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CST: 19/11/2019 15:05:28   

HomeTrust Bancshares, Inc. Reports Financial Results For The First Quarter Of Fiscal 2020

21 Days ago

ASHEVILLE, N.C., Oct. 29, 2019 (GLOBE NEWSWIRE) -- HomeTrust Bancshares, Inc. (NASDAQ: HTBI) ("Company"), the holding company of HomeTrust Bank ("Bank"), today announced preliminary net income increased 13.0% to $8.8 million for the first quarter of fiscal 2020, compared to $7.8 million for the same period a year ago. For the same periods, diluted earning per share increased 19.5% to $0.49 from $0.41 per diluted share.

Highlights for the quarter ended September 30, 2019 compared to the corresponding quarter in the previous year are as follows:

  • return on assets increased 5.3% to 0.99% from 0.94%;
  • return on equity increased 13.5% to 8.57% from 7.55%;
  • net interest income increased $801,000, or 3.0% to $27.1 million from $26.3 million;
  • noninterest income increased $2.0 million, or 36.5% to $7.7 million from $5.6 million;
  • organic net loan growth, which excludes one-to-four family loans transferred to held for sale and purchases of home equity lines of credit, was $73.0 million, or 11.3% annualized compared to $76.8 million, or 13.0% annualized;
  • total deposits increased $169.9 million, or 7.2% to $2.5 billion from $2.3 billion;
  • 189,160 shares were repurchased during the quarter at an average price of $25.38 per share; and
  • quarterly cash dividends continued at $0.06 per share totaling $1.0 million.

“Fiscal 2020 is off to a strong start as accelerated revenues across all business product lines led to record net income for the quarter. Our newer lines of business of SBA loans and equipment finance increased noninterest income $672,000 while our legacy mortgage banking line of business had gains from the sale of mortgage loans totaling $1.3 million, a $499,000, or 65% increase over the same quarter in the prior year," said Dana Stonestreet, Chairman, President, and Chief Executive Officer. "We have continued the methodical execution of our plan to layer in outstanding markets, complimentary lines of business and seasoned revenue producers in all lines of business. The cumulative impact of this strategy continues to increase revenue, earnings and shareholder value."

Income Statement Review

Net interest income increased to $27.1 million for the quarter ended September 30, 2019, compared to $26.3 million for the comparative quarter in fiscal 2019. The $801,000, or 3.0% increase was due to a $4.0 million increase in interest and dividend income primarily driven by an increase in average interest-earning assets, which was partially offset by a $3.2 million increase in interest expense. Average interest-earning assets increased $221.2 million, or 7.2% to $3.3 billion for the quarter ended September 30, 2019 compared to $3.1 billion for the corresponding quarter in fiscal 2019. For the quarter ended September 30, 2019, the average balance of total loans receivable increased $191.7 million, or 6.2% compared to the same quarter last year primarily due to organic loan growth. The average balance of commercial paper and deposits in other banks increased $41.9 million, or 13.0% between the periods driven by increases in commercial paper investments. The average balance in other interest-earning assets increased $3.2 million, or 7.5% as a result of additional Small Business Investment Company ("SBIC") investments and the required purchase of additional shares of Federal Home Loan Bank ("FHLB") stock as our FHLB borrowings have increased. These increases were mainly funded by the decrease of $15.5 million, or 10.1% in average securities available for sale, and an increase in average interest-bearing liabilities, primarily deposits, of $239.4 million, or 9.5% as compared to the same quarter last year. Net interest margin (on a fully taxable-equivalent basis) for the three months ended September 30, 2019 decreased to 3.32% from 3.45% for the same period a year ago.

