		8.00	%	341,196		10.00	%

June 30, 2021	June 30, 2021													June 30, 2021
CTE1 Capital (to risk-weighted assets)	CTE1 Capital (to risk-weighted assets)	$	375,320	11.26	%	$	149,943	4.50	%	$	216,584	6.50	%	CTE1 Capital (to risk-weighted assets)	$	375,320	11.26	%	$	149,943	4.50	%	$	216,584	6.50	%
Tier I Capital (to total adjusted assets)	Tier I Capital (to total adjusted assets)	$	375,320	10.29	%	$	145,915	4.00	%	$	182,393	5.00	%	Tier I Capital (to total adjusted assets)	375,320		10.29	%	145,915		4.00	%	182,393		5.00	%
Tier I Capital (to risk-weighted assets)	Tier I Capital (to risk-weighted assets)	$	375,320	11.26	%	$	199,924	6.00	%	$	266,565	8.00	%	Tier I Capital (to risk-weighted assets)	375,320		11.26	%	199,924		6.00	%	266,565		8.00	%
Total Risk-based Capital (to risk-weighted assets)	Total Risk-based Capital (to risk-weighted assets)	$	398,408	11.96	%	$	266,565	8.00	%	$	333,206	10.00	%	Total Risk-based Capital (to risk-weighted assets)	398,408		11.96	%	266,565		8.00	%	333,206		10.00	%

HomeTrust Bank:	HomeTrust Bank:													HomeTrust Bank:
September 30, 2021
December 31, 2021														December 31, 2021
CTE1 Capital (to risk-weighted assets)	CTE1 Capital (to risk-weighted assets)	$	363,085	10.87	%	$	150,258	4.50	%	$	217,040	6.50	%	CTE1 Capital (to risk-weighted assets)	$	368,790	10.81	%	$	153,535	4.50	%	$	221,772	6.50	%
Tier I Capital (to total adjusted assets)	Tier I Capital (to total adjusted assets)	$	363,085	10.38	%	$	139,913	4.00	%	$	174,891	5.00	%	Tier I Capital (to total adjusted assets)	368,790		10.49	%	140,589		4.00	%	175,737		5.00	%
Tier I Capital (to risk-weighted assets)	Tier I Capital (to risk-weighted assets)	$	363,085	10.87	%	$	200,344	6.00	%	$	267,126	8.00	%	Tier I Capital (to risk-weighted assets)	368,790		10.81	%	204,713		6.00	%	272,951		8.00	%
Total Risk-based Capital (to risk-weighted assets)	Total Risk-based Capital (to risk-weighted assets)	$	385,283	11.54	%	$	267,126	8.00	%	$	333,907	10.00	%	Total Risk-based Capital (to risk-weighted assets)	390,588		11.45	%	272,951		8.00	%	341,188		10.00	%

June 30, 2021	June 30, 2021													June 30, 2021
CTE1 capital (to risk-weighted assets)	CTE1 capital (to risk-weighted assets)	$	357,767	10.74	%	$	149,936	4.50	%	$	216,575	6.50	%	CTE1 capital (to risk-weighted assets)	$	357,767	10.74	%	$	149,936	4.50	%	$	216,575	6.50	%
Tier I Capital (to total adjusted assets)	Tier I Capital (to total adjusted assets)	$	357,767	9.81	%	$	145,933	4.00	%	$	182,417	5.00	%	Tier I Capital (to total adjusted assets)	357,767		9.81	%	145,933		4.00	%	182,417		5.00	%
Tier I Capital (to risk-weighted assets)	Tier I Capital (to risk-weighted assets)	$	357,767	10.74	%	$	199,915	6.00	%	$	266,553	8.00	%	Tier I Capital (to risk-weighted assets)	357,767		10.74	%	199,915		6.00	%	266,553		8.00	%
Total Risk-based Capital (to risk-weighted assets)	Total Risk-based Capital (to risk-weighted assets)	$	380,855	11.43	%	$	266,553	8.00	%	$	333,192	10.00	%	Total Risk-based Capital (to risk-weighted assets)	380,855		11.43	%	266,553		8.00	%	333,192		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 ~~September 30,~~December 31, 2021, the conservation buffer was ~~3.92%~~3.80% and ~~3.54%~~3.45% 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 us. 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 2021 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 ~~September 30,~~December 31, 2021, was carried out under the supervision and with the participation of the Company's Chief Executive Officer, Chief Financial Officer and 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 ~~September 30,~~December 31, 2021, 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, on 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 the Company's internal control over financial reporting that occurred during the three months ended~~September 30, 2021 that materially affected, or are reasonably likely to materially affect, the 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 9 - Commitments and Contingencies" to the Consolidated Financial Statements included in Part I, Item 1 is incorporated herein by reference.

