U.S. Markets open in 8 hrs 47 mins

HomeTrust Bancshares, Inc. Reports Financial Results For The First Quarter Of Fiscal 2019

ASHEVILLE, N.C., Oct. 29, 2018 (GLOBE NEWSWIRE) -- HomeTrust Bancshares, Inc. (HTBI) ("Company"), the holding company of HomeTrust Bank ("Bank"), today announced preliminary net income of $7.8 million for the quarter ended September 30, 2018, a $2.2 million, or 39.9% increase over net income of $5.6 million for the same period a year ago. The Company's diluted earnings per share increased $0.11, or 36.7% to $0.41 for the three months ended September 30, 2018 compared to $0.30 for the same period in fiscal 2018.

In addition to the almost 40% increase in earnings, highlights for the quarter ended September 30, 2018 compared to the corresponding quarter in the previous year include:

  • Return on assets increased to 0.94%, or 34.3% from 0.70%;
  • Net interest income increased $1.6 million, or 6.4% to $26.3 million from $24.7 million;
  • Noninterest income increased $1.4 million, or 31.7% to $5.6 million from $4.3 million;
  • Organic net loan growth, which excludes purchases of home equity lines of credit, was $76.8 million, or 13.0% annualized compared to $43.2 million, or 7.9% annualized for the same quarter last year; and
  • Resuming our stock buyback program with the repurchase of 128,300 shares of common stock at an average share price of $29.03.

"Record net income for the first quarter of fiscal 2019 reflects our continued momentum and the impact of our new lines of business. The gain on sale of SBA loans produced $898,000 of fee income and equipment finance originated almost $33 million in loans for the quarter," said Dana Stonestreet, Chairman, President, and Chief Executive Officer. “The cumulative impact of all that our team has accomplished, coupled with the addition of high performing revenue producers in our attractive markets, continues our inflection point for growth in revenue, earnings and shareholder value."

Income Statement Review

Net interest income increased to $26.3 million for the quarter ended September 30, 2018 compared to $24.7 million for the comparative quarter in fiscal 2018. The $1.6 million or 6.4% increase was primarily due to a $4.3 million increase in interest and dividend income driven by an increase in average interest-earning assets, which was partially offset by a $2.7 million increase in interest expense. Average interest-earning assets increased $156.9 million, or 5.4% to $3.1 billion for the quarter ended September 30, 2018 compared to $2.9 billion for the corresponding quarter in fiscal 2018. For the quarter ended September 30, 2018, the average balance of total loans receivable increased $196.4 million, or 8.3% primarily due to organic loan growth. The average balance of other interest-earning assets increased $62.8 million, or 30.1% primarily due to increases in commercial paper investments. These increases were mainly funded by the cumulative decrease of $102.3 million, or 29.3% in average interest-earning deposits in other banks and investment securities, and an increase in average interest-bearing liabilities of $102.8 million, or 4.3% as compared to the same quarter last year. Net interest margin (on a fully taxable-equivalent basis) for the three months ended September 30, 2018 increased slightly to 3.45% from 3.44% for the same period a year ago.

Total interest and dividend income increased $4.3 million, or 15.2% for the three months ended September 30, 2018 as compared to the same period last year, which was primarily driven by a $3.5 million, or 13.8% increase in loan interest income and a $688,000, or 58.9% increase in interest income from certificates of deposit and other interest-bearing deposits including commercial paper. The additional loan interest income was driven by the increase in the average balance of loans receivable and loan yields compared to the prior year quarter. Average loan yields increased 17 basis points to 4.54% for the quarter ended September 30, 2018 from 4.37% in the corresponding quarter from last year primarily due to the impact of the recent increases in the targeted federal funds rate. Partially offsetting the increase in loan interest income was a $404,000, or 52.1% decrease in the accretion of purchase discounts on acquired loans as a result of reduced prepayments as compared to the same quarter last year. For the quarters ended September 30, 2018 and 2017, the average loan yields included six and 13 basis points, respectively, from the accretion of purchase discounts on acquired loans.

