HomeTrust Bancshares, Inc. Announces Financial Results for the First Quarter of Fiscal Year 2023 and an Increase in the Quarterly Dividend - HomeTrust Bancshares (NASDAQ:HTBI)

ASHEVILLE, N.C., Oct. 26, 2022 (GLOBE NEWSWIRE) -- HomeTrust Bancshares, Inc. HTBI ("Company"), the holding company of HomeTrust Bank ("Bank"), today announced preliminary net income for the first quarter of fiscal year 2023 and an increase in its quarterly cash dividend.

For the quarter ended September 30, 2022 compared to the quarter ended June 30, 2022:

net income was $9.2 million compared to net income of $6.0 million;
diluted earnings per share ("EPS") was $0.60 compared to $0.39;
annualized return on assets ("ROA") was 1.02% compared to 0.68%;
annualized return on equity ("ROE") was 9.25% compared to 6.19%;
net interest income was $34.5 million compared to $28.9 million;
provision for credit losses was $4.0 million compared to $3.4 million;
noninterest income was $7.4 million compared to $9.7 million;
net loan growth was $98.5 million, or 14.2% annualized, compared to $69.8 million, or 10.3% annualized; and
quarterly cash dividends continued at $0.09 per share totaling $1.4 million.

For the quarter ended September 30, 2022 compared to the quarter ended September 30, 2021:

net income was $9.2 million compared to a net income of $10.5 million;
diluted EPS was $0.60 compared to $0.65;
annualized ROA was 1.02% compared to 1.20%;
annualized ROE was 9.25% compared to 10.62%;
net interest income was $34.5 million compared to $27.7 million;
provision for credit losses was $4.0 million compared to a net benefit of $1.5 million;
noninterest income was $7.4 million compared to $10.4 million;
net loan growth was $98.5 million, or 14.2% annualized, compared to a decrease of $13.6 million, or (2.0)% annualized; and
quarterly cash dividends of $0.09 per share totaling $1.4 million compared to $0.08 per share totaling $1.3 million.

The Company also announced today that its Board of Directors declared a quarterly cash dividend of $0.10 per common share, reflecting a $0.01, or 11.1%, increase over the previous quarter's dividend. This is the fourth increase of the quarterly dividend since the Company initiated cash dividends in November 2018. The dividend is payable on December 1, 2022 to shareholders of record as of the close of business on November 17, 2022.

"The Company's strong end to the prior fiscal year carried over to the first quarter," said Hunter Westbrook, President and Chief Executive Officer. "This quarter we grew our loan portfolio by $98.5 million, an annualized growth rate of 14.2%, which was distributed across our business lines. Our growth over the last two quarters, combined with an increase in our tax equivalent net interest margin from 3.53% to 4.13% this quarter, resulted in an increase in net interest income of $5.7 million, or 19.6%, over the prior quarter. This growth more than offset the decline in noninterest income caused by the continued slowdown in the mortgage market as a result of rising interest rates.

"Due to our loan growth and expected higher unemployment rates, we recorded another sizeable provision for credit losses this quarter; however, to this point credit metrics, including the levels of nonperforming and classified credits, remain at historically low levels. We will continue to prudently focus on the asset origination capacity of all our lines of business, while maintaining the credit culture that has supported our growth in recent years."

WEBSITE: WWW.HTB.COM

Comparison of Results of Operations for the Three Months Ended September 30, 2022 and June 30, 2022

Net Income. Net income totaled $9.2 million, or $0.60 per diluted share, for the three months ended September 30, 2022 compared to net income of $6.0 million, or $0.39 per diluted share, for the three months ended June 30, 2022, an increase of $3.2 million, or 52.7%. The results for the three months ended September 30, 2022 were positively impacted by a $5.7 million increase in net interest income, partially offset by a $2.3 million decrease in noninterest income. Details of the changes in the various components of net income are further discussed below.

Net Interest Income. The following table presents the distribution of average assets, liabilities and equity, as well as interest income on average interest-earning assets and interest expense paid on average interest-bearing liabilities. All average balances are daily average balances. Nonaccruing loans have been included in the table as loans carrying a zero yield.

	Three Months Ended
	September 30, 2022							June 30, 2022
(Dollars in thousands)	Average Balance Outstanding			Interest Earned/ Paid⁽²⁾		Yield/ Rate⁽²⁾		Average Balance Outstanding			Interest Earned/ Paid⁽²⁾		Yield/ Rate⁽²⁾
Assets
Interest-earning assets
Loans receivable⁽¹⁾	$	2,880,148		$	33,522	4.62	%	$	2,807,969		$	28,457	4.06	%
Commercial paper		214,214			1,116	2.07			295,485			852	1.16
Debt securities available for sale		135,015			678	1.99			118,075			483	1.64
Other interest-earning assets⁽³⁾		113,821			888	3.10			92,026			628	2.74
Total interest-earning assets		3,343,198			36,204	4.30			3,313,555			30,420	3.68
Other assets		243,113							255,596
Total assets		3,586,311							3,569,151
Liabilities and equity
Interest-bearing liabilities
Interest-bearing checking accounts	$	654,154		$	268	0.16	%	$	664,966		$	340	0.20	%
Money market accounts		968,084			521	0.21			979,816			350	0.14
Savings accounts		238,992			45	0.07			235,848			42	0.07
Certificate accounts		476,761			561	0.47			485,978			500	0.41
Total interest-bearing deposits		2,337,991			1,395	0.24			2,366,608			1,232	0.21
Borrowings		1,526			12	3.12			26,761			35	0.52
Total interest-bearing liabilities		2,339,517			1,407	0.24			2,393,369			1,267	0.21
Noninterest-bearing deposits		800,912							738,734
Other liabilities		51,485							46,928
Total liabilities		3,191,914							3,179,031
Stockholders' equity		394,397							390,120
Total liabilities and stockholders' equity		3,586,311							3,569,151
Net earning assets	$	1,003,681						$	920,186
Average interest-earning assets to average interest-bearing liabilities		142.90	%						138.45	%
Tax-equivalent
Net interest income				$	34,797						$	29,153
Interest rate spread						4.06	%						3.47	%
Net interest margin⁽⁴⁾						4.13	%						3.53	%
Non-tax-equivalent
Net interest income				$	34,520						$	28,859
Interest rate spread						4.02	%						3.43	%
Net interest margin⁽⁴⁾						4.10	%						3.49	%

