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, 20172020


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


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)(IRSI.R.S. 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)


Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $.01 per share
HTBIThe NASDAQ Stock Market LLC

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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth 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 [  ]☐
Emerging growth company [X]☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.[ ]☐
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 18,985,175 16,686,601shares of common stock, par value of $.01 per share, issued and outstanding as of February 6, 2018.

3, 2021.



HOMETRUST BANCSHARES, INC. AND SUBSIDIARIES
10-Q
TABLE OF CONTENTS
Page

Number
Item 1. 
23
34
45
56
68
810
Item 2. 
3440
Item 3. 
5156
Item 4. 
5156
Item 1. 
5156
Item 1A. 
5156
Item 2. 
5156
Item 3. 
5257
Item 4. 
5257
Item 5 
5257
Item 6. 
5257
5360
EXHIBIT INDEX
54



1

Glossary of Defined Terms
The following items may be used throughout this Form 10-Q, including the Notes to Consolidated Financial Statements in Item 1 and Management's Discussion and Analysis of Financial Condition and Results of Operations in Item 2 of this Form 10-Q.
TermDefinition
ACLAllowance for Credit Losses
AFSAvailable-For-Sale
ASCAccounting Standard Codification
ASUAccounting Standard Update
BOLIBank Owned Life Insurance
CARES ActCoronavirus Aid, Relief, and Economic Security Act of 2020
CDCertificates of Deposit
CDACollateral Dependent Asset
CECLCurrent Expected Credit Losses
CET1Common Equity Tier 1
COVID-19Coronavirus Disease 2019
CPIConsumer Price Index
DCFDiscounted Cash Flow
ECLExpected Credit Losses
EPSEarnings Per Share
ESOPEmployee Stock Ownership Plan
FASBFinancial Accounting Standards Board
FDICFederal Deposit Insurance Corporation
FHLBFederal Home Loan Bank
FRBFederal Reserve Bank of Richmond
GAAPGenerally Accepted Accounting Principles in the United States
GSEGovernment-Sponsored Enterprises
HELOCHome Equity Line of Credit
LIBORLondon Interbank Offered Rate
MBSMortgage-Backed Security
NCCOBNorth Carolina Office of the Commissioner of Banks
OTTIOther Than Temporary Impairment
PCDPurchased Credit Deteriorated
PCIPurchase Credit Impaired
PPPPaycheck Protection Program
REOReal Estate Owned
ROURight of Use
SECSecurities and Exchange Commission
SBASmall Business Administration
SBICSmall Business Investment Companies
TDRTroubled Debt Restructuring

2

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, 2020
June 30,
2020 (1)
Assets
Cash$27,365 $31,908 
Interest-bearing deposits198,979 89,714 
Cash and cash equivalents226,344 121,622 
Commercial paper, net183,778 304,967 
Certificates of deposit in other banks48,637 55,689 
Debt securities available for sale, at fair value (amortized cost of $150,807 and $124,918 at December 31, 2020 and June 30, 2020, respectively)153,540 127,537 
Other investments, at cost39,572 38,946 
Loans held for sale118,439 77,177 
Total loans, net of deferred loan costs2,678,624 2,769,119 
Allowance for credit losses(39,844)(28,072)
Net loans2,638,780 2,741,047 
Premises and equipment, net70,104 58,462 
Accrued interest receivable9,796 12,312 
REO252 337 
Deferred income taxes18,626 16,334 
BOLI93,326 92,187 
Goodwill25,638 25,638 
Core deposit intangibles638 1,078 
Other assets52,501 49,519 
Total Assets$3,679,971 $3,722,852 
Liabilities and Stockholders' Equity  
Liabilities  
Deposits$2,743,269 $2,785,756 
Borrowings475,000 475,000 
Other liabilities56,978 53,833 
Total liabilities3,275,247 3,314,589 
Stockholders' Equity  
Preferred stock, $0.01 par value, 10,000,000 shares authorized, NaN issued or
    outstanding
0 0 
Common stock, $0.01 par value, 60,000,000 shares authorized, 16,791,027 shares
    issued and outstanding at December 31, 2020; 17,021,357 at June 30, 2020
168 170 
Additional paid in capital166,352 169,648 
Retained earnings242,182 242,776 
Unearned ESOP shares(6,083)(6,348)
Accumulated other comprehensive income2,105 2,017 
Total stockholders' equity404,724 408,263 
Total Liabilities and Stockholders' Equity$3,679,971 $3,722,852 
 (Unaudited)  
 December 31, 2017 June 30,
2017
Assets   
Cash$46,743
 $41,982
Interest-bearing deposits51,922
 45,003
Cash and cash equivalents98,665
 86,985
Commercial paper199,722
 149,863
Certificates of deposit in other banks100,349
 132,274
Securities available for sale, at fair value167,669
 199,667
Other investments, at cost38,877
 39,355
Loans held for sale7,072
 5,607
Total loans, net of deferred loan fees2,418,014
 2,351,470
Allowance for loan losses(21,090) (21,151)
Net loans2,396,924
 2,330,319
Premises and equipment, net62,435
 63,648
Accrued interest receivable9,371
 8,758
Real estate owned ("REO")4,818
 6,318
Deferred income taxes36,526
 57,387
Bank owned life insurance ("BOLI")86,984
 85,981
Goodwill25,638
 25,638
Core deposit intangibles5,773
 7,173
Other assets9,765
 7,560
Total Assets$3,250,588
 $3,206,533
Liabilities and Stockholders' Equity 
  
Liabilities 
  
Deposits$2,108,208
 $2,048,451
Borrowings685,000
 696,500
Capital lease obligations1,925
 1,937
Other liabilities60,094
 61,998
Total liabilities2,855,227
 2,808,886
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, 18,967,175 shares
    issued and outstanding at December 31, 2017; 18,967,875 at June 30, 2017		190
 190
Additional paid in capital215,928
 213,459
Retained earnings187,241
 191,660
Unearned Employee Stock Ownership Plan ("ESOP") shares(7,670) (7,935)
Accumulated other comprehensive income (loss)(328) 273
Total stockholders' equity395,361
 397,647
Total Liabilities and Stockholders' Equity$3,250,588
 $3,206,533
(1)    Derived from audited financial statements.
The accompanying notes are an integral part of these consolidated financial statements.

3


HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Income (Loss)
(Dollars in thousands, except per share data)
(Unaudited)(Unaudited)
Three Months Ended Six Months EndedThree Months EndedSix Months Ended
December 31, December 31,December 31,December 31,
2017 2016 2017 20162020201920202019
Interest and Dividend Income       Interest and Dividend Income
Loans$26,140
 $19,871
 $51,390
 $40,352
Loans$28,343 $32,119 $56,935 $64,385 
Commercial paper and interest-bearing depositsCommercial paper and interest-bearing deposits614 1,912 1,495 4,165 
Securities available for sale904
 862
 1,875
 1,742
Securities available for sale504 1,093 1,032 1,989 
Certificates of deposit and other interest-bearing deposits1,303
 939
 2,472
 1,982
Other investments501
 391
 1,007
 778
Other investments696 772 1,144 1,604 
Total interest and dividend income28,848
 22,063
 56,744
 44,854
Total interest and dividend income30,157 35,896 60,606 72,143 
Interest Expense 
  
  
  
Interest Expense    
Deposits1,541
 1,041
 2,887
 2,140
Deposits2,347 6,321 5,600 12,174 
Borrowings2,077
 607
 4,046
 1,162
Borrowings1,688 2,541 3,375 5,862 
Total interest expense3,618
 1,648
 6,933
 3,302
Total interest expense4,035 8,862 8,975 18,036 
Net Interest Income25,230
 20,415
 49,811
 41,552
Net Interest Income26,122 27,034 51,631 54,107 
Provision for Loan Losses—
 —
 —
 —
Net Interest Income after Provision for Loan Losses25,230
 20,415
 49,811
 41,552
Provision (Benefit) for Credit LossesProvision (Benefit) for Credit Losses(3,030)400 (2,080)400 
Net Interest Income after Provision (Benefit) for Credit LossesNet Interest Income after Provision (Benefit) for Credit Losses29,152 26,634 53,711 53,707 
Noninterest Income 
  
  
  
Noninterest Income    
Service charges and fees on deposit accounts2,185
 1,886
 4,224
 3,800
Service charges and fees on deposit accounts2,416 2,605 4,513 5,048 
Loan income and fees1,361
 937
 2,463
 1,914
Loan income and fees569 871 1,043 1,753 
Gain on sale of loans held for saleGain on sale of loans held for sale3,704 3,775 7,048 6,074 
BOLI income518
 503
 1,080
 1,065
BOLI income511 509 1,043 1,206 
Gain from sale of premises and equipment—
 —
 164
 385
Other, net723
 615
 1,433
 1,019
Other, net2,144 1,314 4,336 2,653 
Total noninterest income4,787
 3,941
 9,364
 8,183
Total noninterest income9,344 9,074 17,983 16,734 
Noninterest Expense 
  
  
  
Noninterest Expense    
Salaries and employee benefits11,973
 11,839
 24,325
 22,530
Salaries and employee benefits15,700 14,170 30,907 28,082 
Net occupancy expense2,473
 2,015
 4,822
 4,076
Net occupancy expense2,261 2,384 4,554 4,726 
Computer servicesComputer services2,220 1,985 4,527 4,009 
Telephone, postage, and suppliesTelephone, postage, and supplies871 798 1,533 1,600 
Marketing and advertising319
 459
 772
 889
Marketing and advertising327 641 652 1,320 
Telephone, postage, and supplies748
 574
 1,433
 1,187
Deposit insurance premiums419
 203
 833
 481
Deposit insurance premiums487 12 998 12 
Computer services1,595
 1,648
 3,140
 3,075
Loss (gain) on sale and impairment of REO104
 339
 (42) 469
Loss (gain) on sale and impairment of REO0 122 (35)103 
REO expense205
 378
 446
 522
REO expense165 238 413 496 
Core deposit intangible amortization681
 618
 1,400
 1,268
Core deposit intangible amortization202 373 440 784 
Merger-related expenses—
 27
 —
 334
Other2,658
 2,380
 5,127
 4,780
Other4,210 3,318 8,454 6,442 
Total noninterest expense21,175
 20,480
 42,256
 39,611
Total noninterest expense26,443 24,041 52,443 47,574 
Income Before Income Taxes8,842
 3,876
 16,919
 10,124
Income Before Income Taxes12,053 11,667 19,251 22,867 
Income Tax Expense19,508
 893
 22,018
 3,317
Income Tax Expense2,592 2,476 4,037 4,872 
Net Income (Loss)$(10,666) $2,983
 $(5,099) $6,807
Net IncomeNet Income$9,461 $9,191 $15,214 $17,995 
Per Share Data: 
  
  
  
Per Share Data:    
Net income (loss) per common share: 
  
  
  
Net income per common share:Net income per common share:    
Basic$(0.59) $0.17
 $(0.28) $0.39
Basic$0.58 $0.54 $0.93 $1.05 
Diluted$(0.59) $0.17
 $(0.28) $0.39
Diluted$0.57 $0.52 $0.92 $1.01 
Average shares outstanding: 
  
  
  
Average shares outstanding:    
Basic17,975,883
 16,900,387
 17,971,439
 16,893,775
Basic16,202,844 16,906,457 16,216,917 17,002,052 
Diluted17,975,883
 17,444,144
 17,971,439
 17,391,404
Diluted16,563,359 17,567,680 16,514,831 17,660,687 
The accompanying notes are an integral part of these consolidated financial statements.

4


HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Comprehensive Income (Loss)
(Dollars in thousands)
 (Unaudited)
 Three Months Ended Six Months Ended
 December 31, December 31,
 2017 2016 2017 2016
Net Income (Loss)$(10,666) $2,983
 $(5,099) $6,807
Other Comprehensive Income (Loss) 
  
  
  
  Unrealized holding losses on securities available for sale 
  
  
  
Losses arising during the period(1,009) (2,955) (859) (3,540)
Deferred income tax benefit303
 1,005
 258
 1,203
Total other comprehensive loss$(706) $(1,950) $(601) $(2,337)
Comprehensive Income (Loss)$(11,372) $1,033
 $(5,700) $4,470
(Unaudited)
Three Months EndedSix Months Ended
December 31,December 31,
 2020201920202019
Net Income$9,461 $9,191 $15,214 $17,995 
Other Comprehensive Income (Loss)    
  Unrealized holding gains (losses) on securities available for sale    
Gains (losses) arising during the period(84)(270)114 25 
Deferred income tax benefit (expense)19 62 (26)(6)
Total other comprehensive income (loss)$(65)$(208)$88 $19 
Comprehensive Income$9,396 $8,983 $15,302 $18,014 
The accompanying notes are an integral part of these consolidated financial statements.

5


HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders' Equity
(Dollars in thousands)

(Unaudited)
Three Months Ended December 31, 2020
Common StockAdditional
Paid In
Capital		Retained
Earnings		Unearned
ESOP
Shares		Accumulated
Other
Comprehensive
Income (loss)		Total
Stockholders'
Equity
SharesAmount
Balance at September 30, 202017,020,724 $170 $170,204 $234,023 $(6,216)$2,170 $400,351 
Net income— — — 9,461 — — 9,461 
Cash dividends declared on common stock, $0.08/common share— — — (1,302)— — (1,302)
Stock repurchased(277,122)(3)(5,176)— — — (5,179)
Forfeited restricted stock(6,575)— — — — — — 
Exercised stock options54,000 1 775 — — — 776 
Stock option expense— — 153 — — — 153 
Restricted stock expense— — 301 — — — 301 
ESOP shares allocated— — 95 — 133 — 228 
Other comprehensive loss— — — — — (65)(65)
Balance at December 31, 202016,791,027 $168 $166,352 $242,182 $(6,083)$2,105 $404,724 
(Unaudited)
Six Months Ended December 31, 2020
Common StockAdditional
Paid In
Capital		Retained
Earnings		Unearned
ESOP
Shares		Accumulated
Other
Comprehensive
Income		Total
Stockholders'
Equity
SharesAmount
Balance at June 30, 202017,021,357 $170 $169,648 $242,776 $(6,348)$2,017 $408,263 
Net income— — — 15,214 — — 15,214 
Cumulative-effect adjustment due to the adoption of ASU 2016-13— — — (13,358)— — (13,358)
Cash dividends declared on common stock, $0.15/common share— — — (2,450)— — (2,450)
Stock repurchased(277,122)(3)(5,176)— — — (5,179)
Forfeited restricted stock(6,575)— — — — — — 
Retired stock(633)— (9)— — — (9)
Exercised stock options54,000 1 775 — — — 776 
Stock option expense— — 317 — — — 317 
Restricted stock expense— — 643 — — — 643 
ESOP shares allocated— — 154 — 265 — 419 
Other comprehensive income— — — — — 88 88 
Balance at December 31, 202016,791,027 $168 $166,352 $242,182 $(6,083)$2,105 $404,724 







6

 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, 201617,998,750
 $180
 $186,104
 $179,813
 $(8,464) $2,343
 $359,976
Net income—
 —
 —
 6,807
 —
 —
 6,807
Granted restricted stock2,000
 —
 —
 —
 —
 —
 —
Stock option expense—
 —
 2,034
 —
 —
 —
 2,034
Restricted stock expense—
 —
 758
 —
 —
 —
 758
ESOP shares allocated—
 —
 273
 —
 265
 —
 538
Other comprehensive loss—
 —
 —
 —
 —
 (2,337) (2,337)
Balance at December 31, 201618,000,750
 $180
 $189,169
 $186,620
 $(8,199) $6
 $367,776
              
              
Balance at June 30, 201718,967,875
 $190
 $213,459
 $191,660
 $(7,935) $273
 $397,647
Net loss—
 —
 —
 (5,099) —
 —
 (5,099)
Cumulative-effect adjustment on the change in accounting for share-based payments—
 —
 —
 680
 —
 —
 680
Forfeited restricted stock(6,600) —
 —
 —
 —
 —
 —
Granted restricted stock2,000
 —
 —
 —
 —
 —
 —
Exercised stock options3,900
 —
 57
 —
 —
 —
 57
Stock option expense—
 —
 1,209
 —
 —
 —
 1,209
Restricted stock expense—
 —
 805
 —
 —
 —
 805
ESOP shares allocated—
 —
 398
 —
 265
 —
 663
Other comprehensive loss—
 —
 —
 —
 —
 (601) (601)
Balance at December 31, 201718,967,175
 $190
 $215,928
 $187,241
 $(7,670) $(328) $395,361
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders' Equity (continued)
(Dollars in thousands)

(Unaudited)
Three Months Ended December 31, 2019
Common StockAdditional
Paid In
Capital		Retained
Earnings		Unearned
ESOP
Shares		Accumulated
Other
Comprehensive
Income (loss)		Total
Stockholders'
Equity
SharesAmount
Balance at September 30, 201917,818,145 $178 $186,359 $232,315 $(6,744)$960 $413,068 
Net income— — — 9,191 — — 9,191 
Cash dividends declared on common stock, $0.07/common share— — — (1,194)— — (1,194)
Stock repurchased(207,261)(2)(5,417)— — — (5,419)
Exercised stock options53,500 1 768 — — — 769 
Stock option expense— — 190 — — — 190 
Restricted stock expense— — 250 — — — 250 
ESOP shares allocated— — 216 — 132 — 348 
Other comprehensive loss— — — — — (208)(208)
Balance at December 31, 201917,664,384 $177 $182,366 $240,312 $(6,612)$752 $416,995 
(Unaudited)
Six Months Ended December 31, 2019
Common StockAdditional
Paid In
Capital		Retained
Earnings		Unearned
ESOP
Shares		Accumulated
Other
Comprehensive
Income (loss)		Total
Stockholders'
Equity
SharesAmount
Balance at June 30, 201917,984,105 $180 $190,315 $224,545 $(6,877)$733 $408,896 
Net income— — — 17,995 — — 17,995 
Cash dividends declared on common stock, $0.13/common share— — — (2,228)— — (2,228)
Stock repurchased(396,421)(4)(10,215)— — — (10,219)
Forfeited restricted stock(3,200)— — — — — — 
Granted restricted stock13,000 — — — — — 
Exercised stock options66,900 1 962 — — — 963 
Stock option expense— — 388 — — — 388 
Restricted stock expense— — 495 — — — 495 
ESOP shares allocated— — 421 — 265 — 686 
Other comprehensive income— — — — — 19 19 
Balance at December 31, 201917,664,384 $177 $182,366 $240,312 $(6,612)$752 $416,995 

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



7

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Six Months Ended December 31,
 20202019
Operating Activities:
Net income$15,214 $17,995 
Adjustments to reconcile net income to net cash used in operating activities:  
Provision (benefit) for credit losses(2,080)400 
Depreciation3,885 2,564 
Deferred income tax expense1,671 4,451 
Net amortization and accretion(342)(2,991)
Gain (loss) on sale and impairment of REO(35)103 
Gain on sale of loans held for sale(7,048)(6,074)
Origination of loans held for sale(312,627)(156,416)
Proceeds from sales of loans held for sale264,325 138,457 
Increase in deferred loan costs, net(316)(1,082)
Decrease (increase) in accrued interest receivable and other assets4,328 (670)
Amortization of core deposit intangibles440 784 
BOLI income(1,043)(1,206)
ESOP compensation expense419 686 
Restricted stock and stock option expense960 883 
Increase (decrease) in other liabilities717 (4,853)
Net cash used in operating activities(31,532)(6,969)
Investing Activities:  
Purchase of securities available for sale(73,690)(56,430)
Proceeds from maturities of securities available for sale38,720 24,860 
Net proceeds (purchases) of commercial paper120,983 (9,187)
Purchase of certificates of deposit in other banks(1,245)(8,616)
Maturities of certificates of deposit in other banks8,297 12,993 
Principal repayments of mortgage-backed securities8,173 7,090 
Net redemptions (purchases) of other investments(626)8,480 
Proceeds from sale of loans not originated for sale0 154,870 
Net decrease (increase) in loans105,181 (78,731)
Purchase of BOLI(96)(65)
Proceeds from redemption of BOLI0 477 
Purchase of premises and equipment(13,382)(777)
Purchase of operating lease equipment(6,940)(5,569)
Proceeds from sale of REO228 1,421 
Net cash provided by investing activities185,603 50,816 
Financing Activities:  
Net increase (decrease) in deposits(42,487)230,512 
Net increase in other borrowings0 (245,000)
Common stock repurchased(5,179)(10,219)
Cash dividends paid(2,450)(2,228)
Retired stock(9)0 
Exercised stock options776 963 
Net cash used in financing activities(49,349)(25,972)
Net Increase in Cash and Cash Equivalents104,722 17,875 
Cash and Cash Equivalents at Beginning of Period121,622 71,043 
Cash and Cash Equivalents at End of Period$226,344 $88,918 
8
 (Unaudited)
 Six Months Ended December 31,
 2017 2016
Operating Activities:   
Net income (loss)$(5,099) $6,807
Adjustments to reconcile net income (loss) to net cash provided by operating activities: 
  
Depreciation1,950
 1,745
Deferred income tax expense21,780
 3,097
Net amortization and accretion(2,567) (3,505)
Gain from sale of premises and equipment(164) (385)
Loss (gain) on sale and impairment of REO(42) 469
Gain on sale of loans held for sale(1,555) (1,444)
Origination of loans held for sale(61,981) (77,526)
Proceeds from sales of loans held for sale62,071
 79,755
Increase (decrease) in deferred loan fees, net297
 (397)
Increase in accrued interest receivable and other assets(2,818) (5,280)
Amortization of core deposit intangibles1,400
 1,268
BOLI income(1,080) (1,065)
ESOP compensation expense663
 538
Restricted stock and stock option expense2,014
 2,792
Decrease in other liabilities(1,904) (3,920)
Net cash provided by operating activities12,965
 2,949
Investing Activities: 
  
Purchase of securities available for sale—
 (15,091)
Proceeds from maturities of securities available for sale19,680
 17,795
Net maturities (purchases) of commercial paper(48,440) 50,928
Purchase of certificates of deposit in other banks(12,619) (24,708)
Maturities of certificates of deposit in other banks44,544
 36,073
Principal repayments of mortgage-backed securities10,941
 13,080
Net redemptions (purchases) of other investments478
 (2,855)
Net increase in loans(65,808) (121,236)
Purchase of BOLI(69) (110)
Proceeds from redemption of BOLI146
 —
Purchase of premises and equipment(1,496) (2,020)
Capital improvements to REO(18) —
Proceeds from sale of premises and equipment923
 395
Proceeds from sale of REO2,151
 1,169
Acquisition costs related to United Financial of North Carolina Inc.—
 (200)
Acquisition costs related to TriSummit Bancorp, Inc.—
 (16,074)
Net cash used in investing activities(49,587) (62,854)
Financing Activities: 
  
Net increase (decrease) in deposits59,757
 (16,531)
Net increase (decrease) in other borrowings(11,500) 69,000
Exercised stock options57
 —
Decrease in capital lease obligations(12) (11)
Net cash provided by financing activities48,302
 52,458
Net Increase (Decrease) in Cash and Cash Equivalents11,680
 (7,447)
Cash and Cash Equivalents at Beginning of Period86,985
 52,596
Cash and Cash Equivalents at End of Period$98,665
 $45,149



HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows (continued)
(Dollars in thousands)
(Unaudited)(Unaudited)
Supplemental Disclosures:Six Months Ended December 31,Supplemental Disclosures:Six Months Ended December 31,
2017 2016 20202019
Cash paid during the period for:   Cash paid during the period for:
Interest$6,788
 $3,754
Interest$5,404 $18,771 
Income taxes266
 170
Income taxes1,686 1,300 
Noncash transactions: 
  
Noncash transactions:  
Unrealized loss in value of securities available for sale, net of income taxes(601) (2,337)
Transfers of loans to REO591
 1,330
Cumulative-effect adjustment on the change in accounting for share-based payments

680
 —
Payable related to the acquisition of United Financial Inc. of North Carolina—
 225
Unrealized gain in value of securities available for sale, net of income taxesUnrealized gain in value of securities available for sale, net of income taxes88 19 
Transfer of loans to REOTransfer of loans to REO108 46 
Transfer of loans held for sale to total loansTransfer of loans held for sale to total loans10,496 9,736 
Transfer of one-to-four family loans to held for saleTransfer of one-to-four family loans to held for sale0 240,453 
Transfer of land from property and equipment to other assets for new finance lease accountingTransfer of land from property and equipment to other assets for new finance lease accounting0 2,052 
New ROU asset and lease liabilities for new operating lease accountingNew ROU asset and lease liabilities for new operating lease accounting597 5,296 
The accompanying notes are an integral part of these consolidated financial statements.

9

HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
1.Summary of Significant Accounting Policies
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.
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States ("GAAP")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").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, 20172020 ("20172020 Form 10-K") filed with the SEC on September 12, 2017.11, 2020. The results of operations for the three and six months ended December 31, 20172020 are not necessarily indicative of results that may be expected for the entire fiscal year ending June 30, 2018.2021.
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 loancredit losses (ii) business combinationson loans and acquired loans, (iii) the valuation of REO, (iv)(ii) the valuation of goodwill and other intangible assets, and (v) the valuation of or recognition of deferred tax assets and liabilities.assets. 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 2017the Company's 2020 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.
Certain amounts reported in prior periods' consolidated financial statements have been reclassifiedOperating, Accounting and Reporting Considerations related to conformCOVID-19
The COVID-19 pandemic has negatively impacted the global economy. In response to this crisis, the CARES Act was passed by Congress and signed into law on March 27, 2020. The CARES Act provides an estimated $2.2 trillion to fight the COVID-19 pandemic and stimulate the economy by supporting individuals and businesses through loans, grants, tax changes, and other types of relief. Some of the provisions applicable to the current presentation. Such reclassifications had no effectCompany include, but are not limited to:
• Accounting for Loan Modifications - The CARES Act provides that a financial institution may elect to suspend (1) the requirements under GAAP for certain loan modifications that would otherwise be categorized as a TDR and (2) any determination that such loan modifications would be considered a TDR, including the related impairment for accounting purposes. The Bank has elected this as a policy change.
• PPP - The CARES Act established the PPP, an expansion of the SBA's 7(a) loan program and the Economic Injury Disaster Loan Program, administered directly by the SBA.
On December 27, 2020, the 2021 Consolidated Appropriations Act was signed into law combining $900 billion in stimulus relief for the COVID-19 pandemic. The legislation extends certain relief provisions from the March CARES Act that were set to expire at the end of 2020. This new legislation extends the relief to financial institutions to suspend TDR assessment and reporting requirements under GAAP for loan modifications to the earlier of 60 days after the national emergency termination date or January 1, 2022. The legislation includes additional funding for businesses that did not receive PPP funds under the CARES Act, especially minority- and women-owned businesses. In addition, it allows businesses another opportunity to borrow PPP funds if they can show losses of 25% or more in 2020 based on previously reported cash flows, stockholders' equity or net income.their 2019 revenue. The Company expects a smaller number of applications to be made by its customers for these additional PPP funds.
2.Recent Accounting Pronouncements
In August 2015,Also in response to the COVID-19 pandemic, the Board of Governors of the Federal Reserve System, the FDIC, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Consumer Financial Accounting Standards Board ("FASB"Protection Bureau, in consultation with the state financial regulators (collectively, the “agencies”) issued ASU No. 2015-14, “Revenue from Contracts with Customers (Topic 606)”, which defersa joint interagency statement (issued March 22, 2020; revised statement issued April 7, 2020). Some of the effective dateprovisions applicable to the Company include, but are not limited to:
• Accounting for Loan Modifications - A loan modification that does not meet the conditions 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 isthe CARES Act may still qualify as a modification 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 expectsdoes not need to be entitledaccounted for as a TDR. The agencies confirmed with FASB staff that short-term modifications made on a good faith basis in exchange for those goods or services. In general, the new guidance requires companiesresponse to use more judgment and make more estimates than underCOVID-19 to borrowers who were 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 annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted for annual periods beginning after December 15, 2016, and interim periods within those annual periods. 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. A significant amount of the Company’s revenues are derived from net interest income on financial assets and liabilities, which are excluded from the scope of the amended guidance. With respect to noninterest income, the Company is in its preliminary stages of identifying and evaluating the revenue streams and underlying revenue contracts within the scope of the guidance. The Company is expecting to begin developing processes and procedures during fiscal 2018 to ensure it is fully compliant with these amendments at the adoption date. To date, the Company has not yet identified any significant changes in the timing of revenue recognition when considering the amended accounting guidance; however, the Company’s implementation efforts are ongoing and such assessments may change prior to the July 1, 2018 implementation date.
In January 2016, the FASB issued ASU 2016-01, "Financial Instruments (Subtopic 825-10) Recognition and Measurementany relief are not TDRs. This includes short-term (e.g., six months) modifications such as payment deferrals, fee waivers, extensions of Financial Assets and Financial Liabilities." The ASU amends the guidancerepayment terms, or insignificant delays 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

