10q10k10q10k.net

What changed in HomeTrust Bancshares, Inc.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of HomeTrust Bancshares, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+348 added−348 removedSource: 10-K (2025-03-13) vs 10-K (2023-09-11)

Top changes in HomeTrust Bancshares, Inc.'s 2024 10-K

348 paragraphs added · 348 removed · 268 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

65 edited+23 added−10 removed107 unchanged
Biggest changeIn 2023, HomeTrust was recognized as one of the top 20 Great Employers to Work for in North Carolina, by Best Companies Group. This recognition was a testament to our commitment to enhancing the employee experience and our significant investments in improving the culture of our workplace, expansion of inclusive benefits, increased employee communication, training and education opportunities.
Biggest changeHomeTrust continues to make significant investments in the culture of our workplace, expansion of inclusive benefits, increased employee communication, training and education opportunities. Collectively, these initiatives are designed to have a teammate first work environment to boost employee morale, engagement and job satisfaction.
During these examinations, the examiners assess compliance with state and federal banking regulations and the safety and soundness standards on matters such as loan underwriting and documentation, asset quality, earnings standards, internal controls and audit systems, interest rate risk exposure, and employee compensation and benefits. Any institution that fails to comply with these standards must submit a compliance plan.
During these examinations, the examiners assess compliance with state and federal banking regulations and safety and soundness standards on matters such as loan underwriting and documentation, asset quality, earnings standards, internal controls and audit systems, interest rate risk exposure and employee compensation and benefits. Any institution that fails to comply with these standards must submit a compliance plan.
The Federal Reserve also has extensive enforcement authority over bank holding companies, including, among other things, the ability to assess civil money penalties, to issue cease and desist or removal orders and to require that a holding company divest subsidiaries (including its bank subsidiaries).
The Federal Reserve also has extensive enforcement authority over bank holding companies, including, among other things, the ability to assess civil money penalties, to issue cease and desist or removal orders and to require that a bank holding company divest subsidiaries (including its bank subsidiaries).
As a bank holding company, HomeTrust Bancshares, Inc. is subject to the minimum regulatory capital requirements established by Federal Reserve regulation, which generally are the same as capital requirements for the Bank. These capital requirements include provisions that might impact the ability of the Company to pay dividends to stockholders or repurchase shares.
As a bank holding company, HomeTrust Bancshares, Inc. is subject to the minimum regulatory capital requirements established by Federal Reserve regulation, which generally are the same as the capital requirements for the Bank. These capital requirements include provisions that might impact the ability of the Company to pay dividends to stockholders or repurchase shares.
A bank that has experienced rapid growth in commercial real estate lending, has notable exposure to a specific type of commercial real estate loan, or is approaching or exceeding the following supervisory criteria may be identified for further supervisory analysis with respect to real estate concentration risk: • Total reported loans for construction, land development and other land represent 100% or more of the bank’s total regulatory capital; or • Total commercial real estate loans (as defined in the guidance) represent 300% or more of the bank’s total regulatory capital and the outstanding balance of the bank’s commercial real estate loan portfolio has increased 50% or more during the prior 36 months.
A bank that has 9 experienced rapid growth in commercial real estate lending, has notable exposure to a specific type of commercial real estate loan, or is approaching or exceeding the following supervisory criteria may be identified for further supervisory analysis with respect to real estate concentration risk: • Total reported loans for construction, land development and other land represent 100% or more of the bank’s total regulatory capital; or • Total commercial real estate loans (as defined in the guidance) represent 300% or more of the bank’s total regulatory capital and the outstanding balance of the bank’s commercial real estate loan portfolio has increased 50% or more during the prior 36 months.
These include: • BankGreenville Financial Corporation - one office in Greenville, South Carolina (acquired in July 2013) • Jefferson Bancshares, Inc. - nine offices across East Tennessee (acquired in May 2014) • Commercial LPO in Roanoke, Virginia (opened in July 2014) • Bank of Commerce - one office in Charlotte, North Carolina (acquired in July 2014) • 10 Bank of America Branch Offices - nine in southwest Virginia, one in Eden, North Carolina (acquired in November 2014) • Commercial LPO in Raleigh, North Carolina (opened in November 2014) and later converted into a full service branch (converted in April 2017) • United Financial of North Carolina, Inc. - municipal lease company headquartered in Fletcher, North Carolina (acquired in December 2016) • TriSummit Bancorp, Inc. - six offices in East Tennessee (acquired in January 2017) • Began origination and sales of SBA loans through our new SBA line of business (September 2017) • De novo branch in Cary, North Carolina (opened in March 2018) • Began equipment finance line of business (May 2018) • Began originations of HELOCs to be pooled and sold (March 2019) • De novo branch in Cornelius, North Carolina (opened in April 2022) • Quantum Capital Corp. - two offices in Atlanta, Georgia (acquired in February 2023) By expanding our geographic footprint and hiring local experienced talent, we have built a foundation focused on organic growth while maintaining "Our Commitment to the Customer Experience" that has differentiated our brand and characterized our success to date.
These include: • BankGreenville Financial Corporation - one office in Greenville, South Carolina (acquired in July 2013) • Jefferson Bancshares, Inc. - nine offices across East Tennessee (acquired in May 2014) • Commercial LPO in Roanoke, Virginia (opened in July 2014) • Bank of Commerce - one office in Charlotte, North Carolina (acquired in July 2014) • 10 Bank of America Branch Offices - nine in southwest Virginia, one in Eden, North Carolina (acquired in November 2014) • Commercial LPO in Raleigh, North Carolina (opened in November 2014) and later converted into a full service branch (converted in April 2017) • United Financial of North Carolina, Inc. - municipal lease company headquartered in Fletcher, North Carolina (acquired in December 2016) • TriSummit Bancorp, Inc. - six offices in East Tennessee (acquired in January 2017) • Began origination and sales of SBA loans through our new SBA line of business (September 2017) • De novo branch in Cary, North Carolina (opened in March 2018) • Began equipment finance line of business (May 2018) • Began originations of HELOCs to be pooled and sold (March 2019) • De novo branch in Cornelius, North Carolina (opened in April 2022) • Quantum Capital Corp. - two offices in Atlanta, Georgia (acquired in February 2023) • Commercial LPO in Charleston, South Carolina (opened in August 2023) By expanding our geographic footprint and hiring local experienced talent, we have built a foundation focused on organic growth while maintaining "Our Commitment to the Customer Experience" that has differentiated our brand and characterized our success to date.
A bank holding company, except for certain “well-capitalized” and highly rated bank holding companies, is required to give the Federal Reserve prior written notice of any purchase or redemption of its outstanding equity securities if the gross consideration for 11 the purchase or redemption, when combined with the net consideration paid for all such purchases or redemptions during the preceding twelve months, is equal to 10% or more of its consolidated net worth.
A bank holding company, except for certain “well-capitalized” and highly rated bank holding companies, is required to give the Federal Reserve prior written notice of any purchase or redemption of its outstanding equity securities if the gross consideration for the purchase or redemption, when combined with the net consideration paid for all such purchases or redemptions during the preceding twelve months, is equal to 10% or more of its consolidated net worth.
No regulations have yet been proposed by the Federal Reserve to implement the source of strength doctrine required by the Dodd-Frank Act. HomeTrust Bancshares, Inc. and any subsidiaries that it may control are considered “affiliates” within the meaning of the Federal Reserve Act, and transactions between HomeTrust Bancshares, Inc. and affiliates are subject to numerous restrictions.
No regulations have yet been proposed by the Federal Reserve to implement the source of strength doctrine required by the Dodd-Frank Act. HomeTrust Bancshares, Inc. and any subsidiaries that it may control are considered “affiliates” within the meaning of the Federal Reserve Act, and transactions between HomeTrust Bancshares, Inc. and its affiliates are subject to numerous restrictions.
We do not currently know of any practice, condition, or violation that may lead to termination of our deposit insurance. Transactions with Related Parties. Federal laws strictly limit the ability of banks to engage in certain transactions with their affiliates, including their bank holding companies.
We do not currently know of any practice, condition, or violation that may lead to termination of our deposit insurance. 8 Transactions with Related Parties. Federal laws strictly limit the ability of banks to engage in certain transactions with their affiliates, including their bank holding companies.
The Bank is periodically examined by the NCCOB and the Federal Reserve to ensure that it satisfies applicable standards with respect to its capital adequacy, assets, management, earnings, liquidity and sensitivity to market interest rates. The NCCOB and the Federal Reserve also regulate the branching authority of the Bank.
The Bank is periodically examined by the NCCOB and the Federal Reserve to ensure that it satisfies applicable standards with respect to its capital adequacy, assets, management, earnings, liquidity and 7 sensitivity to market interest rates. The NCCOB and the Federal Reserve also regulate the branching authority of the Bank.
The Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”), is a federal statute that generally imposes strict liability on all prior and present “owners and operators” of sites containing 10 hazardous waste.
The Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) is a federal statute that generally imposes strict liability on all prior and present “owners and operators” of sites containing hazardous waste.
The tax is based on the portion of capital deployed within the state and county level (as defined by the state) and was taxed at $1 per $100 of taxable value in 2023 and 2022. The Company is subject to taxation via nexus in several other states where we do not have physical locations.
The tax is based on the portion of capital deployed within the state and county level (as defined by the state) and was taxed at $1 per $100 of taxable value in 2024 and 2023. The Company is subject to taxation via nexus in several other states where we do not have physical locations.
As a multi-state bank, we pay taxes on the portion of revenue generated within the state. In 2023 and 2022 the tax rate was 5.75%. North Carolina. The state of North Carolina requires all corporations chartered or doing business in the state to pay a corporate tax. In 2023 and 2022 the tax rate was 2.5%.
As a multi-state bank, we pay taxes on the portion of revenue generated within the state. In 2024 and 2023 the tax rate was 5.75%. North Carolina. The state of North Carolina requires all corporations chartered or doing business in the state to pay a corporate tax. In 2024 and 2023 the tax rate was 2.5%.
As a multi-state bank, we pay taxes on the portion of revenue generated within the state. In 2023 and 2022 the tax rate was 4.5%. Tennessee . The state of Tennessee requires banks to file a franchise and excise tax form for financial institutions.
As a multi-state bank, we pay taxes on the portion of revenue generated within the state. In 2024 and 2023 the tax rate was 4.5%. Tennessee . The state of Tennessee requires banks to file a franchise and excise tax form for financial institutions.
The Bank is subject to the BSA and other anti-money laundering laws and regulations, including the USA PATRIOT Act of 2001. These laws and regulations require the Bank to implement policies, procedures, and controls to detect, prevent, and report money laundering and terrorist financing and to verify the identity of their customers.
The Bank is subject to the BSA and other anti-money laundering laws and regulations, including the USA PATRIOT Act of 2001. These laws and regulations require the Bank to implement policies, procedures and controls to detect, prevent and report money laundering and terrorist financing and to verify the identity of its customers.
The excise tax is based on the taxable income (as defined by the state), the portion of revenue generated in the state, and the applicable excise tax, which was 6.5% in 2023 and 2022. Virginia . The state of Virginia requires banks to file a bank franchise tax.
The excise tax is based on the taxable income (as defined by the state), the portion of revenue generated in the state and the applicable excise tax, which was 6.5% in 2024 and 2023. Virginia . The state of Virginia requires banks to file a bank franchise tax.
Under the new rule, covered financial institutions are required to collect and report to the CFPB data on credit applications for small businesses, including those that are owned by women or minorities.
Under this rule, covered financial institutions are required to collect and report to the CFPB data on credit applications for small businesses, including those that are owned by women or minorities.
As a reflection of our strategic goal to make the Bank a best place to work, in the prior year the Company made a significant investment in refreshing our culture model to create organizational clarity via a targeted, robust program that focuses on employee behaviors which support our aspirational corporate values.
As a reflection of our strategic goal to make the Bank a best place to work, in 2022 the Company made a significant investment in refreshing our culture model to create organizational clarity via a targeted, robust program that focuses on employee behaviors which support our aspirational corporate values.
The franchise tax is based on the portion of revenue generated in the state, the net worth of the Bank, and the applicable franchise tax, which was $0.25 per $100 in 2023 and 2022.
The franchise tax is based on the portion of revenue generated in the state, the net worth of the Bank and the applicable franchise tax, which was $0.25 per $100 in 2024 and 2023.
Our talent acquisition practices are designed to attract top talent in the financial services industry and foster an inclusive, respectful and rewarding workplace. Selection teams are guided by our talent acquisition professionals in the proper recruitment and selection of candidates with a focus on competency-based hiring.
Our talent acquisition practices are designed to attract top talent and foster an inclusive, respectful and rewarding workplace. Selection teams are guided by our talent acquisition professionals in the proper recruitment and selection of candidates with a focus on competency-based hiring.
The Federal Reserve has a policy that a bank holding company is required to serve as a source of financial and managerial strength to its subsidiary banks and may not conduct its operations in an unsafe or unsound manner.
The Federal Reserve has a policy that requires a bank holding company to serve as a source of financial and managerial strength to its subsidiary banks and may not conduct its operations in an unsafe or unsound manner.
Total credit exposure in a single loan or group of loans to related borrowers exceeding 60% of the Bank’s legal lending limit (currently approximately $45.0 million) must be approved by the Bank's Board of Directors. The bank has no relationships currently in excess of this limit.
Total credit exposure in a single loan or group of loans to related borrowers exceeding 60% of the Bank’s legal lending limit (currently approximately $50.4 million) must be approved by the Bank's Board of Directors. The Bank has no relationships currently in excess of this limit.
Federal law generally prohibits loans by HomeTrust Bancshares to its executive officers and directors, but there is a specific exception for loans made by HomeTrust Bank to its executive officers and directors in compliance with federal banking laws.
Federal law generally prohibits loans by HomeTrust Bancshares to its executive officers and directors, but there is an exception for loans made by HomeTrust Bank to its executive officers and directors in compliance with federal banking laws.
The Bank is subject to examination and regulation primarily by the NCCOB and the Federal Reserve. This system of regulation and supervision establishes a comprehensive framework of activities in which the Bank may engage and is intended primarily for the protection of depositors and the FDIC deposit insurance fund.
The Bank is subject to examination and regulation primarily by the NCCOB and the Federal Reserve as its primary federal regulator. This system of regulation and supervision establishes a comprehensive framework of activities in which the Bank may engage and is intended primarily for the protection of depositors and the FDIC deposit insurance fund.
Accordingly, the information set forth in this Annual Report on Form 10-K (“Form 10-K”), including the audited consolidated financial statements and related data, relates primarily to the Bank and its subsidiary. As a North Carolina state-chartered bank, and member of the FRB, the Bank's primary regulators are the NCCOB and the Federal Reserve.
Accordingly, the information set forth in this Form 10-K, including the audited consolidated financial statements and related data, relates primarily to the Bank and its subsidiary. As a North Carolina state-chartered bank, and member of the FRB, the Bank's primary regulators are the NCCOB and the Federal Reserve.
A quorum consists of at least three members, one of whom must be either the Chief Credit Officer or the Senior Credit Officer. A 70% vote is required for approval.
A quorum consists of at least three members, one of whom must be either the Chief Credit Officer or the Director of Commercial Credit. A 70% vote is required for approval.
Any such institution must submit a capital restoration plan and, until such plan is approved, may not increase its assets, acquire another depository institution, establish a branch or engage in any new activities, or make capital distributions. As of June 30, 2023, HomeTrust Bank met the requirements to be “well capitalized” and met the capital conservation buffer requirement.
Any such institution must submit a capital restoration plan and, until such plan is approved, may not increase its assets, acquire another depository institution, establish a branch or engage in any new activities, or make capital distributions. As of December 31, 2024, HomeTrust Bank met the requirements to be “well capitalized” and met the capital conservation buffer requirement.
Loans in excess of $15.0 million in total credit exposure must be approved by the Executive Loan Committee comprised of the Chief Executive Officer, Commercial Banking Group Executive, Chief Credit Officer, the Director of Commercial Credit and the Senior Credit Officers not involved with the credit.
Loan relationships in excess of $20.0 million in total credit exposure must be approved by the Executive Loan Committee comprised of the Chief Executive Officer, Commercial Banking Group Executive, Chief Credit Officer, the Director of Commercial Credit and the Senior Credit Officers not involved with the credit.
For a description of the capital regulations, see "Regulation of HomeTrust Bank – Capital Requirements for HomeTrust Bank" and “Note 18 – Regulatory Capital Matters” of the Notes to Consolidated Financial Statements included in Item 8 in this report. At June 30, 2023, HomeTrust Bancshares, Inc. exceeded its minimum regulatory capital requirements under Federal Reserve regulations. Federal Securities Law.
For a description of the capital regulations, see "Regulation of HomeTrust Bank – Capital Requirements for HomeTrust Bank" and “Note 18 – Regulatory Capital Matters” of the Notes to Consolidated Financial Statements included in Item 8 in this report. At December 31, 2024, HomeTrust Bancshares, Inc. exceeded its minimum regulatory capital requirements under Federal Reserve regulations. Federal Securities Law.
These actions resulted in mergers between six established banks and one de novo bank located in Tryon, Shelby, Eden, Lexington, Cherryville and Forest City, North Carolina. Since 2013, we have entered eight attractive markets through various acquisitions and new office openings, as well as expanded our product lines.
These actions resulted in mergers between six established banks located in Tryon, Shelby, Eden, Lexington and Cherryville, North Carolina. Since 2013, we have entered eight attractive growth markets through various acquisitions and new office openings, as well as expanded our product lines.
