Company Overview and History
HomeTrust Bancshares, Inc. (NASDAQ:HTBI) is a regional bank holding company that has established itself as a force to be reckoned with in the Southeast United States. With a rich history spanning over three decades, the company has navigated the ever-evolving financial landscape, demonstrating a remarkable ability to adapt and thrive in the face of challenges.
Founded in 1984 as a mutual savings and loan association, HomeTrust Bank, the company’s wholly-owned subsidiary, has grown from a single location in Asheville, North Carolina, to a multi-state banking network with over 30 branches across Georgia, North Carolina, South Carolina, Tennessee, and Virginia. This strategic geographic expansion has allowed HomeTrust to capitalize on the region’s dynamic economic growth, positioning the bank as a trusted financial partner for both individuals and businesses.
HomeTrust Bancshares, Inc. was formed in 2012 as the holding company for HomeTrust Bank during the Bank’s conversion from mutual to stock form. As a bank holding company and financial holding company, HomeTrust Bancshares is regulated by the Federal Reserve. The Bank itself is a North Carolina state-chartered bank and member of the Federal Reserve System, with primary regulators being the North Carolina Office of the Commissioner of Banks and the Federal Reserve.
Market Presence and Strategy
Many of HomeTrust’s locations are situated in markets experiencing growth rates above the national average. While historically focused on small- to medium-sized communities, the company has recently implemented a strategy of expanding into larger, higher growth markets through business banking centers rather than retail-focused branches.
Core Business Activities
The Bank’s core business involves attracting deposits from the general public and investing these funds, along with borrowed money, in various loan types including commercial real estate, construction and development, commercial and industrial loans, equipment finance leases, municipal leases, and loans secured by first and second mortgages on one-to-four family residences. HomeTrust also originates one-to-four family loans, SBA loans, and home equity lines of credit for sale to third parties. Additionally, the Bank invests in a range of debt securities, including those issued by U.S. Government agencies, government-sponsored enterprises, municipal bonds, corporate bonds, commercial paper, and FDIC-insured certificates of deposit.
Recent Expansion
In 2023, HomeTrust Bancshares expanded its footprint into the greater Atlanta market through a merger with Quantum, which operated two locations in the Atlanta metro area. The merger, valued at approximately $70.7 million, included both cash consideration and the issuance of HomeTrust common stock.
Community Banking Focus
At the heart of HomeTrust’s success lies its unwavering commitment to community banking. By maintaining a strong local presence and fostering deep-rooted relationships, the bank has earned the trust and loyalty of its customers, a testament to its personalized approach to banking. This customer-centric focus has been a key driver in the bank’s ability to consistently deliver solid financial performance.
Financial Performance
In the latest quarter ended September 30, 2024, HomeTrust Bancshares reported net income of $13.1 million, or $0.76 per diluted share, compared to $12.4 million, or $0.73 per diluted share, in the previous quarter. The company’s annualized return on assets (ROA) stood at 1.17%, while its annualized return on equity (ROE) reached 9.76%. These metrics demonstrate the bank’s ability to generate consistent profitability and effectively manage its capital and assets.
The company’s net interest margin, a crucial indicator of its lending and funding efficiency, remained strong at 4.00% in the third quarter of 2024, compared to 4.08% in the prior quarter. This resilience in net interest margin highlights HomeTrust’s skill in navigating the shifting interest rate environment and maintaining a favorable spread between its interest-earning assets and interest-bearing liabilities.
For the most recent fiscal year 2023, HomeTrust Bancshares reported revenue of $186.37 million and net income of $44.60 million. The company’s operating cash flow (OCF) was -$42.40 million, and free cash flow (FCF) was -$57.15 million for the year.
In the most recent quarter (Q3 2024), the company’s revenue reached $66.65 million, representing a year-over-year increase of 7.70%. However, net income decreased by 11.61% year-over-year to $13.11 million, primarily due to a $1.30 million decrease in the provision for credit losses. The company’s OCF for the quarter was $11.55 million, with FCF at $9.11 million.