payment.
8
10
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

• Past Due Reporting - With regard to loans not otherwise reportable as past due, financial liabilities by measurement category and form of financial asset (i.e. securities orinstitutions are not expected to designate loans and receivables) on the balance sheet or the accompanying noteswith deferrals granted due 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 investmentCOVID-19 as past due because of the same issuer; (v) eliminatesdeferral. A loan’s payment date is governed by the requirementdue date stipulated in the legal agreement. If a financial institution agrees to disclosea payment deferral, these loans would not be considered past due during the method(s)period of the deferral.
• Nonaccrual Status and significant assumptions usedCharge-offs - While short-term COVID-19 modifications are in effect, these loans generally should not be reported as nonaccrual or as classified.
See Note 6 Loans for more information on COVID-19 specific loans that have been modified or in deferral.
Adoption of CECL standard
On July 1, 2020, the Company adopted ASU No. 2016-13, "Financial Instruments-Credit Losses ("Topic 326"): Measurement of Credit Losses on Financial Instruments", sometimes referred to estimate the fair value that is requiredherein as ASU 2016-13. Topic 326 was subsequently amended by ASU No. 2019-11, Codification Improvements to be disclosed forTopic 326, Financial Instruments-Credit Losses; ASU No. 2019-05, Codification Improvements to Topic 326, Financial Instruments-Credit Losses; and ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments. This standard applies to all financial instrumentsassets measured at amortized cost and off balance sheet credit exposures, including loans, investment securities and unfunded commitments. The Company applied the standard’s provisions using the modified retrospective method as a cumulative effect adjustment to retained earnings as of July 1, 2020. With this transition method, the Company did not have to restate comparative prior periods presented in the financial statements related to Topic 326, but will present comparative prior period disclosures using the previous accounting guidance for the allowance for loan losses. This adoption method is considered a change in accounting principle requiring additional disclosure regarding the nature of and reason for the change, which is solely a result of the adoption of the required standard.
ACL – Investment Securities
Management uses a systematic methodology to determine its ACL for investment securities held to maturity. The ACL is a valuation account that is deducted from the amortized cost basis to present the net amount expected to be collected on the held-to-maturity portfolio. Management considers the effects of past events, current conditions, and reasonable and supportable forecasts on the collectability of the portfolio. The Company’s estimate of its ACL involves a high degree of judgment; therefore, management’s process for determining expected credit losses may result in a range of expected credit losses. Management monitors the held-to-maturity portfolio to determine whether a valuation account would need to be recorded. The Company currently has no investment securities held to maturity.
Management excludes the accrued interest receivable balance from the amortized cost basis in measuring expected credit losses on investment securities and does not record an allowance for credit losses on accrued interest receivable. As of December 31, 2020, the accrued interest receivable for investment securities available for sale was $926.
The Company’s estimate of expected credit losses includes a measure of the expected risk of credit loss even if that risk is remote. However, the Company does not measure expected credit losses on an investment security in which historical credit loss information adjusted for current conditions and reasonable and supportable forecast results in an expectation that nonpayment of the amortized cost basis is zero. Management does not expect nonpayment of the amortized cost basis to be zero solely on the basis of the current value of collateral securing the security but, instead, also considers the nature of the collateral, potential future changes in collateral values, default rates, delinquency rates, third-party guarantees, credit ratings, interest rate changes since purchase, volatility of the security’s fair value and historical loss information for financial assets secured with similar collateral. The Company performed an analysis that determined that the following securities have a zero expected credit loss: U.S. government agencies, residential MBS of U.S. government agencies and GSEs, and municipal bonds. All of the U.S. government agencies and U.S. government agency backed securities have the full faith and credit backing of the United States Government or one of its agencies. Municipal bonds that do not have a zero expected credit loss will be evaluated quarterly to determine whether there is a credit loss associated with a decline in fair value.
Management no longer evaluates securities for OTTI, as ASC Subtopic 326-30, "Financial Instruments—Credit Losses—Available-for-Sale Debt Securities," changes the accounting for recognizing impairment on available-for-sale debt securities. Each quarter management evaluates impairment where there has been a decline in fair value below the amortized cost basis of a security to determine whether there is a credit loss associated with the decline in fair value. Management considers the nature of the collateral, potential future changes in collateral values, default rates, delinquency rates, third-party guarantees, credit ratings, interest rate changes since purchase, volatility of the security’s fair value and historical loss information for financial assets secured with similar collateral among other factors. Credit losses are calculated individually, rather than collectively, using a DCF method, whereby management compares the present value of expected cash flows with the amortized cost basis of the security. The credit loss component would be recognized through the provision for credit losses in the Consolidated Statements of Income.
ACL - Loans and leases
The ACL reflects management’s estimate of losses that will result from the inability of its borrowers to make required loan payments. The Company established the incremental increase in the ACL at adoption of the CECL standard through the cumulative effect adjustment to equity and subsequent adjustments will be made through a provision for credit losses charged against earnings. Management records loans charged off against the ACL and subsequent recoveries, if any, increase the ACL when they are recognized.
11
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
Management uses a systematic methodology to determine its ACL for loans held for investment and certain off-balance-sheet credit exposures. The ACL is a valuation account that is deducted from the amortized cost basis to present the net amount expected to be collected on the loan portfolio. Management considers the effects of past events, current conditions, and reasonable and supportable forecasts on the collectability of the loan portfolio. The Company’s estimate of its ACL involves a high degree of judgment; therefore, management’s process for determining expected credit losses may result in a range of expected credit losses. The Company’s ACL recorded in the balance sheet and requires a reporting organization to present separatelyreflects management’s best estimate within the range of expected credit losses. The Company recognizes in other comprehensivenet income the portionamount needed to adjust the ACL for management’s current estimate of expected credit losses. The Company’s ACL is calculated using collectively evaluated and individually evaluated loans.
The Company collectively evaluates loans that share similar risk characteristics. In general, management has segmented loans by regulatory call code category and collectively evaluates loans within the retail and commercial categories. Loans within the retail consumer category include: 1-4 family, HELOCs - originated, HELOCs - purchased, construction and land/lots, indirect auto finance, and consumer. Loans within the commercial category include: commercial real estate, construction and development, commercial and industrial, equipment finance, and municipal leases.
For collectively evaluated loans, the Company uses a DCF method for each loan in a pool, and the results are aggregated at the pool level. A periodic tendency to default and absolute loss given default are applied to a projective model of the totalloan’s cash flow while considering prepayment and principal curtailment effects. The analysis produces expected cash flows for each instrument in the pool by pairing loan-level term information (maturity date, payment amount, interest rate, etc.) with top-down pool assumptions (default rates, prepayment speeds). The Company has identified the following portfolio segments for the current calculation: 1-4 family construction, 1-4 family mortgage – jr. lien, 1-4 family mortgage – sr. lien, commercial and industrial, commercial leases, construction – multi-family, construction – non-owner occupied, construction – owner occupied, consumer – auto, consumer – other, consumer – revolving, farmland, land and lot, multifamily, municipal leases, non-owner occupied CRE, owner occupied CRE, and HELOCs. PPP loans are fully guaranteed by the SBA; therefore, management estimates a zero reserve for PPP loans within its allowance for credit losses.
Management has determined that the peer loss experience provides the best basis for its assessment of expected credit losses to determine the ACL. The Company utilized peer call report data to measure historical credit loss experience with similar risk characteristics within the segments over an economic cycle. Management reviewed the historical loss information to appropriately adjust for differences in current asset specific risk characteristics. Management also considered further adjustments to historical loss information for current conditions and reasonable and supportable forecasts that differ from the conditions that existed for the period over which historical information was evaluated. For all segment models for collectively evaluated loans (except for HELOCs), the Company incorporated one macroeconomic driver using a statistical regression modeling methodology. The HELOC segment incorporated two macroeconomic drivers. Due to the low loss rates of municipal leases and the expectation of them remaining low, management has elected to separately pool these loans. Management has elected to use readily available municipal default rates and loss given defaults in order to calculate expected credit losses.
Management considers forward-looking information in estimating expected credit losses. The Company uses the Fannie Mae quarterly economic forecast which is a baseline outlook for the United States economy. Management has evaluated the appropriateness of the reasonable and supportable forecast for the current period along with the inputs used in the estimation of expected credit losses. For the contractual term that extends beyond the reasonable and supportable forecast period, the Company reverts to historical loss information within four quarters using a straight-line approach. Management may apply different reversion techniques depending on the economic environment for the financial asset portfolio and as of the current period has utilized a linear reversion technique. Management has evaluated the appropriateness of a reversion period for the current period and noted that it was reasonable.
Included in its systematic methodology to determine its ACL for loans held for investment and certain off-balance-sheet credit exposures, management considers the need to qualitatively adjust expected credit losses for information not already captured in the loss estimation process. These qualitative adjustments can either increase or decrease the quantitative model estimation (i.e. formulaic model results). Each period the Company considers qualitative factors that are relevant within the qualitative framework that include the following: 1) lending policies and procedures, 2) credit review function, 3) experience and depth of management and staff, 4) external factors, and 5) actual and expected changes in economic and business conditions.
When a loan no longer shares similar risk characteristics with its segment, the asset is assessed to determine whether it should be included in another pool or should be individually evaluated. For these individually evaluated loans, the Company maintains specific book balance thresholds for retail or consumer loans, commercial loans, municipal and equipment leases, and unsecured commercial loans. Management would adjust these thresholds if future analysis suggests a change is needed based on the credit environment at that time. Generally, individually evaluated loans other than TDRs are on nonaccrual status. Based on the thresholds above, financial assets will generally remain in pools unless they meet the dollar threshold or foreclosure is probable. The expected credit losses on individually evaluated loans will be estimated based on DCF analysis unless the loan meets the criteria for use of the fair value of collateral, either by virtue of an expected foreclosure or through meeting the definition of collateral dependent. Financial assets that have been individually evaluated can be returned to a liability resultingpool for purposes of estimating the expected credit loss insofar as their credit profile improves and that the repayment terms are not considered to be unique to the asset.
Management measures expected credit losses over the contractual term of the loans. When determining the contractual term, the Company considers expected prepayments but is precluded from considering expected extensions, renewals, or modifications, unless the Company reasonably expects it will execute a TDR with a borrower. In the event of a reasonably-expected TDR, the Company factors the reasonably-expected TDR into the current expected credit losses estimate. The effects of a TDR are recorded when an individual asset is specifically
12
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
identified as a reasonably-expected TDR. The Company identifies the point at which it offers the modification to the borrower as the point at which the TDR is reasonably expected for both commercial and consumer loans. The Company uses a DCF methodology to calculate the effect of the concession provided to the borrower in TDR within the ACL.
PCD assets are defined as acquired individual financial assets (or acquired groups of financial assets with similar risk characteristics) that, as of the date of acquisition, have experienced a more-than-insignificant deterioration in credit quality since origination, as determined by the Company’s assessment. The Company records acquired PCD loans by adding the expected credit losses (i.e., ACL) to the purchase price of the financial assets rather than recording through the provision for credit losses in the income statement. The expected credit loss, as of the acquisition day, of a PCD loan is added to the ACL. The non-credit discount or premium is the difference between the unpaid principal balance and the amortized cost basis as of the acquisition date. Subsequent to the acquisition date, the change in the instrument-specificACL on PCD loans is recognized through the provision for credit risk (also referred to as “own credit”) whenlosses. The non-credit discount or premium is accreted or amortized, respectively, into interest income over the organization has elected to measureremaining life of the liability at fair value inPCD loan on a level-yield basis. 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 ortransition requirements within the standard, the Company’s PCI 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. The amendments in this ASU are effective for annual periods, and interim periods within those 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. Management is in the planning stages of developing processes and procedures to comply with the disclosures requirements of this ASU, which could impact the disclosures the Company makes related to fair value of its financial instruments.were treated as PCD loans.
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. The amendments in this ASU are effective for annual periods, and interim periods within those 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. The Company will compile an inventory of all leased assets to determine the impact of ASU 2016-02 onfollows its financial condition and results of operations. Once adopted, we expect to report higher assets and liabilities on our Consolidated Balance Sheets as a result of including right-of-use assets and lease liabilities related to certain banking offices and certain equipment under noncancelable operating lease agreements, which currently are not reflected in our Consolidated Balance Sheets. We do not expect the guidance to have a material impact on the Consolidated Statements of Income or the Consolidated Statements of Changes in Stockholders' Equity.
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 thenonaccrual policy by reversing contractual interest income tax effects of awards in the income statement when the awards vest or are settled, thus eliminating additional paidCompany places a loan on nonaccrual status. Therefore, management excludes the accrued interest receivable balance from the amortized cost basis in capital pools. The guidance also allowsmeasuring expected credit losses on the portfolio and does not record an ACL on accrued interest receivable. As of December 31, 2020, the accrued interest receivable 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. We have elected to account for forfeitures of stock-based awards as they occur. loans was $8,612.
The Company has adopteda variety of assets that have a component that qualifies as an off-balance sheet exposure. These primarily include undrawn portions of revolving lines of credit and standby letters of credit. The expected losses associated with these exposures within the amendments in this ASU and appropriate disclosures have been included in this Note. Atunfunded portion of the adoptionexpected credit loss will be recorded as a liability on the balance sheet with an offset to the provision for credit losses. Management has determined that a majority of this ASU, we had a cumulative adjustment to retained earnings of $680,000. In accordance with the transition guidance outlined in this ASU, the adoption had no effect on net income or shareholder's equity in any previously issued periods. Going forward, we expect this ASU to create some volatility in our reported income tax expenseCompany’s off-balance-sheet credit exposures are not unconditionally cancellable. See "Note 6 - Loans" for additional details related to the excess tax benefitsCompany's off-balance-sheet credit exposure. The current adjustment to the ACL for employee stock-based transactions, however,unfunded commitments would be recognized through the actual amounts recognized will be dependent onprovision for credit losses in the amountStatement of employee stock-based transactions and the stock price at the time of exercise or vesting.Income.
2.    Recent Accounting Pronouncements
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. The Company adopted this ASU on July 1, 2020, applying the modified-retrospective method. Related to the implementation of this ASU, the Company recorded additional ACL on financial instruments of $15,059, additional deferred tax assets of $3,989, additional reserve for unfunded commitments of $2,288, and a reduction to retained earnings of $13,358. The adoption of this ASU did not have an effect on AFS debt securities. See "Note 1 - Summary of Significant Accounting Policies" and "Note 6 - Loans" for additional details related to the adoption of this ASU.
See table below for impact of this ASU on the Company's consolidated balance sheet:
July 1, 2020
As Reported Under ASC 326Pre-ASC 326 AdoptionImpact of ASC 326 Adoption
Assets:
ACL on commercial paper$(250)$0 $(250)
ACL on loans:
Retail consumer loans$(17,692)$(6,956)$(10,736)
Commercial loans(25,189)(21,116)(4,073)
Total ACL on loans$(42,881)$(28,072)$(14,809)
Deferred income taxes$20,323 $16,334 $3,989 
Liabilities:
Liability for credit losses on off-balance sheet credit exposures$2,288 $0 $2,288 
Equity:
Retained earnings$229,418 $242,776 $(13,358)
In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement." The amendments in this ASU remove, modify, and add certain disclosure requirements related to fair value measurements in ASC 820. The Company adopted this ASU on July 1, 2020. The adoption did not have a material effect on the Company's Consolidated Financial Statements.
13
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
In November 2018, the FASB issued ASU 2018-19, "Codification Improvements to Topic 326, Financial Instruments—Credit Losses." This update clarifies that receivables arising from operating leases are not within the scope of Subtopic 326-20. Instead, impairment of receivables arising from operating leases should be accounted for in accordance with Topic 842, Leases. The Company adopted this ASU on July 1, 2020. The adoption did not have a material effect on the Company's Consolidated Financial Statements.
In April 2019, the FASB issued ASU 2019-04, "Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments." The amendments in this update are part of the FASB's ongoing project to improve codification and correcting unintended application. The items within this ASU are not expected to have a significant effect on current accounting practice. The Company adopted the amendments to Financial Instruments (ASU 2016-01) on July 1, 2020. The Company adopted the amendments to Financial Instruments-Credit Losses (ASU 2016-13) on July 1, 2020. The Company adopted the amendments to Derivatives and Hedging (ASU 2017-12) on July 1, 2019. The adoption did not have a material effect on the Company's Consolidated Financial Statements.
In May 2019, the FASB issued ASU 2019-05, "Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief." The amendments in this update allow companies to irrevocably elect, upon the adoption of ASU 2016-13, the fair value option for financial instruments that i) were previously recorded at amortized cost and ii) are within the scope of the credit losses guidance in ASC 326-20, iii) are eligible for the fair value option under ASC 825-10, and iv) are not held-to-maturity debt securities. The Company adopted this ASU on July 1, 2020. The adoption did not have a material effect on the Company's Consolidated Financial Statements.
In November 2019, the FASB issued ASU 2019-11, "Codification Improvements to Topic 326, Financial Instruments-Credit Losses." This ASU clarifies certain aspects of the amendments in ASU 2016-13 and is part of the FASB's ongoing project to improve codification and correcting unintended application. The items within this ASU are not expected to have a significant effect on current accounting practice. The Company adopted this ASU on July 1, 2020. The adoption did not have a material effect on the Company's Consolidated Financial Statements.
In December 2019, the FASB issued ASU 2019-12, "Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes." This ASU is part of the FASB's simplification initiative to reduce complexity in accounting standards. The items within this ASU are not expected to have a significant effect on current accounting practice. The effective date and transition requirements for the first and second items of this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2020 and early adoption is permitted. The adoption of ASU No. 2019-12 is not expected to have a material impact on the Company's Consolidated Financial Statements.
In January 2020, the FASB issued ASU 2020-01, "Investment—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the Interactions between Topic 321, Topic 323, and Topic 815." This ASU clarified the interaction of the accounting for equity securities under Topic 321 and investments accounted for under the equity method of accounting in Topic 323 and the accounting for certain forward contracts and purchased options accounted for under Topic 815. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. Early2021 and early adoption is permittedpermitted. The adoption of this ASU is not expected to have a material impact on the Company's Consolidated Financial Statements.
In March 2020, the FASB issued ASU 2020-03, "Codification Improvements to Financial Instruments." This ASU makes certain narrow-scope amendments to the following: i) clarified that all entities are required to provide fair value option disclosures; ii) clarified the applicability of the portfolio exception in ASC 820 to nonfinancial items; iii) aligned disclosures for all entitiesdepository and lending institutions (Topic 942) with guidance in Topic 320; iv) added cross-references to guidance in ASC 470-50 on line-of-credit or revolving-debt arrangements; v) added cross-references to net asset value practical expedient in ASC 820-10; vi) clarified the interaction between ASC 842 and ASC 326; and vii) clarified the interaction between ASC 326 and ASC 860-20. The amendments for issues i, ii, iv, and v became effective upon issuance and did not have a material effect on the Company's Consolidated Financial Statements. The Company adopted the amendments related to issue iii, vi, and vii on July 1, 2020. The adoption did not have a material effect on the Company's Consolidated Financial Statements.
In September 2020, the FASB issued ASU 2020-06, "Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40)." This ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity's own equity. Specifically the ASU removes: i) major separation models required under GAAP and ii) certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception, which will permit more equity contract to qualify for the exception. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018, including2021 and early adoption is permitted.The adoption of this ASU is not expected to have a material impact on the Company's Consolidated Financial Statements.
In October 2020, the FASB issued ASU 2020-08, "Codification Improvements to Subtopic 310-20, Receivables—Nonrefundable Fees and Other Costs." This ASU clarified that entities should reevaluate whether a callable debt security is within the scope of paragraph 310-20-35-33 for each reporting period. The amendments in this ASU are effective for annual periods, and interim periods within those fiscal years.annual periods, beginning after December 15, 2020. The Company is in the process of identifying required changes to the loan loss estimation models and processes and evaluating the impactadoption of this new guidance. Once adopted, we expect our allowance for loan lossesASU is not expected to increase, however, until our evaluation is completehave a material impact on the magnitude of the increase will be unknown.Company's Consolidated Financial Statements.
In August 2016,October 2020, the FASB issued ASU 2020-09, "Debt (Topic 470): Amendments to SEC Paragraphs Pursuant to SEC Release No. 2016-15, "Statement33-10762." This ASU updates financial disclosure requirements for subsidiary issuers and guarantors of Cash Flows (Topic 230): Classification of Certain Cash Receiptsregistered debt securities and Cash Payments.
14
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
affinities whose securities are pledged as collateral for registered securities. The amendments in this ASU are effective January 4, 2021.The adoption did not have an effect on the Company's Consolidated Financial Statements.
In October 2020, the FASB issued ASU 2020-10, "Codification Improvements." The amendments in this update are part of the FASB's ongoing project to improve codification and correcting unintended application. This ASU, amends thei) removes references to various FASB Concepts Statements, ii) situates all disclosure guidance on the classification of certain cash receipts and payments in the statementappropriate disclosure section of cash flowsthe Codification, and is intendediii) makes other improvements and technical corrections to reduce the diversity inCodification. The items within this ASU are not expected to have a significant effect on current accounting practice. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early2020 and early adoption is permitted for all entities beginning after December 15, 2017, including interim periods within those fiscal years.permitted. The Company is currently evaluating the impact of the pending adoption of thethis ASU on its Consolidated Financial Statements.
In December 2016, FASB issued ASU No. 2016-19, "Technical Corrections and Improvements" and ASU 2016-20, "Technical Corrections and Improvements to Topic 606: Revenue from Contracts with Customers." 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. These updates contain amendments that will affect a wide variety of Topics in the Codification. The amendments in these ASUs 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 represent changes to clarify the Codification, correct unintended application of guidance, or make minor improvements to the Codification that areis not expected to have a significant effect on current accounting practice. Transition guidance varies basedmaterial impact on the amendments

Company's Consolidated Financial Statements.
9
15
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

3.    Debt Securities
in the ASUs. The amendments that require transition guidance are effective for fiscal years and interim reporting periods after December 15, 2016. Early adoption is permitted including adoption in an interim period. All other amendments are effective upon the issuance of these ASUs. Neither ASU 2016-19 nor ASU 2016-20 had a material impact on the Company's Consolidated Financial Statements.
In January 2017, FASB issued ASU 2017-04, "Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment." The ASU removes the requirement to compare the implied fair value of goodwill with its carrying value as required in Step 2 of the goodwill impairment test. Under the ASU, registrants would perform their goodwill impairment test and recognize an impairment charge for any amount the carrying value exceeds the reporting unit's fair value, but limited by the amount of goodwill allocated to that reporting unit. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted for all entities after January 1, 2017. The Company did early adopt this ASU and adoption did not have a material effect on the Company's Consolidated Financial Statements.
In March 2017, FASB issued ASU 2017-08, "Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities." The ASU requires entities to amortize the premium on certain purchased callable debt securities to the earliest call date, which more closely aligns the amortization period of premiums and discounts to expectations incorporated in the market prices. Entities will no longer recognize a loss in earnings upon the debtor's exercise of a call on a purchased debt security held at a premium. The ASU does not require any accounting change for debt securities held at a discount, therefore the discount will continue to be amortized as an adjustment of yield over the contractual life of the investment. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. Early adoption is permitted for all entities. The adoption of ASU No. 2017-08 is not expected to have a material impact on the Company's Consolidated Financial Statements.
In May 2017, the FASB issued ASU 2017-09, "Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting." This ASU provides clarity on the guidance related to stock compensation when there have been changes to the terms or conditions of a share-based payment award to which an entity would be required to apply modification accounting under ASC 718. The ASU provides the three following criteria must be met in order to not account for the effect of the modification of terms or conditions: the fair value, the vesting conditions and the classification as an equity or liability instrument of the modified award is the same as the original award immediately before the original award is modified. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted. The adoption of ASU No. 2017-09 is not expected to have a material impact on the Company's Consolidated Financial Statements.
In August 2017, FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities." This ASU improves the transparency and understandability of disclosures in the financial statements regarding the entities risk management activities and reduces the complexity of hedge accounting. The amendments in this ASU permit hedge accounting for hedging relationships involving nonfinancial risk and interest rate risk by removing certain limitations in cash flow and fair value hedging relationships. In addition, the ASU requires an entity to present the earnings effect of the hedging instrument in the same income statement line item in which the earnings effect of the hedged item is reported. The amendments in this ASU are effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018 and early adoption is permitted. The adoption of ASU No. 2017-12 is not expected to have a material impact on the Company's Consolidated Financial Statements.
3.Business Combinations
All business combinations are accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed and consideration exchanged are 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.
United Financial of North Carolina, Inc.

On December 31, 2016, the Bank acquired United Financial of North Carolina, Inc. ("United Financial"), a municipal lease company headquartered in Fletcher, North Carolina that specializes in providing financing for fire departments and municipalities to purchase fire trucks and related equipment as well as to construct fire stations and other municipal buildings across the Carolinas and other southeastern states. United Financial underwrites and originates municipal leases and then sells them to HomeTrust and other financial institutions. Since January 1, 2017, United Financial has conducted business under the name United Financial, a division of HomeTrust Bank.

The total consideration paid by the Bank in the United Financial acquisition approximates $425. Per the merger agreement, a cash payment of $200 was paid on the acquisition date with an additional $225 due in the third quarter of fiscal 2018; all of which was allocated to goodwill.

TriSummit Bancorp. Inc.

On January 1, 2017, HomeTrust completed its acquisition of TriSummit Bancorp, Inc., (“TriSummit”) pursuant to an Agreement and Plan of Merger, dated as of September 20, 2016, under which TriSummit merged with and into HomeTrust (the “Merger”) with HomeTrust as the surviving corporation in the Merger. Immediately following the Merger, TriSummit's wholly owned subsidiary bank, TriSummit Bank, merged with and into the Bank (together with the Merger, the “TriSummit Merger”).

Pursuant to the Merger Agreement, each share of the common stock of TriSummit and each share of Series A Preferred Stock of TriSummit issued and outstanding immediately prior to the Merger (on an as converted basis to a share of TriSummit common stock) was converted into

10
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

the right to receive $4.40 in cash and .2099 shares of HomeTrust common stock, with cash paid in lieu of fractional share interests. At the Merger date, 50% of outstanding options granted by TriSummit were canceled. The remaining options were assumed by HomeTrust and converted into options to purchase 86,185 shares of HomeTrust Common Stock. In addition, TriSummit’s $7,222 Series B, Series C and Series D TARP preferred stock (all held by private shareholders) was redeemed in connection with the closing of the merger.
The total consideration paid by HomeTrust in the TriSummit Merger approximates $36,126. The total number of HomeTrust shares issued was 765,277 shares. HomeTrust paid aggregate cash consideration of approximately $16,083.

11
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

The following table presents the consideration paid by the Company in the acquisition of TriSummit and the assets acquired and liabilities assumed as of January 1, 2017:
 As Recorded by TriSummit Fair Value and Other Merger Related Adjustments As Recorded by the Company
Consideration Paid:     
Cash paid including cash in lieu of fractional shares    $16,083
Fair value of HomeTrust common stock at $25.90 per share    20,043
Total consideration    $36,126
Assets:     
Cash and cash equivalents$5,498
 $—
 $5,498
Certificates of deposit in other banks250
 —
 250
Investment securities58,728
 (203) 58,525
Other investments, at cost2,614
 —
 2,614
Loans, net261,926
 (3,867) 258,059
Premises and equipment, net12,841
 (2,419) 10,422
REO1,633
 (122) 1,511
Deferred income tax2,653
 4,462
 7,115
Bank owned life insurance3,762
 —
 3,762
Core deposit intangibles1,285
 1,575
 2,860
Other assets1,453
 (105) 1,348
Total assets acquired$352,643
 $(679) $351,964
      
Liabilities:     
Deposits$279,647
 $587
 280,234
Borrowings47,453
 16
 47,469
Other liabilities675
 —
 675
Total liabilities assumed$327,775
 $603
 $328,378
Net identifiable assets acquired over liabilities assumed$24,868
 $(1,282) $23,586
Goodwill
   $12,540
The carrying amount of acquired loans from TriSummit as of January1, 2017 consisted of purchased performing loans and Purchase Credit Impaired ("PCI") loans as detailed in the following table:
 
Purchased
Performing
 PCI 
Total
Loans
Retail Consumer Loans:     
One-to-four family$75,179
 $3,753
 $78,932
HELOCs6,479
 2
 6,481
Construction and land/lots15,591
 —
 15,591
Consumer1,686
 17
 1,703
Commercial:   
 

Commercial real estate107,880
 3,494
 111,374
Construction and development15,253
 142
 15,395
Commercial and industrial28,295
 288
 28,583
Total$250,363
 $7,696
 $258,059


12
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

The following table presents the performing loans receivable purchased from TriSummit at January 1, 2017, the acquisition date:
Contractually required principal payments receivable$255,852
Adjustment for credit, interest rate, and liquidity5,489
Balance of purchased loans receivable$250,363
The following table presents the PCI loans acquired from TriSummit at January 1, 2017, the acquisition date:
Contractually required principal and interest payments receivable$11,474
Amounts not expected to be collected - nonaccretable difference2,490
Estimated payments expected to be received8,984
Accretable yield1,288
Fair value of PCI loans$7,696
4.Securities Available for Sale
Securities available for sale consist of the following at the dates indicated:
December 31, 2020
Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Estimated
Fair
Value
U.S. government agencies$18,966 $176 $(4)$19,138 
Residential MBS of U.S. government agencies and GSEs39,357 1,693 (37)41,013 
Municipal bonds10,333 566 0 10,899 
Corporate bonds82,151 342 (3)82,490 
Total$150,807 $2,777 $(44)$153,540 
 December 31, 2017
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
U.S. Government Agencies$47,986
 $84
 $(377) $47,693
Residential Mortgage-backed Securities of U.S. Government 
  
  
  
Agencies and Government-Sponsored Enterprises81,675
 244
 (641) 81,278
Municipal Bonds32,154
 351
 (82) 32,423
Corporate Bonds6,216
 83
 (87) 6,212
Equity Securities63
 —
 —
 63
Total$168,094
 $762
 $(1,187) $167,669
 June 30, 2017
 
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
U.S. Government Agencies$65,947
 $184
 $(301) $65,830
Residential Mortgage-backed Securities of U.S. Government 
  
  
  
Agencies and Government-Sponsored Enterprises92,841
 411
 (281) 92,971
Municipal Bonds34,135
 403
 (28) 34,510
Corporate Bonds6,267
 114
 (88) 6,293
Equity Securities63
 —
 —
 63
Total$199,253
 $1,112
 $(698) $199,667
June 30, 2020
Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
Losses		Estimated
Fair
Value
U.S. government agencies$3,957 $216 $0 $4,173 
Residential MBS of U.S. government agencies and GSEs46,629 1,776 (50)48,355 
Municipal bonds16,090 541 0 16,631 
Corporate bonds58,242 270 (134)58,378 
Total$124,918 $2,803 $(184)$127,537 
Debt securities available for sale by contractual maturity at the dates indicatedDecember 31, 2020 are shown below. Mortgage-backed securitiesMBS 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, 2017
 
Amortized
Cost
 
Estimated
Fair Value
Due within one year$12,260
 $12,187
Due after one year through five years54,404
 54,153
Due after five years through ten years10,243
 10,483
Due after ten years9,449
 9,505
Mortgage-backed securities81,675
 81,278
Total$168,031
 $167,606

13
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

 December 31, 2020
Amortized
Cost		Estimated
Fair Value
Due within one year$29,178 $29,250 
Due after one year through five years80,252 81,016 
Due after five years through ten years2,020 2,261 
Due after ten years0 0 
Mortgage-backed securities39,357 41,013 
Total$150,807 $153,540 
The Company had no0 sales of securities available for sale during the three and six months ended December 31, 20172020 and 2016.2019. There were no0 gross realized gains or losses for the three and six months ended December 31, 20172020 and 2016, respectively.2019.