Total interest expense increased $2.7 million, or 81.2% for the quarter ended September 30, 2018 compared to the same period last year. The increase was driven by a $1.4 million, or 104.3% increase in deposit interest expense and a $1.3 million, or 65.5% increase in interest expense on borrowings. The additional deposit interest expense  was a result of our focus on increasing  deposits as the average balance of deposits increased $125.1 million along with a 28 basis point increase in the average cost of deposits for the quarter ended September 30, 2018 compared to the same quarter last year. The decrease in average borrowings was more than offset by the 84 basis point increase in the average cost of borrowings during the three months ended September 30, 2018 as compared to the same period last year, which drove the increase in interest expense. The overall average cost of funds increased 40 basis points to 0.95% for the current quarter as compared to the same quarter last year due primarily to the impact of the previously mentioned interest rate increases on our borrowings.

Noninterest income increased $1.4 million, or 31.7% to $5.6 million for the three months ended September 30, 2018 from $4.3 million for the same period in the previous year. The leading factors of the increase included a $557,000, or 30.2% increase in service charges on deposit accounts as a result of an increase in deposit accounts and related fees; an $896,000, or 81.3% increase in loan income and fees driven by an $883,000 increase in fees from the originations and sales of the guaranteed portion of U.S Small Business Administration (“SBA”) commercial loans; and an $88,000, or 14.9% increase in other noninterest income. Partially offsetting these increases was a $164,000 decline in gains from the sale of premises and equipment for the three months ended September 30, 2018 compared to the same period last year as there were no sales occurring during the current quarter.

Noninterest expense for the three months ended September 30, 2018 increased $997,000, or 4.8% to $21.9 million compared to $20.9 million for the three months ended September 30, 2017. The increase was primarily due to a $333,000, or 2.7% increase in salaries and employee benefits; a $304,000, or 19.7% increase in computer services; a $319,000, or 14.0% increase in other expenses, and a $259,000 increase in real estate owned ("REO") related expenses for the quarter ended September 30, 2018 compared to the quarter ended September 30, 2017. Partially offsetting these increases was the cumulative decrease of $192,000 or 5.5% in net occupancy expense; marketing and advertising; and core deposit amortization for the three months ended September 30, 2018 compared to the same period last year. Deposit insurance premiums decreased $110,000, or 26.6% due to reduced premiums as a result of higher levels of capital and lower nonaccrual loans. For the three months ended September 30, 2018, there was a $179,000 loss on REO sales compared to a $146,000 gain in the corresponding quarter last year offsetting the $66,000 decrease in REO expenses as a result of fewer REO properties held.

For the three months ended September 30, 2018, the Company's income tax expense declined to $2.2 million compared to $2.5 million for the three months ended September 30, 2017 despite the increase in pretax income. The Company’s federal income tax provision for the three months ended September 30, 2018 benefited from the impact of the Tax Cuts and Jobs Act enacted in December 2017 that lowered the corporate income tax rate from 34% to 21%.

Balance Sheet Review

Total assets increased $49.8 million, or 1.5% to $3.4 billion at September 30, 2018 from $3.3 billion at June 30, 2018. Total liabilities remained level at $2.9 billion at both September 30, 2018 and June 30, 2018. Deposit growth of $6.8 million, or 0.3%; a $40.0 million, or 6.3% increase in borrowings; and the cumulative decrease of $26.8 million, or 9.2% in cash and cash equivalents, certificates of deposit in other banks and investment securities were used to partially fund the $61.3 million, or 2.4% increase in total loans receivable, net of deferred loan fees and the $9.2 million, or 4.0% increase in commercial paper during the first three months of fiscal 2019. The increase in net loans receivable was driven by $76.8 million, or 13.0% annualized rate of organic loan growth partially offset by loan repayments. The $44.9 million, or 30.2% increase in commercial and industrial loans was driven by our new equipment finance line of business. The $4.9 million, or 83.4% increase in loans held for sale was due primarily to SBA loans originated during the period.

