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HomeTrust Bancshares, Inc. Announces Financial Results for the First Quarter of Fiscal 2022 and an Increase in Quarterly Dividend
المصدر: Nasdaq GlobeNewswire / 27 أكتوبر 2021 06:00:01 America/Chicago
ASHEVILLE, N.C., Oct. 27, 2021 (GLOBE NEWSWIRE) -- HomeTrust Bancshares, Inc. (NASDAQ: HTBI) ("Company"), the holding company of HomeTrust Bank ("Bank"), today announced preliminary net income for the first quarter of fiscal 2022 and an increase in its quarterly dividend.
For the quarter ended September 30, 2021 compared to the corresponding quarter in the previous year:
- net income was $10.5 million, compared to $5.8 million;
- diluted earnings per share ("EPS") was $0.65, compared to $0.35;
- annualized return on assets ("ROA") was 1.20%, compared to 0.62%;
- annualized return on equity ("ROE") was 10.62%, compared to 5.74%;
- provision for credit losses was a net benefit of $1.5 million, compared to a provision of $950,000;
- noninterest income increased $1.7 million, or 19.8% to $10.4 million from $8.6 million;
- 376,435 shares of Company common stock were repurchased during the quarter at an average price of $27.71 per share;
- organic net loan growth, which excludes U.S. Small Business Administration's ("SBA") Paycheck Protection Program ("PPP") loans and purchases of home equity lines of credit, was $9.7 million, or 1.5% annualized compared to $10.4 million, or 1.6% annualized; and
- organic net commercial loan growth, which excludes SBA PPP loans, was $37.0 million, or 7.7% annualized compared to $33.7 million, or 7.6% annualized.
In addition to the improvements in the provision for credit losses and noninterest income discussed above, earnings for the three months ended September 30, 2021 was positively impacted by a $2.2 million, or 8.6% increase in net interest income driven by lower borrowing costs.
The Company also announced today that its Board of Directors declared a quarterly cash dividend of $0.09 per common share, reflecting a $0.01, or 12.5% increase over the previous quarter's dividend. This is the third increase of the quarterly dividend since the Company initiated cash dividends in November 2018. The dividend is payable on December 2, 2021 to shareholders of record as of the close of business on November 18, 2021.
"We are very pleased to report a 1.20% annualized ROA and 10.62% annualized ROE for the current quarter as our profitability improvement plan and balance sheet restructuring begins to positively impact our financial results," said Dana Stonestreet, Chairman and Chief Executive Officer. "Our plan announced last quarter included branch closures, paying off our remaining long-term borrowings, and bringing our back-office SBA loan servicing process in-house. In July 2021, we transitioned our SBA loan servicing process in-house and in September 2021 we successfully completed all nine previously announced branch closures. Our tax-equivalent net interest margin increased to 3.41% from 3.00% for the same quarterly period last year as interest expense decreased due to the early payoff of all of our longer-term borrowings. Again, we were able to release reserves this quarter with a $1.5 million benefit for credit losses resulting from some improvements in projected credit losses since last quarter. As all our diversified lines of business mature, we are well positioned to continue building a higher performing community bank, leading to greater shareholder value.
In addition, for the second year in a row, HomeTrust Bank has been named Best Small Bank in North Carolina by Newsweek. I congratulate our teammates who have made this achievement possible. While we continue to focus on excellence in both customer-facing roles and customer support, we also offer enhanced digital capabilities to meet the needs of our customers for the future."
COVID-19 Update
Loan Programs. During the previous quarter ended June 30, 2021, the Company completed its origination participation in the SBA PPP as the program came to an end. As of September 30, 2021, PPP loans totaled $28.8 million, which included $611,000 in net deferred fees that will be accreted into interest income over the remaining life of the loans. If the loans are forgiven, these fees will be accelerated into income at that time. For the three months ended September 30, 2021, the Company earned $424,000 in fees through accretion, including some accelerated accretion resulting from loan forgiveness. The Company has worked with the SBA and its customers to forgive a total of $82.5 million in PPP loans during its participation in the program.
Loan Modifications. As of September 30, 2021, the Company had $1.0 million in loans with full principal and interest payment deferrals related to COVID-19 compared to $107,000 at June 30, 2021. Substantially all loans placed on full payment deferral during the pandemic have come out of deferral and borrowers are either making regular loan payments or interest-only payments through the end of calendar year 2021. As of September 30, 2021, the Company had $67.8 million in commercial loan deferrals on interest-only payments compared to $78.9 million at June 30, 2021.