Item 1A. Risk Factors

There have been no material changes in the Risk Factors previously disclosed in Item 1A of the ~~Company's~~ 2021 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(a) Not applicable

(b) Not applicable

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
July 1 - July 31, 2021 117,657 $ 27.81 117,657 825,941
August 1 - August 31, 2021 70,737 27.67 70,737 755,204
September 1 - September 30, 2021 188,041 27.67 188,041 567,163
Total 376,435 $ 27.71 376,435 567,163


	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, 2021	52,648	$	28.61	52,648	514,515
November 1 - November 30, 2021	19,400	30.70		19,400	495,115
December 1 - December 31, 2021	227,349	30.21		227,349	267,766
Total	299,397	$	29.96	299,397	267,766

On April 2, 2020, the ~~Company announced that its~~Company's Board of Directors authorized the repurchase of up to 851,004 shares of the Company's common stock, representing 5% of its 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. On July 26, 2021, the stock~~This repurchase plan was completed ~~with shares purchased at an average price of $22.83.~~on July 26, 2021. On July 28, 2021, an additional 825,941 shares of common stock were authorized for repurchase representing 5% of the Company's outstanding shares at the time of the announcement. For the six months ended December 31, 2021, 675,832 shares were repurchased at an average price of $28.71 per share. 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

Nothing to report.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Nothing to report.

Item 6. Exhibits

Regulation S-K Exhibit Number Document Reference to Prior Filing or Exhibit Number Attached Hereto

3.1
Charter of HomeTrust Bancshares, Inc.
(a)
3.2
Articles Supplementary to the Charter of HomeTrust Bancshares, Inc. for HomeTrust Bancshares, Inc.'s Junior Participating Preferred Stock, Series A
(b)
3.3
Amended and Restated Bylaws of HomeTrust Bancshares, Inc.
(f)
4.1
Tax Benefits Preservation Plan, dated as of September 25, 2012, between HomeTrust Bancshares, Inc. and Registrar and Transfer Company, as Rights Agent
(b)
4.2
Amendment No. 1, dated as of August 31, 2015, to Tax Benefit Preservation Plan, dated as of September 25, 2012, between HomeTrust Bancshares, Inc. and Computershare Trust Company, N.A., as successor rights agent to Registrar and Transfer Company
(d)
4.3
Amendment No. 2, dated as of August 21, 2018, to Tax Benefits Preservation Plan, dated as of September 25, 2012, between HomeTrust Bancshares, Inc. and Computershare Trust Company,N.A., as successor rights agent to Registrar and Transfer Company

(e)
10.1
HomeTrust Bancshares, Inc. Strategic Operating Committee Incentive Plan
10.1
10.2
Amended and Restated Employment Agreement entered into between HomeTrust Bancshares, Inc. and Dana L. Stonestreet
(g)
10.3
Amended and Restated Employment Agreement entered into between HomeTrust Bancshares, Inc. and C. Hunter Westbrook
(g)
10.3A
Amendment No. One to Amended and Restated Employment Agreement entered into between HomeTrust Bancshares, Inc. and C. Hunter Westbrook
(h)
10.3B
Amendment No. Two dated as of October 27, 2020, to Amended and Restated Employment Agreement, dated as of September 11, 2018, by and between the Company and C. Hunter Westbrook
(i)
10.3C
Amendment No. Three dated as of July 26, 2021, to Amended and Restated Employment Agreement, dated as of September 11, 2018, by and between the Company and C. Hunter Westbrook
(c)
10.4
Amended and Restated Employment Agreement entered into between HomeTrust Bancshares,Inc. and Tony J. VunCannon

