HomeTrust Bancshares, Inc. Announces Financial Results for the Second Quarter of Fiscal Year 2023 and Quarterly Dividend

HomeTrust Bancshares, Inc.

ASHEVILLE, N.C., Jan. 24, 2023 (GLOBE NEWSWIRE) -- HomeTrust Bancshares, Inc. (NASDAQ: HTBI) ("Company"), the holding company of HomeTrust Bank ("Bank"), today announced preliminary net income for the second quarter of fiscal year 2023 and approval of its quarterly cash dividend.

For the quarter ended December 31, 2022 compared to the quarter ended September 30, 2022:

• net income was $13.7 million compared to $9.2 million;

• diluted earnings per share ("EPS") was $0.90 compared to $0.60;

• annualized return on assets ("ROA") was 1.54% compared to 1.02%;

• annualized return on equity ("ROE") was 13.37% compared to 9.25%;

• net interest income was $37.5 million compared to $34.5 million;

• provision for credit losses was $2.2 million compared to $4.0 million;

• noninterest income was $8.5 million compared to $7.4 million;

• net loan growth was $117.8 million, or 16.4% annualized, compared to $98.5 million, or 14.2% annualized; and

• quarterly cash dividends increased $0.01 per share, or 11.1%, to $0.10 per share totaling $1.5 million compared to $0.09 per share totaling $1.4 million.

For the six months ended December 31, 2022 compared to the six months ended December 31, 2021:

• net income was $22.9 million compared to $21.6 million;

• diluted EPS was $1.50 compared to $1.33;

• annualized ROA was 1.28% compared to 1.21%;

• annualized ROE was 11.32% compared to 10.78%;

• net interest income was $72.1 million compared to $54.9 million;

• provision for credit losses was $6.2 million compared to a net benefit of $4.0 million;

• noninterest income was $15.9 million compared to $20.4 million;

• net loan growth was $216.3 million, or 15.6% annualized, compared to a net decrease of $37.2 million, or (1.4)% annualized; and

• cash dividends of $0.19 per share totaling $2.9 million compared to $0.17 per share totaling $2.7 million.

The Company also announced today that its Board of Directors declared a quarterly cash dividend of $0.10 per common share payable on March 2, 2023 to shareholders of record as of the close of business on February 16, 2023.

“This was a great quarter for HomeTrust as we continued our margin momentum and double-digit loan growth, and we are pleased with the relative resiliency of our deposit base,” said Hunter Westbrook, President and Chief Executive Officer. “Deposits declined during the quarter, but less than we had anticipated despite higher yielding alternatives. We continue to be pleased with our asset quality across all our lines of business and the continued strength of the customers and communities we serve.

“From a strategic standpoint, the results of the quarter reflect the transition of our operating model and balance sheet over the last several years. I’m extremely proud of all our teammates and their collective hard work that delivered these strong quarterly results.

"Lastly, for the third year in a row, HomeTrust Bank has been named the "Best Small Bank" in North Carolina by Newsweek. I once again congratulate all our teammates who have made this achievement possible."

WEBSITE: WWW.HTB.COM

Comparison of Results of Operations for the Three Months Ended December 31, 2022 and September 30, 2022

