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EX-32 - EXHIBIT 32 - HomeTrust Bancshares, Inc.htbi-2016x09x30x10qxex32.htm
EX-31.2 - EXHIBIT 31.2 - HomeTrust Bancshares, Inc.htbi-2016x09x30x10qxex312.htm
EX-31.1 - EXHIBIT 31.1 - HomeTrust Bancshares, Inc.htbi-2016x09x30x10qxex311.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 September 30, 2016

[  ]            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 18,000,750 shares of common stock, par value of $.01 per share, issued and outstanding as of November 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)
 
 
 
September 30, 2016
 
June 30,
2016
Assets
 
 
 
Cash
$
32,081

 
$
29,947

Interest-bearing deposits
28,482

 
22,649

Cash and cash equivalents
60,563

 
52,596

Commercial paper
220,682

 
229,859

Certificates of deposit in other banks
153,431

 
161,512

Securities available for sale, at fair value
193,701

 
200,652

Other investments, at cost
31,509

 
29,486

Loans held for sale
8,832

 
5,783

Total loans, net of deferred loan costs and discount
1,881,481

 
1,832,831

Allowance for loan losses
(20,951
)
 
(21,292
)
Net loans
1,860,530

 
1,811,539

Premises and equipment, net
53,981

 
54,231

Accrued interest receivable
7,729

 
7,405

Real estate owned ("REO")
5,715

 
5,956

Deferred income taxes
52,087

 
54,153

Bank owned life insurance
80,444

 
79,858

Goodwill
12,673

 
12,673

Core deposit intangibles
6,486

 
7,136

Other assets
5,746

 
4,838

Total Assets
$
2,754,109

 
$
2,717,677

Liabilities and Stockholders' Equity
 

 
 

Liabilities
 

 
 

Deposits
$
1,793,528

 
$
1,802,696

Borrowings
536,500

 
491,000

Capital lease obligations
1,953

 
1,958

Other liabilities
57,727

 
62,047

Total liabilities
2,389,708

 
2,357,701

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, 17,999,150 shares
    issued and outstanding at September 30, 2016; 17,998,750 at June 30, 2016
180

 
180

Additional paid in capital
186,960

 
186,104

Retained earnings
183,637

 
179,813

Unearned Employee Stock Ownership Plan ("ESOP") shares
(8,332
)
 
(8,464
)
Accumulated other comprehensive income
1,956

 
2,343

Total stockholders' equity
364,401

 
359,976

Total Liabilities and Stockholders' Equity
$
2,754,109

 
$
2,717,677

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)
 
(Unaudited)
 
Three Months Ended
 
September 30,
 
2016
 
2015
Interest and Dividend Income
 
 
 
Loans
$
20,480

 
$
19,635

Securities available for sale
880

 
1,199

Certificates of deposit and other interest-bearing deposits
1,044

 
830

Other investments
387

 
345

Total interest and dividend income
22,791

 
22,009

Interest Expense
 

 
 

Deposits
1,099

 
1,191

Other borrowings
555

 
247

Total interest expense
1,654

 
1,438

Net Interest Income
21,137

 
20,571

Provision for Loan Losses

 

Net Interest Income after Provision for Loan Losses
21,137

 
20,571

Noninterest Income
 

 
 

Service charges on deposit accounts
1,749

 
1,699

Mortgage banking income and fees
976

 
728

Gain from sale of premises and equipment
385

 

Other, net
966

 
942

Total noninterest income
4,076

 
3,369

Noninterest Expense
 

 
 

Salaries and employee benefits
10,691

 
10,857

Net occupancy expense
2,061

 
2,259

Marketing and advertising
430

 
485

Telephone, postage, and supplies
612

 
830

Deposit insurance premiums
279

 
525

Computer services
1,427

 
1,584

Loss (gain) on sale and impairment of REO
129

 
(21
)
REO expense
144

 
355

Core deposit intangible amortization
650

 
774

Merger-related expenses
307

 

Other
2,235

 
2,187

Total noninterest expense
18,965

 
19,835

Income Before Income Taxes
6,248

 
4,105

Income Tax Expense
2,424

 
1,541

Net Income
$
3,824

 
$
2,564

Per Share Data:
 

 
 

Net income per common share:
 

 
 

Basic
$
0.22

 
$
0.14

Diluted
$
0.22

 
$
0.14

Average shares outstanding:
 

