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CST: 19/11/2019 14:51:24   

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

294 Days ago

ASHEVILLE, N.C., Jan. 29, 2019 (GLOBE NEWSWIRE) -- HomeTrust Bancshares, Inc. (NASDAQ: HTBI) ("Company"), the holding company of HomeTrust Bank ("Bank"), today announced record net income and diluted earnings per share for the second quarter of fiscal 2019.

Highlights for the second quarter of fiscal 2019:

For the quarter ended December 31, 2018 compared to the corresponding quarter in the previous year:

  • net income was $8.0 million, compared to a net loss of $10.7 million;
  • diluted earnings per share ("EPS") was $0.43, compared to a diluted loss per share of $0.59;
  • return on assets ("ROA") increased to 0.95% from (1.31)%;
  • net interest income increased $1.7 million, or 6.9% to $27.1 million from $25.4 million;
  • noninterest income increased $626,000, or 14.0% to $5.1 million from $4.5 million;
  • organic net loan growth, which excludes purchases of home equity lines of credit, was $57.3 million, or 9.4% annualized compared to $23.6 million, or 4.2% annualized for the same quarter last year;
  • first ever cash dividend of $0.06 per share totaling $1.1 million; and
  • repurchased 431,855 shares of common stock at an average share price of $27.61.

Earnings for the three months ended December 31, 2017 included an approximately $17.7 million write-down of deferred tax assets as a result of the enactment of the Tax Cuts and Jobs Act (the "Tax Act") with no comparable charge in the same 2018 period.

For the quarter ended December 31, 2018 compared to the corresponding quarter in the previous year and before the write-down of deferred tax assets from the change in the federal tax rate (non-GAAP):

  • net income increased 14.4% to $8.0 million from $7.0 million;
  • diluted EPS increased 13.2% to $0.43 from $0.38; and
  • ROA increased 10.5% to 0.95% from 0.86%.

“I am extremely proud of how hard our team members work to meet the needs of our customers and have produced consistently improving financial results for our shareholders," said Dana Stonestreet, Chairman, President, and Chief Executive Officer. “They achieved double digit percentage gains in non-GAAP net income, EPS, and ROA over the same quarter last year. Our new equipment finance line of business continues to gain momentum with $46.0 million in new originations for the quarter and $78.7 million year to date. Our continued improvements in financial performance resulted in our first cash dividend paid in December along with the adoption of a new stock repurchase program. The HomeTrust team is excited about all they will accomplish in the second half of fiscal 2019 to make it our best year ever," stated Stonestreet.

Income Statement Review

Net interest income increased to $27.1 million for the quarter ended December 31, 2018 compared to $25.4 million for the comparative quarter in fiscal 2018. The $1.7 million or 6.9% increase was primarily due to a $5.4 million increase in interest and dividend income driven by an increase in average interest-earning assets, which was partially offset by a $3.7 million increase in interest expense. Average interest-earning assets increased $145.0 million, or 4.9% to $3.1 billion for the quarter ended December 31, 2018 compared to $3.0 billion for the corresponding quarter in fiscal 2018. For the quarter ended December 31, 2018, the average balance of total loans receivable increased $204.1 million, or 8.5% primarily due to organic loan growth. The average balance of other interest-earning assets increased $32.7 million, or 13.5% primarily due to increases in commercial paper investments. These increases were mainly funded by the cumulative decrease of $91.8 million, or 28.1% in average interest-earning deposits in other banks and securities available for sale, and an increase in average interest-bearing deposits of $122.5 million, or 6.8% as compared to the same quarter last year. Net interest margin (on a fully taxable-equivalent basis) for the three months ended December 31, 2018 increased to 3.51% from 3.46% for the same period a year ago.

Total interest and dividend income increased $5.4 million, or 18.7% for the three months ended December 31, 2018 as compared to the same period last year, which was primarily driven by a $4.4 million, or 16.8% increase in loan interest income and a $663,000, or 50.9% increase in interest income from commercial paper and interest-bearing deposits in other banks. The additional loan interest income was driven by the increase in both the average balance of loans receivable and loan yields compared to the prior year quarter. Average loan yields increased 31 basis points to 4.72% for the quarter ended December 31, 2018 from 4.41% in the corresponding quarter from last year primarily due to the impact of the increases in the targeted federal funds rate over the past year. Partially offsetting the increase in loan interest income was a $96,000, or 10.4% decrease in the accretion of purchase discounts on acquired loans as a result of reduced prepayments as compared to the same quarter last year. For the quarters ended December 31, 2018 and 2017, average loan yields included 13 and 15 basis points, respectively, from the accretion of purchase discounts on acquired loans.

Total interest expense increased $3.7 million, or 101.7% for the quarter ended December 31, 2018 compared to the same period last year. The increase was primarily driven by a $2.1 million, or 134.1% increase in deposit interest expense and a $1.6 million, or 77.8% increase in interest expense on borrowings. The additional deposit interest expense was a result of our focus on increasing deposits as the average balance of interest-bearing deposits increased $122.5 million along with a 42 basis point increase in the average cost of interest-bearing deposits for the quarter ended December 31, 2018 compared to the same quarter last year. Average borrowings decreased $3.2 million or 0.5% for the quarter ended December 31, 2018 compared to the same period last year, however, interest expense from borrowings increased $1.6 million due to the 97 basis point increase in the average cost of borrowings between the periods. The overall average cost of funds increased 55 basis points to 1.13% for the current quarter compared to 0.58% in the same quarter last year due primarily to the impact of the previously mentioned interest rate increases on our interest-bearing liabilities.

