• HomeTrust Bancshares, Inc. Announces Financial Results for the Third Quarter of Fiscal Year 2023 and Quarterly Dividend Highlighted by Completion of Merger with Quantum Capital Corp.

    来源: Nasdaq GlobeNewswire / 26 4月 2023 08:15:01   America/New_York

    ASHEVILLE, N.C., April 26, 2023 (GLOBE NEWSWIRE) -- HomeTrust Bancshares, Inc. (NASDAQ: HTBI) ("Company"), the holding company of HomeTrust Bank ("Bank"), today announced preliminary net income for the third quarter of fiscal year 2023 and approval of its quarterly cash dividend.

    Results for the quarter ended March 31, 2023 include the impact of the merger of Quantum Capital Corp. ("Quantum") into the Company effective February 12, 2023. The addition of Quantum contributed total assets of $656.7 million, including loans of $561.9 million, and $570.6 million of deposits, all reflecting the impact of purchase accounting adjustments. Merger-related expenses of $4.7 million and $5.5 million were recognized during the three and nine months ended March 31, 2023, while a $5.3 million provision for credit losses was recognized during the three months ended March 31, 2023 to establish allowances for credit losses on both Quantum's loan portfolio and off-balance-sheet credit exposure. Quantum's scheduled core system conversion was completed in March.

    For the quarter ended March 31, 2023 compared to the quarter ended December 31, 2022:

    • net income was $6.7 million compared to $13.7 million;
    • diluted earnings per share ("EPS") was $0.40 compared to $0.90;
    • annualized return on assets ("ROA") was 0.69% compared to 1.54%;
    • annualized return on equity ("ROE") was 6.21% compared to 13.37%;
    • net interest income was $41.5 million compared to $37.5 million;
    • net interest margin was 4.55% compared to 4.53%;
    • provision for credit losses was $8.8 million compared to $2.2 million;
    • noninterest income was $8.3 million compared to $8.5 million;
    • net organic loan growth was $104.1 million, or 14.2% annualized, compared to $121.9 million, or 17.4% annualized; and
    • quarterly cash dividends of $0.10 per share totaling $1.7 million compared to $1.5 million.

    For the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022:

    • net income was $29.6 million compared to $29.6 million;
    • diluted EPS was $1.90 compared to $1.84;
    • annualized ROA was 1.07% compared to 1.12%;
    • annualized ROE was 9.52% compared to 9.91%;
    • net interest income was $113.5 million compared to $81.9 million;
    • net interest margin was 4.40% compared to 3.34%;
    • provision for credit losses was $15.0 million compared to a net benefit of $4.0 million;
    • noninterest income was $24.2 million compared to $29.4 million;
    • net organic loan growth was $307.8 million, or 15.1% annualized, compared to $34.9 million, or 1.8% annualized; and
    • cash dividends of $0.29 per share totaling $4.5 million compared to $0.26 per share totaling $4.1 million.

    The unrealized loss on our available for sale investment portfolio was $3.9 million, or 2.5% of book value, compared to $3.1 million, or 2.4% of book value as of March 31, 2023 and June 30, 2022, respectively. No held to maturity securities were held as of either date.

    The Company also announced today that its Board of Directors declared a quarterly cash dividend of $0.10 per common share payable on June 1, 2023 to shareholders of record as of the close of business on May 18, 2023.

    “We are pleased with the continuation of our strong core financial results in spite of industry headwinds and expenses related to our merger with Quantum,” said Hunter Westbrook, President and Chief Executive Officer. “Our well-positioned balance sheet allowed us to continue benefiting from the rising interest rate environment, resulting in the expansion of our net interest margin to 4.55% for the quarter. While we intend to take a prudent approach by limiting loan growth in the coming quarters, credit quality remains strong with nonperforming classified credits at historically low levels.

    “The liquidity and tangible common equity concerns experienced by some institutions are not significant risks to HomeTrust. Overall, our deposit portfolio has remained steady with a diverse depositor base including urban and rural areas over parts of five states. Our average deposit account balance is just $33,000 and only 20% of our deposits are uninsured. In addition, we continue to maintain a short duration investment portfolio which has benefited our net interest margin as rates have risen and prevented any large unrealized losses that could have eroded our equity.

    “Lastly, we were excited to welcome the customers and talented group of bankers from Quantum to the HomeTrust team this quarter. With this merger behind us, we look forward to working together to increase shareholder value.”

    WEBSITE: WWW.HTB.COM

    Comparison of Results of Operations for the Three Months Ended March 31, 2023 and December 31, 2022