Asset Quality
One area of focus for the bank has been its commitment to asset quality. The company’s allowance for credit losses (ACL) on loans was $48.1 million, or 1.30% of total loans, at the end of the third quarter of 2024, compared to $48.6 million, or 1.34% of total loans, as of December 31, 2023. This prudent approach to risk management has enabled HomeTrust to weather market volatility and maintain a strong, well-capitalized balance sheet.
Liquidity and Capital Position
The bank’s liquidity position remains robust, with cash and cash equivalents totaling $293.5 million as of September 30, 2024, providing the necessary resources to support ongoing operations and capitalize on growth opportunities. Additionally, HomeTrust’s total risk-based capital ratio stood at 13.62% as of the same date, well above the well-capitalized regulatory threshold of 10.00%, underscoring the company’s financial stability and ability to withstand potential economic headwinds.
The company’s debt-to-equity ratio was 0.215 as of the most recent quarter, indicating a conservative approach to leverage. HomeTrust also had $162.19 million in available FHLB advances and $170.51 million in available FRB borrowing capacity, further strengthening its liquidity position. The current ratio and quick ratio both stood at 0.133 as of the most recent quarter, reflecting the bank’s ability to meet its short-term obligations.
Recognition and Accolades
Notably, HomeTrust Bancshares has also been recognized for its strong workplace culture and financial performance. In 2024, the company was ranked 156th in Newsweek’s America’s Most Loved Workplaces® list and was also named a 2024 Best Bank to Work For by American Banker. These accolades not only reflect the bank’s commitment to its employees but also its ability to attract and retain top talent, a critical factor in driving sustainable growth.
Resilience in the Face of Challenges
Despite the challenges posed by the COVID-19 pandemic and the recent Hurricane Helene, which impacted the company’s operations in certain regions, HomeTrust Bancshares has demonstrated its resilience and adaptability. The bank’s proactive response, including providing payment deferrals and other assistance to affected customers, has helped to mitigate the short-term impact and position the company for continued success.
Business Segments and Product Performance
HomeTrust Bancshares operates across several key business segments, each contributing to the company’s overall performance:
Commercial Real Estate Loans: As of September 30, 2024, this segment totaled $1.84 billion, representing 50% of HTBI’s total loan portfolio. The commercial real estate loan portfolio increased by $34.96 million, or 2%, compared to December 31, 2023, demonstrating continued growth in this area.
Commercial Loans: This segment, which includes commercial and industrial loans, equipment finance leases, and municipal leases, totaled $888.40 million as of September 30, 2024, accounting for 24% of the total loan portfolio. The segment experienced growth of $35.28 million, or 4%, compared to the prior year end.
Residential Real Estate Loans: The residential real estate loan portfolio, including loans for construction and land development, one-to-four family residential, and home equity lines of credit (HELOCs), totaled $885.77 million as of September 30, 2024, representing 24% of the total loan portfolio. This segment grew by $18.84 million, or 2%, compared to December 31, 2023.
Consumer Loans: As of September 30, 2024, the consumer loan portfolio stood at $83.63 million, accounting for 2% of the total loan portfolio. This segment saw a decline of $30.21 million, or 27%, from the prior year end.
Future Outlook and Strategic Priorities
Looking ahead, HomeTrust Bancshares remains focused on executing its strategic priorities, which include organic growth, strategic acquisitions, and ongoing investment in technology and digital capabilities. The company’s strong financial foundation, coupled with its unwavering commitment to its communities, positions it well to capitalize on emerging opportunities and drive long-term value for its shareholders.
Conclusion
In conclusion, HomeTrust Bancshares is a regional banking powerhouse that has weathered the storms of change and emerged as a trusted financial institution in the Southeast. With its robust financial performance, prudent risk management, and dedication to its employees and customers, the company is poised to continue its trajectory of growth and innovation, solidifying its position as a leader in the dynamic and ever-evolving banking landscape.
Disclaimer: This article is for informational purposes only. It does not constitute financial, legal, or other types of advice. While every effort has been made to ensure the accuracy of the information presented here, the author and the publisher do not make any guarantees about the completeness, reliability, and accuracy of this information.