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EX-32 - EXHIBIT 32 - HomeTrust Bancshares, Inc.htbi-2015x12x31x10qxex32.htm
EX-31.2 - EXHIBIT 31.2 - HomeTrust Bancshares, Inc.htbi-2015x12x31x10qxex312.htm
EX-31.1 - EXHIBIT 31.1 - HomeTrust Bancshares, Inc.htbi-2015x12x31x10qxex311.htm


UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


[X]            QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2015

[  ]            TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from _______ to ________

Commission file number:     001-35593

HOMETRUST BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Maryland
 
          45-5055422
(State or other jurisdiction of incorporation of organization)
 
(IRS Employer Identification No.)

10 Woodfin Street, Asheville, North Carolina 28801
(Address of principal executive offices; Zip Code)

(828) 259-3939
(Registrant's telephone number, including area code)

None
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 and 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.        Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X]No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer [  ]      
 
(Do not check if a smaller reporting company)        
 
Accelerated filer [X]
 
 
 
 
Non-accelerated filer   [  ]
 
 
Smaller reporting company [  ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes [  ] No [X]
APPLICABLE ONLY TO CORPORATE ISSUERS
There were 18,364,605 shares of common stock, par value of $.01 per share, issued and outstanding as of February 4, 2016.




HOMETRUST BANCSHARES, INC. AND SUBSIDIARIES
10-Q
TABLE OF CONTENTS
 
 
 
Page
Number
 
 
 
 
Item 1. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2. 
 
 
 
 
Item 3. 
 
 
 
 
Item 4. 
 
 
 
 
 
 
 
 
 
Item 1. 
 
 
 
 
Item 1A. 
 
 
 
 
Item 2. 
 
 
 
 
Item 3. 
 
 
 
 
Item 4. 
 
 
 
 
Item 5 
 
 
 
 
Item 6. 
 
 
 
 
 
 
 
 

1



PART I.  FINANCIAL INFORMATION
Item 1.    Financial Statements
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Balance Sheets
(Dollars in thousands, except per share data)
 
(Unaudited)
 
 
 
December 31, 2015
 
June 30, 2015
Assets
 
 
 
Cash
$
32,803

 
$
33,891

Interest-bearing deposits
24,781

 
82,269

Cash and cash equivalents
57,584

 
116,160

Commercial paper
271,856

 
256,152

Certificates of deposit in other banks
177,934

 
210,629

Securities available for sale, at fair value
229,227

 
257,606

Other investments, at cost
28,886

 
28,711

Loans held for sale
5,080

 
5,874

Total loans, net of deferred loan fees and discount
1,747,767

 
1,685,707

Allowance for loan losses
(21,977
)
 
(22,374
)
Net loans
1,725,790

 
1,663,333

Premises and equipment, net
56,232

 
57,524

Accrued interest receivable
7,238

 
7,522

Real estate owned ("REO")
6,713

 
7,024

Deferred income taxes
57,267

 
59,493

Bank owned life insurance
78,362

 
77,354

Goodwill
12,673

 
12,673

Core deposit intangibles
8,526

 
10,043

Other assets
5,184

 
13,016

Total Assets
$
2,728,552

 
$
2,783,114

Liabilities and Stockholders' Equity
 

 
 

Liabilities
 

 
 

Deposits
$
1,829,987

 
$
1,872,126

Other borrowings
479,000

 
475,000

Capital lease obligations
1,968

 
1,979

Other liabilities
56,402

 
62,959

Total liabilities
2,367,357

 
2,412,064

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, 18,576,972 shares
    issued and outstanding at December 31, 2015; 19,488,449 at June 30, 2015
186

 
195

Additional paid in capital
195,738

 
210,621

Retained earnings
173,370

 
168,357

Unearned Employee Stock Ownership Plan ("ESOP") shares
(8,729
)
 
(8,993
)
Accumulated other comprehensive income
630

 
870

Total stockholders' equity
361,195

 
371,050

Total Liabilities and Stockholders' Equity
$
2,728,552

 
$
2,783,114

The accompanying notes are an integral part of these consolidated financial statements.

2



HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Income
(Dollars in thousands, except per share data)
 
Three Months Ended
 
Six Months Ended
 
December 31,
 
December 31,
 
2015
 
2014
 
2015
 
2014
Interest and Dividend Income
 
 
 
 
 
 
 
Loans
$
19,333

 
$
19,823

 
$
38,968

 
$
38,380

Securities available for sale
1,038

 
884

 
2,237

 
1,689

Certificates of deposit and other interest-bearing deposits
851

 
626

 
1,681

 
1,065

Other investments
344

 
226

 
689

 
290

Total interest and dividend income
21,566

 
21,559

 
43,575

 
41,424

Interest Expense
 

 
 

 
 

 
 

Deposits
1,141

 
1,264

 
2,332

 
2,490

Other borrowings
275

 
105

 
522

 
144

Total interest expense
1,416

 
1,369

 
2,854

 
2,634

Net Interest Income
20,150

 
20,190

 
40,721

 
38,790

Recovery of Loan Losses

 

 

 
(250
)
Net Interest Income after Recovery of Loan Losses
20,150

 
20,190

 
40,721

 
39,040

Noninterest Income
 

 
 

 
 

 
 

Service charges on deposit accounts
1,618

 
1,318

 
3,317

 
2,379

Mortgage banking income and fees
590

 
713

 
1,318

 
1,560

Gain from sales of securities available for sale

 
61

 