Income Statement Review
Net interest income increased by $2.2 million, or 8.6% to $27.7 million for the quarter ended September 30, 2021, compared to $25.5 million for the comparative quarter in fiscal 2021. Interest and dividend income decreased by $1.1 million, or 3.8%, primarily driven by lower average balances on loans and commercial paper combined with lower yields. Average interest-earning assets decreased $187.4 million, or 5.4% to $3.3 billion for the quarter ended September 30, 2021. The average balance of total loans receivable decreased by $55.7 million, or 1.9% compared to the same quarter last year primarily due to the decrease in PPP loans outstanding. The average balance of commercial paper and deposits in other banks decreased $146.6 million, or 34.6% as the Company used excess liquidity to reduce borrowings between the periods, primarily during the quarter ended June 30, 2021. The average balance of other interest-earning assets decreased $17.2 million, or 44.2% driven by a decrease in Federal Home Loan Bank ("FHLB") stock due to the reduction in FHLB borrowings, and an increase in Small Business Investment Company ("SBIC") investments resulting in higher rates earned for the current period. Net interest margin (on a fully taxable-equivalent basis) for the three months ended September 30, 2021 increased to 3.41% from 3.00% for the same period a year ago as all higher rate long-term borrowings were repaid during the quarter ended June 30, 2021.
Total interest and dividend income decreased $1.1 million, or 3.8% for the three months ended September 30, 2021 as compared to the same period last year, which was primarily a result of a $697,000, or 2.4% decrease in loan interest income, a $550,000, or 62.4% decrease in interest income from commercial paper and deposits in other banks, partially offset by a $107,000, or 23.9% increase in other investment income. The lower interest income in each category was primarily driven by the decrease in average balances, discussed above. In addition, average loan yields decreased 5 basis points to 3.97% for the quarter ended September 30, 2021 from 4.02% in the corresponding quarter last year. Average yields on commercial paper and deposits in other banks decreased 36 basis points to 0.47% for the quarter ended September 30, 2021 from 0.83% in the corresponding quarter last year. Average yields on securities available for sale decreased 49 basis points to 1.50% for the quarter ended September 30, 2021 from 1.99% in the corresponding quarter last year. The overall average yield on interest-earning assets increased four basis points to 3.61% for the current quarter compared to 3.57% in the same quarter last year primarily due to the change in mix of interest-earning assets, as excess liquidity was used to repay long-term borrowings and reduce short-term interest-earning assets with lower yields.
Total interest expense decreased $3.3 million, or 67.7% for the three months ended September 30, 2021 compared to the same period last year. The decrease was driven by a $1.7 million, or 51.7% decrease in interest expense on deposits and a $1.7 million, or 98.5% decrease in interest expense on borrowings. Average interest-bearing deposits for the quarter ended September 30, 2021 increased $29.7 million, or 1.3%, which was more than offset by the 30 basis point decrease in the cost of deposits, down to 0.27% compared to 0.57% in the same period last year. Average borrowings for the quarter ended September 30, 2021 decreased $419.5 million, or 88.3% along with a 124 basis point decrease in the average cost of borrowings compared to the same period last year. The increase in average deposits (interest and noninterest-bearing) was due to successful deposit gathering campaigns and funds from PPP loans and other government stimulus. The decrease in the average cost of borrowings was primarily driven by the early retirement of long-term borrowings reducing the average balance and partially driven by a shift to short-term borrowings at lower rates. The overall average cost of funds decreased 45 basis points to 0.27% for the current quarter compared to 0.72% in the same quarter last year due primarily to the impact of lower rates.
Noninterest income increased $1.7 million, or 19.8% to $10.4 million for the three months ended September 30, 2021 from $8.6 million for the same period in the previous year primarily due to a $713,000, or 21.3% increase in gain on sale of loans, a $505,000, or 106.5% increase in loan income and fees, a $275,000, or 13.1% increase in service charges and fees on deposit accounts, and a $215,000, or 16.2% increase in operating lease income. The increase in gain on the sale of loans was driven by an increase in gains from sales of SBA loans in the current period as this line of business improves from the effects of the COVID-19 pandemic. During the quarter ended September 30, 2021, $63.8 million of residential mortgage loans originated for sale which were sold with gains of $2.1 million compared to $96.0 million sold and gains of $2.2 million in the corresponding quarter in the prior year. There were $14.4 million of the guaranteed portion of SBA commercial loans sold with gains of $1.7 million in the current quarter compared to $15.1 million sold and gains of $1.0 million in the corresponding quarter in the prior year. In addition, $47.4 million of home equity loans were sold during the quarter ended September 30, 2021 for a gain of $267,000 compared to $20.0 million sold and gains of $100,000 in the corresponding quarter. The $505,000, or 106.5% increase in loan income and fees was primarily a result of $313,000 in additional loan servicing fees from bringing the Company's SBA loan servicing process in-house beginning July 1, 2021 and $257,000 in additional prepayment fee income from our equipment finance line of business during the current quarter. Other increases in noninterest income were primarily driven by an increase in customer spending as a result of economic recovery from the pandemic.