Stockholders' equity at September 30, 2018 increased $4.9 million, or 1.2% to $414.2 million from $409.2 million at June 30, 2018. The increase was due to $7.8 million in net income and $768,000 in stock-based compensation, partially offset by 128,300 shares of common stock repurchased at an average cost of $29.03, or approximately $3.7 million in total and a $291,000 decrease in other comprehensive income representing unrealized losses on investment securities, net of tax. As of September 30, 2018, HomeTrust Bank was considered "well capitalized" in accordance with its regulatory capital guidelines and exceeded all regulatory capital requirements with Common Equity Tier 1, Tier 1 Risk-Based, Total Risk-Based, and Tier 1 Leverage capital ratios of 11.72%, 11.72%, 12.44%, and 10.52%, respectively.  In addition, the Company exceeded all regulatory capital requirements as of that date.

Asset Quality

The allowance for loan losses was $20.9 million, or 0.81% of total loans, at September 30, 2018 compared to $21.1 million, or 0.83% of total loans, at June 30, 2018. The allowance for loan losses to total gross loans excluding acquired loans was 0.88% at September 30, 2018, compared to 0.91% at June 30, 2018.

There was no provision for losses on loans for the three months ended September 30, 2018 and 2017 reflecting the decline in nonaccruing and classified loans offset by loan growth. Net loan charge-offs totaled $128,000 for the three months ended September 30, 2018, compared to net loan recoveries of $846,000 for the same period in fiscal 2018. Net charge-offs as a percentage of average loans increased to 0.02% for the three months ended September 30, 2018 from net recoveries of (0.14)% for the same period last year.

Nonperforming assets decreased $1.2 million, or 8.2% to $13.4 million, or 0.40% of total assets, at September 30, 2018 compared to $14.6 million, or 0.44% of total assets at June 30, 2018. Nonperforming assets included $10.1 million in nonaccruing loans and $3.3 million in REO at September 30, 2018, compared to $10.9 million and $3.7 million, in nonaccruing loans and REO, respectively, at June 30, 2018. Included in nonperforming loans are $4.0 million of loans restructured from their original terms of which $2.3 million were current at September 30, 2018, with respect to their modified payment terms. At September 30, 2018, $5.5 million, or 54.4% of nonaccruing loans were current on their required loan payments. Purchased impaired loans aggregating $2.9 million obtained through prior acquisitions are excluded from nonaccruing loans due to the accretion of discounts established in accordance with the acquisition method of accounting for business combinations. Nonperforming loans to total loans was 0.39% at September 30, 2018 compared to 0.43% at June 30, 2018.

The ratio of classified assets to total assets decreased to 0.93% at September 30, 2018 from 1.00% at June 30, 2018. Classified assets decreased 6.1% to $31.0 million at September 30, 2018 compared to $33.1 million at June 30, 2018. Our overall asset quality metrics continue to demonstrate our commitment to growing and maintaining a loan portfolio with a moderate risk profile.

About HomeTrust Bancshares, Inc.

HomeTrust Bancshares, Inc. is the holding company for HomeTrust Bank. As of September 30, 2018, the Company had assets of $3.4 billion. The Bank, founded in 1926, is a North Carolina state chartered, community-focused financial institution committed to providing value added relationship banking through 43 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/Bristol, Knoxville, and Morristown) and Southwest Virginia (including the Roanoke Valley). The Bank is the 2nd largest community bank headquartered in North Carolina.

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 our control. Actual results may differ, possibly materially, from those currently expected or projected in these forward-looking statements. Factors that could cause our actual results to differ materially from those described in the forward-looking statements, include expected cost savings, synergies and other financial benefits from our acquisitions  might not be realized within the expected time frames or at all, and costs or difficulties relating to integration matters 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 other factors described in HomeTrust'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 we make in this press release or the documents we 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 we might make, because of the factors described above or because of other factors that we cannot foresee. We do 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. These risks could cause our actual results for fiscal 2019 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, us and could negatively affect our operating and stock performance.