^{(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 $277 and $294 for the three months ended September 30, 2022 and June 30, 2022, 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, SBIC investments, and deposits in other banks.}
^{(4) Net interest income divided by average interest-earning assets.}

Total interest and dividend income for the three months ended September 30, 2022 increased $5.8 million, or 19.3%, compared to the three months ended June 30, 2022, which was driven by a $5.1 million, or 18.0%, increase in interest income on loans. The overall increase in average yield on interest-earning assets was the result of rising interest rates, while the rate paid on interest-bearing liabilities has not increased as rapidly. Specific to the commercial paper and debt securities available for sale, the Company has intentionally maintained relatively short-term duration portfolios which has allowed, and will continue to allow the Company, to take advantage of rising rates when reinvesting the proceeds of maturing instruments.

Total interest expense for the three months ended September 30, 2022 increased $140,000, or 11.0%, compared to the three months ended June 30, 2022. The increase was driven by a $163,000, or 13.2%, increase in interest expense on deposits as a result of a 3 basis point increase in the associated average cost of funds, offset by a $23,000 decrease in interest expense on borrowings.

The following table shows the effects that changes in average balances (volume), including differences in the number of days in the periods compared, and average interest rates (rate) had on the interest earned on interest-earning assets and interest paid on interest-bearing liabilities:

(Dollars in thousands)	Increase/ (Decrease) Due to						Total Increase/ (Decrease)
	Volume			Rate			Total Increase/ (Decrease)
Interest-earning assets
Loans receivable	$	1,096		$	3,969		$	5,065
Commercial paper		(222	)		486			264
Debt securities available for sale		77			118			195
Other interest-earning assets		158			102			260
Total interest-earning assets		1,109			4,675			5,784
Interest-bearing liabilities
Interest-bearing checking accounts		(3	)		(69	)		(72	)
Money market accounts		1			170			171
Savings accounts		1			2			3
Certificate accounts		(3	)		64			61
Borrowings		(33	)		10			(23	)
Total interest-bearing liabilities		(37	)		177			140
Net increase in tax equivalent interest income							$	5,644

Provision for Credit Losses. The provision for credit losses is the amount of expense that, based on our judgment, is required to maintain the allowance for credit losses ("ACL") at an appropriate level under the current expected credit losses ("CECL") model.

The following table presents a breakdown of the components of the provision for credit losses:

	Three Months Ended
	September 30, 2022			June 30, 2022			$ Change			% Change
Provision for credit losses
Loans	$	3,694		$	2,942		$	752		26	%
Off-balance-sheet credit exposure		443			566			(123	)	(22	)
Commercial paper		(150	)		(95	)		(55	)	(58	)
Total provision for credit losses	$	3,987		$	3,413		$	574		17	%

For the quarter ended September 30, 2022, the "loans" portion of the provision for credit losses was the result of the following, offset by net charge-offs of $83,000 during the quarter:

$1.3 million provision specific to fintech portfolios which have a riskier credit profile than loans originated in-house. The elevated credit risk is offset by the higher yields earned on the portfolios.
$1.1 million provision driven by a projected worsening of the economic forecast, specifically the national unemployment rate.
$1.3 million provision driven by loan growth, changes in the loan mix, and qualitative adjustments.

For the quarter ended June 30, 2022, the "loans" portion of the provision for credit losses was the result of the following, offset by net recoveries of $714,000 during the quarter:

$1.2 million provision specific to fintech portfolios.
$0.8 million provision driven by a projected worsening of the economic forecast, specifically the national unemployment rate.
$0.8 million provision driven by loan growth, changes in the loan mix, and qualitative adjustments.
$0.8 million provision to fully reserve a single individually evaluated commercial loan relationship where the borrower's financial performance deteriorated during the quarter.

For both periods presented, a provision for credit losses for off-balance-sheet credit exposure was required for the same reasons outlined above rather than as a result of significant increases in outstanding commitments.