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

(a)
10.7F
SERP Joinder Agreement for Sidney A. Biesecker
(a)
10.7G
SERP Joinder Agreement for Peggy C. Melville
(a)
10.7H
SERP Joinder Agreement for William T. Flynt
(a)
10.7I
Amended and Restated Supplemental Income Agreement between HomeTrust Bank, as successor to Industrial Federal Savings Bank, and Sidney Biesecker
(j)
10.8
HomeTrust Bank Director Emeritus Plan ("Director Emeritus Plan")
(a)
10.8A
Director Emeritus Plan Joinder Agreement for William T. Flynt
(a)
10.8B
Director Emeritus Plan Joinder Agreement for J. Steven Goforth
(a)
10.8C
Director Emeritus Plan Joinder Agreement for Craig C. Koontz
(a)
10.8D
Director Emeritus Plan Joinder Agreement for Larry S. McDevitt
(a)
10.8E
Director Emeritus Plan Joinder Agreement for F.K. McFarland, III
(a)
10.8F
Director Emeritus Plan Joinder Agreement for Peggy C. Melville
(a)
10.8G
Director Emeritus Plan Joinder Agreement for Robert E. Shepherd, Sr.
(a)


Regulation S-K Exhibit Number	Document	Reference to Prior Filing or Exhibit Number Attached Hereto


3.1	Charter of HomeTrust Bancshares, Inc.	(a)
3.2	Articles Supplementary to the Charter of HomeTrust Bancshares, Inc. for HomeTrust Bancshares, Inc.'s Junior Participating Preferred Stock, Series A	(b)

3.3	Amended and Restated Bylaws of HomeTrust Bancshares, Inc.	(f)
4.1	Tax Benefits Preservation Plan, dated as of September 25, 2012, between HomeTrust Bancshares, Inc. and Registrar and Transfer Company, as Rights Agent	(b)
4.2	Amendment No. 1, dated as of August 31, 2015, to Tax Benefit Preservation Plan, dated as of September 25, 2012, between HomeTrust Bancshares, Inc. and Computershare Trust Company, N.A., as successor rights agent to Registrar and Transfer Company	(d)
4.3	Amendment No. 2, dated as of August 21, 2018, to Tax Benefits Preservation Plan, dated as of September 25, 2012, between HomeTrust Bancshares, Inc. and Computershare Trust Company,N.A., as successor rights agent to Registrar and Transfer Company	(e)
10.1	HomeTrust Bancshares, Inc. Strategic Operating Committee Incentive Plan	(p)
10.2	Amended and Restated Employment Agreement entered into between HomeTrust Bancshares, Inc. and Dana L. Stonestreet	(g)
10.3	Amended and Restated Employment Agreement entered into between HomeTrust Bancshares, Inc. and C. Hunter Westbrook	(g)
10.3A	Amendment No. One to Amended and Restated Employment Agreement entered into between HomeTrust Bancshares, Inc. and C. Hunter Westbrook	(h)
10.3B	Amendment No. Two dated as of October 27, 2020, to Amended and Restated Employment Agreement, dated as of September 11, 2018, by and between the Company and C. Hunter Westbrook	(i)
10.3C	Amendment No. Three dated as of July 26, 2021, to Amended and Restated Employment Agreement, dated as of September 11, 2018, by and between the Company and C. Hunter Westbrook	(c)
10.4	Amended and Restated Employment Agreement entered into between HomeTrust Bancshares,Inc. and Tony J. VunCannon	(g)
10.5	Reserved
10.6	Reserved
10.7	HomeTrust Bank Executive Supplemental Retirement Income Master Agreement ("SERP")	(a)
10.7A	SERP Joinder Agreement for F. Edward Broadwell, Jr.	(a)
10.7B	SERP Joinder Agreement for Dana L. Stonestreet	(a)
10.7C	SERP Joinder Agreement for Tony J. VunCannon	(a)
10.7D	SERP Joinder Agreement for Howard L. Sellinger	(a)
10.7E	SERP Joinder Agreement for Stan Allen	(a)
10.7F	SERP Joinder Agreement for Sidney A. Biesecker	(a)
10.7G	SERP Joinder Agreement for Peggy C. Melville	(a)
10.7H	SERP Joinder Agreement for William T. Flynt	(a)
10.7I	Amended and Restated Supplemental Income Agreement between HomeTrust Bank, as successor to Industrial Federal Savings Bank, and Sidney Biesecker	(j)
10.8	HomeTrust Bank Director Emeritus Plan ("Director Emeritus Plan")	(a)
10.8A	Director Emeritus Plan Joinder Agreement for William T. Flynt	(a)
10.8B	Director Emeritus Plan Joinder Agreement for J. Steven Goforth	(a)