In addition, 9 employees are located in other states across the U.S and work remotely. For almost 100 years, HomeTrust Bank has strived to be an employer of choice. We value and promote diversity and inclusion in every aspect of our business and at every level within the company.
In addition, 13 employees are located in other states across the U.S and work remotely. For almost 100 years, HomeTrust Bank has striven to be an employer of choice. We value and promote belonging in every aspect of our business and at every level within the Company.
For additional information regarding the Bank’s required and actual capital levels at June 30, 2023, see “Note 18 – Regulatory Capital Matters” of the Notes to Consolidated Financial Statements included in Item 8 in 9 this report. Federal Home Loan Bank System.
For additional information regarding the Bank’s required and actual capital levels at December 31, 2024, see “Note 18 – Regulatory Capital Matters” of the Notes to Consolidated Financial Statements included in Item 8 in this report. Federal Home Loan Bank System.
The guidance provides that the strength of an institution’s lending and risk management practices with respect to such concentrations will be taken into account in supervisory guidance on evaluation of capital adequacy. As of June 30, 2023, HomeTrust Bank’s aggregate recorded loan balances for construction, land development and land loans were 94.3% of regulatory capital.
The guidance provides that the strength of an institution’s lending and risk management practices with respect to such concentrations will be taken into account in supervisory guidance on evaluation of capital adequacy. As of December 31, 2024, HomeTrust Bank’s aggregate recorded loan balances for construction, land development and land loans were 58.2% of regulatory capital.
Specific to our investment portfolio, we do not currently participate in hedging programs, stand-alone contracts for interest rate caps, floors or swaps or other activities involving the use of off-balance sheet derivative financial instruments and have no present intention to do so.
Specific to our investment portfolio, we do not currently participate in hedging programs, stand-alone contracts for interest rate caps, floors or swaps or other activities involving the use of off-balance sheet derivative financial instruments and have no present intention to do so. Further, we do not invest in securities which are not rated investment grade. HOW WE ARE REGULATED General.
Among other things, it codifies a risk-based approach to anti-money laundering compliance for financial institutions; requires the development of standards for evaluating technology and internal processes for BSA compliance; expands enforcement- and investigation-related authority, including increasing available sanctions for certain BSA violations and instituting BSA whistleblower incentives and protections. Environmental Issues Associated with Real Estate Lending .
Among other things, it codifies a risk-based approach to anti-money laundering compliance for financial institutions; requires the development of standards for evaluating technology and internal processes for BSA compliance; expands enforcement- and investigation-related authority, including increasing available sanctions for certain BSA violations and instituting BSA whistleblower incentives and protections. Privacy Laws and Cyber Security.
At June 30, 2023, we had $13.2 million of net operating loss carryforwards for federal income tax purposes. Corporate Dividends-Received Deduction. HomeTrust Bancshares, Inc. files a consolidated return with the Bank. As a result, any dividends HomeTrust Bancshares, Inc. receives from the Bank will not be included as income to HomeTrust Bancshares, Inc.
At December 31, 2024, we had $8.0 million of net operating loss carryforwards for federal income tax purposes. Corporate Dividends-Received Deduction. HomeTrust Bancshares, Inc. files a consolidated return with the Bank. As a result, any dividends HomeTrust Bancshares, Inc. receives from the Bank will not be included as income to HomeTrust Bancshares, Inc.
We support these initiatives through both financial and people 5 resources in our communities. Collectively, our Bank employees volunteer thousands of hours annually in their local communities, such as helping to build homes and teaching grade school youth how to begin establishing healthy money savings habits.
We support these initiatives through both financial and people resources in our communities. Collectively, our Bank employees volunteer thousands of hours annually in their local communities, such as helping to build homes and teaching grade school youth how to begin establishing healthy money savings habits. Our Bank employees are making a positive difference in the lives of others every day.
The Bank is subject to a statutory lending limit on aggregate loans to one person or a group of persons combined because of certain relationships and common interests. That limit is generally equal to 15% of unimpaired capital and surplus, which was $74.9 million as of June 30, 2023.
The Bank is subject to a statutory lending limit on aggregate loans to one person or a group of persons combined because of certain relationships and common interests. That limit is generally equal to 15% of unimpaired capital and surplus, which was $84.2 million as of December 31, 2024.
In addition, at June 30, 2023, HomeTrust Bank’s commercial real estate loans, as defined by the guidance, were 297.1% of regulatory capital. See "Risk Factors – The level of our commercial real estate portfolio may subject us to additional regulatory scrutiny." Community Reinvestment and Consumer Protection Laws.
In addition, at December 31, 2024, HomeTrust Bank’s commercial real estate loans, as defined by the guidance, were 233.4% of regulatory capital. See "Risk Factors – The level of our commercial real estate portfolio may subject us to additional regulatory scrutiny." Community Reinvestment and Consumer Protection Laws.
Currently, assessment rates (inclusive of certain possible adjustments) 8 for an institution with total assets of less than $10.0 billion range from 1.5 to 30.0 basis points of each institution’s total average consolidated assets less average tangible equity (subject to upward adjustment for certain debt).
Currently, assessment rates (inclusive of certain possible adjustments) for an institution with total assets of less than $10.0 billion range from 2.5 to 32.0 basis points of each institution’s total average consolidated assets less average tangible equity (subject to upward adjustment for certain debt). The FDIC has the authority to increase insurance assessments.
At June 30, 2023, the Company had consolidated total assets of $4.6 billion, total deposits of $3.6 billion and stockholders’ equity of $471.2 million. The Company has not engaged in any significant activity other than holding the stock of the Bank.
At December 31, 2024, the Company had consolidated total assets of $4.6 billion, total deposits of $3.8 billion and stockholders’ equity of $551.8 million. The Company has not engaged in any significant activity other than holding the stock of the Bank.
These loan authorities are reviewed and approved, at least annually, by the Credit Risk Committee, which is made up of the Chief Executive Officer, Chief Credit Officer, Chief Risk Officer, and the Commercial Banking Group Executive. The Senior and Executive Loan Committee approval levels must be approved by the Board of Directors.
These loan authorities are reviewed and approved, at least annually, by the Credit Risk Committee, which is made up of the Chief Executive Officer, Chief Credit Officer, Chief Risk Officer, the Commercial Banking Group Executive, the Consumer Banking Executive and the Director of Commercial Credit.
In 2023, we conducted a comprehensive employee engagement survey, with a high-level of employee participation, to gain perspective on what we do well and our opportunities for improvement. In addition, HomeTrust continued deepening the understanding of our 33 culture fundamentals which we introduced in late 2022.
In 2024, we conducted a 6 comprehensive employee engagement survey, with a high-level of employee participation and year-over-year we have continued to improve employee engagement results. Results are utilized to gain perspective on what we do well and identify opportunities for improvement. In addition, HomeTrust continues deepening the understanding of our 33 culture fundamentals which we introduced in 2022.
An unsatisfactory rating may be the basis for denial of certain applications. The Bank received a “satisfactory” rating during its most recent CRA examination. On May 5, 2022, the federal bank regulatory agencies jointly issued a proposal to strengthen and modernize regulations implementing the CRA.
An unsatisfactory rating may be the basis for denial of certain applications. The Bank received a “satisfactory” rating during its most recent CRA examination. On October 24, 2023, the federal banking agencies issued a final rule designed to strengthen and modernize regulations implementing the CRA.
We believe that a sense of belonging is essential to providing a work environment where everyone can perform their very best. We are committed to fostering an environment that encourages diverse viewpoints, backgrounds and experiences and with the support of our Board of Directors, we continue to explore additional diversity, equity and inclusion efforts.
We believe that a sense of belonging is essential to providing a work environment where everyone can perform their very best. We are committed to fostering an environment that encourages diverse viewpoints, backgrounds and experiences.
All advances from the FHLB are required to be fully secured by sufficient collateral as determined by the FHLB. In addition, all long-term advances are required to provide funds for residential home financing. At June 30, 2023, the Bank held $10.1 million in FHLB stock that was in compliance with the holding requirements.
All advances from the FHLB are required to be fully secured by sufficient collateral as determined by the FHLB. In addition, all long-term advances are required to provide funds for residential home financing. At December 31, 2024, the Bank held $3.5 million in FHLB stock which complied with the holding requirements.
The Federal Reserve may disapprove such a purchase or redemption if it determines that the proposal would constitute an unsafe or unsound practice or would violate any law, regulation, Federal Reserve order or any condition imposed by, or written agreement with, the Federal Reserve. Legislative and Regulatory Proposals.
The Federal Reserve may disapprove such a purchase or redemption if it determines that the proposal would constitute an unsafe or unsound practice or would violate any law, regulation, Federal Reserve order or any condition imposed by, or written agreement with, the Federal Reserve. The Company repurchased 23,483 shares during the year ended December 31, 2024.
Method of Accounting . For federal income tax purposes, the Company currently reports its income and expenses on the accrual method of accounting and uses a fiscal year ending on June 30th for filing its federal income tax return. Net Operating Loss Carryovers .
Method of Accounting . For federal income tax purposes, the Company currently reports its income and expenses on the accrual method of accounting and uses a fiscal year ending on December 31 st for filing its federal income tax return (updated from June 30 th consistent with the Company's change in fiscal year end). Net Operating Loss Carryovers .
By building a platform that supports growth and profitability, we are continuing our transition toward becoming a high-performing community bank and helping our customers every day to be "Ready For What's Next." Our 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 loans, and other consumer loans.
Our 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 loans and other consumer loans.
Further, we do not invest in securities which are not rated investment grade. 7 HOW WE ARE REGULATED General. HomeTrust Bancshares, Inc. is subject to examination and supervision by, and is required to file certain reports with, the Federal Reserve. HomeTrust Bancshares, Inc. is also subject to the rules and regulations of the SEC under the federal securities laws.
HomeTrust Bancshares, Inc. is subject to examination and supervision by, and is required to file certain reports with, the Federal Reserve. HomeTrust Bancshares, Inc. is also subject to the rules and regulations of the SEC under the federal securities laws.
Human Capital As of June 30, 2023, we employed 532 full-time employees and 24 part-time employees, for a total of 556 employees. Our employees are located primarily in our five-state geographic footprint: North Carolina - 372, Tennessee - 62, Virginia - 39, Georgia - 42 and South Carolina - 32.
Human Capital As of December 31, 2024, we employed 539 full-time employees and 24 part-time employees, for a total of 563 employees. Our employees are located primarily in our five-state geographic footprint: North Carolina - 367, Tennessee - 60, Georgia - 49, Virginia - 37 and South Carolina - 37.
Other commercial banks, credit unions, and finance companies provide vigorous competition in consumer lending. Commercial and industrial loan competition is primarily from local and regional commercial banks. We believe that we compete effectively because we consistently deliver high-quality, personal service to our customers that results in a high level of customer satisfaction.
Commercial and industrial loan competition is primarily from local and regional commercial banks. We believe that we compete effectively because we consistently deliver high-quality, personal service to our customers that results in a high level of customer satisfaction. We attract our deposits through our branch office network, supplementing this funding through brokered deposits as necessary.
Our Bank employees are making a positive difference in the lives of others every day. Competition We face strong competition in originating loans and in attracting deposits. Competition in originating real estate loans comes primarily from other commercial banks, savings institutions, credit unions, life insurance companies, and mortgage bankers.
Competition We face strong competition in originating loans and in attracting deposits. Competition in originating real estate loans comes primarily from 5 other commercial banks, savings institutions, credit unions, life insurance companies and mortgage bankers. Other commercial banks, credit unions and finance companies provide vigorous competition in consumer lending.
The Federal Reserve policy statement also indicates that it would be inappropriate for a company experiencing serious financial problems to borrow funds to pay dividends. As described above under "Regulation of HomeTrust Bank – Capital Requirements for HomeTrust Bank," the capital conservation buffer requirement can also restrict the ability of HomeTrust Bancshares, Inc. and the Bank to pay dividends.
The Federal Reserve policy statement also indicates that it would be inappropriate for a bank holding company experiencing serious financial problems to borrow funds to pay dividends.
As of June 30, 2023, the Bank's risk-based capital exceeded the required capital contribution buffer.
As of December 31, 2024, the Bank's risk-based capital exceeded the required capital conservation buffer.
The Company's competitive paid time off program gives our employees a chance to step back from their professional commitments, which employees may use for vacation, personal use and illness. 6 To foster inclusivity and support our employees through various life events, in 2023, we launched a six week, 100% paid parental leave benefit to all eligible employees, regardless of gender, for the birth, adoption, or fostering of a new child.
To foster inclusivity and support our employees through various life events, we offer a 100% paid parental leave benefit to all eligible employees, regardless of gender, for the birth, adoption or fostering of a new child.
We believe that we compete for deposits by offering superior service and a variety of deposit accounts at competitive rates. We also have a highly competitive suite of cash management services, online/mobile banking, and internal support expertise specific to the needs of small to mid-sized commercial business customers.
We also have a highly competitive suite of cash management services, online/mobile banking and internal support expertise specific to the needs of small to mid-sized commercial business customers. Beyond traditional financial institutions, we also face competition from financial technology companies, or fintechs.
We also provide a wellness program, which delivers products, services and tools to help employees maintain a healthy life. Lending Policy and Procedures Loan credit authority is granted by position rather than on an individual officer-by-officer basis.
Lending Policy and Procedures Loan credit authority is granted by position rather than on an individual officer-by-officer basis.
Valuing our people, our greatest asset, means that good health, safety and well-being practices, both at home and at work, are woven into the fabric of our culture. We offer a confidential employee assistance program for employees and for those living in their households which provide tools, resources and counseling at no charge to them.
Valuing our people, our greatest asset, means that good health, safety and well-being practices, both at home and at work, are woven into the fabric of our culture. We offer a comprehensive benefits package to our employees and have designed our benefits and compensation programs to attract, retain, motivate and reward employees.
We attract our deposits through our branch office network, supplementing this funding through brokered deposits as necessary. Competition for deposits is principally from other commercial banks, savings institutions, and credit unions located in the same communities, as well as mutual funds and other alternative investments.
Competition for deposits is principally from other commercial banks, savings institutions and credit unions located in the same communities, as well as mutual funds and other alternative investments. We believe that we compete for deposits by offering superior service and a variety of deposit accounts at competitive rates.
In addition, we significantly increased our short-term disability coverage to provide 100% wage replacement for eight weeks for employees with at least one year of service if they experience a qualifying medical event. We believe a strong corporate culture and employee engagement is crucial to the success of the Company.
In addition, we offer company-paid short-term disability coverage to provide 100% wage replacement for eight weeks for employees with at least one year of service if they experience a qualifying medical event. In 2024, more than half our workforce was impacted by Hurricane Helene, which caused catastrophic damage across Western North Carolina, Eastern Tennessee and Upstate South Carolina.
Revised assessment rate schedules will remain in effect unless and until the reserve ratio meets or exceeds 2%, absent further action by the FDIC Board of Directors. Increases in the assessment rates for deposit insurance adversely affect the Company's results of operations. Management cannot predict what assessment rates will be in the future.
Significant increases in the assessment rates for deposit insurance would adversely affect the Company's results of operations. Management cannot predict what assessment rates will be in the future.
Collectively, these initiatives are designed to have a teammate first work environment to boost employee morale, engagement, and job satisfaction. We are committed to serving and strengthening the communities in which we live, work and play and believe this commitment fosters strong and rewarding relationships with our clients and community partners.
We are committed to serving and strengthening the communities in which we live, work and play and believe this commitment fosters strong and rewarding relationships with our clients and community partners. Community Service Leave ("CSL") is awarded annually to employees to foster volunteerism with charitable organizations of their choice throughout the year.
We offer a comprehensive benefits package to our employees and have designed our benefits and compensation programs to attract, retain, motivate and reward employees. We provide access to financial wellness counseling services and promote the health and wellness of our employees by strongly encouraging work-life balance and a healthy lifestyle.
We provide access to financial wellness counseling services and promote the health and wellness of our employees by strongly encouraging work-life balance and a healthy lifestyle. The Company's competitive paid time off program gives our employees a chance to step back from their professional commitments, which employees may use for vacation, personal use and illness.
Community Service Leave ("CSL") is awarded annually to employees to foster volunteerism with charitable organizations of their choice throughout the year. All employees are eligible for CSL and may use it throughout the calendar year to participate in eligible community service activities.
All employees are eligible for CSL and may use it throughout the calendar year to participate in eligible community service activities. The Bank also sponsors a two week per year program called the "Heart of HTB" where employees come together to volunteer at non-profit organizations which serve our communities.
Removed
Our mission is to create stockholder value by building relationships with our employees, customers, and communities.
Added
In recent years, we have focused on our mission to establish a behavior-based culture that focuses on fundamentals that serve as a guiding light in every facet of our business. In 2022, we introduced 33 culture fundamentals that encapsulate the values we hold and solidify our unique culture.
Removed
Beyond traditional financial institutions, we also face competition from financial technology companies, or fintechs. In an effort to open alternative origination sources beyond our physical locations, the Bank positioned itself to partner with fintechs, intentionally selecting an open architecture when converting core banking systems in February 2020 to allow the Bank to quickly integrate fintech partners.
Added
Each week, a different fundamental is emphasized and discussed throughout the Company through unique videos, a culture mobile app, and at the start of each team meeting.
Removed
As a reflection of this investment, in March 2022 we integrated our second fintech partner focused on small business lending, and integrated our third fintech partner in June 2022 focused on unsecured consumer lending. The Bank continues to evaluate future fintech partnerships which present opportunities for both loan and deposit gathering beyond our traditional origination sources.