Net interest income increased $3.3 million or 6.6% to $53.4 million for the six months ended December 31, 2018 compared to $50.1 million for the six months ended December 31, 2017. Average interest-earning assets increased $151.1 million, or 5.1% to $3.1 billion for the six months ended December 31, 2018 compared to $2.9 billion in the same period in 2017. The $200.4 million, or 8.4% increase in the average balance of loans receivable for the six months ended December 31, 2018 was due primarily to organic loan growth, which was mainly funded by the cumulative decrease of $97.0 million, or 28.7% in average interest-earning deposits in other banks and securities available for sale, and an increase in average interest-bearing deposits of $123.8 million, or 7.0%. Net interest margin (on a fully taxable-equivalent basis) for the six months ended December 31, 2018 increased three basis points to 3.48% from 3.45% for last year.

Total interest and dividend income increased $9.7 million, or 17.0% for the six months ended December 31, 2018 as compared to the same period last year. The increase was primarily driven by an $7.9 million, or 15.3% increase in loan interest income, a $1.4 million, or 54.7% increase in interest income from commercial paper and interest-bearing deposits in other banks, and a $596,000, or 47.4% increase in other investment income. The additional loan interest income was primarily due to the increase in the average balance of loans receivable, which was partially offset by a $500,000, or 29.5% decrease in the accretion of purchase discounts on acquired loans to $1.2 million for the six months ended December 31, 2018 from $1.7 million for the same period in fiscal 2018, as a result of reduced prepayments as compared to the same period last year. For the six months ended December 31, 2018 and 2017, average loan yields included nine and 15 basis points, respectively, from the accretion of purchase discounts on acquired loans.

Total interest expense increased $6.4 million, or 91.9% for the six months ended December 31, 2018 compared to the same period last year. This increase was primarily related to the increase in average interest-bearing deposits and the corresponding 34 basis point increase in the average cost of those deposits, resulting in additional deposit interest expense of $3.5 million for the six months ended December 31, 2018 as compared to the same period in the prior year. The average cost of borrowings increased 91 basis points, more than offsetting a $12.7 million decline in average borrowings resulting in an additional $2.9 million in interest expense from borrowings for the six months ended December 31, 2018 as compared to the same period in the prior year. The overall cost of funds increased 48 basis points to 1.04% for the six months ended December 31, 2018 compared to 0.56% in the corresponding period last year.

Noninterest income increased $626,000, or 14.0% to $5.1 million for the three months ended December 31, 2018 from $4.5 million for the same period in the previous year. The leading factors of the increase included a $590,000, or 29.7% increase in service charges on deposit accounts as a result of an increase in deposit accounts and related fees; and an $156,000, or 26.3% increase in other noninterest income primarily related to operating lease income from the new equipment finance line of business. Partially offsetting these increases was a $220,000, decline in gains from the sale of loans for the three months ended December 31, 2018 compared to the same period last year primarily related to decreasing residential mortgage banking activity.

Noninterest income increased $2.0 million, or 22.7% to $10.7 million for the six months ended December 31, 2018 from $8.7 million for the same period in the previous year, primarily due to a $1.1 million, or 29.9% increase in service charges on deposit accounts; a $731,000, or 38.8% increase on gain on sale of loans primarily due to originations and sales of the guaranteed portion of U.S. Small Business Administration (“SBA”) commercial loans; and a $244,000, or 20.6% increase in other noninterest income. Partially offsetting these increases was a $164,000 decline in gains from the sale of premises and equipment for the six months ended December 31, 2018 compared to the same period last year as there were no sales occurring during the current period.

Noninterest expense for the three months ended December 31, 2018 increased $881,000, or 4.2% to $21.9 million compared to $21.0 million for the three months ended December 31, 2017. The increase was primarily due to a $884,000, or 7.4% increase in salaries and employee benefits; a $300,000, or 18.8% increase in computer services; a $83,000, or 26.0% increase in marketing and advertising, and a $78,000, or 3.2% increase in net occupancy expense, mainly driven by the expansion of our SBA and equipment finance lines of business. Partially offsetting these increases was the cumulative decrease of $464,000 or 10.1% in telephone, postage, and supplies expense; deposit insurance premiums, real estate owned ("REO") related expenses; core deposit intangibles amortization; and other expenses for the three months ended December 31, 2018 compared to the same period last year.

Noninterest expense for the six months ended December 31, 2018 increased $1.9 million, or 4.5% to $43.7 million compared to $41.9 million for the six months ended December 31, 2017. The increase was primarily due to a $1.2 million, or 5.0% increase in salaries and employee benefits; a $604,000, or 19.2% increase in computer services; a $198,000, or 49.0% increase in REO related expenses; and a cumulative increase of $202,000, or 2.9% in net occupancy, marketing and advertising, and telephone, postage, and supplies expense. Partially offsetting these increases was a $309,000, or 22.1% decrease in core deposit intangible amortization and a $194,000, or 23.3% decrease in deposit insurance premiums for the six months ended December 31, 2018 compared to the same period last year.

For the three months ended December 31, 2018, the Company's income tax expense was $2.3 million compared to $19.5 million for the three months ended December 31, 2017. The Company’s federal income tax provision for the three months ended December 31, 2018 benefited from the impact of the Tax Act that lowered the corporate federal income tax rate from 34% to 21%. In the fourth quarter of 2017, following a revaluation of net deferred tax assets due to the Tax Act, the Company recorded additional income tax expense of $17.7 million.