 
61

Other, net
797

 
727

 
1,739

 
1,588

Total noninterest income
3,005

 
2,819

 
6,374

 
5,588

Noninterest Expense
 

 
 

 
 

 
 

Salaries and employee benefits
10,875

 
10,068

 
21,732

 
19,876

Net occupancy expense
2,306

 
2,032

 
4,565

 
3,885

Marketing and advertising
499

 
624

 
984

 
1,011

Telephone, postage, and supplies
842

 
759

 
1,672

 
1,437

Deposit insurance premiums
523

 
415

 
1,048

 
845

Computer services
1,406

 
1,250

 
2,990

 
2,603

Loss (gain) on sale and impairment of REO
159

 
(200
)
 
138

 
(235
)
REO expense
327

 
433

 
682

 
788

Core deposit intangible amortization
743

 
484

 
1,517

 
898

Merger-related expenses

 
2,310

 

 
3,731

Other
2,162

 
1,960

 
4,349

 
3,793

Total other expense
19,842

 
20,135

 
39,677

 
38,632

Income Before Income Taxes
3,313

 
2,874

 
7,418

 
5,996

Income Tax Expense
864

 
825

 
2,405

 
1,691

Net Income
$
2,449

 
$
2,049

 
$
5,013

 
$
4,305

Per Share Data:
 

 
 

 
 

 
 

Net income per common share:
 

 
 

 
 

 
 

Basic
$
0.14

 
$
0.10

 
$
0.28

 
$
0.22

Diluted
$
0.14

 
$
0.10

 
$
0.28

 
$
0.22

Average shares outstanding:
 

 
 

 
 

 
 

Basic
17,479,150

 
19,145,084

 
17,778,568

 
19,161,846

Diluted
17,810,984

 
19,235,841

 
18,053,187

 
19,239,539

The accompanying notes are an integral part of these consolidated financial statements.

3



HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Comprehensive Income
(Dollars in thousands)
 
Three Months Ended
 
Six Months Ended
 
December 31,
 
December 31,
 
2015
 
2014
 
2015
 
2014
Net Income
$
2,449

 
$
2,049

 
$
5,013

 
$
4,305

Other Comprehensive Income (Loss)
 

 
 

 
 

 
 

  Unrealized holding gains (losses) on securities available for sale
 

 
 

 
 

 
 

Gains (losses) arising during the period
(1,691
)
 
1,166

 
(363
)
 
1,119

Deferred income tax benefit (expense)
575

 
(397
)
 
123

 
(380
)
Reclassification of securities gains recognized in net income

 
61

 

 
57

Deferred income tax expense

 
(20
)
 

 
(20
)
Total other comprehensive income (loss)
$
(1,116
)
 
$
810

 
$
(240
)
 
$
776

Comprehensive Income
$
1,333

 
$
2,859

 
$
4,773

 
$
5,081

The accompanying notes are an integral part of these consolidated financial statements.

4



HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders' Equity
(Dollars in thousands)
 
Common Stock
 
Additional
Paid In
Capital
 
Retained
Earnings
 
Unearned
ESOP
Shares
 
Accumulated
Other
Comprehensive
Income
 
Total
Stockholders'
Equity
 
Shares
 
Amount
 
 
 
 
 
Balance at June 30, 2014
20,632,008

 
$
207

 
$
225,889

 
$
160,332

 
$
(9,522
)
 
$
245

 
$
377,151

Net income

 

 

 
4,305

 

 

 
4,305

Stock repurchased
(198,503
)
 
(2
)
 
(3,395
)
 

 

 

 
(3,397
)
Exercised stock options
18,000

 

 
259

 

 

 

 
259

Stock option expense

 

 
693

 

 

 

 
693

Restricted stock expense

 

 
734

 

 

 

 
734

ESOP shares allocated

 

 
142

 

 
264

 

 
406

Other comprehensive income

 

 

 

 

 
776

 
776

Balance at December 31, 2014
20,451,505

 
$
205

 
$
224,322

 
$
164,637

 
$
(9,258
)
 
$
1,021

 
$
380,927

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2015
19,488,449

 
$
195

 
$
210,621

 
$
168,357

 
$
(8,993
)
 
$
870

 
$
371,050

Net income

 

 

 
5,013

 

 

 
5,013

Stock repurchased
(911,427
)
 
(9
)
 
(16,782
)
 

 

 

 
(16,791
)
Forfeited restricted stock
(2,250
)
 

 

 

 

 

 

Exercised stock options
2,200

 

 
32

 

 

 

 
32

Stock option expense

 

 
953

 

 

 

 
953

Restricted stock expense

 

 
684

 

 

 

 
684

ESOP shares allocated

 

 
230

 

 
264

 

 
494

Other comprehensive loss

 

 

 

 

 
(240
)
 
(240
)
Balance at December 31, 2015
18,576,972

 
$
186

 
$
195,738

 
$
173,370

 
$
(8,729
)
 
$
630

 
$
361,195

The accompanying notes are an integral part of these consolidated financial statements.