Securities available for sale with costs totaling $131,784$53,433 and $156,592$82,888 and market values of $131,337$54,780 and $154,264$84,456 at December 31, 20172020 and June 30, 2017,2020, 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 December 31, 20172020 and June 30, 20172020 were as follows:
December 31, 2020
Less than 12 Months12 Months or MoreTotal
Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses
U.S. government agencies$14,996 $(4)$0 $0 $14,996 $(4)
Residential MBS of U.S. government agencies and GSEs115 (7)1,922 (30)2,037 (37)
Corporate bonds16,941 (3)0 0 16,941 (3)
Total$32,052 $(14)$1,922 $(30)$33,974 $(44)
16
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
 December 31, 2017
 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$13,885
 $(80) $25,696
 $(297) $39,581
 $(377)
Residential Mortgage-backed Securities of U.S. Government Agencies and Government-Sponsored Enterprises31,210
 (285) 20,058
 (356) 51,268
 (641)
Municipal Bonds11,616
 (72) 1,068
 (10) 12,684
 (82)
Corporate Bonds—
 —
 3,691
 (87) 3,691
 (87)
Total$56,711
 $(437) $50,513
 $(750) $107,224
 $(1,187)
 June 30, 2017
 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$46,767
 $(222) $6,921
 $(79) $53,688
 $(301)
Residential Mortgage-backed Securities of U.S. Government Agencies and Government-Sponsored Enterprises42,921
 (240) 3,970
 (41) 46,891
 (281)
Municipal Bonds9,153
 (28) —
 —
 9,153
 (28)
Corporate Bonds3,734
 (88) —
 —
 3,734
 (88)
Total$102,575
 $(578) $10,891
 $(120) $113,466
 $(698)
June 30, 2020
Less than 12 Months12 Months or MoreTotal
Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses		Fair
Value		Unrealized
Losses
Residential MBS of U.S. government agencies and GSEs$227 $(10)$2,435 $(40)$2,662 $(50)
Corporate bonds11,779 (134)0 0 11,779 (134)
Total$12,006 $(144)$2,435 $(40)$14,441 $(184)
The total number of securities with unrealized losses at December 31, 2017,2020, and June 30, 20172020 were 16421 and 136,24, respectively. Unrealized
Management evaluates securities for impairment where there has been a decline in fair value below the amortized cost basis of a security to determine whether there is a credit loss associated with the decline in fair value on at least a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. All debt securities available for sale in an unrealized loss position as of December 31, 2020 continue to perform as scheduled and management does not believe that there is a credit loss or that a provision for credit losses on securities have not been recognized in income because management has theis necessary. Also, as part of management's evaluation of its intent and ability to hold investments for a period of time sufficient to allow for any anticipated recovery in the market, management considers its investment strategy, cash flow needs, liquidity position, capital adequacy and interest rate risk position. Management does not currently intend to sell the securities forwithin the foreseeable future,portfolio and has determined that it is not more likely than notmore-likely-than-not that the Companysecurities will be required to sellbe sold. See Note 1 – Summary of Significant Account Policies for further discussion.
Management continues to monitor all of its securities with a high degree of scrutiny. There can be no assurance that management will not conclude in future periods that conditions existing at that time indicate some or all of its securities may be sold or would require a charge to earnings as a provision for credit losses in such periods.
4.    Other Investments
Other investments, at cost consist of 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 duringfollowing at the six months ended December 31, 2017 or the year ended June 30, 2017.dates indicated:
December 31, 2020June 30, 2020
FHLB of Atlanta stock$23,309 $23,309 
FRB stock7,374 7,368 
SBIC investments8,889 8,269 
Total$39,572 $38,946 
As a requirement for membership, the Bank invests in the stock of both the FHLB of Atlanta and the Federal Reserve Bank of Richmond ("FRB").FRB. No ready market exists for these securities so carrying value approximates their fair value based on the redemption provisions of the FHLB of Atlanta and the FRB, respectively. SBIC investments are equity securities without a readily determinable fair value.


5.    Loans Held For Sale
Loans held for sale as of the dates indicated consist of the following:
December 31, 2020June 30, 2020
One-to-four family$45,998 $28,152 
SBA8,319 1,240 
HELOCs64,122 47,785 
Total$118,439 $77,177 
14
17
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

6.    Loans and Allowance for Credit Losses on Loans
5.Loans
Loans consist of the following at the dates indicated:
December 31, 2020
June 30,
2020 (1)
Commercial loans:
Commercial real estate$1,056,971 $1,052,906 
Construction and development172,892 215,934 
Commercial and industrial138,761 154,825 
Equipment finance272,761 229,239 
Municipal finance128,549 127,987 
PPP64,845 80,697 
Total commercial loans1,834,779 1,861,588 
Retail consumer loans:
One-to-four family452,421 473,693 
HELOCs - originated125,397 137,447 
HELOCs - purchased58,640 71,781 
Construction and land/lots75,108 81,859 
Indirect auto finance122,947 132,303 
Consumer9,332 10,259 
Total retail consumer loans843,845 907,342 
Total loans2,678,624 2,768,930 
Deferred loan costs, net (2)
0 189 
Total loans, net of deferred loan costs2,678,624 2,769,119 
Allowance for credit losses(39,844)(28,072)
Loans, net$2,638,780 $2,741,047 
___________
 December 31, 2017 June 30, 2017
Retail consumer loans:   
One-to-four family$686,229
 $684,089
HELOCs - originated150,084
 157,068
HELOCs - purchased162,181
 162,407
Construction and land/lots60,805
 50,136
Indirect auto finance150,042
 140,879
Consumer9,699
 7,900
Total retail consumer loans1,219,040
 1,202,479
Commercial loans: 
  
Commercial real estate786,381
 730,408
Construction and development185,921
 197,966
Commercial and industrial127,709
 120,387
Municipal leases100,205
 101,175
Total commercial loans1,200,216
 1,149,936
Total loans2,419,256
 2,352,415
Deferred loan fees, net(1,242) (945)
Total loans, net of deferred loan fees2,418,014
 2,351,470
Allowance for loan losses(21,090) (21,151)
Loans, net$2,396,924
 $2,330,319
(1) The June 30, 2020 information in the above table reflects the loan portfolio prior to the adoption of ASU 2016-13. This information was reported as shown in the below tables under "Loans and Allowance for Loan Losses - Pre ASU 2016-13", with the acquired loans being net of earned income and related discounts, which includes the credit discount on the acquired credit impaired loans.
(2) In accordance with the adoption of ASU 2016-13, the loan portfolio is shown at the amortized cost basis as of December 31, 2020, to include net deferred cost of $1,941 and unamortized discount total related to loans acquired of $5,126. Accrued interest receivable at December 31, 2020 of $8,612 is accounted for separately from the amortized cost basis. The ACL at June 30, 2020 includes the valuation allowance on PCI loans of $182.
All qualifying one-to-four family first mortgage loans, HELOCs, commercial real estate loans, and FHLB Stockof Atlanta stock are pledged as collateral by a blanket pledge to secure any outstanding FHLB advances.
Loans are monitored for credit quality on a recurring basis and the composition of the loans outstanding by credit quality indicator is provided below. Loan credit quality indicators are developed through review of individual borrowers on an ongoing basis. Generally, loans are monitored for performance on a quarterly basis with the credit quality indicators adjusted as needed. The Company's total non-purchasedindicators represent the rating for loans as of the date presented based on the most recent assessment performed. These credit quality indicators are defined as follows:
Pass—A pass rated asset is not adversely classified because it does not display any of the characteristics for adverse classification.
Special Mention—A special mention asset has potential weaknesses that deserve management’s close attention. If left uncorrected, such potential weaknesses may result in deterioration of the repayment prospects or collateral position at some future date. Special mention assets are not adversely classified and purchased performing loansdo not warrant adverse classification.
Substandard—A substandard asset is inadequately protected by segment, class,the current net worth and risk grade atpaying capacity of the dates indicated follow:obligor, or of the collateral pledged, if any. Assets classified as substandard generally have a well-defined weakness, or weaknesses, that jeopardize the liquidation of the debt. These assets are characterized by the distinct possibility of loss if the deficiencies are not corrected.
Doubtful—An asset classified doubtful has all the weaknesses inherent in an asset classified substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable, on the basis of currently existing facts, conditions, and values.
Loss—Assets classified loss are considered uncollectible and of such little value that their continuing to be carried as an asset is not warranted. This classification is not necessarily equivalent to no potential for recovery or salvage value, but rather that it is not appropriate to defer a full write-off even though partial recovery may be effected in the future.
18
 Pass 
Special
Mention
 Substandard Doubtful Loss Total
December 31, 2017           
Retail consumer loans:           
One-to-four family$658,436
 $4,783
 $14,298
 $1,132
 $132
 $678,781
HELOCs - originated146,733
 756
 2,318
 —
 21
 149,828
HELOCs - purchased161,991
 —
 190
 —
 —
 162,181
Construction and land/lots59,496
 389
 409
 —
 —
 60,294
Indirect auto finance149,660
 —
 382
 —
 —
 150,042
Consumer9,656
 10
 20
 1
 9
 9,696
Commercial loans: 
  
  
  
  
  
Commercial real estate760,262
 7,584
 5,809
 —
 —
 773,655
Construction and development179,946
 714
 2,829
 —
 —
 183,489
Commercial and industrial122,282
 906
 2,099
 —
 2
 125,289
Municipal leases99,798
 309
 98
 —
 —
 100,205
Total loans$2,348,260
 $15,451
 $28,452
 $1,133
 $164
 $2,393,460

15
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, 2017           
Retail consumer loans:           
One-to-four family$655,424
 $4,715
 $14,769
 $1,101
 $11
 $676,020
HELOCs - originated153,676
 809
 2,100
 188
 7
 156,780
HELOCs - purchased162,215
 —
 192
 —
 —
 162,407
Construction and land/lots48,728
 479
 341
 60
 —
 49,608
Indirect auto finance140,780
 —
 97
 1
 1
 140,879
Consumer7,828
 12
 34
 —
 8
 7,882
Commercial loans: 
  
  
  
  
  
Commercial real estate700,060
 5,847
 7,118
 —
 —
 713,025
Construction and development192,025
 992
 2,320
 —
 —
 195,337
Commercial and industrial113,923
 883
 2,954
 —
 1
 117,761
Municipal leases99,811
 1,258
 106
 —
 —
 101,175
Total loans$2,274,470
 $14,995
 $30,031
 $1,350
 $28
 $2,320,874
The Company's total PCIfollowing table presents the credit risk profile by risk grade for commercial loans by segment, class, and risk grade at the dates indicated follow:origination year:
Term Loans By Origination Year
December 31, 202020212020201920182017PriorRevolvingTotal
Commercial real estate
Risk rating:
Pass$84,992 $180,257 $146,108 $175,521 $166,606 $241,865 $32,112 $1,027,461 
Special mention0 0 0 14,407 1,281 3,245 295 19,228 
Substandard0 0 0 653 5,412 4,206 0 10,271 
Doubtful0 0 0 0 0 0 0 0 
Loss0 11 0 0 0 0 0 11 
Total commercial real estate$84,992 $180,268 $146,108 $190,581 $173,299 $249,316 $32,407 $1,056,971 
Construction and development
Risk rating:
Pass$8,366 $17,695 $10,527 $8,345 $1,621 $8,164 $114,970 $169,688 
Special mention0 0 0 0 0 534 2,133 2,667 
Substandard0 0 0 0 0 537 0 537 
Doubtful0 0 0 0 0 0 0 0 
Loss0 0 0 0 0 0 0 0 
Total construction and development$8,366 $17,695 $10,527 $8,345 $1,621 $9,235 $117,103 $172,892 
Commercial and industrial
Risk rating:
Pass$12,949 $14,603 $22,120 $17,797 $17,448 $12,347 $33,356 $130,620 
Special mention0 0 794 0 952 171 5,656 7,573 
Substandard0 0 299 117 64 86 0 566 
Doubtful0 0 0 0 0 0 0 0 
Loss0 1 0 0 0 1 0 2 
Total commercial and industrial$12,949 $14,604 $23,213 $17,914 $18,464 $12,605 $39,012 $138,761 
Equipment finance
Risk rating:
Pass$73,835 $121,829 $69,830 $6,407 $0 $0 $0 $271,901 
Special mention0 440 78 0 0 0 0 518 
Substandard0 0 46 0 0 0 0 46 
Doubtful0 0 296 0 0 0 0 296 
Loss0 0 0 0 0 0 0 0 
Total equipment finance$73,835 $122,269 $70,250 $6,407 $0 $0 $0 $272,761 
Municipal leases
Risk rating:
Pass$1,178 $21,158 $14,812 $19,662 $10,411 $54,947 $5,762 $127,930 
Special mention0 0 0 0 0 271 0 271 
Substandard0 0 0 0 0 348 0 348 
Doubtful0 0 0 0 0 0 0 0 
Loss0 0 0 0 0 0 0 0 
Total municipal leases$1,178 $21,158 $14,812 $19,662 $10,411 $55,566 $5,762 $128,549 
PPP
Risk rating:
Pass$0 $64,845 $0 $0 $0 $0 $0 $64,845 
Special mention0 0 0 0 0 0 0 0 
Substandard0 0 0 0 0 0 0 0 
Doubtful0 0 0 0 0 0 0 0 
Loss0 0 0 0 0 0 0 0 
Total PPP$0 $64,845 $0 $0 $0 $0 $0 $64,845 
Total commercial loans
Risk rating:
Pass$181,320 $420,387 $263,397 $227,732 $196,086 $317,323 $186,200 $1,792,445 
Special mention0 440 872 14,407 2,233 4,221 8,084 30,257 
Substandard0 0 345 770 5,476 5,177 0 11,768 
Doubtful0 0 296 0 0 0 0 296 
Loss0 12 0 0 0 1 0 13 
Total commercial loans$181,320 $420,839 $264,910 $242,909 $203,795 $326,722 $194,284 $1,834,779 
19
 Pass 
Special
Mention
 Substandard Doubtful Loss Total
December 31, 2017           
Retail consumer loans:           
One-to-four family$2,827
 $1,193
 $3,427
 $—
 $1
 $7,448
HELOCs - originated256
 —
 —
 —
 —
 256
Construction and land/lots469
 —
 42
 —
 —
 511
Consumer3
 —
 —
 —
 —
 3
Commercial loans: 
  
  
  
  
  
Commercial real estate6,627
 1,579
 4,520
 —
 —
 12,726
Construction and development326
 —
 2,106
 —
 —
 2,432
Commercial and industrial2,267
 23
 130
 —
 —
 2,420
Total loans$12,775
 $2,795
 $10,225
 $—
 $1
 $25,796
 Pass 
Special
Mention
 Substandard Doubtful Loss Total
June 30, 2017           
Retail consumer loans:           
One-to-four family$3,115
 $1,129
 $3,615
 $210
 $—
 $8,069
HELOCs - originated258
 —
 30
 —
 —
 288
Construction and land/lots487
 —
 41
 —
 —
 528
Consumer4
 14
 —
 —
 —
 18
Commercial loans: 
  
  
  
  
  
Commercial real estate8,909
 2,299
 6,175
 —
 —
 17,383
Construction and development338
 —
 2,291
 —
 —
 2,629
Commercial and industrial2,460
 44
 122
 —
 —
 2,626
Total loans$15,571
 $3,486
 $12,274
 $210
 $—
 $31,541

16
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)


The Company's totalfollowing table presents the credit risk profile by risk grade for consumer loans by segment, class, and delinquency status at the dates indicated follows:origination year:
Term Loans By Origination Year
December 31, 202020212020201920182017PriorRevolvingTotal
One-to-four family
Risk rating:
Pass$43,718 $55,592 $61,576 $55,305 $46,841 $175,540 $2,464 $441,036 
Special mention0 0 0 0 29 1,523 0 1,552 
Substandard0 999 0 218 201 8,217 0 9,635 
Doubtful0 0 0 0 0 197 0 197 
Loss0 0 0 1 0 0 0 1 
Total one-to-four family$43,718 $56,591 $61,576 $55,524 $47,071 $185,477 $2,464 $452,421 
HELOCs - originated
Risk rating:
Pass$1,654 $1,066 $1,495 $455 $671 $8,619 $108,828 $122,788 
Special mention0 0 0 0 0 769 0 769 
Substandard0 0 0 0 38 1,603 199 1,840 
Doubtful0 0 0 0 0 0 0 0 
Loss0 0 0 0 0 0 0 0 
Total HELOCs - originated$1,654 $1,066 $1,495 $455 $709 $10,991 $109,027 $125,397 
HELOCs - purchased
Risk rating:
Pass$0 $0 $0 $0 $0 $0 $57,799 $57,799 
Special mention0 0 0 0 0 0 0 0 
Substandard0 0 0 0 0 0 841 841 
Doubtful0 0 0 0 0 0 0 0 
Loss0 0 0 0 0 0 0 0 
Total HELOCs - purchased$0 $0 $0 $0 $0 $0 $58,640 $58,640 
Construction and land/lots
Risk rating:
Pass$428 $23,130 $8,311 $1,270 $0 $4,948 $36,414 $74,501 
Special mention0 0 0 0 0 0 0 0 
Substandard0 0 0 102 0 505 0 607 
Doubtful0 0 0 0 0 0 0 0 
Loss0 0 0 0 0 0 0 0 
Total construction and land/lots$428 $23,130 $8,311 $1,372 $0 $5,453 $36,414 $75,108 
Indirect auto finance
Risk rating:
Pass$22,171 $34,993 $21,944 $26,196 $11,684 $4,554 $0 $121,542 
Special mention0 0 0 0 0 0 0 0 
Substandard8 208 386 436 217 147 0 1,402 
Doubtful0 0 0 0 0 0 0 0 
Loss0 2 1 0 0 0 0 3 
Total indirect auto finance$22,179 $35,203 $22,331 $26,632 $11,901 $4,701 $0 $122,947 
Total consumer loans
Risk rating:
Pass$740 $1,213 $5,952 $363 $157 $159 $429 $9,013 
Special mention0 0 0 4 0 0 0 4 
Substandard243 16 11 7 0 18 20 315 
Doubtful0 0 0 0 0 0 0 0 
Loss0 0 0 0 0 0 0 0 
Total consumer loans$983 $1,229 $5,963 $374 $157 $177 $449 $9,332 
Total retail consumer loans
Risk rating:
Pass$68,711 $115,994 $99,278 $83,589 $59,353 $193,820 $205,934 $826,679 
Special mention0 0 0 4 29 2,292 0 2,325 
Substandard251 1,223 397 763 456 10,490 1,060 14,640 
Doubtful0 0 0 0 0 197 0 197 
Loss0 2 1 1 0 0 0 4 
Total retail consumer loans$68,962 $117,219 $99,676 $84,357 $59,838 $206,799 $206,994 $843,845 
20
 Past Due   Total
 30-89 Days 90 Days+ Total Current Loans
December 31, 2017         
Retail consumer loans:         
One-to-four family$4,730
 $3,601
 $8,331
 $677,898
 $686,229
HELOCs - originated531
 740
 1,271
 148,813
 150,084
HELOCs - purchased—
 —
 —
 162,181
 162,181
Construction and land/lots164
 133
 297
 60,508
 60,805
Indirect auto finance441
 67
 508
 149,534
 150,042
Consumer7
 4
 11
 9,688
 9,699
Commercial loans:         
Commercial real estate341
 2,854
 3,195
 783,186
 786,381
Construction and development831
 2,062
 2,893
 183,028
 185,921
Commercial and industrial267
 538
 805
 126,904
 127,709
Municipal leases—
 —
 —
 100,205
 100,205
Total loans$7,312
 $9,999
 $17,311
 $2,401,945
 $2,419,256
The table above includes PCI loans of $797 30-89 days past due and $2,023 90 days or more past due as of December 31, 2017.
 Past Due   Total
 30-89 Days 90 Days+ Total Current Loans
June 30, 2017         
Retail consumer loans:         
One-to-four family$3,496
 $3,990
 $7,486
 $676,603
 $684,089
HELOCs - originated1,037
 274
 1,311
 155,757
 157,068
HELOCs - purchased—
 —
 —
 162,407
 162,407
Construction and land/lots132
 129
 261
 49,875
 50,136
Indirect auto finance96
 —
 96
 140,783
 140,879
Consumer5
 14
 19
 7,881
 7,900
Commercial loans: 
  
  
  
  
Commercial real estate809
 3,100
 3,909
 726,499
 730,408
Construction and development385
 887
 1,272
 196,694
 197,966
Commercial and industrial37
 831
 868
 119,519
 120,387
Municipal leases—
 —
 —
 101,175
 101,175
Total loans$5,997
 $9,225
 $15,222
 $2,337,193
 $2,352,415
The table above includes PCI loans of $854 30-89 days past due and $4,211 90 days or more past due as of June 30, 2017.

17
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

The Company's recorded investment infollowing table presents the credit risk profile by risk grade for total non-purchased and purchased performing consumer and commercial 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:
 December 31, 2017 June 30, 2017
 Nonaccruing 
90 Days + &
still accruing
 Nonaccruing 
90 Days + &
still accruing
Retail consumer loans:       
One-to-four family$6,281
 $—
 $6,453
 $—
HELOCs - originated1,275
 —
 1,291
 —
HELOCs - purchased190
 —
 192
 —
Construction and land/lots315
 —
 245
 —
Indirect auto finance285
 —
 1
 —
Consumer21
 —
 29
 —
Commercial loans: 
  
  
  
Commercial real estate2,808
 —
 2,756
 —
Construction and development2,569
 —
 1,766
 —
Commercial and industrial525
 —
 827
 —
Municipal leases98
 —
 106
 —
Total loans$14,367
 $—
 $13,666
 $—
PCI loans totaling $4,596 at December 31, 2017 and $6,664 at June 30, 2017 are excluded from nonaccruing loans dueprior to the accretionadoption of discounts established in accordance withASU 2016-13:
PassSpecial
Mention		SubstandardDoubtfulLossTotal
June 30, 2020
Commercial loans:
Commercial real estate$1,028,709 $7,580 $10,779 $0 $16 $1,047,084 
Construction and development212,370 2,723 250 1 0 215,344 
Commercial and industrial130,202 20,439 2,622 0 0 153,263 
Equipment finance228,288 150 801 0 0 229,239 
Municipal finance127,706 281 0 0 0 127,987 
PPP80,697 0 0 0 0 80,697 
Retail consumer loans:
One-to-four family458,248 1,724 9,042 206 0 469,220 
HELOCs - originated134,697 902 1,848 0 0 137,447 
HELOCs - purchased71,119 0 662 0 0 71,781 
Construction and land/lots81,112 0 402 0 0 81,514 
Indirect auto finance130,975 0 1,328 0 0 132,303 
Consumer9,894 4 361 0 0 10,259 
Total loans$2,694,017 $33,803 $28,095 $207 $16 $2,756,138 
The following table presents the acquisition methodcredit risk profile by risk grade for PCI consumer and commercial loans, prior to the adoption of accounting for business combinations.ASU 2016-13:
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 December 31, 2017.
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:
PassSpecial
Mention		SubstandardDoubtfulLossTotal
June 30, 2020
Commercial loans:
Commercial real estate$3,181 $1,742 $899 $0 $0 $5,822 
Construction and development271 0 319 0 0 590 
Commercial and industrial1,556 0 3 0 3 1,562 
Retail consumer loans:
One-to-four family2,994 465 1,014 0 0 4,473 
Construction and land/lots108 0 237 0 0 345 
Total loans$8,110 $2,207 $2,472 $0 $3 $12,792 
21
 December 31, 2017 June 30, 2017
Performing TDRs included in impaired loans$25,181
 $27,043
An analysis of the allowance for loan losses by segment for the periods shown is as follows:
 Three Months Ended December 31, 2017 Three Months Ended December 31, 2016
 PCI 
Retail
Consumer
 Commercial Total PCI 
Retail
Consumer
 Commercial Total
Balance at beginning of period$1,197
 $8,310
 $12,490
 $21,997
 $356
 $10,446
 $10,149
 $20,951
Provision for (recovery of) loan losses(286) 162
 124
 —
 (20) (609) 629
 —
Charge-offs(345) (378) (349) (1,072) —
 (155) (67) (222)
Recoveries—
 97
 68
 165
 —
 131
 126
 257
Balance at end of period$566
 $8,191
 $12,333
 $21,090
 $336
 $9,813
 $10,837
 $20,986
 Six Months Ended December 31, 2017 Six Months Ended December 31, 2016
 PCI 
Retail
Consumer
 Commercial Total PCI 
Retail
Consumer
 Commercial Total
Balance at beginning of period$727
 $8,585
 $11,839
 $21,151
 $361
 $11,549
 $9,382
 $21,292
Provision for (recovery of) loan losses184
 (250) 66
 —
 (25) (1,505) 1,530
 —
Charge-offs(345) (528) (363) (1,236) —
 (574) (675) (1,249)
Recoveries—
 384
 791
 1,175
 —
 343
 600
 943
Balance at end of period$566
 $8,191
 $12,333
 $21,090
 $336
 $9,813
 $10,837
 $20,986

18
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

The following table presents an aging analysis of past due loans (includes nonaccrual loans) by segment and class:
Past DueTotal
30-89 Days90 Days+TotalCurrentLoans
December 31, 2020
Commercial loans:
Commercial real estate$45 $2,060 $2,105 $1,054,866 $1,056,971 
Construction and development0 361 361 172,531 172,892 
Commercial and industrial0 91 91 138,670 138,761 
Equipment finance286 68 354 272,407 272,761 
Municipal finance0 352 352 128,197 128,549 
PPP0 0 0 64,845 64,845 
Retail consumer loans:
One-to-four family1,431 2,874 4,305 448,116 452,421 
HELOCs - originated98 248 346 125,051 125,397 
HELOCs - purchased147 145 292 58,348 58,640 
Construction and land/lots0 22 22 75,086 75,108 
Indirect auto finance395 405 800 122,147 122,947 
Consumer256 17 273 9,059 9,332 
Total loans$2,658 $6,643 $9,301 $2,669,323 $2,678,624 
The Company's ending balancesfollowing table presents an aging analysis of past due 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
December 31, 2017               
Retail consumer loans:               
One-to-four family$135
 $391
 $3,587
 $4,113
 $7,448
 $9,302
 $669,479
 $686,229
HELOCs - originated—
 21
 1,311
 1,332
 256
 462
 149,366
 150,084
HELOCs - purchased—
 —
 791
 791
 —
 —
 162,181
 162,181
Construction and land/lots—
 22
 1,063
 1,085
 511
 611
 59,683
 60,805
Indirect auto finance—
 —
 940
 940
 —
 —
 150,042
 150,042
Consumer—
 9
 56
 65
 3
 9
 9,687
 9,699
Commercial loans: 
  
  
  
  
  
  
  
Commercial real estate248
 190
 7,463
 7,901
 12,726
 5,806
 767,849
 786,381
Construction and development168
 51
 2,876
 3,095
 2,432
 2,583
 180,906
 185,921
Commercial and industrial15
 91
 1,197
 1,303
 2,420
 1,060
 124,229
 127,709
Municipal leases—
 —
 465
 465
 —
 —
 100,205
 100,205
Total$566
 $775
 $19,749
 $21,090
 $25,796
 $19,833
 $2,373,627
 $2,419,256
June 30, 2017 
  
  
  
  
  
  
  
Retail consumer loans: 
  
  
  
  
  
  
  
One-to-four family$28
 $863
 $3,585
 $4,476
 $8,069
 $10,305
 $665,715
 $684,089
HELOCs - originated—
 44
 1,340
 1,384
 288
 12
 156,768
 157,068
HELOCs - purchased—
 —
 838
 838
 —
 —
 162,407
 162,407
Construction and land/lots—
 88
 889
 977
 528
 634
 48,974
 50,136
Indirect auto finance—
 1
 880
 881
 —
 1
 140,878
 140,879
Consumer—
 8
 49
 57
 18
 8
 7,874
 7,900
Commercial loans: 
  
  
  
  
  
  
  
Commercial real estate512
 239
 6,600
 7,351
 17,383
 6,284
 706,741
 730,408
Construction and development171
 13
 2,982
 3,166
 2,629
 2,184
 193,153
 197,966
Commercial and industrial16
 287
 1,221
 1,524
 2,626
 1,514
 116,247
 120,387
Municipal leases—
 —
 497
 497
 —
 —
 101,175
 101,175
Total$727
 $1,543
 $18,881
 $21,151
 $31,541
 $20,942
 $2,299,932
 $2,352,415
Loans acquired from acquisitions are initially excluded from the allowance for loan losses in accordance with the acquisition method of accounting for business combinations. The Company records these loans at fair value, which includes a credit discount, therefore, no allowance for loan losses are established for these acquired loans at acquisition. A provision for loan losses is recorded for any further deterioration in these acquired loans subsequentprior to the acquisition.adoption of ASU 2016-13:

Past DueTotal
30-89 Days90 Days+TotalCurrentLoans
June 30, 2020
Commercial loans:
Commercial real estate$4,528 $2,892 $7,420 $1,045,486 $1,052,906 
Construction and development293 341 634 215,300 215,934 
Commercial and industrial0 91 91 154,734 154,825 
Equipment finance303 498 801 228,438 229,239 
Municipal finance0 0 0 127,987 127,987 
PPP0 0 0 80,697 80,697 
Retail consumer loans:
One-to-four family1,679 3,147 4,826 468,867 473,693 
HELOCs - originated442 310 752 136,695 137,447 
HELOCs - purchased214 47 261 71,520 71,781 
Construction and land/lots0 252 252 81,607 81,859 
Indirect auto finance756 285 1,041 131,262 132,303 
Consumer30 25 55 10,204 10,259 
Total loans$8,245 $7,888 $16,133 $2,752,797 $2,768,930 

19
22
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

The Company's impairedfollowing table presents recorded investment in loans and the related allowance,on nonaccrual status, by segment and class, atincluding restructured loans. It also includes interest income recognized on nonaccrual loans for the dates indicated follows:
 Total Impaired Loans
 
Unpaid
Principal
Balance
 
Recorded
Investment
With a
Recorded
Allowance
 
Recorded
Investment
With No
Recorded
Allowance
 Total 
Related
Recorded
Allowance
December 31, 2017         
Retail consumer loans:         
One-to-four family$27,510
 $18,013
 $6,147
 $24,160
 $935
HELOCs - originated3,826
 2,046
 554
 2,600
 63
HELOCs - purchased190
 190
 —
 190
 1
Construction and land/lots2,538
 1,277
 332
 1,609
 60
Indirect auto finance354
 257
 28
 285
 1
Consumer512
 2
 29
 31
 9
Commercial loans: 
  
  
  
  
Commercial real estate7,483
 4,737
 2,390
 7,127
 204
Construction and development4,433
 1,272
 2,006
 3,278
 62
Commercial and industrial6,280
 1,339
 50
 1,389
 93
Municipal leases98
 98
 —
 98
 —
Total impaired loans$53,224
 $29,231
 $11,536
 $40,767
 $1,428
June 30, 2017 
  
  
  
  
Retail consumer loans: 
  
  
  
  
One-to-four family$28,469
 $17,353
 $7,773
 $25,126
 $881
HELOCs - originated4,070
 2,270
 532
 2,802
 49
HELOCs - purchased192
 —
 192
 192
 —
Construction and land/lots2,817
 1,310
 468
 1,778
 88
Indirect auto finance22
 —
 1
 1
 1
Consumer552
 15
 27
 42
 8
Commercial loans: 
  
  
  