Total interest and dividend income increased $4.0 million, or 12.3% for the three months ended September 30, 2019 as compared to the same period last year, which was primarily driven by a $3.5 million, or 12.3% increase in loan interest income and a $396,000, or 21.3% increase in interest income from commercial paper and interest-bearing deposits in other banks. The additional loan interest income was driven by increases in both the average balance of loans receivable and loan yields compared to the prior year quarter. Average loan yields increased 20 basis points to 4.74% for the quarter ended September 30, 2019 from 4.54% in the corresponding quarter last year. For each of the quarters ended September 30, 2019 and 2018, average loan yields included six basis points from the accretion of purchase discounts on acquired loans. The incremental accretion and the impact to the yield on loans may change during any period based on the volume of prepayments, but it is expected to decrease over time as the balance of the purchase discount for acquired loans decreases. The total purchase discount for acquired loans was $6.3 million at September 30, 2019, compared to $6.7 million at June 30, 2019, and $8.5 million at September 30, 2018.

Total interest expense increased $3.2 million, or 52.7% for the quarter ended September 30, 2019 compared to the same period last year. The increase was driven by a $3.1 million, or 112.8% increase in deposit interest expense. The additional deposit interest expense was a result of our continued focus on increasing deposits as the average balance of interest-bearing deposits increased $201.8 million, or 10.8% along with a 54 basis point increase in the average cost of interest-bearing deposits for the quarter ended September 30, 2019 compared to the same quarter last year. Average borrowings for the quarter ended September 30, 2019 increased $37.6 million, or 5.8% and was offset by an eight basis point decrease in the average cost of borrowings compared to the same period last year. The overall average cost of funds increased 38 basis points to 1.33% for the current quarter compared to 0.95% in the same quarter last year due primarily to the impact of the deposit market interest rate increases on our interest-bearing liabilities.

Noninterest income increased $2.0 million, or 36.5% to $7.7 million for the three months ended September 30, 2019 from $5.6 million for the same period in the previous year. The leading factors of the increase included a $661,000, or 97.5% increase in other noninterest income primarily related to operating lease income from the new equipment finance line of business, a $499,000, or 64.6% increase in gains from the sale of mortgage loans, a $129,000, or 14.4% increase in gains from the sale of loans due to originations and sales of the guaranteed portion of U.S Small Business Administration (“SBA”) commercial loans, a $554,000, or 168.9% increase in loan income and fees primarily as a result of our adjustable rate conversion program and prepayment fees on equipment finance loans, and a $161,000, or 30.1% increase in BOLI income primarily from $134,000 of additional life insurance proceeds received for the three months ended September 30, 2019 compared to the same period last year.

Noninterest expense for the three months ended September 30, 2019 increased $1.7 million, or 7.5% to $23.5 million compared to $21.9 million for the three months ended September 30, 2018. The increase was primarily due to a $1.2 million, or 9.7% increase in salaries and employee benefits; a $510,000, or 19.5% increase in other expenses, mainly driven by depreciation from our equipment finance line of business; a $262,000, or 62.8% increase in marketing and advertising expense, which was used to promote deposit growth and other banking products; and a $175,000, or 9.5% increase in computer services. Partially offsetting these increases was a decrease of $304,000, or 100.0% in deposit insurance premiums as a result of credits issued by the Federal Deposit Insurance Corporation ("FDIC") and a $115,000, or 32.5% decrease in real estate owned ("REO") related expenses as a result of gain on sales for the three months ended September 30, 2019 compared to the same period last year.

For the three months ended September 30, 2019, the Company's income tax expense was $2.4 million compared to $2.2 million for the three months ended September 30, 2018. The increase in the Company’s federal income tax provision for the three months ended September 30, 2019 was due to an increase in taxable income. The effective tax rate for the three months ended September 30, 2019 and 2018 was 21.4% and 22.1%, respectively.

Balance Sheet Review

Total assets increased $179.1 million, or 5.2% to $3.7 billion at September 30, 2019 from $3.5 billion at June 30, 2019. Total liabilities increased $175.0 million, or 5.7% to $3.2 billion at September 30, 2019 from $3.1 billion at June 30, 2019. Deposit growth of $167.0 million, or 7.2% and a $5.0 million, or 0.7% increase in borrowings were used to fund the $74.7 million, or 2.7% net increase in total loans receivable including loans held for sale, the $43.9 million, or 36.1% increase in securities available for sale; the $12.9 million, or 5.3% increase in commercial paper as well as the $46.1 million, or 64.8% increase in cash and cash equivalents during the first three months of fiscal 2020. Loans held for sale increased with a corresponding decrease in total loans receivable as a result of approximately $256.8 million in one-to-four family loans being marketed for sale. This loan sale is expected to close in November 2019 and result in a gain. The Company is selling these lower rate one-to-four family loans to lower its loan to deposit ratio while increasing its net interest margin over time. Excluding these one-to-four family loans, loans held for sale increased $14.3 million as a result of SBA loans originations during the period.