5



HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Dollars in thousands)
 
Six Months Ended December 31,
 
2015
 
2014
Operating Activities:
 
 
 
Net income
$
5,013

 
$
4,305

Adjustments to reconcile net income to net cash provided by operating activities:
 

 
 

Recovery of loan losses

 
(250
)
Depreciation
2,090

 
1,696

Deferred income tax expense
2,349

 
1,679

Net amortization and accretion
(2,151
)
 
(1,983
)
Loss (gain) on sale and impairment of REO
138

 
(235
)
Gain on sale of loans held for sale
(775
)
 
(847
)
Origination of loans held for sale
(41,995
)
 
(32,178
)
Proceeds from sales of loans held for sale
43,564

 
34,084

Gain on sale of securities available for sale

 
(61
)
Decrease in deferred loan fees, net
(184
)
 
(699
)
Increase (decrease) in accrued interest receivable and other assets
8,072

 
(693
)
Amortization of core deposit intangibles
1,517

 
898

Earnings from bank owned life insurance
(964
)
 
(821
)
ESOP compensation expense
494

 
406

Restricted stock and stock option expense
1,637

 
1,427

Increase (decrease) in other liabilities
(6,557
)
 
506

Net cash provided by operating activities
12,248

 
7,234

Investing Activities:
 

 
 

Purchase of securities available for sale
(11,100
)
 
(44,909
)
Proceeds from maturities of securities available for sale
26,060

 
21,385

Proceeds from sale of securities available for sale

 
10,387

Net increase in commercial paper
(15,704
)
 
(128,249
)
Purchase of certificates of deposit in other banks
(14,632
)
 
(54,797
)
Maturities of certificates of deposit in other banks
47,327

 
22,002

Principal repayments of mortgage-backed securities
12,844

 
11,911

Net purchases of other investments
(175
)
 
(14,480
)
Net increase in loans
(61,277
)
 
(64,001
)
Purchase of premises and equipment
(798
)
 
(4,329
)
Capital improvements to REO

 
(55
)
Proceeds from sale of REO
1,540

 
6,574

Acquisition of Bank of Commerce, net of cash received

 
(7,759
)
Acquisition of Bank of America branches, net of cash paid

 
310,868

Net cash provided by (used in) investing activities
(15,915
)
 
64,548

Financing Activities:
 

 
 

Net decrease in deposits
(42,139
)
 
(67,322
)
Net increase in other borrowings
4,000

 
184,828

Common stock repurchased
(16,791
)
 
(3,397
)
Exercised stock options
32

 
259

Decrease in capital lease obligations
(11
)
 
(9
)
Net cash provided by (used in) financing activities
(54,909
)
 
114,359

Net Increase (Decrease) in Cash and Cash Equivalents
(58,576
)
 
186,141

Cash and Cash Equivalents at Beginning of Period
116,160

 
45,830

Cash and Cash Equivalents at End of Period
$
57,584

 
$
231,971


6



HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows (continued)
(Dollars in thousands)
Supplemental Disclosures:
Six Months Ended December 31,
 
2015
 
2014
Cash paid during the period for:
 
 
 
Interest
$
2,881

 
$
2,242

Income taxes
100

 
140

Noncash transactions:
 

 
 

Unrealized gain (loss) in value of securities available for sale, net of income taxes
(240
)
 
776

Transfers of loans to REO
1,367

 
1,413

Loans originated to finance the sale of REO

 
460

Business Combinations:
 

 
 

Assets acquired

 
463,959

Liabilities assumed

 
444,154

Net assets acquired

 
19,805

The accompanying notes are an integral part of these consolidated financial statements.