    Net Income. Net income totaled $6.7 million, or $0.40 per diluted share, for the three months ended March 31, 2023 compared to net income of $13.7 million, or $0.90 per diluted share, for the three months ended December 31, 2022, a decrease of $7.0 million, or 50.7%. The results for the three months ended March 31, 2023 were negatively impacted by increases of $6.5 million in the provision for credit losses and $6.8 million in noninterest expense, partially offset by a $4.0 million increase in net interest income. These changes were primarily related to the merger with Quantum completed this quarter. 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
     March 31, 2023 December 31, 2022
    (Dollars in thousands)Average
    Balance
    Outstanding    		 Interest
    Earned /
    Paid    		 Yield /
    Rate    		 Average
    Balance
    Outstanding    		 Interest
    Earned /
    Paid    		 Yield /
    Rate
    Assets           
    Interest-earning assets           
    Loans receivable(1)$3,413,641  $47,908  5.69% $2,999,207  $38,995  5.16%
    Commercial paper —   —  —   34,487   184  2.12 
    Debt securities available for sale 156,778   1,183  3.06   167,818   1,151  2.72 
    Other interest-earning assets(2) 124,120   1,575  5.15   86,430   1,072  4.92 
    Total interest-earning assets 3,694,539   50,666  5.56   3,287,942   41,402  5.00 
    Other assets 253,746       236,159     
    Total assets$3,948,285      $3,524,101     
    Liabilities and equity           
    Interest-bearing liabilities           
    Interest-bearing checking accounts$645,011  $976  0.61% $627,548  $571  0.36%
    Money market accounts 1,133,415   4,338  1.55   954,007   1,935  0.80 
    Savings accounts 230,820   48  0.08   236,027   45  0.08 
    Certificate accounts 515,326   2,502  1.97   444,845   1,052  0.94 
    Total interest-bearing deposits 2,524,572   7,864  1.26   2,262,427   3,603  0.63 
    Junior subordinated debt 5,299   109  8.34   —   —  — 
    Borrowings 98,400   1,239  5.11   26,063   254  3.87 
    Total interest-bearing liabilities 2,628,271   9,212  1.42   2,288,490   3,857  0.67 
    Noninterest-bearing deposits 830,510       785,785     
    Other liabilities 49,674       44,333     
    Total liabilities 3,508,455       3,118,608     
    Stockholders' equity 439,830       405,493     
    Total liabilities and stockholders' equity$3,948,285      $3,524,101     
    Net earning assets$1,066,268      $999,452     
    Average interest-earning assets to average interest-bearing liabilities 140.57%      143.67%    
    Non-tax-equivalent           
    Net interest income  $41,454      $37,545   
    Interest rate spread    4.14%     4.33%
    Net interest margin(3)    4.55%     4.53%
    Tax-equivalent(4)           
    Net interest income  $41,744      $37,832   
    Interest rate spread    4.17%     4.36%
    Net interest margin(3)    4.58%     4.56%


    (1)Average loans receivable balances include loans held for sale and nonaccruing loans.
    (2)Average other interest-earning assets consist of FRB stock, FHLB stock, SBIC investments, and deposits in other banks.
    (3)Net interest income divided by average interest-earning assets.
    (4)Interest income used in the average interest earned and yield calculation includes the tax equivalent adjustment of $290 and $287 for the three months ended March 31, 2023 and December 31, 2022, respectively, calculated based on a combined federal and state tax rate of 24%.

    Total interest and dividend income for the three months ended March 31, 2023 increased $9.3 million, or 22.4%, compared to the three months ended December 31, 2022, which was driven by a $8.9 million, or 22.9%, increase in interest income on loans. Accretion income on acquired loans of $353,000 and $195,000 was recognized during the same periods, respectively, and was included in interest income on loans. Beyond accretion income, the increase was driven by a continued increase in the average yield on loans and the inclusion of Quantum's loan portfolio for roughly half a quarter.

    Total interest expense for the three months ended March 31, 2023 increased $5.4 million, or 138.8%, compared to the three months ended December 31, 2022. The increase was the result of increases in the average cost of funds across funding sources, an increase in average deposits outstanding and the inclusion of junior subordinated debt assumed from Quantum.

    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:

     Increase / (Decrease)
    Due to    		 Total
    Increase /
    (Decrease)

    (Dollars in thousands)Volume Rate 
    Interest-earning assets     
    Loans receivable$4,324  $4,589  $8,913 
    Commercial paper (184)  —   (184)
    Debt securities available for sale (102)  134   32 
    Other interest-earning assets 432   71   503 
    Total interest-earning assets 4,470   4,794   9,264 
    Interest-bearing liabilities     
    Interest-bearing checking accounts (6)  411   405 
    Money market accounts 267   2,136   2,403 
    Savings accounts (2)  5   3 
    Certificate accounts 111   1,339   1,450 
    Junior subordinated debt 109   —   109 
    Borrowings 677   308   985 
    Total interest-bearing liabilities 1,156   4,199   5,355 
    Net increase in interest income    $3,909 

    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  
    (Dollars in thousands)March 31,
    2023    		 December 31,
    2022    		 $ Change % Change
    Provision for credit losses       
    Loans$8,360  $2,425  $5,935  245%
    Off-balance-sheet credit exposure 400   (85)  485  571 
    Commercial paper —   (100)  100  100 
    Total provision for credit losses$8,760  $2,240  $6,520  291%

    For the quarter ended March 31, 2023, the "loans" portion of the provision for credit losses was the result of the following, offset by net charge-offs of $0.1 million during the quarter:

    • $4.9 million provision to establish an allowance on Quantum's loan portfolio.
    • $2.0 million provision driven by loan growth and changes in the loan mix.
    • $1.2 million provision due to changes in the projected economic forecast, specifically the national unemployment rate, and changes in qualitative adjustments.
    • $0.2 million increase in specific reserves on individually evaluated credits.