WEBSITE: WWW.HOMETRUSTBANCSHARES.COM

Contact:  
  Dana L. Stonestreet – Chairman, President and Chief Executive Officer
  Tony J. VunCannon – Executive Vice President, Chief Financial Officer, and Treasurer
828-259-3939 
   

Consolidated Balance Sheets (Unaudited)

(Dollars in thousands) September 30,
2018
  June 30,
2018(2)
  March 31, 
2018
  December 31, 
2017
  September 30,
2017
Assets                  
Cash $ 39,872     $ 45,222     $ 38,100     $ 46,743     $ 38,162  
Interest-bearing deposits 18,896     25,524     41,296     51,922     40,809  
Cash and cash equivalents 58,768     70,746     79,396     98,665     78,971  
Commercial paper 238,224     229,070     239,435     199,722     199,774  
Certificates of deposit in other banks 58,384     66,937     84,218     100,349     110,454  
Securities available for sale, at fair value 148,704     154,993     160,971     167,669     182,053  
Other investments, at cost 43,996     41,931     41,405     43,319     42,307  
Loans held for sale 10,773     5,873     6,071     7,072     7,793  
Total loans, net of deferred loan fees 2,587,106     2,525,852     2,445,755     2,418,014     2,394,755  
Allowance for loan losses (20,932 )   (21,060 )   (21,472 )   (21,090 )   (21,997 )
Net loans 2,566,174     2,504,792     2,424,283     2,396,924     2,372,758  
Premises and equipment, net 62,681     62,537     62,725     62,435     62,614  
Accrued interest receivable 10,252     9,344     9,216     9,371     9,340  
Real estate owned ("REO") 3,286     3,684     5,053     4,818     5,941  
Deferred income taxes 30,942     32,565     34,311     36,526     55,653  
Bank owned life insurance ("BOLI") 88,581     88,028     87,532     86,984     86,561  
Goodwill 25,638     25,638     25,638     25,638     25,938  
Core deposit intangibles 3,963     4,528     5,131     5,773     6,454  
Other assets 3,593     3,503     5,478     5,323     3,687  
Total Assets $ 3,353,959     $ 3,304,169     $ 3,270,863     $ 3,250,588     $ 3,249,998  
Liabilities and Stockholders' Equity                  
Liabilities                  
Deposits $ 2,203,044     $ 2,196,253     $ 2,180,324     $ 2,108,208     $ 2,100,310  
Borrowings 675,000     635,000     625,000     685,000     679,800  
Capital lease obligations 1,905     1,914     1,920     1,925     1,931  
Other liabilities 59,815     61,760     62,066     60,094     62,458  
Total liabilities 2,939,764     2,894,927     2,869,310     2,855,227     2,844,499  
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 (1) 190     191     190     190     190  
Additional paid in capital 214,803     217,480     216,712     215,928     214,827  
Retained earnings 208,365     200,575     193,368     187,241     197,907  
Unearned Employee Stock Ownership Plan ("ESOP") shares (7,274 )   (7,406 )   (7,538 )   (7,670 )   (7,803 )
Accumulated other comprehensive income (loss) (1,889 )   (1,598 )   (1,179 )   (328 )   378  
Total stockholders' equity 414,195     409,242     401,553     395,361     405,499  
Total Liabilities and Stockholders' Equity $ 3,353,959     $ 3,304,169     $ 3,270,863     $ 3,250,588     $ 3,249,998  

_________________________________

  1. Shares of common stock issued and outstanding were 18,939,280 at September 30, 2018; 19,041,668 at June 30, 2018; 19,034,868 at March 31, 2018; 18,967,175 at December 31, 2017; and 18,968,675 at September 30, 2017.
  2. Derived from audited financial statements.


Consolidated Statement of Income (Unaudited)