 
 

Basic
17,208,682

 
18,077,987

Diluted
17,451,295

 
18,291,029

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
 
September 30,
 
2016
 
2015
Net Income
$
3,824

 
$
2,564

Other Comprehensive Income
 

 
 

  Unrealized holding gains (losses) on securities available for sale
 

 
 

Gains (losses) arising during the period
(586
)
 
1,327

Deferred income tax benefit (expense)
199

 
(451
)
Total other comprehensive income (loss)
$
(387
)
 
$
876

Comprehensive Income
$
3,437

 
$
3,440

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 (loss)
 
Total
Stockholders'
Equity
 
Shares
 
Amount
 
 
 
 
 
Balance at June 30, 2015
19,488,449

 
$
195

 
$
210,621

 
$
168,357

 
$
(8,993
)
 
$
870

 
$
371,050

Net income

 

 

 
2,564

 

 

 
2,564

Stock repurchased
(414,362
)
 
(4
)
 
(7,367
)
 

 

 

 
(7,371
)
Forfeited restricted stock
(450
)
 

 

 

 

 

 

Exercised stock options
400

 

 
6

 

 

 

 
6

Stock option expense

 

 
442

 

 

 

 
442

Restricted stock expense

 

 
346

 

 

 

 
346

ESOP shares allocated

 

 
103

 

 
132

 

 
235

Other comprehensive income

 

 

 

 

 
876

 
876

Balance at September 30, 2015
19,074,037

 
$
191

 
$
204,151

 
$
170,921

 
$
(8,861
)
 
$
1,746

 
$
368,148

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2016
17,998,750

 
$
180

 
$
186,104

 
$
179,813

 
$
(8,464
)
 
$
2,343

 
$
359,976

Net income

 

 

 
3,824

 

 

 
3,824

Granted restricted stock
400

 

 

 

 

 

 

Stock option expense

 

 
362

 

 

 

 
362

Restricted stock expense

 

 
377

 

 

 

 
377

ESOP shares allocated

 

 
117

 

 
132

 

 
249

Other comprehensive loss

 

 

 

 

 
(387
)
 
(387
)
Balance at September 30, 2016
17,999,150

 
$
180

 
$
186,960

 
$
183,637

 
$
(8,332
)
 
$
1,956

 
$
364,401

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)
 
Three Months Ended September 30,
 
2016
 
2015
Operating Activities:
 
 
 
Net income
$
3,824

 
$
2,564

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 

 
 

Depreciation
868

 
1,046

Deferred income tax expense
2,266

 
1,571

Net amortization and accretion
(2,180
)
 
(1,442
)
Gain from sale of premises and equipment
(385
)
 

Loss (gain) on sale and impairment of REO
129

 
(21
)
Gain on sale of loans held for sale
(382
)
 
(455
)
Origination of loans held for sale
(38,908
)
 
(22,561
)
Proceeds from sales of loans held for sale
36,241

 
24,878

Decrease (increase) in deferred loan costs, net
(5
)
 
153

Decrease (increase) in accrued interest receivable and other assets
(1,232
)
 
7,544

Amortization of core deposit intangibles
650

 
774

Earnings from bank owned life insurance
(586
)
 
(509
)
ESOP compensation expense
249

 
235

Restricted stock and stock option expense
739

 
788

Decrease in other liabilities
(4,320
)
 
(3,031
)
Net cash provided by (used in) operating activities
(3,032
)
 
11,534

Investing Activities:
 

 
 

Purchase of securities available for sale
(13,000
)
 
(11,100
)
Proceeds from maturities of securities available for sale
12,570

 
13,060

Net maturities of commercial paper
9,724

 
13,224

Purchase of certificates of deposit in other banks
(13,754
)
 
(7,453
)
Maturities of certificates of deposit in other banks
21,835

 
21,696

Principal repayments of mortgage-backed securities
6,649

 
7,320

Net purchases of other investments
(2,023
)
 
(42
)
Net increase in loans
(47,513
)
 
(55,842
)
Purchase of premises and equipment
(628
)
 
(420
)
Proceeds from sale of premises and equipment
395

 

Proceeds from sale of REO
417

 
639

Net cash used in investing activities
(25,328
)
 
(18,918
)
Financing Activities:
 

 
 