Noninterest expense of $26.0 million for the three months ended September 30, 2021 was unchanged compared to the same period last year. An increase of $380,000, or 116.9% in marketing and advertising was partially offset by a decrease of $367,000, or 8.6% in other noninterest expense primarily driven by lower depreciation expense on operating lease equipment for the three months ended September 30, 2021 compared to the same period last year.
For the three months ended September 30, 2021, the Company's income tax expense increased $1.6 million to $3.0 million from $1.4 million as a result of greater taxable income. The effective tax rates for the three months ended September 30, 2021 and 2020 were 22.0% and 20.1%, respectively.
Balance Sheet Review
Total assets and liabilities both decreased by $43.4 million down to $3.5 billion and $3.1 billion, respectively, at September 30, 2021 as compared to June 30, 2021. The decrease in assets was primarily driven by a cumulative decrease of $44.9 million, or 18.1% in cash and cash equivalents, certificates of deposit in other banks, and debt securities available for sale, and a $13.6 million, or 0.5% decrease in loans receivable as the Company redirected its excess liquidity to continue paying down borrowings during the period. These decreases were partially offset by a $11.6 million, or 12.4% increase in loans held for sale primarily related to additional SBA commercial loans, one-to-four family residential mortgage loans and home equity loans originated for sale during the period, and a $7.1 million, or 3.7% increase in commercial paper.
Total loans decreased $13.6 million, or 0.5% to $2.7 billion at September 30, 2021 from the balance at June 30, 2021. The decrease was driven by PPP forgiveness of $18.3 million and a $32.7 million, or 4.3% decrease in retail consumer loans resulting from a reduction in one-to-four family loans and indirect auto finance loans. This decrease was partially offset by a $37.0 million, or 1.9% increase in commercial loans (excluding PPP loans) as the Company continues its focus on the growth of this loan segment.
Stockholders' equity remained at $396.5 million at September 30, 2021 as compared to June 30, 2021. Increases within stockholders' equity including $10.5 million in net income and $1.1 million in stock-based compensation and stock option exercises were offset by repurchases of 376,435 shares of common stock at an average cost of $27.71, or approximately $10.4 million and $1.3 million related to cash dividends declared. As of September 30, 2021, the Bank was considered "well capitalized" in accordance with its regulatory capital guidelines and exceeded all regulatory capital requirements.
Asset Quality
The allowance for credit losses was $34.4 million, or 1.27% of total loans, at September 30, 2021 compared to $35.5 million, or 1.30% of total loans, at June 30, 2021. The allowance for credit losses to total gross loans excluding PPP loans was 1.28% at September 30, 2021, compared to 1.32% at June 30, 2021. The overall decrease was largely driven by lower expected credit losses estimated by management based on an improving economic outlook.
Provision for credit losses was a net benefit of $1.5 million for the three months ended September 30, 2021, compared to a $950,000 provision for the corresponding period in fiscal year 2021. Net loan recoveries totaled $273,000 for the three months ended September 30, 2021, compared to net charge-offs of $699,000 for the same period last year. Net recoveries as a percentage of average loans were (0.04)% for the quarter ended September 30, 2021 compared to net charge-offs of 0.10% for the corresponding quarter last year.
Nonperforming assets decreased by $6.0 million, or 47.0% to $6.8 million, or 0.19% of total assets at September 30, 2021 compared to $12.8 million, or 0.36% of total assets at June 30, 2021. The significant decrease from last quarter was primarily a result of the payoff of two commercial real estate loan relationships totaling $5.1 million. Nonperforming assets included $6.7 million in nonaccruing loans and $45,000 in REO at September 30, 2021, compared to $12.6 million and $188,000 in nonaccruing loans and REO, respectively, at June 30, 2021. Included in nonperforming loans are $930,000 of loans restructured from their original terms of which $186,000 was current at September 30, 2021, with respect to their modified payment terms. Nonperforming loans to total loans was 0.25% at September 30, 2021 and 0.46% at June 30, 2021.
The ratio of classified assets to total assets decreased to 0.65% at September 30, 2021 from 0.76% at June 30, 2021. Classified assets decreased to $22.5 million at September 30, 2021 compared to $26.7 million at June 30, 2021 primarily due to the payoff of two commercial real estate loan relationships discussed above. The Company's overall asset quality metrics continue to demonstrate its commitment to growing and maintaining a loan portfolio with a moderate risk profile; however, the Company will remain diligent in its review of the portfolio and overall economy as it continues to maneuver through the uncertainty surrounding COVID-19 and rising inflation.