Noninterest Income. Noninterest income for the three months ended September 30, 2022 decreased $2.3 million, or 23.7%, when compared to the quarter ended June 30, 2022. Changes in selected components of noninterest income are discussed below:

	Three Months Ended
	September 30, 2022		June 30, 2022		$ Change			% Change
Noninterest income
Service charges and fees on deposit accounts	$	2,338	$	2,361	$	(23	)	(1	)%
Loan income and fees		570		649		(79	)	(12	)
Gain on sale of loans held for sale		1,586		1,949		(363	)	(19	)
BOLI income		527		500		27		5
Operating lease income		1,585		1,472		113		8
Gain on sale of debt securities available for sale		—		1,895		(1,895	)	(100	)
Other		804		890		(86	)	(10	)
Total noninterest income	$	7,410	$	9,716	$	(2,306	)	(24	)%

Gain on sale of loans held for sale: The decrease in the gain on sale of loans held for sale was primarily driven by a decrease in volume of residential mortgage loans sold during the period as a result of rising interest rates. During the quarter ended September 30, 2022, $20.9 million of residential mortgage loans originated for sale were sold with gains of $493,000 compared to $38.3 million sold with gains of $835,000 for the quarter ended June 30, 2022. There were $12.1 million of sales of the guaranteed portion of SBA commercial loans with gains of $891,000 in the current quarter compared to $11.2 million sold and gains of $904,000 in the prior quarter. Lastly, the Company sold $22.8 million of home equity lines of credit ("HELOCs") during the current quarter for a gain of $202,000 compared to $22.8 million sold and gains of $210,000 in the prior quarter.
Gain on sale of debt securities available for sale: The decrease in the gain was driven by the sale of seven trust preferred securities during the quarter ended June 30, 2022 which had previously been written down to zero through purchase accounting adjustments from a merger in a prior period. No other securities were sold during either period presented.

Noninterest Expense. Noninterest expense for the three months ended September 30, 2022 decreased $1.4 million, or 4.9%, when compared to the three months ended June 30, 2022. Changes in selected components of noninterest expense are discussed below:

	Three Months Ended
	September 30, 2022		June 30, 2022		$ Change			% Change
Noninterest expense
Salaries and employee benefits	$	14,815	$	14,709	$	106		1	%
Occupancy expense, net		2,408		2,491		(83	)	(3	)
Computer services		2,763		2,811		(48	)	(2	)
Telephone, postage and supplies		603		599		4		1
Marketing and advertising		590		473		117		25
Deposit insurance premiums		542		432		110		25
Core deposit intangible amortization		34		42		(8	)	(19	)
Merger-related expenses		474		—		474		100
Officer transition agreement expense		—		1,795		(1,795	)	(100	)
Other		3,872		4,107		(235	)	(6	)
Total noninterest expense	$	26,101	$	27,459	$	(1,358	)	(5	)%

Merger-related expenses: On July 24, 2022, the Company entered into an Agreement and Plan of Merger with Quantum Capital Corp. The expense for the three months ended September 30, 2022 are costs incurred related to due diligence and legal work performed associated with the transaction. No such expense was incurred in the quarter ended June 30, 2022.
Officer transition agreement expense: In May 2022, the Company entered into an amended and restated employment and transition agreement with the Company's Chairman and former CEO. As part of this agreement, the full amount of the estimated separation payment was accrued in the quarter ended June 30, 2022. No such expenses were incurred in the quarter ended September 30, 2022.

Income Taxes. The amount of income tax expense is influenced by the amount of pre-tax income, the amount of tax-exempt income, changes in the statutory rate, and the effect of changes in valuation allowances maintained against deferred tax benefits. Income tax expense for the three months ended September 30, 2022 increased $965,000 as a result of higher taxable income in the current quarter and an increase in the effective tax rate which moved from 21.8% to 22.3% quarter-over-quarter.

Comparison of Results of Operations for the Three Months Ended September 30, 2022 and September 30, 2021

Net Income. Net income totaled $9.2 million, or $0.60 per diluted share, for the three months ended September 30, 2022 compared to net income of $10.5 million, or $0.65 per diluted share, for the three months ended September 30, 2021, a decrease of $1.3 million, or 12.6%. The results for the three months ended September 30, 2022 were negatively impacted by an increase of $5.4 million in the provision for credit losses and a $2.9 million decrease in noninterest income, partially offset by a $6.8 million increase in net interest income. Details of the changes in the various components of net income are further discussed below.

Net Interest Income. The following table presents the distribution of average assets, liabilities and equity, as well as interest income earned on average interest-earning assets and interest expense paid on average interest-bearing liabilities. All average balances are daily average balances. Nonaccruing loans have been included in the table as loans carrying a zero yield.

	Three Months Ended
	September 30, 2022							September 30, 2021
(Dollars in thousands)	Average Balance Outstanding			Interest Earned/ Paid⁽²⁾		Yield/ Rate⁽²⁾		Average Balance Outstanding			Interest Earned/ Paid⁽²⁾		Yield/ Rate⁽²⁾
Assets
Interest-earning assets
Loans receivable⁽¹⁾	$	2,880,148		$	33,522	4.62	%	$	2,819,716		$	28,205	3.97	%
Commercial paper		214,214			1,116	2.07			160,857			155	0.38
Debt securities available for sale		135,015			678	1.99			138,435			524	1.50
Other interest-earning assets⁽³⁾		113,821			888	3.10			138,438			731	2.09
Total interest-earning assets		3,343,198			36,204	4.30			3,257,446			29,615	3.61
Other assets		243,113							260,976
Total assets		3,586,311							3,518,422
Liabilities and equity
Interest-bearing liabilities
Interest-bearing checking accounts	$	654,154		$	268	0.16	%	$	635,456		$	397	0.25	%
Money market accounts		968,084			521	0.21			988,990			367	0.15
Savings accounts		238,992			45	0.07			223,658			41	0.07
Certificate accounts		476,761			561	0.47			457,865			767	0.67
Total interest-bearing deposits		2,337,991			1,395	0.24			2,305,969			1,572	0.27
Borrowings		1,526			12	3.12			55,464			26	0.18
Total interest-bearing liabilities		2,339,517			1,407	0.24			2,361,433			1,598	0.27
Noninterest-bearing deposits		800,912							708,219
Other liabilities		51,485							52,305
Total liabilities		3,191,914							3,121,957
Stockholders' equity		394,397							396,465
Total liabilities and stockholders' equity		3,586,311							3,518,422
Net earning assets	$	1,003,681						$	896,013
Average interest-earning assets to average interest-bearing liabilities		142.90	%						137.94	%
Tax-equivalent
Net interest income				$	34,797						$	28,017
Interest rate spread						4.06	%						3.34	%
Net interest margin⁽⁴⁾						4.13	%						3.41	%
Non-tax-equivalent
Net interest income				$	34,520						$	27,707
Interest rate spread						4.02	%						3.30	%
Net interest margin⁽⁴⁾						4.10	%						3.37	%