For the six months ended December 31, 2018, the Company's income tax expense was $4.5 million compared to $22.0 million for the corresponding period last year. The Company’s corporate federal income tax rate for the six months ended December 31, 2018 and 2017 was 21% and 27.5%, respectively.

Balance Sheet Review

Total assets increased $108.9 million, or 3.3% to $3.4 billion at December 31, 2018 from $3.3 billion at June 30, 2018. Total liabilities increased $107.2 million, or 3.7% to $3.0 billion at December 31, 2018 from $2.9 billion at June 30, 2018. Deposit growth of $61.8 million, or 2.8%; a $53.0 million, or 8.3% increase in borrowings; and the cumulative decrease of $20.2 million, or 9.1% in certificates of deposit in other banks and investment securities were used to fund the $106.4 million, or 4.2% increase in total loans receivable, net of deferred loan fees, the $10.2 million, or 4.5% increase in commercial paper, the $7.2 million, or 123.0% increase in loans held for sale, and the $2.9 million, or 7.0% increase in other investments, net during the first six months of fiscal 2019. The increase in net loans receivable from June 30, 2018, was primarily driven by organic net loan growth of $134.1 million, or 11.1% annualized. The $75.8 million, or 51.0% increase in commercial and industrial loans was driven by our new equipment finance line of business. In addition, commercial real estate loans increased during the six months ended December 31, 2018, by $47.0 million or 5.5%. The increase in loans held for sale was due primarily to SBA loans originated during the period.

Stockholders' equity at December 31, 2018 increased $1.7 million, or 0.4% to $411.0 million from $409.2 million at June 30, 2018. The increase was due to $15.8 million in net income, $1.5 million in stock-based compensation, and a $576,000 increase in other comprehensive income representing a reduction in unrealized losses on investment securities, net of tax, partially offset by 560,155 shares of common stock repurchased at an average cost of $27.49, or approximately $15.6 million in total, and $1.1 million related to our first cash dividend. As of December 31, 2018, HomeTrust Bank was considered "well capitalized" in accordance with its regulatory capital guidelines and exceeded all regulatory capital requirements with Common Equity Tier 1, Tier 1 Risk-Based, Total Risk-Based, and Tier 1 Leverage capital ratios of 11.86%, 11.86%, 12.58%, and 10.68%, respectively.  In addition, the Company exceeded all regulatory capital requirements as of that date.

Asset Quality

The allowance for loan losses was $21.4 million, or 0.81% of total loans, at December 31, 2018 compared to $21.1 million, or 0.83% of total loans, at June 30, 2018. The allowance for loan losses to total gross loans excluding acquired loans was 0.89% at December 31, 2018, compared to 0.91% at June 30, 2018.

There was no provision for losses on loans for the six months ended December 31, 2018 and 2017 reflecting the decline in nonaccruing loans and net loan recoveries offset by loan growth. Net loan recoveries totaled $359,000 for the six months ended December 31, 2018, compared to net loan charge-offs of $61,000 for the same period in fiscal 2018. Net recoveries as a percentage of average loans increased to (0.03%) for the six months ended December 31, 2018 from net charge-offs of 0.01% for the same period last year.

Nonperforming assets decreased $2.0 million, or 13.5% to $12.6 million, or 0.37% of total assets, at December 31, 2018 compared to $14.6 million, or 0.44% of total assets at June 30, 2018. Nonperforming assets included $9.6 million in nonaccruing loans and $3.0 million in REO at December 31, 2018, compared to $10.9 million and $3.7 million, in nonaccruing loans and REO, respectively, at June 30, 2018. Included in nonperforming loans are $3.9 million of loans restructured from their original terms of which $2.2 million were current at December 31, 2018, with respect to their modified payment terms. At December 31, 2018, $5.8 million, or 60.0% of nonaccruing loans were current on their required loan payments. Purchased impaired loans aggregating $2.1 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 0.37% at December 31, 2018 compared to 0.43% at June 30, 2018.

The ratio of classified assets to total assets decreased slightly to 0.97% at December 31, 2018 from 1.00% at June 30, 2018. Classified assets remained consistent at $33.2 million at December 31, 2018 compared to $33.1 million at June 30, 2018. Our overall asset quality metrics continue to demonstrate our commitment to growing and maintaining a loan portfolio with a moderate risk profile.

About HomeTrust Bancshares, Inc.

HomeTrust Bancshares, Inc. is the holding company for HomeTrust Bank. As of December 31, 2018, the Company had assets of $3.4 billion. The Bank, founded in 1926, is a North Carolina state chartered, community-focused financial institution committed to providing value added relationship banking through 43 locations as well as online/mobile channels. Locations include: North Carolina (including the Asheville metropolitan area, the "Piedmont" region, Charlotte, and Raleigh/Cary), Upstate South Carolina (Greenville), East Tennessee (including Kingsport/Johnson City/Bristol, Knoxville, and Morristown) and Southwest Virginia (including the Roanoke Valley). The Bank is the 2nd largest community bank headquartered in North Carolina.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements often include words such as "believe," "expect," "anticipate," "estimate," and "intend" or future or conditional verbs such as "will," "would," "should," "could," or "may." Forward-looking statements are not historical facts but instead represent management's current expectations and forecasts regarding future events, many of which are inherently uncertain and outside of our control. Actual results may differ, possibly materially, from those currently expected or projected in these forward-looking statements. Factors that could cause our actual results to differ materially from those described in the forward-looking statements, include expected cost savings, synergies and other financial benefits from our acquisitions  might not be realized within the expected time frames or at all, and costs or difficulties relating to integration matters might be greater than expected; increased competitive pressures; changes in the interest rate environment; changes in general economic conditions and conditions within the securities markets; legislative and regulatory changes; and other factors described in HomeTrust's latest annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other documents filed with or furnished to the Securities and Exchange Commission - which are available on our website at www.htb.com  and on the SEC's website at www.sec.gov. Any of the forward-looking statements that we make in this press release or the documents we file with or furnish to the SEC are based upon management's beliefs and assumptions at the time they are made and may turn out to be wrong because of inaccurate assumptions we might make, because of the factors described above or because of other factors that we cannot foresee. We do not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These risks could cause our actual results for fiscal 2019 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, us and could negatively affect our operating and stock performance.