Net Income.  Net income totaled $13.7 million, or $0.90 per diluted share, for the three months ended December 31, 2022 compared to net income of $9.2 million, or $0.60 per diluted share, for the three months ended September 30, 2022, an increase of $4.5 million, or 48.5%. The results for the three months ended December 31, 2022 were positively impacted by a $3.0 million increase in net interest income and a $1.1 million increase 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
	December 31, 2022										September 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)	$	2,999,207			$	39,282		5.20	%		$	2,880,148			$	33,522		4.62	%
Commercial paper		34,487				184		2.12				214,214				1,116		2.07
Debt securities available for sale		167,818				1,151		2.72				135,015				678		1.99
Other interest-earning assets(3)		86,430				1,072		4.92				113,821				888		3.10
Total interest-earning assets		3,287,942				41,689		5.03				3,343,198				36,204		4.30
Other assets		236,159										243,113
Total assets		3,524,101										3,586,311
Liabilities and equity
Interest-bearing liabilities
Interest-bearing checking accounts	$	627,548			$	571		0.36	%		$	654,154			$	268		0.16	%
Money market accounts		954,007				1,935		0.80				968,084				521		0.21
Savings accounts		236,027				45		0.08				238,992				45		0.07
Certificate accounts		444,845				1,052		0.94				476,761				561		0.47
Total interest-bearing deposits		2,262,427				3,603		0.63				2,337,991				1,395		0.24
Borrowings		26,063				254		3.87				1,526				12		3.12
Total interest-bearing liabilities		2,288,490				3,857		0.67				2,339,517				1,407		0.24
Noninterest-bearing deposits		785,785										800,912
Other liabilities		44,333										51,485
Total liabilities		3,118,608										3,191,914
Stockholders' equity		405,493										394,397
Total liabilities and stockholders' equity		3,524,101										3,586,311
Net earning assets	$	999,452									$	1,003,681
Average interest-earning assets to average interest-bearing liabilities		143.67	%									142.90	%
Tax-equivalent
Net interest income					$	37,832									$	34,797
Interest rate spread								4.36	%									4.06	%
Net interest margin(4)								4.56	%									4.13	%
Non-tax-equivalent
Net interest income					$	37,545									$	34,520
Interest rate spread								4.33	%									4.02	%
Net interest margin(4)								4.53	%									4.10	%

(1)	The average loans receivable balances include loans held for sale and nonaccruing loans.
(2)	Interest income used in the average interest earned and yield calculation includes the tax equivalent adjustment of $287 and $277 for the three months ended December 31, 2022 and September 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 December 31, 2022 increased $5.5 million, or 15.2%, compared to the three months ended September 30, 2022, which was driven by a $5.8 million, or 17.3%, increase in interest income on loans. The overall increase in average yield on interest-earning assets and rate paid on liabilities was the result of rising interest rates. Specific to debt securities available for sale, the Company has intentionally maintained a relatively short-term duration portfolio 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 December 31, 2022 increased $2.5 million, or 174.1%, compared to the three months ended September 30, 2022. The increase was driven by a $2.2 million, or 158.3%, increase in interest expense on deposits as a result of a 39 basis point increase in the associated average cost of funds, and a $242,000 increase in interest expense on borrowings as a result of higher average balances and higher rates.

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

(Dollars in thousands)	Increase / (Decrease) Due to							Total Increase / (Decrease)
	Volume				Rate
Interest-earning assets
Loans receivable	$	1,386			$	4,374		$	5,760
Commercial paper		(936	)			4			(932	)
Debt securities available for sale		165				308			473
Other interest-earning assets		(214	)			398			184
Total interest-earning assets		401				5,084			5,485
Interest-bearing liabilities
Interest-bearing checking accounts		(11	)			314			303
Money market accounts		(8	)			1,422			1,414
Savings accounts		(1	)			1			—
Certificate accounts		(38	)			529			491
Borrowings		193				49			242
Total interest-bearing liabilities		135				2,315			2,450
Net increase in tax equivalent interest income								$	3,035

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

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

	Three Months Ended
	December 31, 2022				September 30, 2022				$ Change				% Change
Provision for credit losses
Loans	$	2,425			$	3,694			$	(1,269	)		(34	)%
Off-balance-sheet credit exposure		(85	)			443				(528	)		(119	)
Commercial paper		(100	)			(150	)			50			33
Total provision for credit losses	$	2,240			$	3,987			$	(1,747	)		(44	)%

For the quarter ended December 31, 2022, the "loans" portion of the provision for credit losses was the result of the following, offset by net charge-offs of $1.9 million during the quarter:

• $1.6 million provision driven by loan growth and changes in the loan mix.