^{(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 $277 and $310 for the three months ended September 30, 2022 and September 30, 2021, 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, SBIC investments, and deposits in other banks.}
^{(4) Net interest income divided by average interest-earning assets.}

Total interest and dividend income for the three months ended September 30, 2022 increased $6.6 million, or 22.6%, compared to the three months ended September 30, 2021, which was driven by a $5.4 million, or 19.2%, increase in interest income on loans, and a $961,000, or 620.0%, increase in interest income on commercial paper. The overall increase in average yield on interest-earning assets was the result of rising interest rates, while the rate paid on interest-bearing liabilities has not increased as rapidly. Specific to the commercial paper and debt securities available for sale, the Company has intentionally maintained relatively short-term duration portfolios which has allowed, and will continue to allow the Company, to take advantage of rising rates when reinvesting the proceeds of maturing instruments.

Total interest expense for the three months ended September 30, 2022 decreased $191,000, or 12.0%, compared to the three months ended September 30, 2021. The decrease was driven by a $177,000, or 11.3%, decrease in interest expense on deposits as a result of a 3 basis point decrease in the associated average cost of funds.

(Dollars in thousands)	Increase/ (Decrease) Due to						Total Increase/ (Decrease)
	Volume			Rate			Total Increase/ (Decrease)
Interest-earning assets
Loans receivable	$	604		$	4,713		$	5,317
Commercial paper		51			910			961
Debt securities available for sale		(13	)		167			154
Other interest-earning assets		(130	)		287			157
Total interest-earning assets		512			6,077			6,589
Interest-bearing liabilities
Interest-bearing checking accounts		12			(141	)		(129	)
Money market accounts		(8	)		162			154
Savings accounts		3			1			4
Certificate accounts		32			(238	)		(206	)
Borrowings		(25	)		11			(14	)
Total interest-bearing liabilities		14			(205	)		(191	)
Net increase in tax equivalent interest income							$	6,780

Provision (Benefit) for Credit Losses. The following table presents a breakdown of the components of the provision (benefit) for credit losses:

	Three Months Ended
	September 30, 2022			September 30, 2021			$ Change			% Change
Provision (benefit) for credit losses
Loans	$	3,694		$	(1,335	)	$	5,029		(377	)%
Off-balance-sheet credit exposure		443			(125	)		568		(454	)
Commercial paper		(150	)		—			(150	)	(100	)
Total provision (benefit) for credit losses	$	3,987		$	(1,460	)	$	5,447		(373	)%

For the quarter ended September 30, 2022, the "loans" portion of the provision (benefit) for credit losses was the result of the following, offset by net charge-offs of $83,000 during the quarter:

$1.3 million provision specific to fintech portfolios which have a riskier credit profile than loans originated in-house. The elevated credit risk is offset by the higher yields earned on the portfolios.
$1.1 million provision driven by a projected worsening of the economic forecast, specifically the national unemployment rate.
$1.3 million provision driven by loan growth, changes in the loan mix, and qualitative adjustments.

For the quarter ended September 30, 2021, the "loans" portion of the benefit for credit losses was driven by a slight improvement in the economic forecast, as more clarity was gained regarding the impact of COVID-19 upon the loan portfolio.

Noninterest Income. Noninterest income for the three months ended September 30, 2022 decreased $2.9 million, or 28.4%, when compared to the quarter ended September 30, 2021. Changes in selected components of noninterest income are discussed below:

	Three Months Ended
	September 30, 2022		September 30, 2021		$ Change			% Change
Noninterest income
Service charges and fees on deposit accounts	$	2,338	$	2,372	$	(34	)	(1	)%
Loan income and fees		570		979		(409	)	(42	)
Gain on sale of loans held for sale		1,586		4,057		(2,471	)	(61	)
BOLI income		527		518		9		2
Operating lease income		1,585		1,540		45		3
Gain on sale of debt securities available for sale		—		—		—		—
Other		804		886		(82	)	(9	)
Total noninterest income	$	7,410	$	10,352	$	(2,942	)	(28	)%

Loan income and fees: The decrease in loan income and fees during the quarter ended September 30, 2022 was the result of lower prepayment and underwriting fees recognized during the period compared to the same period last year.
Gain on sale of loans held for sale: The decrease in the gain on sale of loans held for sale was primarily driven by a decrease in the volume of residential mortgage loans, SBA commercial loans, and HELOCs sold during the period as a result of rising interest rates. During the quarter ended September 30, 2022, $20.9 million of residential mortgage loans originated for sale were sold with gains of $493,000 compared to $63.8 million sold with gains of $2.1 million for the quarter ended September 30, 2021. There were $12.1 million of sales of the guaranteed portion of SBA commercial loans with gains of $891,000 in the current quarter compared to $14.4 million sold and gains of $1.7 million for the same period in the prior year. Lastly, the Company sold $22.8 million of HELOCs during the quarter for a gain of $202,000 compared to $47.4 million sold and gains of $267,000 in the same period last year.