  
Commercial real estate8,307
 4,721
 3,186
 7,907
 253
Construction and development3,768
 1,024
 1,617
 2,641
 16
Commercial and industrial7,757
 845
 1,231
 2,076
 288
Municipal leases400
 106
 294
 400
 —
Total impaired loans$56,354
 $27,644
 $15,321
 $42,965
 $1,584
Impaired loans above excludes $4,596 atsix months ended December 31, 2017 and $6,677 at June 30, 20172020.
December 31, 2020June 30, 202090 Days + &
still accruing as of December 31, 2020		Nonaccrual with no allowance as of December 31, 2020Interest income recognized
Commercial loans:
Commercial real estate$7,751 $8,869 $0 $4,576 $290 
Construction and development537 465 0 80 39 
Commercial and industrial234 259 0 92 62 
Equipment finance354 801 0 293 14 
Municipal finance352 0 0352 0 
Retail consumer loans:
One-to-four family3,425 3,582 0 1,085 129 
HELOCs - originated344 531 0 0 34 
HELOCs - purchased841 662 0 0 12 
Construction and land/lots22 37 0 0 0 
Indirect auto finance661 668 0 0 56 
Consumer18 49 0 0 6 
Total loans$14,539 $15,923 $0 $6,478 $642 
The decrease in PCI loans due to the accretion of discounts established in accordance with the acquisition method of accounting for business combinations. The June 30, 2017nonaccrual balance in the preceding sentenceabove schedule, compared to June 30, 2020, is mainly due to one large commercial nonaccrual loan paying off partially offset by the addition to nonaccrual loans of $486 of PCI loans, formerly accounted for as credit impaired loans, prior to the adoption of ASU 2016-13. These loans were previously excluded from nonaccrual loans. The adoption of CECL resulted in the discontinuation of the pool-level accounting for acquired credit impaired loans which was previously disclosed as $13,425. Based on further review, this amount was determined to be an error and was corrected during the quarter ended September 30, 2017. The error had no effect on the Company’s audited financial statements or other disclosures.replaced with a loan-level evaluation for nonaccrual status.
The following table above includes $20,934 and $22,023,presents a breakdown of impairedthe provision (benefit) for credit losses included in our Consolidated Statements of Income:
Three Months EndedSix Months Ended
December 31,December 31,
2020201920202019
Provision (benefit) for credit losses:
Loans$(3,350)$400 $(2,400)$400 
Off-balance-sheet credit exposure140 0 140 0 
Commercial paper180 0 180 0 
Total provision (benefit) for credit losses$(3,030)$400 $(2,080)$400 
The following table presents an analysis of the ACL on loans that were not individually evaluated at December 31, 2017 and June 30, 2017, respectively, because these loans did not meet the Company's threshold for individual impairment evaluation. The recorded allowance above includes $653 and $41 related to these loans that were not individually evaluated at December 31, 2017 and June 30, 2017, respectively.by segment:

Three Months EndedSix Months Ended
December 31, 2020December 31, 2020
CommercialRetail
Consumer		TotalCommercialRetail
Consumer		Total
Balance at beginning of period$25,199 $17,933 $43,132 $21,116 $6,956 $28,072 
Impact of adoption ASU 2016-130 0 0 4,073 10,736 14,809 
Provision (benefit) for credit losses(292)(3,058)(3,350)0 (2,400)(2,400)
Charge-offs(308)(253)(561)(1,403)(935)(2,338)
Recoveries300 323 623 1,113 588 1,701 
Net charge-offs(8)70 62 (290)(347)(637)
Balance at end of period$24,899 $14,945 $39,844 $24,899 $14,945 $39,844 


20
23
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

The following table presents an analysis of the allowance for loan losses by segment, prior to the adoption of ASU 2016-13:
Three Months EndedSix Months Ended
December 31, 2019December 31, 2019
PCICommercialRetail
Consumer		TotalPCICommercialRetail
Consumer		Total
Balance at beginning of period$194 $15,392 $5,728 $21,314 $201 $14,809 $6,419 $21,429 
Provision for (recovery of) loan losses(42)1,485 (1,043)400 (49)2,048 (1,599)400 
Charge-offs0 (599)(96)(695)0 (742)(383)(1,125)
Recoveries0 201 811 1,012 0 364 963 1,327 
Balance at end of period$152 $16,479 $5,400 $22,031 $152 $16,479 $5,400 $22,031 
The Company's average recorded investment in impairedfollowing table presents ending balances of loans and interest income recognized on impaired loans for the threerelated ACL, by segment and six months ended December 31, 2017 and 2016 was as follows:
 Three Months Ended
 December 31, 2017 December 31, 2016
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Retail consumer loans:       
One-to-four family$24,519
 $287
 $26,673
 $283
HELOCs - originated2,750
 31
 2,544
 33
HELOC - purchased191
 3
 —
 —
Construction and land/lots1,588
 27
 1,594
 38
Indirect auto finance232
 3
 134
 1
Consumer33
 4
 32
 5
Commercial loans: 
  
  
  
Commercial real estate7,184
 77
 7,673
 63
Construction and development2,973
 31
 2,530
 31
Commercial and industrial1,723
 23
 3,372
 22
Municipal leases102
 6
 408
 —
Total loans$41,295
 $492
 $44,960
 $476
class:
 Six Months Ended
 December 31, 2017 December 31, 2016
 
Average
Recorded
Investment
 
Interest
Income
Recognized
 
Average
Recorded
Investment
 
Interest
Income
Recognized
Retail consumer loans:       
One-to-four family$24,721
 $585
 $26,356
 $585
HELOCs - originated2,767
 61
 2,755
 65
HELOCs - purchased191
 7
 —
 —
Construction and land/lots1,651
 56
 1,548
 75
Indirect auto finance155
 9
 96
 3
Consumer36
 8
 29
 10
Commercial loans: 
  
  
  
Commercial real estate7,425
 152
 7,326
 130
Construction and development2,862
 52
 2,530
 49
Commercial and industrial1,841
 42
 3,624
 58
Municipal leases201
 6
 412
 12
Total loans$41,850
 $978
 $44,676
 $987
A summary of changes in the accretable yield for PCI loans for the three and six months ended December 31, 2017 and 2016 was as follows:
Allowance for Credit LossesTotal Loans Receivable
Loans
individually
evaluated		Loans
collectively
evaluated		TotalLoans
individually
evaluated		Loans
collectively
evaluated		Total
December 31, 2020
Commercial loans:
Commercial real estate$86 $12,841 $12,927 $6,463 $1,050,508 $1,056,971 
Construction and development0 2,385 2,385 80 172,812 172,892 
Commercial and industrial16 2,874 2,890 887 137,874 138,761 
Equipment finance76 6,179 6,255 373 272,388 272,761 
Municipal finance0 442 442 352 128,197 128,549 
PPP0 0 0 0 64,845 64,845 
Retail consumer loans:
One-to-four family11 7,800 7,811 3,266 449,155 452,421 
HELOCs - originated0 1,680 1,680 0 125,397 125,397 
HELOCs - purchased0 784 784 0 58,640 58,640 
Construction and land/lots0 1,456 1,456 0 75,108 75,108 
Indirect auto finance0 2,978 2,978 0 122,947 122,947 
Consumer0 236 236 0 9,332 9,332 
Total$189 $39,655 $39,844 $11,421 $2,667,203 $2,678,624 
24
 Three Months Ended
 December 31, 2017 December 31, 2016
Accretable yield, beginning of period$6,698
 $8,339
Reclass from nonaccretable yield (1)
77
 185
Other changes, net (2)
80
 (282)
Interest income(634) (723)
Accretable yield, end of period$6,221
 $7,519

21
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

The following table presents ending balances of loans and the related allowance, by segment and class, prior to the adoption of ASU 2016-13:
Allowance for Loan LossesTotal Loans Receivable
PCILoans
individually
evaluated for
impairment		Loans
collectively
evaluated		TotalPCILoans
individually
evaluated for
impairment		Loans
collectively
evaluated		Total
June 30, 2020
Commercial loans:
Commercial real estate$113 $961 $10,731 $11,805 $5,822 $7,924 $1,039,160 $1,052,906 
Construction and development4 5 3,599 3,608 590 299 215,045 215,934 
Commercial and industrial15 31 2,153 2,199 1,562 852 152,411 154,825 
Equipment finance0 209 2,598 2,807 0 801 228,438 229,239 
Municipal finance0 0 697 697 0 0 127,987 127,987 
PPP0 0 0 0 0 0 80,697 80,697 
Retail consumer loans:
One-to-four family17 52 2,400 2,469 4,473 4,304 464,916 473,693 
HELOCs - originated0 0 1,344 1,344 0 0 137,447 137,447 
HELOCs - purchased0 0 430 430 0 0 71,781 71,781 
Construction and land/lots33 0 1,409 1,442 345 296 81,218 81,859 
Indirect auto finance0 0 1,136 1,136 0 10 132,293 132,303 
Consumer0 0 135 135 0 0 10,259 10,259 
Total$182 $1,258 $26,632 $28,072 $12,792 $14,486 $2,741,652 $2,768,930 
Prior to the adoption of ASU 2016-13, loans acquired through acquisitions were initially excluded from the allowance for loan losses in accordance with the acquisition method of accounting for business combinations. The Company recorded these loans at fair value, which includes a credit discount; therefore, no allowance for loan losses was established for these acquired loans at acquisition. A provision for loan losses was recorded for any further deterioration in these acquired loans subsequent to the acquisition.
The following table presents impaired loans and the related allowance, by segment and class, excluding PCI loans, prior to the adoption of ASU 2016-13:
 Total Impaired Loans
Unpaid
Principal
Balance		Recorded
Investment
With a
Recorded
Allowance		Recorded
Investment
With No
Recorded
Allowance		TotalRelated
Recorded
Allowance
June 30, 2020     
Commercial loans:
Commercial real estate$10,401 $8,062 $1,068 $9,130 $976 
Construction and development1,785 818 80 898 11 
Commercial and industrial9,782 1,058 26 1,084 34 
Equipment finance2,631 303 498 801 209 
Retail consumer loans:     
One-to-four family16,560 10,805 3,374 14,179 412 
HELOCs - originated2,087 1,585 53 1,638 43 
HELOCs - purchased662 662 0 662 3 
Construction and land/lots1,585 749 296 1,045 13 
Indirect auto finance1,075 486 241 727 5 
Consumer297 38 27 65 2 
Total impaired loans$46,865 $24,566 $5,663 $30,229 $1,708 
The table above includes $15,743, of impaired loans that were not individually evaluated because these loans did not meet the Company's threshold for individual impairment evaluation. The recorded allowance above includes $450 related to these loans that were not individually evaluated.
 Six Months Ended
 December 31, 2017 December 31, 2016
Accretable yield, beginning of period$7,080
 $9,532
Reclass from nonaccretable yield (1)
278
 1,072
Other changes, net (2)
107
 (741)
Interest income(1,244) (2,344)
Accretable yield, end of period$6,221
 $7,519
25

(1)Represents changes attributable to expected losses assumptions.
(2)Represents changes in cash flows expected to be collected due to the impact of modifications, changes in prepayment assumptions, and changes in interest rates.


22
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

The following table presents average recorded investments in impaired loans and interest income recognized on impaired loans, prior to the adoption of ASU 2016-13:
Three Months EndedSix Months Ended
December 31, 2019December 31, 2019
Average
Recorded
Investment		Interest
Income
Recognized		Average
Recorded
Investment		Interest
Income
Recognized
Commercial loans:
Commercial real estate$8,665 $76 $8,419 $144 
Construction and development1,181 11 1,527 26 
Commercial and industrial742 14 710 90 
Equipment finance1,032 0 643 3 
Retail consumer loans:
One-to-four family14,276 192 15,085 378 
HELOCs - originated1,862 26 1,700 53 
HELOCs - purchased476 3 540 6 
Construction and land/lots1,117 20 1,201 44 
Indirect auto finance483 6 467 15 
Consumer53 3 288 6 
Total loans$29,887 $351 $30,580 $765 
The following table presents a summary of changes in the accretable yield for PCI loans, prior to the adoption of ASU 2016-13:
 Three Months EndedSix Months Ended
December 31, 2019December 31, 2019
Accretable yield, beginning of period$4,916 $5,259 
Reclass from nonaccretable yield (1)
135 250 
Other changes, net (2)
(295)(309)
Interest income(401)(845)
Accretable yield, end of period$4,355 $4,355 
______________________________________
(1)    Represents changes attributable to expected loss assumptions.
(2)    Represents changes in cash flows expected to be collected due to the impact of modifications, changes in prepayment assumptions, and changes in interest rates.
26
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
In estimating ECL, ASC 326 prescribes that if foreclosure is probable, a CDA is required to be measured at the fair value of collateral, but as a practical expedient, if foreclosure is not probable, fair value measurement is optional. For those CDA loans measured at the fair value of collateral, a credit loss expense is recorded for loan amounts in excess of fair value. The following table provides a breakdown between loans identified as CDAs and non-CDAs, by segment and class, and securing collateral, as well as collateral coverage for those loans at December 31, 2020:
Type of Collateral and Extent to Which Collateral Secures Financial Assets
Residential PropertyInvestment PropertyCommercial PropertyBusiness AssetsFinancial Assets Not Considered Collateral DependentTotal
Commercial loans:
Commercial real estate$0 $3,800 $2,460 $0 $1,050,711 $1,056,971 
Construction and development0 80 0 0 172,812 172,892 
Commercial and industrial0 0 0 90 138,671 138,761 
Equipment finance0 0 0 87 272,674 272,761 
Municipal finance0 0 0 352 128,197 128,549 
PPP0 0 0 0 64,845 64,845 
Retail consumer loans:
One-to-four family1,085 0 0 0 451,336 452,421 
HELOCs - originated0 0 0 0 125,397 125,397 
HELOCs - purchased0 0 0 0 58,640 58,640 
Construction and land/lots0 0 0 0 75,108 75,108 
Indirect auto finance0 0 0 0 122,947 122,947 
Consumer0 0 0 0 9,332 9,332 
Total$1,085 $3,880 $2,460 $529 $2,670,670 $2,678,624 
Total Collateral Value$1,257 $3,924 $2,732 $2,506 
27
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
For the three and six months ended December 31, 2020 and 2019, the following table presents a breakdown of the types of concessions made on TDRs by loan class:
Three Months Ended December 31, 2020Three Months Ended December 31, 2019
Number
of
Loans		Pre
Modification
Outstanding
Recorded
Investment		Post
Modification
Outstanding
Recorded
Investment		Number
of
Loans		Pre
Modification
Outstanding
Recorded
Investment		Post
Modification
Outstanding
Recorded
Investment
Below market interest rate:
Commercial:
Commercial real estate0 $0 $0 1 $88 $88 
Extended payment terms:      
Commercial:
Commercial and industrial0 0 0 1 826 826 
Retail consumer:      
One-to-four family0 0 0 1 56 53 
Other TDRs:      
Commercial:
Construction and development0 0 0 1 182 79 
Retail consumer:      
One-to-four family1 19 16 2 11 10 
Construction and land/lots1 225 223 0 0 0 
Indirect auto finance3 45 43 0 0 0 
Total5 $289 $282 6 $1,163 $1,056 
Six Months Ended December 31, 2020Six Months Ended December 31, 2019
Number
of
Loans		Pre
Modification
Outstanding
Recorded
Investment		Post
Modification
Outstanding
Recorded
Investment		Number
of
Loans		Pre
Modification Outstanding Recorded
Investment		Post
Modification
Outstanding
Recorded
Investment
Below market interest rate:
Commercial:
Commercial real estate0 $0 $0 1 $88 $88 
Extended payment terms:      
Commercial:
Commercial and industrial0 0 0 1 826 826 
Retail consumer:      
One-to-four family0 0 0 2 70 67 
Other TDRs:      
Commercial:
Commercial real estate1 4,408 3,800 0 0 0 
Construction and development0 0 0 1 182 79 
Retail consumer:      
One-to-four family1 19 16 3 45 43 
Construction and land/lots1 225 223 0 0 0 
Indirect auto finance9 141 109 4 68 61 
Total12 $4,793 $4,148 12 $1,279 $1,164 
Other TDRs include TDRs that have a below market interest rate and extended payment terms. The Company does not typically forgive principal when restructuring troubled debt.
For the three and six months ended December 31, 2017 and 2016, the following table presents a breakdown of the types of concessions made on TDRs by loan class:
 Three Months Ended December 31, 2017 Three Months Ended December 31, 2016
 
Number
of
Loans
 
Pre
Modification
Outstanding
Recorded
Investment
 
Post
Modification
Outstanding
Recorded
Investment
 
Number
of
Loans
 
Pre
Modification
Outstanding
Recorded
Investment
 
Post
Modification
Outstanding
Recorded
Investment
Extended payment terms: 
  
  
  
  
  
Retail consumer: 
  
  
  
  
  
One-to-four family3
 $398
 $395
 1
 $20
 $20
HELOCs - originated1
 64
 59
 —
 —
 —
Construction and land/lots1
 36
 36
 1
 280
 280
Total5
 $498
 $490
 2
 $300
 $300
Other TDRs: 
  
  
  
  
  
Retail consumer: 
  
  
  
  
  
One-to-four family6
 $177
 $176
 5
 $168
 $171
Construction and land/lots—
 —
 —
 2
 254
 251
Indirect auto finance1
 19
 6
 —
 —
 —
Commercial:           
Commercial & Industrial—
 —
 —
 1
 24
 24
Total7
 $196
 $182
 8
 $446
 $446
Total12
 $694
 $672
 10
 $746
 $746
28
 Six Months Ended December 31, 2017 Six Months Ended December 31, 2016
 
Number
of
Loans
 
Pre
Modification
Outstanding
Recorded
Investment
 
Post
Modification
Outstanding
Recorded
Investment
 
Number
of
Loans
 
Pre
Modification Outstanding Recorded
Investment
 
Post
Modification
Outstanding
Recorded
Investment
Extended payment terms: 
  
  
  
  
  
Retail consumer: 
  
  
  
  
  
One-to-four family3
 $398
 $395
 3
 $139
 $137
HELOCs - originated1
 64
 59
 —
 —
 —
Construction and land/lots1
 36
 36
 1
 280
 280
Total5
 $498
 $490
 4
 $419
 $417
Other TDRs: 
  
  
  
  
  
Retail consumer: 
  
  
  
  
  
One-to-four family15
 $1,493
 $1,481
 8
 $273
 $275
HELOCs - originated—
 —
 —
 1
 3
 3
Construction and land/lots—
 —
 —
 2
 254
 251
Indirect auto finance1
 19
 6
 —
 —
 —
Commercial:           
Commercial and industrial—
 —
 —
 1
 24
 24
Total16
 $1,512
 $1,487
 12
 $554
 $553
Total21
 $2,010
 $1,977
 16
 $973
 $970

23
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

The following table presents loans that were modified as TDRs within the previous 12 months and for which there was a payment default during the three and six months ended December 31, 20172020 and 2016:2019:
Three Months Ended December 31, 2020Three Months Ended December 31, 2019
Number of
Loans		Recorded
Investment		Number of
Loans		Recorded
Investment
Other TDRs:    
Retail consumer:    
Indirect auto finance1 $1 0 $0 
Total1 $1 0 $0 
 Three Months Ended December 31, 2017 Three Months Ended December 31, 2016
 
Number of
Loans
 
Recorded
Investment
 
Number of
Loans
 
Recorded
Investment
Extended payment terms:       
Retail consumer:       
One-to-four family1
 $37
 —
 $—
Total1
 $37
 —
 $—
Other TDRs: 
  
  
  
Retail consumer: 
  
  
  
One-to-four family3
 $493
 —
 $—
Indirect auto finance1
 6
 —
 —
Commercial:       
Commercial and industrial—
 —
 4
 1,277
Total4
 $499
 4
 $1,277
Total5
 $536
 4
 $1,277
Six Months Ended December 31, 2020Six Months Ended December 31, 2019
Six Months Ended December 31, 2017 Six Months Ended December 31, 2016Number of
Loans		Recorded
Investment		Number of
Loans		Recorded
Investment
Number of
Loans
 
Recorded
Investment
 
Number of
Loans
 
Recorded
Investment
Extended payment terms:

 

 

 

Retail consumer:       
One-to-four family1
 $37
 —
 $—
Total1
 $37
 —
 $—
Other TDRs: 
  
  
  
Other TDRs:    
Retail consumer: 
  
  
  
Retail consumer:    
One-to-four family3
 $493
 —
 $—
One-to-four family0 $0 2 $50 
Indirect auto finance1
 6
 —
 —
Indirect auto finance2 12 0 0 
Commercial:       
Commercial real estate—
 —
 —
 —
Commercial and industrial—
 —
 4
 1,277
Total4
 $499
 4
 $1,277
Total2 $12 2 $50 
Total5
 $536
 4
 $1,277
In the determination of the allowance for loan losses,ACL, management considers TDRs for all loan classes, and the subsequent nonperformance in accordance with their modified terms, by measuring impairmenta reserve on a loan-by-loan basis based on either the value of the loan's expected future cash flows discounted at the loan's original effective interest rate or on the collateral value, net of the estimated costs of disposal, if the loan is collateral dependent.

Off-Balance-Sheet Credit Exposure
The Company maintains a separate reserve for credit losses from off-balance-sheet credit exposures, including unfunded loan commitments, which is included in other liabilities on the consolidated balance sheets. The reserve for credit losses on off-balance-sheet credit exposures is adjusted as a provision for credit losses in the consolidated statements of income. The estimate includes consideration of the likelihood that funding will occur and an estimate of ECLs on commitments expected to be funded over its estimated life, utilizing the same models and approaches for the Company's other loan portfolio segments described above, as these unfunded commitments share similar risk characteristics as its loan portfolio segments. The Company has identified the unfunded portion of certain lines of credit as unconditionally cancellable credit exposures, meaning the Company can cancel the unfunded commitment at any time. No credit loss estimate is reported for off-balance-sheet credit exposures that are unconditionally cancellable by the Company or for undrawn amounts under such arrangements that may be drawn prior to the cancellation of the arrangement. At December 31, 2020, the liability for credit losses on off-balance-sheet credit exposures included in other liabilities was $2,428.
Modifications in Response to COVID-19
Beginning in March 2020, the Company began offering short-term loan modifications to assist borrowers during the COVID-19 pandemic. The CARES Act along with a joint agency statement issued by banking agencies and confirmed by FASB staff that short-term modifications made in response to COVID-19 are not TDRs. Accordingly, the Company does not account for such loan modifications as TDRs. As of December 31, 2020, modifications totaling $1,654 and $82,035 had been granted in retail consumer loans and commercial loans, respectively.
The Bank is offering payment and financial relief programs for borrowers impacted by COVID-19. These programs include loan payment deferrals for up to 90 days (which can be renewed for another 90 days under certain circumstances) waived late fees, and suspension of foreclosure proceedings and repossessions. Since March, the Company has received numerous requests from borrowers for some type of payment relief; however, the majority of these payment deferrals have ended and borrowers are again making regular loan payments. The breakout of loans deferred by loan type as of the dates indicated is as follows:
24
29
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

Principal and Interest Payment Deferrals by Loan Types (1) (2)
December 31, 2020June 30, 2020
DeferralPercent of Total Loan PortfolioDeferralPercent of Total Loan Portfolio
Lodging$0 0 %$108,171 4.0 %
Other commercial real estate, construction and development, and commercial and industrial4,018 0.2 367,443 13.7 
Equipment finance2,196 0.1 33,693 1.3 
One-to-four family822 0 36,821 1.4 
Other consumer loans832 0 5,203 0.2 
     Total$7,868 0.3 %$551,331 20.6 %
6.Real Estate Owned
__________________________
(1)    Modified loans are not included in classified assets or nonperforming assets.
(2)    Principal and interest is being deferred

A majority of loans placed on principal and interest payment deferral during the pandemic came out of deferral as of December 31, 2020. However, the Company has allowed for continued relief to borrowers in the form of interest-only payments for certain loans recently coming out of full deferral. At December 31, 2020, the Company had $75,821 in commercial loans on interest-only payments for a period of time no greater than 12 months before being required to return to their original contractual payments.
30
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
7.    Real Estate Owned
The activity within REO for the periods shown is as follows:
 Three Months Ended December 31, Six Months Ended December 31,
 2017 2016 2017 2016
Balance at beginning of period$5,941
 $5,715
 $6,318
 $5,956
Transfers from loans339
 1,025
 591
 1,330
Sales, net of gain or loss(1,111) (1,005) (1,758) (1,551)
Writedowns(351) (87) (351) (87)
Capital improvements—
 —
 18
 —
Balance at end of period$4,818
 $5,648
 $4,818
 $5,648
Three Months Ended December 31,Six Months Ended December 31,
2020201920202019
Balance at beginning of period$144 $2,582 $337 $2,929 
Transfers from loans108 0 108 46 
Sales, net of gain or loss0 (965)(193)(1,346)
Writedowns0 (166)0 (178)
Balance at end of period$252 $1,451 $252 $1,451 
At December 31, 20172020 and June 30, 2017,2020, the Bank had $1,081$0 and $1,015$97, 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 $2,268$447 and $2,230$1,318 at December 31, 20172020 and June 30, 2017,2020, respectively.
7. 8.    Net Income Taxesper Share
Income tax expense consists of:
 Three Months Ended December 31, Six Months Ended December 31,
 2017 2016 2017 2016
Current:       
Federal$92
 $40
 $230
 $191
State(3) 22
 8
 29
Total current expense89
 62
 238
 220
Deferred:       
Federal1,611
 751
 3,681
 2,356
State115
 80
 406
 741
Adjustment due to the Tax Cuts and Jobs Act17,693
 —
 17,693
 —
Total deferred expense19,419
 831
 21,780
 3,097
Total income tax expense$19,508
 $893
 $22,018
 $3,317
Income tax expense differed from the amounts computed by applying the U.S. federal income tax rate of 28% and 34% for the periods ended December 31, 2017 and 2016, respectively, to pretax income from continuing operations before income taxes as a result of the following:
 Three Months Ended December 31, Six Months Ended December 31,
 2017 2016 2017 2016
 $ Rate $ Rate $ Rate $ Rate
Tax at federal income tax rate$2,432
 28 % $1,318
 34 % $4,653
 28 % $3,442
 34 %
Increase (decrease) resulting from:               
Tax exempt income(264) (3)% (340) (9)% (541) (3)% (712) (7)%
Nondeductible merger expenses1
 — % 1
 — % 1
 — % 28
 — %
Change in valuation allowance for deferred tax assets, allocated to income tax expense(49) (1)% (65) (2)% (184) (1)% (264) (3)%
State tax, net of federal benefit81
 1 % 67
 2 % 204
 1 % 185
 2 %
Change in deferred tax assets due to North Carolina corporate tax rate decrease—
 — % —
 — % 133
 1 % 490
 5 %
Change in deferred tax assets due to the Tax Cuts and Jobs Act17,693
 200 % —
 — % 17,693
 105 % —
 — %
Adjustment for prior quarter expense due to accrual at higher rate(418) (5)% —
 — % —
 — % —
 — %
Other32
 — % (88) (2)% 59
 — % 148
 1 %
Total$19,508
 220 % $893
 23 % $22,018
 131 % $3,317
 32 %

25
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

The sources and tax effects of temporary differences that give rise to significant portions of the deferred tax assets (liabilities) at December 31, 2017 and June 30, 2017 are presented below:
 December 31, 2017 June 30, 2017
Deferred tax assets:   
Alternative minimum tax credit$4,637
 $4,418
Allowance for loan losses4,646
 7,452
Deferred compensation and post-retirement benefits9,672
 16,055
Accrued vacation and sick leave18
 29
Impairments on real estate owned877
 1,337
Other than temporary impairment on investments2,262
 3,617
Net operating loss carryforward11,109
 21,443
Discount from business combination3,056
 3,645
Unrealized loss on securities held for sale98
 —
Stock compensation plans2,154
 2,884
Other1,904
 2,687
Total gross deferred tax assets40,433
 63,567
Less valuation allowance(54) (238)
Deferred tax assets40,379
 63,329
Deferred tax (liabilities): 
  
Depreciable basis of fixed assets(589) (670)
Deferred loan fees(406) (493)
FHLB stock, book basis in excess of tax(89) (143)
Unrealized gain on securities available for sale—
 (152)
Other(2,769) (4,484)
Total gross deferred tax liabilities(3,853) (5,942)
Net deferred tax assets$36,526
 $57,387
We use the asset and liability method of accounting for income taxes. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion of the deferred tax asset will not be realized. We exercise significant judgment in evaluating the amount and timing of recognition of the resulting tax liabilities and assets. These judgments require us to make projections of future taxable income. The judgments and estimates we make in determining our deferred tax assets, which are inherently subjective, are reviewed on a continual basis as regulatory and business factors change. Any reduction in estimated future taxable income may require us to record a valuation allowance against our deferred tax assets.
The decrease in net deferred tax assets was driven by the enactment of the Tax Cuts and Jobs Act (the "Tax Act"), which among other things reduced the federal corporate tax rate to 21% effective January 1, 2018 requiring the Company to revalue net deferred tax assets. The resulting estimated $17.7 million deferred tax revaluation was reflected as an increase to the Company's income tax expense. In addition, our June 30 fiscal year end required the use of a blended rate as prescribed by the Internal Revenue Code. The blended federal rate of 27.5% was retroactively effective July 1, 2017 and will be used for the entire fiscal year ending June 30, 2018. As a result of this blended rate, income tax expense for the quarter ended December 31, 2017 includes approximately $418,000 in tax benefit from adjusting the federal income tax rate to 27.5% from 34% for the first quarter of the fiscal year. The estimated $17.7 million deferred tax revaluation includes provisional amounts where a reasonable estimate was made to comply with the Tax Act, which can be adjusted throughout the measurement period or up to one year. These provisional amounts include estimates related to the timing of potential reversals of various deferred tax assets and liabilities during fiscal year 2018 using the blended tax rate as described above. The Company will continue to update the provisional amounts as additional information becomes available and expects all adjustments to be finalized by the end of fiscal 2018.
The Company had federal net operating loss ("NOL") carry forwards of $52,655 and $62,041 as of December 31, 2017 and June 30, 2017, respectively, with a recorded tax benefit of $11,109 and $21,443 included in deferred tax assets. The majority of these NOLs will expire for federal tax purposes from 2024 through 2036.
The Company also adjusted its net deferred tax asset as a result of additional reductions in the North Carolina corporate income tax rates that were enacted July 23, 2013, and effective January 1, 2014 through 2017. The lower corporate income tax rate resulted in a reduction in the deferred tax assets as of December 31, 2017 and June 30, 2017 and an increase in income tax expense for the six months ended December 31, 2017 and 2016.