Net decrease in deposits
(9,168
)
 
(52,176
)
Net increase in other borrowings
45,500

 
1,000

Common stock repurchased

 
(7,371
)
Exercised stock options

 
6

Decrease in capital lease obligations
(5
)
 
(5
)
Net cash provided by (used in) financing activities
36,327

 
(58,546
)
Net Increase (Decrease) in Cash and Cash Equivalents
7,967

 
(65,930
)
Cash and Cash Equivalents at Beginning of Period
52,596

 
116,160

Cash and Cash Equivalents at End of Period
$
60,563

 
$
50,230


6



HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows (continued)
(Dollars in thousands)
Supplemental Disclosures:
Three Months Ended September 30,
 
2016
 
2015
Cash paid during the period for:
 
 
 
Interest
$
2,129

 
$
1,445

Income taxes
100

 
100

Noncash transactions:
 

 
 

Unrealized gain (loss) in value of securities available for sale, net of income taxes
(387
)
 
876

Transfers of loans to REO
305

 
228

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, 2016 ("2016 Form 10-K") filed with the SEC on September 13, 2016. The results of operations for the three months ended September 30, 2016 are not necessarily indicative of results that may be expected for the entire fiscal year ending June 30, 2017.
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 2016 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 August 2015, the Financial Accounting Standards Board ("FASB") issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606)”, which defers the effective date of Accounting Standard Update ("ASU") No. 2014-09 one year. ASU No. 2014-09 created Topic 606 and supersedes Topic 605, Revenue Recognition. The core principle of Topic 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In general, the new guidance requires companies to use more judgment and make more estimates than under current guidance, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. In May 2016, the FASB issued ASU No. 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which provides clarifying guidance in certain narrow areas and adds some practical expedients, but does not change the core revenue recognition principle in Topic 606. ASU No. 2015-14 is effective for interim and annual periods beginning after December 15, 2017; early adoption is permitted for interim and annual periods beginning after December 15, 2016. For financial reporting purposes, the standard allows for either full retrospective adoption, meaning the standard is applied to all of the periods presented, or modified retrospective adoption, meaning the standard is applied only to the most current period presented in the financial statements with the cumulative effect of initially applying the standard recognized at the date of initial application. We are currently evaluating the impact of this guidance on our financial statements and the timing of adoption.
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

8

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

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 interim and annual periods beginning after December 15, 2017. The adoption of ASU No. 2016-01 is not expected to have a material impact on the Company's Consolidated Financial Statements.
In February 2016, the FASB issued ASU 2016-02, "Leases (ASC 842)." The guidance in this ASU requires most leases to be recognized on the balance sheet as a right-of-use asset and a lease liability. It will be critical to identify leases embedded in a contract to avoid misstating the lessee’s balance sheet. For income statement purposes, the FASB retained a dual model, requiring leases to be classified as either operating or finance. Classification will be based on criteria that are largely similar to those applied in current lease accounting, but without explicit bright lines. This ASU is effective for interim and annual periods beginning after December 15, 2018. We are currently evaluating the impact of this guidance on our Consolidated Financial Statements and the timing of adoption.
In March 2016, the FASB issued ASU 2016-09, "Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting." The ASU changes the accounting for certain aspects of share-based payments to employees. The guidance requires the recognition of the income tax effects of awards in the income statement when the awards vest or are settled, thus eliminating additional paid in capital pools. The guidance also allows for the employer to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting. In addition, the guidance allows for a policy election to account for forfeitures as they occur rather than on an estimated basis. This ASU is effective for interim and annual periods beginning after December 15, 2016. We are currently evaluating the impact of this guidance on our Consolidated Financial Statements and the timing of adoption.
In June 2016, the FASB issued ASU No. 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." The ASU significantly changes the impairment model for most financial assets that are measured at amortized cost and certain other instruments from an incurred loss model to an expected loss model. This ASU is effective for interim and annual reporting periods beginning after December 15, 2019. Early adoption is permitted for all entities beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact of the pending adoption of the ASU on its Consolidated Financial Statements.
In August 2016, the FASB issued ASU No. 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments." The ASU amends the guidance on the classification of certain cash receipts and payments in the statement of cash flows and is intended to reduce the diversity in practice. This ASU is effective for interim and annual reporting periods beginning after December 15, 2017. Early adoption is permitted for all entities beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact of the pending adoption of the ASU on its Consolidated Financial Statements.
3.
Business Combinations
On September 21, 2016, the Company announced that HomeTrust Bancshares, Inc. and TriSummit Bancorp, Inc. ("TriSummit") entered into an agreement under which the Company will acquire TriSummit with six locations in Kingsport, TN, Johnson City, TN, and Bristol, VA (the “Tri-Cities” region) and also in Morristown and Jefferson City, TN. The acquisition will add approximately $246.0 million of loans and $288.0 million of deposits. Under the terms of the agreement, TriSummit shareholders will receive a total of $8.80 per share in merger consideration consisting of $4.40 in cash plus $4.40 in HomeTrust common stock. This represents approximately $31.8 million of aggregate transaction consideration. The transaction is anticipated to close in the first calendar quarter of 2017, subject to TriSummit shareholder approval and customary closing conditions, including regulatory approvals.
4.
Securities Available for Sale
Securities available for sale consist of the following at the dates indicated:
 