As of July 1, 2019, the Company adopted the new lease accounting standard, which drove several changes on the balance sheet. Land totaling $2.1 million related to the Company's one finance lease (f/k/a capital lease) was reclassed from premises and equipment, net to other assets as a right of use ("ROU") asset and the corresponding liability was reclassed from a separate line on the balance sheet to other liabilities as a lease liability. The Company's operating leases led to approximately $5.1 million in ROU assets and corresponding lease liabilities, which are maintained in other assets and other liabilities, respectively.

Stockholders' equity at September 30, 2019 increased $4.2 million, or 1.0% to $413.1 million in comparison to $408.9 million at June 30, 2019. Changes within stockholders' equity included $8.8 million in net income, $781,000 in stock-based compensation, and a $227,000 increase in other comprehensive income representing an increase in unrealized gains on investment securities, net of tax, partially offset by 189,160 shares of common stock repurchased at an average cost of $25.38, or approximately $4.8 million in total, and $1.0 million related to cash dividends declared. As of September 30, 2019, HomeTrust Bank and the Company were considered "well capitalized" in accordance with their regulatory capital guidelines and exceeded all regulatory capital requirements.

On October 16, 2019, the Company announced the authorization of a new stock repurchase program where up to 889,123 shares, or 5% of the Company’s common stock at that date are eligible to be repurchased.

Asset Quality

The allowance for loan losses was $21.3 million, or 0.85% of total loans, at September 30, 2019 compared to $21.4 million, or 0.79% of total loans, at June 30, 2019. The allowance for loan losses to total gross loans excluding acquired loans was 0.92% at September 30, 2019, compared to 0.85% at June 30, 2019. The increase in the ratio of allowance for loan losses to gross loans was driven by approximately $256.8 million of one-to-four family loans being transferred to loans held for sale from total loans. The allowance recovered on these transferred loans was offset by the need to increase allowances within our commercial real estate and equipment finance portfolios.

There was no provision for loan losses for the three months ended September 30, 2019 or 2018. Net loan charge-offs totaled $115,000 for the three months ended September 30, 2019, compared to $128,000 for the same period in fiscal 2019, respectively. Net charge-offs as a percentage of average loans remained stable at 0.02% for the three months ended September 30, 2019 and 2018.

Nonperforming assets increased by $177,000, or 1.3% to $13.5 million, or 0.37% of total assets, at September 30, 2019 compared to $13.3 million, or 0.40% of total assets at June 30, 2019. Nonperforming assets included $10.9 million in nonaccruing loans and $2.6 million in REO at September 30, 2019, compared to $10.4 million and $2.9 million, in nonaccruing loans and REO, respectively, at June 30, 2019. Included in nonperforming loans are $4.2 million of loans restructured from their original terms of which $664,000 were current at September 30, 2019, with respect to their modified payment terms. Purchased impaired loans aggregating $1.2 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 0.43% at September 30, 2019 and 0.38% at June 30, 2019.