Noninterest Expense. Noninterest expense for the three months ended September 30, 2022 increased $85,000, or 0.3%, when compared to the three months ended September 30, 2021. Changes in selected components of noninterest expense are discussed below:

	Three Months Ended
	September 30, 2022		September 30, 2021		$ Change			% Change
Noninterest expense
Salaries and employee benefits	$	14,815	$	15,280	$	(465	)	(3	)%
Occupancy expense, net		2,408		2,317		91		4
Computer services		2,763		2,521		242		10
Telephone, postage and supplies		603		650		(47	)	(7	)
Marketing and advertising		590		705		(115	)	(16	)
Deposit insurance premiums		542		566		(24	)	(4	)
Core deposit intangible amortization		34		93		(59	)	(63	)
Merger-related expenses		474		—		474		100
Officer transition agreement expense		—		—		—		—
Other		3,872		3,884		(12	)	—
Total noninterest expense	$	26,101	$	26,016	$	85		—	%

Salaries and employee benefits: The decrease in salaries and employee benefits expense is primarily the result of branch closures and lower mortgage banking incentive pay as a result of the reduction of the volume of originations as a result of rising interest rates.
Merger-related expenses: On July 24, 2022, the Company entered into an Agreement and Plan of Merger with Quantum Capital Corp. The expense for the three months ended September 30, 2022 are costs incurred related to due diligence and legal work performed associated with the transaction. No such expense was incurred in the quarter ended September 30, 2021.

Income Taxes. The amount of income tax expense is influenced by the amount of pre-tax income, the amount of tax-exempt income, changes in the statutory rate, and the effect of changes in valuation allowances maintained against deferred tax benefits. Income tax expense for the three months ended September 30, 2022 decreased $333,000 as a result of lower taxable income in the current quarter compared to the corresponding period in the prior year, partially offset by an increase in the effective tax rate from 22.0% to 22.3% between periods.

Balance Sheet Review

Total assets increased by $5.9 million to $3.6 billion and total liabilities decreased by $1.4 million to $3.2 billion, respectively, at September 30, 2022 as compared to June 30, 2022. The decrease in commercial paper of $109.1 million was used to fund loan growth of $98.5 million and an increase of $34.8 million in available for sale debt securities during the period.

Stockholders' equity increased $7.4 million to $396.2 million at September 30, 2022 as compared to June 30, 2022. Activity within stockholders' equity included $9.2 million in net income, $1.2 million in stock-based compensation and stock option exercises, offset by $1.4 million in cash dividends declared and a $1.6 million decline in accumulated other comprehensive income associated with available for sale debt securities. As of September 30, 2022, the Bank was considered "well capitalized" in accordance with its regulatory capital guidelines and exceeded all regulatory capital requirements.

Asset Quality

The ACL on loans was $38.3 million, or 1.34% of total loans, at September 30, 2022 compared to $34.7 million, or 1.25% of total loans, as of June 30, 2022. The drivers of this quarter-over-quarter change are discussed in the "Three Months Ended September 30, 2022 and June 30, 2022" section above.

Net loan charge-offs totaled $83,000 for the three months ended September 30, 2022 compared to net recoveries of $714,000 for the three months ended June 30, 2022. Net charge-offs as a percentage of average loans were 0.01% for the three months ended September 30, 2022 compared to net recoveries of 0.10% for the prior quarter.

Nonperforming assets increased by $706,000, or 11.2%, to $7.0 million, or 0.20% of total assets, at September 30, 2022 compared to $6.3 million, or 0.18% of total assets, at June 30, 2022. Nonperforming assets included $6.8 million in nonaccruing loans and $200,000 of real estate owned ("REO") at September 30, 2022, compared to $6.1 million and $200,000 in nonaccruing loans and REO, respectively, at June 30, 2022. Nonperforming loans to total loans was 0.24% at September 30, 2022 and 0.22% at June 30, 2022.

The ratio of classified assets to total assets decreased to 0.54% at September 30, 2022 from 0.61% at June 30, 2022. Classified assets decreased $2.2 million, or 10.2%, to $19.3 million at September 30, 2022 compared to $21.5 million at June 30, 2022, due to loan paydowns.

About HomeTrust Bancshares, Inc.

HomeTrust Bancshares, Inc. is the holding company for the Bank. As of September 30, 2022, the Company had assets of $3.6 billion. The Bank, founded in 1926, is a North Carolina state chartered, community-focused financial institution committed to providing value added relationship banking with over 30 locations as well as online/mobile channels. Locations include: North Carolina (including the Asheville metropolitan area, the "Piedmont" region, Charlotte, and Raleigh/Cary), Upstate South Carolina (Greenville), East Tennessee (including Kingsport/Johnson City, Knoxville, and Morristown) and Southwest Virginia (including the Roanoke Valley).