September 30, 2016
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
U.S. Government Agencies
$
77,868

 
$
503

 
$
(9
)
 
$
78,362

Residential Mortgage-backed Securities of U.S. Government
 

 
 

 
 

 
 

Agencies and Government-Sponsored Enterprises
88,929

 
1,535

 
(78
)
 
90,386

Municipal Bonds
16,131

 
854

 
(3
)
 
16,982

Corporate Bonds
7,746

 
165

 
(3
)
 
7,908

Equity Securities
63

 

 

 
63

Total
$
190,737

 
$
3,057

 
$
(93
)
 
$
193,701


9

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

 
June 30, 2016
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
U.S. Government Agencies
$
77,356

 
$
624

 
$

 
$
77,980

Residential Mortgage-backed Securities of U.S. Government
 

 
 

 
 

 
 

Agencies and Government-Sponsored Enterprises
95,668

 
1,824

 
(84
)
 
97,408

Municipal Bonds
16,242

 
992

 

 
17,234

Corporate Bonds
7,773

 
194

 

 
7,967

Equity Securities
63

 

 

 
63

Total
$
197,102

 
$
3,634

 
$
(84
)
 
$
200,652

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.
 
September 30, 2016
 
Amortized
Cost
 
Estimated
Fair Value
Due within one year
$
905

 
$
908

Due after one year through five years
80,586

 
81,039

Due after five years through ten years
17,766

 
18,621

Due after ten years
2,488

 
2,684

Mortgage-backed securities
88,929

 
90,386

Total
$
190,674

 
$
193,638

The Company had no sales of securities available for sale during the three months ended September 30, 2016 and 2015.
Securities available for sale with costs totaling $134,678 and $151,359 with market values of $137,064 and $154,132 at September 30, 2016 and June 30, 2016, respectively, were pledged as collateral to secure various public deposits and other borrowings.
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 September 30, 2016 and June 30, 2016 were as follows:
 
September 30, 2016
 
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
$
10,995

 
$
(9
)
 
$

 
$

 
$
10,995

 
$
(9
)
Residential Mortgage-backed Securities of U.S. Government Agencies and Government-Sponsored Enterprises
6,262

 
(19
)
 
4,383

 
(59
)
 
10,645

 
(78
)
Municipal Bonds
1,477

 
(3
)
 

 

 
1,477

 
(3
)
Corporate Bonds
3,883

 
(3
)
 

 

 
3,883

 
(3
)
Total
$
22,617

 
$
(34
)
 
$
4,383

 
$
(59
)
 
$
27,000

 
$
(93
)
 
June 30, 2016
 
Less than 12 Months
 
12 Months or More
 
Total
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
Residential Mortgage-backed Securities of U.S. Government Agencies and Government-Sponsored Enterprises
$
1,970

 
$
(20
)
 
$
6,040

 
$
(64
)
 
$
8,010

 
$
(84
)
Total
$
1,970

 
$
(20
)
 
$
6,040

 
$
(64
)
 
$
8,010

 
$
(84
)
The total number of securities with unrealized losses at September 30, 2016, and June 30, 2016 were 53 and 44, 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,

10

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

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 months ended September 30, 2016 or the year ended June 30, 2016.
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.
5.
Loans
Loans consist of the following at the dates indicated:
 