  Three Months Ended
  September 30,   June 30,   September 30,
(Dollars in thousands) 2018   2018   2017
Interest and Dividend Income          
Loans $ 28,728     $ 27,337     $ 25,250  
Securities available for sale 856     877     971  
Certificates of deposit and other interest-bearing deposits 1,857     1,969     1,169  
Other investments 839     510     626  
Total interest and dividend income 32,280     30,693     28,016  
Interest Expense          
Deposits 2,750     2,249     1,346  
Borrowings 3,258     2,854     1,969  
Total interest expense 6,008     5,103     3,315  
Net Interest Income 26,272     25,590     24,701  
Provision for Loan Losses          
Net Interest Income after Provision for Loan Losses 26,272     25,590     24,701  
Noninterest Income          
Service charges and fees on deposit accounts 2,401     2,208     1,844  
Loan income and fees 1,998     1,579     1,102  
BOLI income 536     501     562  
Gain from sale of premises and equipment         164  
Other, net 678     926     590  
Total noninterest income 5,613     5,214     4,262  
Noninterest Expense          
Salaries and employee benefits 12,685     11,918     12,352  
Net occupancy expense 2,347     2,478     2,349  
Marketing and advertising 417     372     453  
Telephone, postage, and supplies 769     777     685  
Deposit insurance premiums 304     373     414  
Computer services 1,849     1,700     1,545  
Loss (gain) on sale and impairment of REO 179     (25 )   (146 )
REO expense 175     308     241  
Core deposit intangible amortization 565     603     719  
Other 2,593     3,082     2,274  
Total noninterest expense 21,883     21,586     20,886  
Income Before Income Taxes 10,002     9,218     8,077  
Income Tax Expense 2,212     2,011     2,510  
Net Income $ 7,790     $ 7,207     $ 5,567  
                       


Per Share Data

  Three months ended
  September 30,   June 30,   September 30,
  2018   2018   2017
Net income per common share:(1)          
Basic $ 0.43     $ 0.40     $ 0.31  
Diluted $ 0.41     $ 0.38     $ 0.30  
Adjusted net income per common share:(2)          
Basic $ 0.43     $ 0.38     $ 0.31  
Diluted $ 0.41     $ 0.36     $ 0.30  
           
Average shares outstanding:          
Basic 18,125,637     18,121,690     17,966,994  
Diluted 18,880,476     18,847,279     18,616,452  
Book value per share at end of period $ 21.87     $ 21.49     $ 21.38  
Tangible book value per share at end of period (2) $ 20.35     $ 19.96     $ 19.81  
Total shares outstanding at end of period 18,939,280     19,041,668     18,968,675  

__________________________________________________

  1. Basic and diluted net income per common share have been prepared in accordance with the two-class method.
  2. See Non-GAAP reconciliation tables below for adjustments.


Selected Financial Ratios and Other Data

    Three Months Ended
    September 30,   June 30,   September 30,
    2018   2018   2017
Performance ratios: (1)            
Return on assets (ratio of net income to average total assets)   0.94 %   0.88 %   0.70 %
Return on assets - adjusted(2)   0.94     0.83     0.70  
Return on equity (ratio of net income to average equity)   7.55     7.12     5.55  
Return on equity - adjusted(2)   7.55     6.75     5.58  
Tax equivalent yield on earning assets(3)   4.23     4.10     3.90  
Rate paid on interest-bearing liabilities   0.95     0.82     0.54  
Tax equivalent average interest rate spread (3)   3.28     3.28     3.36  
Tax equivalent net interest margin(3) (4)   3.45     3.43     3.44  
Average interest-earning assets to average interest-bearing liabilities   121.97     121.27     120.67  
Operating expense to average total assets   2.64     2.62     2.61  
Efficiency ratio   68.63     70.08     72.11  
Efficiency ratio - adjusted (2)   68.03     69.20     71.17  

_____________________________

  1. Ratios are annualized where appropriate.
  2. See Non-GAAP reconciliation tables below for adjustments.
  3. For the three months ended September 30, 2018, June 30, 2018, and September 30, 2017, the weighted average rate for municipal leases is adjusted for a 24%, 30%, and 37% combined federal and state tax rate, respectively since the interest from these leases is tax exempt.
  4. Net interest income divided by average interest-earning assets.
   
   
  At or For the Three Months Ended
  September 30,   June 30,   March 31,   December 31,   September 30,
  2018   2018   2018   2017   2017
Asset quality ratios:                  
Nonperforming assets to total assets(1) 0.40 %   0.44 %   0.54 %   0.59 %   0.62 %
Nonperforming loans to total loans(1) 0.39     0.43     0.52     0.59     0.59  
Total classified assets to total assets 0.93     1.00     1.29     1.39     1.50  
Allowance for loan losses to nonperforming loans(1) 207.06     192.96     169.71     146.79     156.17  
Allowance for loan losses to total loans 0.81     0.83     0.88     0.87     0.92  
Allowance for loan losses to total gross loans excluding acquired loans(2) 0.88     0.91     0.97     0.97     1.01  
Net charge-offs (recoveries) to average loans (annualized) 0.02     0.07     (0.06 )   0.15     (0.14 )
Capital ratios:                  
Equity to total assets at end of period 12.35 %   12.39 %   12.28 %   12.16 %   12.48 %
Tangible equity to total tangible assets(2) 11.59     11.61     11.48     11.34     11.67  
Average equity to average assets 12.43     12.31     12.30     12.49     12.55  