10.8C				10.8C	Director Emeritus Plan Joinder Agreement for Craig C. Koontz	(a)
10.8D				10.8D	Director Emeritus Plan Joinder Agreement for Larry S. McDevitt	(a)
10.8E				10.8E	Director Emeritus Plan Joinder Agreement for F.K. McFarland, III	(a)
10.8F				10.8F	Director Emeritus Plan Joinder Agreement for Peggy C. Melville	(a)
10.8G				10.8G	Director Emeritus Plan Joinder Agreement for Robert E. Shepherd, Sr.	(a)
10.9	10.9	HomeTrust Bank Defined Contribution Executive Medical Care Plan	(a)	10.9	HomeTrust Bank Defined Contribution Executive Medical Care Plan	(a)
10.10	10.10	HomeTrust Bank 2005 Deferred Compensation Plan	(a)	10.10	HomeTrust Bank 2005 Deferred Compensation Plan	(a)
10.11	10.11	HomeTrust Bank Pre-2005 Deferred Compensation Plan	(a)	10.11	HomeTrust Bank Pre-2005 Deferred Compensation Plan	(a)
10.12	10.12	HomeTrust Bancshares, Inc. 2013 Omnibus Incentive Plan ("Omnibus Incentive Plan")	(k)	10.12	HomeTrust Bancshares, Inc. 2013 Omnibus Incentive Plan ("Omnibus Incentive Plan")	(k)
10.13	10.13	Form of Incentive Stock Option Award Agreement under Omnibus Incentive Plan	(l)	10.13	Form of Incentive Stock Option Award Agreement under Omnibus Incentive Plan	(l)
10.14	10.14	Form of Non-Qualified Stock Option Award Agreement under Omnibus Incentive Plan	(l)	10.14	Form of Non-Qualified Stock Option Award Agreement under Omnibus Incentive Plan	(l)
10.15	10.15	Form of Stock Appreciation Right Award Agreement under Omnibus Incentive Plan	(l)	10.15	Form of Stock Appreciation Right Award Agreement under Omnibus Incentive Plan	(l)
10.16	10.16	Form of Restricted Stock Award Agreement under Omnibus Incentive Plan	(l)	10.16	Form of Restricted Stock Award Agreement under Omnibus Incentive Plan	(l)
10.17	10.17	Form of Restricted Stock Unit Award Agreement under Omnibus Incentive Plan	(l)	10.17	Form of Restricted Stock Unit Award Agreement under Omnibus Incentive Plan	(l)
10.18	10.18	Agreement and General Release between HomeTrust Bancshares, Inc. and Paula Labian	(f)	10.18	Agreement and General Release between HomeTrust Bancshares, Inc. and Paula Labian	(f)
10.19	10.19	Reserved		10.19	Retirement Payment Agreement, dated as of September 1, 1987, between HomeTrust Bank and Larry S. McDevitt, as amended	(m)
10.20	10.20	Money Purchase Deferred Compensation Agreement, dated as of September 1, 1987, between HomeTrust Bank and F. Edward Broadwell, Jr.	(m)	10.20	Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and Marty Caywood	(n)
10.21	10.21	Retirement Payment Agreement, dated as of September 1, 1987, between HomeTrust Bank and F. Edward Broadwell, Jr., as amended	(m)	10.21	Amended and Restated Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and Keith J. Houghton	(g)
10.22	10.22	Retirement Payment Agreement, dated as of September 1, 1987, between HomeTrust Bank and Larry S. McDevitt, as amended	(m)	10.22	Amended and Restated Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and R. Parrish Little	(o)
10.23		Retirement Payment Agreement, dated as of September 1, 1987, between HomeTrust Bank and Peggy C. Melville, as amended	(m)
10.24		Retirement Payment Agreement, dated as of August 1, 1988, between HomeTrust Bank and Robert E. Shepherd, Sr., as amended	(m)
10.25		Retirement Payment Agreement, dated as of May 1, 1991, between HomeTrust Bank and William T. Flynt, as amended	(m)
10.26		Offer Letter between HomeTrust Bank and Keith J. Houghton	(n)
10.27		Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and Marty Caywood	(o)
10.28		Amended and Restated Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and Keith J. Houghton	(g)
10.29		Amended and Restated Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and R. Parrish Little	(p)
31.1	31.1	Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	31.1	31.1	Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	31.1
31.2	31.2	Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	31.2	31.2	Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	31.2
32	32	Certificate of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	32.0	32	Certificate of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	32.0
101	101	The following materials from HomeTrust Bancshares' Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, 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	101	The following materials from HomeTrust Bancshares' Quarterly Report on Form 10-Q for the quarter ended December 31, 2021, 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 July 26, 2021 (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~~Bancshares's Current Report on Form 8-K filed on August 21, 2018 (File No. 001-35593).