September 30, 2016
 
June 30, 2016
Retail consumer loans:
 
 
 
One-to-four family
$
613,568

 
$
623,701

HELOCs - originated
161,679

 
163,293

HELOCs - purchased
169,007

 
144,377

Construction and land/lots
40,100

 
38,102

Indirect auto finance
122,115

 
108,478

Consumer
5,348

 
4,635

Total retail consumer loans
1,111,817

 
1,082,586

Commercial loans:
 

 
 

Commercial real estate
487,997

 
486,561

Construction and development
109,507

 
86,840

Commercial and industrial
70,393

 
73,289

Municipal leases
101,400

 
103,183

Total commercial loans
769,297

 
749,873

Total loans
1,881,114

 
1,832,459

Deferred loan costs, net
367

 
372

Total loans, net of deferred loan costs and discount
1,881,481

 
1,832,831

Allowance for loan and lease losses
(20,951
)
 
(21,292
)
Loans, net
$
1,860,530

 
$
1,811,539

All the qualifying one-to-four family first mortgage loans, HELOCs, 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
September 30, 2016
 
 
 
 
 
 
 
 
 
 
 
Retail consumer loans:
 
 
 
 
 
 
 
 
 
 
 
One-to-four family
$
579,110

 
$
7,542

 
$
19,038

 
$
1,610

 
$
47

 
$
607,347

HELOCs - originated
157,802

 
711

 
2,782

 
94

 
9

 
161,398

HELOCs - purchased
169,007

 

 

 

 

 
169,007

Construction and land/lots
38,433

 
444

 
672

 
9

 

 
39,558

Indirect auto finance
121,990

 
13

 
101

 
10

 
1

 
122,115

Consumer
5,148

 

 
183

 
1

 
9

 
5,341

Commercial loans:
 

 
 

 
 

 
 

 
 

 
 
Commercial real estate
453,449

 
6,862

 
9,476

 
1

 

 
469,788

Construction and development
102,035

 
681

 
3,869

 

 

 
106,585

Commercial and industrial
61,685

 
995

 
4,472

 

 
3

 
67,155

Municipal leases
99,782

 
964

 
654

 

 

 
101,400

Total loans
$
1,788,441

 
$
18,212

 
$
41,247

 
$
1,725

 
$
69

 
$
1,849,694


11

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, 2016
 
 
 
 
 
 
 
 
 
 
 
Retail consumer loans:
 
 
 
 
 
 
 
 
 
 
 
One-to-four family
$
587,440

 
$
7,800

 
$
20,129

 
$
1,283

 
$
11

 
$
616,663

HELOCs - originated
159,275

 
678

 
2,997

 
55

 
10

 
163,015

HELOCs - purchased
144,377

 

 

 

 

 
144,377

Construction and land/lots
36,298

 
542

 
679

 
9

 

 
37,528

Indirect auto finance
108,432

 
14

 
21

 
11

 

 
108,478

Consumer
4,390

 
1

 
224

 
2

 
9

 
4,626

Commercial loans:
 

 
 

 
 

 
 

 
 

 
 

Commercial real estate
448,188

 
7,817

 
9,232

 
1

 

 
465,238

Construction and development
79,005

 
480

 
4,208

 

 

 
83,693

Commercial and industrial
63,299

 
1,032

 
5,361

 

 
2

 
69,694

Municipal leases
100,867

 
1,651

 
665

 

 

 
103,183

Total loans
$
1,731,571

 
$
20,015

 
$
43,516

 
$
1,361

 
$
32

 
$
1,796,495

The Company's total PCI loans by segment, class, and risk grade at the dates indicated follow:
 
Pass
 
Special
Mention
 
Substandard
 
Doubtful
 
Loss
 
Total
September 30, 2016
 
 
 
 
 
 
 
 
 
 
 
Retail consumer loans:
 
 
 
 
 
 
 
 
 
 
 
One-to-four family
$
4,244

 
$
376

 
$
1,397

 
$
189

 
$
15

 
$
6,221

HELOCs - originated
257

 

 
24

 

 

 
281

Construction and land/lots
501

 

 
41

 

 

 
542

Consumer
7

 

 

 

 

 
7

Commercial loans:
 

 
 

 
 

 
 

 
 

 
 

Commercial real estate
10,439

 
3,133

 
4,637

 

 