WEBSITE: WWW.HOMETRUSTBANCSHARES.COM

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


Consolidated Balance Sheets (Unaudited)

(Dollars in thousands) December 31, 2018   September 30, 2018   June 30, 2018(2)   March 31,
 2018
  December 31,
 2017
Assets                  
Cash $ 44,425     $ 39,872     $ 45,222     $ 38,100     $ 46,743  
Interest-bearing deposits 26,881     18,896     25,524     41,296     51,922  
Cash and cash equivalents 71,306     58,768     70,746     79,396     98,665  
Commercial paper 239,286     238,224     229,070     239,435     199,722  
Certificates of deposit in other financial institutions 51,936     58,384     66,937     84,218     100,349  
Securities available for sale, at fair value 149,752     148,704     154,993     160,971     167,669  
Other investments, at cost 44,858     43,996     41,931     41,405     43,319  
Loans held for sale 13,095     10,773     5,873     6,071     7,072  
Total loans, net of deferred loan fees 2,632,231     2,587,106     2,525,852     2,445,755     2,418,014  
Allowance for loan losses (21,419 )   (20,932 )   (21,060 )   (21,472 )   (21,090 )
Net loans 2,610,812     2,566,174     2,504,792     2,424,283     2,396,924  
Premises and equipment, net 66,610     62,681     62,537     62,725     62,435  
Accrued interest receivable 10,372     10,252     9,344     9,216     9,371  
Real estate owned ("REO") 2,955     3,286     3,684     5,053     4,818  
Deferred income taxes 28,533     30,942     32,565     34,311     36,526  
Bank owned life insurance ("BOLI") 89,156     88,581     88,028     87,532     86,984  
Goodwill 25,638     25,638     25,638     25,638     25,638  
Core deposit intangibles 3,436     3,963     4,528     5,131     5,773  
Other assets 5,354     3,593     3,503     5,478     5,323  
Total Assets $ 3,413,099     $ 3,353,959     $ 3,304,169     $ 3,270,863     $ 3,250,588  
Liabilities and Stockholders' Equity                  
Liabilities                  
Deposits $ 2,258,069     $ 2,203,044     $ 2,196,253     $ 2,180,324     $ 2,108,208  
Borrowings 688,000     675,000     635,000     625,000     685,000  
Capital lease obligations 1,897     1,905     1,914     1,920     1,925  
Other liabilities 54,163     59,815     61,760     62,066     60,094  
Total liabilities 3,002,129     2,939,764     2,894,927     2,869,310     2,855,227  
Stockholders' Equity                  
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued or outstanding                  
Common stock, $0.01 par value, 60,000,000 shares authorized (1) 185     190     191     190     190  
Additional paid in capital 203,660     214,803     217,480     216,712     215,928  
Retained earnings 215,289     208,365     200,575     193,368     187,241  
Unearned Employee Stock Ownership Plan ("ESOP") shares (7,142 )   (7,274 )   (7,406 )   (7,538 )   (7,670 )
Accumulated other comprehensive income (loss) (1,022 )   (1,889 )   (1,598 )   (1,179 )   (328 )
Total stockholders' equity 410,970     414,195     409,242     401,553     395,361  
Total Liabilities and Stockholders' Equity $ 3,413,099     $ 3,353,959     $ 3,304,169     $ 3,270,863     $ 3,250,588  

_________________________________

(1) Shares of common stock issued and outstanding were 18,520,825 at December 31, 2018, 18,939,280 at September 30, 2018; 19,041,668 at June 30, 2018; 19,034,868 at March 31, 2018; and 18,967,175 at December 31, 2017.

(2) Derived from audited financial statements.


Consolidated Statement of Income (Loss) (Unaudited)