The ratio of classified assets to total assets decreased to 0.84% at September 30, 2019 from 0.89% at June 30, 2019. Classified assets decreased to $30.7 million at September 30, 2019 compared to $30.9 million at June 30, 2019. 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, 2019, the Company had assets of $3.7 billion. The Bank, founded in 1926, is a North Carolina state chartered, community-focused financial institution committed to providing value added relationship banking through 42 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 2020 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, Corporate Secretary and Treasurer
828-259-3939

Consolidated Balance Sheets (Unaudited)

(Dollars in thousands) September 30,
2019
  June 30,
2019(1)
  March 31,
2019
  December 31,
2018
  September 30,
2018
Assets                  
Cash $ 52,082     $ 40,909     $ 40,633     $ 44,425     $ 39,872  
Interest-bearing deposits 65,011     30,134     37,678     26,881     18,896  
Cash and cash equivalents 117,093     71,043     78,311     71,306     58,768  
Commercial paper 254,302     241,446     246,903     239,286     238,224  
Certificates of deposit in other banks 50,117     52,005     56,209     51,936     58,384  
Securities available for sale, at fair value 165,714     121,786     139,112     149,752     148,704  
Other investments, at cost 45,900     45,378     51,122     44,858     43,996  
Loans held for sale 289,319     18,175     14,745     13,095     10,773  
Total loans, net of deferred loan fees 2,508,730     2,705,190     2,660,647     2,632,231     2,587,106  
Allowance for loan losses (21,314 )   (21,429 )   (24,416 )   (21,419 )   (20,932 )
Net loans 2,487,416     2,683,761     2,636,231     2,610,812     2,566,174  
Premises and equipment, net 58,509     61,051     60,559     66,610     62,681  
Accrued interest receivable 10,434     10,533     10,885     10,372     10,252  
Real estate owned ("REO") 2,582     2,929     3,003     2,955     3,286  
Deferred income taxes 24,257     26,523     28,832     28,533     30,942  
Bank owned life insurance ("BOLI") 90,499     90,254     89,663     89,156     88,581  
Goodwill 25,638     25,638     25,638     25,638     25,638  
Core deposit intangibles 2,088     2,499     2,948     3,436     3,963  
Other assets 31,441     23,157     13,576     5,354     3,593  
Total Assets $ 3,655,309     $ 3,476,178     $ 3,457,737     $ 3,413,099     $ 3,353,959  
Liabilities and Stockholders' Equity                  
Liabilities                  
Deposits $ 2,494,194     $ 2,327,257     $ 2,308,395     $ 2,258,069     $ 2,203,044  
Borrowings 685,000     680,000     680,000     688,000     675,000  
Other liabilities 63,047     60,025     62,112     56,060     61,720  
Total liabilities 3,242,241     3,067,282     3,050,507     3,002,129     2,939,764  
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) 178     180     183     185     190  
Additional paid in capital 186,359     190,315     196,824     203,660     214,803  
Retained earnings 232,315     224,545     217,490     215,289     208,365  
Unearned Employee Stock Ownership Plan ("ESOP") shares (6,744 )   (6,877 )   (7,009 )   (7,142 )   (7,274 )
Accumulated other comprehensive income (loss) 960     733     (258 )   (1,022 )   (1,889 )
Total stockholders' equity 413,068     408,896     407,230     410,970     414,195  
Total Liabilities and Stockholders' Equity $ 3,655,309     $ 3,476,178     $ 3,457,737     $ 3,413,099     $ 3,353,959  

_________________________________

(1) Derived from audited financial statements.
(2) Shares of common stock issued and outstanding were 17,818,145 at September 30, 2019; 17,984,105 at June 30, 2019; 18,265,535 at March 31, 2019; 18,520,825 at December 31, 2018, and 18,939,280 at September 30, 2018.
   

Consolidated Statement of Income (Unaudited)