About HomeTrust Bancshares, Inc.
HomeTrust Bancshares, Inc. is the holding company for the Bank. As of September 30, 2021, the Company had assets of $3.5 billion. The Bank, founded in 1926, is a North Carolina state chartered, community-focused financial institution committed to providing value added relationship banking with over 30 locations as well as online/mobile channels. Locations include: North Carolina (including the Asheville metropolitan area, the "Piedmont" region, Charlotte, and Raleigh/Cary), Upstate South Carolina (Greenville), East Tennessee (including Kingsport/Johnson City/Bristol, Knoxville, and Morristown) and Southwest Virginia (including the Roanoke Valley).
Forward-Looking Statements
This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements often include words such as "believe," "expect," "anticipate," "estimate," and "intend" or future or conditional verbs such as "will," "would," "should," "could," or "may." Forward-looking statements are not historical facts but instead represent management's current expectations and forecasts regarding future events, many of which are inherently uncertain and outside of the Company's control. Actual results may differ, possibly materially, from those currently expected or projected in these forward-looking statements. Factors that could cause the Company's actual results to differ materially from those described in the forward-looking statements include: the effect of the COVID-19 pandemic, including on the Company's credit quality and business operations, as well as its impact on general economic and financial market conditions and other uncertainties resulting from the COVID-19 pandemic, such as the extent and duration of the impact on public health, the U.S. and global economies, and consumer and corporate customers, including economic activity, employment levels and market liquidity; increased competitive pressures; changes in the interest rate environment; changes in general economic conditions and conditions within the securities markets; legislative and regulatory changes; and other factors described in HomeTrust's latest annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other documents filed with or furnished to the Securities and Exchange Commission - which are available on their website at www.htb.com and on the SEC's website at www.sec.gov. These risks could cause the Company's actual results for fiscal 2022 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, the Company and could negatively affect its operating and stock performance. Any of the forward-looking statements that the Company makes in this press release or the documents they file with or furnish to the SEC are based upon management's beliefs and assumptions at the time they are made and may turn out to be wrong because of inaccurate assumptions they might make, because of the factors described above or because of other factors that they cannot foresee. The Company does not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.
WEBSITE: WWW.HTB.COM
Consolidated Balance Sheets (Unaudited)
(Dollars in thousands) September 30,
2021June 30,
2021(1)March 31,
2021December 31,
2020September 30,
2020Assets Cash $ 22,431 $ 22,312 $ 24,621 $ 27,365 $ 29,472 Interest-bearing deposits 20,142 28,678 139,474 198,979 141,672 Cash and cash equivalents 42,573 50,990 164,095 226,344 171,144 Commercial paper 196,652 189,596 238,445 183,778 204,867 Certificates of deposit in other banks 35,495 40,122 42,015 48,637 52,361 Debt securities available for sale, at fair value 124,576 156,459 162,417 153,540 96,159 Other investments, at cost 20,891 23,710 28,899 39,572 38,949 Loans held for sale 105,161 93,539 86,708 118,439 124,985 Total loans, net of deferred loan fees and costs 2,719,642 2,733,267 2,690,153 2,678,624 2,769,396 Allowance for credit losses (34,406 ) (35,468 ) (36,059 ) (39,844 ) (43,132 ) Net loans 2,685,236 2,697,799 2,654,094 2,638,780 2,726,264 Premises and equipment, net 68,568 70,909 70,886 70,104 59,418 Accrued interest receivable 8,429 7,933 8,271 9,796 10,648 Real estate owned ("REO") 45 188 143 252 144 Deferred income taxes 15,722 16,901 16,889 18,626 19,209 Bank owned life insurance ("BOLI") 93,679 93,108 93,877 93,326 92,775 Goodwill 25,638 25,638 25,638 25,638 25,638 Core