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements often include words such as "believe," "expect," "anticipate," "estimate," and "intend" or future or conditional verbs such as "will," "would," "should," "could," or "may." Forward-looking statements are not historical facts but instead represent management's current expectations and forecasts regarding future events, many of which are inherently uncertain and outside of the Company's control. Actual results may differ, possibly materially, from those currently expected or projected in these forward-looking statements. Factors that could cause the Company's actual results to differ materially from those described in the forward-looking statements include: the effect of the COVID-19 pandemic, including on the Company's credit quality and business operations, as well as its impact on general economic and financial market conditions and other uncertainties resulting from the COVID-19 pandemic, such as the extent and duration of the impact on public health, the U.S. and global economies, and consumer and corporate customers, including economic activity, employment levels and labor shortages, and market liquidity, both nationally and in our market areas; expected revenues, cost savings, synergies and other benefits from our merger and acquisition activities, including the proposed acquisition of Quantum Capital Corp. might not be realized to the extent anticipated, within the anticipated time frames, or at all, and costs or difficulties relating to integration matters, including but not limited to customer and employee retention, might be greater than expected; increased competitive pressures; changes in the interest rate environment; changes in general economic conditions and conditions within the securities markets; legislative and regulatory changes; and the effects of inflation, a potential recession, and other factors described in the Company's latest annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other documents filed with or furnished to the Securities and Exchange Commission - which are available on our website at www.htb.com and on the SEC's website at www.sec.gov. Any of the forward-looking statements that the Company makes in this press release or the documents they file with or furnish to the SEC are based upon management's beliefs and assumptions at the time they are made and may turn out to be wrong because of inaccurate assumptions they might make, because of the factors described above or because of other factors that they cannot foresee. The Company does not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.

Consolidated Balance Sheets (Unaudited)

(Dollars in thousands)	September 30, 2022			June 30, 2022⁽¹⁾			March 31, 2022			December 31, 2021			September 30, 2021
Assets
Cash	$	18,026		$	20,910		$	19,783		$	20,586		$	22,431
Interest-bearing deposits		76,133			84,209			32,267			14,240			20,142
Cash and cash equivalents		94,159			105,119			52,050			34,826			42,573
Commercial paper, net		85,296			194,427			312,918			254,157			196,652
Certificates of deposit in other banks		27,535			23,551			28,125			34,002			35,495
Debt securities available for sale, at fair value		161,741			126,978			106,315			121,851			124,576
FHLB and FRB stock		9,404			9,326			10,451			10,368			10,360
SBIC investments, at cost		12,235			12,758			12,589			11,749			10,531
Loans held for sale		76,252			79,307			85,263			102,070			105,161
Total loans, net of deferred loan fees and costs		2,867,783			2,769,295			2,699,538			2,696,072			2,719,642
Allowance for credit losses – loans		(38,301	)		(34,690	)		(31,034	)		(30,933	)		(34,406	)
Loans, net		2,829,482			2,734,605			2,668,504			2,665,139			2,685,236
Premises and equipment, net		68,705			69,094			69,629			69,461			68,568
Accrued interest receivable		9,667			8,573			7,980			8,200			8,429
Deferred income taxes, net		11,838			11,487			12,494			12,019			15,722
Bank owned life insurance ("BOLI")		95,837			95,281			94,740			94,209			93,679
Goodwill		25,638			25,638			25,638			25,638			25,638
Core deposit intangibles, net		58			93			135			185			250
Other assets		47,339			52,967			54,954			58,945			58,490
Total assets	$	3,555,186		$	3,549,204		$	3,541,785		$	3,502,819		$	3,481,360
Liabilities and stockholders' equity
Liabilities
Deposits	$	3,102,668		$	3,099,761		$	3,059,157		$	2,998,691		$	2,987,284
Borrowings		—			—			30,000			48,000			40,000
Other liabilities		56,296			60,598			57,497			54,382			57,565
Total liabilities		3,158,964			3,160,359			3,146,654			3,101,073			3,084,849
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⁽²⁾		156			156			160			163			163
Additional paid in capital		127,153			126,106			136,181			147,552			151,425
Retained earnings		278,120			270,276			265,609			258,986			249,331
Unearned Employee Stock Ownership Plan ("ESOP") shares		(5,158	)		(5,290	)		(5,422	)		(5,555	)		(5,687	)
Accumulated other comprehensive income (loss)		(4,049	)		(2,403	)		(1,397	)		600			1,279
Total stockholders' equity		396,222			388,845			395,131			401,746			396,511
Total liabilities and stockholders' equity	$	3,555,186		$	3,549,204		$	3,541,785		$	3,502,819		$	3,481,360

^{(1) Derived from audited financial statements.}
^{(2) Shares of common stock issued and outstanding were 15,632,348 at September 30, 2022; 15,591,466 at June 30, 2022; 15,978,262 at March 31, 2022; 16,303,461 at December 31, 2021; and 16,307,658 at September 30, 2021.}

Consolidated Statements of Income (Unaudited)