    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 March 31, 2023, a provision of $0.4 million was also recorded to establish an allowance on Quantum's off-balance-sheet credit exposure. For the quarter ended December 31, 2022, the change 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 March 31, 2023 decreased $0.1 million, or 1.7%, when compared to the quarter ended December 31, 2022. Changes in the components of noninterest income are discussed below:

     Three Months Ended  
    (Dollars in thousands)March 31,
    2023    		 December 31,
    2022    		 $ Change % Change
    Noninterest income       
    Service charges and fees on deposit accounts$2,256  $2,523  $(267) (11)%
    Loan income and fees 562   647   (85) (13)
    Gain on sale of loans held for sale 1,811   1,102   709  64 
    BOLI income 522   494   28  6 
    Operating lease income 1,505   1,156   349  30 
    Gain (loss) on sale of premises and equipment 900   1,127   (227) (20)
    Other 754   1,405   (651) (46)
    Total noninterest income$8,310  $8,454  $(144) (2)%
    • Gain on sale of loans held for sale: The increase in the gain on sale of loans held for sale was primarily driven by an increase in volume of SBA loans sold during the period. During the quarter ended March 31, 2023, there were $16.6 million in sales of the guaranteed portion of SBA commercial loans with gains of $1.2 million compared to $8.2 million sold and gains of $568,000 for the quarter ended December 31, 2022. There were $6.4 million of residential mortgage loans originated for sale which were sold during the current quarter with gains of $147,000 compared to $7.3 million sold with gains of $183,000 in the prior quarter. There were $35.2 million of home equity lines of credit ("HELOCs") sold during the current quarter for a gain of $354,000 compared to $41.4 million sold and gains of $340,000 in the prior quarter.
    • Operating lease income: The increase in operating lease income was the result of a net gain of $17,000 at the end of operating leases for the quarter ended March 31, 2023 versus a net loss of $337,000 for the quarter ended December 31, 2022.
    • Gain (loss) on sale of premises and equipment: During the quarter ended March 31, 2023, one property was sold for a gain of $900,000. 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 decrease in other income was driven by a $721,000 gain recognized during the quarter ended December 31, 2022 on the sale of closely held equity securities which the Company obtained through a prior bank acquisition. No such sales occurred during the quarter ended March 31, 2023.

    Noninterest Expense. Noninterest expense for the three months ended March 31, 2023 increased $6.8 million, or 25.9%, when compared to the three months ended December 31, 2022. Changes in the components of noninterest expense are discussed below:

     Three Months Ended  
    (Dollars in thousands)March 31,
    2023    		 December 31,
    2022    		 $ Change % Change
    Noninterest expense       
    Salaries and employee benefits$16,246  $14,484  $1,762  12%
    Occupancy expense, net 2,467   2,428   39  2 
    Computer services 2,911   2,796   115  4 
    Telephone, postage and supplies 613   575   38  7 
    Marketing and advertising 372   481   (109) (23)
    Deposit insurance premiums 612   546   66  12 
    Core deposit intangible amortization 606   26   580  2,231 
    Merger-related expenses 4,741   250   4,491  1,796 
    Other 4,265   4,490   (225) (5)
    Total noninterest expense$32,833  $26,076  $6,757  26%
    • Salaries and employee benefits: The increase in salaries and employee benefits expense is primarily the result of the inclusion of Quantum employees for half a quarter, partially offset by lower mortgage banking incentive pay as a result of the reduction in the volume of originations due to rising interest rates.
    • Core deposit intangible amortization: The increase in amortization expense is a result of a $12.2 million core deposit intangible associated with the Company's merger with Quantum, which will be amortized on an accelerated basis over ten years.
    • Merger-related expenses: With the closing of the Company's merger with Quantum, merger-related expenses increased both in anticipation of and after the closing. The most significant expenses incurred included the payout of severance and employment contracts, professional fees, termination of prior contracts, and conversion of IT systems which occurred during the 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 March 31, 2023 decreased $2.6 million as a result of lower pre-tax income and permanent tax differences associated with employee stock options recognized during the current quarter.

    Comparison of Results of Operations for the Nine Months Ended March 31, 2023 and March 31, 2022

    Net Income. Net income totaled $29.6 million, or $1.90 per diluted share, for the nine months ended March 31, 2023 compared to net income of $29.6 million, or $1.84 per diluted share, for the nine months ended March 31, 2022, a decrease of $37,000, or 0.1%. The results for the nine months ended March 31, 2023 were negatively impacted by an increase of $19.0 million in the provision for credit losses, a $5.2 million decrease in noninterest income, and a $7.4 million increase in noninterest expense driven by $5.5 million in merger-related expenses, partially offset by a $31.6 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.

     Nine Months Ended
     March 31, 2023 March 31, 2022
    (Dollars in thousands)Average
    Balance
    Outstanding    		 Interest
    Earned /
    Paid    		 Yield /
    Rate    		 Average
    Balance
    Outstanding    		 Interest
    Earned /
    Paid    		 Yield /
    Rate
    Assets           
    Interest-earning assets           
    Loans receivable(1)$3,095,358  $120,148  5.17% $2,810,240  $81,440  3.86%
    Commercial paper 83,506   1,300  2.07   211,739   869  0.55 
    Debt securities available for sale 153,178   3,012  2.62   124,053   1,319  1.42 
    Other interest-earning assets(2) 108,007   3,535  4.36   121,936   2,360  2.58 
    Total interest-earning assets 3,440,049   127,995  4.96   3,267,968   85,988  3.51 
    Other assets 244,271       259,535     
    Total assets$3,684,320      $3,527,503     
    Liabilities and equity           
    Interest-bearing liabilities           
    Interest-bearing checking accounts$642,217  $1,814  0.38% $640,194  $1,038  0.22%
    Money market accounts 1,017,663   6,794  0.89   1,002,542   1,056  0.14 
    Savings accounts 235,312   137  0.08   224,664   120  0.07 
    Certificate accounts 478,712   4,117  1.15   447,623   1,814  0.54 
    Total interest-bearing deposits 2,373,904   12,862  0.72   2,315,023   4,028  0.23 
    Junior subordinated debt 1,741   109  8.34   —   —  — 
    Borrowings 41,585   1,505  4.82   48,894   45  0.12 
    Total interest-bearing liabilities 2,417,230   14,476  0.80   2,363,917   4,073  0.23 
    Noninterest-bearing deposits 805,555       719,872     
    Other liabilities 47,544       45,443     
    Total liabilities 3,270,329       3,129,232     
    Stockholders' equity 413,991       398,271     
    Total liabilities and stockholders' equity$3,684,320      $3,527,503     
    Net earning assets$1,022,819      $904,051     
    Average interest-earning assets to average interest-bearing liabilities 142.31%      138.24%    
    Non-tax-equivalent           
    Net interest income  $113,519      $81,915   
    Interest rate spread    4.16%     3.28%
    Net interest margin(3)    4.40%     3.34%
    Tax-equivalent           
    Net interest income  $114,383      $82,852   
    Interest rate spread    4.19%     3.31%
    Net interest margin(3)    4.43%     3.38%