26
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

The valuation allowance for deferred tax assets as of December 31, 2017 and June 30, 2017 was $54 and $238, respectively. The net decrease in the total valuation allowance relates to North Carolina state income taxes due to limitations on state net operating loss carry forwards.
Retained earnings at December 31, 2017 and June 30, 2017 include $19,570 representing pre-1988 tax bad debt reserve base year amounts for which no deferred tax liability has been provided since these reserves are not expected to reverse and may never reverse. Circumstances that would require an accrual of a portion or all of this unrecorded tax liability are a failure to meet the definition of a bank, dividend payments in excess of current year or accumulated earnings and profits, or other distributions in dissolution or liquidation of the Bank. The Company is no longer subject to examination for federal and state purposes for tax years prior to 2013.
8.Net Income (Loss) per Share
The following is a reconciliation of the numerator and denominator of basic and diluted net income (loss) per share of common stock:
 Three Months Ended December 31, Six Months Ended December 31,
 2017 2016 2017 2016
Numerator:       
Net income (loss)$(10,666) $2,983
 $(5,099) $6,807
Allocation of earnings to participating securities—
 (44) —
 (100)
Numerator for basic EPS - Net income (loss) available to common stockholders$(10,666) $2,939
 $(5,099) $6,707
Effect of dilutive securities:       
Dilutive effect to participating securities—
 1
 —
 3
Numerator for diluted EPS$(10,666) $2,940
 $(5,099) $6,710
Denominator: 
  
  
  
Weighted-average common shares outstanding - basic17,975,883
 16,900,387
 17,971,439
 16,893,775
Effect of dilutive shares—
 543,757
 —
 497,629
Weighted-average common shares outstanding - diluted17,975,883
 17,444,144
 17,971,439
 17,391,404
Net income (loss) per share - basic$(0.59) $0.17
 $(0.28) $0.39
Net income (loss) per share - diluted$(0.59) $0.17
 $(0.28) $0.39
stock as of the dates indicated:
Three Months Ended December 31,Six Months Ended December 31,
2020201920202019
Numerator:
Net income$9,461 $9,191 $15,214 $17,995 
Allocation of earnings to participating securities(77)(72)(124)(140)
Numerator for basic EPS - Net income available to common stockholders$9,384 $9,119 $15,090 $17,855 
Effect of dilutive securities:
Dilutive effect to participating securities1 8 2 5 
Numerator for diluted EPS$9,385 $9,127 $15,092 $17,860 
Denominator:    
Weighted-average common shares outstanding - basic16,202,844 16,906,457 16,216,917 17,002,052 
Effect of dilutive shares360,515 661,223 297,914 658,635 
Weighted-average common shares outstanding - diluted16,563,359 17,567,680 16,514,831 17,660,687 
Net income per share - basic$0.58 $0.54 $0.93 $1.05 
Net income per share - diluted$0.57 $0.52 $0.92 $1.01 
Potential dilutive shares are excluded from the computation of earnings per share if their effect is anti-dilutive. There were no512,200 and 547,200 stock options that were anti-dilutive for the three and six months ended December 31, 2016.2020, respectively. There were 46,500459,400 and 470,800 stock options that were anti-dilutive for the three and six months ended December 31, 2016.2019, respectively.
9.Equity Incentive Plan
9.    Equity Incentive Plan
The Company provides stock-based awards through the 2013 Omnibus Incentive Plan, which provides for awards of restricted stock, restricted stock units, stock options, stock appreciation rights and cash awards to directors, directors emeritus, directors, officers, employees and advisory directors. The cost of equity-based awards under the 2013 Omnibus Incentive Plan generally is based on the fair value of the awards on their grant date for current directors, officers, and employees. The fair value of equity-based awards is updated quarterly for certain nonemployee emeritus directors and advisory directors.date. The maximum number of shares that may be utilized for awards under the plan is 2,962,400, including 2,116,000 for stock options and stock appreciation rights and 846,400 for awards of restricted stock and restricted stock units.
Shares of common stock issued under the 2013 Omnibus Incentive Planplan may be authorized but unissued shares or may be repurchased shares. During fiscal 2013, the Company had repurchased the 846,400 shares available for awards of restricted stock and restricted stock units under the 2013 Omnibus Incentive Plan on the open market, for $13,297, at an average cost of $15.71 per share.
The table below presents share basedshare-based compensation expense and the estimated related tax benefit for stock options and restricted stock for the three and six months ended December 31, 20172020 and 2016:2019, respectively:
Three Months Ended December 31,Six Months Ended December 31,
2020201920202019
Share-based compensation expense$454 $440 $960 $883 
Tax benefit$107 $103 $226 $208 
31
 Three Months Ended December 31, Six Months Ended December 31,
 2017 2016 2017 2016
Share based compensation expense$841
 $2,053
 $2,014
 $2,792
Tax benefit$235
 $698
 $564
 $950

27
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

The table below presents stock option activity for the six months ended December 31, 20172020 and 2016:2019:
OptionsWeighted-
average
exercise
price		Remaining
contractual
life
(years)		Aggregate
Intrinsic
Value
Options outstanding at June 30, 20191,657,214 $17.59 5.0$12,909 
Granted25,000 25.37 — — 
Exercised66,900 14.40 — — 
Forfeited800 17.35 — — 
Options outstanding at December 31, 20191,614,514 $17.84 4.7$14,538 
Exercisable at December 31, 20191,212,714 $15.45 3.5$13,805 
Non-vested at December 31, 2019401,800 $25.07 7.9$733 
Options outstanding at June 30, 20201,615,500 $18.12 4.4$1,711 
Exercised54,000 14.37 — — 
Forfeited26,900 25.77 — — 
Options outstanding at December 31, 20201,534,600 $18.12 3.8$5,070 
Exercisable at December 31, 20201,243,700 $16.35 3.0$5,027 
Non-vested at December 31, 2020290,900 $25.67 7.3$42 
 Options Weighted-
average
exercise
price		 Remaining
contractual
life
(years)		 Aggregate
Intrinsic
Value
Options outstanding at June 30, 20161,529,300
 $14.50
 6.8
 $6,117
Exercised—
 —
 —
 —
Forfeited—
 —
 —
 —
Expired—
 —
 —
 —
Options outstanding at December 31, 20161,529,300
 $14.50
 6.3
 $17,433
Exercisable at December 31, 2016829,400
 $14.40
    
        
Options outstanding at June 30, 20171,470,043
 $15.22
 5.8
 $13,533
Exercised3,900
 14.37
 —
 —
Forfeited24,700
 14.43
 —
 —
Expired43,273
 23.82
 —
 —
Options outstanding at December 31, 20171,398,170
 $14.97
 5.4
 $15,077
Exercisable at December 31, 2017986,670
 $14.43
 5.2
 $11,169
Non-vested at December 31, 2017411,500
 $16.25
 6.0
 $3,908
There were no options granted during the six months ended December 31, 2020. Assumptions used in estimating the fair value of options granted during the six months ended December 31, 2019 are presented below:
December 31,
2019
Weighted-average volatility17.84 %
Expected dividend yield0.95 %
Risk-free interest rate1.55 %
Expected life (years)6.5
Weighted-average fair value of options granted$4.67 
At December 31, 2017,2020, the Company had $835$1,297 of unrecognized compensation expense related to 411,500290,900 stock options scheduled to vest over a five-year vesting period. The weighted average period over which compensation cost related to non-vested awards expected to be recognized was 1.3 years at December 31, 2020. At December 31, 2019, the Company had $1,854 of unrecognized compensation expense related to 401,800 stock options originally scheduled to vest over five-five- and seven-year vesting periods. The weighted average period over which compensation cost related to non-vested awards expected to be recognized was 0.71.4 years at December 31, 2017. At December 31, 2016, the Company had $2,444 of unrecognized compensation expense related to 699,900 stock options originally scheduled to vest over five- and seven-year vesting periods. The weighted average period over which compensation cost related to non-vested awards expected to be recognized was 0.9 years at December 31, 2016.2019.
The table below presents restricted stock award activity for the six months ended December 31, 20172020 and 2016:2019:
Restricted
stock awards		Weighted-
average grant
date fair value		Aggregate
Intrinsic
Value
Non-vested at June 30, 2019123,800 $24.65 $2,258 
Granted13,000 25.37 — 
Vested400 19.02 — 
Forfeited3,200 20.62 — 
Non-vested at December 31, 2019133,200 $24.83 $3,574 
Non-vested at June 30, 2020144,046 $25.89 $2,305 
Vested2,600 25.37 — 
Forfeited7,650 25.65 — 
Non-vested at December 31, 2020133,796 $25.91 $2,584 
The table above includes non-vested performance-based restrictive stock units totaling 15,565 and 10,375 at December 31, 2020 and 2019, respectively. Each issuance of these stock units is scheduled to vest over 3.0 years assuming certain performance metrics are met.
32
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
 
Restricted
stock awards
 
Weighted-
average grant
date fair value
 
Aggregate
Intrinsic
Value
Non-vested at June 30, 2016248,750
 $14.81
 $4,602
Granted2,000
 19.02
 —
Vested—
 —
 —
Non-vested at December 31, 2016250,750
 $14.84
 $6,494
      
Non-vested at June 30, 2017185,630
 $17.46
 $4,780
Granted2,000
 23.05
 —
Vested400
 19.02
 —
Forfeited6,600
 14.37
 —
Non-vested at December 31, 2017180,630
 $17.57
 $4,651
At December 31, 2017,2020, unrecognized compensation expense was $1,671$2,250 related to 180,630133,796 shares of restricted stock scheduled to vest over five-three- and five-year vesting periods. The weighted average period over which compensation cost related to non-vested awards is expected to be recognized was 1.4 years at December 31, 2020. At December 31, 2019, unrecognized compensation expense was $2,325 related to 133,200 shares of restricted stock originally scheduled to vest over three-, five-, and seven-year vesting periods. The weighted average period over which compensation cost related to non-vested awards is expected to be recognized was 1.11.5 years at December 31, 2017. At December 31, 2016, unrecognized compensation expense was $2,230 related to 250,750 shares of restricted stock scheduled to vest over five-2019.
10.    Commitments and seven-year vesting periods. The weighted average period over which compensation cost related to non-vested awards is expected to be recognized was 1.0 years at December 31, 2016.Contingencies

28
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

10.Commitments and Contingencies
Loan Commitments – Legally binding commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Since many commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. In the normal course of business, there are various outstanding commitments to extend credit that are not reflected in the consolidated financial statements. At December 31, 20172020 and June 30, 2017,2020, respectively, loan commitments (excluding $123,262$146,181 and $158,380$141,557 of undisbursed portions of construction loans) totaled $54,720$86,648 and $43,730$57,798 of which $25,846$17,468 and $21,221$10,678 were variable rate commitments and $28,874$69,180 and $22,509$47,120 were fixed rate commitments. The fixed rate loans had interest rates ranging from 2.03%1.09% to 7.75%8.28% at December 31, 20172020 and 1.95%1.74% to 6.25%8.54% at June 30, 2017,2020, and terms ranging from three to 30 years. Pre-approved but unused lines of credit (principally second mortgage home equity loans and overdraft protection loans) totaled $447,787$465,200 and $414,373$398,781 at December 31, 20172020 and June 30, 2017,2020, respectively. These amounts represent the Company's exposure to credit risk, and in the opinion of management have no more than the normal lending risk that the Company commits to its borrowers. The Company has two types of commitments related to certain one-to-four family loans held for sale: rate lock commitments and forward loan commitments. Rate lock commitments are commitments to extend credit to a customer that has an interest rate lock and are considered derivative instruments. The rate lock commitments do not qualify for hedge accounting. In order to mitigate the risk from interest rate fluctuations, we enterthe Company enters into forward loan sale commitments on a “best efforts” basis, which do not meet the definition of a derivative instrument. The fair value of these interest rate lock commitments was not material at December 31, 20172020 or June 30, 2017.2020.
The Company grants construction and permanent loans collateralized primarily by residential and commercial real estate to customers throughout its primary market area.areas. In addition, the Company grants equipment financing throughout the United States and municipal leasesfinancing to customers throughout North and South Carolina. The Company'sCompany’s loan portfolio can be affected by the general economic conditions within these market areas. Management believes that the Company has no significant concentration of credit in the loan portfolio.
Restrictions on Cash – TheIn response to COVID-19, the FRB reduced the reserve requirements to zero on March 15, 2020. Prior to this change the Bank iswas required by regulation to maintain a varying cash reserve balance with the Federal Reserve System. The daily average calculated cash reserve required as of December 31, 2017 and June 30, 2017 was $2,513, and $2,152, respectively, which was satisfied by vault cash and balances held at the FRB.
Guarantees – Standby letters of credit obligate the Company to meet certain financial obligations of its customers, if, under the contractual terms of the agreement, the customers are unable to do so. The financial standby letters of credit issued by the Company are irrevocable and payment is only guaranteed upon the borrower's failure to perform its obligations to the beneficiary. Total commitments under standby letters of credit as of December 31, 20172020 and June 30, 20172020 were $9,927$7,936 and $5,164,$7,766, respectively. There was no liability recorded for these letters of credit at December 31, 20172020 or June 30, 2017,2020, respectively.
Litigation –TheFrom time to time, the Company is involved in several litigation matters in the ordinary course of business. These proceedings and the associated legal claims are often contested, and the outcome of individual matters is not always predictable. These claims and counter claims typically arise during the course of collection efforts on problem loans or with respect to actions to enforce liens on properties in which the Company holds a security interest. The Company is not a party to any pending legal proceedings that management believes would have a material adverse effect on the Company’s financial condition or results of operations.
11.Fair Value of Financial Instruments
11.    Fair Value of Financial Instruments
The Company utilizes fair value measurements to record fair value adjustments to certain assets and to determine fair value disclosures. Securities available for sale are recorded at fair value on a recurring basis. Additionally, from time to time, the Company may be required to record at fair value other assets on a nonrecurring basis, such as impaired loans. These nonrecurring fair value adjustments typically involve application of lower of cost or market accounting or write-downs of individual assets. The fair value of financial instruments presented in this note are based on the same methodology as presented in Note 21 of the Notes to Consolidated Financial Statements contained in the Company’s 2020 Form 10-K.
Fair Value Hierarchy
The Company groups assets at fair value in three levels, based on the markets in which the assets are traded and the reliability of the assumptions used to determine fair value. These levels are:
Level 1:Valuation is based upon quoted prices for identical instruments traded in active markets.
Level 2:Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
Level 3:Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.
Level 1:    Valuation is based upon quoted prices for identical instruments traded in active markets.
Level 2:    Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.
33
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
Level 3:    Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset. Valuation techniques include use of option pricing models, discounted cash flow models and similar techniques.
Following is a description of valuation methodologies used for assets recorded at fair value. The Company does not have any liabilities recorded at fair value.
Investment Securities Available for Sale
Securities available for sale are valued on a recurring basis at quoted market prices where available. If quoted market prices are not available, fair values are based on quoted prices of comparable securities. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange or U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include mortgage-backed securities and debentures issued by government sponsored enterprises, municipal bonds, and corporate debt securities. The Company has no Level 3 securities.

Loans Held for Sale
29
HOMETRUST BANCSHARES, INC. AND SUBSIDIARYLoans held for sale are adjusted to lower of cost or fair value.  Fair value is based on commitments on hand from investors or, if commitments have not yet been obtained, what investors are currently offering for loans with similar characteristics. The Company considers all loans held for sale carried at fair value as nonrecurring Level 3.
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

Individually Evaluated Loans
The Company does not record loans at fair value on a recurring basis. From time to time, however, a loan is considered impairedindividually evaluated and an allowance for loan lossescredit loss is established. Loans for which it is probable that payment of interestprincipal and principalinterest will not be made in accordance with the contractual terms of the loan agreement are considered impaired.individually evaluated. Once a loan is identified, as individually impaired, the fair value is estimated using one of several methods, includingtwo ways, which include collateral value, market value of similar debt, enterprise value, liquidation value and discounted cash flows. The Company reviews all impairedindividually evaluated loans each quarter to determine if an allowance is necessary. Those impairedindividually evaluated loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans.
The fair value of impaired loans is estimated in one of two ways, which include collateral value and discounted cash flows. Loans are considered collateral dependent if repayment is expected solely from the collateral. For these collateral dependent impaired loans, the Company obtains updated appraisals at least annually. These appraisals are reviewed for appropriateness and then discounted for estimated closing costs to determine if an allowance is necessary. As part of the quarterly review of impairedindividually evaluated loans, the Company reviews these appraisals to determine if any additional discounts to the fair value are necessary. If a current appraisal is not obtained, the Company determines whether a discount is needed to the value from the original appraisal based on the decline in value of similar properties with recent appraisals. For loans that are not collateral dependent, estimated fair value is based on the present value of expected future cash flows using the interest rate implicit in the original agreement. ImpairedIndividually evaluated loans where a charge-off has occurred or an allowance is established during the period being reported require classification in the fair value hierarchy. The Company records such impaired loans as a nonrecurring Level 3 in the fair value hierarchy.
Loans Held for Sale
Loans held for sale are adjusted to lower of cost or fair value.  Fair value is based upon investor pricing. The Company considers all loans held for sale carried at fair value as nonrecurring Level 3.
Real Estate Owned
REO is considered held for sale and is adjusted to fair value less estimated selling costs upon transfer of the loan to foreclosed assets.  Fair value is based upon independent market prices, appraised value of the collateral or management's estimation of the value of the collateral. The Company considers all REO that has been charged off or received an allowance during the period as nonrecurring Level 3.
34
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
Financial Assets Recorded at Fair Value on a Recurring Basis
The following table presents financial assets measured at fair value on a recurring basis at the dates indicated:
December 31, 2020
DescriptionTotalLevel 1Level 2Level 3
U.S government agencies$19,138 $0 $19,138 $0 
Residential MBS of U.S. government agencies and GSEs41,013 0 41,013 0 
Municipal bonds10,899 0 10,899 0 
Corporate bonds82,490 0 82,490 0 
Total$153,540 $0 $153,540 $0 
 December 31, 2017
DescriptionTotal Level 1 Level 2 Level 3
U.S Government Agencies$47,693
 $—
 $47,693
 $—
Residential Mortgage-backed Securities of U.S. Government Agencies and Government Sponsored Enterprises81,278
 —
 81,278
 —
Municipal Bonds32,423
 —
 32,423
 —
Corporate Bonds6,212
 —
 6,212
 —
Equity Securities63
 —
 63
 —
Total$167,669
 $—
 $167,669
 $—
 June 30, 2017
DescriptionTotal Level 1 Level 2 Level 3
U.S Government Agencies$65,830
 $—
 $65,830
 $—
Residential Mortgage-backed Securities of U.S. Government Agencies and Government Sponsored Enterprises92,971
 —
 92,971
 —
Municipal Bonds34,510
 —
 34,510
 —
Corporate Bonds6,293
 —
 6,293
 —
Equity Securities63
 —
 63
 —
Total$199,667
 $—
 $199,667
 $—
June 30, 2020
DescriptionTotalLevel 1Level 2Level 3
U.S government agencies$4,173 $0 $4,173 $0 
Residential MBS of U.S. government agencies and GSEs48,355 0 48,355 0 
Municipal bonds16,631 0 16,631 0 
Corporate bonds58,378 0 58,378 0 
Total$127,537 $0 $127,537 $0 
There were no transfers between levels during the three or six months ended December 31, 2017.2020.

The following table presents financial assets measured at fair value on a non-recurring basis at the dates indicated:
December 31, 2020
DescriptionTotalLevel 1Level 2Level 3
Individually evaluated loans$5,230 $0 $0 $5,230 
June 30, 2020
DescriptionTotalLevel 1Level 2Level 3
Individually evaluated loans$9,168 $0 $0 $9,168 
REO97 0 0 97 
Total$9,265 $0 $0 $9,265 
Quantitative information about Level 3 fair value measurements during the period ended December 31, 2020 is shown in the table below:
Nonrecurring measurements:Fair Value at December 31, 2020Valuation
Techniques		Unobservable
Input		RangeWeighted
Average
Individually evaluated loans$5,230 Discounted appraisals and discounted cash flowsCollateral discounts
and discount spread
      0% - 53%

     2% - 3%
13%
30
35
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

The following table presents financial assets measured at fair value on a non-recurring basis at the dates indicated:
 December 31, 2017
DescriptionTotal Level 1 Level 2 Level 3
Impaired loans$8,538
 $—
 $—
 $8,538
REO3,018
 —
 —
 3,018
Total$11,556
 $—
 $—
 $11,556
 June 30, 2017
DescriptionTotal Level 1 Level 2 Level 3
Impaired loans$9,156
 $—
 $—
 $9,156
REO4,044
 —
 —
 4,044
Total$13,200
 $—
 $—
 $13,200
Quantitative information about Level 3 fair value measurements during the period ended December 31, 2017 is shown in the table below:
 Fair Value at December 31, 2017 
Valuation
Techniques
 
Unobservable
Input
 Range 
Weighted
Average
Nonrecurring measurements:         
Impaired loans, net$8,538
 Discounted appraisals and discounted cash flows Collateral discounts
and discount spread		 3% - 26%

1% - 4%		 4%
REO$3,018
 Discounted appraisals Collateral discounts 10% - 20% 13%
The stated carrying value and estimated fair value amounts of financial instruments as of December 31, 20172020 and June 30, 2017,2020, are summarized below:
 December 31, 2020
Carrying
Value		Fair
Value		Level 1Level 2Level 3
Assets:
Cash and interest-bearing deposits$226,344 $226,344 $226,344 $0 $0 
Commercial paper183,778 183,778 183,778 0 0 
Certificates of deposit in other banks48,637 48,637 0 48,637 0 
Securities available for sale153,540 153,540 0 153,540 0 
Loans, net2,638,780 2,608,848 0 0 2,608,848 
Loans held for sale118,439 120,254 0 0 120,254 
FHLB stock23,309 23,309 23,309 0 0 
FRB stock7,374 7,374 7,374 0 0 
SBIC investments8,889 8,889 0 0 8,889 
Accrued interest receivable9,796 9,796 0 1,184 8,612 
Liabilities:
Noninterest-bearing and NOW deposits1,124,958 1,124,958 0 1,124,958 0 
Money market accounts882,366 882,366 0 882,366 0 
Savings accounts209,699 209,699 0 209,699 0 
Certificates of deposit526,246 529,661 0 529,661 0 
Borrowings475,000 504,734 0 504,734 0 
Accrued interest payable623 623 0 623 0 
 December 31, 2017
 
Carrying
Value
 
Fair
Value
 Level 1 Level 2 Level 3
Cash and interest-bearing deposits$98,665
 $98,665
 $98,665
 $—
 $—
Commercial paper199,722
 199,722
 199,722
 —
 —
Certificates of deposit in other banks100,349
 100,349
 —
 100,349
 —
Securities available for sale167,669
 167,669
 —
 167,669
 $—
Loans, net2,396,924
 2,312,758
 —
 —
 2,312,758
Loans held for sale7,072
 7,213
 —
 —
 7,213
FHLB stock31,582
 31,582
 31,582
 —
 —
FRB stock7,295
 7,295
 7,295
 —
 —
Accrued interest receivable9,371
 9,371
 —
 1,268
 8,103
Noninterest-bearing and NOW deposits803,161
 803,161
 —
 803,161
 —
Money market accounts638,259
 638,259
 —
 638,259
 —
Savings accounts224,732
 224,732
 —
 224,732
 —
Certificates of deposit442,056
 437,304
 —
 437,304
 —
Borrowings685,000
 684,852
 —
 684,852
 —
Accrued interest payable655
 655
 —
 655
 —

31
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

June 30, 2020
June 30, 2017Carrying
Value		Fair
Value		Level 1Level 2Level 3
Carrying
Value
 
Fair
Value
 Level 1 Level 2 Level 3
Assets:Assets:
Cash and interest-bearing deposits$86,985
 $86,985
 $86,985
 $—
 $—
Cash and interest-bearing deposits$121,622 $121,622 $121,622 $0 $0 
Commercial paper149,863
 149,863
 149,863
 —
 —
Commercial paper304,967 304,967 304,967 0 0 
Certificates of deposit in other banks132,274
 132,274
 —
 132,274
 —
Certificates of deposit in other banks55,689 55,689 0 55,689 0 
Securities available for sale199,667
 199,667
 —
 199,667
 —
Securities available for sale127,537 127,537 0 127,537 0 
Loans, net2,330,319
 2,230,683
 —
 —
 2,230,683
Loans, net2,741,047 2,692,265 0 0 2,692,265 
Loans held for sale5,607
 5,719
 —
 —
 5,719
Loans held for sale77,177 78,129 0 0 78,129 
FHLB stock32,071
 32,071
 32,071
 —
 —
FHLB stock23,309 23,309 23,309 0 0 
FRB stock7,284
 7,284
 7,284
 —
 —
FRB stock7,368 7,368 7,368 0 0 
SBIC investmentsSBIC investments8,269 8,269 0 0 8,269 
Accrued interest receivable8,758
 8,758
 331
 1,078
 7,349
Accrued interest receivable12,312 12,312 208 744 11,360 
Liabilities:Liabilities:
Noninterest-bearing and NOW deposits779,549
 779,549
 —
 779,549
 —
Noninterest-bearing and NOW deposits1,012,200 1,012,200 0 1,012,200 0 
Money market accounts569,607
 569,607
 —
 569,607
 —
Money market accounts836,738 836,738 0 836,738 0 
Savings accounts237,149
 237,149
 —
 237,149
 —
Savings accounts197,676 197,676 0 197,676 0 
Certificates of deposit462,146
 458,818
 —
 458,818
 —
Certificates of deposit739,142 745,078 0 745,078 0 
Borrowings696,500
 696,500
 —
 696,500
 —
Borrowings475,000 511,529 0 511,529 0 
Accrued interest payable512
 512
 —
 512
 —
Accrued interest payable1,087 1,087 0 1,087 0 
The Company had off-balance sheet financial commitments, which included approximately $625,769$698,029 and $616,483$598,136 of commitments to originate loans, undisbursed portions of interim construction loans, and unused lines of credit at December 31, 20172020 and June 30, 2017,2020, respectively (see Note 10). Since these commitments are based on current rates, the carrying amount approximates the fair value.
Estimated fair values were determined using the following methods and assumptions:
Cash and interest-bearing deposits – The stated amounts approximate fair values as maturities are less than 90 days.
Commercial paper - – The stated amounts approximate fair value due to the short-term nature of these investments.
36
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
Certificates of deposit in other banks – The stated amounts approximate fair values.
Securities available for sale – Fair values are based on quoted market prices where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments.
Loans held for sale – The fair value of mortgage loans held for sale is determined by outstanding commitments from investors on a "best efforts" basis or current investor yield requirements, calculated on the aggregate loan basis. The fair value of SBA loans and HELOCs held for sale is based on what investors are currently offering for loans with similar characteristics.
Loans, net – Fair values for loans are estimated by segregating the portfolio by type of loan and discounting scheduled cash flows using current market interest rates for loans with similar terms and credit quality. A prepayment assumption is used as an estimate of the portion of loans that will be repaid prior to their scheduled maturity. BothA liquidity premium assumption is used as an estimate for the carrying value and estimated fair value amountsadditional return required by an investor of assets that are shown net of the allowance for loan losses and purchase discounts.potentially considered illiquid.
FHLB and FRB stock– No ready market exists for these stocks and they have no quoted market value. However, redemptions of these securities have historically been at par value. Accordingly, cost is deemed to be a reasonable estimate of fair value.
SBIC investments – No ready market exists for these investments and they have no quoted market value. SBIC investments are valued at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions of identical or similar investments. Accordingly, cost is deemed to be a reasonable estimate of fair value.
Deposits– Fair values for demand deposits, money market accounts, and savings accounts are the amounts payable on demand as of December 31, 2017 and June 30, 2017.demand. The fair value of certificates of deposit is estimated by discounting the contractual cash flows using current market interest rates for accounts with similar maturities.
Borrowings – The fair value of advances from the FHLB is estimated based on current rates for borrowings with similar terms.
Accrued interest receivable and payable – The stated amounts of accrued interest receivable and payable approximate the fair value.
Limitations – Fair value estimates are made at a specific point in time, based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. Because no market exists for a significant portion of the Company's financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, risk characteristics of various financial instruments, and other factors. These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. Changes in assumptions could significantly affect the estimates.
Fair value estimates are based on existing on-and-off balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments. For example, a significant asset not considered

32
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)

a financial asset is premises and equipment. In addition, tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of the estimates.