  Three Months Ended   Six Months Ended
  December 31,   September 30,   December 31,   December 31,   December 31,
(Dollars in thousands) 2018   2018   2017   2018   2017
Interest and Dividend Income                  
Loans $ 30,544     $ 28,728     $ 26,140     $ 59,272     $ 51,390  
Securities available for sale 876     856     904     1,732     1,875  
Commercial paper and interest-bearing deposits in other financial institutions 1,966     1,857     1,303     3,823     2,472  
Other investments 1,014     839     631     1,853     1,257  
Total interest and dividend income 34,400     32,280     28,978     66,680     56,994  
Interest Expense                  
Deposits 3,607     2,750     1,541     6,357     2,887  
Borrowings 3,692     3,258     2,077     6,950     4,046  
Total interest expense 7,299     6,008     3,618     13,307     6,933  
Net Interest Income 27,101     26,272     25,360     53,373     50,061  
Provision for Loan Losses                  
Net Interest Income after Provision for Loan Losses 27,101     26,272     25,360     53,373     50,061  
Noninterest Income                  
Service charges and fees on deposit accounts 2,577     2,401     1,987     4,978     3,831  
Loan income and fees 295     328     197     623     580  
Gain on sale of loans held for sale 944     1,670     1,164     2,614     1,883  
BOLI income 520     536     518     1,056     1,080  
Gain from sale of premises and equipment                 164  
Other, net 749     678     593     1,427     1,183  
Total noninterest income 5,085     5,613     4,459     10,698     8,721  
Noninterest Expense                  
Salaries and employee benefits 12,857     12,685     11,973     25,542     24,325  
Net occupancy expense 2,551     2,347     2,473     4,898     4,822  
Marketing and advertising 402     417     319     819     772  
Telephone, postage, and supplies 743     769     748     1,512     1,433  
Deposit insurance premiums 335     304     419     639     833  
Computer services 1,895     1,849     1,595     3,744     3,140  
Loss (gain) on sale and impairment of REO 75     179     104     254     (42 )
REO expense 173     175     205     348     446  
Core deposit intangible amortization 526     565     681     1,091     1,400  
Other 2,301     2,593     2,460     4,894     4,734  
Total noninterest expense 21,858     21,883     20,977     43,741     41,863  
Income Before Income Taxes 10,328     10,002     8,842     20,330     16,919  
Income Tax Expense 2,287     2,212     19,508     4,499     22,018  
Net Income (Loss) $ 8,041     $ 7,790     $ (10,666 )   $ 15,831     $ (5,099 )




Per Share Data

    Three Months Ended   Six months ended
    December 31,   September 30,   December 31,   December 31,   December 31,
    2018   2018   2017   2018   2017
Net income (loss) per common share:(1)                    
Basic   $ 0.45     $ 0.43     $ (0.59 )   $ 0.88     $ (0.28 )
Diluted   $ 0.43     $ 0.41     $ (0.59 )   $ 0.84     $ (0.28 )
Adjusted net income per common share:(2)                    
Basic   $ 0.45     $ 0.43     $ 0.39     $ 0.88     $ 0.70  
Diluted   $ 0.43     $ 0.41     $ 0.38     $ 0.84     $ 0.68  
                     
Average shares outstanding:                    
Basic   17,797,553     18,125,637     17,975,883     17,961,465     17,971,439  
Diluted   18,497,334     18,880,476     17,975,883     18,689,584     17,971,439  
Diluted (adjusted) (3)   18,497,334     18,880,476     18,689,894     18,689,584     18,655,048  
Book value per share at end of period   $ 22.19     $ 21.87     $ 20.84     $ 22.19     $ 20.84  
Tangible book value per share at end of period (2)   $ 20.66     $ 20.35     $ 19.26     $ 20.66     $ 19.26  
Total shares outstanding at end of period   18,520,825     18,939,280     18,967,175     18,520,825     18,967,175  

__________________________________________________

(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.

(3) Average shares outstanding - diluted were adjusted for the three and six months ended December 31, 2017 to include potentially dilutive shares not otherwise included due to the corresponding net losses under GAAP.


Selected Financial Ratios and Other Data

    Three Months Ended   Six Months Ended
    December 31,   September 30,   December 31,   December 31,   December 31,
    2018   2018   2017   2018   2017
Performance ratios: (1)            
Return (loss) on assets (ratio of net income to average total assets)   0.95 %   0.94 %   (1.31 )%   0.95 %   (0.32 )%
Return on assets - adjusted(2)   0.95     0.94     0.86     0.95     0.78  
Return (loss) on equity (ratio of net income to average equity)   7.83     7.55     (10.51 )   7.69     (2.53 )
Return on equity - adjusted(2)   7.83     7.55     6.92     7.69     6.25  
Tax equivalent yield on earning assets(3)   4.45     4.23     3.95     4.34     3.92  
Rate paid on interest-bearing liabilities   1.13     0.95     0.58     1.04     0.56  
Tax equivalent average interest rate spread (3)   3.32     3.28     3.37     3.30     3.36  
Tax equivalent net interest margin(3) (4)   3.51     3.45     3.46     3.48     3.45  
Average interest-earning assets to average interest-bearing liabilities   120.48     121.97     120.42     121.22     120.54  
Operating expense to average total assets   2.59     2.64     2.58     2.61     2.60  
Efficiency ratio   67.91     68.63     70.35     68.27     71.22  
Efficiency ratio - adjusted (2)   67.32     68.03     69.47     67.67     70.50  

_____________________________

(1) Ratios are annualized where appropriate.

(2) See Non-GAAP reconciliation tables below for adjustments.

(3) For the three months ended December 31, 2018, September 30, 2018, and December 31, 2017, the weighted average rate for municipal leases is adjusted for a 24%, 24%, and 30% combined federal and state tax rate, respectively since the interest from these leases is tax exempt. For the six months ended December 31, 2018 and 2017, the weighted average rate for municipal leases is adjusted for a 24% and 30% combined federal and state tax rate, respectively.

(4) Net interest income divided by average interest-earning assets.