    (1)Average loans receivable balances include loans held for sale and nonaccruing loans.
    (2)Average other interest-earning assets consist of FRB stock, FHLB stock, SBIC investments, and deposits in other banks.
    (3)Net interest income divided by average interest-earning assets.
    (4)Interest income used in the average interest earned and yield calculation includes the tax equivalent adjustment of $864 and $937 for the nine months ended March 31, 2023 and March 31, 2022, respectively, calculated based on a combined federal and state tax rate of 24%.

    Total interest and dividend income for the nine months ended March 31, 2023 increased $42.0 million, or 48.9%, compared to the nine months ended March 31, 2022, which was driven by a $38.7 million, or 47.5%, increase in interest income on loans, a combined increase of $2.1 million, or 97.4%, in interest income on commercial paper and debt securities available for sale, and an increase of $1.2 million, or 49.8%, in interest income on other interest-earning assets. 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 nine months ended March 31, 2023 increased $10.4 million, or 255.4%, compared to the nine months ended March 31, 2022. The increase was primarily the result of increases in the average cost of funds across all funding sources driven by higher market interest 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:

     Increase / (Decrease)
    Due to    		 Total
    Increase /
    (Decrease)
    (Dollars in thousands)Volume Rate 
    Interest-earning assets     
    Loans receivable$8,263  $30,445  $38,708 
    Commercial paper (526)  957   431 
    Debt securities available for sale 310   1,383   1,693 
    Other interest-earning assets (270)  1,445   1,175 
    Total interest-earning assets 7,777   34,230   42,007 
    Interest-bearing liabilities     
    Interest-bearing checking accounts 3   773   776 
    Money market accounts 16   5,722   5,738 
    Savings accounts 6   11   17 
    Certificate accounts 126   2,177   2,303 
    Junior subordinated debt 109   —   109 
    Borrowings (7)  1,467   1,460 
    Total interest-bearing liabilities 253   10,150   10,403 
    Net increase in interest income    $31,604 

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

     Nine Months Ended  
    (Dollars in thousands)March 31,
    2023    		 March 31,
    2022    		 $ Change % Change
    Provision (benefit) for credit losses       
    Loans$14,479  $(4,415) $18,894  428%
    Off-balance-sheet credit exposure 758   415   343  83 
    Commercial paper (250)  (5)  (245) (4,900)
    Total provision (benefit) for credit losses$14,987  $(4,005) $18,992  474%

    For the nine months ended March 31, 2023, the "loans" portion of the provision (benefit) for credit losses was the result of the following, offset by net charge-offs of $2.0 million during the period:

    • $4.9 million provision to establish an allowance on Quantum's loan portfolio.
    • $0.9 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.
    • $4.9 million provision driven by loan growth and changes in the loan mix.
    • $3.1 million provision due to changes in the projected economic forecast, specifically the national unemployment rate, and changes in qualitative adjustments.
    • $1.3 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 nine months ended March 31, 2022, 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 the nine months ended March 31, 2023, a provision of $0.4 million was also recorded to establish an allowance on Quantum's off-balance-sheet credit exposure. The remainder of the change 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, which is the same reasoning for the provision for the nine months ended March 31, 2022.

    Noninterest Income. Noninterest income for the nine months ended March 31, 2023 decreased $5.2 million, or 17.8%, when compared to the same period last year. Changes in the components of noninterest income are discussed below:

     Nine Months Ended  
    (Dollars in thousands)March 31,
    2023    		 March 31,
    2022    		 $ Change % Change
    Noninterest income       
    Service charges and fees on deposit accounts$7,117  $7,101  $16  —%
    Loan income and fees 1,779   2,536   (757) (30)
    Gain on sale of loans held for sale 4,499   10,927   (6,428) (59)
    BOLI income 1,543   1,500   43  3 
    Operating lease income 4,246   4,920   (674) (14)
    Gain (loss) on sale of premises and equipment 2,015   (87)  2,102  2,416 
    Other 2,963   2,496   467  19 
    Total noninterest income$24,162  $29,393  $(5,231) (18)%
    • 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 SBA loans and residential mortgages sold during the period as a result of rising interest rates. During the nine months ended March 31, 2023, there were $36.9 million of sales of the guaranteed portion of SBA commercial loans with gains of $2.7 million compared to $43.5 million sold and gains of $4.5 million for the corresponding period in the prior year. There were $34.6 million of residential mortgage loans originated for sale which were sold during the current period with gains of $823,000 compared to $204.1 million sold with gains of $5.6 million for the corresponding period in the prior year. There were $99.4 million of HELOCs sold during the current period for a gain of $897,000 compared to $97.2 million sold and gains of $581,000 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 nine months ended March 31, 2022 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 was the result of lower contractual earnings as well as gains or losses incurred at the end of operating leases, where we recognized a net loss of $172,000 for the nine months ended March 31, 2023 versus a net loss of $17,000 in the same period last year.
    • Gain (loss) on sale of premises and equipment: During the nine months ended March 31, 2023 three properties were sold for a combined gain of $2.5 million, partially offset by additional impairment of $420,000 on premises associated with prior branch closures. For the nine months ended March 31, 2022, no sales occurred but $87,000 of additional impairment was recorded on premises held for sale.
    • 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 nine months ended March 31, 2023 increased $7.4 million, or 9.5%, when compared to the same period last year. Changes in the components of noninterest expense are discussed below:

     Nine Months Ended  
    (Dollars in thousands)March 31,
    2023    		 March 31,
    2022    		 $ Change % Change
    Noninterest expense       
    Salaries and employee benefits$45,545  $44,882  $663  1%
    Occupancy expense, net 7,291   7,201   90  1 
    Computer services 8,470   7,817   653  8 
    Telephone, postage and supplies 1,791   1,946   (155) (8)
    Marketing and advertising 1,443   2,110   (667) (32)
    Deposit insurance premiums 1,700   1,280   420  33 
    Core deposit intangible amortization 666   208   458  220 
    Merger-related expenses 5,465   —   5,465  100 
    Other 12,627   12,194   433  4 
    Total noninterest expense$84,998  $77,638  $7,360  9%
    • 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 is primarily driven by a reduction in traditional media advertising (print, billboards, etc.) in favor of digital platforms at lower costs during the current fiscal year.
    • Deposit insurance premiums: The increase in expense can be traced to an increase in rates the Company is charged for deposit insurance and the inclusion of Quantum's deposit portfolio for roughly half a quarter.
    • Core deposit intangible amortization: The increase in amortization expense during the nine months ended March 31, 2023 is a result of a $12.2 million core deposit intangible associated with the Company's merger with Quantum, which will be amortized on an accelerated basis over ten years.
    • Merger-related expenses: These are expenses related to the merger of Quantum into the Company. The most significant expenses incurred included the payout of severance and employment contracts, due diligence, professional fees, termination of prior contracts, due diligence, and conversion of IT systems which occurred during the period.
    • Other: During the nine months ended March 31, 2023 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 nine months ended March 31, 2023 increased $58,000 compared to the prior period.

    Balance Sheet Review
    Total assets increased by $977.7 million to $4.5 billion and total liabilities increased by $908.3 million to $4.1 billion, respectively, at March 31, 2023 as compared to June 30, 2022. The majority of these changes were the result of the Company's merger with Quantum.

    Stockholders' equity increased $69.4 million to $458.2 million at March 31, 2023 as compared to June 30, 2022. Activity within stockholders' equity included $29.6 million in net income, $37.7 million in stock issued in connection with the Company's merger with Quantum, $7.6 million in stock-based compensation and stock option exercises, offset by $4.5 million in cash dividends declared and a $0.6 million increase in accumulated other comprehensive loss associated with available for sale debt securities. As of March 31, 2023, 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 $47.5 million, or 1.30% of total loans, at March 31, 2023 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 "Nine Months Ended March 31, 2023 and March 31, 2022" section above.

    Net loan charge-offs totaled $2.0 million, or 0.09% as a percentage of average loans, for the nine months ended March 31, 2023 compared to $19,000, or 0.00% as a percentage of average loans, for the same period last year.

    Nonperforming assets increased by $1.7 million, or 27.1%, to $8.0 million, or 0.18% of total assets, at March 31, 2023 compared to $6.3 million, or 0.18% of total assets, at June 30, 2022. Nonperforming assets included $7.9 million in nonaccruing loans and $123,000 of real estate owned ("REO") at March 31, 2023, compared to $6.1 million and $200,000 in nonaccruing loans and REO, respectively, at June 30, 2022. Nonperforming loans to total loans was 0.22% at March 31, 2023 and 0.22% at June 30, 2022.

    The ratio of classified assets to total assets decreased to 0.49% at March 31, 2023 from 0.61% at June 30, 2022, mainly due to growth in the balance sheet as a result of the merger with Quantum. Classified assets increased $416,000, or 1.9%, to $22.0 million at March 31, 2023 compared to $21.5 million at June 30, 2022.

    Merger with Quantum Capital Corp.

    On February 12, 2023, the Company merged with Quantum Capital Corp. and its wholly owned subsidiary, Quantum National Bank, which operated two locations in the Atlanta metro area. The aggregate amount of consideration to be paid per the purchase agreement of approximately $70.8 million, inclusive of consideration of common stock, other cash consideration, and cash in lieu of fractional shares, included $15.9 million of cash consideration already paid by Quantum to its stockholders in advance of the closing date as is further described below. These distributions reduced Quantum's stockholders' equity by an equal amount prior to the transaction closing date.

    The following table provides a summary of the assets acquired, liabilities assumed, and associated preliminary fair value adjustments by the Company as of the merger date. As provided for under Generally Accepted Accounting Principles, management has up to 12 months following the date of the merger to finalize the fair value adjustments.