• $0.4 million provision due to changes in the projected economic forecast, specifically the national unemployment rate, and changes in qualitative adjustments.

• $1.5 million reduction of specific reserves on individually evaluated credits, which was tied to two relationships which were fully charged-off during the quarter.

For the quarter ended 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.

• $1.3 million provision driven by loan growth and changes in the loan mix.

• $1.1 million provision due to a projected worsening of the economic forecast, specifically the national unemployment rate, and changes in qualitative adjustments.

For both periods presented, the change in the provision for credit losses for off-balance-sheet credit exposure was the result of changes in the balance of loan commitments as well as changes in the loan mix and changes in the projected economic forecast outlined above.

Noninterest Income.  Noninterest income for the three months ended December 31, 2022 increased $1.1 million, or 14.3%, when compared to the quarter ended September 30, 2022. Changes in selected components of noninterest income are discussed below:

	Three Months Ended
	December 31, 2022			September 30, 2022				$ Change				% Change
Noninterest income
Service charges and fees on deposit accounts	$	2,523		$	2,338			$	185			8	%
Loan income and fees		647			570				77			14
Gain on sale of loans held for sale		1,102			1,586				(484	)		(31	)
BOLI income		494			527				(33	)		(6	)
Operating lease income		1,156			1,585				(429	)		(27	)
Gain (loss) on sale of premises and equipment		1,127			(12	)			1,139			9,492
Other		1,405			804				601			75
Total noninterest income	$	8,454		$	7,398			$	1,056			14	%

• Gain on sale of loans held for sale: The decrease in the gain on sale of loans held for sale was primarily driven by a decrease in volume of residential mortgage and SBA loans sold during the period as a result of rising interest rates. During the quarter ended December 31, 2022, $7.3 million of residential mortgage loans originated for sale were sold with gains of $183,000 compared to $20.9 million sold with gains of $493,000 for the quarter ended September 30, 2022. There were $8.2 million of sales of the guaranteed portion of SBA commercial loans with gains of $568,000 in the current quarter compared to $12.1 million sold and gains of $891,000 in the prior quarter. There were $41.4 million of home equity lines of credit ("HELOCs") sold during the current quarter for a gain of $340,000 compared to $22.8 million sold and gains of $202,000 in the prior quarter.

• Operating lease income: The decrease in operating lease income can be traced to lower contractual earnings as well as gains or losses incurred at the end of operating leases, where we recognized a net loss of $337,000 for the quarter ended December 31, 2022 versus a net gain of $148,000 for the quarter ended September 30, 2022.

• Gain (loss) on sale of premises and equipment: During the quarter ended December 31, 2022 two properties were sold for a combined gain of $1.6 million, partially offset by additional impairment of $420,000 on premises and equipment associated with prior branch closures.

• Other: The increase in other income was driven by a $721,000 gain recognized on the sale of closely held equity securities which the Company obtained through a prior bank acquisition.

Noninterest Expense.  Noninterest expense for the three months ended December 31, 2022 decreased $12,000, or 0.0%, when compared to the three months ended September 30, 2022. Changes in selected components of noninterest expense are discussed below:

	Three Months Ended
	December 31, 2022			September 30, 2022			$ Change				% Change
Noninterest expense
Salaries and employee benefits	$	14,484		$	14,815		$	(331	)		(2	)%
Occupancy expense, net		2,428			2,396			32			1
Computer services		2,796			2,763			33			1
Telephone, postage and supplies		575			603			(28	)		(5	)
Marketing and advertising		481			590			(109	)		(18	)
Deposit insurance premiums		546			542			4			1
Core deposit intangible amortization		26			34			(8	)		(24	)
Merger-related expenses		250			474			(224	)		(47	)
Other		4,490			3,872			618			16
Total noninterest expense	$	26,076		$	26,089		$	(13	)		—	%

• Salaries and employee benefits: The decrease in salaries and employee benefits expense is primarily the result of lower mortgage banking incentive pay as a result of the reduction in the volume of originations due to rising interest rates.