  At or For the Three Months Ended
  December 31,   September 30,   June 30,   March 31,   December 31,
  2018   2018   2018   2018   2017
Asset quality ratios:                  
Nonperforming assets to total assets(1) 0.37 %   0.40 %   0.44 %   0.54 %   0.59 %
Nonperforming loans to total loans(1) 0.37     0.39     0.43     0.52     0.59  
Total classified assets to total assets 0.97     0.93     1.00     1.29     1.39  
Allowance for loan losses to nonperforming loans(1) 221.45     207.06     192.96     169.71     146.79  
Allowance for loan losses to total loans 0.81     0.81     0.83     0.88     0.87  
Allowance for loan losses to total gross loans excluding acquired loans(2) 0.89     0.88     0.91     0.97     0.97  
Net charge-offs (recoveries) to average loans (annualized) (0.07 )   0.02     0.07     (0.06 )   0.15  
Capital ratios:                  
Equity to total assets at end of period 12.04 %   12.35 %   12.39 %   12.28 %   12.16 %
Tangible equity to total tangible assets(2) 11.31     11.59     11.61     11.48     11.34  
Average equity to average assets 12.20     12.43     12.31     12.30     12.49  

__________________________________________

(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 December 31, 2018, there were $3.9 million of restructured loans included in nonaccruing loans and $5.8 million, or 60.0% 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 December 31,
  2018   2017
  Average
Balance
Outstanding
  Interest
Earned/
Paid(2)
  Yield/
Rate(2)
  Average
Balance
Outstanding
  Interest
Earned/
Paid(2)
  Yield/
Rate(2)
(Dollars in thousands)  
Assets:                      
Interest-earning assets:                      
Loans receivable(1) $ 2,610,117     $ 30,826     4.72 %   $ 2,406,014     $ 26,518     4.41 %
Deposits in other financial institutions 82,700     395     1.91 %   151,197     517     1.37 %
Investment securities 151,788     876     2.31 %   175,039     903     2.06 %
Other interest-earning assets(3) 274,605     2,585     3.77 %   241,948     1,418     2.34 %
Total interest-earning assets 3,119,210     34,682     4.45 %   2,974,198     29,356     3.95 %
Other assets 250,516             275,434          
Total assets 3,369,726             3,249,632          
Liabilities and equity:                      
Interest-bearing deposits:                      
Interest-bearing checking accounts 465,418     302     0.26 %   471,474     236     0.20 %
Money market accounts 689,335     1,265     0.73 %   644,928     585     0.36 %
Savings accounts 196,434     63     0.13 %   227,933     76     0.13 %
Certificate accounts 564,112     1,977     1.40 %   448,507     644     0.57 %
Total interest-bearing deposits 1,915,299     3,607     0.75 %   1,792,842     1,541     0.33 %
Borrowings 673,783     3,692     2.19 %   677,013     2,077     1.22 %
 Total interest-bearing liabilities 2,589,082     7,299     1.13 %   2,469,855     3,618     0.58 %
Noninterest-bearing deposits 309,012             307,934          
Other liabilities 60,689             65,850          
Total liabilities 2,958,783             2,843,639          
Stockholders' equity 410,943             405,993          
Total liabilities and stockholders' equity $ 3,369,726             $ 3,249,632          
                       
Net earning assets $ 530,128             $ 504,343          
Average interest-earning assets to                      
average interest-bearing liabilities 120.48 %           120.42 %        
Tax-equivalent:                      
Net interest income     $ 27,383             $ 25,738      
Interest rate spread         3.32 %           3.37 %
Net interest margin(4)         3.51 %           3.46 %
Non-tax-equivalent:                      
Net interest income     $ 27,101             $ 25,360      
Interest rate spread         3.28 %           3.32 %
Net interest margin(4)         3.48 %           3.41 %

__________________
(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 $282 and $378 for the three months ended December 31, 2018 and 2017, respectively, calculated based on a combined federal and state tax rate of 24% and 30%, respectively.
(3) The average other interest-earning assets consists of FRB stock, FHLB stock, Small Business Investment Company ("SBIC") investments, and commercial paper.
(4) Net interest income divided by average interest-earning assets.

  For the Six Months Ended December 31,
  2018   2017
  Average
Balance
Outstanding
  Interest
Earned/
Paid(2)
  Yield/
Rate(2)
  Average
Balance
Outstanding
  Interest
Earned/
Paid(2)
  Yield/
Rate(2)
(Dollars in thousands)  
Assets:                      
Interest-earning assets:                      
Loans receivable(1) $ 2,584,145     $ 59,837     4.63 %   $ 2,383,768     $ 52,154     4.38 %
Deposits in other financial institutions 87,607     811     1.85 %   155,175     1,053     1.36 %
Investment securities 153,019     1,732     2.26 %   182,479     1,875     2.06 %
Other interest-earning assets(3) 272,914     4,865     3.57 %   225,185     2,676     2.38 %
Total interest-earning assets 3,097,685     67,245     4.34 %   2,946,607     57,758     3.92 %
Other assets 248,084             277,151          
Total assets $ 3,345,769             $ 3,223,758          
Liabilities and equity:                      
Interest-bearing liabilities:                      
Interest-bearing checking accounts 462,657     571     0.25 %   467,201     452     0.19 %
Money market accounts 683,332     2,222     0.65 %   625,095     1,062     0.34 %
Savings accounts 202,362     131     0.13 %   230,436     153     0.13 %
Certificate accounts 547,310     3,433     1.25 %   449,173     1,220     0.54 %
Total interest-bearing deposits 1,895,661     6,357     0.67 %   1,771,905     2,887     0.33 %
Borrowings 659,821     6,950     2.11 %   672,552     4,046     1.20 %
 Total interest-bearing liabilities 2,555,482     13,307     1.04 %   2,444,457     6,933     0.56 %
Noninterest-bearing deposits 316,397             309,265          
Other liabilities 61,985             66,328          
Total liabilities 2,933,864             2,820,050          
Stockholders' equity 411,905             403,708          
Total liabilities and stockholders' equity $ 3,345,769             $ 3,223,758          
                       