Added
From “#1 - do the right thing, always” to “#17 - think and act like an owner” to “#33 - keep things fun,” these fundamentals are not just how we behave and treat each other and our customers, but also how we manage the Company.
Removed
Extraordinary growth in insured deposits during the first and second quarters of 2020 caused the Deposit Insurance Fund reserve ratio to decline below the statutory minimum of 1.35% as of June 30, 2020.
Added
In addition to traditional health benefits, we offer a confidential employee assistance program for employees and for those living in their households which provides tools, resources and counseling at no charge to them. We also provide a physical wellness program, which delivers products, services and tools to help employees maintain a healthy life.
Removed
In September 2020, the FDIC Board of Directors adopted a Restoration Plan to restore the reserve ratio to at least 1.35% within eight years, absent extraordinary circumstances, as required by the Federal Deposit Insurance Act.
Added
Employees were supported through inclement weather pay, flexible work arrangements and donations of food and supplies. We also established the HTB Employee Relief Fund, launched with a significant initial donation by the Bank, which provided monetary grants to all employees living in areas affected by the storm.
Removed
The Restoration Plan maintained the assessment rate schedules in place at the time and required the FDIC to update its analysis and projections for the deposit insurance fund balance and reserve ratio at least semiannually.
Added
The HTB Employee Relief Fund will remain in place to provide future charitable financial support to employees in times of crisis, disaster or hardship. We believe a strong corporate culture and employee engagement is crucial to the success of the Company.
Removed
In the semiannual update for the Restoration Plan in June 2022, the FDIC projected that the reserve ratio was at risk of not reaching the statutory minimum of 1.35% by September 30, 2028.
Added
HomeTrust is committed to creating and sustaining a high performing regional community bank and we believe the best way to achieve that goal is to become a regionally and nationally recognized best place to work.
Removed
Based on this update, the FDIC Board of Directors approved an Amended Restoration Plan, and concurrently proposed an increase in initial base deposit insurance assessment rate schedules uniformly by 2 basis points, applicable to all insured depository institutions.

… 18 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

117 edited+21 added−22 removed122 unchanged
Biggest changeLoans on land under development or held for future construction as well as lot loans made to individuals for the future construction of a residence also pose additional risk because the length of time from financing to completion of a development project is significantly longer than for a traditional construction loan, which makes them more susceptible to declines in real estate values, declines in overall economic conditions, which may delay the development of the land and changes in the political landscape that could affect the permitted and intended use of the land being financed, and the potential illiquid nature of the collateral.
Biggest changeThis makes them more susceptible to declines in real estate values, declines in overall economic conditions, which may delay the development of the land, changes in the political landscape that could affect the permitted and intended use of the land being financed, and the potential illiquid nature of the collateral.
Adverse economic conditions in our market areas can reduce our rate of growth, affect our customers’ ability to repay loans and adversely impact our financial condition and earnings. General economic conditions, including inflation, unemployment and money supply fluctuations, also may affect our profitability adversely.
Adverse economic conditions in our market areas can reduce our rate of growth, affect our customers’ ability to repay loans and adversely impact our financial condition and earnings. General economic conditions, including inflation, unemployment and money supply fluctuations, also may adversely affect our profitability.
Recessionary conditions or declines in the volume of real estate sales and/or the sales prices coupled with elevated unemployment rates may result in higher than expected loan delinquencies or problem assets, and a decline in demand for our products and services.
Recessionary conditions or declines in the volume of real estate sales and/or sales prices coupled with elevated unemployment rates may result in higher than expected loan delinquencies or problem assets, and a decline in demand for our products and services.
Because of the uncertainties inherent in estimating construction costs, as well as the market value of the complete project and the effects of governmental regulation on real property, it is relatively difficult to evaluate accurately the total funds required to complete a project and the completed project loan-to-value ratio.
Because of the uncertainties inherent in estimating construction costs, as well as the market value of the completed project and the effects of governmental regulation on real property, it is relatively difficult to accurately evaluate the total funds required to complete a project and the completed project loan-to-value ratio.
For these reasons, a downturn in housing or the real estate market, could increase loan delinquencies, defaults and foreclosures, and significantly impair the value of the collateral underlying our construction and land development loans and our ability to sell the collateral upon foreclosure. Some of the builders we deal with have more than one loan outstanding with us.
For these reasons, a downturn in the housing or real estate market could increase loan delinquencies, defaults and foreclosures and significantly impair the value of the collateral underlying our construction and land development loans and our ability to sell the collateral upon foreclosure. Some of the builders we deal with have more than one loan outstanding with us.
As a result, these loans often involve the disbursement of funds with repayment substantially dependent on the success of the ultimate project and the ability of the borrower to sell or lease the property or obtain permanent take-out financing, rather than the ability of the borrower or guarantor to repay principal and interest.
As a result, these loans often involve the disbursement of funds with repayment substantially dependent on the ultimate success of the project and the ability of the borrower to sell or lease the property or obtain permanent take-out financing, rather than the ability of the borrower or guarantor to repay principal and interest.
In addition, during this long period of time from financing to completion, the collateral often does not generate any cash flow to support the debt service. Our commercial real estate loans involve higher principal amounts than other loans and repayment of these loans may be dependent on factors outside our control or the control of our borrowers.
In addition, during this long period of time from financing to completion, the collateral often does not generate any cash flow to support debt service. Our commercial real estate loans involve higher principal amounts than other loans and repayment of these loans may be dependent on factors outside our control or the control of our borrowers.
Further, our cardholders use their debit and credit cards to make purchases from third parties or through third party processing services. As such, we are subject to risk from data breaches of such third party’s information systems or their payment processors. Such a data security breach could compromise our account information.
Further, our cardholders use their debit and credit cards to make purchases from third-parties or through third-party processing services. As such, we are subject to risk from data breaches of a third-party’s information systems or their payment processors. Such a data security breach could compromise our account information.
If our third-party providers encounter difficulties including those resulting from breakdowns or other disruptions in communication services provided by a vendor, failure of a vendor to handle current or higher transaction volumes, cyber-attacks and security breaches or if we otherwise have difficulty in communicating with them, our ability to adequately process and account for transactions could be affected, and our ability to deliver products and services to our customers and otherwise conduct business operations could be adversely impacted.
If our third-party providers encounter difficulties, including those resulting from breakdowns or other disruptions in communication services provided by a vendor, failure of a vendor to handle current or higher transaction volumes, cyber-attacks or security breaches or if we otherwise have difficulty in communicating with them, our ability to adequately process and account for transactions could be affected, and our ability to deliver products and services to our customers and otherwise conduct business operations could be adversely impacted.
Factors that could detrimentally impact our access to liquidity sources include a decrease in the level of our business activity as a result of a downturn in the Georgia, North Carolina, South Carolina, Virginia, and/or Tennessee markets in which the majority of our loans are concentrated or adverse regulatory action against us.
Factors that could detrimentally impact our access to liquidity sources include a decrease in the level of our business activity as a result of a downturn in the Georgia, North Carolina, South Carolina, Tennessee and/or Virginia markets in which the majority of our loans are concentrated or adverse regulatory action against us.
We rely on numerous external vendors to provide us with products and services necessary to maintain our day-to-day operations. Accordingly, our operations are exposed to risk that these vendors will not perform in accordance with the contracted arrangements under service level agreements.
We rely on numerous external vendors to provide us with products and services necessary to maintain our day-to-day operations. Accordingly, our operations are exposed to the risk that these vendors will not perform in accordance with the contracted arrangements under service level agreements.
Although these funds historically have been a relatively stable source of funds for us, availability depends on the individual municipality’s fiscal policies and cash flow needs. Competition with other financial institutions could adversely affect our profitability. Although we consider ourselves competitive in our market areas, we face intense competition in both making loans and attracting deposits.
Although these funds historically have been a relatively stable source of funds for us, availability depends on the individual municipality’s fiscal policies and cash flow needs. 21 Competition with other financial institutions could adversely affect our profitability. Although we consider ourselves competitive in our market areas, we face intense competition in both making loans and attracting deposits.
These accounting changes could materially impact, potentially even retroactively, how we report our financial condition and results of our operations as could our interpretation of those changes. Non-compliance with the USA PATRIOT Act, Bank Secrecy Act, or other laws and regulations could result in fines or sanctions and limit our ability to get regulatory approval of acquisitions.
These accounting changes could materially impact, potentially even retroactively, how we report our financial condition and results of operations as could our interpretation of those changes. Non-compliance with the USA PATRIOT Act, Bank Secrecy Act or other laws and regulations could result in fines or sanctions and limit our ability to get regulatory approval of acquisitions or other activities.
Some of these borrowers have higher debt-to-income ratios, or the loans are secured by unique properties in rural markets for which there are no sales of comparable properties to support the value according to secondary market requirements. We may require additional collateral or lower loan-to-value ratios to reduce the risk of these loans.
Some of the borrowers on these loans have higher debt-to-income ratios, or the loans are secured by unique properties in rural markets for which there are no sales of comparable properties to support the value according to secondary market requirements. We may require additional collateral or lower loan-to-value ratios to reduce the risk of these loans.
In addition, bank regulatory agencies periodically review our allowance and may require an increase in the provision for credit losses or the recognition of further loan charge-offs based on judgments different than those of management. If charge-offs in future periods exceed the ACL, we may need additional provisions to increase the ACL.
In addition, bank regulatory agencies periodically review our ACL and may require an increase in the provision for credit losses or the recognition of further loan charge-offs based on judgments different than those of management. If charge-offs in future periods exceed the ACL, we may need additional provisions to increase the ACL.
Because our liabilities tend to be shorter in duration than our assets in periods where we anticipate a declining-rate environment, when the yield curve flattens or even inverts, we will experience pressure on our net interest margin as our cost of funds increases relative to the yield we can earn on our assets.
As our liabilities tend to be shorter in duration than our assets in periods where we anticipate a declining-rate environment, when the yield curve flattens or even inverts, we will experience pressure on our net interest margin as our cost of funds increases relative to the yield we can earn on our assets.
As is the case with many other financial institutions, our emphasis on increasing the development of core deposits, those deposits bearing no or a relatively low rate of interest with no stated maturity date, has resulted in our having a significant amount of these deposits which have a shorter duration than our assets.
As is the case with many other financial institutions, our emphasis on increasing the development of core deposits, those deposits bearing no or a relatively low interest rate with no stated maturity date, resulted in our having a significant amount of these deposits, which have a shorter duration than our assets.
The particular focus of the guidance is on exposure to commercial real estate loans that are dependent on the cash flow from the real estate held as collateral and that are likely to be at greater risk to conditions in the commercial real estate market (as opposed to real estate collateral held as a secondary source of repayment or as an abundance of caution).
The particular focus of the guidance is on exposure to commercial real estate loans that are dependent on the cash flow from the real estate held as collateral and that are likely to be at greater risk to conditions in the commercial real estate market (as opposed to real estate collateral held as a secondary source of repayment or out of an abundance of caution).
The USA PATRIOT and Bank Secrecy Acts require financial institutions to develop programs to prevent financial institutions from being used for money laundering and terrorist activities. If such activities are detected, financial institutions are obligated to file suspicious activity reports with the U.S. Treasury’s Office of Financial Crimes Enforcement Network.
The USA PATRIOT and Bank Secrecy Acts require financial institutions to develop programs to prevent them from being used for money laundering and terrorist activities. If such activities are detected, financial institutions are obligated to file suspicious activity reports with the U.S. Treasury’s Office of Financial Crimes Enforcement Network.
If these issues or liabilities exceed our estimates, our results of operations and financial condition may be materially negatively affected; • prices at which future acquisitions can be made may not be acceptable to us; • our growth initiatives may require us to recruit experienced personnel to assist in such initiatives.
If these issues or liabilities exceed our estimates, our results of operations and financial condition may be materially negatively affected. • prices at which future acquisitions can be made may not be acceptable to us. 18 • our growth initiatives may require us to recruit experienced personnel to assist in such initiatives.
Additionally, charge-offs on commercial real estate loans may be larger on a per loan basis than those incurred with our residential and consumer loan portfolios. 15 The level of our commercial real estate loan portfolio may subject us to additional regulatory scrutiny.
Additionally, charge-offs on commercial real estate loans may be larger on a per loan basis than those incurred with our residential and consumer loan portfolios. The level of our commercial real estate loan portfolio may subject us to additional regulatory scrutiny.
Our NBV in the loan at the time of foreclosure and thereafter is compared to the updated market value of the foreclosed property less estimated selling costs (fair value). A charge-off is recorded for any excess in the asset’s NBV over its fair value.
Our NBV in the loan at the time of foreclosure and thereafter is 16 compared to the updated market value of the foreclosed property less estimated selling costs (fair value). A charge-off is recorded for any excess in the asset’s NBV over its fair value.
The loans in our held-for-sale portfolio are carried at the lower of cost or fair market value less estimated costs to sell with changes recognized in our statement of operations. Carrying the loans at fair value may also increase the volatility in our earnings.
The loans in our held-for-sale portfolio are carried at either fair market value or the lower of cost or fair market value less estimated costs to sell, with changes recognized in our statement of operations. Carrying the loans at fair value may also increase the volatility in our earnings.
As a result, our financial condition and results of operations are subject to general economic conditions and the real estate conditions prevailing in the markets in which the underlying properties securing these loans are located, as well as the conditions in our primary market areas.
As a result, our financial condition and results of operations are subject to general and regional economic conditions and the real estate conditions prevailing in the markets in which the underlying properties securing these loans are located, as well as the conditions in our primary market areas.
These factors include, but are not limited to, rating agency actions in respect of the securities, defaults by, or other adverse events affecting the issuer or the underlying securities, and changes in market interest rates and continued instability in the capital markets.
These factors include, but are not limited to, rating agency actions in respect of the securities, defaults by, or other adverse events affecting the issuer or the underlying securities, and changes in market interest rates and instability in the capital markets.
If these loans outperform our original fair value estimates, the difference between our original estimate and the actual performance of the loan (the “discount”) is accreted into net interest income. Thus, our net interest margins may initially increase due to the discount.
If these loans outperform our original fair value estimates, the difference between our original estimate and the actual performance of the loan (the “discount”) is accreted into net interest income. Thus, our net interest margins may increase due to the discount.
The inability of our loans to adjust downward can contribute to increased income in periods of declining interest rates, although this result is subject to the risks that borrowers may refinance these loans during such periods.
The 17 inability of our loans to adjust downward can contribute to increased income in periods of declining interest rates, although this result is subject to the risks that borrowers may refinance these loans during such periods.
The Company is continuously working to install new and upgrade its existing information technology systems and provide employee awareness training around phishing, malware, and other cyber risks to further protect the Company against cyber risks and security breaches.
The Company is continuously working to install new, and upgrade its existing, information technology systems and provide employee awareness training around phishing, malware and other cyber risks to further protect the Company against such risks and security breaches.
In addition, the physical condition of non-owner occupied properties is often below that of owner occupied properties due to lax property maintenance standards, which has a negative impact on the 14 value of the collateral properties.
In addition, the physical condition of non-owner occupied properties is often below that of owner occupied properties due to lax property maintenance standards, which has a negative impact on the value of the collateral properties.
The amount of this ACL is determined by our management through periodic reviews and consideration of several factors, including, but not limited to: • our reserve on loans collectively evaluated, based on peer loss experience, which management believes provides the best basis for its assessment of ECLs, and consideration of the effects of past events, current conditions, and reasonable and supportable forecasts on the collectability of the loan portfolio; • a qualitative reserve based on factors that are relevant within the qualitative framework; and • our reserve on loans individually evaluated for loans no longer sharing similar risk characteristics which is based on a DCF analysis unless the loan meets the criteria for use of the fair value of collateral, either by virtue of an expected foreclosure or through meeting the definition of collateral dependent.
The amount of this ACL is determined by our management through periodic reviews and consideration of several factors, including, but not limited to: • our reserve on loans collectively evaluated, based on peer loss experience, which management believes provides the best basis for its assessment of ECLs, and consideration of the effects of past events, current conditions and reasonable and supportable forecasts on the collectability of the loan portfolio; • a qualitative reserve adjustment based on factors that are relevant within the qualitative framework; and • our reserve on individually evaluated loans which no longer share similar risk characteristics, which is based on a DCF analysis unless the loan meets the criteria for use of the fair value of collateral, either by virtue of an expected foreclosure or through meeting the definition of collateral dependent.
Properties under construction are often difficult to sell and typically must be completed in order to be successfully sold, which also complicates the process of working out problem construction loans.
Properties under construction are often difficult to sell and typically must be completed in order to be successfully 14 sold, which also complicates the process of working out problem construction loans.
We are an entity separate and distinct from our principal subsidiary, HomeTrust Bank, and derive substantially all of our revenue at the holding company level in the form of dividends from that subsidiary.
We are an entity separate and distinct from our principal subsidiary, the Bank, and derive substantially all of our revenue at the holding company level in the form of dividends from that subsidiary.
While commercial real estate lending may potentially be more profitable than single-family residential lending, it is generally more sensitive to regional and local economic conditions, making loss levels more difficult to predict. Collateral evaluation and financial statement analysis in these types of loans require a more detailed analysis at the time of loan underwriting and on an ongoing basis.
While commercial real estate lending is potentially more profitable than single-family residential lending, it is generally more sensitive to regional and local economic conditions, making loss levels more difficult to predict. Collateral evaluation and financial statement analysis in these types of loans require a more detailed analysis at the time of loan underwriting and on an ongoing basis.
