HomeTrust Bancshares, Inc. (HTBI) is a bank holding company primarily engaged in the business of planning, directing, and coordinating the business activities of its wholly-owned subsidiary, HomeTrust Bank. The bank operates as a North Carolina state-chartered bank and member of the Federal Reserve System, providing a wide range of retail and commercial banking products within its geographic footprint, which includes North Carolina, South Carolina, Tennessee, Virginia, and Georgia.
Business Overview
HomeTrust Bank has more than 30 locations across its five-state footprint, with a focus on small- to medium-sized communities as well as larger, higher-growth markets through its business banking centers. The bank's principal business consists of attracting deposits from the general public and investing those funds, along with borrowed funds, in commercial real estate loans, construction and development loans, commercial and industrial loans, equipment finance leases, municipal leases, loans secured by first and second mortgages on one-to-four family residences including home equity and other consumer loans. The bank also originates one-to-four family loans, SBA loans, and HELOCs to sell to third-parties. Additionally, HomeTrust invests in debt securities issued by United States Government agencies and GSEs, municipal bonds, corporate bonds, commercial paper, and certificates of deposit insured by the FDIC.
Financials
For the fiscal year ended December 31, 2023, HomeTrust Bancshares reported annual net income of $44.6 million and annual revenue of $186.4 million. The company's annual operating cash flow was -$42.4 million, and its annual free cash flow was -$57.1 million.
In the first quarter of 2024, the company reported net income of $15.1 million, or $0.88 per diluted share, compared to net income of $13.5 million, or $0.79 per diluted share, in the fourth quarter of 2023. This represents an 11.9% increase in net income quarter-over-quarter. The increase was primarily driven by a $2.2 million decrease in the provision for credit losses and a $563,000 increase in noninterest income, partially offset by a $693,000 decrease in net interest income.
Net interest income for the first quarter of 2024 was $41.2 million, compared to $41.9 million in the prior quarter, a decrease of 1.7%. This was due to a $1.2 million, or 5.9%, increase in total interest expense, partially offset by a $536,000, or 0.9%, increase in total interest and dividend income. The increase in interest expense was the result of both increases in the average cost of funds and average balances across interest-bearing deposit types, partially offset by a decline in average borrowings outstanding.
The provision for credit losses was $1.2 million in the first quarter of 2024, compared to $3.4 million in the prior quarter, a decrease of 65.2%. This decrease was primarily driven by a $2.9 million, or 72.0%, decrease in the provision for credit losses on loans, partially offset by a $710,000 increase in the provision for off-balance-sheet credit exposure.
Noninterest income increased 6.9% to $8.8 million in the first quarter of 2024, compared to $8.2 million in the prior quarter. This increase was primarily driven by a $420,000, or 40.5%, increase in gain on sale of loans held for sale, a $255,000, or 60.3%, increase in loan income and fees, and a $267,000, or 16.8%, increase in operating lease income, partially offset by a $317,000, or 14.7%, decrease in BOLI income.
Noninterest expense increased slightly by 0.3% to $29.9 million in the first quarter of 2024, compared to $29.8 million in the prior quarter. This increase was primarily due to a $720,000, or 4.4%, increase in salaries and employee benefits, partially offset by a $473,000, or 8.9%, decrease in other noninterest expenses.
The company's effective tax rate was 20.8% in the first quarter of 2024, compared to 20.9% in the prior quarter. The effective tax rate was positively impacted by tax-free gains on BOLI death benefit proceeds of $1.1 million and $1.6 million in the respective quarters.
Geographic and Segment Breakdown
HomeTrust Bank's operations are concentrated in North Carolina, South Carolina, Tennessee, Virginia, and Georgia. The bank does not provide detailed geographic or segment breakdowns of its financial results.
Liquidity
As of March 31, 2024, HomeTrust Bancshares had total assets of $4.7 billion, total deposits of $3.8 billion, and stockholders' equity of $513.2 million. The company's CET1 capital ratio was 11.68%, its Tier 1 capital ratio was 11.93%, and its total risk-based capital ratio was 13.07% at the end of the first quarter of 2024, all of which exceeded regulatory requirements.
The company maintains a strong liquidity position, with the ability to borrow an additional $170.0 million through FHLB advances and $80.6 million through the unused portion of a line of credit with the Federal Reserve Bank as of March 31, 2024. Additionally, HomeTrust maintained revolving lines of credit with three unaffiliated banks, the unused portion of which totaled $149.5 million at the end of the first quarter.
Risks and Challenges
HomeTrust Bancshares faces several risks and challenges, including: - The potential impact of bank failures or adverse developments in the banking industry on investor and depositor sentiment - The lingering effects of the COVID-19 pandemic on general economic and financial market conditions - Credit risks associated with its lending activities, including potential deterioration in the housing and commercial real estate markets - Changes in interest rates and their impact on the company's net interest margin and funding sources - Regulatory changes that could adversely affect the company's business, such as the Dodd-Frank Act - The ability to attract and retain deposits, as well as access cost-effective funding - The ability to control operating costs and expenses, especially those associated with operating as a public company
Outlook
HomeTrust Bancshares has not provided any specific financial guidance or outlook for the remainder of 2024. However, the company's management has expressed cautious optimism about the company's prospects, citing the strength of its balance sheet, liquidity position, and diversified loan portfolio.
Conclusion
HomeTrust Bancshares is a well-capitalized, regional bank with a strong presence in its five-state footprint. The company has demonstrated solid financial performance, with a 11.9% increase in net income in the first quarter of 2024 compared to the prior quarter. While the company faces several risks and challenges, its management team has navigated these challenges effectively, and the company appears well-positioned to continue delivering value to its shareholders.