Net earning assets $ 542,203             $ 502,150          
Average interest-earning assets to                      
average interest-bearing liabilities 121.22 %           120.54 %        
Tax-equivalent:                      
Net interest income     $ 53,938             $ 50,825      
Interest rate spread         3.30 %           3.36 %
Net interest margin(4)         3.48 %           3.45 %
Non-tax-equivalent:                      
Net interest income     $ 53,373             $ 50,061      
Interest rate spread         3.26 %           3.30 %
Net interest margin(4)         3.45 %           3.40 %

__________________
(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 $565 and $764 for the six months ended December 31, 2018 and 2017, respectively, calculated based on a combined federal and state tax rate of 24% and 30%, respectively.
(3) The average other interest-earning assets consists of FRB stock, FHLB stock, Small Business Investment Company ("SBIC") investments, and commercial paper.
(4) Net interest income divided by average interest-earning assets.


Loans

(Dollars in thousands) December 31, 2018   September 30, 2018   June 30, 2018   March 31, 2018   December 31, 2017
Retail consumer loans:                  
  One-to-four family $ 661,374     $ 656,011     $ 664,289     $ 670,036     $ 686,229  
  HELOCs - originated 135,430     135,512     137,564     143,049     150,084  
  HELOCs - purchased 138,571     150,733     166,276     165,680     162,181  
  Construction and land/lots 74,507     75,433     65,601     68,121     60,805  
  Indirect auto finance 170,516     173,305     173,095     160,664     150,042  
  Consumer 13,520     13,139     12,379     11,317     9,699  
Total retail consumer loans 1,193,918     1,204,133     1,219,204     1,218,867     1,219,040  
Commercial loans:                  
  Commercial real estate 904,357     879,184     857,315     810,332     786,381  
  Construction and development 198,738     198,809     192,102     184,179     185,921  
  Commercial and industrial 224,671     193,739     148,823     132,337     127,709  
  Municipal leases 111,135     111,951     109,172     101,108     100,205  
Total commercial loans 1,438,901     1,383,683     1,307,412     1,227,956     1,200,216  
Total loans 2,632,819     2,587,816     2,526,616     2,446,823     2,419,256  
  Deferred loan fees, net (588 )   (710 )   (764 )   (1,068 )   (1,242 )
Total loans, net of deferred loan fees 2,632,231     2,587,106     2,525,852     2,445,755     2,418,014  
  Allowance for loan losses (21,419 )   (20,932 )   (21,060 )   (21,472 )   (21,090 )
Loans, net $ 2,610,812     $ 2,566,174     $ 2,504,792     $ 2,424,283     $ 2,396,924  

Deposits

(Dollars in thousands) December 31, 2018   September 30, 2018   June 30, 2018   March 31, 2018   December 31, 2017
Core deposits:                  
  Noninterest-bearing accounts $ 300,031     $ 313,110     $ 317,822     $ 303,875     $ 313,493  
  NOW accounts 474,080     462,694     471,364     496,934     489,668  
  Money market accounts 703,445     687,148     677,665     659,791     638,259  
  Savings accounts 192,954     203,372     213,250     220,497     224,732  
Total core deposits 1,670,510     1,666,324     1,680,101     1,681,097     1,666,152  
Certificates of deposit 587,559     536,720     516,152     499,227     442,056  
Total $ 2,258,069     $ 2,203,044     $ 2,196,253     $ 2,180,324     $ 2,108,208  


Non-GAAP Reconciliations

In addition to results presented in accordance with generally accepted accounting principles utilized in the United States ("GAAP"), this earnings release contains certain non-GAAP financial measures, which include: the efficiency ratio; tangible book value; tangible book value per share; tangible equity to tangible assets ratio; net income excluding certain state income tax expense, adjustments for the change in federal tax law, and gain from the sale of premises and equipment; earnings per share ("EPS"), return on assets ("ROA"), and return on equity ("ROE") excluding certain state income tax expense, adjustments for the change in federal tax law, and gain from the sale of premises and equipment; and the ratio of the allowance for loan losses to total loans excluding acquired loans. The Company believes these non-GAAP financial measures and ratios as presented are useful for both investors and management to understand the effects of certain items and provides an alternative view of the Company's performance over time and in comparison to the Company's competitors. These non-GAAP measures have inherent limitations, are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for total stockholders' equity or operating results determined in accordance with GAAP.  These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.

Set forth below is a reconciliation to GAAP of our efficiency ratio:

    Three Months Ended   Six Months Ended
(Dollars in thousands)   December 31,   September 30,   December 31,   December 31,   December 31,
    2018   2018   2017   2018   2017
Noninterest expense   $ 21,858     $ 21,883     $ 20,977     $ 43,741     $ 41,863  
                     
Net interest income   $ 27,101     $ 26,272     $ 25,360     $ 53,373     $ 50,061  
Plus noninterest income   5,085     5,613     4,459     10,698     8,721  
Plus tax equivalent adjustment   282     281     378     565     764  
Less gain on sale of premises and equipment                   164  
Net interest income plus noninterest income – as adjusted   $ 32,468     $ 32,166     $ 30,197     $ 64,636     $ 59,382  
Efficiency ratio   67.32 %   68.03 %   69.47 %   67.67 %   70.50 %
Efficiency ratio (without adjustments)   67.91 %   68.63 %   70.35 %   68.27 %   71.22 %