If our estimates are incorrect, the ACL may not 16 be sufficient to cover the expected losses in our loan portfolio, resulting in the need for increases in our ACL.
If our estimates are incorrect, the ACL may not be sufficient to cover the expected losses in our loan portfolio, resulting in the need for increases in our ACL.
If our valuation process is incorrect, or if property values decline, the fair value of our REO may not be sufficient to recover our carrying value in such assets, resulting in the need for additional charge-offs. Significant charge-offs to our REO could have a material adverse effect on our financial condition and results of operations.
If our valuation process is incorrect, or if property values decline, the fair value of our repossessed assets may not be sufficient to recover our carrying value in such assets, resulting in the need for additional charge-offs. Significant charge-offs to our repossessed assets could have a material adverse effect on our financial condition and results of operations.
Our nonperforming assets adversely affect our net income in various ways: • we record interest income only on a cash basis for nonaccrual loans and any nonperforming debt securities, and do not record interest income for REO; • we must provide for ECLs through a current period charge to the provision for credit losses; • noninterest expense increases when we write down the value of properties in our REO portfolio to reflect changing market values or recognize credit impairment on nonperforming debt securities; • there are legal fees associated with the resolution of problem assets, as well as carrying costs such as taxes, insurance and maintenance fees related to our REO; and • the resolution of nonperforming assets requires the active involvement of management, a distraction from more profitable activity.
Our nonperforming assets adversely affect our net income in various ways: • we record interest income only on a cash basis for nonaccrual loans and any nonperforming debt securities, and do not record interest income for repossessed assets; • we must provide for ECLs through a current period charge to the provision for credit losses; • noninterest expense increases when we write down the value of repossessed assets to reflect changing market values or recognize credit impairment on nonperforming debt securities; • there are legal fees associated with the resolution of problem assets, as well as carrying costs such as taxes, insurance and maintenance fees related to our repossessed assets; and • the resolution of nonperforming assets requires the active involvement of management, a distraction from more profitable activity.
The required accounting treatment of loans we acquire through acquisitions, including purchased financial assets with credit deterioration, could result in higher net interest margins and interest income in current periods and lower net interest margins and interest income in future periods. Under US GAAP, we are required to record loans acquired through acquisitions, including PCD, at fair value.
The required accounting treatment of loans we acquire through acquisitions, including purchased financial assets with credit deterioration, could result in higher net interest margins and interest income initially and lower net interest margins and interest income in future periods. Under US GAAP, we are required to record loans acquired through acquisitions, including PCD, at fair value.
A deterioration in economic conditions, particularly within our primary market areas, could result in the following consequences among others, any of which could materially hurt our business: • loan delinquencies, problem assets and foreclosures may increase; • we may need to increase our ACL; • the slowing of sales and/or the reduction in value of foreclosed assets; • demand for our products and services may decline, possibly resulting in a decrease in our total loans or assets; • collateral for loans made may decline further in value, exposing us to increased risk of loss on existing loans and reducing customers’ borrowing power; • the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; and • the amount of our deposits may decrease and the composition of our deposits may be adversely affected.
A deterioration in economic conditions, particularly within our primary market areas, could result in the following consequences among others, any of which could materially hurt our business: • loan delinquencies, problem assets and foreclosures may increase; • we may need to increase our ACL; • the slowing of sales and/or the reduction in value of foreclosed assets; • demand for our products and services may decline, possibly resulting in a decrease in our total loans or assets; • collateral for loans may decline further in value, exposing us to increased risk of loss on existing loans and reducing customers’ borrowing power; • the net worth and liquidity of loan guarantors may decline, impairing their ability to honor commitments to us; and • the amount of our deposits may decrease and our deposit mix may be adversely affected.
Accordingly, we are, and will be, dependent upon dividends from the Bank to pay the principal of and interest on our indebtedness, to satisfy our other cash needs and to pay dividends on our common stock. HomeTrust Bank’s ability to pay dividends is subject to its ability to earn net income and to meet certain regulatory requirements.
Accordingly, we are, and will be, dependent upon dividends from the Bank to pay the principal of and interest on our indebtedness, to satisfy our other cash needs and to pay dividends on and repurchase our common stock. The Bank’s ability to pay dividends is subject to its ability to earn net income and to meet certain regulatory requirements.
Our primary market areas are concentrated in North Carolina (the Asheville metropolitan area, the "Piedmont" region, Charlotte, and Raleigh/Cary), Upstate South Carolina (Greenville), East Tennessee (Kingsport/Johnson City, Knoxville, and Morristown), Southwest Virginia (the Roanoke Valley) and Georgia (Greater Atlanta).
Our primary market areas are concentrated in North Carolina (the Asheville metropolitan area, the "Piedmont" region, Charlotte and Raleigh/Cary), South Carolina (Greenville and Charleston), East Tennessee (Kingsport/Johnson City, Knoxville and Morristown), Southwest Virginia (the Roanoke Valley) and Georgia (Greater Atlanta).
If economic conditions or the real estate markets decline in the areas where these properties are located, we may suffer decreased net income or losses associated with higher default rates and decreased collateral values on our existing portfolio.
If economic conditions or the real estate markets decline in the areas where the properties securing these loans are located, we may suffer decreased net income or losses associated with higher default rates and decreased collateral values on our existing portfolio.
Communications and information systems are essential to the conduct of our business, as we use such systems to manage our customer relationships, our general ledger, and virtually all other aspects of our business. Our operations rely on the secure processing, storage, and transmission of confidential and other information in our computer systems and networks.
Communications and information systems are essential to the conduct of our business, as we use these systems to manage our customer relationships, our general ledger and virtually all other aspects of our business. Our operations rely on the secure processing, storage and transmission of confidential and other information in our computer systems and networks.
We may also experience greater than anticipated customer losses even if the integration process is successful; • to finance a future acquisition, we may borrow funds, thereby increasing our leverage and diminishing our liquidity, or raise additional capital, which could dilute the interests of our existing stockholders; • we have completed six acquisitions during the past 10 fiscal years that enhanced our rate of growth.
We may also experience greater than anticipated customer losses even if the integration process is successful. • to finance a future acquisition, we may borrow funds, thereby increasing our leverage and diminishing our liquidity, or raise additional capital, which could dilute the interests of our existing stockholders. • we have completed six acquisitions during the past 12 years that enhanced our rate of growth.
Furthermore, some of our non-owner occupied residential loan borrowers have more than one loan outstanding with HomeTrust Bank, which may expose us to a greater risk of loss compared to an adverse development with respect to an owner occupied residential mortgage loan.
Furthermore, some of our non-owner occupied residential loan borrowers have more than one loan outstanding with the Bank, which may expose us to a greater risk of loss compared to an adverse development with respect to an owner occupied residential mortgage loan.
A secondary market for most types of commercial real estate loans is not readily available, so we have less opportunity to mitigate credit risk by selling part or all of our interest in these loans.
A secondary market for many types of commercial real estate loans is not readily available, so we have less opportunity to mitigate credit risk by selling part or all of our interest in these loans.
Our determination of the appropriate level of the ACL inherently involves a high degree of subjectivity and requires us to make significant estimates of current credit risks and future trends, all of which may undergo material changes.
Our determination of the appropriate level of the ACL inherently involves a high degree of subjectivity and requires us to make significant estimates of current credit risks and future trends, all of which may undergo material changes over time.
Because construction loans require active monitoring of the building process, including cost comparisons and on-site inspections, these loans are more difficult and costly to monitor. Increases in market rates of interest may have a more pronounced effect on construction loans by rapidly increasing the end-purchasers' borrowing costs, thereby reducing the overall demand for the project.
Because construction loans require active monitoring of the building process, including cost comparisons and on-site inspections, these loans are more difficult and costly to monitor. In addition, increases in market rates of interest may have a more pronounced effect on construction loans by rapidly increasing the end-purchaser's borrowing costs, thereby reducing the overall demand for the project.
In addition, bank regulators periodically review our REO and may require us to recognize further charge-offs. Any increase in our write-downs may have a material adverse effect on our financial condition, liquidity and results of operations. Risks Related to Market Interest Rates Fluctuating interest rates can adversely affect our profitability.
In addition, bank regulators periodically review our repossessed assets and may require us to recognize further charge-offs. Any increase in our write-downs may have a material adverse effect on our financial condition, liquidity and results of operations. Risks Related to Market Interest Rates Fluctuating interest rates can adversely affect our profitability.
A continued weak economic recovery or recessionary conditions could increase our level of nonperforming assets, lower real estate values in our primary market areas and reduce demand for loans, which would result in increased loan losses and lower earnings.
A continued weak economic recovery or recessionary conditions could increase our level of nonperforming assets, lower real estate values and reduce demand for loans, which would result in increased loan losses and lower earnings.
Commercial real estate loans also expose a lender to greater credit risk than loans secured by one-to-four family residential real estate because the collateral securing these loans typically cannot be sold as easily as residential real estate. In addition, many of our commercial real estate loans are not fully amortizing and contain large balloon payments upon maturity.
Commercial real estate loans also expose a lender to greater credit risk than loans secured by one-to-four family residential real estate because commercial real estate typically cannot be sold as easily as residential real estate. In addition, many of our commercial real estate loans are not fully amortizing and contain large balloon payments upon maturity.
Changes in demand for new housing and higher than anticipated building costs, may cause actual results to vary significantly from those estimated. This type of lending also typically involves higher loan principal amounts and is often concentrated with loans to a small number of builders.
Changes in demand for new housing or commercial buildings and higher than anticipated building costs may cause the actual results of this type of lending to vary significantly from those estimated. This type of lending also typically involves higher loan principal amounts and is often concentrated with loans to a small number of builders.
Real estate values are affected by various other factors, including changes in general or regional economic conditions, governmental rules or policies and natural disasters. If we are required to liquidate a significant amount of collateral during a period of reduced real estate values, our financial condition and profitability could be adversely affected.
Real estate values are affected by various other factors, including changes in governmental rules or policies and natural disasters. If we are required to liquidate a significant amount of collateral during a period of reduced real estate values, our financial condition and profitability could be adversely affected.
Changes in interest rates also affect the value of our interest-earning assets and in particular our debt securities portfolio. Generally, the fair value of fixed-rate debt securities fluctuates inversely with changes in interest rates. Unrealized gains and losses on debt securities available for sale are reported as a separate component of equity, net of tax.
Changes in interest rates also affect the value of our interest-earning assets and in particular our debt securities portfolio. Generally, the fair values of fixed-rate debt securities fluctuate inversely with changes in interest rates. Unrealized gains and losses on debt securities available for sale are reported as a separate component of stockholders' equity, net of tax.
If we cannot raise additional capital when needed, our ability to further expand our operations could be materially impaired and our financial condition and liquidity could be materially and adversely affected. In addition, any additional capital we obtain may result in the dilution of the interests of existing holders of our common stock.
If we cannot raise additional capital when needed, our ability to further expand our operations could be materially impaired and our financial condition and liquidity could be materially and adversely affected. In addition, any additional capital we 22 obtain may dilute the interests of existing holders of our common stock.
When we anticipate a rising-rate environment, our assets tend to be shorter in duration than our liabilities, so they may adjust faster in response to changes in interest rates.
When we anticipate a rising-rate environment, we work to adjust our assets to be shorter in duration than our liabilities, so that they may adjust faster in response to changes in interest rates.
When we anticipate a declining-rate environment, our liabilities tend to be shorter in duration than our assets, so they may adjust faster in response to changes in interest rates.
When we anticipate a declining-rate environment, we work to adjust our liabilities to be shorter in duration than our assets, so that they may adjust faster in response to changes in interest rates.
Although we have developed and continue to invest in systems and processes that are designed to detect and prevent security breaches and cyber-attacks and periodically test our security, these precautions may not protect our systems from compromises or breaches of our security measures, and could result in losses to us or our customers, our loss of business and/or customers, damage to our reputation, the incurrence of additional expenses, disruption to our business, our inability to grow our online services or other businesses, additional regulatory scrutiny or penalties, or our exposure to civil litigation and possible financial liability, any of which could have a material adverse effect on our business, financial condition, and results of operations.
Although we have developed and continue to invest in systems and processes that are designed to detect and prevent security breaches and cyber-attacks and periodically test our security, these precautions may not protect our systems from compromises or breaches of our security measures, and could result in losses to us or our customers, our loss of business and/or customers, damage to our reputation, the incurrence of additional expenses, disruption to our business, our inability to grow our online services or other businesses, additional regulatory scrutiny or penalties or our exposure to civil litigation and possible financial liability, any of which could have a material adverse effect on our business, financial condition and results of operations. 20 Our security measures may not protect us from system failures or interruptions of our own systems or those of our third-party vendors .
We obtain updated valuations in the form of appraisals and broker price opinions when a loan has been foreclosed upon and the property taken in as REO and at certain other times during the asset’s holding period.
We obtain updated valuations in the form of appraisals and broker price opinions when a loan has been foreclosed upon and the property repossessed, and at certain other times during the asset’s holding period.
In March 2020, in response to the COVID-19 pandemic, the Federal Open Market Committee (“FOMC”) of the Federal Reserve reduced the targeted federal funds rate 150 basis points to a range of 0.00% to 0.25%. The reduction in the targeted federal funds rate resulted in a decline in overall interest rates which negatively impacted our net interest income.
In March 2020, in response to the COVID-19 pandemic, the FOMC of the Federal Reserve reduced the targeted federal funds rate by 150 basis points to a range of 0.00% to 0.25%. The reduction in the targeted federal funds rate resulted in a decline in overall interest rates which negatively impacted our net interest income.
Thus, in addition to the interest rate environment, our mortgage business is dependent upon (i) the existence of an active secondary market and (ii) our ability to profitably sell loans into that market. Similar to mortgage production, our SBA and USDA B&I operations are dependent upon (i) and (ii) previously mentioned.
Thus, in addition to the interest rate environment, our mortgage business is dependent upon (i) the existence of an active secondary market and (ii) our ability to profitably sell loans into that market. Similar to mortgage production, our SBA and USDA B&I operations are likewise dependent upon these two factors.
Severe weather and other natural disasters, acts of war or terrorism, new public health issues, or other adverse external events could harm our business. Severe weather and other natural disasters, acts of war or terrorism, new public health issues, or other adverse external events could have a significant impact on our ability to conduct business.
Severe weather and other natural disasters such as Hurricane Helene, acts of war or terrorism, new public health issues or other adverse external events could have a significant impact on our ability to conduct business.
If our REO is not properly valued or sufficiently reserved to cover actual losses, or if we are required to increase our valuation reserves, our earnings could be reduced.
If our repossessed assets are not properly valued or sufficiently reserved to cover actual losses, or if we are required to increase our valuation reserves, our earnings could be reduced.
While we believe we have implemented policies and procedures with respect to our commercial real estate loan portfolio consistent with this guidance, bank regulators could require us to implement additional policies and procedures pursuant to their interpretation of the guidance that may result in additional costs to us.
While not exceeding the 300% of capital threshold, we have implemented policies and procedures with respect to our commercial real estate loan portfolio that we believe are consistent with this guidance. Bank regulators could, however, require us to implement additional policies and procedures pursuant to their interpretation of the guidance that may result in additional costs to us.
We also could be adversely affected to the extent such an agreement is not renewed by the third- 22 party vendor or is renewed on terms less favorable to us. Additionally, the bank regulatory agencies expect financial institutions to be responsible for all aspects of our vendors’ performance, including aspects which they delegate to third parties.
We also could be adversely affected to the extent such an agreement is not renewed by the third-party vendor or is renewed on terms less favorable to us. Additionally, the bank regulatory agencies expect financial institutions to be responsible for all aspects of a vendor’s performance, including aspects which the vendor delegates to third-parties.
We may not be able to continue to sustain our past rate of growth or to grow at all in the future; and • we expect our net income will increase following our acquisitions; however, we also expect our general and administrative expenses, and consequently our efficiency rates, will also increase.
We may not be able to continue to maintain our past rate of growth or to grow at all in the future, even if we do have additional acquisitions. • we expect our net income will increase following our acquisitions; however, we also expect our general and administrative expenses, and consequently our efficiency rates, will also increase.
If we fail to comply with applicable rules or requirements for the payment methods we accept, or if payment-related data is compromised due to a breach or misuse of data, we may be liable for losses associated with reimbursing our clients for such fraudulent transactions on clients’ card accounts, as well as costs incurred by payment card issuing banks and other third parties, we may be subject to fines and higher transaction fees, or our ability to accept or facilitate certain types of payments may be impaired.
If we fail to comply with applicable rules or requirements for the payment methods we accept, or if payment-related data is compromised due to a breach or misuse of data, we may be liable for losses associated with reimbursing our clients for fraudulent transactions on clients’ card accounts, as well as costs incurred by payment card issuing banks and other third-parties.
Managing reputational risk is important to attracting and maintaining customers, investors and employees. Threats to our reputation can come from many sources, including adverse sentiment about financial institutions generally, unethical practices, employee misconduct, failure to deliver minimum standards of service or quality, compliance deficiencies, and questionable or fraudulent activities of our customers.
Threats to our reputation can come from many sources, including adverse sentiment about financial institutions generally, unethical practices, employee misconduct, failure to deliver minimum standards of service or quality, compliance deficiencies and questionable or fraudulent activities of our customers.
These rules require financial institutions to establish procedures for identifying and verifying the identity of customers seeking to open new financial accounts. Failure to comply with these regulations could result in fines or sanctions and limit our ability to get regulatory approval of acquisitions. Banking institutions continue to receive large fines for non-compliance with these laws and regulations.