	Three Months Ended
(Dollars in thousands)	September 30, 2022		June 30, 2022		September 30, 2021
Interest and dividend income
Loans	$	33,245	$	28,163	$	27,895
Commercial paper		1,116		852		155
Debt securities available for sale		678		483		524
Other investments and interest-bearing deposits		888		628		731
Total interest and dividend income		35,927		30,126		29,305
Interest expense
Deposits		1,395		1,232		1,572
Borrowings		12		35		26
Total interest expense		1,407		1,267		1,598
Net interest income		34,520		28,859		27,707
Provision (benefit) for credit losses		3,987		3,413		(1,460	)
Net interest income after provision (benefit) for credit losses		30,533		25,446		29,167
Noninterest income
Service charges and fees on deposit accounts		2,338		2,361		2,372
Loan income and fees		570		649		979
Gain on sale of loans held for sale		1,586		1,949		4,057
BOLI income		527		500		518
Operating lease income		1,585		1,472		1,540
Gain on sale of securities available for sale		—		1,895		—
Other		804		890		886
Total noninterest income		7,410		9,716		10,352
Noninterest expense
Salaries and employee benefits		14,815		14,709		15,280
Occupancy expense, net		2,408		2,491		2,317
Computer services		2,763		2,613		2,521
Telephone, postage, and supplies		603		621		650
Marketing and advertising		590		473		705
Deposit insurance premiums		542		432		566
Core deposit intangible amortization		34		42		93
Officer transition agreement expense		—		1,795		—
Merger-related expenses		474		—		—
Other		3,872		4,283		3,884
Total noninterest expense		26,101		27,459		26,016
Income before income taxes		11,842		7,703		13,503
Income tax expense		2,643		1,678		2,976
Net income	$	9,199	$	6,025	$	10,527

Per Share Data

	Three Months Ended
	September 30, 2022		June 30, 2022		September 30, 2021
Net income per common share⁽¹⁾
Basic	$	0.61	$	0.40	$	0.66
Diluted	$	0.60	$	0.39	$	0.65
Average shares outstanding
Basic		14,988,006		15,064,694		15,761,247
Diluted		15,130,762		15,245,673		16,146,611
Book value per share at end of period	$	25.35	$	24.94	$	24.31
Tangible book value per share at end of period⁽²⁾	$	23.70	$	23.29	$	22.73
Cash dividends declared per common share	$	0.09	$	0.09	$	0.08
Total shares outstanding at end of period		15,632,348		15,591,466		16,307,658

^{(1) Basic and diluted net income per common share have been prepared in accordance with the two-class method.}
^{(2) See Non-GAAP reconciliations below for adjustments.}

Selected Financial Ratios and Other Data

	Three Months Ended
	September 30, 2022		June 30, 2022		September 30, 2021
Performance ratios⁽¹⁾
Return on assets (ratio of net income (loss) to average total assets)	1.02	%	0.68	%	1.20	%
Return on equity (ratio of net income (loss) to average equity)	9.25		6.19		10.62
Tax equivalent yield on earning assets⁽²⁾	4.30		3.68		3.61
Rate paid on interest-bearing liabilities	0.24		0.21		0.27
Tax equivalent average interest rate spread⁽²⁾	4.06		3.47		3.34
Tax equivalent net interest margin⁽²^{) (}³⁾	4.13		3.53		3.41
Average interest-earning assets to average interest-bearing liabilities	142.90		138.45		137.94
Noninterest expense to average total assets	2.89		3.09		2.96
Efficiency ratio	62.25		71.18		68.36
Efficiency ratio – adjusted⁽⁴⁾	60.72		69.41		67.80

^{(1) Ratios are annualized where appropriate.}
^{(2) The weighted average rate for municipal leases is adjusted for a 24% combined federal and state tax rate since the interest from these leases is tax exempt.}
^{(3) Net interest income divided by average interest-earning assets.}
^{(4) See Non-GAAP reconciliations below for adjustments.}

	At or For the Three Months Ended
	September 30, 2022		June 30, 2022		March 31, 2022		December 31, 2021		September 30, 2021
Asset quality ratios
Nonperforming assets to total assets⁽¹⁾	0.20	%	0.18	%	0.16	%	0.18	%	0.19	%
Nonperforming loans to total loans⁽¹⁾	0.24		0.22		0.22		0.23		0.25
Total classified assets to total assets	0.54		0.61		0.61		0.65		0.65
Allowance for credit losses to nonperforming loans⁽¹⁾	561.10		566.83		534.06		500.70		510.63
Allowance for credit losses to total loans	1.34		1.25		1.15		1.15		1.27
Net charge-offs (recoveries) to average loans (annualized)	0.01		(0.10	)	(0.11	)	0.15		(0.04	)
Capital ratios
Equity to total assets at end of period	11.14	%	10.96	%	11.16	%	11.47	%	11.39	%
Tangible equity to total tangible assets⁽²⁾	10.50		10.31		10.51		10.81		10.73
Average equity to average assets	11.00		10.93		11.32		11.28		11.27

^{(1) Nonperforming assets include nonaccruing loans, consisting of certain restructured loans, and REO. There were no accruing loans more than 90 days past due at the dates indicated. At September 30, 2022, there were $2.6 million of restructured loans included in nonaccruing loans and $4.4 million, or 64.2%, of nonaccruing loans were current on their loan payments as of that date.}
^{(2) See Non-GAAP reconciliations below for adjustments.}