• Merger-related expenses: On July 24, 2022, the Company entered into an Agreement and Plan of Merger with Quantum Capital Corp. The expense for both periods are costs incurred related to due diligence and legal work performed associated with the transaction, in addition to ongoing costs incurred in preparation for the transaction.

• Other: During the quarter ended December 31, 2022 the Company wrote off $350,000 in previously capitalized costs associated with a technology project which the Company is no longer pursuing. No such expense was incurred in the prior quarter.

Income Taxes.  The amount of income tax expense is influenced by the amount of pre-tax income, the amount of tax-exempt income, changes in the statutory rate, and the effect of changes in valuation allowances maintained against deferred tax benefits. Income tax expense for the three months ended December 31, 2022 increased $1.4 million as a result of higher taxable income in the current quarter and an increase in the effective tax rate which moved from 22.3% to 22.8% quarter-over-quarter.

Comparison of Results of Operations for the Six Months Ended December 31, 2022 and December 31, 2021

Net Income.  Net income totaled $22.9 million, or $1.50 per diluted share, for the six months ended December 31, 2022 compared to net income of $21.6 million, or $1.33 per diluted share, for the six months ended December 31, 2021, an increase of $1.3 million, or 5.8%. The results for the six months ended December 31, 2022 were positively impacted by a $17.2 million increase in net interest income, partially offset by an increase of $10.2 million in the provision for credit losses and a $4.7 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 earned on average interest-earning assets and interest expense paid on average interest-bearing liabilities. All average balances are daily average balances. Nonaccruing loans have been included in the table as loans carrying a zero yield.

	Six Months Ended
	December 31, 2022										December 31, 2021
(Dollars in thousands)	Average Balance Outstanding				Interest Earned / Paid(2)			Yield / Rate(2)			Average Balance Outstanding				Interest Earned / Paid(2)			Yield / Rate(2)
Assets
Interest-earning assets
Loans receivable(1)	$	2,939,677			$	72,814		4.91	%		$	2,819,482			$	55,441		3.90	%
Commercial paper		124,351				1,300		2.07				191,712				458		0.47
Debt securities available for sale		151,417				1,829		2.40				130,143				935		1.43
Other interest-earning assets(3)		100,125				1,960		3.88				126,054				1,576		2.48
Total interest-earning assets		3,315,570				77,903		4.66				3,267,391				58,410		3.55
Other assets		239,636										260,288
Total assets		3,555,206										3,527,679
Liabilities and equity
Interest-bearing liabilities
Interest-bearing checking accounts	$	640,851			$	838		0.26	%		$	635,362			$	728		0.23	%
Money market accounts		961,045				2,456		0.51				993,643				716		0.14
Savings accounts		237,509				89		0.07				223,061				81		0.07
Certificate accounts		460,803				1,615		0.70				450,706				1,352		0.60
Total interest-bearing deposits		2,300,208				4,998		0.43				2,302,772				2,877		0.25
Borrowings		13,795				266		3.83				56,356				41		0.15
Total interest-bearing liabilities		2,314,003				5,264		0.45				2,359,128				2,918		0.25
Noninterest-bearing deposits		793,349										722,432
Other liabilities		46,501										48,393
Total liabilities		3,153,853										3,129,953
Stockholders' equity		401,353										397,726
Total liabilities and stockholders' equity		3,555,206										3,527,679
Net earning assets	$	1,001,567									$	908,263
Average interest-earning assets to average interest-bearing liabilities		143.28	%									138.50	%
Tax-equivalent
Net interest income					$	72,639									$	55,492
Interest rate spread								4.21	%									3.30	%
Net interest margin(4)								4.35	%									3.37	%
Non-tax-equivalent
Net interest income					$	72,065									$	54,875
Interest rate spread								4.18	%									3.26	%
Net interest margin(4)								4.31	%									3.33	%