7


HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
1.
Summary of Significant Accounting Policies
The consolidated financial statements presented in this report include the accounts of HomeTrust Bancshares, Inc., a Maryland corporation ("HomeTrust"), and its wholly-owned subsidiary, HomeTrust Bank (the "Bank"). As used throughout this report, the term the "Company" refers to HomeTrust and the Bank, its consolidated subsidiary, unless the context otherwise requires. Effective December 31, 2015, the Bank converted from a national association to a North Carolina state bank. See Management's Discussion and Analysis of Financial Condition and Results of Operations "Overview" for discussion of charter change.
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP") for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission ("SEC"). Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the financial position and results of operations for the periods presented have been included. It is recommended that these unaudited interim consolidated financial statements be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended June 30, 2015 ("2015 Form 10-K") filed with the SEC on September 11, 2015. The results of operations for the three and six months ended December 31, 2015 are not necessarily indicative of results that may be expected for the entire fiscal year ending June 30, 2016. Certain prior year amounts have been reclassified to conform to current fiscal year presentation. The reclassifications had no impact on previously reported net income or equity.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements. Various elements of the Company's accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions and other subjective assessments. In particular, management has identified several accounting policies that, due to the judgments, estimates and assumptions inherent in those policies, are critical to an understanding of the Company's financial statements. These policies relate to (i) the determination of the provision and the allowance for loan losses, (ii) business combinations and acquired loans, (iii) the valuation of REO, (iv) the valuation of goodwill and other intangible assets, and (v) the valuation of or recognition of deferred tax assets and liabilities. These policies and judgments, estimates and assumptions are described in greater detail in subsequent notes to the Consolidated Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations (Critical Accounting Policies) in our 2015 Form 10-K. Management believes that the judgments, estimates and assumptions used in the preparation of the financial statements are appropriate based on the factual circumstances at the time. However, given the sensitivity of the financial statements to these critical accounting policies, the use of other judgments, estimates and assumptions could result in material differences in the Company's results of operations or financial condition. Further, subsequent changes in economic or market conditions could have a material impact on these estimates and the Company's financial condition and operating results in future periods.
2.
Recent Accounting Pronouncements
In January 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-04, "Receivables—Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure". The objective of this guidance is to clarify when an in substance repossession or foreclosure occurs, that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. ASU No. 2014-04 states that an in substance repossession or foreclosure occurs, and a creditor is considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan, upon either (1) the creditor obtaining legal title to the residential real estate property upon completion of a foreclosure or (2) the borrower conveying all interest in the residential real estate property to the creditor to satisfy that loan through completion of a deed in lieu of foreclosure or through a similar legal agreement. Additionally, ASU No. 2014-04 requires interim and annual disclosure of both (1) the amount of foreclosed residential real estate property held by the creditor and (2) the recorded investment in consumer mortgage loans collateralized by residential real estate property that are in the process of foreclosure according to local requirements of the applicable jurisdiction. ASU No. 2014-04 was effective, for the Company, for interim and annual reporting periods beginning after June 30, 2015. The adoption of ASU No. 2014-04 did not have a material impact on the Company's Consolidated Financial Statements. At December 31, 2015 and June 30, 2015, the Bank had $429,000 and $1.6 million, respectively, of foreclosed residential real estate property in REO. The recorded investment in consumer mortgage loans collateralized by residential real estate in the process of foreclosure totaled $1.9 million and $1.7 million at December 31, 2015 and June 30, 2015, respectively.
In August 2014, the FASB issued ASU No. 2014-14, "Receivables-Troubled Debt Restructuring by Creditors (Subtopic 310-40): Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure". The amendments in this ASU require that a mortgage loan be derecognized and that a separate other receivable be recognized upon foreclosure if the following conditions are met: (1) the loan has a government guarantee that is not separable from the loan before foreclosure; (2) at the time of foreclosure, the creditor has the intent to convey the real estate property to the guarantor and make a claim of the guarantee, and the creditor has the ability to recover under that claim; and (3) at the time of foreclosure, any amount of the claim that is determined on the basis of the fair value of the real estate is fixed. Upon foreclosure, the separate other receivable should be measured based on the amount of the loan balance (principal and interest) expected to be recovered from the guarantor. The amendments in this ASU were effective, for the Company, for annual periods, and interim periods within those annual periods, beginning after June 30, 2015. The adoption of ASU No. 2014-14 did not have a material impact on the Company's Consolidated Financial Statements.

8

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

In January 2015, the FASB issued ASU No. 2015-01, "Income Statement-Extraordinary and Unusual Items (Subtopic 225-20)." The ASU eliminates the need to separately classify, present, and disclose extraordinary events. The disclosure of events or transactions that are unusual or infrequent in nature will be included in other guidance. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. The adoption of ASU No. 2015-01 is not expected to have a material impact on the Company's Consolidated Financial Statements.
In April 2015, FASB issued ASU No. 2015-05, "Customer's Accounting for Fees Paid in a Cloud Computing Arrangement." The amendments in this ASU provide guidance to customers in cloud computing arrangements about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The amendments are effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. This ASU is not expected to have a material effect on the Company's Consolidated Financial Statements.
In June 2015, FASB issued ASU No. 2015-10, "Technical Corrections and Improvements." On November 10, 2010 FASB added a standing project that will facilitate the FASB Accounting Standards Codification ("Codification”) updates for technical corrections, clarifications, and improvements. These amendments are referred to as Technical Corrections and Improvements. Maintenance updates include non-substantive corrections to the Codification, such as editorial corrections, various link-related changes, and changes to source fragment information. This ASU contains amendments that will affect a wide variety of Topics in the Codification. The amendments in this ASU will apply to all reporting entities within the scope of the affected accounting guidance and generally fall into one of four categories: amendments related to differences between original guidance and the Codification, guidance clarification and reference corrections, simplification, and minor improvements. In summary, the amendments in this ASU represent changes to clarify the Codification, correct unintended application of guidance, or make minor improvements to the Codification that are not expected to have a significant effect on current accounting practice. Transition guidance varies based on the amendments in this ASU. The amendments in this ASU that require transition guidance are effective for fiscal years and interim reporting periods after December 15, 2015. Early adoption is permitted including adoption in an interim period. All other amendments are effective upon the issuance of this ASU. ASU 2015-10 did not have a material impact on the Company's Consolidated Financial Statements.
In August 2015, the FASB issued ASU No. 2015-15, "Interest-Imputation of Interest (Subtopic 835-30), Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements." This ASU provides guidance not previously included in ASU 2015-03 regarding debt issuance related to line-of-credit arrangements. The amendments in this ASU allows an entity to present debt issuance costs as an asset and subsequently amortize the deferred debt issuance costs over the term of the line-of-credit arrangement, regardless if there are any outstanding borrowings on the line-of-credit arrangement. This ASU is effective for fiscal years beginning after December 15, 2015. The adoption of ASU No. 2015-15 is not expected to have a material impact on the Company's Consolidated Financial Statements.
In September 2015, the FASB issued ASU No. 2015-16, "Business Combinations (Topic 805)". The ASU simplifies the accounting for measurement period adjustments. The amendments in this ASU require that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period when the adjustment amounts are determined. The acquirer is required to record in the same period's financial statements the effect on earnings from changes in depreciation, amortization, or other income effects resulting from the change to provisional amounts, calculated as if the accounting had been completed at the acquisition date. The acquirer must present separately on the income statement, or disclose in the notes, the amount recorded in current-period earnings that would have been recorded in previous reporting periods if the provisional amount had been recognized at the acquisition date. This ASU is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The adoption of ASU No. 2015-16 is not expected to have a material impact on the Company's Consolidated Financial Statements.
In January 2016, the FASB issued ASU 2016-01, "Financial Instruments (Subtopic 825-10) Recognition and Measurement of Financial Assets and Financial Liabilities." The ASU amends the guidance in GAAP on the classification and measurement of financial instruments. The ASU includes the following changes: i) equity investments (except those accounted for under the equity method of accounting, or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income; (ii) requires the use of exit price notion when measuring the fair value of financial instruments for disclosure purposes; (iii) require separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e. securities or loans and receivables) on the balance sheet or the accompanying notes to the financial statements; (iv) allows an equity investment that does not have readily determinable fair values, to be measured at cost minus impairment (if any), plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer; (v) eliminates the requirement to disclose the method(s) and significant assumptions used to estimate the fair value that is required to be disclosed for financial instruments measured at amortized cost on the balance sheet, and requires a reporting organization to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk (also referred to as “own credit”) when the organization has elected to measure the liability at fair value in accordance with the fair value option for financial instruments; (vi) requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (i.e. securities or loans and receivables) on the balance sheet or in the accompanying notes to the financial statements; and (vii) clarifies that a valuation allowance on a deferred tax asset related to available-for-sale securities should be evaluated in combination with the organization’s other deferred tax assets. This ASU is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of ASU No. 2016-1 is not expected to have a material impact on the Company's Consolidated Financial Statements.