12.    Leases
As Lessee - Operating Leases
The Company's operating leases primarily include office space and bank branches. Certain leases include one or more options to renew, with renewal terms that can extend the lease term up to 15 additional years. The exercise of lease renewal options is at management's sole discretion. When it is reasonably certain that the Company will exercise its option to renew or extend the lease term, that option is included in estimating the value of the ROU and lease liability. At December 31, 2020, the Company did not have any leases that had not yet commenced for which it had created a ROU asset and a lease liability. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants. Most of the Company's lease agreements include periodic rate adjustments for inflation. The depreciable life of ROU assets and leasehold improvements are limited to the shorter of the useful life or the expected lease term. Leases with an initial term of 12 months or less are not recorded on the Company's Consolidated Balance Sheets. The Company recognizes lease expenses for these leases over the lease term.
37
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
The following table presents supplemental balance sheet information related to operating leases. ROU assets are included in other assets and lease liabilities are included in other liabilities.
Supplemental Balance Sheet Information:December 31, 2020June 30, 2020
ROU assets$4,546$4,601
Lease liabilities4,5614,590
Weighted-average remaining lease terms4.565.02
Weighted-average discount rate2.81 %2.97 %
The following schedule summarizes aggregate future minimum lease payments under these operating leases at December 31, 2020:
Fiscal year ending June 30:
Remaining 2021$663 
20221,248 
20231,200 
2024735 
2025349 
Thereafter676 
Total of future minimum payments$4,871 
The following table presents components of operating lease expense for the three and six months ended December 31, 2020 and 2019:
Three Months Ended December 31,Six Months Ended December 31,
2020201920202019
Operating lease cost (included in occupancy expense)$452 $459 $891 $932 
Sublease income (included in other, net noninterest income)(61)(56)(122)(120)
Total operating lease expense, net$391 $403 $769 $812 
As Lessee - Finance Lease
The Company currently leases land for one of its branch office locations under a finance lease. The ROU asset for the finance lease totaled $2,052 at December 31, 2020 and June 30, 2020 and is included in other assets. The corresponding lease liability totaled $1,823 and $1,843 at December 31, 2020 and June 30, 2020, respectively, and is included in other liabilities. For the three and six months ended December 31, 2020, interest expense on the lease liability totaled $24 and $48, respectively. For the three and six months ended December 31, 2019, interest expense on the lease liability totaled $24 and $48, respectively.The finance lease has a maturity date of July 2028 and a discount rate of 5.18%.
The following schedule summarizes aggregate future minimum lease payments under this finance lease obligation at December 31, 2020:
Fiscal year ending June 30:
Remaining 2021$66 
2022134 
2023134 
2024145 
2025146 
Thereafter1,848 
Total minimum lease payments2,473 
Less: amount representing interest(650)
Present value of net minimum lease payments$1,823 
Supplemental lease cash flow information for the six months ended December 31, 2020 and 2019:
20202019
ROU assets - noncash additions (operating leases)$597 $5,296 
ROU assets - noncash addition (finance lease)0 2,052 
Cash paid for amounts included in the measurement of lease liabilities (operating leases)1,055 1,091 
Cash paid for amounts included in the measurement of lease liabilities (finance leases)67 67 
38
HOMETRUST BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Dollars in thousands, except per share data)
As Lessor - General
The Company leases equipment to commercial end users under operating and finance lease arrangements. The Company's equipment finance leases consist mainly of transportation, medical, and agricultural equipment. Many of its operating and finance leases offer the lessee the option to purchase the equipment at fair value or for a nominal fixed purchase option; and most of the leases that do not have a nominal purchase option include renewal provisions resulting in some leases continuing beyond initial contractual terms. The Company's leases do not include early termination options, and continued rent payments are due if leased equipment is not returned at the end of the lease.
As Lessor - Operating Leases
Operating lease income is recognized as a component of noninterest income on a straight-line basis over the lease term. Lease terms range from 1 to 5 years. Assets related to operating leases are included in other assets and the corresponding depreciation expense is recorded on a straight-line basis as a component of other noninterest expense. The net book value of leased assets totaled $25,293 and $21,595 with a residual value of $15,364 and $12,370 as of December 31, 2020 and June 30, 2020, respectively.
The following table presents total equipment finance operating lease income and depreciation expense for the three and six months ended December 31, 2020 and 2019:
Three Months Ended December 31,Six Months Ended December 31,
2020201920202019
Operating lease income$1,349 $658 $2,675 $1,226 
Depreciation expense1,413 459 2,954 808 
The following schedule summarizes aggregate future minimum operating lease payments to be received at December 31, 2020:
Fiscal year ending June 30:
Remaining 2021$2,902 
20225,038 
20233,192 
20241,123 
2025320 
Thereafter48 
Total of future minimum payments$12,623 
As Lessor - Finance Leases
Finance lease income is recognized as a component of loan interest income over the lease term. The finance leases are included as a component of the equipment finance class of financing receivables under the commercial loan segment. For the three months ended December 31, 2020 and 2019, total interest income on equipment finance leases totaled $570 and $459, respectively. For the six months ended December 31, 2020 and 2019, total interest income on equipment finance leases totaled $1,099 and $808, respectively.
The following table presents components of finance lease net investment included within equipment finance class of financing receivables:
December 31, 2020June 30, 2020
Lease receivables$54,024 $44,927 
The following schedule summarizes aggregate future minimum finance lease payments to be received at December 31, 2020:
Fiscal year ending June 30:
Remaining 2021$6,452 
202214,628 
202314,205 
202412,073 
20258,358 
Thereafter3,813 
Total minimum payments59,529 
Less: amount representing interest(5,505)
Total$54,024 

39

Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
Certain matters in this Form 10-Q constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to our financial condition, results of operations, plans, objectives, future performance or business. Forward-looking statements are not statements of historical fact, are based on certain assumptions and are generally identified by use of the words "believes," "expects," "anticipates," "estimates," "forecasts," "intends," "plans," "targets," "potentially," "probably," "projects," "outlook" or similar expressions or future or conditional verbs such as "may," "will," "should," "would," and "could." Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, assumptions, and statements about future economic performance and projections of financial items. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated or implied by our forward-looking statements, including, but not limited to: the effect of the COVID-19 pandemic, including on the Company’ 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; the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write offs and changes in our allowance for loancredit losses and provision for loancredit losses that may be impacted by deterioration in the housing and commercial real estate markets; changes in general economic conditions, either nationally or in our market areas; changes in the levels of general interest rates, and the relative differences between short and long term interest rates, deposit interest rates, our net interest margin and funding sources; uncertainty regarding the future of LIBOR, and the potential transition away from LIBOR toward new interest rate benchmarks; fluctuations in the demand for loans, the number of unsold homes, land and other properties and fluctuations in real estate values in our market areas; decreases in the secondary market for the sale of loans that we originate;the Company originates; results of examinations of us by the Board of Governors of the Federal Reserve System (“Federal Reserve”), the North Carolina Office of the Commissioner of Banks (“NCCOB”),NCCOB, or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our allowance for loancredit losses, write-down assets, change our regulatory capital position or affect our ability to borrow funds or maintain or increase deposits, which could adversely affect our liquidity and earnings; legislative or regulatory changes that adversely affect our business including the effect of Dodd-Frank Wall Street Reform and Consumer Protection Act, (the "Dodd-Frank Act"), changes in laws or regulations, changes in regulatory policies and principles or the application or interpretation of laws and regulations by regulatory agencies and tax authorities, including changes in deferred tax asset and liability activity, or the interpretation of regulatory capital or other rules, including as a result of Basel III; our ability to attract and retain deposits; management's assumptions in determining the adequacy of the allowance for loancredit losses; our ability to control operating costs and expenses, especially costs associated with our operation as a public company; the use of estimates in determining fair value of certain assets, which estimates may prove to be incorrect and result in significant declines in valuation; difficulties in reducing risks associated with the loans on our balance sheet; staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our workforce and potential associated charges; computerdisruptions, security breaches, or other adverse events, failures or interruptions in, or attacks on, our information technology systems or on which we depend could fail or experience a security breach;the third-party vendors who perform several of our critical processing functions; our ability to retain key members of our senior management team; costs and effects of litigation, including settlements and judgments; our ability to successfully integrate any assets, liabilities, customers, systems, and management personnel wethe Company may in the future acquire into ourits operations and our ability to realize related revenue synergies and cost savings within expected time frames and any goodwill charges related thereto; increased competitive pressures among financial services companies; changes in consumer spending, borrowing and savings habits; the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions; adverse changes in the securities markets; inability of key third-party providers to perform their obligations to us; statements with respect to our intentions regarding disclosure and other changes resulting from the Jumpstart Our Business Startups Act of 2012 ("JOBS Act"); changes in accounting principles, policies or guidelines and practices, as may be adopted by the financial institution regulatory agencies, the Public Company Accounting Oversight Board or the Financial Accounting Standards Board; and other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services;services including the CARES Act; and the other risks detailed from time to time in our filings with the Securities and Exchange Commission ("SEC"),SEC, including our 20172020 Form 10-K.
AnyMany of the forward-looking statements are based upon management's beliefs and assumptions at the time they are made. We undertakeThe Company undertakes no obligation to publicly update or revise any forward-looking statements included in this report or to update the reasons why actual results could differ from those contained in such statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward-looking statements discussed in this report might not occur and you should not put undue reliance on any forward-looking statements.
As used throughout this report, the terms "we", "our", "us", "HomeTrust Bancshares" or the "Company" refer to HomeTrust Bancshares, Inc. and its consolidated subsidiaries,subsidiary, including HomeTrust Bank (the "Bank") unless the context indicates otherwise.
Overview
HomeTrust Bancshares, Inc., a Maryland corporation, was formed for the purpose of becoming the holding company for HomeTrust Bank in connection with HomeTrust Bank’s conversion from mutual to stock form, which was completed on July 10, 2012 (the “Conversion”). As a bank holding company and financial holding company, HomeTrust Bancshares, Inc. is regulated by the Federal Reserve. As a North Carolina state-chartered bank, and member of the Federal Reserve System,FRB, the Bank's primary regulators are the NCCOB and the Federal Reserve. The Bank's deposits are federally insured up to applicable limits by the Federal Deposit Insurance Corporation ("FDIC").FDIC. The Bank is a member of the Federal Home Loan BankFHLB of Atlanta, (“FHLB” or “FHLB of Atlanta”), which is one of the 12 regional banks in the Federal Home Loan Bank System (“FHLB System”).System. Our headquarters is located in Asheville, North Carolina.
40

Our principal business consists of attracting deposits from the general public and investing those funds, along with borrowed funds, in loans secured by first and second mortgages on one-to-four family residences, including home equity loans and construction and land/lot loans, commercial real estate loans, construction and development loans, commercial and industrial loans, SBA loans, equipment finance leases, indirect automobile loans, and municipal leases. Municipal leasesfinance agreements. The Company also works with a third party to originate HELOCs which are secured primarily by a ground lease for a firehouse or an equipment lease for fire truckspooled and firefighting equipment to fire departments located throughout North and South Carolina. We also purchasesold. In addition, the Company purchases investment securities consisting primarily of securities issued


by United States Government agencies and government-sponsored enterprises,GSEs, as well as corporate bonds, commercial paper, and FDIC insured certificates of deposit insured by the FDIC.deposit.
We offerThe Company offers a variety of deposit accounts for individuals, businesses, and nonprofit organizations. Deposits and borrowings are our primary source of funds for our lending and investing activities.
We areThe Company is significantly affected by prevailing economic conditions, as well as government policies and regulations concerning, among other things, monetary and fiscal affairs, housing and financial institutions. Deposit flows are influenced by a number of factors, including interest rates paid on competing time deposits, other investments, account maturities, and the overall level of personal income and savings. Lending activities are influenced by the demand for funds, the number and quality of lenders, and regional economic cycles.
Our primary source of pre-tax income is net interest income. Net interest income is the difference between interest income, which is the income that we earnthe Company earns on ourits loans and investments, and interest expense, which is the interest that we payis paid on our deposits and borrowings. Changes in levels of interest rates affect our net interest income. Because the length of the COVID-19 pandemic and the efficacy of the extraordinary measures being put in place to address its economic consequences are unknown, including the 150 basis point reduction in the targeted federal funds rate during 2020, until the pandemic subsides, the Company expects its net interest income and net interest margin will be adversely affected throughout fiscal 2021 and possibly longer.
A secondary source of income is noninterest income, which includes revenue we receive from providing products and services, including service charges on deposit accounts, loan income and fees, SBA lending fees,lease income, gain on sale of loans, and gains and losses from sales of securities.
An offset to net interest income is the provision for loancredit losses which is required to establish the allowanceACL. Under the new CECL standard allfinancial assets measured at amortized cost and off balance sheet credit exposures, including loans, investment securities and unfunded commitments are evaluated for loan losses at a level that adequately providescredit losses. See Note 1 – Summary of Significant Accounting Policies for probable losses inherent in our loan portfolio. As a loan's risk rating improves, property values increase, or recoveries of amounts previously charged off are received, a recapture of previously recognized provision for loan losses may be added to net interest income.further discussion.
Our noninterest expenses consist primarily of salaries and employee benefits, expenses for occupancy, marketing and computer services, and FDIC deposit insurance premiums. Salaries and benefits consist primarily of the salaries and wages paid to our employees, payroll taxes, expenses for retirement and other employee benefits. Occupancy expenses, which are the fixed and variable costs of buildings and equipment, consist primarily of lease payments, property taxes, depreciation charges, maintenance and costs of utilities.
In recent years, we have expanded ourOur geographic footprint intoincludes seven additional markets obtained through numerous strategic acquisitions as well as threetwo de novo commercial loan offices. Looking forward, we believethe Company believes opportunities currently exist within our market areas to grow our franchise. We anticipate organicWhile COVID-19 has dampened our growth activities, the Company believes as the local and global economy and loan demand strengthens,returns to normalcy it remains in a position to create organic growth through our marketing efforts and as a result of the opportunities being created as a result of the consolidation of financial institutions occurring in our market areas. Weefforts. The Company may also seek to expand ourits franchise through the selective acquisition of individual branches, loan purchases and, to a lesser degree, whole bank transactions that meet our investment and market objectives. WeThe Company will continue to be disciplined as it pertains to future expansion focusing primarily on organic growth in our current market areas.
On January 1, 2017, the Company completed its acquisition of TriSummit pursuant to an Agreement and Plan of Merger, dated as of September 20, 2016, under which TriSummit merged with and into HomeTrust with HomeTrust as the surviving corporation in the Merger. Immediately following the Merger, TriSummit's wholly owned subsidiary bank, TriSummit Bank, merged with and into the Bank. See Note 3 of the Notes to Consolidated Financial Statements under Item 1 of this report for more details on the Merger.
On August 1, 2017, the Company opened a commercial loan production office in Greensboro, North Carolina.
At December 31, 2017, we2020, the Company had 4341 locations in North Carolina (including the Asheville metropolitan area, Greensboro/"Piedmont"the "Piedmont" region, Charlotte, and Raleigh)Raleigh/Cary), Upstate South Carolina (Greenville), East Tennessee (including Kingsport/Johnson City/Bristol, Knoxville, and Morristown) and Southwest Virginia (including the Roanoke Valley).
Critical Accounting Policies and Estimates
Certain of our accounting policies are important to the portrayal of our financial condition, since they require management to make difficult, complex or subjective judgments, some of which may relate to matters that are inherently uncertain. Estimates associated with these policies are susceptible to material changes as a result of changes in facts and circumstances. Facts and circumstances which could affect these judgments include, but are not limited to, changes in interest rates, changes in the performance of the economy, and changes in the financial condition of borrowers. These policies relate to (i) the determination of the provision for credit losses and the allowance for loan losses,ACL, and (ii) business combinations and acquired loans, (iii) the valuation of REO, (iv) the valuation of goodwill and other intangible assets,assets. The ACL reflects management’s estimate of losses that will result from the inability of our borrowers to make required loan payments. Management uses a systematic methodology to determine its ACL for loans held for investment and (v)certain off-balance-sheet credit exposures. Management considers the effects of past events, current conditions, and reasonable and supportable forecasts on the collectability of the loan portfolio. The Company’s estimate of its ACL involves a high degree of judgment; therefore, management’s process for determining expected credit losses may result in a range of expected credit losses. It is possible that others, given the same information, may at any point in time reach a different reasonable conclusion. The Company’s ACL recorded in the balance sheet reflects management’s best estimate within the range of expected credit losses. The Company recognizes in net income the amount needed to adjust the ACL for management’s estimate of current expected credit losses. See Note 1 — Summary of Significant Accounting Policies and Note 6 — Loans and Allowance for Credit Losses on Loans in this Quarterly Report on Form 10-Q for further detailed descriptions of our estimation process and methodology related to the ACL. The valuation of or recognition of deferred taxgoodwill and other intangible assets and liabilities. These policies and estimates arepolicy is described in further detail in Part II, Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 1, Summary of Significant Accounting Policies with the 2017 Form 10-K. There have not been any material changes in the Company's critical accounting policies and estimates during the six months ended December 31, 2017 as compared to the disclosure contained in the Company's 20172020 Form 10-K, with the exception of the revaluation of net deferred tax assets related to the Tax Act. For more information on the revaluation, see Note 7 of the Notes to Consolidated Financial Statements under Item 1 of this report.10-K.
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, reduce certain reporting requirements for qualifying public companies. As an "emerging growth company" we may delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. We intend to take advantage of the benefits of this extended transition period, although we have not done so to date. Accordingly, our financial statements may not be comparable to companies that comply with such new or revised accounting standards or disclosures.
41

Reclassifications and corrections. To maintain consistency and comparability, certain amounts from prior periods have been reclassified to conform to current period presentation with no effect on net income, or shareholders’ equity, or cash flows as previously reported.


Recent Accounting Pronouncements. Refer to See Note 2 of our consolidated financial statementsNotes to Consolidated Financial Statements under Item 1 of this report for a description of recent accounting pronouncements including the respective dates of adoption and effects on results of operations and financial condition.
Non-GAAP Financial Measures


In addition to results presented in accordance with GAAP, this report contains certain non-GAAP financial measures, which include: tangible book value; tangible book value per share;share, tangible equity to tangible assets ratio; net interest income and net interest margin as adjusted to exclude additional FHLB borrowings and proceeds from such borrowings; net income, earnings per share ("EPS"), return on assets ("ROA"), and return on equity ("ROE") excluding merger-related expenses, certain state tax expense, adjustments for the change in federal tax law, and gain from the sale of premises and equipment; and the ratio of the allowance for loan lossesACL to total loans excluding acquiredPPP loans. Management elected to utilize short-term FHLB borrowings beginning in November 2014 as part of a leverage strategy to increase net interest income. The Company believes that showing the effects of these borrowings on net interest income and net interest margin is useful to both management and investors as these measures are commonly used to measure financial institution's performance and against peers.

Management has presented the non-GAAP financial measures in this discussion and analysis excluding merger-related expenses, certain state tax expense, adjustments for the change in federal tax law, and gain from the sale of premises because it believes excludingincluding these items is more indicative of and provides useful and comparative information to assess trends in our core operations while facilitating comparison of the quality and composition of the Company’s earnings over time and in comparison to its competitors. However, these non-GAAP financial measures are supplemental, are not audited and are not a substitute for operating results or any analysis determined in accordance with GAAP. Where applicable, we havethe Company has also presented comparable earnings information using GAAP financial measures. Because not all companies use the same calculations, our presentation may not be comparable to other similarly titled measures as calculated by other companies. See “Comparison of Results of Operations for the Three Months and Six Months Ended December 31, 20172020 and 2016”2019” for more detailed information about our financial performance.

Set forth below is a reconciliation to GAAP of tangible book value and tangible book value per share:
As of
December 31,September 30,December 31,
(Dollars in thousands, except per share data)202020202019
Total stockholders' equity$404,724 $400,351 $416,995 
Less: goodwill, core deposit intangibles, net of taxes26,130 26,285 26,959 
Tangible book value (1)
$378,594 $374,066 $390,036 
Common shares outstanding16,791,027 17,020,724 17,664,384 
Tangible book value per share$22.55 $21.98 $22.08 
Book value per share$24.10 $23.52 $23.61 
  As of
  December 31, June 30, December 31,
(Dollars in thousands, except per share data) 2017 2017 2016
Total stockholders' equity $395,361
 $397,647
 $367,776
Less: goodwill, core deposit intangibles, net of taxes 30,083
 30,157
 16,795
Tangible book value (1)
 $365,278
 $367,490
 $350,981
Common shares outstanding 18,967,175
 18,967,875
 18,000,750
Tangible book value per share $19.26
 $19.37
 $19.50
Book value per share $20.84
 $20.96
 $20.43

(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:
 As ofAs of
 December 31, June 30, December 31,December 31,September 30,December 31,
(Dollars in thousands) 2017 2017 2016(Dollars in thousands)202020202019
Tangible book value(1)
 $365,278
 $367,490
 $350,981
Tangible book value (1)
$378,594 $374,066 $390,036 
Total assets 3,250,588
 3,206,533
 2,774,240
Total assets3,679,971 3,674,034 3,470,232 
Less: goodwill, core deposit intangibles, net of taxes 30,083
 30,157
 16,795
Less: goodwill, core deposit intangibles, net of taxes26,130 26,285 26,959 
Total tangible assets(2)
 $3,220,505
 $3,176,376
 $2,757,445
Total tangible assets(2)
$3,653,841 $3,647,749 $3,443,273 
Tangible equity to tangible assets 11.34% 11.57% 12.73%Tangible equity to tangible assets10.36 %10.25 %11.33 %

(1)    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.
(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 interest income and net interest margin as adjusted to exclude additional FHLB borrowings and proceeds from such borrowings:
 Three Months Ended December 31,
 2017 2016
(Dollars in thousands)Average Balance Outstanding Interest Earned / Paid Yield/ Rate Average Balance Outstanding Interest Earned / Paid Yield/ Rate
Interest-earning assets (1)
$2,974,198
 $29,226
 3.93 % $2,521,311
 $22,636
 3.59 %
Less: Interest-earning assets funded by additional FHLB borrowings (2)
255,000
 1,056
 1.66 % 340,000
 908
 1.07 %
Interest-earning assets - adjusted$2,719,198
 $28,170
 4.14 % $2,181,311
 $21,728
 3.98 %
            
Interest-bearing liabilities$2,469,855
 $3,618
 0.58 % $2,088,325
 $1,648
 0.31 %
Additional FHLB borrowings255,000
 782
 1.23 % 340,000
 378
 0.44 %
Interest-bearing liabilities - adjusted$2,214,855
 $2,836
 0.51 % $1,748,325
 $1,270
 0.29 %
            
Tax equivalent net interest income and net interest margin  $25,608
 3.44 %   $20,988
 3.33 %
Tax equivalent net interest income and net interest margin - adjusted  25,334
 3.73 %   20,458
 3.75 %
Difference  $274
 (0.29)%   $530
 (0.42)%
 Six Months Ended December 31,
 2017 2016
(Dollars in thousands)Average Balance Outstanding Interest Earned / Paid Yield/ Rate Average Balance Outstanding Interest Earned / Paid Yield/ Rate
Interest-earning assets (1)
$2,946,607
 $57,508
 3.90 % $2,524,362
 $46,017
 3.65 %
Less: Interest-earning assets funded by additional FHLB borrowings (2)
250,000
 2,024
 1.62 % 367,500
 1,907
 1.04 %
Interest-earning assets - adjusted$2,696,607
 $55,484
 4.12 % $2,156,862
 $44,110
 4.20 %
            
Interest-bearing liabilities$2,444,457
 $6,933
 0.56 % $2,093,127
 $3,302
 0.31 %
Less: Additional FHLB borrowings250,000
 1,505
 1.20 % 367,500
 788
 0.43 %
Interest-bearing liabilities - adjusted$2,194,457
 $5,428
 0.49 % $1,725,627
 $2,514
 0.29 %
            
Tax equivalent net interest income and net interest margin  $50,575
 3.43 %   $42,715
 3.38 %
Tax equivalent net interest income and net interest margin - adjusted  50,056
 3.71 %   41,596
 3.86 %
Difference  $519
 (0.28)%   $1,119
 (0.48)%

(1)Interest income used in the average interest/earned and yield calculation includes the tax equivalent adjustment of $378 and $573 for the three months ended December 31, 2017 and 2016, respectively, calculated based on a combined federal and state tax rate of 30% and 37%, respectively. Interest income used in the average interest/earned and yield calculation includes the tax equivalent adjustment of $764 and $1,163 for the six months ended December 31, 2017 and 2016, respectively, calculated based on a combined federal and state tax rate of 30% and 37%, respectively.
(2)Proceeds from the additional borrowings were invested in various interest-earning assets including: deposits with the FRB, FHLB stock, certificates of deposit in other banks, and commercial paper.


Set forth below is a reconciliation to GAAP net income (loss), EPS, ROA, and ROE as adjusted to exclude merger-related expenses, certain state tax expense, adjustments for the change in federal tax law, and gain from the sale of premises and equipment:
  Three Months Ended Six months ended
(Dollars in thousands, except per share data) December 31, December 31,
  2017 2016 2017 2016
Merger-related expenses $—
 $27
 $—
 $334
State tax expense adjustment (1)
 —
 —
 133
 490
Change in federal tax law adjustment (2)
 17,693
 —
 17,693
 —
Gain from sale of premises and equipment —
 —
 (164) (385)
Total adjustments 17,693
 27
 17,662
 439
Tax effect (3)
 —
 (10) 49
 49
Total adjustments, net of tax 17,693
 17
 17,711
 488
  

 

 

 

Net income (loss) (GAAP) (10,666) 2,983
 (5,099) 6,807
         
Net income (non-GAAP) $7,027
 $3,000
 $12,612
 $7,295
         
Per Share Data        
Average shares outstanding - basic 17,975,883
 16,900,387
 17,971,439
 16,893,775
Average shares outstanding - diluted 17,975,883
 17,444,144
 17,971,439
 17,391,404
Average shares outstanding - diluted (adjusted) (4)
 18,689,894
 17,444,144
 18,655,048
 17,391,404
         
Basic EPS        
EPS (GAAP) $(0.59) $0.17
 $(0.28) $0.39
Non-GAAP adjustment 0.98
 0.01
 0.98
 0.04
EPS (non-GAAP) $0.39
 $0.18
 $0.70
 $0.43
         
Diluted EPS        
EPS (GAAP) $(0.59) $0.17
 $(0.28) $0.39
Non-GAAP adjustment 0.97
 —
 0.96
 0.04
EPS (non-GAAP) $0.38
 $0.17
 $0.68
 $0.43
         
Average Balances        
Average assets $3,249,632
 $2,765,047
 $3,223,758
 $2,764,985
Average equity 405,993
 365,740
 403,708
 364,018
         
ROA        
ROA (GAAP) (1.31)% 0.43% (0.32)% 0.49%
Non-GAAP adjustment 2.17 % —% 1.10 % 0.04%
ROA (non-GAAP) 0.86 % 0.43% 0.78 % 0.53%
         
ROE        
ROE (GAAP) (10.51)% 3.26% (2.53)% 3.74%
Non-GAAP adjustment 17.43 % 0.02% 8.78 % 0.27%
ROE (non-GAAP) 6.92 % 3.28% 6.25 % 4.01%

(1)State tax adjustment is a result of a decrease in value of our deferred tax assets stemming from recent decreases in North Carolina's corporate tax rate.
(2)Revaluation of net deferred tax assets due to the Tax Cuts and Jobs Act.
(3)Tax amounts have been adjusted for certain nondeductible merger-related expenses.
(4)Average shares outstanding - diluted were adjusted for the three and six months ended December 31, 2017 to include potentially dilutive shares not considered due to the corresponding net losses under GAAP.




Set forth below is a reconciliation to GAAP of the allowance for loan lossesACL to total loans (excluding net deferred loan costs) and the allowance for loancredit losses as adjusted to exclude acquiredPPP loans:
As of
(Dollars in thousands)December 31,September 30,December 31,
202020202019
Total gross loans receivable (GAAP)$2,678,624 $2,769,396 $2,553,455 
Less: PPP loans (1)
64,845 80,816 — 
Adjusted gross loans (non-GAAP)$2,613,779 $2,688,580 $2,553,455 
ACL$39,844 $43,132 $22,031 
ACL / Adjusted gross loans (non-GAAP)1.52 %1.60 %0.86 %

(1)    PPP loans are fully guaranteed loans by the U.S, government and became available with the CARES Act.
42
 As of
(Dollars in thousands)December 31, June 30, December 31,
 2017 2017 2016
Total gross loans receivable (GAAP)$2,419,256
 $2,352,415
 $1,955,629
Less: acquired loans311,508
 374,538
 169,234
Adjusted gross loans (non-GAAP)$2,107,748
 $1,977,877
 $1,786,395
      
Allowance for loan losses (GAAP)$21,090
 $21,151
 $20,986
Less: allowance for loan losses on acquired loans566
 727
 336
Adjusted allowance for loan losses (non-GAAP)$20,524
 $20,424
 $20,650
Adjusted allowance for loan losses / Adjusted gross loans (non-GAAP)0.97% 1.03% 1.16%


Recent Developments: COVID-19, the CARES Act, and Our Response
The COVID-19 pandemic has caused economic and social disruption on an unprecedented scale. While some industries have been impacted more severely than others, all businesses have been impacted to some degree. This disruption has resulted in business closures across the country, significant job loss, and aggressive measures by the federal government.
Congress, the President, and the Federal Reserve have taken several actions designed to cushion the economic fallout. Most notably, the CARES Act was signed into law on March 27, 2020 as a $2.2 trillion legislative package. The goal of the CARES Act is to prevent a severe economic downturn through various measures, including direct financial aid to families and economic stimulus to significantly impacted industry sectors. The package also includes extensive emergency funding for hospitals and healthcare providers. In addition to the general impact of COVID-19, certain provisions of the CARES Act as well as other recent legislative and regulatory relief efforts are expected to have a material impact on our operations. While it is not possible to know the full extent of these impacts as of the date of this filing, the Company is disclosing potentially material items of which it is aware.
On December 27, 2020, the 2021 Consolidated Appropriations Act was signed into law including $900 billion in stimulus relief for the COVID-19 pandemic. The legislation extends certain relief provisions from the March CARES Act that were set to expire at the end of 2020. This new legislation extends the relief to financial institutions to suspend TDR assessment and reporting requirements under GAAP for loan modifications to the earlier of 60 days after the national emergency termination date or January 1, 2022. The legislation includes additional funding for businesses that did not receive PPP funds under the CARES Act, especially minority- and women-owned businesses. In addition, it allows businesses another opportunity to borrow PPP funds if they can show losses of 25% or more in 2020 based on their 2019 revenue. The Company expects a smaller number of applications to be made by its customers for these additional PPP funds.
In response to the COVID-19 pandemic, the Company is offering a variety of relief options designed to support our customers and communities served.
Paycheck Protection Program Participation. The CARES Act authorized the SBA to temporarily guarantee loans under the new PPP loan program. The goal of the PPP was to avoid as many layoffs as possible, and to encourage small businesses to maintain payrolls. As a qualified SBA lender, the Company was automatically authorized to originate PPP loans upon commencement of the program in April 2020. PPP loans have: (a) an interest rate of 1.0%, (b) a two-year loan term to maturity; and (c) principal and interest payments deferred for six months from the date of disbursement. The SBA guarantees 100% of the PPP loans made to eligible borrowers. The entire principal amount of the borrower’s PPP loan, including any accrued interest, is eligible to be forgiven and repaid by the SBA so long as employee and compensation levels of the business are maintained and 60% of the loan proceeds are used for payroll expenses, with the remaining 40% of the loan proceeds used for other qualifying expenses.
As of December 31, 2020, the Company had originated $80.8 million of PPP loans for 290 customers. Total net origination fees deferred on these loans were approximately $2.1 million which are being accreted into interest income over the life of the loans. For the three months ended December 31, 2020, the Company earned $488,000 in fees through accretion including some accelerated accretion resulting from loan forgiveness. At December 31, 2020 the Company had $1.1 million of deferred PPP loan fees remaining which are expected to be recognized over the next several quarters as loan forgiveness accelerates. Additional PPP loans were processed and funded through a third party provider due to demand exceeding the Bank's capacity, which, as of December 31, 2020 totaled $32.1 million for almost 1,000 customers. The Company also continues to work with its clients to assist them with accessing other borrowing options, including other government sponsored lending programs, as appropriate. The Bank originated $12.5 million under the Main Street Lending Program before the program ended on January 8, 2021.
Loan Modifications.The Company continues to closely monitor the effects of COVID-19 on its loan portfolio and all the associated risks to minimize any potential losses. HomeTrust Bank is offering payment and financial relief programs for borrowers impacted by COVID-19. These programs include loan payment deferrals for up to 90 days, waived late fees, and suspension of foreclosure proceedings and repossessions. For the quarter ended December 31, 2020, the Bank experienced a significant decline in requests by borrowers for payment and financial relief programs; however, it will continue to work with individual borrowers in order to minimize the impact to both the Bank and its customers.
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The breakout of loans deferred by loan type as of the dates indicated is as follows:
Principal and Interest Payment Deferrals by Loan Types (1) (2)
December 31, 2020September 30, 2020June 30, 2020
DeferralPercent of Total Loan PortfolioDeferralPercent of Total Loan PortfolioDeferralPercent of Total Loan Portfolio
Lodging$— — %$60,782 2.2 %$108,171 4.0 %
Other commercial real estate, construction and development, and commercial and industrial4,018 0.2 27,169 1.0 367,443 13.7 
Equipment finance2,196 0.1 2,187 0.1 33,693 1.3 
One-to-four family822 — 684 — 36,821 1.4 
Other consumer loans832 — 422 — 5,203 0.2 
     Total$7,868 0.3 %$91,244 3.3 %$551,331 20.6 %
__________________________
(1)    Modified loans are not included in classified assets or nonperforming assets.
(2)    Principal and interest is being deferred