(f)Filed as an exhibit to HomeTrust Bancshares's Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 (File No. 001-35593).

(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~~Bancshares's Current Report on Form 8-K filed on September 25, 2018 (File No. 001-35593.

(i)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on October 28, 2020 (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)~~(o)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).

(p)Filed as an exhibit to HomeTrust Bancshares's Quarterly Report on Form 10-Q for the quarter ended September 30, 2021 (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: ~~November 5, 2021~~February 7, 2022	By:	/s/ Dana L. Stonestreet
		Dana L. Stonestreet
		Chairman and CEO
		(Duly Authorized Officer)

Date: ~~November 5, 2021~~February 7, 2022	By:	/s/ Tony J. VunCannon
		Tony J. VunCannon
		Executive Vice President, CFO, Corporate Secretary and Treasurer
		(Principal Financial and Accounting Officer)


	(Unaudited)
	September 30, 2021		June 30, 2021(1)
Assets
Cash	$	22,431	$	22,312
Interest-bearing deposits	20,142		28,678
Cash and cash equivalents	42,573		50,990
Commercial paper	196,652		189,596
Certificates of deposit in other banks	35,495		40,122
Debt securities available for sale, at fair value (amortized cost of $122,915 and $154,493 at September 30, 2021 and June 30, 2021, respectively)	124,576		156,459
Other investments, at cost	20,891		23,710
Loans held for sale	105,161		93,539
Total loans, net of deferred loan fees and costs	2,719,642		2,733,267
Allowance for credit losses	(34,406)		(35,468)
Net loans	2,685,236		2,697,799
Premises and equipment, net	68,568		70,909
Accrued interest receivable	8,429		7,933
Real Estate Owned ("REO")	45		188
Deferred income taxes	15,722		16,901
Bank Owned Life Insurance ("BOLI")	93,679		93,108
Goodwill	25,638		25,638
Core deposit intangibles	250		343
Other assets	58,445		57,488
Total Assets	$	3,481,360	$	3,524,723
Liabilities and stockholders' equity
Liabilities
Deposits	$	2,987,284	$	2,955,541
Borrowings	40,000		115,000

Other liabilities	57,565		57,663
Total liabilities	3,084,849		3,128,204
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, 16,307,658 shares issued and outstanding at September 30, 2021; 16,636,483 at June 30, 2021	163		167
Additional paid in capital	151,425		160,582
Retained earnings	249,331		240,075
Unearned Employee Stock Ownership Plan ("ESOP") shares	(5,687)		(5,819)
Accumulated other comprehensive income	1,279		1,514
Total stockholders' equity	396,511		396,519
Total liabilities and stockholders' equity	$	3,481,360	$	3,524,723


	September 30, 2021		June 30, 2021
Performing TDRs	$	11,341	$	11,088


	Three Months Ended
	September 30, 2020
	Commercial		Retail Consumer		Total
Balance at beginning of period	$	21,116	$	6,956	$	28,072
Impact of adoption ASU 2016-13	4,073		10,736		14,809
Provision for credit losses	292		658		950
Charge-offs	(1,095)		(682)		(1,777)
Recoveries	813		265		1,078
Net charge-offs	(282)		(417)		(699)
Balance at end of period	$	25,199	$	17,933	43,132


	September 30, 2021		June 30, 2021
Lease receivables	$	63,741	$	63,279