(1)	The average loans receivable balances include loans held for sale and nonaccruing loans.
(2)	Interest income used in the average interest earned and yield calculation includes the tax equivalent adjustment of $574 and $617 for the six months ended December 31, 2022 and December 31, 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 six months ended December 31, 2022 increased $19.5 million, or 33.8%, compared to the six months ended December 31, 2021, which was driven by a $17.4 million, or 31.8%, increase in interest income on loans, and a combined increase of $1.7 million, or 124.6%, in interest income on commercial paper and debt securities available for sale. The overall increase in average yield on interest-earning assets and rate paid on liabilities was the result of rising interest rates. Specific to debt securities available for sale, the Company has intentionally maintained a relatively short-term duration portfolio 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 six months ended December 31, 2022 increased $2.3 million, or 80.4%, compared to the six months ended December 31, 2021. The increase was driven by a $2.1 million, or 73.7%, increase in interest expense on deposits as a result of an 18 basis point increase in the associated average cost of funds.

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

(Dollars in thousands)	Increase / (Decrease) Due to							Total Increase / (Decrease)
	Volume				Rate
Interest-earning assets
Loans receivable	$	2,363			$	15,010		$	17,373
Commercial paper		(161	)			1,003			842
Debt securities available for sale		153				741			894
Other interest-earning assets		(324	)			708			384
Total interest-earning assets		2,031				17,462			19,493
Interest-bearing liabilities
Interest-bearing checking accounts		6				104			110
Money market accounts		(23	)			1,763			1,740
Savings accounts		5				3			8
Certificate accounts		30				233			263
Borrowings		(31	)			256			225
Total interest-bearing liabilities		(13	)			2,359			2,346
Net increase in tax equivalent interest income								$	17,147

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

	Six Months Ended
	December 31, 2022				December 31, 2021				$ Change				% Change
Provision (benefit) for credit losses
Loans	$	6,119			$	(3,775	)		$	9,894			262	%
Off-balance-sheet credit exposure		358				(235	)			593			252
Commercial paper		(250	)			50				(300	)		(600	)
Total provision (benefit) for credit losses	$	6,227			$	(3,960	)		$	10,187			257	%

For the six months ended December 31, 2022, the "loans" portion of the provision (benefit) for credit losses was the result of the following, offset by net charge-offs of $1.9 million during the period:

• $1.3 million provision specific to fintech portfolios which have a riskier credit profile than loans originated in-house. The elevated credit risk is offset by the higher yields earned on the portfolios.

• $2.9 million provision driven by loan growth and changes in the loan mix.

• $1.5 million provision due to changes in the projected economic forecast, specifically the national unemployment rate, and changes in qualitative adjustments.

• $1.5 million reduction of specific reserves on individually evaluated credits, which was tied to two relationships which were fully charged-off during the period.

For the six months ended December 31, 2021, the "loans" portion of the benefit for credit losses was driven by an improvement in the economic forecast, as more clarity was gained regarding the impact of COVID-19 upon the loan portfolio.

For both periods presented, the change in the provision for credit losses for off-balance-sheet credit exposure was the result of changes in the balance of loan commitments as well as changes in the loan mix and changes in the projected economic forecast outlined above.

Noninterest Income.  Noninterest income for the six months ended December 31, 2022 decreased $4.7 million, or 22.7%, when compared to the same period last year. Changes in selected components of noninterest income are discussed below:

	Six Months Ended
	December 31, 2022			December 31, 2021				$ Change				% Change
Noninterest income
Service charges and fees on deposit accounts	$	4,861		$	4,885			$	(24	)		—	%
Loan income and fees		1,217			1,784				(567	)		(32	)
Gain on sale of loans held for sale		2,688			7,958				(5,270	)		(66	)
BOLI income		1,021			1,008				13			1
Operating lease income		2,741			3,258				(517	)		(16	)
Gain (loss) on sale of premises and equipment		1,115			(87	)			1,202			1,382
Other		2,209			1,639				570			35
Total noninterest income	$	15,852		$	20,445			$	(4,593	)		(22	)%

• Loan income and fees: The decrease in loan income and fees was driven by lower underwriting fees, interest rate swap fees, and prepayment penalties in the current period compared to the same period last year, all of which were impacted by rising interest rates.