A majority of loans placed on principal and interest payment deferral during the pandemic came out of deferral as of December 31, 2020. However, the Company has allowed for continued relief to borrowers in the form of interest-only payments for certain loans recently coming out of full deferral. At December 31, 2020, the Company had $75.8 million in commercial loans on interest-only payments for a period of time no greater than 12 months before being required to return to their original contractual payments.
All loans modified due to COVID-19 are separately monitored and any request for continuation of relief beyond the initial modification will be reassessed at that time to determine if a further modification should be granted and if a downgrade in risk rating is appropriate. The deferrals are short-term modifications made on a good faith basis in response to COVID-19 to borrowers who were current as of December 31, 2019 and are not considered TDRs.
The Company believes the steps it has taken and is taking are necessary to effectively manage the loan portfolio and assist customers through the ongoing uncertainty surrounding the duration, impact and government response to the COVID-19 pandemic. In addition, the Company will continue to work with its customers to determine the best option for repayment of accrued interest on the deferred payments.
Branch Operations. Since the beginning of the pandemic, the Company has taken various steps to ensure the safety of our customers and our team members by limiting branch activities to appointment only and use of our drive-up facilities, and by encouraging the use of our digital and electronic banking channels, all the while adjusting for evolving State and Federal guidelines. On October 13, 2020, the Company reopened the lobbies of all its branches across its four state footprint with appropriate protective measures to help ensure the safety of its customers and retail banking employees.
Comparison of Financial Condition at December 31, 20172020 and June 30, 20172020
General. General.  Total assets increased $44.0 million, or 1.4% toand liabilities remained at $3.7 billion and $3.3 billion, respectively, at December 31, 2017 from $3.2 billion at2020 as compared to June 30, 2017. Total liabilities increased $46.32020. The cumulative increase of $130.7 million, or 1.6% to $2.9 billion at December 31, 2017 from $2.8 billion at June 30, 2017. Deposit growth of $59.8 million, or 2.9%52.5% in cash and cash equivalents and securities held for sale was offset by the cumulative decrease of $63.9$128.2 million, or 19.3%35.6% in certificates of depositcommercial paper and deposits in other banks as the Company repositioned its liquidity due to maturities and securities availablelower short-term rates during the period. The $41.3 million, or 53.5% increase in loans held for sale primarily relates to additional 1-4 family and home equity loans originated for sale during the firstperiod.
On July 1, 2020, the Company adopted the CECL accounting standard in accordance with ASU 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." The cumulative effect adjustment from this change in accounting standard resulted in an increase in our ACL for loans of $14.8 million, additional deferred tax assets of $3.9 million, additional reserve for unfunded loan commitments of $2.3 million, and a reduction to retained earnings of $13.2 million. In addition, an ACL for commercial paper was established for $250,000 with a deferred tax asset of $58,000. The adoption of this ASU did not have an effect on available for sale debt securities for the six months of fiscal 2018 were used to partially fund the $66.5 million, or 2.8% increase in total loans, the $49.9 million, or 33.3% increase in commercial paper, and reduce borrowings by $11.5 million, or 1.7%. We continue to utilize our leveraging strategy, where designated short-term FHLB borrowings are invested in various short-term liquid assets to generate additional net interest income, as well as the required purchase of additional FHLB stock which generates increased dividend income.ended December 31, 2020.
Cash, cash equivalents, and commercial paper.  Total cash and cash equivalents increased $11.7$104.7 million, or 13.4%86.1%, to $98.7$226.3 million at December 31, 20172020 from $87.0$121.6 million at June 30, 2017 mainly due to additional funds held at the Federal Reserve Bank. In conjunction with our leveraging strategy, we purchase commercial2020. Commercial paper to take advantage of higher returns with relatively low risk while remaining highly liquid. The commercial paper balance increased $49.9decreased $121.2 million, or 33.3%39.7% to $199.7$183.8 million at December 31, 20172020 from $149.9$305.0 million at June 30, 2017.2020 as a result of the lower interest rate environment. Our investments in commercial paper have short-term maturities and limited exposure of $15.0 million or less per each highly-rated company.
Investments. SecuritiesDebt securities available for sale decreased $32.0increased $26.0 million, or 16.0%20.4%, to $167.7$153.5 million at December 31, 20172020 from $199.7$127.5 million at June 30, 2017.2020. During the six months ended December 31, 2017, $19.72020, $73.7 million of securities were purchased, $38.7 million of securities matured, and $10.9$8.2 million of MBS principal payments were received. At December 31, 2017,2020, certificates of deposit in other banks decreased $32.0$7.1 million, or 24.1%12.7% to $100.3$48.6 million compared to $132.3$55.7 million at June 30, 2017.2020. The decrease in certificates of deposit in other banks was due to $44.5$8.3 million in maturities partially offset by $12.6$1.2 million in purchases. All certificates of deposit in other banks are fully
44

insured by the FDIC. We evaluate individual investmentManagement evaluates securities for impairment where there has been a decline in fair value below the amortized cost basis of a security to determine whether there is a credit loss associated with the decline in fair value on at least a quarterly for other-than-temporary declines inbasis, and more frequently when economic or market value. We didconcerns warrant such evaluation. Management does not believe that there were any other-than-temporary impairmentscredit losses at December 31, 2017;2020; therefore, no impairment losses were recorded during the first six months of fiscal 2018.2021. Other investments at cost increased $626,000, or 1.6%, to $39.6 million at December 31, 20172020 from $38.9 million at June 30, 2020. Other investments at cost included FRB and FHLB stock, FRB stock, and SBIC investments totaling $7.3$23.3 million, $7.4 million, and $31.6$8.9 million, respectively. In total, other investments decreased $478,000, or 1.2% from June 30, 2017 as a result of required redemptions of FHLB stock due to reductions in our FHLB borrowings.
Loans held for sale. Loans held for sale increased $1.5to $118.4 million or 26.1% at December 31, 2017 to $7.1 million2020 from $5.6$77.2 million at June 30, 2017.2020. The increase was primarily driven by volume increasesa $16.3 million, or 34.2% increase in HELOCs originated for sale, as well as a result63.4% increase in mortgage loans originated for sale of expanding our mortgage operations into our newer market areas$17.8 million and adding additional seasoned loan officers.an increase in SBA loans held for sale of $7.1 million, or 570.8% increase.
Loans.  Net  Total loans receivable increased $66.6decreased $90.5 million, or 2.9%,3.3% to $2.7 billion at December 31, 2017 to $2.42020 from $2.8 billion fromat June 30, 2017 primarily due to $66.82020. The decrease was driven by two large commercial relationship payoffs totaling $52.8 million, PPP loan forgiveness of organic loan growth.$15.9 million, and the continued payoff of purchased HELOCs of $13.1 million.
For the six-month period ended December 31, 2017,Commercial and retail loan portfolio originations increased $16.2 million, or 11.0% to $163.7 million from $147.5 million, compared to the same period in the previous year. For the six-month period ended December 31, 2017, commercial loan portfolio originations increased $68.2 million, or 30.2% to $294.0 million, from $225.8 million, compared to the same period in the previous year. For the quarter ended December 31, 2017, organic net loan growth, which excludes loans acquired through acquisitions and purchases of HELOCs, was $66.8 million or 6.1% annualized.


Retail consumer and commercial loans consist of the following at the dates indicated:
As of     Percent of totalAs ofPercent of total
December 31, June 30, Change December 31, June 30,December 31,June 30,ChangeDecember 31,June 30,
(Dollars in thousands)2017 2017 $ % 2017 2017(Dollars in thousands)20202020$%20202020
Commercial loans:Commercial loans:
Commercial real estateCommercial real estate$1,056,971 $1,052,906 $4,065 0.4 %39.5 %38.0 %
Construction and developmentConstruction and development172,892 215,934 (43,042)(19.9)6.5 7.8 
Commercial and industrialCommercial and industrial138,761 154,825 (16,064)(10.4)5.2 5.6 
Equipment financeEquipment finance272,761 229,239 43,522 19.0 10.2 8.3 
Municipal leasesMunicipal leases128,549 127,987 562 0.4 4.8 4.6 
PPP loansPPP loans64,845 80,697 (15,852)(19.6)2.4 2.9 
Total commercial loansTotal commercial loans1,834,779 1,861,588 (26,809)(1.4)68.6 67.2 
Retail consumer loans:           Retail consumer loans:
One-to-four family$686,229
 $684,089
 $2,140
 0.3 % 28.4% 29.1%One-to-four family452,421 473,693 (21,272)(4.5)16.9 17.1 
HELOCs - originated150,084
 157,068
 (6,984) (4.4) 6.2
 6.7
HELOCs - originated125,397 137,447 (12,050)(8.8)4.7 5.0 
HELOCs - purchased162,181
 162,407
 (226) (0.1) 6.7
 6.9
HELOCs - purchased58,640 71,781 (13,141)(18.3)2.2 2.6 
Construction and land/lots60,805
 50,136
 10,669
 21.3
 2.5
 2.1
Construction and land/lots75,108 81,859 (6,751)(8.2)2.8 3.0 
Indirect auto finance150,042
 140,879
 9,163
 6.5
 6.2
 6.0
Indirect auto finance122,947 132,303 (9,356)(7.1)4.6 4.8 
Consumer9,699
 7,900
 1,799
 22.8
 0.4
 0.3
Consumer9,332 10,259 (927)(9.0)0.3 0.4 
Total retail consumer loans1,219,040
 1,202,479
 16,561
 1.4
 50.4
 51.1
Total retail consumer loans843,845 907,342 (63,497)(7.0)31.4 32.8 
Commercial loans: 
  
        
Commercial real estate786,381
 730,408
 55,973
 7.7
 32.5
 31.0
Construction and development185,921
 197,966
 (12,045) (6.1) 7.7
 8.4
Commercial and industrial127,709
 120,387
 7,322
 6.1
 5.3
 5.1
Municipal leases100,205
 101,175
 (970) (1.0) 4.1
 4.3
Total commercial loans1,200,216
 1,149,936
 50,280
 4.4
 49.6
 48.9
Total loans$2,419,256
 $2,352,415
 $66,841
 2.8 % 100.0% 100.0%Total loans$2,678,624 $2,768,930 $(90,306)(3.3)%100.0 %100.0 %
Recently, our expansion into larger metro markets as well as in-market acquisitions combined with improvements in the economy, employment rates, stronger real estate prices, and a general lack of new housing inventory in certain markets have led to us significantly increasing originations of construction loans for properties located in our market areas. We have hired experienced commercial real estate relationship managers, credit officers, and developed a construction risk management group to better manage construction risk, as part of our efforts to grow the construction portfolio. We will continue to take a disciplined approach in our construction and land development lending by concentrating our efforts on smaller one-to-four residential loans to builders known to us and developers of commercial real estate and multifamily properties with proven success in this type of construction. At December 31, 2017, construction and land/lots totaled $60.8 million including $46.4 million of one-to-four family construction loans that will roll over to permanent loans upon completion of the construction period, excluding unfunded loan commitments of $59.3 million. Total construction and development loans at December 31, 2017, were $185.9 million, excluding unfunded loan commitments of $123.3 million, of which $69.5 million was for non-residential commercial real estate construction, $65.0 million was for land development, $39.6 million was for speculative construction of single family properties, and $11.8 million was for multi-family construction. Undisbursed construction and development loan commitments at December 31, 2017 included $80.9 million of commercial real estate projects, multi-family residential projects of $8.7 million and $33.7 million for the speculative construction of one- to four-family residential properties.
Asset Quality. Our overall asset quality metrics continue to demonstrate our commitment to growing and maintaining a loan portfolio with a moderate risk profile. 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. See "Recent Developments: COVID-19, the CARES Act, and Our Response" on page 44 for additional information regarding our response to COVID-19.
Nonperforming assets decreased $800,000 to $19.2by $1.5 million, or 0.59%9.2% to $14.8 million, or 0.40% of total assets at December 31, 20172020 from $20.0$16.3 million, or 0.44% of total assets at June 30, 2017.2020. Nonperforming assets included $14.4$14.5 million in nonaccruing loans and $4.8 million$252,000 in REO at December 31, 2017,2020, compared to $13.7$15.9 million and $6.3 million,$337,000 in nonaccruing loans and REO, respectively, at June 30, 2017.2020. Included in nonperforming loans at December 31, 2020 are $4.8$5.9 million of TDR loans restructured from their original terms of which $2.1$4.1 million were current with respect to their modified payment terms. The increase in nonaccruing loans was primarily due to one construction and development relationship totaling $771,000, partially offset by loans returning to performing status as payment history and the borrower's financial status improved. At December 31, 2017, $4.62020, $7.0 million, or 32.1%48.3%, of nonaccruing loans were current on their loan payments. Purchased credit impaired loans aggregating $4.6 million were excluded from nonaccruing loans due to the accretionThe ratio of discounts established in accordance with the acquisition method of accounting for business combinations. Nonperformingnonperforming loans to total loans was 0.59%0.54% at December 31, 2017 compared to2020 and 0.58% at June 30, 2017.2020.
The ratio of classified assets to total assets decreased to 1.39%0.74% at December 31, 20172020 from 1.57%0.84% at June 30, 2017.2020. Classified assets decreased 10.8% to $44.8$27.2 million at December 31, 20172020 compared to $50.2$31.1 million at June 30, 20172020 primarily due to $3.1 million in payoffs of two commercial real estate loans totaling $1.6and $1.5 million andin charge-offs during the decrease in REO of $1.5 million. Delinquent loans (loans delinquent 30 days or more) increased to $17.3 million atsix month period ended December 31, 2017, from $15.2 million at June 30, 2017 primarily due to one construction and development loan relationship in the 90+ day category and one-to-four family loans in the 30-60 day category.2020.
As of December 31, 2017, we had identified $40.8 million of impaired loans compared to $43.0 million at June 30, 2017. Our impairedindividually evaluated loans are comprised of loans meeting certain thresholds, on non-accrualnonaccrual status, and all TDRs, whether performing or on non-accrualnonaccrual status under their restructured terms. ImpairedIndividually evaluated loans may be evaluated for reserve purposes using either a specific impairment analysisthe cash flow or on a collective basis as part of homogeneous pools.the collateral valuation method. As of December 31, 2017,2020, there were $19.8$11.4 million loans individually evaluated for impairment and $21.0 million were collectively evaluated. For more information on these impairedindividually evaluated loans, see Note 56 of the Notes to Consolidated Financial Statements under Item 1 of this report.
45

Allowance for loancredit losses.  We establish an allowance  On July 1, 2020, the Company adopted the CECL accounting standard in accordance with ASU 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments." See "Note 1 - Summary of Significant Accounting Policies" and "Note 6 - Loans" for loan losses by charging amountsadditional details related to the loan loss provision at a level required to reflect estimated credit losses in the loan portfolio. In evaluating the leveladoption of the allowance for loan losses, management considers, among other factors, historical loss experience, the types of loans and the amount of loans in the loan portfolio, adverse situations that may affect borrowers' ability


to repay, estimated value of any underlying collateral, prevailing economic conditions and current risk factors specifically related to each loan type.CECL.
The allowance for loan lossesACL was $21.1$39.8 million, or 0.87%1.49% of total loans at December 31, 20172020 compared to $21.2$28.1 million, or 0.90%1.01% of total loans at June 30, 2017.2020. The allowance for loan lossesACL to gross loans excluding acquiredPPP loans was 0.97%1.52% at December 31, 2017,2020, compared to 1.03%1.04% at June 30, 2017. Loans acquired2020. The overall increase was driven by the additional allowance stemming from acquisitions are recorded at fair value, which includes a credit discount, therefore, no allowance for loan losses is established for these acquired loans unless the credit quality deteriorates further subsequent toCompany's adoption of the acquisition. The allowance for our acquired loans at December 31, 2017 was $566,000 compared to $727,000 at June 30, 2017.new CECL accounting standard.
There was noa net benefit of $2.1 million for the provision for loan loss during the three and six months ended December 31, 2017 and December 31, 2016 as the allowance for loancredit losses required by our loan growth was offset by continued improvements in our asset quality. Net loan charge offs totaled $907,000 for the three months ended December 31, 2017 compared to net recoveries of $35,000 for the same period during the prior fiscal year. Net charge offs totaled $61,000 for the six months ended December 31, 20172020, compared to $306,000a $400,000 provision for the corresponding period in fiscal year 2020. The net benefit of provision was primarily driven by changes in the economic forecast which improved in outlook since the adoption of the standard and a decline in the balance of total loans. Net loan charge-offs totaled $637,000 for the six months ended December 31, 2020, compared to net recoveries of $202,000 for the same period during the prior fiscallast year. Net charge offscharge-offs as a percentage of average loans increased to 0.15%were 0.04% for the threesix months ended December 31, 2017 from2020 compared to net recoveries of (0.01)% for the samecorresponding period lastin fiscal year. Net charge offs as a percentage of average loans decreased to 0.01% compared to 0.03% for the same period last fiscal year.year 2020.
The allowance as a percentage of nonaccruing loans decreasedincreased to 146.79%274.05% at December 31, 20172020 from 154.77%176.30% at June 30, 2017.2020.
We believe thatManagement believes the allowance for loan lossesACL as of December 31, 20172020 was adequate to absorb the known and inherent risks of lossestimated losses in the loan portfolio at that date. While we believemanagement believes the estimates and assumptions used in our determination of the adequacy of the allowance are reasonable, there can be no assurance that such estimates and assumptions will not be proven incorrect in the future, or that the actual amount of future provisions will not exceed the amount of past provisions or that any increased provisions that may be required will not adversely impact our financial condition and results of operations. In addition, the determination of the amount of the allowance for loan lossesACL is subject to review by bank regulators as part of the routine examination process, which may result in the establishment of additional reserves based upon their judgment of information available to them at the time of their examination. Lastly, a further decline in national and local economic conditions, as a result of the COVID-19 pandemic or other factors, could result in a material increase in the ACL and may adversely affect the Company’s financial condition and results of operations.
Real estate owned. REO decreased $1.5$85,000, or 25.2% to $252,000 at December 31, 2020 due to $193,000 in REO sales partially offset by $108,000 in transfers from loans during the six months ended December 31, 2020.
Deferred income taxes. Deferred income taxes increased $2.3 million, or 14.0%, to $4.8$18.6 million at December 31, 2017 primarily due to $2.2 million in REO sales during the period, partially offset by $591,000 in properties transferred to REO and a gain on sale of REO of $393,000 during the period. The total balance of REO at December 31, 2017 included $1.9 million in land, construction and development projects (both residential and commercial), $1.8 million in commercial real estate, and $1.1 million in single-family homes.
Deferred income taxes. Deferred income taxes decreased $20.9 million, or 36.4%, to $36.5 million at December 31, 20172020 from $57.4$16.3 million at June 30, 2017.2020. The decreaseincrease was primarily driven by the previously mentioned revaluation as a resultthe adoption of the Tax Act,CECL standard which resulted in an increase of $3.9 million, which was partially offset by the realization of net operating losses through increaseslosses.
Premises and equipment, net. Premises and equipment, net increased $11.6 million, or 19.9% to $70.1 million at December 31, 2020 from $58.5 million at June 30, 2020. The increase was a result of the purchase of an office building in taxable income,Charlotte, N.C. for use as a future branch location and to a lesser extent, the revaluation of deferred tax assets relating to a change in North Carolina's corporate tax rate, as discussed below.other Bank office space.
Goodwill. Goodwill remained unchanged at $25.6 million at both December 31, 20172020 and June 30, 2017.2020.
Deposits. DepositsOther assets. Other assets increased $59.8$3.0 million, or 2.9%6.0%, to $2.1 billion$52.5 million at December 31, 2017 as compared2020 from $49.5 million at June 30, 2020. The increase was primarily driven by operating leases from our equipment finance line of business.
Deposits. Deposits decreased $42.5 million, or 1.5% during the six months ended December 31, 2020 to $2.0$2.7 billion from $2.8 billion at June 30, 2017. The increase2020 which was primarily duedriven by our focused effort to an increaserealign the deposit mix. As part of $79.8 million in our core deposits (which excludes certificates of deposit) as a result of recent deposit gathering initiatives, which were partially offset by a $20.1 million managed run off in our higher costingrunoff, certificates of deposit and brokered deposits decreased $212.9 million, or 28.8% to $526.2 million at December 31, 2020. This decrease was partially offset by competing less aggressively for time deposits.successful efforts to increase core deposits which increased $170.4 million, 8.3%.
The following table sets forth our deposits by type of deposit account as of the dates indicated:
As ofPercent of total
December 31,June 30,ChangeDecember 31,June 30,
(Dollars in thousands)20202020$%20202020
Core deposits:
     Noninterest-bearing accounts$469,998 $429,901 $40,097 9.3 %17.1 %15.4 %
     NOW accounts654,960 582,299 72,661 12.5 %23.9 %20.9 %
     Money market accounts882,366 836,738 45,628 5.5 %32.2 %30.0 %
     Savings accounts209,699 197,676 12,023 6.1 %7.7 %7.1 %
Core deposits2,217,023 2,046,614 170,409 8.3 %80.8 %73.5 %
Certificates of deposit526,246 739,142 (212,896)(28.8)%19.2 %26.5 %
Total$2,743,269 $2,785,756 $(42,487)(1.5)%100.0 %100.0 %
46

 As of   Percent of total
 December 31, June 30, Change December 31, June 30,
(Dollars in thousands)2017 2017 $ % 2017 2017
Core deposits:           
     Noninterest-bearing accounts$313,493
 $310,172
 3,321
 1.1 % 14.9% 15.1%
     NOW accounts489,668
 469,377
 20,291
 4.3 % 23.2% 22.9%
     Money market accounts638,259
 569,607
 68,652
 12.1 % 30.3% 27.8%
     Savings accounts224,732
 237,149
 (12,417) (5.2)% 10.7% 11.6%
Core deposits1,666,152
 1,586,305
 79,847
 5.0 % 79.0% 77.4%
Certificates of deposit442,056
 462,146
 (20,090) (4.3)% 21.0% 22.6%
Total$2,108,208
 $2,048,451
 59,757
 2.9 % 100.0% 100.0%
Borrowings. Borrowings decreased to $685.0remained at $475.0 million at December 31, 2017 from $696.5 million at2020 compared to June 30, 2017. A total of $585.0 million of these2020. At December 31, 2020 all FHLB advances havehad maturities of seven years or more (but were callable in less than 90 daystwo years) with a weighted average interest rate of 1.34% at December 31, 2017.1.39%.


Equity.Equity.  Stockholders' equity at December 31, 20172020 decreased $3.5 million, or 0.9% to $395.4$404.7 million from $397.6$408.3 million at June 30, 2017. The decrease was primarily driven by $5.12020. Changes within stockholders' equity included $15.2 million in net losses due to the deferred tax revaluation,income and a $601,000 decrease$2.2 million in other comprehensive income, partiallystock-based compensation, ESOP shares allocated, and stock option exercises, offset by $2.0$13.4 million representing stock-based compensation, and $680,000 in a cumulative adjustment forrelated to the adoption of Accounting Standard Update 2016-09, "Improvementsthe new CECL accounting standard, 277,122 shares of common stock being repurchased at an average cost of $18.69 per share, or approximately $5.2 million in total, and $2.5 million related to Employee Share-Based Payment Accounting."

cash dividends declared. As of December 31, 2020, the Bank and the Company were considered "well capitalized" in accordance with their regulatory capital guidelines and exceeded all regulatory capital requirements.

47

Average Balances, Interest and Average Yields/Cost
The following table sets forth for the periods indicated, information regarding average balances of assets and liabilities as well as the total dollar amounts of interest income from average interest-earning assets and interest expense on average interest-bearing liabilities, resultant yields, interest rate spread, net interest margin (otherwise known as net yield on interest-earning assets), and the ratio of average interest-earning assets to average interest-bearing liabilities. All average balances are daily average balances. Nonaccruing loans have been included in the table as loans carrying a zero yield.
For the Three Months Ended December 31,
For the Three Months Ended December 31,20202019
2017 2016Average
Balance
Outstanding
Interest
Earned/
Paid(2)
Yield/
Rate(2)
Average
Balance
Outstanding
Interest
Earned/
Paid(2)
Yield/
Rate(2)
Average
Balance
Outstanding		 
Interest
Earned/
Paid(2)
 
Yield/
Rate(2)
 Average
Balance
Outstanding		 
Interest
Earned/
Paid(2)
 
Yield/
Rate(2)
(Dollars in thousands)
(Dollars in thousands)(Dollars in thousands)
Assets:           Assets:
Interest-earning assets:           Interest-earning assets:
Loans receivable(1)
$2,406,014
 $26,518
 4.41% $1,910,134
 $20,444
 4.28%
Loans receivable(1)
$2,826,133 $28,648 4.05 %$2,782,412 $32,409 4.66 %
Deposits in other financial institutions151,197
 517
 1.37% 178,119
 478
 1.07%
Investment securities175,039
 903
 2.06% 188,023
 862
 1.83%
Commercial paper and deposits in other banksCommercial paper and deposits in other banks417,401 614 0.59 %346,376 1,912 2.21 %
Securities available for saleSecurities available for sale133,856 504 1.50 %165,577 1,093 2.64 %
Other interest-earning assets(3)
241,948
 1,288
 2.13% 245,035
 852
 1.39%
Other interest-earning assets(3)
39,290 696 7.08 %44,398 772 6.95 %
Total interest-earning assets2,974,198
 29,226
 3.93% 2,521,311
 22,636
 3.59%Total interest-earning assets3,416,680 30,462 3.57 %3,338,763 36,186 4.34 %
Other assets275,434
     243,736
    Other assets257,572 269,679 
Total assets3,249,632
     2,765,047
    Total assets$3,674,252 $3,608,442 
Liabilities and equity:           Liabilities and equity:
Interest-bearing deposits:           Interest-bearing deposits:
Interest-bearing checking accounts471,474
 236
 0.20% 405,340
 172
 0.17%Interest-bearing checking accounts$584,530 $353 0.24 %$455,747 $375 0.33 %
Money market accounts644,928
 585
 0.36% 518,095
 351
 0.27%Money market accounts848,760 414 0.20 %785,374 2,083 1.06 %
Savings accounts227,933
 76
 0.13% 210,223
 70
 0.13%Savings accounts206,205 38 0.07 %168,022 50 0.12 %
Certificate accounts448,507
 644
 0.57% 408,314
 448
 0.44%Certificate accounts576,078 1,542 1.07 %778,664 3,813 1.96 %
Total interest-bearing deposits1,792,842
 1,541
 0.33% 1,541,972
 1,041
 0.28%Total interest-bearing deposits2,215,573 2,347 0.42 %2,187,807 6,321 1.16 %
Borrowings677,013
 2,077
 1.22% 546,353
 607
 0.44%Borrowings475,000 1,688 1.42 %605,489 2,541 1.68 %
Total interest-bearing liabilities2,469,855
 3,618
 0.58% 2,088,325
 1,648
 0.31% Total interest-bearing liabilities2,690,573 4,035 0.60 %2,793,296 8,862 1.27 %
Noninterest-bearing deposits307,934
     250,914
    Noninterest-bearing deposits523,488 334,732 
Other liabilities65,850
     60,068
    Other liabilities57,813 65,812 
Total liabilities2,843,639
     2,399,307
    Total liabilities3,271,874 3,193,840 
Stockholders' equity405,993
     365,740
    Stockholders' equity402,378 414,602 
Total liabilities and stockholders' equity$3,249,632
     $2,765,047
    Total liabilities and stockholders' equity$3,674,252 $3,608,442 
           
Net earning assets$504,343
  
   $432,986
    Net earning assets$726,107  $545,467 
Average interest-earning assets to           Average interest-earning assets to
average interest-bearing liabilities120.42%     120.73%    average interest-bearing liabilities126.99 %119.53 %
Tax-equivalent:           Tax-equivalent:
Net interest income  $25,608
     $20,988
  Net interest income$26,427 $27,324 
Interest rate spread    3.35%     3.28%Interest rate spread2.97 %3.07 %
Net interest margin(4)
    3.44%     3.33%
Net interest margin(4)
3.09 %3.27 %
Non-tax-equivalent:           Non-tax-equivalent:
Net interest income  $25,230
     $20,415
  Net interest income$26,122 $27,034 
Interest rate spread    3.30%     3.18%Interest rate spread2.93 %3.03 %
Net interest margin(4)
    3.39%     3.24%
Net interest margin(4)
3.06 %3.24 %
(1) The average loans receivable, net balances include loans held for sale and nonaccruing loans.
(2) Interest income used in the average interest/interest earned and yield calculation includes the tax equivalent adjustment of $378,000$305 and $573,000$290 for the three months ended December 31, 2017 2020
and 2016,2019, respectively, calculated based on a combined federal and state tax rate of 30% and 37%, respectively.24%.
(3) The average other interest-earning assets consistsconsist of FRB stock, FHLB stock, and commercial paper. See Comparison of Results of Operation for the Three Months Ended December 31, 2017 for discussion of our leveraging strategy.SBIC investments.
(4) Net interest income divided by average interest-earning assets.


48

 For the Six Months Ended December 31,
 2017 2016
 
Average
Balance
Outstanding
 
Interest
Earned/
Paid(2)
 
Yield/
Rate(2)
 
Average
Balance
Outstanding
 
Interest
Earned/
Paid(2)
 
Yield/
Rate(2)
(Dollars in thousands) 
Assets:           
Interest-earning assets:           
Loans receivable(1)
$2,383,768
 $52,154
 4.38% $1,879,110
 $41,515
 4.42%
Deposits in other financial institutions155,175
 1,053
 1.36% 184,918
 974
 1.05%
Investment securities182,479
 1,875
 2.06% 192,456
 1,742
 1.81%
Other interest-earning assets(3)
225,185
 2,426
 2.15% 267,878
 1,786
 1.33%
Total interest-earning assets2,946,607
 57,508
 3.90% 2,524,362
 46,017
 3.65%
Other assets277,151
     240,623
    
Total assets$3,223,758
     $2,764,985
    
Liabilities and equity:           
Interest-bearing liabilities:           
Interest-bearing checking accounts467,201
 452
 0.19% 404,581
 345
 0.17%
Money market accounts625,095
 1,062
 0.34% 518,672
 698
 0.27%
Savings accounts230,436
 153
 0.13% 210,201
 140
 0.13%
Certificate accounts449,173
 1,220
 0.54% 419,552
 957
 0.46%
Total interest-bearing deposits1,771,905
 2,887
 0.33% 1,553,006
 2,140
 0.27%
Borrowings672,552
 4,046
 1.20% 540,121
 1,162
 0.43%
Total interest-bearing liabilities2,444,457
 6,933
 0.56% 2,093,127
 3,302
 0.31%
Noninterest-bearing deposits309,265
     246,212
    
Other liabilities66,328
     61,628
    
Total liabilities2,820,050
     2,400,967
    
Stockholders' equity403,708
     364,018
    
Total liabilities and stockholders' equity$3,223,758
     $2,764,985
    
            
Net earning assets$502,150
     $431,235
    
Average interest-earning assets to           
average interest-bearing liabilities120.54%     120.60%    
Tax-equivalent:           
Net interest income  $50,575
     $42,715
  
Interest rate spread    3.34%     3.34%
Net interest margin(4)
    3.43%     3.38%
Non-tax-equivalent:           
Net interest income  $49,811
     $41,552
  
Interest rate spread   
 3.29%     3.24%
Net interest margin(4)
    3.38%     3.29%
__________________
For the Six Months Ended December 31,
20202019
Average
Balance
Outstanding
Interest
Earned/
Paid(2)
Yield/
Rate(2)
Average
Balance
Outstanding
Interest
Earned/
Paid(2)
Yield/
Rate(2)
(Dollars in thousands)
Assets:
Interest-earning assets:
Loans receivable(1)
$2,850,783 $57,550 4.04 %$2,766,022 $64,960 4.70 %
Commercial paper and deposits in other banks420,785 1,495 0.71 %354,750 4,165 2.35 %
Securities available for sale120,062 1,032 1.72 %152,143 1,989 2.61 %
Other interest-earning assets(3)
39,118 1,144 5.85 %45,054 1,604 7.12 %
Total interest-earning assets3,430,748 61,221 3.57 %3,317,969 72,718 4.38 %
Other assets254,610 267,028 
Total assets$3,685,358 $3,584,997 
Liabilities and equity:
Interest-bearing liabilities:
Interest-bearing checking accounts$572,505 $750 0.26 %$448,636 $694 0.31 %
Money market accounts837,153 964 0.23 %752,178 3,844 1.02 %
Savings accounts203,374 75 0.07 %170,207 103 0.12 %
Certificate accounts632,894 3,811 1.20 %761,810 7,533 1.98 %
Total interest-bearing deposits2,245,926 5,600 0.50 %2,132,831 12,174 1.14 %
Borrowings475,000 3,375 1.42 %644,451 5,862 1.82 %
Total interest-bearing liabilities2,720,926 8,975 0.66 %2,777,282 18,036 1.30 %
Noninterest-bearing deposits507,087 330,418 
Other liabilities55,699 64,456 
Total liabilities3,283,712 3,172,156 
Stockholders' equity401,646 412,841 
Total liabilities and stockholders' equity$3,685,358 $3,584,997 
Net earning assets$709,822 $540,687 
Average interest-earning assets to
average interest-bearing liabilities126.09 %119.47 %
Tax-equivalent:
Net interest income$52,246 $54,682 
Interest rate spread2.91 %3.08 %
Net interest margin(4)
3.05 %3.30 %
Non-tax-equivalent:
Net interest income$51,631 $54,107 
Interest rate spread 2.87 %3.05 %
Net interest margin(4)
3.01 %3.26 %
(1) The average loans receivable, net balances include loans held for sale and nonaccruing loans.
(2) Interest income used in the average interest/interest earned and yield calculation includes the tax equivalent adjustment of $764,000$615 and $1,163,000$575 for the six months ended December 31, 2017 2020
and 2016,2019, respectively, calculated based on a combined federal and state tax rate of 30% and 37%, respectively.24%.
(3) The average other interest-earning assets consistsconsist of FRB stock, FHLB stock, and commercial paper. See Comparison of Results of Operation for the Six Months Ended December 31, 2017 for discussion of our leveraging strategy.SBIC investments.
(4) Net interest income divided by average interest-earning assets.