    (Dollars in thousands)Quantum Fair Value
    Adjustments    		 As Recorded by
    HomeTrust
    Assets acquired     
    Cash and cash equivalents$47,769  $—  $47,769 
    Debt securities available for sale 10,608   —   10,608 
    FHLB and FRB stock 1,125   —   1,125 
    Loans(1) 567,140   (5,207)  561,933 
    Premises and equipment 4,415   4,668   9,083 
    Accrued interest receivable 1,706   —   1,706 
    BOLI 9,066   —   9,066 
    Core deposit intangibles —   12,210   12,210 
    Other assets 2,727   569   3,296 
    Total assets acquired$644,556  $12,240  $656,796 


    (Dollars in thousands)Quantum Fair Value Adjustments As Recorded by HomeTrust
    Liabilities assumed     
    Deposits$570,419  $183  $570,602 
    Junior subordinated debt 11,341   (1,408)  9,933 
    Other borrowings 24,728   —   24,728 
    Deferred income taxes —   1,341   1,341 
    Other liabilities 3,334   —   3,334 
    Total liabilities assumed$609,822  $116  $609,938 
          
    Net assets acquired    $46,858 
          
    Consideration paid     
    Common stock consideration     
    Shares of Quantum     574,157 
    Exchange ratio     2.3942 
    HomeTrust common stock issued     1,374,647 
    Price per share of HomeTrust common stock on February 10, 2023    $27.45 
    HomeTrust common stock consideration    $37,734 
    Cash consideration(2)     17,168 
    Total consideration    $54,902 
          
    Goodwill    $8,044 


    (1)Adjustments to Quantum's total loans include the elimination of Quantum's existing allowance for loan losses of $6.0 million, the recognition of an ACL at close on purchase credit deteriorated ("PCD") loans of $0.4 million, and adjustments to reflect the estimated credit fair value mark on the non-PCD loan portfolio of $3.0 million and the estimated interest rate fair value adjustment on the loan portfolio as a whole (non-PCD and PCD) of $7.9 million.
    (2)As indicated in the Current Report on Form 8-K/A filed with the SEC on March 30, 2023, the amount of cash consideration paid at closing differs from the $57.54 per share, or $33.0 million, reported in the Current Report on Form 8-K filed on February 13, 2023, which announced the closing of the merger. Consistent with the merger agreement, between the execution of the merger agreement and the transaction closing date, Quantum's principal stockholders had the option to withdraw some or all of the amount of cash consideration to eventually be paid at closing in advance of the closing date. The amount of cash consideration paid at closing was reduced by the amount withdrawn during this time period.

    About HomeTrust Bancshares, Inc.

    HomeTrust Bancshares, Inc. is the holding company for the Bank. As of March 31, 2023, the Company had assets of $4.5 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), Southwest Virginia (including the Roanoke Valley) and Georgia (Greater Atlanta).

    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 on general economic and financial market conditions and on public health, both nationally and in our market areas; expected revenues, cost savings, synergies and other benefits from our merger and acquisition activities, including the Company's recent merger with 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)March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022(1)    		 March 31,
    2022
    Assets         
    Cash$18,262  $15,825  $18,026  $20,910  $19,783 
    Interest-bearing deposits 296,151   149,209   76,133   84,209   32,267 
    Cash and cash equivalents 314,413   165,034   94,159   105,119   52,050 
    Commercial paper, net —   —   85,296   194,427   312,918 
    Certificates of deposit in other banks 33,102   29,371   27,535   23,551   28,125 
    Debt securities available for sale, at fair value 154,718   147,942   161,741   126,978   106,315 
    FHLB and FRB stock 19,125   13,661   9,404   9,326   10,451 
    SBIC investments, at cost 13,620   12,414   12,235   12,758   12,589 
    Loans held for sale, at fair value 1,209   518   —   —   — 
    Loans held for sale, at the lower of cost or fair value 89,172   72,777   76,252   79,307   85,263 
    Total loans, net of deferred loan fees and costs 3,649,333   2,985,623   2,867,783   2,769,295   2,699,538 
    Allowance for credit losses – loans (47,503)  (38,859)  (38,301)  (34,690)  (31,034)
    Loans, net 3,601,830   2,946,764   2,829,482   2,734,605   2,668,504 
    Premises and equipment, net 74,107   65,216   68,705   69,094   69,629 
    Accrued interest receivable 13,813   11,076   9,667   8,573   7,980 
    Deferred income taxes, net 10,894   11,319   11,838   11,487   12,494 
    Bank owned life insurance ("BOLI") 105,952   96,335   95,837   95,281   94,740 
    Goodwill 33,682   25,638   25,638   25,638   25,638 
    Core deposit intangibles, net 11,637   32   58   93   135 
    Other assets 49,596   48,918   47,339   52,967   54,954 
    Total assets$4,526,870  $3,647,015  $3,555,186  $3,549,204  $3,541,785 
    Liabilities and stockholders' equity         
    Liabilities         
    Deposits$3,675,599  $3,048,020  $3,102,668  $3,099,761  $3,059,157 
    Junior subordinated debt 9,945   —   —   —   — 
    Borrowings 320,263   130,000   —   —   30,000 
    Other liabilities 62,821   58,840   56,296   60,598   57,497 
    Total liabilities 4,068,628   3,236,860   3,158,964   3,160,359   3,146,654 
    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) 174   157   156   156   160 
    Additional paid in capital 170,670   128,486   127,153   126,106   136,181 
    Retained earnings 295,325   290,271   278,120   270,276   265,609 
    Unearned Employee Stock Ownership Plan ("ESOP") shares (4,893)  (5,026)  (5,158)  (5,290)  (5,422)
    Accumulated other comprehensive loss (3,034)  (3,733)  (4,049)  (2,403)  (1,397)
    Total stockholders' equity 458,242   410,155   396,222   388,845   395,131 
    Total liabilities and stockholders' equity$4,526,870  $3,647,015  $3,555,186  $3,549,204  $3,541,785 


    (1)Derived from audited financial statements.
    (2)Shares of common stock issued and outstanding were 17,370,063 at March 31, 2023; 15,673,595 at December 31, 2022; 15,632,348 at September 30, 2022; 15,591,466 at June 30, 2022; and 15,978,262 at March 31, 2022.