• Gain on sale of loans held for sale: The decrease in the gain on sale of loans held for sale was primarily driven by a decrease in volume of residential mortgage and SBA loans sold during the period as a result of rising interest rates. During the six months ended December 31, 2022, $28.2 million of residential mortgage loans originated for sale were sold with gains of $676,000 compared to $150.7 million sold with gains of $4.3 million for the corresponding period in the prior year. There were $20.3 million of sales of the guaranteed portion of SBA commercial loans with gains of $1.5 million in the current period compared to $27.0 million sold and gains of $3.1 million for the corresponding period in the prior year. There were $64.2 million of HELOCs sold during the current period for a gain of $542,000 compared to $72.2 million sold and gains of $426,000 for the corresponding period in the prior year. Lastly, $11.5 million of indirect auto finance loans were sold out of the held for investment portfolio during the six months ended December 31, 2021 for a gain of $205,000. No such sales occurred in the same period in the current year.

• Operating lease income: The decrease in operating lease income can be traced to lower contractual earnings as well as gains or losses incurred at the end of operating leases, where we recognized a net loss of $189,000 for the six months ended December 31, 2022 versus a net loss of $92,000 in the same period last year.

• Gain (loss) on sale of premises and equipment: During the six months ended December 31, 2022 two properties were sold for a combined gain of $1.6 million, partially offset by additional impairment of $420,000 on premises and equipment associated with prior branch closures. No such sales occurred in the same period in the prior year.

• Other: The increase in other income was driven by a $721,000 gain recognized on the sale of closely held equity securities which the Company obtained through a prior bank acquisition. No such sales occurred in the same period in the prior year.

Noninterest Expense.  Noninterest expense for the six months ended December 31, 2022 increased $265,000, or 0.5%, when compared to the same period last year. Changes in selected components of noninterest expense are discussed below:

	Six Months Ended
	December 31, 2022			December 31, 2021			$ Change				% Change
Noninterest expense
Salaries and employee benefits	$	29,299		$	30,152		$	(853	)		(3	)%
Occupancy expense, net		4,824			4,718			106			2
Computer services		5,559			5,130			429			8
Telephone, postage and supplies		1,178			1,322			(144	)		(11	)
Marketing and advertising		1,071			1,537			(466	)		(30	)
Deposit insurance premiums		1,088			868			220			25
Core deposit intangible amortization		60			158			(98	)		(62	)
Merger-related expenses		724			—			724			100
Other		8,362			7,953			409			5
Total noninterest expense	$	52,165		$	51,838		$	327			1	%

• Salaries and employee benefits: The decrease in salaries and employee benefits expense in the current period compared to the same period last year is primarily the result of branch closures and lower mortgage banking incentive pay as a result of the reduction in the volume of originations due to rising interest rates.

• Computer services: The increase in expense between periods is due to continued investments in technology as well as increases in the cost of services provided by third parties.

• Marketing and advertising: The decrease in expense between periods is partially due to timing differences when expenses are incurred and paid as well as lower projected marketing expenses for the current fiscal year versus the prior period.

• Deposit insurance premiums: The rates the Company is charged for deposit insurance have increased year-over-year.

• Merger-related expenses: On July 24, 2022, the Company entered into an Agreement and Plan of Merger with Quantum Capital Corp. The expense for the six months ended December 31, 2022 are costs incurred related to due diligence and legal work performed associated with the transaction, in addition to ongoing costs incurred in preparation for the transaction. No such expense was incurred in the prior period.