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)   December 31,   September 30,   June 30,   March 31,   December 31,
    2018   2018   2018   2018   2017
Total stockholders' equity   $ 410,970     $ 414,195     $ 409,242     $ 401,553     $ 395,361  
Less: goodwill, core deposit intangibles, net of taxes   28,284     28,690     29,125     29,589     30,083  
Tangible book value (1)   $ 382,686     $ 385,505     $ 380,117     $ 371,964     $ 365,278  
Common shares outstanding   18,520,825     18,939,280     19,041,668     19,034,868     18,967,175  
Tangible book value per share   $ 20.66     $ 20.35     $ 19.96     $ 19.54     $ 19.26  
Book value per share   $ 22.19     $ 21.87     $ 21.49     $ 21.10     $ 20.84  

(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
    December 31,   September 30,   June 30,   March 31,   December 31,
    2018   2018   2018   2018   2017
    (Dollars in thousands)
Tangible equity(1)   $ 382,686     $ 385,505     $ 380,117     $ 371,964     $ 365,278  
Total assets   3,413,099     3,353,959     3,304,169     3,270,863     3,250,588  
Less: goodwill, core deposit intangibles, net of taxes   28,284     28,690     29,125     29,589     30,083  
Total tangible assets(2)   $ 3,384,815     $ 3,325,269     $ 3,275,044     $ 3,241,274     $ 3,220,505  
Tangible equity to tangible assets   11.31 %   11.59 %   11.61 %   11.48 %   11.34 %

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

Set forth below is a reconciliation to GAAP of net income and earnings per share (EPS) as adjusted to exclude state tax expense rate change, federal tax law rate change, and gain from sale of premises and equipment:

    Three Months Ended   Six Months Ended
(Dollars in thousands, except per share data)   December 31,   September 30,   December 31,   December 31,   December 31,
    2018   2018   2017   2018   2017
State tax expense adjustment (1)   $     $     $     $     $ 133  
Change in federal tax law adjustment (2)           17,693         17,693  
Gain from sale of premises and equipment                   (164 )
Total adjustments           17,693         17,662  
Tax effect                   49  
Total adjustments, net of tax           17,693         17,711  
                     
Net income (loss) (GAAP)   8,041     7,790     (10,666 )   15,831     (5,099 )
                     
Net income (non-GAAP)   $ 8,041     $ 7,790     $ 7,027     $ 15,831     $ 12,612  
                     
Per Share Data                    
Average shares outstanding - basic   17,797,553     18,125,637     17,975,883     17,961,465     17,971,439  
Average shares outstanding - diluted   18,497,334     18,880,476     17,975,883     18,689,584     17,971,439  
Average shares outstanding - diluted (adjusted) (3)   18,497,334     18,880,476     18,689,894     18,689,584     18,655,048  
                     
Basic EPS                    
EPS (GAAP)   $ 0.45     $ 0.43     $ (0.59 )   $ 0.88     $ (0.28 )
Non-GAAP adjustment           0.98         0.98  
EPS (non-GAAP)   $ 0.45     $ 0.43     $ 0.39     $ 0.88     $ 0.70  
                     
Diluted EPS                    
EPS (GAAP)   $ 0.43     $ 0.41     $ (0.59 )   $ 0.84     $ (0.28 )
Non-GAAP adjustment           0.97         0.96  
EPS (non-GAAP)   $ 0.43     $ 0.41     $ 0.38     $ 0.84     $ 0.68  
                     
Average Balances                    
Average assets   $ 3,369,726     $ 3,321,811     $ 3,249,632     $ 3,345,769     $ 3,223,758  
Average equity   410,943     412,868     405,993     411,905     403,708  
                     
ROA                    
ROA (GAAP)   0.95 %   0.94 %   (1.31 )%   0.95 %   (0.32 )%
Non-GAAP adjustment   %   %   2.17 %   %   1.10 %
ROA (non-GAAP)   0.95 %   0.94 %   0.86 %   0.95 %   0.78 %
                     
ROE                    
ROE (GAAP)   7.83 %   7.55 %   (10.51 )%   7.69 %   (2.53 )%
Non-GAAP adjustment   %   %   17.43 %   %   8.78 %
ROE (non-GAAP)   7.83 %   7.55 %   6.92 %   7.69 %   6.25 %

(1)                   State tax adjustment is a result of various revaluations of state deferred tax assets.
(2)                   Revaluation and related adjustments of net deferred tax assets due to the Tax Cuts and Jobs Act.
(3)                   Average shares outstanding - diluted were adjusted for the three and six months ended December 31, 2017 to included potentially dilutive shares not considered due to the corresponding net losses under GAAP.

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

    As of
(Dollars in thousands)   December 31,   September 30,   June 30,   March 31,   December 31,
    2018   2018   2018   2018   2017
Total gross loans receivable (GAAP)   $ 2,632,819     $ 2,587,816     $ 2,526,616     $ 2,446,823     $ 2,419,256  
Less: acquired loans   236,389     253,695     271,801     288,847     311,508  
Adjusted loans (non-GAAP)   $ 2,396,430     $ 2,334,121     $ 2,254,815     $ 2,157,976     $ 2,107,748  
                     
Allowance for loan losses (GAAP)   $ 21,419     $ 20,932     $ 21,060     $ 21,472     $ 21,090  
Less: allowance for loan losses on acquired loans   199     295     483     459     566  
Adjusted allowance for loan losses   $ 21,220     $ 20,637     $ 20,577     $ 21,013     $ 20,524  
Adjusted allowance for loan losses / Adjusted loans (non-GAAP)   0.89 %   0.88 %   0.91 %   0.97 %   0.97 %

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