    Consolidated Statements of Income (Unaudited)

     Three Months Ended Nine Months Ended
    (Dollars in thousands)March 31,
    2023    		 December 31,
    2022    		 March 31,
    2023    		 March 31,
    2022
    Interest and dividend income       
    Loans$47,908  $38,995  $120,148  $81,440 
    Commercial paper —   184   1,300   869 
    Debt securities available for sale 1,183   1,151   3,012   1,319 
    Other investments and interest-bearing deposits 1,575   1,072   3,535   2,360 
    Total interest and dividend income 50,666   41,402   127,995   85,988 
    Interest expense       
    Deposits 7,864   3,603   12,862   4,028 
    Junior subordinated debt 109   —   109   — 
    Borrowings 1,239   254   1,505   45 
    Total interest expense 9,212   3,857   14,476   4,073 
    Net interest income 41,454   37,545   113,519   81,915 
    Provision (benefit) for credit losses  8,760   2,240   14,987   (4,005)
    Net interest income after provision (benefit) for credit losses 32,694   35,305   98,532   85,920 
    Noninterest income       
    Service charges and fees on deposit accounts 2,256   2,523   7,117   7,101 
    Loan income and fees 562   647   1,779   2,536 
    Gain on sale of loans held for sale 1,811   1,102   4,499   10,927 
    BOLI income 522   494   1,543   1,500 
    Operating lease income 1,505   1,156   4,246   4,920 
    Gain (loss) on sale of premises and equipment 900   1,127   2,015   (87)
    Other 754   1,405   2,963   2,496 
    Total noninterest income 8,310   8,454   24,162   29,393 
    Noninterest expense       
    Salaries and employee benefits 16,246   14,484   45,545   44,882 
    Occupancy expense, net 2,467   2,428   7,291   7,201 
    Computer services 2,911   2,796   8,470   7,817 
    Telephone, postage, and supplies 613   575   1,791   1,946 
    Marketing and advertising 372   481   1,443   2,110 
    Deposit insurance premiums 612   546   1,700   1,280 
    Core deposit intangible amortization 606   26   666   208 
    Merger-related expenses 4,741   250   5,465   — 
    Other 4,265   4,490   12,627   12,194 
    Total noninterest expense 32,833   26,076   84,998   77,638 
    Income before income taxes 8,171   17,683   37,696   37,675 
    Income tax expense 1,437   4,025   8,105   8,047 
    Net income$6,734  $13,658  $29,591  $29,628 

    Per Share Data

      Three Months Ended  Nine Months Ended
      March 31,
    2023    		 December 31,
    2022    		 March 31,
    2023    		 March 31,
    2022
    Net income per common share(1)        
    Basic $0.40  $0.90  $1.91  $1.87 
    Diluted $0.40  $0.90  $1.90  $1.84 
    Average shares outstanding        
    Basic  16,021,994   15,028,179   15,341,222   15,666,093 
    Diluted  16,077,116   15,161,153   15,449,060   15,997,377 
    Book value per share at end of period $26.38  $26.17  $26.38  $24.73 
    Tangible book value per share at end of period(2) $23.93  $24.53  $23.93  $23.13 
    Cash dividends declared per common share $0.10  $0.10  $0.29  $0.26 
    Total shares outstanding at end of period  17,370,063   15,673,595   17,370,063   15,978,262 


    (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 Nine Months Ended
      March 31,
    2023    		 December 31,
    2022    		 March 31,
    2023    		 March 31,
    2022
    Performance ratios(1)      
    Return on assets (ratio of net income to average total assets) 0.69% 1.54% 1.07% 1.12%
    Return on equity (ratio of net income to average equity) 6.21  13.37  9.52  9.91 
    Yield on earning assets 5.56  5.00  4.96  3.51 
    Rate paid on interest-bearing liabilities 1.42  0.67  0.80  0.23 
    Average interest rate spread 4.14  4.33  4.16  3.28 
    Net interest margin(2) 4.55  4.53  4.40  3.34 
    Average interest-earning assets to average interest-bearing liabilities 140.57  143.67  142.31  138.24 
    Noninterest expense to average total assets 3.37  2.94  3.07  2.94 
    Efficiency ratio 65.98  56.69  61.74  69.83 
    Efficiency ratio – adjusted(3) 57.15  58.12  58.56  69.19 


    (1)Ratios are annualized where appropriate.
    (2)Net interest income divided by average interest-earning assets.
    (3)See Non-GAAP reconciliations below for adjustments.


      At or For the Three Months Ended
      March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022    		 March 31,
    2022
    Asset quality ratios          
    Nonperforming assets to total assets(1) 0.18% 0.17% 0.20% 0.18% 0.16%
    Nonperforming loans to total loans(1) 0.22  0.21  0.24  0.22  0.22 
    Total classified assets to total assets 0.49  0.50  0.54  0.61  0.61 
    Allowance for credit losses to nonperforming loans(1) 600.47  629.40  561.10  566.83  534.06 
    Allowance for credit losses to total loans 1.30  1.30  1.34  1.25  1.15 
    Net charge-offs (recoveries) to average loans (annualized) 0.01  0.25  0.01  (0.10) (0.11)
    Capital ratios          
    Equity to total assets at end of period 10.12% 11.25% 11.14% 10.96% 11.16%
    Tangible equity to total tangible assets(2) 9.27  10.62  10.50  10.31  10.51 
    Average equity to average assets 11.14  11.50  11.00  10.93  11.32 