Loans

(Dollars in thousands)	September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021
Commercial real estate loans:
Construction and land development	$	310,985		$	291,202			251,668			226,439			187,900
Commercial real estate – owner occupied		336,456			335,658			332,078			323,434			329,252
Commercial real estate – non-owner occupied		661,644			662,159			688,071			709,825			715,324
Multifamily		79,082			81,086			82,035			80,071			88,188
Total commercial real estate loans		1,388,167			1,370,105			1,353,852			1,339,769			1,320,664
Commercial loans:
Commercial and industrial		205,606			192,652			167,342			162,396			153,612
Equipment finance		411,012			394,541			378,629			367,008			341,995
Municipal leases		130,777			129,766			130,260			131,078			142,100
PPP loans		238			661			2,756			19,044			28,762
Total commercial loans		747,633			717,620			678,987			679,526			666,469
Residential real estate loans:
Construction and land development		91,488			81,847			72,735			69,253			69,835
One-to-four family		374,849			354,203			347,945			356,850			384,901
HELOCs		164,701			160,137			155,356			158,984			163,734
Total residential real estate loans		631,038			596,187			576,036			585,087			618,470
Consumer loans		100,945			85,383			90,663			91,690			114,039
Total loans, net of deferred loan fees and costs		2,867,783			2,769,295			2,699,538			2,696,072			2,719,642
Allowance for credit losses – loans		(38,301	)		(34,690	)		(31,034	)		(30,933	)		(34,406	)
Loans, net	$	2,829,482		$	2,734,605		$	2,668,504		$	2,665,139		$	2,685,236

As of September 30, 2022, $30.5 million of commercial and industrial and $5.3 million of consumer loans were purchased from fintech partners. As of June 30, 2022, $17.5 million of commercial and industrial and $0.4 million of consumer loans were purchased from fintech partners. Although we value these strategic relationships, in August we temporarily paused purchases within both loan segments until the impact of the current economic environment upon these portfolios can be better understood.

Deposits

(Dollars in thousands)	September 30, 2022		June 30, 2022		March 31, 2022		December 31, 2021		September 30, 2021
Core deposits
Noninterest-bearing accounts	$	794,242	$	745,746	$	704,344	$	677,159	$	711,764
NOW accounts		636,859		654,981		652,577		644,343		621,675
Money market accounts		960,150		969,661		1,026,595		1,010,901		987,650
Savings accounts		240,412		238,197		232,831		224,474		220,614
Total core deposits		2,631,663		2,608,585		2,616,347		2,556,877		2,541,703
Certificates of deposit		471,005		491,176		442,810		441,814		445,581
Total	$	3,102,668	$	3,099,761	$	3,059,157	$	2,998,691	$	2,987,284

Non-GAAP Reconciliations

In addition to results presented in accordance with generally accepted accounting principles utilized in the United States ("GAAP"), this earnings release contains certain non-GAAP financial measures, which include: the efficiency ratio, tangible book value, tangible book value per share and the tangible equity to tangible assets ratio. The Company believes these non-GAAP financial measures and ratios as presented are useful for both investors and management to understand the effects of certain items and provide an alternative view of its performance over time and in comparison to its competitors. These non-GAAP measures have inherent limitations, are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for total stockholders' equity or operating results determined in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.

Set forth below is a reconciliation to GAAP of the Company's efficiency ratio:

	Three Months Ended
(Dollars in thousands)	September 30, 2022			June 30, 2022			September 30, 2021
Noninterest expense	$	26,101		$	27,459		$	26,016
Less: officer transition agreement expense		—			1,795			—
Less: merger expense		474			—			—
Noninterest expense – adjusted	$	25,627		$	25,664		$	26,016

Net interest income	$	34,520		$	28,859		$	27,707
Plus: tax equivalent adjustment		277			294			310
Plus: noninterest income		7,410			9,716			10,352
Less: gain on sale of securities available for sale		—			1,895			—
Net interest income plus noninterest income – adjusted	$	42,207		$	36,974		$	38,369
Efficiency ratio		62.25	%		71.18	%		68.36	%
Efficiency ratio – adjusted		60.72	%		69.41	%		67.80	%

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, 2022		June 30, 2022		March 31, 2022		December 31, 2021		September 30, 2021
Total stockholders' equity	$	396,222	$	388,845	$	395,131	$	401,746	$	396,511
Less: goodwill, core deposit intangibles, net of taxes		25,683		25,710		25,742		25,780		25,830
Tangible book value	$	370,539	$	363,135	$	369,389	$	375,966	$	370,681
Common shares outstanding		15,632,348		15,591,466		15,978,262		16,303,461		16,307,658
Book value per share at end of period	$	25.35	$	24.94	$	24.73	$	24.64	$	24.31
Tangible book value per share at end of period	$	23.70	$	23.29	$	23.12	$	23.06	$	22.73

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

	As of
	September 30, 2022			June 30, 2022			March 31, 2022			December 31, 2021			September 30, 2021
(Dollars in thousands)
Tangible equity⁽¹⁾	$	370,539		$	363,135		$	369,389		$	375,966		$	370,681
Total assets		3,555,186			3,549,204			3,541,785			3,502,819			3,481,360
Less: goodwill and core deposit intangibles, net of taxes		25,683			25,710			25,742			25,780			25,830
Total tangible assets	$	3,529,503		$	3,523,494		$	3,516,043		$	3,477,039		$	3,455,530
Tangible equity to tangible assets		10.50	%		10.31	%		10.51	%		10.81	%		10.73	%

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

Contact:
C. Hunter Westbrook – President and Chief Executive Officer
Tony J. VunCannon – Executive Vice President, Chief Financial Officer, Corporate Secretary and Treasurer
828-259-3939

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