9

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

3.
Business Combinations
All business combinations are accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed and consideration exchanged were recorded at acquisition date fair values. Fair values are preliminary and subject to refinement for up to one year after the closing date of the acquisition as additional information regarding the closing date fair values becomes available.
On November 14, 2014, the Bank completed its acquisition of ten branch banking operations in Southwest Virginia and Eden, North Carolina from Bank of America Corporation (the "Branch Acquisition"). Under the terms of the agreement, the Bank paid a deposit premium of $9,805 equal to 2.86% of the average daily deposits for the 30 calendar day period prior to the acquisition date. In addition, the Bank acquired approximately $1,045 in loans and all related premises and equipment valued at $8,993.

The following table presents the consideration paid by the Bank in the Branch Acquisition and the assets acquired and liabilities assumed as of November 14, 2014:
 
As Recorded
By Bank of
America
 
Fair Value and
Other Merger
Related
Adjustments
 
As
Recorded
by the
Company
Consideration Paid
 
 
 
 
 
Cash paid as deposit premium
 
 
 
 
$
9,805

Total consideration
 
 
 
 
$
9,805

Assets
 
 
 
 
 

Cash and cash equivalents
$
320,673

 
$

 
$
320,673

Loans, net of allowance
1,045

 

 
1,045

Premises and equipment, net
6,303

 
2,690

 
8,993

Accrued interest receivable
3

 

 
3

Deferred income taxes

 
353

 
353

Core deposit intangibles

 
7,936

 
7,936

Total assets acquired
$
328,024

 
$
10,979

 
$
339,003

Liabilities
 

 
 

 
 

Deposits
$
328,007

 
$
1,174

 
$
329,181

Other liabilities
17

 

 
17

Total liabilities assumed
$
328,024

 
$
1,174

 
$
329,198

Net identifiable assets acquired over liabilities assumed
$

 
$
9,805

 
$
9,805

Goodwill
 

 
 

 
$


10

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

On July 31, 2014, the Bank completed its acquisition of Bank of Commerce in accordance with the terms of the Agreement and Plan of Share Exchange dated March 3, 2014. Under the terms of the agreement, Bank of Commerce shareholders received $6.25 per share in cash consideration, representing approximately $10,000 of aggregate deal consideration. In addition, all $3,200 of Bank of Commerce's preferred stock was redeemed.
The excess of the merger consideration over the fair value of Bank of Commerce's net assets was allocated to goodwill. The book value as of July 31, 2014, of assets acquired was $122,530 and liabilities assumed was $114,672. The Company recorded $1,922 in goodwill related to the acquisition.
The following table presents the consideration paid by the Bank in the acquisition of Bank of Commerce and the assets acquired and liabilities assumed as of July 31, 2014:
 
As Recorded
By Bank of
Commerce
 
Fair Value and
Other Merger
Related
Adjustments
 
As
Recorded
by the
Company
Consideration Paid
 
 
 
 
 
Cash paid
 
 
 
 
$
10,000

Total consideration
 
 
 
 
$
10,000

Assets
 
 
 
 
 

Cash and cash equivalents
$
2,241

 
$

 
$
2,241

Securities available for sale
24,228

 

 
24,228

Loans, net of allowance
89,339

 
(2,855
)
 
86,484

Federal Home Loan Bank ("FHLB") Stock
791

 

 
791

REO
224

 
(14
)
 
210

Premises and equipment, net
135

 

 
135

Accrued interest receivable
355

 
(100
)
 
255

Deferred income taxes
286

 
2,839

 
3,125

Core deposit intangibles

 
640

 
640

Other assets
4,931

 
(6
)
 
4,925

Total assets acquired
$
122,530

 
$
504

 
$
123,034

Liabilities
 

 
 

 
 