  Three Months Ended
  September 30,   June 30,   September
(Dollars in thousands) 2019   2019   2018
Interest and Dividend Income          
Loans $ 32,266     $ 31,861     $ 28,728  
Commercial paper and interest-bearing deposits 2,253     2,172     1,857  
Securities available for sale 896     861     856  
Other investments 832     926     839  
Total interest and dividend income 36,247     35,820     32,280  
Interest Expense          
Deposits 5,853     4,996     2,750  
Borrowings 3,321     3,935     3,258  
Total interest expense 9,174     8,931     6,008  
Net Interest Income 27,073     26,889     26,272  
Provision for Loan Losses     200      
Net Interest Income after Provision for Loan Losses 27,073     26,689     26,272  
Noninterest Income          
Service charges and fees on deposit accounts 2,443     2,368     2,401  
Loan income and fees 882     665     328  
Gain on sale of loans held for sale 2,299     2,132     1,670  
BOLI income 697     529     536  
Other, net 1,339     1,152     678  
Total noninterest income 7,660     6,846     5,613  
Noninterest Expense          
Salaries and employee benefits 13,912     13,286     12,685  
Net occupancy expense 2,342     2,408     2,326  
Marketing and advertising 679     634     417  
Telephone, postage, and supplies 802     830     769  
Deposit insurance premiums     467     304  
Computer services 2,024     1,940     1,849  
Loss (gain) on sale and impairment of REO (19 )   (61 )   179  
REO expense 258     326     175  
Core deposit intangible amortization 411     449     565  
Other 3,124     3,136     2,614  
Total noninterest expense 23,533     23,415     21,883  
Income Before Income Taxes 11,200     10,120     10,002  
Income Tax Expense 2,396     2,107     2,212  
Net Income $ 8,804     $ 8,013     $ 7,790  
                       

Per Share Data

  Three months ended
  September 30,   June 30,   September 30,
  2019   2019   2018
Net income per common share:(1)          
Basic $ 0.51     $ 0.45     $ 0.43  
Diluted $ 0.49     $ 0.44     $ 0.41  
Average shares outstanding:          
Basic 17,097,647     17,332,700     18,125,637  
Diluted 17,753,657     17,984,958     18,880,476  
Book value per share at end of period $ 23.18     $ 22.74     $ 21.87  
Tangible book value per share at end of period (2) $ 21.65     $ 21.20     $ 20.35  
Cash dividends declared per common share $ 0.06     $ 0.06     $  
Total shares outstanding at end of period 17,818,145     17,984,105     18,939,280  

_________________________________

(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,
  2019   2019   2018
Performance ratios: (1)          
Return on assets (ratio of net income to average total assets) 0.99 %   0.92 %   0.94 %
Return on equity (ratio of net income to average equity) 8.57     7.87     7.55  
Tax equivalent yield on earning assets(2) 4.43     4.49     4.23  
Rate paid on interest-bearing liabilities 1.33     1.32     0.95  
Tax equivalent average interest rate spread (2) 3.10     3.17     3.28  
Tax equivalent net interest margin(2) (3) 3.32     3.38     3.45  
Average interest-earning assets to average interest-bearing liabilities 119.41     119.16     121.97  
Operating expense to average total assets 2.64     2.70     2.64  
Efficiency ratio 67.75     69.41     68.63  
Efficiency ratio - adjusted (4) 67.20     68.81     68.03  

_________________________________

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


  At or For the Three Months Ended
  September 30,   June 30,   March 31,   December 31,   September 30,
  2019   2019   2019   2018   2018
Asset quality ratios:                  
Nonperforming assets to total assets(1) 0.37 %   0.38 %   0.41 %   0.37 %   0.40 %
Nonperforming loans to total loans(1) 0.43     0.38     0.43     0.37     0.39  
Total classified assets to total assets 0.84     0.89     1.00     0.97     0.93  
Allowance for loan losses to nonperforming loans(1) 195.88     206.90     215.46     221.45     207.06  
Allowance for loan losses to total loans 0.85     0.79     0.92     0.81     0.81  
Allowance for loan losses to total gross loans excluding acquired loans(2) 0.92     0.85     0.99     0.89     0.88  
Net charge-offs (recoveries) to average loans (annualized) 0.02     0.47     0.38     (0.07 )   0.02  
Capital ratios:                  
Equity to total assets at end of period 11.30 %   11.76 %   11.78 %   12.04 %   12.35 %
Tangible equity to total tangible assets(2) 10.63     11.06     11.06     11.31     11.59  
Average equity to average assets 11.54     11.72     11.93     12.20     12.43  