 
18,209

Construction and development
894

 
64

 
1,964

 

 

 
2,922

Commercial and industrial
3,055

 
139

 
44

 

 

 
3,238

Total loans
$
19,397

 
$
3,712

 
$
8,107

 
$
189

 
$
15

 
$
31,420

 
Pass
 
Special
Mention
 
Substandard
 
Doubtful
 
Loss
 
Total
June 30, 2016
 
 
 
 
 
 
 
 
 
 
 
Retail consumer loans:
 
 
 
 
 
 
 
 
 
 
 
One-to-four family
$
5,039

 
$
377

 
$
1,593

 
$
14

 
$
15

 
$
7,038

HELOCs - originated
258

 

 
20

 

 

 
278

Construction and land/lots
522

 

 
52

 

 

 
574

Consumer
8

 

 

 

 
1

 
9

Commercial loans:
 

 
 

 
 

 
 

 
 

 
 

Commercial real estate
12,594

 
4,266

 
4,463

 

 

 
21,323

Construction and development
1,136

 
292

 
1,719

 

 

 
3,147

Commercial and industrial
3,234

 
194

 
167

 

 

 
3,595

Total loans
$
22,791

 
$
5,129

 
$
8,014

 
$
14

 
$
16

 
$
35,964


12

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


The Company's total loans by segment, class, and delinquency status at the dates indicated follows:
 
Past Due
 
 
 
Total
 
30-89 Days
 
90 Days+
 
Total
 
Current
 
Loans
September 30, 2016
 
 
 
 
 
 
 
 
 
Retail consumer loans:
 
 
 
 
 
 
 
 
 
One-to-four family
$
3,002

 
$
5,160

 
$
8,162

 
$
605,406

 
$
613,568

HELOCs - originated
726

 
374

 
1,100

 
160,579

 
161,679

HELOCs - purchased

 

 

 
169,007

 
169,007

Construction and land/lots
51

 
61

 
112

 
39,988

 
40,100

Indirect auto finance
71

 
52

 
123

 
121,992

 
122,115

Consumer
9

 
8

 
17

 
5,331

 
5,348

Commercial loans:
 
 
 
 
 
 
 
 
 
Commercial real estate
1,226

 
3,841

 
5,067

 
482,930

 
487,997

Construction and development
223

 
1,514

 
1,737

 
107,770

 
109,507

Commercial and industrial
70

 
1,732

 
1,802

 
68,591

 
70,393

Municipal leases

 

 

 
101,400

 
101,400

Total loans
$
5,378

 
$
12,742

 
$
18,120

 
$
1,862,994

 
$
1,881,114

The table above includes PCI loans of $591 30-89 days past due and $5,580 90 days or more past due as of September 30, 2016.
 
Past Due
 
 
 
Total
 
30-89 Days
 
90 Days+
 
Total
 
Current
 
Loans
June 30, 2016
 
 
 
 
 
 
 
 
 
Retail consumer loans:
 
 
 
 
 
 
 
 
 
One-to-four family
$
3,514

 
$
5,476

 
$
8,990

 
$
614,711

 
$
623,701

HELOCs - originated
220

 
377

 
597

 
162,696

 
163,293

HELOCs - purchased

 

 

 
144,377

 
144,377

Construction and land/lots
100

 
119

 
219

 
37,883

 
38,102

Indirect auto finance
182

 

 
182

 
108,296

 
108,478

Consumer
4

 
4

 
8

 
4,627

 
4,635

Commercial loans:
 

 
 

 
 

 
 

 
 

Commercial real estate
1,436

 
3,353

 
4,789

 
481,772

 
486,561

Construction and development
371

 
1,296

 
1,667

 
85,173

 
86,840

Commercial and industrial
216

 
2,819

 
3,035

 
70,254

 
73,289

Municipal leases

 

 

 
103,183

 
103,183

Total loans
$
6,043

 
$
13,444

 
$
19,487

 
$
1,812,972

 
$
1,832,459

The table above includes PCI loans of $1,596 30-89 days past due and $5,776 90 days or more past due as of June 30, 2016.