deposit intangibles 250 343 473 638 840 Other assets 58,445 57,488 55,763 52,501 50,633 Total assets $ 3,481,360 $ 3,524,723 $ 3,648,613 $ 3,679,971 $ 3,674,034 Liabilities and stockholders' equity Liabilities Deposits $ 2,987,284 $ 2,955,541 $ 2,908,478 $ 2,743,269 $ 2,742,046 Borrowings 40,000 115,000 275,000 475,000 475,000 Other liabilities 57,565 57,663 58,683 56,978 56,637 Total liabilities 3,084,849 3,128,204 3,242,161 3,275,247 3,273,683 Stockholders' equity Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued or outstanding — — — — — Common stock, $0.01 par value, 60,000,000 shares authorized (2) 163 167 167 168 170 Additional paid in capital 151,425 160,582 162,010 166,352 170,204 Retained earnings 249,331 240,075 248,767 242,182 234,023 Unearned Employee Stock Ownership Plan ("ESOP") shares (5,687 ) (5,819 ) (5,951 ) (6,083 ) (6,216 ) Accumulated other comprehensive income 1,279 1,514 1,459 2,105 2,170 Total stockholders' equity 396,511 396,519 406,452 404,724 400,351 Total liabilities and stockholders' equity $ 3,481,360 $ 3,524,723 $ 3,648,613 $ 3,679,971 $ 3,674,034 (1) Derived from audited financial statements. (2) Shares of common stock issued and outstanding were 16,307,658 at September 30, 2021; 16,636,483 at June 30, 2021; 16,655,347 at March 31, 2021, 16,791,027 at December 31, 2020; and 17,020,724 at September 30, 2020. Consolidated Statements of Income (Loss) (Unaudited)
Three Months Ended (Dollars in thousands) September 30,
2021June 30,
2021September 30,
2020Interest and dividend income Loans $ 27,895 $ 27,234 $ 28,592 Commercial paper and interest-bearing deposits 331 467 881 Debt securities available for sale 524 496 528 Other investments 555 609 448 Total interest and dividend income 29,305 28,806 30,449 Interest expense Deposits 1,572 1,774 3,253 Borrowings 26 1,034 1,687 Total interest expense 1,598 2,808 4,940 Net interest income 27,707 25,998 25,509 Provision (benefit) for credit losses (1,460 ) (955 ) 950 Net interest income after provision (benefit) for credit losses 29,167 26,953 24,559 Noninterest income Service charges and fees on deposit accounts 2,372 2,376 2,097 Loan income and fees 979 529 474 Gain on sale of loans held for sale 4,057 5,423 3,344 BOLI income 518 605 532 Operating lease income 1,540 1,494 1,325 Other, net 886 733 867 Total noninterest income 10,352 11,160 8,639 Noninterest expense Salaries and employee benefits 15,280 16,265 15,207 Net occupancy expense 2,317 2,511 2,293 Computer services 2,324 2,499 2,307 Telephone, postage, and supplies 712 777 662 Marketing and advertising 705 655 325 Deposit insurance premiums 566 438 511 REO related expense 142 120 213 Core deposit intangible amortization 93 130 238 Branch closure and restructuring expenses — 1,513 — Prepayment penalties on borrowings — 19,034 — Other 3,877 4,291 4,244 Total noninterest expense 26,016 48,233 26,000 Income (loss) before income taxes 13,503 (10,120 ) 7,198 Income tax expense (benefit) 2,976 (2,712 ) 1,445 Net income (loss) $ 10,527 $ (7,408 ) $ 5,753 Per Share Data
Three Months Ended September 30,
2021June 30,
2021September 30,
2020Net income (loss) per common share:(1) Basic $ 0.66 $ (0.46 ) $ 0.35 Diluted $ 0.65 $ (0.46 ) $ 0.35 Average shares outstanding: Basic 15,761,247 15,894,342 16,230,990 Diluted 16,146,611 15,894,342 16,469,242 Book value per share at end of period $ 24.31 $ 23.83 $ 23.52 Tangible book value per share at end of period (2) $ 22.73 $ 22.28 $ 21.98 Cash dividends declared per common share $ 0.08 $ 0.08 $ 0.07 Total shares outstanding at end of period 16,307,658 16,636,483 17,020,724 (1) Basic and diluted net income per common share have been prepared in accordance with the two-class method. (2) See Non-GAAP reconciliation tables below for adjustments. Selected Financial Ratios and Other Data
Three Months Ended September 30,
2021June 30,
2021September 30,