These rules require financial institutions to establish procedures for 19 identifying and verifying the identity of customers seeking to open new financial accounts. Failure to comply with these regulations could result in fines or sanctions and limit our ability to get regulatory approval of acquisitions or other activities.
A sustained increase in market interest rates, such as the increases experienced over the past 15-18 months, could adversely affect our earnings. A significant portion of our loans have fixed interest rates and longer terms than our deposits and borrowings.
A sustained increase in market interest rates, such as the increases experienced during 2022 and 2023, could adversely affect our earnings. A significant portion of our loans have fixed interest rates and longer terms than our deposits and borrowings.
Further, because of their geographical diversity, these loans can be more difficult to oversee than loans in our market areas in the event of delinquency. A decline in economic conditions may have a greater effect on our earnings and capital than on the earnings and capital of larger financial institutions whose real estate loan portfolios are more geographically diverse.
Further, because they are outside of our primary market areas, these loans can be more difficult to monitor than other loans. A decline in economic conditions may have a greater effect on our earnings and capital than on the earnings and capital of larger financial institutions whose real estate loan portfolios are more geographically diverse.
If the FOMC further increases the targeted federal funds rates, overall interest rates will likely rise, which will positively impact our net interest income but may continue to negatively impact both the housing market, by reducing refinancing activity and new home purchases, and the U.S. economy.
If the FOMC increases the targeted federal funds rate, overall interest rates will likely rise, which may negatively impact both the housing market, by reducing refinancing activity and new home purchases, and the U.S. economy.
This could result in higher net interest margins and interest income in current periods and lower net interest rate margins and lower interest income in future periods. We may experience future goodwill impairment, which could reduce our earnings. Our annual goodwill impairment test did not identify any impairment for the year ended June 30, 2023.
This could result in lower net interest margins and lower interest income in future periods. We may experience future goodwill impairment, which could reduce our earnings. Our annual goodwill impairment test did not identify any impairment for the year ended December 31, 2024.
Changes in interest rates, up or down, could adversely affect our net interest margin and, as a result, our net interest income. 17 Although the yield we earn on our assets and our funding costs tend to move in the same direction in response to changes in interest rates, one can rise or fall faster than the other, causing our net interest margin to expand or contract.
Although the yield we earn on our assets and our funding costs tend to move in the same direction in response to changes in interest rates, one can rise or fall faster than the other, causing our net interest margin to expand or contract.
At June 30, 2023, we had $642.8 million in certificates of deposit that mature within one year and $2.9 billion in checking, savings, and money market accounts with no stated maturity.
At December 31, 2024, we had $976.9 million in certificates of deposit that mature within one year and $2.8 billion in checking, savings and money market accounts with no stated maturity.
At June 30, 2023, the most significant portion of our loans located outside of our primary market areas were equipment finance, SBA, and purchased HELOCs.
At December 31, 2024, the most significant portion of our loans located outside of our primary market areas were equipment finance loans, SBA loans and purchased HELOCs.
Furthermore, in the case of speculative construction loans, there is the added risk associated with identifying an end-purchaser for the finished project. At June 30, 2023, $80.1 million of our construction and land development loans were for speculative construction loans and none were classified as nonaccruing.
Furthermore, in the case of speculative construction loans, there is the added risk associated with identifying an end-purchaser for the finished project. At December 31, 2024, $70.5 million of our construction and land development loans were for speculative construction and none were classified as nonaccruing.
At June 30, 2023, construction and land development loans in our residential real estate loan portfolio were $110.1 million, or 3.0% of our total loan portfolio, and consisted primarily of construction to permanent loans to homeowners building a residence or developing lots in residential subdivisions intending to construct a residence within one year.
At December 31, 2024, construction and land development loans in our residential real estate loan portfolio were $53.7 million, or 1.5% of our total loan portfolio, and consisted primarily of construction to permanent loans to homeowners building a residence or developing lots in residential subdivisions intending to construct a residence within one year.
We have incurred and may continue to incur a higher cost of funds to retain these deposits in a rising interest rate environment, as well as supplementing any runoff with other types of borrowings also at a higher cost of funds.
We have incurred and may continue to incur a higher cost of funds to retain these deposits in a rising interest rate environment or one that is maintained for a significant period of time at a historically high interest rate, as well as supplementing any runoff with other types of borrowings also at a higher cost of funds.
Equipment finance loan collections depend on the borrower's continuing financial stability, and therefore are more likely to be adversely affected by the cash flows of the borrower's business within certain industries. Similarly, automobile loan collections depend on the borrower’s continuing financial stability, and therefore are more likely to be adversely affected by job loss, divorce, illness, or personal bankruptcy.
Equipment finance loan collections depend on the borrower's continuing financial stability and, therefore, are more likely to be adversely affected by reduced cash flows of the borrower's business within certain industries.
Starting in March 2022, the FOMC has increased the targeted federal funds rate eleven separate times, raising the rate by 525 basis points to a range of 5.25% to 5.50%.
Starting in March 2022, the FOMC increased the targeted federal funds rate 11 separate times, raising the rate by 525 basis points to a range of 5.25% to 5.50%, before decreasing the rate three times starting in September 2024 to a range of 4.25% to 4.50%.

… 80 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed3 unchanged
Biggest changeIn total, as of June 30, 2023, we have 34 locations in five states, which 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, Knoxville, and Morristown), Southwest Virginia (including the Roanoke Valley) and Georgia (Greater Atlanta). Of those offices, 9 are leased facilities.
Biggest changeIn total, as of December 31, 2024, we have 37 locations in five states, which include: North Carolina (the Asheville metropolitan area, the "Piedmont" region, Charlotte and Raleigh/Cary), South Carolina (Greenville and Charleston), East Tennessee (Kingsport/Johnson City, Knoxville and Morristown), Southwest Virginia (the Roanoke Valley) and Georgia (Greater Atlanta). Of those offices, 8 are leased facilities.
We also own an operations center located in Asheville, North Carolina. We lease additional space, which is adjacent to the facility we own in Asheville, for administrative and operations personnel. The lease terms for our branch offices, operations center, and other offices are not individually material. Lease expirations range from two to 18 years.
We also own an operations center located in Asheville, North Carolina. We lease additional space, which is adjacent to the facility we own in Asheville, for administrative and operations personnel. The lease terms for our branch offices, operations center and other offices are not individually material. Lease expirations range from one to 18 years.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

8 edited+2 added−2 removed0 unchanged
Biggest changeSee Item 1, “How We Are Regulated,” for more information regarding the restrictions on the Company’s and the Bank’s abilities to pay dividends. 23 Purchases of Equity Securities by the Issuer The following table provides information about repurchases of common stock by the Company during the quarter ended June 30, 2023: Period Total # of Shares Purchased Average Price Paid per Share Total # of Shares Purchased as Part of Publicly Announced Plans Maximum # of Shares that May Yet Be Purchased Under Publicly Announced Plans April 1 - April 30, 2023 — $ — — 266,639 May 1 - May 31, 2023 — — — 266,639 June 1 - June 30, 2023 — — — 266,639 Total — $ — — 266,639 On April 2, 2020, the Company's Board of Directors authorized the repurchase of up to 851,004 shares of the Company's common stock, representing 5% of its outstanding shares at the time of the announcement.
Biggest changePurchases of Equity Securities by the Issuer The following table provides information about repurchases of common stock by the Company during the quarter ended December 31, 2024: Period Total # of Shares Purchased Average Price Paid per Share Total # of Shares Purchased as Part of Publicly Announced Plans Maximum # of Shares that May Yet Be Purchased Under Publicly Announced Plans October 1 - October 31, 2024 — $ — — 243,156 November 1 - November 30, 2024 — — — 243,156 December 1 - December 31, 2024 — — — 243,156 Total — $ — — 243,156 Over the years as a public company, the Company's Board of Directors has, from time to time, authorized the repurchase of its common stock.
The information presented below assumes the reinvestment of all dividends and that the value of common stock and each index was $100 on June 30, 2018. Historical stock price performance is not necessarily indicative of future stock price performance.
The information presented below assumes the reinvestment of all dividends and that the value of common stock and each index was $100 on June 30, 2019. Historical stock price performance is not necessarily indicative of future stock price performance.
On February 28, 2022, an additional 806,000 shares of common stock were authorized for repurchase representing approximately 5% of the Company's outstanding shares at the time of the announcement.
The most recent time this was done, on February 28, 2022, 806,000 shares of common stock were authorized for repurchase representing approximately 5% of the Company's outstanding shares at the time of the announcement.
The timing and amount of cash dividends paid depends on our earnings, capital requirements, financial condition and other relevant factors. We also have the ability to receive dividends or capital distributions from HomeTrust Bank, our wholly owned subsidiary. There are regulatory restrictions on the ability of HomeTrust Bank to pay dividends.
The Company began paying its first cash dividends during the second quarter of fiscal year 2019. The timing and amount of cash dividends paid depends on our earnings, capital requirements, financial condition and other relevant factors. We also have the ability to receive dividends or capital distributions from HomeTrust Bank, our wholly owned subsidiary.
Stockholder Return Performance Graph Presentation The performance graph below compares the Company’s cumulative stockholder return on its common stock since June 30, 2018 to the cumulative total return of the S&P US BMI Bank Index and the Nasdaq Composite for the periods indicated.
The shares may be purchased in the open market or in privately negotiated transactions, from time to time depending upon market conditions and other factors. 24 Stockholder Return Performance Graph Presentation The performance graph below compares the Company’s cumulative stockholder return on its common stock since June 30, 2019 to the cumulative total return of the S&P US BMI Bank Index and the NASDAQ Composite for the periods indicated.
Certain shares are held in “nominee” or “street” name and accordingly, the number of beneficial owners of such shares is not known or included in the foregoing number. The Company began paying its first cash dividends during the second fiscal quarter of 2019.
As of the close of business on March 7, 2025, there were 17,567,959 shares of common stock outstanding held by 959 holders of record. Certain shares are held in “nominee” or “street” name and accordingly, the number of beneficial owners of such shares is not known or included in the foregoing number.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. The Company’s common stock is listed on the Nasdaq Global Market under the symbol “HTBI.” As of the close of business on September 4, 2023, there were 17,367,173 shares of common stock outstanding held by 1,029 holders of record.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. As of December 31, 2024, the Company’s common stock was listed on the NASDAQ Stock Market LLC under the symbol “HTBI.” However, the Company's listing was transferred to the New York Stock Exchange LLC on February 24, 2025 under the symbol "HTB".
As of June 30, 2023, 539,361 of these shares had been purchased at an average price of $28.93 per share, although no shares were repurchased during the year ended June 30, 2023. The shares may be purchased in the open market or in privately negotiated transactions, from time to time depending upon market conditions and other factors.
As of December 31, 2024 , 562,844 of these shares had been purchased at an average price of $28.83 per share, 23,483 of which were repurchased during the year ended December 31, 2024 .
Removed
This repurchase plan was completed on July 26, 2021. On July 28, 2021, 825,941 shares of common stock were authorized for repurchase representing 5% of the Company's outstanding shares at the time of the announcement. This repurchase plan was completed on February 28, 2022.
Added
There are regulatory restrictions on the ability of HomeTrust Bank to pay dividends. See Item 1, “How We Are Regulated,” for more information regarding the restrictions on the Company’s and the Bank’s abilities to pay dividends.
Removed
Year Ended June 30, 2018 2019 2020 2021 2022 2023 HomeTrust Bancshares, Inc. 100.00 88.37 56.72 101.24 90.56 75.67 S&P US BMI Bank Index 100.00 97.17 74.17 124.88 100.77 93.08 NASDAQ Composite 100.00 107.88 137.61 203.61 155.66 196.35
Added
Year Ended June 30, Six Months Ended December 31, 2023 Year Ended December 31, 2024 2019 2020 2021 2022 2023 HomeTrust Bancshares, Inc. 100.00 64.18 114.56 102.48 85.63 107.71 135.82 S&P US BMI Bank Index 100.00 76.33 128.52 103.70 95.79 115.05 148.25 NASDAQ Composite 100.00 127.56 188.74 144.29 182.01 201.83 265.85

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

75 edited+34 added−46 removed82 unchanged
Biggest changeFinancial Highlights (Dollars in thousands) June 30, 2023 June 30, 2022 June 30, 2021 Selected financial condition data Total assets $ 4,607,487 $ 3,549,204 $ 3,524,723 Cash and cash equivalents 303,497 105,119 50,990 Commercial paper, net — 194,427 189,596 Certificates of deposit in other banks 33,152 23,551 40,122 Debt securities available for sale, at fair value 151,926 126,978 156,459 Loans, net of ACL and deferred loan fees and costs 3,611,630 2,734,605 2,697,799 Deposits 3,601,168 3,099,761 2,955,541 Junior subordinated debt 9,971 — — Borrowings 457,263 — 115,000 Stockholders’ equity 471,186 388,845 396,519 Year Ended June 30, (Dollars in thousands, except per share data) 2023 2022 2021 Selected operations data Total interest and dividend income $ 187,126 $ 116,114 $ 118,733 Total interest expense 29,711 5,340 15,411 Net interest income 157,415 110,774 103,322 Provision (benefit) for credit losses 15,392 (592) (7,135) Net interest income after provision (benefit) for credit losses 142,023 111,366 110,457 Service charges and fees on deposit accounts 9,510 9,462 9,083 Loan income and fees 2,571 3,185 2,208 Gain on sale of loans held for sale 5,608 12,876 17,352 BOLI income 2,116 2,000 2,156 Operating lease income 5,471 6,392 5,601 Gain on sale of debt securities available for sale — 1,895 — Gain (loss) on sale of premises and equipment 2,097 (87) (1,311) Other 3,677 3,386 4,732 Total noninterest income 31,050 39,109 39,821 Total noninterest expense 115,909 105,097 131,182 Income before income taxes 57,164 45,378 19,096 Income tax expense 12,560 9,725 3,421 Net income $ 44,604 $ 35,653 $ 15,675 Net income per common share Basic $ 2.82 $ 2.27 $ 0.96 Diluted $ 2.80 $ 2.23 $ 0.94 At or For the Year Ended June 30, 2023 2022 2021 Performance ratios Return on assets (ratio of net income to average total assets) 1.16 % 1.01 % 0.42 % Return on equity (ratio of net income to average equity) 10.43 9.00 3.88 Yield on earning assets 5.20 3.54 3.45 Rate paid on interest-bearing liabilities 1.17 0.23 0.57 Average interest rate spread 4.03 3.31 2.88 Net interest margin (1) 4.38 3.38 3.00 Average interest-earning assets to average interest-bearing liabilities 141.23 138.30 128.01 Noninterest expense to average total assets 3.01 2.97 3.55 Efficiency ratio 61.50 70.12 91.64 Efficiency ratio - adjusted (2) 59.12 69.19 73.41 25 At or For the Year Ended June 30, 2023 2022 2021 Asset quality ratios Nonperforming assets to total assets (3) 0.18 % 0.18 % 0.36 % Nonperforming loans to total loans (3) 0.23 0.22 0.46 Total classified assets to total assets 0.53 0.61 0.64 Allowance for credit losses to nonperforming loans (3) 567.56 566.83 281.38 Allowance for credit losses to total loans 1.29 1.25 1.30 Net charge-offs to average loans 0.10 (0.02) 0.01 Capital ratios Equity to total assets at end of period 10.23 % 10.96 % 11.25 % Tangible equity to total tangible assets (2) 9.39 10.31 10.59 Average equity to average assets 11.11 11.20 10.91 Dividend payout ratio 13.97 15.30 32.01 Dividends declared per common share $ 0.39 $ 0.35 $ 0.31 (1) Net interest income divided by average interest-earning assets.