Deposits
$
93,303

 
$
112

 
$
93,415

Other borrowings
15,000

 
172

 
15,172

Other liabilities
6,369

 

 
6,369

Total liabilities assumed
$
114,672

 
$
284

 
$
114,956

Net identifiable assets acquired over liabilities assumed
$
7,858

 
$
220

 
$
8,078

Goodwill
 

 
 

 
$
1,922

The carrying amount of acquired loans from Bank of Commerce as of July 31, 2014 consisted of purchased performing loans and purchased credit-impaired ("PCI") loans as detailed in the following table:
 
Purchased
Performing
 
PCI
 
Total
Loans
Retail Consumer Loans:
 
 
 
 
 
One-to-four family
$
2,717

 
$
2,979

 
$
5,696

Home equity lines of credit ("HELOCs")
8,823

 
317

 
9,140

Consumer
37

 
15

 
52

Commercial:
 
 
 
 
 
Commercial real estate
29,048

 
30,047

 
59,095

Construction and development
202

 
3,020

 
3,222

Commercial and industrial
5,402

 
3,877

 
9,279

Total
$
46,229

 
$
40,255

 
$
86,484


11

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

On May 31, 2014, the Company completed its acquisition of Jefferson Bancshares, Inc. ("Jefferson") in accordance with the terms of the Agreement and Plan of Merger dated January 22, 2014. Under the terms of the agreement, Jefferson shareholders received 0.2661 shares of HomeTrust common stock, and $4.00 in cash for each share of Jefferson common stock. This represents approximately $50,490 of aggregate deal consideration.
The excess of the merger consideration over the fair value of Jefferson's net assets was allocated to goodwill. The book value as of May 31, 2014, of assets acquired was $494,261 and liabilities assumed was $441,858. The Company recorded $7,949 in goodwill related to the acquisition.
The following table presents the consideration paid by the Company in the acquisition of Jefferson and the assets acquired and liabilities assumed as of May 31, 2014:
 
As
Recorded
by
Jefferson
 
Fair Value and
Other Merger
Related
Adjustments
 
As
Recorded
by the
Company
Consideration Paid
 
 
 
 
 
Cash paid including cash in lieu of fractional shares
 
 
 
 
$
25,251

Fair value of HomeTrust common stock at $15.03 per share
 
 
 
 
25,239

Total consideration
 
 
 
 
$
50,490

Assets
 
 
 
 
 

Cash and cash equivalents
$
18,325

 
$

 
$
18,325

Securities available for sale
85,744

 
(675
)
 
85,069

Loans, net of allowance
338,616

 
(8,704
)
 
329,912

FHLB Stock
4,635

 

 
4,635

REO
3,288

 
(1,064
)
 
2,224

Premises and equipment, net
24,662

 
(1,487
)
 
23,175

Accrued interest receivable
1,367

 
(90
)
 
1,277

Deferred income taxes
9,606

 
3,637

 
13,243

Core deposit intangibles
847

 
2,683

 
3,530

Other assets
7,171

 
(393
)
 
6,778

Total assets acquired
$
494,261

 
$
(6,093
)
 
$
488,168

Liabilities
 

 
 

 
 

Deposits
$
376,985

 
$
371

 
$
377,356

Other borrowings
55,081

 
858

 
55,939

Subordinated debentures
7,460

 
2,540

 
10,000

Other liabilities
2,332

 

 
2,332

Total liabilities assumed
$
441,858

 
$
3,769

 
$
445,627

Net identifiable assets acquired over liabilities assumed
$
52,403

 
$
(9,862
)
 
42,541

Goodwill
 

 
 

 
$
7,949

The carrying amount of acquired loans from Jefferson as of May 31, 2014 consisted of purchased performing loans and PCI loans as detailed in the following table:
 
Purchased
Performing
 
PCI
 
Total
Loans
Retail Consumer Loans:
 
 
 
 
 
One-to-four family
$
74,378

 
$
6,066

 
$
80,444

HELOCs
16,857

 
18

 
16,875

Construction and land/lots
7,810

 
924

 
8,734

Consumer
3,690

 
2

 
3,692

Commercial:
 

 
 

 
 

Commercial real estate
119,635

 
15,649

 
135,284

Construction and development
24,658

 
1,012

 
25,670

Commercial and industrial
52,863

 
6,350

 
59,213

Total
$
299,891

 
$
30,021

 
$
329,912


12

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

On July 31, 2013, the Company completed its acquisition of BankGreenville Financial Corporation ("BankGreenville") in accordance with the terms of the Agreement and Plan of Merger dated May 3, 2013. Under the terms of the agreement, BankGreenville shareholders received $6.63 per share in cash consideration. This represents approximately $7,823 of aggregate deal consideration. On October 27, 2015, additional contingent cash consideration of $0.41 per share (or approximately $484) was paid at the expiration of a 24 month performance period on a select pool of loans totaling approximately $8,000.
The book value as of July 31, 2013, of assets acquired was $102,180 and liabilities assumed was $94,117. The Company recorded $2,802 in goodwill related to the acquisition.
The following table presents the consideration paid by the Company in the acquisition of BankGreenville and the assets acquired and liabilities assumed as of July 31, 2013:
 
As Recorded
by
BankGreenville
 
Fair Value and
Other Merger
Related
Adjustments
 
As
Recorded
by the
Company
Consideration Paid
 
 
 
 
 
Cash
 
 
 