2020Performance ratios: (1) Return on assets (ratio of net income (loss) to average total assets) 1.20 % (0.81 )% 0.62 % Return on equity (ratio of net income (loss) to average equity) 10.62 (7.30 ) 5.74 Tax equivalent yield on earning assets(2) 3.61 3.43 3.57 Rate paid on interest-bearing liabilities 0.27 0.44 0.72 Tax equivalent average interest rate spread (2) 3.34 2.99 2.85 Tax equivalent net interest margin(2) (3) 3.41 3.10 3.00 Average interest-earning assets to average interest-bearing liabilities 137.94 132.52 125.51 Operating expense to average total assets 2.96 5.26 2.81 Efficiency ratio 68.36 129.81 76.14 Efficiency ratio - adjusted (4) 67.80 73.86 75.45 (1) Ratios are annualized where appropriate. (2) The weighted average rate for municipal leases is adjusted for a 24% combined federal and state tax rate since the interest from these leases is tax exempt. (3) Net interest income divided by average interest-earning assets. (4) See Non-GAAP reconciliation tables below for adjustments. Three Months Ended September 30,
2021June 30,
2021March 31,
2021December 31,
2020September 30,
2020Asset quality ratios: Nonperforming assets to total assets(1) 0.19 % 0.36 % 0.37 % 0.40 % 0.40 % Nonperforming loans to total loans(1) 0.25 0.46 0.49 0.54 0.52 Total classified assets to total assets 0.65 0.76 0.76 0.74 0.73 Allowance for credit losses to nonperforming loans(1) 510.63 281.38 272.64 274.05 299.11 Allowance for credit losses to total loans 1.27 1.30 1.34 1.49 1.56 Allowance for credit losses to total gross loans excluding PPP loans(2) 1.28 1.32 1.38 1.52 1.61 Net charge-offs (recoveries) to average loans (annualized) (0.04 ) (0.04 ) (0.03 ) (0.01 ) 0.10 Capital ratios: Equity to total assets at end of period 11.39 % 11.25 % 11.14 % 11.00 % 10.90 % Tangible equity to total tangible assets(2) 10.73 10.59 10.50 10.36 10.25 Average equity to average assets 11.27 11.06 10.79 10.95 10.85 (1) Nonperforming assets include nonaccruing loans, consisting of certain restructured loans, and REO. There were no accruing loans more than 90 days past due at the dates indicated. At September 30, 2021, there were $930,000 of restructured loans included in nonaccruing loans and $3.4 million, or 51.2% of nonaccruing loans were current on their loan payments. (2) See Non-GAAP reconciliation tables below for adjustments. Average Balance Sheet Data
Three Months Ended (Dollars in thousands) September 30, 2021 September 30, 2020 Average
Balance
OutstandingInterest
Earned/
Paid(2)Yield/
Rate(2)Average
Balance
OutstandingInterest
Earned/
Paid(2)Yield/
Rate(2)Assets: Interest-earning assets: Loans receivable(1) $ 2,819,716 $ 28,205 3.97 % $ 2,875,432 $ 28,902 4.02 % Commercial paper and deposits in other banks 277,564 331 0.47 % 424,170 881 0.83 % Securities available for sale 138,435 524 1.50 % 106,268 528 1.99 % Other interest-earning assets(3) 21,731 555 10.13 % 38,946 448 4.61 % Total interest-earning assets 3,257,446 29,615 3.61 % 3,444,816 30,759 3.57 % Other assets 260,976 251,648 Total assets $ 3,518,422 $ 3,696,464 Liabilities and equity: Interest-bearing deposits: Interest-bearing checking accounts 635,456 397 0.25 % 560,481 397 0.28 % Money market accounts 988,990 367 0.15 % 825,545 550 0.27 % Savings accounts 223,658 41 0.07 % 200,543 37 0.07 % Certificate accounts 457,865 767 0.67 % 689,709 2,269 1.32 % Total interest-bearing deposits 2,305,969 1,572 0.27 % 2,276,278 3,253 0.57 % Borrowings 55,464 26 0.18 % 475,000 1,687 1.42 % Total interest-bearing liabilities 2,361,433 1,598 0.27 % 2,751,278 4,940 0.72 % Noninterest-bearing deposits 708,219 484,336 Other liabilities 52,305 59,935 Total liabilities 3,121,957 3,295,549 Stockholders' equity 396,465 400,915 Total liabilities and stockholders' equity $ 3,518,422 $ 3,696,464 Net earning assets $ 896,013 $ 693,538 Average interest-earning assets to average interest-bearing liabilities 137.94 % 125.21 % Tax-equivalent: Net interest income $ 28,017 $ 25,819 Interest rate spread 3.34 % 2.85 % Net interest margin(4) 3.41 % 3.00 % Non-tax-equivalent: Net interest income $ 27,707 $ 25,509 Interest rate spread 3.30 % 2.82 % Net interest margin(4) 3.37 % 2.96 % (1) The average loans receivable, net balances include loans held for sale and nonaccruing loans. (2) Interest income used in the average interest earned and yield calculation includes the tax equivalent adjustment of $310 for the three months ended September 30, 2021 and 2020, respectively, calculated based on a combined federal and state tax rate of 24%. (3) The average other interest-earning assets consist of FRB stock, FHLB stock, and SBIC investments. (4) Net interest income divided by average interest-earning assets. Loans
(Dollars in thousands) September 30,