Biggest changeFinancial Highlights (Dollars in thousands) December 31, 2024 December 31, 2023 June 30, 2023 June 30, 2022 Selected financial condition data Total assets $ 4,595,430 $ 4,672,633 $ 4,607,487 $ 3,549,204 Cash and cash equivalents 279,219 347,140 303,497 105,119 Commercial paper, net — — — 194,427 Certificates of deposit in other banks 28,538 34,722 33,152 23,551 Debt securities available for sale, at fair value 152,011 126,950 151,926 126,978 Loans, net of ACL and deferred loan fees and costs 3,603,014 3,591,381 3,611,630 2,734,605 Deposits 3,779,203 3,661,373 3,601,168 3,099,761 Junior subordinated debt 10,120 10,021 9,971 — Borrowings 188,000 433,763 457,263 — Stockholders’ equity 551,758 499,893 471,186 388,845 Year Ended December 31, 2024 Six Months Ended December 31, 2023 Year Ended June 30, (Dollars in thousands, except per share data) 2023 2022 Selected operations data Total interest and dividend income $ 261,616 $ 124,684 $ 187,126 $ 116,114 Total interest expense 92,941 40,601 29,711 5,340 Net interest income 168,675 84,083 157,415 110,774 Provision (benefit) for credit losses 7,545 5,930 15,392 (592) Net interest income after provision (benefit) for credit losses 161,130 78,153 142,023 111,366 Service charges and fees on deposit accounts 9,165 4,686 9,510 9,462 Loan income and fees 2,737 982 2,571 3,185 Gain on sale of loans held for sale 6,253 2,330 5,608 12,876 BOLI income 4,312 3,901 2,116 2,000 Operating lease income 7,346 3,377 5,471 6,392 Gain on sale of debt securities available for sale — — — 1,895 Gain (loss) on sale of premises and equipment (9) (248) 2,097 (87) Other 3,645 1,847 3,677 3,386 Total noninterest income 33,449 16,875 31,050 39,109 Total noninterest expense 124,668 59,345 115,909 105,097 Income before income taxes 69,911 35,683 57,164 45,378 Income tax expense 15,106 7,386 12,560 9,725 Net income $ 54,805 $ 28,297 $ 44,604 $ 35,653 Net income per common share – basic $ 3.21 $ 1.67 $ 2.82 $ 2.27 Net income per common share – diluted $ 3.20 $ 1.67 $ 2.80 $ 2.23 At or For the Year Ended December 31, 2024 At or For the Six Months Ended December 31, 2023 At or For the Year Ended June 30, 2023 2022 Performance ratios Return on assets (ratio of net income to average total assets) (1) 1.23 % 1.27 % 1.16 % 1.01 % Return on equity (ratio of net income to average equity) (1) 10.37 11.51 10.43 9.00 Yield on earning assets (1) 6.28 5.96 5.20 3.54 Rate paid on interest-bearing liabilities (1) 3.00 2.66 1.17 0.23 Average interest rate spread (1) 3.28 3.30 4.03 3.31 Net interest margin (1)(2) 4.05 4.02 4.38 3.38 Average interest-earning assets to average interest-bearing liabilities 134.60 136.76 141.23 138.30 Noninterest expense to average total assets (1) 2.81 2.66 3.01 2.97 Efficiency ratio 61.68 58.78 61.50 70.12 Efficiency ratio – adjusted (3) 60.12 59.81 59.12 69.19 26 At or For the Year Ended December 31, 2024 At or For the Six Months Ended December 31, 2023 At or For the Year Ended June 30, 2023 2022 Asset quality ratios Nonperforming assets to total assets (4) 0.63 % 0.41 % 0.18 % 0.18 % Nonperforming loans to total loans (4) 0.76 0.53 0.23 0.22 Total classified assets to total assets 1.06 0.90 0.53 0.61 Allowance for credit losses to nonperforming loans (4) 163.68 251.60 567.56 566.83 Allowance for credit losses to total loans 1.24 1.34 1.29 1.25 Net charge-offs to average loans (1) 0.28 0.28 0.10 (0.02) Capital ratios Equity to total assets at end of period 12.01 % 10.70 % 10.23 % 10.96 % Tangible equity to total tangible assets (3) 11.25 9.91 9.39 10.31 Average equity to average assets 11.90 11.03 11.11 11.20 Dividend payout ratio 13.99 12.53 13.97 15.30 Dividends declared per common share $ 0.45 $ 0.21 $ 0.39 $ 0.35 (1) Ratio is annualized for the six months ended December 31, 2023.
We originate and underwrite all leases prior to funding. These leases are at a fixed rate of interest and may have a term to maturity of up to 20 years.
We originate and underwrite all leases prior to funding. These leases are at a fixed interest rate and may have a term to maturity of up to 20 years.
Land/lot loans are typically originated in an amount up to 70% of the lower of the purchase price or appraisal, are secured by a first lien on the property, for up to a 20-year term, require payments of interest only and are structured with an adjustable rate of interest on terms similar to our one-to-four family residential mortgage loans.
Land/lot loans are typically originated in an amount up to 70% of the lower of the purchase price or appraisal, are secured by a first lien on the property, for up to a 20-year term, require payments of interest only and are structured with an adjustable interest rate on terms similar to our one-to-four family residential mortgage loans.
For further information, see “Note 17 – Commitments and Contingencies” of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K. Asset/Liability Management and Interest Rate Risk Our Risk When Interest Rates Change. The rates of interest we earn on assets and pay on liabilities generally are established contractually for a period of time.
For further information, see “Note 17 – Commitments and Contingencies” of the Notes to Consolidated Financial Statements included in Item 8 of this Form 10-K. 40 Asset/Liability Management and Interest Rate Risk Our Risk When Interest Rates Change. The rates of interest we earn on assets and pay on liabilities generally are established contractually for a period of time.
See "Note 1 – Summary of Significant Accounting Policies" of the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K for discussion of our ACL methodology on loans. The following table summarizes the distribution of the ACL by loan category at the dates indicated.
See "Note 1 – Summary of Significant Accounting Policies" of the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K for discussion of our ACL methodology on loans. 37 The following table summarizes the distribution of the ACL by loan category at the dates indicated.
The provision (benefit) for credit losses is the amount of expense that, based on our judgment, is required to maintain the ACL at an appropriate level under the CECL model. The determination of the ACL is complex and involves a high degree of judgment and subjectivity.
The provision for credit losses is the amount of expense that, based on our judgment, is required to maintain the ACL at an appropriate level under the CECL model. The determination of the ACL is complex and involves a high degree of judgment and subjectivity.
Additionally, we 38 classify our securities portfolio as available for sale, providing an additional source of liquidity. Management believes that our securities portfolio is of high quality, of short duration, and the securities would therefore be readily marketable.
Additionally, we classify our securities portfolio as available for sale, providing an additional source of liquidity. Management believes that our securities portfolio is of high quality, of short duration, and the securities would therefore be readily marketable.
Commercial Real Estate – Construction and Land Development . We originate residential construction and development loans for the construction of single-family residences, condominiums, townhouses, and residential developments. Our commercial construction development loans are for the development of business properties, including multi-family, retail, office/warehouse, and office buildings.
Commercial Real Estate – Construction and Land Development . We originate residential construction and development loans for the construction of single-family residences, condominiums, townhouses and residential developments. Our commercial construction development loans are for the development of business properties, including multifamily, retail, office/warehouse and office buildings.
See "Note 1 – Summary of Significant Accounting Policies” of the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K for further discussion. Our noninterest expenses consist primarily of salaries and employee benefits, occupancy expenses, marketing and computer services, and FDIC deposit insurance premiums.
See "Note 1 – Summary of Significant Accounting Policies” of the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K for further discussion. Our noninterest expenses consist primarily of salaries and employee benefits, occupancy expenses, computer services, operating lease depreciation, marketing and FDIC deposit insurance premiums.
Details of the changes in the various components of net income are further discussed below. 28 Net Interest Income. The following table presents the Company's distribution of average assets, liabilities and equity, as well as interest income on average interest-earning assets and interest expense paid on average interest-bearing liabilities. All average balances are daily average balances.
Details of the changes in the various components of net income are further discussed below. 29 Net Interest Income. The following table presents the distribution of average assets, liabilities and equity, as well as interest income earned on average interest-earning assets and interest expense paid on average interest-bearing liabilities. All average balances are daily average balances.
The lines of credit may be originated in amounts, together with the amount of the existing first mortgage, typically up to 85% of the value of the property securing the loan (less any prior mortgage loans) with an adjustable-rate of interest based on The Wall Street Journal prime rate plus a margin.
Our HELOCs consist primarily of adjustable-rate lines of credit. The lines of credit may be originated in amounts, together with the amount of the existing first mortgage, typically up to 85% of the value of the property securing the loan (less any prior mortgage loans) with an adjustable-rate based on The Wall Street Journal prime rate plus a margin.
The following table details the contractual maturity ranges of our loan portfolio without factoring in scheduled payments or potential prepayments. Loan balances do not include undisbursed loan proceeds, unearned discounts, unearned income or the ACL. In addition, we have disclosed those loans with predetermined (fixed) and floating interest rates at June 30, 2023.
The following table details the contractual maturity ranges of our loan portfolio without factoring in scheduled payments or potential prepayments. Loan balances do not include undisbursed loan proceeds, unearned discounts, unearned income or the ACL. In addition, we have disclosed those loans with predetermined (fixed) and floating interest rates at December 31, 2024.
It is management's policy to manage deposit rates that are competitive with other local financial institutions. Based on this strategy, we believe that a majority of maturing deposits will remain with us.
It is management's policy to manage deposit rates that are competitive with other local financial institutions. Based on this strategy, we believe that a majority of maturing deposits will be retained.
The primary sources are increases in deposit accounts, wholesale borrowings, and cash flows from loan payments and the securities portfolio. In addition to these primary sources of funds, management has several secondary sources available to meet potential funding requirements as outlined in the "Comparison of Financial Condition at June 30, 2023 and June 30, 2022 – Borrowings" section above.
The primary sources are increases in deposit accounts, wholesale borrowings and cash flows from loan payments and the securities portfolio. In addition to these primary sources of funds, management has several secondary sources available to meet potential funding requirements as outlined in the "Comparison of Financial Condition at December 31 , 2024 and December 31, 2023 – Borrowings" section above.
Net interest income is the difference between interest income, which is the income that we earn on our loans and investments, and interest expense, which is the interest that we pay on our deposits and borrowings. Changes in levels of interest rates affect our net interest income.
Our primary source of pre-tax income is net interest income. Net interest income is the difference between interest income, which is the income that we earn on our loans and investments, and interest expense, which is the interest that we pay on our deposits and borrowings. Changes in levels of interest rates affect our net interest income.
Our Equipment Finance line of business offers companies that are purchasing equipment for their business various products to help manage tax and accounting issues, while offering flexible and customizable repayment terms. These products are primarily made up of commercial finance agreements and commercial loans for transportation, construction, healthcare, and manufacturing equipment.
Our equipment finance line of business offers companies that are purchasing equipment for their business various products to help manage working capital needs, while offering flexible and customizable repayment terms. These products are primarily made up of commercial finance agreements and commercial loans for transportation, construction, healthcare and manufacturing equipment.
Residential Real Estate – One-to-Four Family . We originate loans secured by first mortgages on one-to-four family residences typically for the purchase or refinance of owner occupied primary or secondary residences located primarily in our market areas.
Residential Real Estate – One-to-Four Family . We originate loans secured by first mortgages on one-to-four family residences typically for the purchase or refinance of owner occupied primary or secondary residences located primarily in our market areas. We originate both 35 fixed-rate loans and adjustable-rate loans.
Merger-related expenses of $5.5 million were recognized during the year ended June 30, 2023, while a $5.3 million provision for credit losses was recognized during the fiscal year to establish ACLs on both Quantum's loan portfolio and off-balance-sheet credit exposure.
Merger-related expenses of $4.7 million were recognized during the year ended December 31, 2023, while a $5.3 million provision for credit losses was recognized during the year to establish ACLs on both Quantum's loan portfolio and off-balance-sheet credit exposure.
The following table indicates the amount of our CDs, both within and in excess of the $250,000 FDIC insurance limit, by time remaining until maturity as of June 30, 2023.
The following table indicates the amount of our CDs, both within and in excess of the $250,000 FDIC insurance limit, by time remaining until maturity as of December 31, 2024.
For more information on income taxes and deferred taxes, see "Note 12 – Income Taxes" of the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K. Comparison of Financial Condition at June 30, 2023 and June 30, 2022 Assets.
For more information on income taxes and deferred taxes, see "Note 12 – Income Taxes” of the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K. 32 Comparison of Financial Condition at December 31, 2024 and December 31, 2023 Assets.
In addition to borrowings deemed necessary to address funding needs, as a result of our merger with Quantum, we assumed $11.3 million of junior subordinated debentures, which carried a purchase accounting discount of $1.4 million as of June 30, 2023.
In addition to borrowings deemed necessary to address funding needs, as a result of our merger with Quantum, we assumed $11.3 million of junior subordinated debentures, which carried a purchase accounting discount of $1.2 million as of December 31, 2024.
Our primary source of funds consists of dividends or capital distributions from the Bank, although there are regulatory restrictions on the ability of the Bank to pay dividends. At June 30, 2023, we (on an unconsolidated basis) had liquid assets of $0.9 million.
Our primary source of funds consists of dividends or capital distributions from the Bank, although there are regulatory restrictions on the ability of the Bank to pay dividends. At December 31, 2024, we (on an unconsolidated basis) had liquid assets of $1.1 million.
All of our construction and land/lot loans were made on properties located within our market area. Unfunded loan commitments totaled $93.0 million and $94.9 million at June 30, 2023 and 2022, respectively. Construction-to-permanent loans are made for the construction of a one-to-four family property which is intended to be occupied by the borrower as either a primary or secondary residence.
All of our construction and land/lot loans were made on properties located within our market area. Unfunded loan commitments totaled $29.8 million and $60.4 million at December 31, 2024 and 2023, respectively. Construction-to-permanent loans are made for the construction of a one-to-four family property which is intended to be occupied by the borrower as either a primary or secondary residence.
The loans have terms ranging from 24 to 84 months, with an average of five years and are secured by the financed equipment. Typical transaction sizes range from $25,000 to $1.0 million, with an average outstanding loan size of $138,000. Commercial – Municipal Leases .
The loans have terms ranging from 24 to 96 months, with an average of five years, and are secured by the financed equipment. Typical transaction sizes range from $10,000 to $4.0 million, with an average outstanding loan balance of $140,000. Commercial – Municipal Leases .
See further discussion of the drivers of the change in the "Comparison of Results of Operations for the Years Ended June 30, 2023 and June 30, 2022 – Provision (Benefit) for Credit Losses" section above.
See further discussion of the drivers of the change in the "Comparison of Results of Operations for the Years Ended December 31, 2024 and December 31, 2023 – Provision for Credit Losses" section above.
Loans to finance the construction of speculative single-family homes are generally offered to experienced builders with a proven track record of performance. These loans require payment of interest-only during the construction phase. Unfunded commitments were $68.1 million at June 30, 2023 and $74.6 million at June 30, 2022. Both adjustable and fixed rates are offered on commercial construction loans.
Loans to finance the construction of speculative single-family homes are generally offered to experienced builders with a proven track record of performance. These loans require interest-only payments during the construction phase. Unfunded commitments on these loans were $67.6 million and $53.4 million at December 31, 2024 and 2023, respectively. Both adjustable and fixed rates are offered on commercial construction loans.
(2) See "GAAP Reconciliation of Non-GAAP Financial Measures" section below for additional details. (3) Nonperforming assets and loans 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.
(2) Net interest income divided by average interest-earning assets. (3) See "GAAP Reconciliation of Non-GAAP Financial Measures" section below for additional details. (4) Nonperforming assets and loans include nonaccruing loans and repossessed assets. There were no accruing loans more than 90 days past due at the dates indicated.
HELOCs generally have up to a 10-year draw period and amounts may be reborrowed after payment at any time during the draw period. Once the draw period has lapsed, the payment is amortized over a 15-year period based on the loan balance at that time. At June 30, 2023, unfunded commitments on these lines of credit totaled $393.5 million.
HELOCs generally have up to a 10-year draw period and amounts may be reborrowed after payment at any time during the draw period. Once the draw period has lapsed, the payment is amortized over a 15-year period based on the loan balance at that time.
The net premium or discount on non-PCD loans, that includes credit quality and interest rate considerations, is accreted or amortized into interest income over the remaining life of the loan using the level yield method. The Company then records the necessary ACL on the non-PCD loans through provision for credit losses expense. 27 Goodwill .
The net premium or discount on non-PCD loans, that includes credit quality and interest rate considerations, is accreted or amortized into interest income over the remaining life of the loan using the level yield method.
Commercial – Commercial and Industrial Loans . We typically offer commercial and industrial loans to businesses located in our primary market areas. These loans are primarily originated as conventional loans to business borrowers, which include lines of credit, term loans, and letters of credit.
Commercial – Commercial and Industrial Loans . Over the last year, we have intentionally focused on the growth of commercial and industrial loans to businesses located in our primary market areas. These loans are primarily originated as conventional loans to business borrowers, which include lines of credit, term loans and letters of credit.
The amount of income tax expense is influenced by the amount of pre-tax income, tax-exempt income, changes in the statutory rate and the effect of changes in valuation allowances maintained against deferred tax benefits. The effective tax rate for 2023 and 2022 was 22.0% and 21.4%, respectively.
The amount of income tax expense is influenced by the amount of pre-tax income, tax-exempt income, changes in the statutory rate and the effect of changes in valuation allowances maintained against deferred tax benefits. The effective tax rates for the years ended December 31, 2024 and 2023 were 21.6% and 21.0%, respectively.
We originate commercial real estate loans, including loans secured by office buildings, retail/wholesale facilities, hotels, industrial facilities, medical and professional buildings, churches, and multifamily residential properties located primarily in our market areas. The average outstanding loan size was $817,000 as of June 30, 2023. 33 We offer both fixed- and adjustable-rate commercial real estate loans.
We originate commercial real estate loans, including loans secured by retail/wholesale facilities, hotels, industrial facilities, medical and professional buildings, office buildings, churches and multifamily residential properties located primarily in our market areas. The average outstanding loan balance was $957,000 as of December 31, 2024.
At June 30, 2023, brokered deposits totaled $232.5 million, or 6.5%, of total deposits. Liquidity management is both a daily and long-term function of business management. Excess liquidity is generally invested in short-term investments, such as overnight deposits and federal funds.
At December 31, 2024, brokered deposits totaled $387.1 million, or 10.2% of total deposits. Liquidity management is both a daily and long-term function of business management. Excess liquidity is generally invested in short-term investments, such as overnight deposits and federal funds.
Nonperforming assets include nonaccrual loans, TDRs that haven’t performed for a sufficient period of time, and REO. Loans are placed on nonaccrual status when the collection of principal and/or interest becomes doubtful or other factors involving the loan warrant placing the loan on nonaccrual status.
Nonperforming assets include nonaccrual loans and repossessed assets. Loans are placed on nonaccrual status when the collection of principal and/or interest becomes doubtful or other factors involving the loan warrant placing the loan on nonaccrual status.