__________________________________________

  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, 2018, there were $4.0 million of restructured loans included in nonaccruing loans and $5.5 million, or 54.4% of nonaccruing loans were current on their loan payments. Purchased impaired loans acquired through bank acquisitions are excluded from nonaccruing loans due to the accretion of discounts in accordance with the acquisition method of accounting for business combinations.
  2. See Non-GAAP reconciliation tables below for adjustments.


Average Balance Sheet Data

  For the Three Months Ended September 30,
  2018   2017
  Average
Balance
Outstanding
  Interest
Earned/
Paid(2)
  Yield/
Rate(2)
  Average
Balance
Outstanding
  Interest
Earned/
Paid(2)
  Yield/
Rate(2)
(Dollars in thousands)  
Assets:                      
Interest-earning assets:                      
Loans receivable(1) $ 2,557,970     $ 29,010     4.54 %   $ 2,361,522     $ 25,798     4.37 %
Deposits in other banks 92,514     415     1.80 %   159,152     536     1.35 %
Investment securities 154,249     856     2.22 %   189,920     972     2.05 %
Other interest-earning assets(3) 271,223     2,280     3.36 %   208,422     1,138     2.18 %
Total interest-earning assets 3,075,956     32,561     4.23 %   2,919,016     28,444     3.90 %
Other assets 245,855             278,869          
Total assets 3,321,811             3,197,885          
Liabilities and equity:                      
Interest-bearing deposits:                      
Interest-bearing checking accounts 459,895     270     0.23 %   462,928     216     0.19 %
Money market accounts 677,329     957     0.57 %   605,261     477     0.31 %
Savings accounts 208,289     68     0.13 %   232,940     78     0.13 %
Certificate accounts 530,507     1,455     1.10 %   449,839     575     0.51 %
Total interest-bearing deposits 1,876,020     2,750     0.59 %   1,750,968     1,346     0.31 %
Borrowings 645,859     3,258     2.02 %   668,091     1,969     1.18 %
Total interest-bearing liabilities 2,521,879     6,008     0.95 %   2,419,059     3,315     0.55 %
Noninterest-bearing deposits 323,781             310,596          
Other liabilities 63,282             66,808          
Total liabilities 2,908,943             2,796,463          
Stockholders' equity 412,868             401,422          
Total liabilities and stockholders' equity $ 3,321,811             $ 3,197,885          
                       
Net earning assets $ 554,077             $ 499,957          
Average interest-earning assets to                      
average interest-bearing liabilities 121.97 %           120.67 %        
Tax-equivalent:                      
Net interest income     $ 26,553             $ 25,129      
Interest rate spread         3.28 %           3.35 %
Net interest margin(4)         3.45 %           3.44 %
Non-tax-equivalent:                      
Net interest income     $ 26,272             $ 24,581      
Interest rate spread         3.25 %           3.27 %
Net interest margin(4)         3.42 %           3.37 %

__________________

  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 $281 and $548 for the three months ended September 30, 2018 and 2017, respectively, calculated based on a combined federal and state tax rate of 24% and 37%, respectively.
  3. The average other interest-earning assets consists of FRB stock, FHLB stock, Small Business Investment Company ("SBIC") investments, and commercial paper.
  4. Net interest income divided by average interest-earning assets.