 
$
7,823

Repayment of BankGreenville preferred stock
 
 
 
 
1,050

Contingent cash consideration (1)
 
 
 
 
680

Total consideration
 
 
 
 
$
9,553

Assets
 
 
 
 
 

Cash and cash equivalents
$
10,348

 
$

 
$
10,348

Investment securities
34,345

 

 
34,345

Loans, net of allowance
51,622

 
(3,792
)
 
47,830

FHLB Stock
447

 

 
447

REO
2,317

 
(168
)
 
2,149

Premises and equipment, net
2,458

 
(117
)
 
2,341

Accrued interest receivable
429

 

 
429

Deferred tax asset

 
2,470

 
2,470

Other assets
214

 

 
214

Core deposit intangibles

 
530

 
530

Total assets acquired
$
102,180

 
$
(1,077
)
 
$
101,103

Liabilities
 

 
 

 
 

Deposits
$
88,906

 
$
201

 
$
89,107

Other borrowings
4,700

 
34

 
4,734

Other liabilities
511

 

 
511

Total liabilities assumed
$
94,117

 
$
235

 
$
94,352

Net identifiable assets acquired over liabilities assumed
$
8,063

 
$
(1,312
)
 
6,751

Goodwill
 

 
 

 
$
2,802

______________________________________
(1)
Estimate of additional amount to be paid to shareholders after 24 months based on performance of a select pool of loans totaling approximately $8,000. Actual amount paid was $484 on October 27, 2015.
The carrying amount of acquired loans from BankGreenville as of July 31, 2013 consisted of purchased performing loans and PCI loans as detailed in the following table:
 
Purchased
Performing
 
PCI
 
Total
Loans
Retail Consumer Loans:
 
 
 
 
 
One-to-four family
$
8,274

 
$
1,392

 
$
9,666

HELOCs
3,987

 
134

 
4,121

Consumer
522

 

 
522

Commercial:
 

 
 

 
 

Commercial real estate
23,073

 
4,552

 
27,625

Construction and development
2,367

 
3,529

 
5,896

Total
$
38,223

 
$
9,607

 
$
47,830


13

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

4.
Securities Available for Sale
Securities available for sale consist of the following at the dates indicated:
 
December 31, 2015
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
U.S. Government Agencies
$
100,444

 
$
353

 
$
(40
)
 
$
100,757

Residential Mortgage-backed Securities of U.S. Government
 

 
 

 
 

 
 

Agencies and Government-Sponsored Enterprises
107,202

 
495

 
(354
)
 
107,343

Municipal Bonds
16,674

 
436

 
(33
)
 
17,077

Corporate Bonds
3,889

 
100

 
(2
)
 
3,987

Equity Securities
63

 

 

 
63

Total
$
228,272

 
$
1,384

 
$
(429
)
 
$
229,227

 
June 30, 2015
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
U.S. Government Agencies
$
115,683

 
$
455

 
$
(67
)
 
$
116,071

Residential Mortgage-backed Securities of U.S. Government
 

 
 

 
 

 
 

Agencies and Government-Sponsored Enterprises
120,294

 
674

 
(159
)
 
120,809

Municipal Bonds
16,359

 
372

 
(53
)
 
16,678

Corporate Bonds
3,889

 
96

 

 
3,985

Equity Securities
63

 

 

 
63

Total
$
256,288

 
$
1,597

 
$
(279
)
 
$
257,606

Debt securities available for sale by contractual maturity at the dates indicated are shown below. Mortgage-backed securities are not included in the maturity categories because the borrowers in the underlying pools may prepay without penalty; therefore, it is unlikely that the securities will pay at their stated maturity schedule.
 
December 31, 2015
 
Amortized
Cost
 
Estimated
Fair Value
Due within one year
$
310

 
$
310

Due after one year through five years
71,817

 
71,934

Due after five years through ten years
45,131

 
45,724

Due after ten years
3,749

 
3,853

Mortgage-backed securities
107,202

 
107,343

Total
$
228,209

 
$
229,164

The Company had no sales of securities available for sale during the three and six months ended December 31, 2015. Proceeds from sales of securities available for sale were $10,387 in the three and six months ended December 31, 2014. Gross realized gains were $74 and gross realized losses were $13 for the three and six months ended December 31, 2014.
Securities available for sale with costs totaling $171,039 and $181,404 with market values of $171,581 and $182,217 at December 31, 2015 and June 30, 2015, respectively, were pledged as collateral to secure various public deposits and other borrowings.

14

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

The gross unrealized losses and the fair value for securities available for sale aggregated by the length of time that individual securities have been in a continuous unrealized loss position as of December 31, 2015 and June 30, 2015 were as follows:
 
December 31, 2015
 
Less than 12 Months
 
12 Months or More
 
Total
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
U.S. Government Agencies
$
24,366

 
$
(40
)
 
$

 
$

 
$
24,366

 
$
(40
)
Residential Mortgage-backed
 

 
 

 
 

 
 

 
 

 
 

Securities of U.S. Government
 

 
 

 
 

 
 

 
 

 
 

Agencies and Government-
 

 
 

 
 

 
 

 
 

 
 

Sponsored Enterprises
42,493

 
(251
)
 
7,269

 
(103
)
 
49,762

 
(354
)
Municipal Bonds
2,285

 
(33
)
 

 

 
2,285

 
(33
)
Corporate Bonds
395

 
(2
)
 