_________________________________

(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, 2019, there were $4.2 million of restructured loans included in nonaccruing loans and $2.6 million, or 24.0% 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,
  2019   2018
  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) $ 2,749,635     $ 32,551     4.74 %   $ 2,557,970     $ 29,010     4.54 %
Commercial paper and deposits in other banks 363,123     2,253     2.48 %   321,217     1,856     2.31 %
Securities available for sale 138,709     896     2.58 %   154,249     856     2.22 %
Other interest-earning assets(3) 45,710     832     7.28 %   42,520     839     7.89 %
Total interest-earning assets 3,297,177     36,532     4.43 %   3,075,956     32,561     4.23 %
Other assets 264,375             245,855          
Total assets $ 3,561,552             $ 3,321,811          
Liabilities and equity:                      
Interest-bearing liabilities:                      
Interest-bearing checking accounts 441,524     319     0.29 %   459,895     270     0.23 %
Money market accounts 718,981     1,761     0.98 %   677,329     957     0.57 %
Savings accounts 172,393     52     0.12 %   208,289     68     0.13 %
Certificate accounts 744,956     3,721     2.00 %   530,507     1,455     1.10 %
Total interest-bearing deposits 2,077,854     5,853     1.13 %   1,876,020     2,750     0.59 %
Borrowings 683,413     3,321     1.94 %   645,859     3,258     2.02 %
 Total interest-bearing liabilities 2,761,267     9,174     1.33 %   2,521,879     6,008     0.95 %
Noninterest-bearing deposits 326,105             323,781          
Other liabilities 63,101             63,282          
Total liabilities 3,150,473             2,908,942          
Stockholders' equity 411,079             412,868          
Total liabilities and stockholders' equity $ 3,561,552             $ 3,321,811          
                       
Net earning assets $ 535,910             $ 554,077          
Average interest-earning assets to average interest-bearing liabilities 119.41 %           121.97 %        
Tax-equivalent:                      
Net interest income     $ 27,358             $ 26,553      
Interest rate spread         3.10 %           3.28 %
Net interest margin(4)         3.32 %           3.45 %
Non-tax-equivalent:                      
Net interest income     $ 27,073             $ 26,272      
Interest rate spread         3.07 %           3.25 %
Net interest margin(4)         3.28 %           3.42 %

_________________________________

(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 $285 and $281 for the three months ended September 30, 2019 and 2018, respectively, calculated based on a combined federal and state tax rate of 24%.
(3) The average other interest-earning assets consists of FRB stock, FHLB stock, and SBIC investments.
(4) Net interest income divided by average interest-earning assets.
   

Loans

(Dollars in thousands)   September 30,
2019
      June 30,
2019
      March 31,
2019
      December 31,
2018
      September 30,
2018
 
Retail consumer loans:                                      
One-to-four family $ 396,649     $ 660,591     $ 658,723     $ 661,374     $ 656,011  
HELOCs - originated 141,129     131,095     133,203     135,430     135,512  
HELOCs - purchased 104,324     116,972     128,832     138,571     150,733  
Construction and land/lots 85,319     80,602     76,153     74,507     75,433  
Indirect auto finance 147,808     153,448     162,127     170,516     173,305  
Consumer 11,400     19,756     19,374     13,520     13,139  
Total retail consumer loans 886,629     1,162,464     1,178,412     1,193,918     1,204,133  
Commercial loans:                  
Commercial real estate 990,787     927,261     892,383     904,357     879,184  
Construction and development 203,494     210,916     214,511     198,738     198,809  
Commercial and industrial 158,706     160,471     154.47     143,201     150,362  
Equipment finance 154,479     132,058     109.175     81,380     43,377  
Municipal leases 114,382     112,016     112,067     111,135     111,951  
Total commercial loans 1,621,848     1,542,722     1,482,607     1,438,812     1,383,683  
Total loans 2,508,477     2,705,186     2,661,019     2,632,730     2,587,816  
Deferred loan costs (fees), net 253     4     (372 )   (499 )   (710 )
Total loans, net of deferred loan fees 2,508,730     2,705,190     2,660,647     2,632,231     2,587,106  
Allowance for loan losses (21,314 )   (21,429 )   (24,416 )   (21,419 )   (20,932 )
Loans, net $ 2,487,416     $ 2,683,761     $ 2,636,231     $ 2,610,812     $ 2,566,174  
                                       