Loans

(Dollars in thousands) September 30,
2018
  June 30,
2018
  March 31,
2018
  December 31,
2017
  September 30,
2017
Retail consumer loans:                  
One-to-four family $ 656,011     $ 664,289     $ 670,036     $ 686,229     $ 684,956  
HELOCs - originated 135,512     137,564     143,049     150,084     152,979  
HELOCs - purchased 150,733     166,276     165,680     162,181     162,518  
Construction and land/lots 75,433     65,601     68,121     60,805     54,969  
Indirect auto finance 173,305     173,095     160,664     150,042     142,915  
Consumer 13,139     12,379     11,317     9,699     8,814  
Total retail consumer loans 1,204,133     1,219,204     1,218,867     1,219,040     1,207,151  
Commercial loans:                  
Commercial real estate 879,184     857,315     810,332     786,381     753,857  
Construction and development 198,809     192,102     184,179     185,921     209,672  
Commercial and industrial 193,739     148,823     132,337     127,709     124,722  
Municipal leases 111,951     109,172     101,108     100,205     100,638  
Total commercial loans 1,383,683     1,307,412     1,227,956     1,200,216     1,188,889  
Total loans 2,587,816     2,526,616     2,446,823     2,419,256     2,396,040  
Deferred loan fees, net (710 )   (764 )   (1,068 )   (1,242 )   (1,285 )
Total loans, net of deferred loan fees 2,587,106     2,525,852     2,445,755     2,418,014     2,394,755  
Allowance for loan losses (20,932 )   (21,060 )   (21,472 )   (21,090 )   (21,997 )
Loans, net $ 2,566,174     $ 2,504,792     $ 2,424,283     $ 2,396,924     $ 2,372,758  
                                       

Deposits

(Dollars in thousands) September 30,
2018
  June 30,
2018
  March 31,
2018
  December 31,
2017
  September 30,
2017
Core deposits:                  
Noninterest-bearing accounts $ 313,110     $ 317,822     $ 303,875     $ 313,493     $ 304,144  
NOW accounts 462,694     471,364     496,934     489,668     464,992  
Money market accounts 687,148     677,665     659,791     638,259     642,351  
Savings accounts 203,372     213,250     220,497     224,732     230,944  
Total core deposits 1,666,324     1,680,101     1,681,097     1,666,152     1,642,431  
Certificates of deposit 536,720     516,152     499,227     442,056     457,879  
Total $ 2,203,044     $ 2,196,253     $ 2,180,324     $ 2,108,208     $ 2,100,310  
                                       

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; tangible equity to tangible assets ratio; net income excluding certain state income tax expense, adjustments for the change in federal tax law, and gain from the sale of premises and equipment; earnings per share ("EPS"), return on assets ("ROA"), and return on equity ("ROE") excluding certain state income tax expense, adjustments for the change in federal tax law, and gain from the sale of premises and equipment; and the ratio of the allowance for loan losses to total loans excluding acquired loans. 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 provides an alternative view of the Company's performance over time and in comparison to the Company's 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 our efficiency ratio:

     
    Three Months Ended
(Dollars in thousands)   September 30,   June 30,   September 30,
    2018   2018   2017
Noninterest expense   $ 21,883     $ 21,586     $ 20,886  
             
Net interest income   $ 26,272     $ 25,590     $ 24,701  
Plus noninterest income   5,613     5,214     4,262  
Plus tax equivalent adjustment   281     390     548  
Less gain on sale of premises and equipment           164  
Net interest income plus noninterest income – as adjusted   $ 32,166     $ 31,194     $ 29,347  
Efficiency ratio   68.03 %   69.20 %   71.17 %
Efficiency ratio (without adjustments)   68.63 %   70.08 %   72.11 %
                   

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,   March 31,   December 31,   September 30,
    2018   2018   2018   2017   2017
Total stockholders' equity   $ 414,195     $ 409,242     $ 401,553     $ 395,361     $ 405,499  
Less: goodwill, core deposit intangibles, net of taxes   28,690     29,125     29,589     30,083     29,704  
Tangible book value (1)   $ 385,505     $ 380,117     $ 371,964     $ 365,278     $ 375,795  
Common shares outstanding   18,939,280     19,041,668     19,034,868     18,967,175     18,968,675  
Tangible book value per share   $ 20.35     $ 19.96     $ 19.54     $ 19.26     $ 19.81  
Book value per share   $ 21.87     $ 21.49     $ 21.10     $ 20.84     $ 21.38  
  1. Tangible book value is equal to total stockholders' equity less goodwill and core deposit intangibles, net of related deferred tax liabilities.