    (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 March 31, 2023, there were $2.3 million of restructured loans included in nonaccruing loans and $3.6 million, or 45.1%, 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)March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022    		 March 31,
    2022
    Commercial real estate loans         
    Construction and land development$368,756  $328,253  $310,985  $291,202  $251,668 
    Commercial real estate – owner occupied 524,247   340,824   336,456   335,658   332,078 
    Commercial real estate – non-owner occupied 926,991   690,241   661,644   662,159   688,071 
    Multifamily 85,285   69,156   79,082   81,086   82,035 
    Total commercial real estate loans 1,905,279   1,428,474   1,388,167   1,370,105   1,353,852 
    Commercial loans         
    Commercial and industrial 229,840   194,679   205,844   193,313   170,098 
    Equipment finance 440,345   426,507   411,012   394,541   378,629 
    Municipal leases 138,436   135,922   130,777   129,766   130,260 
    Total commercial loans 808,621   757,108   747,633   717,620   678,987 
    Residential real estate loans         
    Construction and land development 105,617   100,002   91,488   81,847   72,735 
    One-to-four family 518,274   400,595   374,849   354,203   347,945 
    HELOCs 193,037   194,296   164,701   160,137   155,356 
    Total residential real estate loans 816,928   694,893   631,038   596,187   576,036 
    Consumer loans 118,505   105,148   100,945   85,383   90,663 
    Total loans, net of deferred loan fees and costs 3,649,333   2,985,623   2,867,783   2,769,295   2,699,538 
    Allowance for credit losses – loans (47,503)  (38,859)  (38,301)  (34,690)  (31,034)
    Loans, net$3,601,830  $2,946,764  $2,829,482  $2,734,605  $2,668,504 

    As of March 31, 2023, $26.8 million of commercial and industrial and $4.4 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 2022 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)March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022    		 March 31,
    2022
    Core deposits         
    Noninterest-bearing accounts$872,492  $726,416  $794,242  $745,746  $704,344 
    NOW accounts 678,178   638,896   636,859   654,981   652,577 
    Money market accounts 1,299,503   992,083   960,150   969,661   1,026,595 
    Savings accounts 228,390   230,896   240,412   238,197   232,831 
    Total core deposits 3,078,563   2,588,291   2,631,663   2,608,585   2,616,347 
    Certificates of deposit 597,036   459,729   471,005   491,176   442,810 
    Total$3,675,599  $3,048,020  $3,102,668  $3,099,761  $3,059,157 

    The following bullet points provide further information regarding the composition of our deposit portfolio as of March 31, 2023:

    • Total deposits increased $57.0 million, or 1.9% (7.6% annualized), during the quarter, excluding the $570.6 million assumed as part of the merger with Quantum.
    • The balance of uninsured deposits was $730.4 million, or 19.9% of total deposits, which excludes collateralized deposits to municipalities.
    • The balance of brokered deposits was $134.9 million, or 3.7% of total deposits.
    • Total deposits are evenly distributed between commercial and consumer depositors.
    • The average balance of our deposit accounts was $33,000.
    • Our largest 25 depositors made up $643.8 million, or 17.5% of total deposits. Of these depositors, $443.5 million, or 12.1% of total deposits, are collateralized deposits to municipalities.

    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 Nine Months Ended
    (Dollars in thousands) March 31,
    2023    		 December 31,
    2022    		 March 31,
    2023    		 March 31,
    2022
    Noninterest expense $32,833  $26,076  $84,998  $77,725 
    Less: merger expense  4,741   250   5,465   — 
    Noninterest expense – adjusted $28,092  $25,826  $79,533  $77,725 
             
    Net interest income $41,454  $37,545  $113,519  $81,915 
    Plus: tax-equivalent adjustment  290   287   864   937 
    Plus: noninterest income  8,310   8,454   24,162   29,393 
    Less: gain on sale of equity securities  —   721   721   — 
    Less: gain (loss) on sale of premises and equipment  900   1,127   2,015   (87)
    Net interest income plus noninterest income – adjusted $49,154  $44,438  $135,809  $112,332 
                     
    Efficiency ratio  65.98%  56.69%  61.74%  69.83%
    Efficiency ratio – adjusted  57.15%  58.12%  58.56%  69.19%

    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) March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022    		 March 31,
    2022
    Total stockholders' equity $458,242  $410,155  $396,222  $388,845  $395,131 
    Less: goodwill, core deposit intangibles, net of taxes  42,642   25,663   25,683   25,710   25,742 
    Tangible book value $415,600  $384,492  $370,539  $363,135  $369,389 
    Common shares outstanding  17,370,063   15,673,595   15,632,348   15,591,466   15,978,262 
    Book value per share at end of period $26.38  $26.17  $25.35  $24.94  $24.73 
    Tangible book value per share at end of period $23.93  $24.53  $23.70  $23.29  $23.12 

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

      As of
    (Dollars in thousands) March 31,
    2023    		 December 31,
    2022    		 September 30,
    2022    		 June 30,
    2022    		 March 31,
    2022
    Tangible equity(1) $415,600  $384,492  $370,539  $363,135  $369,389 
    Total assets  4,526,870   3,647,015   3,555,186   3,549,204   3,541,785 
    Less: goodwill and core deposit intangibles, net of taxes  42,642   25,663   25,683   25,710   25,742 
    Total tangible assets $4,484,228  $3,621,352  $3,529,503  $3,523,494  $3,516,043 
                         
    Tangible equity to tangible assets  9.27%  10.62%  10.50%  10.31%  10.51%


    (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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