13

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

The Company's recorded investment in loans, by segment and class, that are not accruing interest or are 90 days or more past due and still accruing interest at the dates indicated follow:
 
September 30, 2016
 
June 30, 2016
 
Nonaccruing
 
90 Days + &
still accruing
 
Nonaccruing
 
90 Days + &
still accruing
Retail consumer loans:
 
 
 
 
 
 
 
One-to-four family
$
8,611

 
$

 
$
9,192

 
$

HELOCs - originated
1,000

 

 
1,026

 

Construction and land/lots
183

 

 
188

 

Indirect auto finance
91

 

 
20

 

Consumer
30

 

 
15

 

Commercial loans:
 

 
 

 
 

 
 

Commercial real estate
3,226

 

 
3,222

 

Construction and development
1,275

 

 
1,417

 

Commercial and industrial
2,195

 

 
3,019

 

Municipal leases
408

 

 
419

 

Total loans
$
17,019

 
$

 
$
18,518

 
$

PCI loans totaling $6,149 at September 30, 2016 and $6,607 at June 30, 2016 are excluded from nonaccruing loans due to the accretion of discounts established in accordance with the acquisition method of accounting for business combinations.
Troubled debt restructurings ("TDRs") are loans which have renegotiated loan terms to assist borrowers who are unable to meet the original terms of their loans.  Such modifications to loan terms may include a lower interest rate, a reduction in principal, or a longer term to maturity. Additionally, all TDRs are considered impaired. The Company had no commitments to lend additional funds on these TDR loans at September 30, 2016.
The Company's loans that were performing under the payment terms of TDRs that were excluded from nonaccruing loans above at the dates indicated follow:
 
September 30, 2016
 
June 30, 2016
Performing TDRs included in impaired loans
$
27,635

 
$
28,263

An analysis of the allowance for loan losses by segment for the periods shown is as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30, 2016
 
Three Months Ended September 30, 2015
 
PCI
 
Retail
Consumer
 
Commercial
 
Total
 
PCI
 
Retail
Consumer
 
Commercial
 
Total
Balance at beginning of period
$
361

 
$
11,549

 
$
9,382

 
$
21,292

 
$
401

 
$
12,575

 
$
9,398

 
$
22,374

Provision for (recovery of) loan losses
(5
)
 
(895
)
 
900

 

 
(73
)
 
73

 

 

Charge-offs

 
(419
)
 
(607
)
 
(1,026
)
 

 
(469
)
 
(334
)
 
(803
)
Recoveries

 
211

 
474

 
685

 

 
247

 
294

 
541

Balance at end of period
$
356

 
$
10,446

 
$
10,149

 
$
20,951

 
$
328

 
$
12,426

 
$
9,358

 
$
22,112


14

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

The Company's ending balances of loans and the related allowance, by segment and class, at the dates indicated follows:
 
Allowance for Loan Losses
 
Total Loans Receivable
 
PCI
 
Loans
individually
evaluated for
impairment
 
Loans
collectively
evaluated
 
Total
 
PCI
 
Loans
individually
evaluated for
impairment
 
Loans
collectively
evaluated
 
Total
September 30, 2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Retail consumer loans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
One-to-four family
$
20

 
$
364

 
$
5,526

 
$
5,910

 
$
6,221

 
$
11,209

 
$
596,138

 
$
613,568

HELOCs - originated

 
9

 
1,736

 
1,745

 
281

 
14

 
161,384

 
161,679

HELOCs - purchased

 

 
676

 
676

 

 

 
169,007

 
169,007

Construction and land/lots

 

 
1,038

 
1,038

 
542

 
388

 
39,170

 
40,100

Indirect auto finance

 
1

 
1,045

 
1,046

 

 
1

 
122,114

 
122,115

Consumer

 
9

 
42

 
51

 
7

 
9

 
5,332

 
5,348

Commercial loans:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 
Commercial real estate
298

 
150

 
6,282

 
6,730

 
18,209

 
5,206

 
464,582

 
487,997

Construction and development
14

 

 
2,313

 
2,327

 
2,922

 
1,767

 
104,818

 
109,507

Commercial and industrial
24

 
3

 
754

 
781

 
3,238

 
2,773

 
64,382

 
70,393

Municipal leases

 

 
647

 
647

 

 
294

 
101,106

 
101,400

Total
$
356

 
$
536

 
$
20,059

 
$
20,951

 
$
31,420

 
$
21,661

 
$
1,828,033

 
$
1,881,114

June 30, 2016
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

Retail consumer loans:
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

One-to-four family
$
23

 
$
187

 
$