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

     
    As of
    September 30,   June 30,   March 31,   December 31,   September 30,
    2018   2018   2018   2017   2017
    (Dollars in thousands)
Tangible equity(1)   $ 385,505     $ 380,117     $ 371,964     $ 365,278     $ 375,795  
Total assets   3,353,959     3,304,169     3,270,863     3,250,588     3,249,998  
Less: goodwill, core deposit intangibles, net of taxes   28,690     29,125     29,589     30,083     29,704  
Total tangible assets(2)   $ 3,325,269     $ 3,275,044     $ 3,241,274     $ 3,220,505     $ 3,220,294  
Tangible equity to tangible assets   11.59 %   11.61 %   11.48 %   11.34 %   11.67 %
  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 net income and earnings per share (EPS) as adjusted to exclude state tax expense rate change, federal tax law rate change, and gain from sale of premises and equipment:

    Three Months Ended
(Dollars in thousands, except per share data)   September 30,   June 30,   September 30,
    2018   2018   2017
State tax expense adjustment (1)       (275 )   133  
Change in federal tax law adjustment (2)       (103 )    
Gain from sale of premises and equipment           (164 )
Total adjustments       (378 )   (31 )
Tax effect           59  
Total adjustments, net of tax       (378 )   28  
             
Net income (GAAP)   7,790     7,207     5,567  
             
Net income (non-GAAP)   $ 7,790     $ 6,829     $ 5,595  
             
Per Share Data            
Average shares outstanding - basic   18,125,637     18,121,690     17,966,994  
Average shares outstanding - diluted   18,880,476     18,847,279     18,616,452  
             
Basic EPS            
EPS (GAAP)   $ 0.43     $ 0.40     $ 0.31  
Non-GAAP adjustment       (0.02 )    
EPS (non-GAAP)   $ 0.43     $ 0.38     $ 0.31  
             
Diluted EPS            
EPS (GAAP)   $ 0.41     $ 0.38     $ 0.30  
Non-GAAP adjustment       (0.02 )    
EPS (non-GAAP)   $ 0.41     $ 0.36     $ 0.30  
             
Average Balances            
Average assets   $ 3,321,811     $ 3,289,437     $ 3,197,885  
Average equity   412,868     404,832     401,422  
             
ROA            
ROA (GAAP)   0.94 %   0.88 %   0.70 %
Non-GAAP adjustment   %   (0.05 )%   %
ROA (non-GAAP)   0.94 %   0.83 %   0.70 %
             
ROE            
ROE (GAAP)   7.55 %   7.12 %   5.55 %
Non-GAAP adjustment   %   (0.37 )%   0.03 %
ROE (non-GAAP)   7.55 %   6.75 %   5.58 %
  1. State tax adjustment is a result of various revaluations of state deferred tax assets.
  2. Revaluation and related adjustments of net deferred tax assets due to the Tax Cuts and Jobs Act.


Set forth below is a reconciliation to GAAP of the allowance for loan losses to total loans and the allowance for loan losses as adjusted to exclude acquired loans:

     
    As of
(Dollars in thousands)   September 30,   June 30,   March 31,   December 31,   September 30,
    2018   2018   2018   2017   2017
Total gross loans receivable (GAAP)   $ 2,587,816     $ 2,526,616     $ 2,446,823     $ 2,419,256     $ 2,396,040  
Less: acquired loans   253,695     271,801     288,847     311,508     338,933  
Adjusted loans (non-GAAP)   $ 2,334,121     $ 2,254,815     $ 2,157,976     $ 2,107,748     $ 2,057,107  
                     
Allowance for loan losses (GAAP)   $ 20,932     $ 21,060     $ 21,472     $ 21,090     $ 21,997  
Less: allowance for loan losses on acquired loans   295     483     459     566     1,197  
Adjusted allowance for loan losses   $ 20,637     $ 20,577     $ 21,013     $ 20,524     $ 20,800  
Adjusted allowance for loan losses / Adjusted loans (non-GAAP)   0.88 %   0.91 %   0.97 %   0.97 %   1.01 %