Overview The following discussion and analysis presents the more significant factors that affected our financial condition as of June 30, 2023 and 2022 and results of operations for each of the years in the three-year period then ended. Refer to "Item 7.
Overview The following discussion and analysis presents the more significant factors that affected our financial condition as of December 31, 2024 and 2023 and results of operations for the years ended December 31, 2024 and December 31, 2023. Refer to "Item 7.
Total nonperforming assets were $8.3 million, or 0.18% of total assets, at June 30, 2023, compared to $6.3 milion, or 0.18% of total assets, at June 30, 2022. The following table sets forth the composition of our nonperforming assets among our different asset categories.
Total nonperforming assets were $28.8 million, or 0.63% of total assets, at December 31, 2024, compared to $19.3 milion, or 0.41% of total assets, at December 31, 2023. The following table sets forth the composition of our nonperforming assets among our different asset categories.
Recent Accounting Pronouncements For a discussion of recent accounting pronouncements, see “Note 1 – Summary of Significant Accounting Policies" of the Notes to the Consolidated Financial Statements in Item 8 of this report on Form 10-K for further discussion.
The Company then records the necessary ACL on the non-PCD loans through provision for credit losses expense. 28 Recent Accounting Pronouncements For a discussion of recent accounting pronouncements, see “Note 1 – Summary of Significant Accounting Policies" of the Notes to the Consolidated Financial Statements in Item 8 of this report on Form 10-K for further discussion.
Total liabilities were $4.1 billion at June 30, 2023, compared to $3.2 billion at June 30, 2022, an increase of $975.9 million, or 30.9%, year-over-year, the components of which are discussed below. Deposits. The following table summarizes the composition of our deposit portfolio as of the dates indicated.
Total liabilities were $4.0 billion at December 31, 2024, compared to $4.2 billion at December 31, 2023, a decrease of $129.1 million, or 3.1%, period-over-period, the components of which are discussed below. Deposits. The following table summarizes the composition of our deposit portfolio as of the dates indicated.
Our asset/liability management strategy sets limits on the change in PVE given certain changes in interest rates. The table presented here, as of June 30, 2023, is forward-looking information about our sensitivity to changes in interest rates. The table incorporates data from an independent service, as it relates to maturity repricing and repayment/withdrawal of interest-earning assets and interest-bearing liabilities.
The table presented here, as of December 31, 2024, is forward-looking information about our sensitivity to changes in interest rates. The table incorporates data from an independent service, as it relates to maturity repricing and repayment/withdrawal of interest-earning assets and interest-bearing liabilities.
The ACL on loans held for investment is a valuation account that is deducted from the amortized cost basis to present the net amount expected to be collected on the loan portfolio. We consider the effects of past events, current conditions, and reasonable and supportable forecasts on the collectability of the loan portfolio.
The ACL on loans held for investment is a valuation account that is deducted from the amortized cost basis to present the net amount expected to be collected on the loan portfolio.
As a result of this philosophy, our results of operations and the 39 economic value of our equity will remain vulnerable to increases in interest rates and to declines due to differences between long- and short-term interest rates.
As a result of this philosophy, our results of operations and the economic value of our equity will remain vulnerable to increases in interest rates and to declines due to differences between long- and short-term interest rates. The committee regularly reviews interest rate risk by forecasting the impact of alternative interest rate environments on net interest income and our PVE.
The composition and contractual maturities of our debt securities portfolio as of June 30, 2023 is indicated in the following table. Maturities are based on the final contractual payment dates, and do not reflect the impact of prepayments or early redemptions that may occur. Weighted average yields were calculated using amortized cost on a fully-taxable equivalent basis.
Maturities are based on the final contractual payment dates, and do not reflect the impact of prepayments or early redemptions that may occur. Weighted average yields were calculated using amortized cost on a fully-taxable equivalent basis. The Company did not hold any tax-exempt debt securities as of December 31, 2024.
In March 2022, the Company began purchasing commercial small business loans originated by a fintech partner. At June 30, 2023, the outstanding balance of these loans totaled $25.1 million, or 0.6% of our loan portfolio.
In March 2022, the Company began purchasing commercial small business loans originated by a fintech partner, although in 2023 we elected to cease further purchases. At December 31, 2024, the outstanding balance of these loans totaled $11.6 million, or 0.3% of our loan portfolio.
The committee regularly reviews interest rate risk by forecasting the impact of alternative interest rate environments on net interest income and our PVE. The committee also evaluates these impacts against the potential changes in net interest income and market value of our portfolio equity that are monitored by the Board of Directors of HomeTrust Bank generally on a quarterly basis.
The committee also evaluates these impacts against the potential changes in net interest income and market value of our portfolio equity that are monitored by the Board of Directors of HomeTrust Bank generally on a quarterly basis. 41 Our asset/liability management strategy sets limits on the change in PVE given certain changes in interest rates.
Set forth below is a reconciliation to US GAAP of our efficiency ratio: Year Ended June 30, (Dollars in thousands) 2023 2022 2021 Noninterest expense $ 115,909 $ 105,097 $ 131,182 Less: branch closure and restructuring expenses — — 1,513 Less: officer transition agreement expense — 1,795 — Less: merger-related expenses 5,465 — — Less: prepayment penalties on borrowings — — 22,690 Noninterest expense – adjusted $ 110,444 $ 103,302 $ 106,979 Net interest income $ 157,415 $ 110,774 $ 103,322 Plus: tax equivalent adjustment 1,163 1,231 1,267 Plus: noninterest income 31,050 39,109 39,821 Less: gain on sale of available for sale and equity securities 721 1,895 — Less: gain (loss) on sale of premises and equipment 2,097 (87) (1,311) Net interest income plus noninterest income – adjusted $ 186,810 $ 149,306 $ 145,721 Efficiency ratio 61.50 % 70.12 % 91.64 % Efficiency ratio – adjusted 59.12 % 69.19 % 73.41 % Set forth below is a reconciliation to US GAAP of tangible book value and tangible book value per share: (Dollars in thousands, except per share data) June 30, 2023 June 30, 2022 June 30, 2021 Total stockholders' equity $ 471,186 $ 388,845 $ 396,519 Less: goodwill, core deposit intangibles, net of taxes 42,410 25,710 25,902 Tangible book value $ 428,776 $ 363,135 $ 370,617 Common shares outstanding 17,366,673 15,591,466 16,636,483 Book value per share $ 27.13 $ 24.94 $ 23.83 Tangible book value per share $ 24.69 $ 23.29 $ 22.28 26 Set forth below is a reconciliation to US GAAP of tangible equity to tangible assets: (Dollars in thousands) June 30, 2023 June 30, 2022 June 30, 2021 Tangible equity (1) $ 428,776 $ 363,135 $ 370,617 Total assets 4,607,487 3,549,204 3,524,723 Less: goodwill, core deposit intangibles, net of taxes 42,410 25,710 25,902 Total tangible assets $ 4,565,077 $ 3,523,494 $ 3,498,821 Tangible equity to tangible assets 9.39 % 10.31 % 10.59 % (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.
Set forth below is a reconciliation to US GAAP of our efficiency ratio: Year Ended December 31, 2024 Six Months Ended December 31, 2023 Year Ended June 30, (Dollars in thousands) 2023 2022 Noninterest expense $ 124,668 $ 59,345 $ 115,909 $ 105,097 Less: officer transition agreement expense — — — 1,795 Less: merger-related expenses — — 5,465 — Less: contract renewal consulting fee 2,965 — — — Noninterest expense – adjusted $ 121,703 $ 59,345 $ 110,444 $ 103,302 Net interest income $ 168,675 $ 84,083 $ 157,415 $ 110,774 Plus: tax equivalent adjustment 1,460 656 1,163 1,231 Plus: noninterest income 33,449 16,875 31,050 39,109 Less: BOLI death benefit proceeds in excess of cash surrender value 1,143 2,646 — — Less: gain on sale of available for sale and equity securities — — 721 1,895 Less: gain (loss) on sale of premises and equipment (9) (248) 2,097 (87) Net interest income plus noninterest income – adjusted $ 202,450 $ 99,216 $ 186,810 $ 149,306 Efficiency ratio 61.68 % 58.78 % 61.50 % 70.12 % Efficiency ratio – adjusted 60.12 % 59.81 % 59.12 % 69.19 % Set forth below is a reconciliation to US GAAP of tangible book value and tangible book value per share: (Dollars in thousands, except per share data) December 31, 2024 December 31, 2023 June 30, 2023 June 30, 2022 Total stockholders' equity $ 551,758 $ 499,893 $ 471,186 $ 388,845 Less: goodwill, core deposit intangibles, net of taxes 39,189 41,086 42,410 25,710 Tangible book value $ 512,569 $ 458,807 $ 428,776 $ 363,135 Common shares outstanding 17,527,709 17,387,069 17,366,673 15,591,466 Book value per share $ 31.48 $ 28.75 $ 27.13 $ 24.94 Tangible book value per share $ 29.24 $ 26.39 $ 24.69 $ 23.29 27 Set forth below is a reconciliation to US GAAP of tangible equity to tangible assets: (Dollars in thousands) December 31, 2024 December 31, 2023 June 30, 2023 June 30, 2022 Tangible equity (1) $ 512,569 $ 458,807 $ 428,776 $ 363,135 Total assets 4,595,430 4,672,633 4,607,487 3,549,204 Less: goodwill, core deposit intangibles, net of taxes 39,189 41,086 42,410 25,710 Total tangible assets $ 4,556,241 $ 4,631,547 $ 4,565,077 $ 3,523,494 Tangible equity to tangible assets 11.25 % 9.91 % 9.39 % 10.31 % (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.
Construction loans may be originated up to 95% of the cost or of the appraised value upon completion, whichever is less; however, we generally do not originate construction loans which exceed the lower of 80% loan to cost or appraised value without securing adequate private mortgage insurance or other form of credit enhancement such as the Federal Housing Administration or other governmental guarantee.
Construction-to-permanent loans require payment of interest only during the construction phase. Construction loans may be originated up to 90% of the cost or of the appraised value upon completion, whichever is less; however, we generally do not originate conforming construction loans which exceed an 80% loan-to-value without securing adequate private mortgage insurance.
At June 30, 2023, the total approved loan commitments and unused lines of credit outstanding amounted to $307.2 million and $608.2 million, respectively, as compared to $417.6 million and $485.2 million as of June 30, 2022. Certificates of deposit scheduled to mature in one year or less at June 30, 2023 totaled $642.8 million.
At December 31, 2024, the total approved loan commitments and unused lines of credit outstanding amounted to $230.5 million and $712.3 million, respectively, as compared to $240.9 million and $690.6 million as of December 31, 2023. Certificates of deposit scheduled to mature in one year or less at December 31, 2024 totaled $976.9 million.
Management’s Discussion and Analysis of Financial Condition and Results of Operations" included in our Annual Report on Form 10-K filed with the SEC on September 12, 2022 (the “2022 Form 10-K”) for a discussion and analysis of the more significant factors that affected periods prior to fiscal year 2022. Our primary source of pre-tax income is net interest income.
Management’s Discussion and Analysis of Financial Condition and Results of Operations" included in our Transition Report on Form 10-KT filed with the SEC on March 12, 2024 (the “2023 Form 10-KT") for a discussion and analysis of the more significant factors that affected periods prior to the year ended December 31, 2024.
Fiscal 2023 Items of Note On February 12, 2023, the Company merged with Quantum which operated two locations in the Atlanta metro area. The addition of Quantum contributed total assets of $656.7 million, including loans of $561.9 million, and $570.6 million of deposits, all reflecting the impact of purchase accounting adjustments.
The addition of Quantum contributed total assets of $656.7 million, including loans of $561.9 million, and $570.6 million of deposits, all reflecting the impact of purchase accounting adjustments.
Of these depositors, $405.0 million, or 11.2% of total deposits, are insured or collateralized deposits to municipalities. Specific to time deposits, we held approximately $120.7 million in uninsured CDs as of June 30, 2023. The uninsured amount is an estimate consistent with the methodology used for the Company's regulatory reporting disclosures.
Specific to time deposits, we held approximately $168.1 million in uninsured CDs as of December 31, 2024. The uninsured amount is an estimate consistent with the methodology used for the Company's regulatory reporting disclosures.
Consumer Lending . Our consumer loans consist of loans secured by deposit accounts or personal property such as automobiles, boats, and motorcycles, as well as unsecured consumer debt.
At December 31, 2024, unfunded commitments on these lines of credit, including loans held for sale, totaled $436.0 million. Consumer Lending . Our consumer loans consist of loans secured by deposit accounts or personal property such as automobiles, boats and motorcycles, as well as unsecured consumer debt.
As of June 30, 2023, there were $6.8 million in loans individually evaluated compared to $5.3 million at June 30, 2022. The following table summarizes net charge-offs (recoveries) to average loans outstanding by loan category as of the dates indicated.
Individually evaluated loans may be evaluated for ACL purposes using either the cash flow or the collateral valuation method. As of December 31, 2024, there were $13.8 million of loans individually evaluated compared to $8.8 million at December 31, 2023. The following table summarizes net charge-offs (recoveries) to average loans outstanding by loan category as of the dates indicated.
This portfolio includes indirect auto finance installment contracts sourced through our relationships with automobile dealerships, both manufacturer franchised dealerships and independent dealerships, who utilize our origination platform to provide automotive financing through installment contracts on new and used vehicles. At June 30, 2023, the outstanding balance of indirect auto finance loans was $105.0 million.
This portfolio includes indirect auto finance installment contracts on new and used vehicles sourced through our relationships with automobile dealerships, both manufacturer franchised dealerships and independent dealerships.
Total assets were $4.6 billion and $3.5 billion at June 30, 2023 and 2022, an increase of $1.1 billion, or 29.8%, year-over-year, the components of which are discussed below. Debt Securities Available for Sale. Debt securities available for sale increased $24.9 million, or 19.6%, to $151.9 million at June 30, 2023.
Total assets were $4.6 billion and $4.7 billion at December 31, 2024 and December 31, 2023, respectively, a decrease of $77.2 million, or 1.7%, period-over-period, the components of which are discussed below. Debt Securities Available for Sale. Debt securities available for sale increased $25.1 million, or 19.7%, to $152.0 million at December 31, 2024.
At June 30, 2023, $86.1 million, or 60.5%, of our municipal leases were secured by fire trucks, $47.9 million, or 33.7%, were secured by fire stations, $104,000, or 0.1%, were secured by both, with the remaining $8.1 million, or 5.7%, secured by miscellaneous firefighting equipment and land. At June 30, 2023, the average outstanding municipal lease size was $430,000.
At December 31, 2024, $106.7 million, or 64.3%, of our municipal leases were secured by fire trucks, $51.7 million, or 31.2%, were secured by fire stations, with the remaining $7.6 million, or 4.5%, secured by miscellaneous firefighting equipment and land. At December 31, 2024, the average outstanding municipal lease balance was $454,000.
Year Ended June 30, (Dollars in thousands) 2023 2022 Average balances Junior subordinated debentures $ 3,788 $ — FHLB advances 54,005 38,370 FRB advances 11,662 5,006 Revolving lines of credit 7,717 — Weighted average interest rate Junior subordinated debentures 8.63 % — % FHLB advances 4.90 0.16 FRB advances 4.73 0.38 Revolving lines of credit 8.59 — (Dollars in thousands) June 30, 2023 June 30, 2022 Balance outstanding at end of period Junior subordinated debentures $ 9,971 $ — FHLB advances 180,000 — FRB advances 257,000 — Revolving lines of credit 20,263 — Weighted average interest rate Junior subordinated debentures 7.49 % — % FHLB advances 5.19 — FRB advances 5.25 — Revolving lines of credit 8.75 — All qualifying one-to-four family loans, HELOCs, commercial real estate loans, and FHLB of Atlanta stock are pledged as collateral to secure outstanding FHLB advances while commercial construction, indirect auto, and municipal leases are pledged as collateral to secure outstanding FRB advances.
Year Ended December 31, (Dollars in thousands) 2024 2023 Average balances Junior subordinated debentures $ 10,067 $ 8,826 FHLB advances 24,784 116,842 FRB advances 25,635 23,907 Revolving lines of credit 10,785 67,233 Weighted average interest rate Junior subordinated debentures 9.22 % 9.11 % FHLB advances 5.55 5.29 FRB advances 5.41 5.34 Revolving lines of credit 9.12 8.90 39 (Dollars in thousands) December 31, 2024 December 31, 2023 Balance outstanding at end of period Junior subordinated debentures $ 10,120 $ 10,021 FHLB advances — 105,000 FRB advances 188,000 310,000 Revolving lines of credit — 18,763 Weighted average interest rate Junior subordinated debentures 6.51 % 7.59 % FHLB advances — 5.44 FRB advances 4.50 5.50 Revolving lines of credit — 9.00 All qualifying one-to-four family loans, HELOCs, commercial real estate loans and FHLB of Atlanta stock are pledged as collateral to secure outstanding FHLB advances while commercial construction, indirect auto and municipal leases are pledged as collateral to secure outstanding FRB advances.
The overall increase in average yield and balances was the result of a continual rise in interest rates and inclusion of Quantum's loan portfolio for the current year. Accretion income on acquired loans of $1.7 million and $1.6 million was recognized during the same periods, respectively, and was included in interest income on loans.
Accretion income on acquired loans of $3.2 million and $2.1 million was recognized during the same periods, respectively, and was included in loan interest income.