Deposits

(Dollars in thousands)   September 30,
2019
      June 30,
2019
      March 31,
2019
      December 31,
2018
      September 30,
2018
 
Core deposits:                                      
Noninterest-bearing accounts $ 327,371     $ 294,322     $ 301,083     $ 300,031     $ 313,110  
NOW accounts 449,623     452,295     477,637     474,080     462,694  
Money market accounts 769,000     691,172     692,102     703,445     687,148  
Savings accounts 169,872     177,278     192,754     192,954     203,372  
Total core deposits 1,715,866     1,615,067     1,663,576     1,670,510     1,666,324  
Certificates of deposit 778,328     712,190     644,819     587,559     536,720  
Total deposits $ 2,494,194     $ 2,327,257     $ 2,308,395     $ 2,258,069     $ 2,203,044  
                                       

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; 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,
  2019
  2019
  2018
Noninterest expense $ 23,533     $ 23,415     $ 21,883  
Net interest income $ 27,073     $ 26,889     $ 26,272  
Plus noninterest income 7,660     6,846     5,613  
Plus tax equivalent adjustment 285     295     281  
Less gain on sale of premises and equipment          
Net interest income plus noninterest income – as adjusted $ 35,018     $ 34,030     $ 32,166  
Efficiency ratio - adjusted 67.20 %   68.81 %   68.03 %
Efficiency ratio 67.75 %   69.41 %   68.63 %
                 

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,
  2019   2019   2019   2018   2018
Total stockholders' equity                            
  $ 413,068   $ 408,896   $ 407,230   $ 410,970   $ 414,195
Less: goodwill, core deposit intangibles, net of taxes   27,246     27,562     27,908     28,284     28,690
Tangible book value (1) $ 385,822   $ 381,334   $ 379,322   $ 382,686   $ 385,505
Common shares outstanding   17,818,145     17,984,105     18,265,535     18,520,825     18,939,280
Tangible book value per share $ 21.65   $ 21.20   $ 20.77   $ 20.66   $ 20.35
Book value per share $ 23.18   $ 22.74   $ 22.29   $ 22.19   $ 21.87


(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,
  2019   2019   2019   2018   2018
                                       
(Dollars in thousands)                                      
Tangible equity(1)                                      
  $ 385,822     $ 381,334     $ 379,322     $ 382,686     $ 385,505  
Total assets   3,655,309       3,476,178       3,457,737       3,413,099       3,353,959  
Less: goodwill, core deposit intangibles, net of taxes   27,246       27,562       27,908       28,284       28,690  
Total tangible assets(2) $ 3,628,063     $ 3,448,616     $ 3,429,829     $ 3,384,815     $ 3,325,269  
                                       
Tangible equity to tangible assets   10.63 %     11.06 %     11.06 %     11.31 %     11.59 %


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

Set forth below is a reconciliation to GAAP of the allowance for loan losses to total loans (excluding net deferred loan fees) 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,
  2019   2019   2019   2018   2018
Total gross loans receivable (GAAP) $ 2,508,477     $ 2,705,186     $ 2,661,019     $ 2,632,730     $ 2,587,816  
Less: acquired loans 206,937     214,046     223,101     236,389     253,695  
Adjusted loans (non-GAAP) $ 2,301,540     $ 2,491,140     $ 2,437,918     $ 2,396,341     $ 2,334,121  
                             
Allowance for loan losses (GAAP) $ 21,314     $ 21,429     $ 24,416     $ 21,419     $ 20,932  
Less: allowance for loan losses on acquired loans 194     201     201     199     295  
Adjusted allowance for loan losses $ 21,120     $ 21,228     $ 24,215     $ 21,220     $ 20,637  
Adjusted allowance for loan losses / Adjusted loans (non-GAAP) 0.92 %   0.85 %   0.99 %   0.89 %   0.88 %

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