2021June 30,
2021March 31,
2021December 31,
2020September 30,
2020Commercial loans: Commercial real estate $ 1,132,764 $ 1,142,276 $ 1,088,178 $ 1,056,971 $ 1,068,255 Construction and development 187,900 179,427 162,820 172,892 216,757 Commercial and industrial 153,612 141,341 140,579 138,761 148,413 Equipment finance 341,995 317,920 291,950 272,761 250,813 Municipal leases 142,100 140,421 129,141 128,549 130,337 PPP loans 28,762 46,650 73,090 64,845 80,816 Total commercial loans 1,987,133 1,968,035 1,885,758 1,834,779 1,895,391 Retail consumer loans One-to-four family 384,901 406,549 430,001 452,421 459,285 HELOCs - originated 129,791 130,225 131,867 125,397 135,885 HELOCs - purchased 33,943 38,976 46,086 58,640 61,535 Construction and land/lots 69,835 66,027 68,118 75,108 78,799 Indirect auto finance 106,184 115,093 119,656 122,947 128,466 Consumer 7,855 8,362 8,667 9,332 10,035 Total retail consumer loans 732,509 765,232 804,395 843,845 874,005 Total loans, net of deferred loan fees and costs 2,719,642 2,733,267 2,690,153 2,678,624 2,769,396 Allowance for credit losses (34,406 ) (35,468 ) (36,059 ) (39,844 ) (43,132 ) Net loans $ 2,685,236 $ 2,697,799 $ 2,654,094 $ 2,638,780 $ 2,726,264 Deposits
(Dollars in thousands) September 30,
2021June 30,
2021March 31,
2021December 31,
2020September 30,
2020Core deposits: Noninterest-bearing accounts $ 711,764 $ 636,414 $ 528,711 $ 469,998 $ 458,157 NOW accounts 621,675 644,958 727,240 654,960 608,968 Money market accounts 987,650 975,001 927,519 882,366 826,970 Savings accounts 220,614 226,391 221,537 209,699 202,787 Total core deposits 2,541,703 2,482,764 2,405,007 2,217,023 2,096,882 Certificates of deposit 445,581 472,777 503,471 526,246 645,164 Total deposits $ 2,987,284 $ 2,955,541 $ 2,908,478 $ 2,743,269 $ 2,742,046 Non-GAAP Reconciliations
In addition to results presented in accordance with generally accepted accounting principles utilized in the United States ("GAAP"), this earnings release contains certain non-GAAP financial measures, which include: the efficiency ratio; tangible book value; tangible book value per share; tangible equity to tangible assets ratio; and the ratio of the allowance for credit losses to total loans excluding PPP loans. The Company believes these non-GAAP financial measures and ratios as presented are useful for both investors and management to understand the effects of certain items and provide an alternative view of its performance over time and in comparison to its competitors. These non-GAAP measures have inherent limitations, are not required to be uniformly applied and are not audited. They should not be considered in isolation or as a substitute for total stockholders' equity or operating results determined in accordance with GAAP. These non-GAAP measures may not be comparable to similarly titled measures reported by other companies.
Set forth below is a reconciliation to GAAP of the Company's efficiency ratio:
Three Months Ended (Dollars in thousands) September 30,
2021June 30,
2021September 30,
2020Noninterest expense $ 26,016 $ 48,233 $ 26,000 Less: branch closure and restructuring expenses — 1,513 Less: prepayment penalties on borrowings — 19,034 — Noninterest expense $ 26,016 $ 27,686 $ 26,000 Net interest income $ 27,707 $ 25,998 $ 25,509 Plus noninterest income 10,352 11,160 8,639 Plus tax equivalent adjustment 310 325 310 Net interest income plus noninterest income – as adjusted $ 38,369 $ 37,483 $ 34,458 Efficiency ratio - adjusted 67.80 % 73.86 % 75.45 % Efficiency ratio 68.36 % 129.81 % 76.14 % Set forth below is a reconciliation to GAAP of tangible book value and tangible book value per share:
(Dollars in thousands, except per share data) September 30,
2021June 30,
2021March 31,
2021December 31,
2020September 30,
2020Total stockholders' equity $ 396,511 $ 396,519 $ 406,452 $ 404,724 $ 400,351 Less: goodwill, core deposit intangibles, net of taxes 25,830 25,902 26,002 26,130 26,285 Tangible book value (1) $ 370,681 $ 370,617 $ 380,450 $ 378,594 $ 374,066 Common shares outstanding 16,307,658 16,636,483 16,655,347 16,791,027 17,020,724 Tangible book value per share $ 22.73 $ 22.28 $ 22.84 $ 22.55 $ 21.98 Book value per share $ 24.31 $ 23.83 $ 24.40 $ 24.10 $ 23.52 (1) Tangible book value is equal to total stockholders' equity less goodwill and core deposit intangibles, net of related deferred tax liabilities. Set forth below is a reconciliation to GAAP of tangible equity to tangible assets:
(Dollars in thousands) September 30,
2021June 30,
2021March 31,
2021December 31,
2020September 30,
2020Tangible equity(1) $ 370,681 $ 370,617 $ 380,450 $ 378,594 $ 374,066 Total assets 3,481,360 3,524,723 3,648,613 3,679,971 3,674,034 Less: goodwill, core deposit intangibles, net of taxes 25,830 25,902 26,002 26,130 26,285 Total tangible assets(2) $ 3,455,530 $ 3,498,821 $ 3,622,611 $ 3,653,841 $ 3,647,749 Tangible equity to tangible assets 10.73 % 10.59 % 10.50 % 10.36 % 10.25 % (1) Tangible equity (or tangible book value) is equal to total stockholders' equity less goodwill and core deposit intangibles, net of related deferred tax liabilities. (2) Total tangible assets is equal to total assets less goodwill and core deposit intangibles, net of related deferred tax liabilities. Set forth below is a reconciliation to GAAP of net income (loss), EPS, ROA, and ROE as adjusted to exclude branch closure/restructuring expenses and prepayment penalties on borrowings:
Three Months Ended (Dollars in thousands, except per share data) September 30,
2021June 30,
2021September 30,
2020Branch closure and restructuring expenses $ — $ 1,513 $ — Prepayment penalties on borrowings — 19,034 — Total adjustments — 20,547 — Tax effect — 4,829 — Total adjustments, net of tax — 15,718 — Net income (loss) (GAAP) 10,527 (7,408 ) 5,753 Adjusted net income (non-GAAP) $ 10,527 $ 8,310 $ 5,753 Per Share Data Average shares outstanding - basic 15,761,247 15,894,342 16,230,990 Average shares outstanding - diluted 16,146,611 15,894,342 16,469,242 Average shares outstanding - diluted (adjusted) (1) 16,146,611 16,406,581 16,469,242 Basic EPS Basic EPS (GAAP) (2) $ 0.66 $ (0.46 ) $ 0.35 Non-GAAP adjustment — 0.98 — Adjusted basic EPS (non-GAAP) (3) $ 0.66 $ 0.52 $ 0.35 Diluted EPS Diluted EPS (GAAP) (4) $ 0.65 $ (0.46 ) $ 0.35 Non-GAAP adjustment — 0.96 — Adjusted diluted EPS (non-GAAP) (5) $ 0.65 $ 0.50 $ 0.35 Average Balances Average assets $ 3,518,422 $ 3,669,597 $ 3,696,464 Average equity 396,465 405,933 400,915 ROA ROA (GAAP) 1.20 % (0.81 )% 0.62 % Non-GAAP adjustment — % 1.72 % — % Adjusted ROA (non-GAAP) 1.20 % 0.91 % 0.62 % ROE ROE (GAAP) 10.62 % (7.30 )% 5.74 % Non-GAAP adjustment — % 15.49 % — % Adjusted ROE (non-GAAP) 10.62 % 8.19 % 5.74 % (1) Average shares outstanding - diluted were adjusted for the three months ended June 30, 2021 to include potentially dilutive shares not considered due to the corresponding net losses under GAAP. (2) Net income (loss) used in the basic EPS calculation includes an adjustment of $69 for the three months ended June 30, 2021 in relation to the two-class method. (3) Adjusted net income used in the basic EPS calculation includes an adjustment of $(78) for the three months ended June 30, 2021 in relation to the two-class method. (4) Net income (loss) used in the diluted EPS calculation includes an adjustment of $69 for the three months ended June 30, 2021 in relation to the two-class method. (5) Adjusted net income used in the diluted EPS calculation includes an adjustment of $(76) for the three months ended June 30, 2021 in relation to the two-class method. Set forth below is a reconciliation to GAAP of the allowance for credit losses to total loans (excluding net deferred loan costs) and the allowance for credit losses as adjusted to exclude PPP loans:
(Dollars in thousands) September 30,
2021June 30,
2021March 31,
2021December 31
2020September 30,
2020Total gross loans receivable (GAAP) $ 2,719,642 $ 2,733,267 $ 2,690,153 $ 2,678,624 $ 2,769,396 Less: PPP loans (1) 28,762 46,650 73,090 64,845 80,816 Adjusted loans (non-GAAP) $ 2,690,880 $ 2,686,617 $ 2,617,063 $ 2,613,779 $ 2,688,580 Allowance for credit losses (GAAP) $ 34,406 $ 35,468 $ 36,059 $ 39,844 $ 43,132 Allowance for credit losses / Adjusted loans (non-GAAP) 1.28 % 1.32 % 1.38 % 1.52 % 1.60 % (1) PPP loans are fully guaranteed loans by the U.S. government. 
Contact: Dana L. Stonestreet – Chairman and Chief Executive Officer C. Hunter Westbrook – President and Chief Operating Officer Tony J. VunCannon – Executive Vice President, Chief Financial Officer, Corporate Secretary and Treasurer 828-259-3939