There were $49.0 million of sales of the guaranteed portion of SBA commercial loans with gains of $3.4 million in the current year compared to $54.7 million sold with gains of $5.4 million in the prior year.
During the year ended December 31, 2024, there were $48.7 million of sales of the guaranteed portion of SBA commercial loans with gains of $3.9 million compared to $46.7 million sold with gains of $3.0 million during the prior year, with the improvement in profitability due to more favorable pricing on the secondary market.
We originate both fixed-rate loans and adjustable-rate loans; however, the majority of our one-to-four family residential loans are originated with fixed rates and have terms of 10 to 30 years. We generally originate fixed rate mortgage loans with terms greater than 10 years for sale to various 34 secondary market investors on a servicing released basis.
We generally originate fixed rate mortgage loans with terms greater than 10 years for sale to various secondary market investors, currently on a servicing retained basis. We also originate adjustable-rate mortgage, or ARM, loans which have interest rates that adjust to the average 30-day yield on the SOFR plus a margin.
June 30, 2023 June 30, 2022 (Dollars in thousands) Allocated Allowance % of Loan Portfolio ACL to Loans Allocated Allowance % of Loan Portfolio ACL to Loans Commercial real estate loans Construction and land development $ 5,866 10 % 0.16 % $ 4,402 11 % 0.16 % Commercial real estate - owner occupied 4,837 15 0.13 3,038 12 0.11 Commercial real estate - non-owner occupied 9,230 25 0.26 5,589 24 0.20 Multifamily 757 2 0.02 385 3 0.01 Total commercial real estate loans 20,690 52 0.57 13,414 50 0.48 Commercial loans Commercial and industrial 4,738 7 0.13 5,083 7 0.18 Equipment finance 10,299 13 0.28 6,651 14 0.24 Municipal leases 179 4 0.01 302 5 0.01 Total commercial loans 15,216 24 0.42 12,036 26 0.43 Residential real estate loans Construction and land development 1,689 3 0.05 1,052 2 0.04 One-to-four family 5,612 14 0.15 4,673 13 0.17 HELOCs 1,983 5 0.05 1,886 6 0.07 Total residential real estate loans 9,284 22 0.25 7,611 21 0.28 Consumer loans 2,003 2 0.05 1,629 3 0.06 Total loans $ 47,193 100 % 1.29 % $ 34,690 100 % 1.25 % 36 At or For the Year Ended June 30, 2023 2022 Asset quality ratios Nonaccruing loans to total loans (1) 0.23 % 0.22 % ACL to nonaccruing loans (1) 567.56 566.83 Net charge-offs (recoveries) to average loans 0.10 (0.02) (1) At June 30, 2023, there were $1.9 million of restructured loans included in nonaccruing loans and $3.3 million, or 40.0%, of nonaccruing loans were current on their loan payments as of that date.
December 31, 2024 December 31, 2023 (Dollars in thousands) Allocated Allowance % of Loan Portfolio ACL to Loans Allocated Allowance % of Loan Portfolio ACL to Loans Commercial real estate loans Construction and land development $ 3,541 8 % 0.10 % $ 4,591 8 % 0.13 % Commercial real estate - owner occupied 5,465 15 0.15 5,647 15 0.16 Commercial real estate - non-owner occupied 9,074 24 0.25 9,187 24 0.25 Multifamily 1,204 3 0.03 898 2 0.02 Total commercial real estate loans 19,284 50 0.53 20,323 49 0.56 Commercial loans Commercial and industrial 4,837 9 0.13 4,994 7 0.14 Equipment finance 10,090 11 0.28 11,843 13 0.32 Municipal leases 340 5 0.01 189 4 0.01 Total commercial loans 15,267 25 0.42 17,026 24 0.47 Residential real estate loans Construction and land development 465 1 0.01 1,203 3 0.03 One-to-four family 7,441 17 0.20 6,302 16 0.17 HELOCs 1,758 5 0.05 1,779 5 0.05 Total residential real estate loans 9,664 23 0.26 9,284 24 0.25 Consumer loans 1,070 2 0.03 2,008 3 0.06 Total loans $ 45,285 100 % 1.24 % $ 48,641 100 % 1.34 % December 31, 2024 December 31, 2023 (Dollars in thousands) Allocated Allowance ACL to Loans Allocated Allowance ACL to Loans ACL composition Quantitative allocation $ 22,330 0.61 % $ 23,664 0.65 % Qualitative allocation 21,880 0.60 22,858 0.63 Individual allocation 1,075 0.03 2,119 0.06 Total ACL $ 45,285 1.24 % $ 48,641 1.34 % At or For the Year Ended December 31, 2024 At or For the Year Ended December 31, 2023 At or For the Year Ended June 30, 2023 Asset quality ratios ACL to nonaccruing loans (1) 163.68 % 251.60 % 567.56 % Net charge-offs to average loans 0.28 0.18 0.10 (1) At December 31, 2024, $13.0 million, or 47.1%, of nonaccruing loans were current on their loan payments.
The elevated credit risk is offset by the higher yields earned on the portfolios. • $4.9 million provision driven by loan growth and changes in the loan mix. • $2.6 million provision due to changes in the projected economic forecast, specifically the national unemployment rate, and changes in qualitative adjustments. • $1.5 million reduction of specific reserves on individually evaluated credits, which was tied to two relationships which were fully charged-off during the period.
For the year ended December 31 , 2023 , the "loans" portion of the provision for credit losses was the result of the following, offset by net charge-offs of $6.7 million during the period: • $4.9 million provision to establish an allowance on Quantum's loan portfolio. • $1.4 million provision driven by changes in the loan mix. • $2.1 million provision due to changes in the projected economic forecast, specifically the national unemployment rate, and changes in qualitative adjustments. • $1.1 million increase in specific reserves on individually evaluated credits.
Conversely, in a falling interest rate environment these interest rate floors will assist in maintaining our net interest income. As of June 30, 2023, our loans with interest rate floors totaled approximately $640.1 million, or 17.5% of our total loan portfolio, and had a weighted average floor rate of 4.80%, of which $26.5 million were at their floor rate.
As of December 31, 2024, our loans with interest rate floors totaled approximately $749.0 million, or 20.5% of our total loan portfolio, and had a weighted average floor rate of 5.45%, of which $113.0 million were at their floor rate.
At June 30, 2023, there were $1.9 million of restructured loans included in nonperforming loans and $3.3 million, or 40.0%, of nonperforming loans were current on their loan payments.
At December 31, 2023, $2.4 million, or 12.3%, of nonaccruing loans were current on their loan payments. At June 30, 2023, $3.3 million, or 40.0%, of nonaccruing loans were current on their loan payments. The ACL on loans decreased $3.4 million, or 6.9%, during the year ended December 31, 2024.
Interest rate risk is measured by changes in PVE for instantaneous parallel shifts in the yield curve up and down 400 basis points. An increase in rates would increase our PVE because the repricing of nonmaturing deposits tend to lag behind the increase in market rates.
Interest rate risk is measured by changes in PVE for instantaneous parallel shifts in the yield curve up and down 400 basis points. Overall, our interest rate sensitivity is very low with minimal changes to our PVE with rate increases or smaller rate decreases. Loans with interest rate floors assist in maintaining our net interest income when rates decrease.
Loans held for investment totaled $3.7 billion at June 30, 2023 compared to $2.8 billion at June 30, 2022, an increase of $889,528 or 32.1%. The increase was mainly the result of $561.9 million of loans acquired through the Company's merger with Quantum. The following table illustrates the changes within the portfolio.
Loans held for investment totaled $3.6 billion at December 31, 2024, an increase of $8.3 million or 0.2%. The following table illustrates the changes within the portfolio.
Our commercial real estate mortgage loans generally include a balloon maturity of five years or less. Amortization terms are generally limited to 20 years.
Specific to 34 our non-owner occupied portfolio, the outstanding balance of loans secured by offices totaled $93.7 million as of December 31, 2024. We offer both fixed- and adjustable-rate commercial real estate loans. Our commercial real estate mortgage loans generally include a balloon maturity of five years or less. Amortization terms are generally limited to 20 years.
During the year ended June 30, 2023, there were $56.6 million of residential mortgages originated for sale sold with gains of $1.1 million compared to $263.0 million sold with gains of $6.4 million in the prior year, although the implementation of a hedging program on mandatory commitments in the year ended June 30, 2023 contributed an additional $278,000 in income.
There were $95.4 million of HELOCs sold during the current year with gains of $887,000 compared to $104.0 million sold with gains of $873,000 in the prior year. There were $82.0 million of residential mortgages originated for sale sold with gains of $1.4 million compared to $69.3 million sold with gains of $1.1 million in the prior year.
Net income totaled $44.6 million, or $2.80 per diluted share, for the year ended June 30, 2023 compared to $35.7 million, or $2.23 per diluted share, for the year ended June 30, 2022, an increase of $8.9 million, or 25.1%.
Comparison of Results of Operations for the Years Ended December 31 , 2024 and December 31, 2023 Net Income. Net income totaled $54.8 million, or $3.20 per diluted share, for the year ended December 31, 2024 compared to $50.0 million, or $2.97 per diluted share, for the year ended December 31, 2023, an increase of $4.8 million, or 9.5%.
The results for the year ended June 30, 2023 compared to the year ended June 30, 2022 were positively impacted by a $46.6 million, or 42.1%, increase in net interest income partially offset by a $16.0 million increase in the provision for credit losses, a combined $9.2 million, or 62.0%, decrease in gain on sale of loans held for sale and debt securities available for sale and a $5.5 million, or 100.0%, increase in merger-related expenses.
The results for the year ended December 31, 2024 compared to the prior year were positively impacted by a $7.6 million decrease in the provision for credit losses and a $1.4 million increase in noninterest income, partially offset by a $758,000 decrease in net interest income and a $1.6 million increase in noninterest expense.
The remainder of the change in the provision for off-balance-sheet credit exposure was the result of changes in the balance and mix of loan commitments as well as changes in the projected economic forecast outlined above, which is the same reasoning for the provision for the year ended June 30, 2022 . 30 See further discussion in the “Comparison of Financial Condition at June 30, 2023 and June 30, 2022 – Allowance for Credit Losses on Loans” section below.
For the years ended December 31 , 2024 and December 31 , 2023 , the amounts recorded for off-balance-sheet credit exposure were the result of changes in the balance of loan commitments, loan mix and the projected economic forecast as outlined above.
At June 30, 2023 and 2022, the Company had the ability to borrow $22,673 and $277,561, respectively, through FHLB advances and $91,316 and $68,230, respectively, through the unused portion of a line of credit with the FRB. During the year ended June 30, 2021, the Company paid $22,690 in prepayment penalties on FHLB advances.
At December 31, 2024 and 2023, the Company had the ability to borrow $315.5 million and $72.8 million, respectively, through FHLB advances and $106.6 million and $55.3 million, respectively, through the unused portion of a line of credit with the FRB.
As of June 30, 2023, the Bank was considered "well capitalized" in accordance with its regulatory capital guidelines and exceeded all regulatory capital requirements.
Activity within stockholders' equity included $54.8 million in net income and $5.9 million in stock-based compensation and stock option exercises, partially offset by $7.7 million in cash dividends declared. As of December 31, 2024, the Bank was considered "well capitalized" in accordance with its regulatory capital guidelines and exceeded all regulatory capital requirements.
(4) Tax-equivalent results include adjustments to interest income of $1.2 million, $1.2 million, and $1.3 million for fiscal years ended June 30, 2023, 2022, and 2021, respectively, calculated based on a combined federal and state tax rate of 24% for all three years. 29 Total interest and dividend income for the year ended June 30, 2023 increased $71.0 million, or 61.2%, compared to the year ended June 30, 2022, which was driven by a $66.7 million, or 60.8%, increase in interest income on loans, a $2.5 million, or 141.4%, increase in interest income on debt securities available for sale, and a $2.2 million, or 74.2%, increase in interest income on other interest-earning assets.
Total interest and dividend income for the year ended December 31, 2024 increased $27.1 million, or 11.6%, compared to the year ended December 31, 2023, which was driven by a $25.0 million increase in loan interest income, a $1.1 million increase in interest income on other investments and interest-bearing accounts, and a $1.0 million increase in interest income on debt securities available for sale.
(Dollars in thousands) June 30, 2023 June 30, 2022 Nonaccruing loans Commercial real estate loans Construction and land development $ 23 $ 67 Commercial real estate - owner occupied 517 706 Commercial real estate - non-owner occupied — 5 Multifamily 84 103 Total commercial real estate loans 624 881 Commercial loans Commercial and industrial 1,222 1,951 Equipment finance 2,862 270 Municipal leases 106 — Total commercial loans 4,190 2,221 Residential real estate loans Construction and land development 132 137 One-to-four family 1,935 1,773 HELOCs 957 724 Total residential real estate loans 3,024 2,634 Consumer 477 384 Total nonaccruing loans $ 8,315 $ 6,120 Total foreclosed assets — 200 Total nonperforming assets $ 8,315 $ 6,320 Total nonperforming assets as a percentage of total assets 0.18 % 0.18 % The ratio of nonperforming loans to total loans was 0.23% at June 30, 2023 and 0.22% at June 30, 2022.
(Dollars in thousands) December 31, 2024 December 31, 2023 Nonaccruing loans Commercial real estate loans Construction and land development $ — $ — Commercial real estate - owner occupied 8,471 912 Commercial real estate - non-owner occupied 3,551 4,032 Multifamily 47 74 Total commercial real estate loans 12,069 5,018 Commercial loans Commercial and industrial 3,487 2,774 Equipment finance 4,666 6,463 Municipal leases — — Total commercial loans 8,153 9,237 Residential real estate loans Construction and land development 132 132 One-to-four family 2,916 2,205 HELOCs 3,990 2,173 Total residential real estate loans 7,038 4,510 Consumer 407 568 Total nonaccruing loans $ 27,667 $ 19,333 Total repossessed assets 1,103 — Total nonperforming assets $ 28,770 $ 19,333 Total nonperforming assets as a percentage of total assets 0.63 % 0.41 % This increase was primarily driven by increases of $7.6 million in owner occupied commercial real estate and $1.8 million in home equity loans, partially offset by a $1.8 million decrease in equipment finance loans.
(Dollars in thousands) June 30, 2023 June 30, 2022 $ Change % Change Core deposits Noninterest-bearing deposits $ 825,481 $ 745,746 $ 79,735 11 % NOW accounts 611,105 654,981 (43,876) (7) Money market accounts 1,241,840 969,661 272,179 28 Savings accounts 212,220 238,197 (25,977) (11) Total core deposits $ 2,890,646 $ 2,608,585 $ 282,061 11 % Certificates of deposit 710,522 491,176 219,346 45 Total $ 3,601,168 $ 3,099,761 $ 501,407 16 % The following bullet points provide further information regarding the composition of our deposit portfolio as of June 30, 2023: • The balance of uninsured deposits was $913.2 million, or 25.4% of total deposits, which includes $341.9 million of collateralized deposits to municipalities. • The balance of brokered deposits was $232.5 million, or 6.5% of total deposits. • Total deposits are evenly distributed between commercial and consumer depositors. • The average balance of our deposit accounts was $32,000. • Our largest 25 depositors made up $554.7 million, or 15.4% of total deposits.
(Dollars in thousands) December 31, 2024 December 31, 2023 $ Change % Change Core deposits Noninterest-bearing deposits $ 680,926 $ 784,950 $ (104,024) (13) % NOW accounts 575,238 591,270 (16,032) (3) Money market accounts 1,341,995 1,246,807 95,188 8 Savings accounts 181,317 194,486 (13,169) (7) Total core deposits $ 2,779,476 $ 2,817,513 (38,037) (1) Certificates of deposit 999,727 843,860 155,867 18 Total $ 3,779,203 $ 3,661,373 $ 117,830 3 % The following bullet points provide further information regarding the composition of our deposit portfolio as of December 31, 2024: • The balance of uninsured deposits was $897.7 million, or 23.8% of total deposits, which included $195.9 million of collateralized deposits to municipalities. • The balance of brokered deposits was $387.1 million, or 10.2% of total deposits. • Commercial and consumer depositors represented 55% and 45% of total deposits, respectively. • The average balance of our deposit accounts was $35,000. • Our largest 25 depositors made up $480.8 million, or 12.7% of total deposits.
Removed
The estimate of our ACL on loans held for investment involves a high degree of judgment; therefore, our process for determining ECLs may result in a range of ECLs. Our ACL recorded in the balance sheet reflects our best estimate within the range of ECLs.
Added
At December 31, 2024, $13.0 million, or 47.1%, of nonaccruing loans were current on their loan payments.
Removed
We review goodwill for potential impairment on an annual basis during the fourth quarter, or more often if events or circumstances indicate there may be impairment.
Added
The estimate of our ACL on loans held for investment involves a high degree of judgment including consideration of the effects of past events, current conditions and reasonable and supportable forecasts on the collectability of the loan portfolio.
Removed
In testing goodwill for impairment, we have the option to assess either qualitative or quantitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not that the estimated fair value of a reporting unit is less than its carrying amount.

… 75 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

1 edited+0 added−0 removed2 unchanged
Biggest changeIn addition to other risks that we manage in the normal course of business, such as credit quality and liquidity, management considers interest rate risk to be a significant market risk that could have a potentially material effect on our financial condition and result of operations.
Biggest changeIn addition to other risks that we manage in the normal course of business, such as credit quality and liquidity, management considers interest rate risk to be a significant market risk that could have a potentially material effect on our financial condition and results of operations.

Other HTB 10-K year-over-year comparisons