Business context and reporting period
HomeTrust Bancshares, Inc. is a bank holding company operating through HomeTrust Bank, a community bank serving markets in North Carolina, South Carolina, Tennessee, and Virginia. This Form 10-K reports the fiscal year ended June 30, 2018, with comparisons primarily to the year ended June 30, 2017. The requested “2017 Q4” period does not match the filing’s reporting period.
Key financial metrics
| Metric | FY 2018 | FY 2017 |
|---|---|---|
| Total assets at year-end | $3.304 billion | $3.207 billion |
| Total loans, before allowance | $2.527 billion | $2.352 billion |
| Deposits | $2.196 billion | $2.048 billion |
| FHLB borrowings | $635.0 million | $696.5 million |
| Net interest income | $100.6 million | $91.2 million |
| Net interest margin, tax-equivalent | 3.43% | 3.49% |
| Net income | $8.2 million | $11.8 million |
| Diluted earnings per share | $0.44 | $0.65 |
Total interest and dividend income was $116.7 million, up 17.4%; noninterest income was $19.7 million, up 22.1%. Cash provided by operating activities was $31.3 million; investing activities used $134.0 million and financing activities provided $86.4 million. Cash and cash equivalents ended at $70.7 million, down $16.2 million. Stockholders’ equity was $409.2 million. The Bank’s regulatory capital ratios included 11.70% CET1, 12.45% total risk-based capital, and 10.33% Tier 1 leverage; it met “well-capitalized” requirements.
Material changes versus the prior period
- Loans rose 7.4%, led by commercial real estate growth of 17.4% and commercial and industrial growth of 23.6%. Deposits grew 7.2%; core deposits were 76.5% of deposits.
- Net interest income increased 10.4%, but margin declined six basis points as funding costs rose. Interest expense nearly doubled to $16.1 million.
- GAAP net income fell 30.5%, despite higher pretax income, primarily because the Tax Cuts and Jobs Act led to a $17.6 million deferred-tax revaluation charge. Management’s adjusted, non-GAAP net income was $25.9 million versus $17.1 million; these adjusted figures exclude specified items and are not GAAP results.
- Asset quality improved: nonperforming assets fell to $14.6 million, or 0.44% of assets, from $20.0 million, or 0.62%. The allowance was $21.1 million, 0.83% of loans; there was no loan-loss provision in either year.
Outlook, risks and unusual items
Management emphasized organic growth in current markets, selective expansion, and disciplined lending; it gave no formal quantitative earnings guidance. It expects to reduce leverage-strategy assets and borrowings in line with anticipated organic loan growth. The FY 2018 results include the one-time tax revaluation charge; the prior year included $7.8 million of TriSummit merger expenses. No common dividends were declared in either year.
Key risks include rising deposit and borrowing costs pressuring margins, commercial real estate and construction/development exposure, credit risks in indirect auto and purchased home-equity loans, and liquidity dependence on deposits and wholesale funding. The Bank had $635 million of FHLB advances and $759.6 million of commitments to extend credit, including unused lines. Management also cited uncertainty around LIBOR’s planned phaseout and expected the CECL accounting standard to increase the allowance, with the size not yet determined. Litigation was described as arising in the ordinary course; management did not expect pending matters to have a material adverse effect. Auditors gave unqualified opinions on the financial statements and internal controls.
Important facts for investors to verify
- Confirm that the relevant period is FY ended June 30, 2018, rather than 2017 Q4.
- Review the tax-charge reconciliation and distinguish GAAP earnings from management’s non-GAAP adjusted results.
- Track margin and funding-cost trends, including upcoming certificate maturities and FHLB advance renewals.
- Assess commercial real estate and construction concentrations, credit migration, and allowance adequacy as CECL implementation approaches.
- Review the full cash-flow, liquidity, commitments, and regulatory-capital disclosures for changes after year-end.