• Other: During the six months ended December 31, 2022 the Company wrote off $350,000 in previously capitalized costs associated with a technology project which the Company is no longer pursuing. No such expense was incurred in the prior period.

Income Taxes.  The amount of income tax expense is influenced by the amount of pre-tax income, the amount of tax-exempt income, changes in the statutory rate, and the effect of changes in valuation allowances maintained against deferred tax benefits. Income tax expense for the six months ended December 31, 2022 increased $831,000 as a result of higher taxable income in the current quarter compared to the corresponding period in the prior year, and an increase in the effective tax rate from 21.3% to 22.6% between periods.

Balance Sheet Review
Total assets increased by $97.8 million to $3.6 billion and total liabilities increased by $76.5 million to $3.2 billion, respectively, at December 31, 2022 as compared to June 30, 2022. The combined decrease in commercial paper of $194.4 million and net increase in funding sources of $78.3 million was used to fund loan growth of $216.3 million during the period.

Stockholders' equity increased $21.3 million to $410.2 million at December 31, 2022 as compared to June 30, 2022. Activity within stockholders' equity included $22.9 million in net income, $2.7 million in stock-based compensation and stock option exercises, offset by $2.9 million in cash dividends declared and a $1.3 million increase in accumulated other comprehensive loss associated with available for sale debt securities. As of December 31, 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 $38.9 million, or 1.30% of total loans, at December 31, 2022 compared to $34.7 million, or 1.25% of total loans, as of June 30, 2022. The drivers of this change are discussed in the "Six Months Ended December 31, 2022 and December 31, 2021" section above.

Net loan charge-offs totaled $1.9 million for the six months ended December 31, 2022 compared to $760,000 for the same period last year. Net charge-offs as a percentage of average loans were 0.13% for the six months ended December 31, 2022 compared to 0.05% for the corresponding period last year.

Nonperforming assets increased by $54,000, or 0.9%, to $6.4 million, or 0.17% of total assets, at December 31, 2022 compared to $6.3 million, or 0.18% of total assets, at June 30, 2022. Nonperforming assets included $6.2 million in nonaccruing loans and $200,000 of real estate owned ("REO") at December 31, 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 0.21% at December 31, 2022 and 0.22% at June 30, 2022.

The ratio of classified assets to total assets decreased to 0.50% at December 31, 2022 from 0.61% at June 30, 2022. Classified assets decreased $3.2 million, or 15.1%, to $18.3 million at December 31, 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 December 31, 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 remaining effect of the COVID-19 pandemic, including on the Company's credit quality and business operations, as well as its impact on general economic and financial market conditions and other uncertainties resulting from the COVID-19 pandemic, such as the extent and remaining duration of the impact on public health, the 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)	December 31, 2022				September 30, 2022				June 30, 2022(1)				March 31, 2022				December 31, 2021
Assets
Cash	$	15,825			$	18,026			$	20,910			$	19,783			$	20,586
Interest-bearing deposits		149,209				76,133				84,209				32,267				14,240
Cash and cash equivalents		165,034				94,159				105,119				52,050				34,826
Commercial paper, net		—				85,296				194,427				312,918				254,157
Certificates of deposit in other banks		29,371				27,535				23,551				28,125				34,002
Debt securities available for sale, at fair value		147,942				161,741				126,978				106,315				121,851
FHLB and FRB stock		13,661				9,404				9,326				10,451				10,368
SBIC investments, at cost		12,414				12,235				12,758				12,589				11,749
Loans held for sale, at fair value		518				—				—				—				—
Loans held for sale, at the lower of cost or fair value		72,777				76,252				79,307				85,263				102,070
Total loans, net of deferred loan fees and costs		2,985,623				2,867,783				2,769,295				2,699,538				2,696,072
Allowance for credit losses – loans		(38,859	)			(38,301	)...