 

 
395

 
(2
)
Total
$
69,539

 
$
(326
)
 
$
7,269

 
$
(103
)
 
$
76,808

 
$
(429
)
 
June 30, 2015
 
Less than 12 Months
 
12 Months or More
 
Total
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
U.S. Government Agencies
$
35,793

 
$
(67
)
 
$

 
$

 
$
35,793

 
$
(67
)
Residential Mortgage-backed
 

 
 

 
 

 
 

 
 

 
 

Securities of U.S. Government
 

 
 

 
 

 
 

 
 

 
 

Agencies and Government-
 

 
 

 
 

 
 

 
 

 
 

Sponsored Enterprises
24,429

 
(81
)
 
5,037

 
(78
)
 
29,466

 
(159
)
Municipal Bonds
3,920

 
(53
)
 

 

 
3,920

 
(53
)
Total
$
64,142

 
$
(201
)
 
$
5,037

 
$
(78
)
 
$
69,179

 
$
(279
)
The total number of securities with unrealized losses at December 31, 2015, and June 30, 2015 were 112 and 81, respectively. Unrealized losses on securities have not been recognized in income because management has the intent and ability to hold the securities for the foreseeable future, and has determined that it is not more likely than not that the Company will be required to sell the securities prior to a recovery in value. The decline in fair value was largely due to increases in market interest rates. The Company had no other than temporary impairment losses during the three and six months ended December 31, 2015 or the year ended June 30, 2015.
As a requirement for membership, the Bank invests in stock of the FHLB of Atlanta and the Federal Reserve Bank of Richmond ("FRB"). No ready market exists for this stock and the carrying value approximates its fair value based on the redemption provisions of the FHLB of Atlanta and the FRB.

15

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

5.
Loans
Loans consist of the following at the dates indicated:
 
December 31, 2015
 
June 30, 2015
Retail consumer loans:
 
 
 
One-to-four family
$
644,433

 
$
650,750

HELOCs - originated
161,559

 
161,204

HELOCs - purchased
94,112

 
72,010

Construction and land/lots
40,190

 
45,931

Indirect auto finance
86,972

 
52,494

Consumer
3,882

 
3,708

Total retail consumer loans
1,031,148

 
986,097

Commercial loans:
 

 
 

Commercial real estate
453,068

 
441,620

Construction and development
78,540

 
64,573

Commercial and industrial
78,026

 
84,820

Municipal leases
106,778

 
108,574

Total commercial loans
716,412

 
699,587

Total loans
1,747,560

 
1,685,684

Deferred loan costs, net
207

 
23

Total loans, net of deferred loan fees and discount
1,747,767

 
1,685,707

Allowance for loan and lease losses
(21,977
)
 
(22,374
)
Loans, net
$
1,725,790

 
$
1,663,333

All the qualifying one-to-four family first mortgage loans, HELOCs - originated, and FHLB Stock are pledged as collateral by a blanket pledge to secure any outstanding FHLB advances.
The Company's total non-purchased and purchased performing loans by segment, class, and risk grade at the dates indicated follow:
 
Pass
 
Special
Mention
 
Substandard
 
Doubtful
 
Loss
 
Total
December 31, 2015
 
 
 
 
 
 
 
 
 
 
 
Retail consumer loans:
 
 
 
 
 
 
 
 
 
 
 
One-to-four family
$
598,936

 
$
9,548

 
$
27,262

 
$
1,252

 
$
8

 
$
637,006

HELOCs - originated
156,306

 
679

 
4,072

 
198

 
7

 
161,262

HELOCs - purchased
94,112

 

 

 

 

 
94,112

Construction and land/lots
37,228

 
610

 
1,649

 
20

 

 
39,507

Indirect auto finance
86,886

 
53

 
33

 

 

 
86,972

Consumer
3,781

 
40

 
39

 
4

 
9

 
3,873

Commercial loans:
 

 
 

 
 

 
 

 
 

 
 
Commercial real estate
408,070

 
7,425

 
10,610

 

 

 
426,105

Construction and development
67,863

 
464

 
5,407

 

 

 
73,734

Commercial and industrial
66,780

 
1,384

 
5,028

 

 
44

 
73,236

Municipal leases
104,522

 
1,705

 
551

 

 

 
106,778

Total loans
$
1,624,484

 
$
21,908

 
$
54,651

 
$
1,474

 
$
68

 
$
1,702,585


16

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

 
Pass
 
Special
Mention
 
Substandard
 
Doubtful
 
Loss
 
Total
June 30, 2015
 
 
 
 
 
 
 
 
 
 
 
Retail consumer loans:
 
 
 
 
 
 
 
 
 
 
 
One-to-four family
$
598,417

 
$
11,563

 
$
28,656

 
$
1,772

 
$
12

 
$
640,420

HELOCs - originated
155,899

 
580

 
4,020

 
407

 
3

 
160,909

HELOCs - purchased
72,010

 

 

 

 

 
72,010

Construction and land/lots
42,689

 
650

 
1,754

 
124

 

 
45,217

Indirect auto finance
52,396

 
59

 
39

 

 

 
52,494

Consumer
3,610

 
16

 
32

 

 
39

 
3,697

Commercial loans:
 

 
 

 
 

 
 

 
 

 
 

Commercial real estate
384,525

 
12,762

 
13,972

 
182

 

 
411,441

Construction and development
50,815

 
3,567