49


Rate/Volume Analysis
The following table presents the dollar amount of changes in interest income and interest expense for major components of interest-earning assets and interest-bearing liabilities. It distinguishes between the changes related to outstanding balances and that due to the changes in interest rates. For each category of interest-earning assets and interest-bearing liabilities, information is provided on changes attributable to (i) changes in volume (i.e., changes in volume multiplied by old rate) and (ii) changes in rate (i.e., changes in rate multiplied by old volume). For purposes of this table, changes attributable to both rate and volume, which cannot be segregated, have been allocated proportionately to the change due to volume and the change due to rate.
Three Months Ended December 31, 2020
Compared to
Three Months Ended December 31, 2019
Increase/
(decrease)
due to		Total
increase/(decrease)
(Dollars in thousands)VolumeRate
Interest-earning assets:
 Loans receivable(1)
$508 $(4,269)$(3,761)
Commercial paper and deposits in other banks392 (1,690)(1,298)
Securities available for sale(209)(380)(589)
 Other interest-earning assets(89)13 (76)
    Total interest-earning assets$602 $(6,326)$(5,724)
Interest-bearing liabilities:
 Interest-bearing checking accounts$106 $(128)$(22)
 Money market accounts168 (1,837)(1,669)
 Savings accounts 
12 (24)(12)
 Certificate accounts(992)(1,279)(2,271)
 Borrowings(548)(305)(853)
    Total interest-bearing liabilities(1,254)(3,573)(4,827)
Net increase (decrease) in tax equivalent interest income$1,856 $(2,753)$(897)
 Three Months Ended December 31, 2017
 Compared to
 Three Months Ended December 31, 2016
 
Increase/
(decrease)
due to
 Total
increase/(decrease)
(Dollars in thousands)Volume Rate 
Interest-earning assets:     
 Loans receivable(1)
$5,306
 $768
 $6,074
Deposits in other financial institutions(72) 111
 39
 Investment securities(60) 101
 41
 Other interest-earning assets(11) 447
 436
    Total interest-earning assets$5,163
 $1,427
 $6,590
Interest-bearing liabilities:     
 Interest-bearing checking accounts$29
 $35
 $64
 Money market accounts85
 149
 234
 Savings accounts 
6
 —
 6
 Certificate accounts44
 152
 196
 Borrowings145
 1,325
 1,470
    Total interest-bearing liabilities309
 1,661
 1,970
Net increase (decrease) in tax equivalent interest income$4,854
 $(234) $4,620

 Six Months Ended December 31, 2017
 Compared to
 Six Months Ended December 31, 2016
 
Increase/
(decrease)
due to
 
Total
increase/(decrease)
(Dollars in thousands)Volume Rate 
Interest-earning assets:     
 Loans receivable(1)
$11,151
 $(512) $10,639
Deposits in other financial institutions(156) 235
 79
 Investment securities(90) 223
 133
 Other interest-earning assets(285) 925
 640
    Total interest-earning assets10,620
 871
 11,491
Interest-bearing liabilities:     
 Interest-bearing checking accounts 
$54
 $53
 $107
 Money market accounts143
 221
 364
 Savings accounts13
 —
 13
 Certificate accounts68
 195
 263
 Borrowings285
 2,599
 2,884
    Total interest-bearing liabilities563
 3,068
 3,631
Net increase (decrease) in tax equivalent interest income$10,057
 $(2,197) $7,860
_____________
Six Months Ended December 31, 2020
Compared to
Six Months Ended December 31, 2019
Increase/
(decrease)
due to		Total
increase/(decrease)
(Dollars in thousands)VolumeRate
Interest-earning assets:
 Loans receivable(1)
$1,991 $(9,401)$(7,410)
Commercial paper and deposits in other banks775 (3,445)(2,670)
Securities available for sale(419)(538)(957)
 Other interest-earning assets(212)(248)(460)
    Total interest-earning assets$2,135 $(13,632)$(11,497)
Interest-bearing liabilities:
 Interest-bearing checking accounts 
$191 $(135)$56 
 Money market accounts434 (3,314)(2,880)
 Savings accounts20 (48)(28)
 Certificate accounts(1,275)(2,447)(3,722)
 Borrowings(1,540)(947)(2,487)
    Total interest-bearing liabilities(2,170)(6,891)(9,061)
Net increase (decrease) in tax equivalent interest income$4,305 $(6,741)$(2,436)
__________
(1) Interest income used in the average interest/interest earned and yield calculation includes the tax equivalent adjustment of $378,000$305 and $573,000$290 for the three months ended December 31, 20172020 and 2016,2019, respectively, calculated based on a combined federal and state income tax rate of 30% and 37%24%. Interest income used in the average interest/interest earned and yield calculation includes the tax equivalent adjustment of $764,000$615 and $1,163,000$575 for the six months ended December 31, 20172020 and 2016,2019, respectively, calculated based on a combined federal and state income tax rate of 30% and 37%24%.

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Comparison of Results of OperationOperations for the Three Months Ended December 31, 20172020 and 20162019
General.  During the three months ended December 31, 2017, we had a2020, net loss of $10.7income increased 2.9% to $9.5 million driven by an estimated $17.7 million deferred tax revaluation resulting from enactment of the Tax Cuts and Jobs Act (the "Tax Act”), compared to net income of $3.0$9.2 million for the three months ended December 31, 2016.2019. The Company's diluted lossearnings per share was $0.59increased to $0.57 for the three months ended December 31, 20172020 compared to earning per share of $0.17$0.52 for the same period in fiscal 2017. The Tax Act, among other things, reduced the federal corporate tax2020. First quarter earnings continue to be negatively impacted by an economy weakened by COVID-19 as well as a lower interest rate to 21% effective January 1, 2018 requiring the Company to revalue net deferred tax assets. The resulting estimated $17.7 million deferred tax revaluation was reflected as an increasemargin due to the Company'sdecrease in interest rates over the past year. Despite the lower net interest income tax expense. Net income and diluted earnings per share before the change in the federal tax rate and prior year merger-related expenses for the quarter, the increase in earnings for the three months ended December 31, 2017 was $7.0 million and $0.38,2020 as compared to $3.0 million and $0.17, respectively.the same period a year ago was driven by a net benefit in the provision for credit losses due to improvement in the economic forecast since adoption of the new accounting standard to measure current expected credit losses.
Net Interest Income. NetNet interest income increased $4.8 million, or 23.6%decreased to $25.2$26.1 million for the quarter ended December 31, 20172020, compared to $20.4$27.0 million for the corresponding periodcomparative quarter in 2016.fiscal 2020. The increase in net interest income for the quarter ended December 31, 2017$912,000, or 3.4% decrease was driven bydue to a $6.8$5.7 million or 30.8% increasedecrease in interest and dividend income, due primarily to an increasedriven by lower rates on loans and commercial paper as a result of lower federal funds and other market interest rates. This decrease was partially offset by a $4.8 million decrease in average interest-earning assets.interest expense.
Average interest-earning assets increased $452.9$77.9 million, or 18.0%2.3% to $3.0$3.4 billion for the quarter ended December 31, 2017 compared to $2.5 billion for the corresponding quarter in fiscal 2017.2020. The average balance of total loans receivable for the quarter ended December 31, 2017 increased $495.9by $43.7 million, or 26.0%1.6% compared to the same quarter last year due to the TriSummit acquisition and organic net loan growth whichand PPP loan originations. The average balance of commercial paper and deposits in other banks increased $71.0 million, or 20.5% driven by increases in commercial paper investments as a result of the Company's increased liquidity between the periods. The Company's investments in commercial paper have short-term maturities and limited exposure of $15.0 million or less per each highly-rated company. The overall increase in interest-earning assets was mainlyprimarily funded by the cumulative decrease of $43.0a $188.8 million, or 7.0% in average interest-earning deposits with banks, securities available for sale, and other interest-earning assets, an56.4% increase in average noninterest-bearing deposits of $307.9partially offset by a $102.7 million, or 17.2%, and an increase3.7% decrease in average FHLB borrowings of $130.7 million, or 23.9%interest-bearing liabilities as compared to the same quarter last year. Net interest margin (on a fully taxable-equivalent basis) for the three months ended December 31, 2017 increased2020 decreased to 3.44%3.09% from 3.33%3.27% for the same period a year ago. During the three months ended December 31, 2017 our leveraging strategy produced an additional $1.1 million in interest and dividend income at an average yield of 1.66%, while the average cost of the borrowings was 1.23%, resulting in approximately $274,000 in net interest income. During the same quarter in the prior fiscal year, our leveraging strategy produced an additional $908,000 in interest and dividend income at an average yield of 1.07%, while the average cost of the borrowings was 0.44%, resulting in approximately $530,000 in net interest income. Excluding the effects of the leveraging strategy, the tax equivalent net interest margin would be 3.73% and 3.75% for the quarters ended December 31, 2017 and 2016, respectively.
Total interest and dividend income increased $6.8decreased $5.7 million, or 30.8%16.0% for the three months ended December 31, 20172020 as compared to the same period last year, which was primarily driven by a $6.3$3.8 million, or 31.6% increase11.8% decrease in loan interest income, a $364,000,$1.3 million, or 38.8% increase67.9% decrease in interest income from commercial paper and deposits in other banks, and a $589,000, or 53.9% decrease in interest income on certificates of deposit and other interest-bearing deposits, and a $110,000, or 28.1% increase in other investment interest income.securities available for sale. The additional loanlower interest income in each category was primarily duedriven by the decrease in yields caused by the significant reduction in current market rates compared to the increase in the average balance of loans receivable as well as an increase in the average loan yields due to increases in the federal funds rate over the past 12 months.same quarter last year. Average loan yields increased 13decreased 61 basis points to 4.41%4.05% for the quarter ended December 31, 20172020 from 4.28%4.66% in the corresponding quarter from last year. In addition, there was a $146,000, or 18.9% increaseAverage yields on commercial paper and deposits in the accretion of purchase discounts on acquired loansother banks decreased 162 basis points to $920,0000.59% for the quarter ended December 31, 20172020 from $774,0002.21% in the corresponding quarter last year. Average yields on securities available for the same quarter in fiscal 2017 as a result of prepayments. Accretable income on acquired loans stems from the discount established at the time these loan portfolios were acquired and the related impact of prepayments on purchased loans. Each quarter, the Company analyzes the cash flow assumptions on the PCI loan pools and, at least semi-annually, the Company updates loss estimates, prepayment speeds and other variables when analyzing cash flows. In addition to this accretion income, which is recognized over the estimated life of the loan pools, if a loan is removed from a pool due to payoff or foreclosure, the unaccreted discount in excess of losses is recognized as an accretion gain in interest income. As a result, income from loan pools can be volatile from quarter to quarter. For the quarters ended December 31, 2017 and 2016, the average loan yields included 15 and 16sale decreased 114 basis points respectively, from the accretion of purchase discounts on acquired loans.
Total interest expense increased $2.0 million, or 119.5%to 1.50% for the quarter ended December 31, 20172020 from 2.64% in the corresponding quarter last year.
Total interest expense decreased $4.8 million, or 54.5% for the quarter ended December 31, 2020 compared to the same period last year. This increaseThe decrease was primarily related to the TriSummit acquisition and recent deposit gathering initiatives contributing todriven by a $250.9$4.0 million, or 16.3% increase62.9% decrease in interest expense on deposits and a $853,000, or 33.6% decrease in interest expense on borrowings. Average interest-bearing deposits for the quarter ended December 31, 2020 increased $27.8 million, or 1.3%, but was more than offset by the 74 basis point decrease in cost of deposits, down to 0.42% compared to 1.16% in the average balance of interest-bearing deposits. In addition, averagesame period in fiscal 2020. Average borrowings consisting primarily of short-term FHLB advances, increased by $130.7for the quarter ended December 31, 2020 decreased $130.5 million, to $677.0 million due to funding for loan growthor 21.6% along with a 7826 basis point increasedecrease in the average cost of such borrowings during the quarter as 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 borrowing was driven by the lower federal funds rate during the current quarter lastcompared to the prior year. The overall average cost of funds increased 27decreased 67 basis points to 0.58%0.60% for the current quarter as compared to 1.27% in the same quarter last year due primarily to the impact of the recent increases in the federal funds rate on our borrowings.lower amount of borrowings and rates.
Provision (Benefit) for LoanCredit Losses. During the three months ended December 31, 2017 and 2016,2020 there was noa $3.0 million net benefit of the provision for loancredit losses as improved credit quality measures have been sufficientcompared to cover reserves neededa $400,000 provision for loan growth andthe corresponding quarter of fiscal 2020. The net benefit of provision relates to the previously discussed changes in the mixeconomic forecast since September 30, 2020 and the decline in the balance of total loans. Net loan charge-offsrecoveries totaled $907,000$62,000 for the three months ended December 31, 20172020, compared to net recoveries of $35,000$317,000 for the same period last year. Net charge-offsrecoveries as a percentage of average loans increased to 0.15%were 0.01% and 0.05% for the three monthsquarter ended December 31, 2017 from net recoveries of (0.01%) for the same period last fiscal year.2020 and 2019, respectively.
See Comparison"Comparison of Financial Condition - Asset QualityQuality" for additional details.
Noninterest Income.  Noninterest Noninterest income increased $846,000,$270,000, or 21.5%,3.0% to $4.8$9.3 million for the three months ended December 31, 20172020 from $3.9$9.1 million for the same period in the comparative quarterprevious year primarily due to a $830,000, or 63.2% increase in other noninterest income, partially offset by a $302,000, or 34.7% decrease in loan income and fees, a $189,000, or 7.3% decrease in service charges and fees on deposit accounts, and a $71,000, or 1.9% decrease in gain of 2016.sale of loans. The leading factorsincrease in other noninterest income primarily related to operating lease income from the continued growth in the equipment finance line of the increase includedbusiness. The decrease in loan income and fees is primarily a $299,000, or 15.9% increaseresult of lower fees from our adjustable rate conversion program and servicing fees. The decrease in service charges on deposit accounts aswas a result of fewer transactions as customers have decreased spending during the pandemic. The decrease in gain on the sale of loans was driven by a decrease in gains from the sale of SBA loans, partially offset by an increase in deposit accounts as well as a $424,000, or 45.3% increase in loan income from the gain on salesales of mortgage loans and various commercial loan-related fees driven by the new SBA loan line of business.
Noninterest Expense. Noninterest expense forhome equity loans. During the quarter ended December 31, 2017 increased $695,000, or 3.4%,2020, $9.3 million of the guaranteed portion of SBA commercial loans were sold with gains of $778,000 compared to $21.2$16.5 million sold and gains of $1.0 million in the corresponding quarter in the prior year. There were $108.9 million of residential mortgage loans originated for sale which were sold with gains of $2.8 million compared to $20.5$57.8 million forsold and gains of $1.4
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million in the corresponding quarter in the prior year. Included in the prior year's gain on sale of loans was an additional $1.3 million non-recurring gain related to one-to-four family loans of $154.9 million that were sold during the quarter. In addition, $23.2 million of home equity loans were sold during the quarter ended December 31, 2016. The TriSummit acquisition led to additional noninterest expenses as shown in the cumulative increase2020 for a gain of $973,000, or 17.4% in net occupancy expense; telephone, postage,and supplies; core deposit intangible amortization; and$158,000.


other expenses. Deposit insurance premiums increased $216,000, or 106.4% as the net asset base has increased. These increases in noninterestNoninterest Expense. Noninterest expense were partially offset by the absence of $27,000 in merger-related expenses, a $140,000, or 30.5% decrease in marketing and advertising expense, and a $408,000, or 56.9% decrease in real estate owned ("REO") related expenses for the quarter ended December 31, 2017 compared to the same period last year. For the three months ended December 31, 2017, there was a $235,000 decrease on writedowns and losses from REO sales2020 increased $2.4 million, or 10.0% to $26.4 million compared to the corresponding quarter last year; and a $173,000 decrease in REO expenses as a result of fewer REO properties held.
Income Taxes.  The Company had income tax expense of $19.5$24.0 million for the three months ended December 31, 2017, an2019. The increase was primarily due to a $1.5 million, or 10.8% increase in salaries and employee benefits as a result of $18.6 million compared to $893,000new positions, mortgage loan origination incentives, and annual salary increases; a $892,000, or 26.9% increase in other expenses, mainly driven by depreciation from our equipment finance line of business; a $475,000 increase in deposit insurance premiums as a result of credits issued by the FDIC being utilized in the prior year period, and a $235,000, or 11.8% increase in computer services. Partially offsetting these increases was a cumulative decrease of $608,000, or 17.9% in net occupancy expense; marketing and advertising expense; and core deposit intangible amortization for the three months ended December 31, 20162020 compared to the same period last year. In addition, there was a $195,000, 54.2% decrease in REO-related expenses as a result of the Tax Act. As previously mentioned, the reduction in the corporate tax rate required the Company to revalue net deferred tax assets, resulting in a $17.7 million adjustment through income tax expense. In addition, our June 30 fiscal year end required the use of a blended rate as prescribed by the Internal Revenue Code.fewer properties held and no post-foreclosure writedowns.
Income Taxes. The blended federal rate of 27.5% was effective retroactively to July 1, 2017 and will be used for the entire fiscal year ended June 30, 2018. As a result of this blended rate,Company's income tax expense for the quarterthree months ended December 31, 2017 includes approximately $418,000 in tax benefit2020 increased $116,000, or 4.7% to $2.6 million from adjusting the federal income$2.5 million. The effective tax rate to 27.5% from 34% for the first quarter of the fiscal year. Excluding the effect of the revaluation of net deferred tax assets, the additional income tax expensethree months ended December 31, 2020 and 2019 was due to higher taxable income. For more information on the Tax Act's impact on the Company's income tax expense, see Note 7 of the Notes to Consolidated Financial Statements under Item 1 of this report.21.5% and 21.2%, respectively.
Comparison of Results of OperationOperations for the Six Months Ended December 31, 20172020 and 20162019
General.  During the six months ended December 31, 2017, we had a net loss of $5.1 million compared to2020, net income of $6.8decreased by $2.8 million, or 15.5% to $15.2 million from $18.0 million for the six months ended December 31, 2016 as a result of the previously mentioned deferred tax revaluation.2019. Diluted loss per share was $0.28 for the first six months of fiscal year 2018, compared to $0.39 per share in the same period in fiscal 2017. Net income and diluted earnings per share before the change in the federal tax rate, prior year merger-related expenses, certain state income tax expenses, and gains from the sale of premises and equipmentdecreased to $0.92 for the six months ended December 31, 2017 was $12.6 million and $0.68,2020 compared to $7.3 million and $0.43, respectively.$1.01 in the same period in fiscal 2020. Offsetting the decrease in net income for the six months ended December 31, 2020 as compared to the prior comparable six-month period was a net benefit in the provision for credit losses due to improvement in the economic forecast since adoption of the new accounting standard to measure current expected credit losses. The net benefit in the provision nearly offset the decline in net interest income for the period as compared to the same period ended December 31, 2019. The overall decline in net income resulted from an increase in total noninterest expense.
Net Interest Income. Net interest income increased $8.3 million, or 19.9%decreased to $49.8$51.6 million for the six months ended December 31, 20172020, compared to $41.6$54.1 million for the six months ended December 31, 2016. This increasecomparative period in net interest income was driven by an $11.9fiscal 2020. The $2.5 million, or 26.5% increase4.6% decrease was due to a $11.5 million decrease in interest and dividend income partially offset by a $3.6$9.1 million or 110.0% increasedecrease in interest expense.expense, both of which were driven by the lower rate environment in the current period.
Average interest-earning assets increased $422.2$112.8 million, or 16.7%3.4% to $2.9$3.4 billion for the six months ended December 31, 20172020 compared to $2.5$3.3 billion in the same period in fiscal 2017.corresponding prior period. The $504.7 million, or 26.9% increase in average balance of total loans receivable for the six months ended December 31, 2017 was dueincreased by $84.8 million, or 3.1% compared to the TriSummit acquisitionsame period last year. The average balance of commercial paper and deposits in other banks increased organic loan growth, which was mainly$66.0 million, or 18.6% between the periods. These increases were funded by the cumulative decrease of $82.4a $32.1 million, or 12.8%21.1% decrease in average interest-earning deposits with banks, securities available for sale and other interest-earning assets, ana $176.7 million, or 53.5% increase in average noninterest-bearing deposits of $282.0partially offset by a $56.4 million, or 15.7% and an increase2.0% decrease in average FHLB borrowings of $132.4 million, or 24.5%.interest-bearing liabilities as compared to the same period last year. Net interest margin (on a fully taxable-equivalent basis) for the six months ended December 31, 2017 increased five basis points2020 decreased to 3.43%3.05% from 3.38%3.30% for the same period last year. For the six months ended December 31, 2017, our leveraging strategy produced an additional $2.0 million ina year ago.
Total interest and dividend income at an average yield of 1.62%, while the average cost of the borrowings was 1.20%, resulting in approximately $519,000 in net interest income. Our leveraging strategy produced an additional $1.9decreased $11.5 million, in interest and dividend income at an average yield of 1.04% during the corresponding period in fiscal 2017, while the average cost of the borrowings was 0.43%, resulting in approximately $1.1 million in net interest income. Excluding the effects of the leveraging strategy, the tax equivalent net interest margin would be 3.71% and 3.86%or 16.0% for the six months ended December 31, 2017 and 2016, respectively.
Total2020 as compared to the same period last year, which was primarily driven by a $7.5 million, or 11.6% decrease in loan interest income, increased $11.9a $2.7 million, or 26.5%64.1% decrease in interest income from commercial paper and deposits in other banks, a $957,000, or 48.1% decrease in interest income on securities available for sale, and a $460,000, or 28.7% decrease in interest income on other interest-earning assets. The lower interest income was driven by the decrease in market yields compared to the prior year period. Average loan yields decreased 66 basis points to 4.04% for the six months ended December 31, 2017 as2020 from 4.70% in the corresponding period last year. Average yields on commercial paper and deposits in other banks decreased 164 basis points to 0.71% for the six months ended December 31, 2020 from 2.35% in the corresponding period last year. Average yields on securities available for sale decreased 89 basis points to 1.72% for the six months ended December 31, 2020 from 2.61% in the corresponding period last year.
Total interest expense decreased $9.1 million, or 50.2% for the six months ended December 31, 2020 compared to the same period last year. The increasedecrease was primarily driven by an $11.0a $6.6 million, or 27.4% increase54.0% decrease in loan interest income, a $490,000, or 24.7% increase in certificates of deposit and other interest-bearingexpense on deposits and a $229,000,$2.5 million, or 29.4%42.4% decrease in interest expense on borrowings. The $113.1 million, or 5.3% increase in other investment income. The additional loan interest incomeaverage interest-bearing deposits for the six months ended December 31, 2020 was primarily duemore than offset by the 64 basis point decrease down to 0.50% in the increasecorresponding cost of funds compared to 1.14%. Average borrowings for the six months ended December 31, 2020 decreased $169.5 million, or 26.3% along with a 40 basis point decrease in the average cost of borrowings compared to the same period last year. The overall average cost of funds decreased 64 basis points to 0.66% for the six month period compared to 1.30% in the same period last year due primarily to the impact of the lower amount of borrowings and rates.
Provision (Benefit) for Loan Losses.  During the six months ended December 31, 2020 there was a $2.1 million net benefit of the provision for credit losses compared to a $400,000 provision for the corresponding period of fiscal 2020. The net benefit of provision relates to the previously discussed changes in the economic forecast since the adoption of CECL and the decline in the balance of total loans. Net loan charge-offs totaled $637,000 for the six months ended December 31, 2020, compared to net recoveries of $202,000 for the same period last year. Net charge-offs as a percentage of average loans receivable, which was partially offset by a $908,000 decrease inwere 0.04% and (0.01%) for the accretionsix months ended December 31, 2020 and 2019, respectively.
See "Comparison of purchase discounts on acquired loansFinancial Condition - Asset Quality" for additional details.
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Noninterest Income.  Noninterest income increased $1.2 million, or 7.5%, to $1.7$18.0 million for the six months ended December 31, 20172020 from $2.6 million for the same period in fiscal 2017, as a result of full repayments of several loans with large discounts in the previous year. Overall, average loan yields decreased four basis points to 4.38% for the six months ended December 31, 2017 from 4.42% in the fiscal 2017 period. Excluding the effects of the accretion on purchase discounts on acquired loans, loan yields increased nine basis points to 4.23% for the six months ended December 31, 2017 compared to 4.14% in the same period last year.
Total interest expense increased $3.6 million, or 110.0% for the six months ended December 31, 2017 compared to the same period last year. This increase was primarily related to the increase in average borrowings and the corresponding 77 basis point increase in the average cost of those borrowings, resulting in additional interest expense of $2.9$16.7 million for the six months ended December 31, 2017 as2019, primarily due to a $1.7 million, or 63.4% increase in other noninterest income and a $974,000, or 16.0% increase in gain of sale of loans, partially offset by a $710,000, or 40.5% decrease in loan income and fees and a $535,000, or 10.6% decrease in service charges and fees on deposit accounts. The increase in other noninterest income primarily related to an increase in operating lease income from the equipment finance line of business. The increase in gain on the sale of loans was driven by an increase in sales of mortgage loans and home equity loans, partially offset by a decrease in gains from the sale of SBA loans. There were $190.7 million of residential mortgage loans originated for sale which were sold with gains of $5.0 million compared to $103.2 million sold and gains of $2.7 million in the samecorresponding period in the prior year. The overall increase in average interest-bearing deposits andAs previously mentioned, the seven basis point increase in costprior period's gain on sale of funds resulted inloans included an additional $747,000 in interest expense for$1.3 million non-recurring gain related to one-to-four family loans. During the six months ended December 31, 20172020, $39.7 million of the guaranteed portion of SBA commercial loans were sold with gains of $1.8 million compared to $29.2 million sold and gains of $2.1 million in the corresponding period lastin the prior year.
Provision for Loan Losses.  There was no provision for loan losses In addition, $42.1 million of home equity loans were sold during the six months ended December 31, 2017 or 2016. Net charge-offs2020 for the six months ended December 31, 2017a gain of $258,000. The decrease in loan income and 2016 were $61,000 and $306,000, respectively. Net charge-offs asfees is primarily a percentage of average loans was 0.01% for the six months ended December 31, 2017 compared to 0.03% for the same period last fiscal year.
See Comparison of Financial Condition - Asset Quality for additional details.
Noninterest Income.  Noninterest income increased $1.2 million, or 14.4%, to $9.4 million for the six months ended December 31, 2017 from $8.2 million for the six months ended December 31, 2016. The increase was primarily the result of a $424,000, or 11.2% increaselower fees from our adjustable rate conversion program and other loan servicing fees. The decrease in service charges on deposit accounts; a $549,000, or 28.7% increase in loan income from the gain on sale of mortgage loans and various commercial


loan-related fees; and $414,000, or 40.6% increase in other income. Partially offsetting these increasesaccounts was a $221,000, or 57.4% decrease in gains fromresult of fewer transactions as customers have decreased spending during the sale of fixed assets for the six months ended December 31, 2017 compared to the same period last year.pandemic.
Noninterest Expense. Noninterest expense for the six months ended December 31, 20172020 increased $2.6$4.9 million, or 6.7%10.2%, to $42.3$52.4 million compared to $39.6$47.6 million for the six months ended December 31, 2016. Salaries2019. The increase was primarily due to a $2.8 million, or 10.1% increase in salaries and employee benefits increased $1.8benefits; a $2.0 million, or 8.0% primarily as a result of the TriSummit acquisition. The TriSummit acquisition was the leading factor in the $1.5 million, or 13.0% cumulative31.2% increase in net occupancy expense; telephone, postage,other expenses, driven by depreciation from our equipment finance line of business; a $986,000 increase in deposit insurance premiums, and supplies; core deposit intangible amortization; and other expenses.a $518,000, or 12.9% increase in computer services. Partially offsetting these increases was the absencea cumulative decrease of $334,000$1.5 million, or 16.3% in merger-related expenses,net occupancy expense; marketing and a $587,000, or 59.2% decrease inadvertising expense; telephone, postage and supplies, core deposit intangible amortization, and REO-related expenses for the six months ended December 31, 20172020 compared to the same period last year, which was driven by a $42,000 gain on the sale of REO compared to a $469,000 loss on the sale of REO in the corresponding period in the prior year.
Income Taxes.  For the six months ended December 31, 2017,2020, the Company's income tax expense was $22.0decreased $835,000, or 17.1% to $4.0 million compared to $3.3from $4.9 million as a result of lower taxable income. The effective tax rate for the six months ended December 31, 2016. The increase2020 and 2019 was a result of the deferred tax revaluation21.0% and to a lesser extent, higher taxable income. In addition, the Company had a $133,000 and a $490,000 charge during the six months ended December 31, 2017 and 2016, respectively, related to the decrease in value of our deferred tax assets based on decreases in North Carolina's corporate tax rate.21.3%, respectively.
Liquidity
Management maintains a liquidity position that it believes will adequately provide funding for loan demand and deposit run-off that may occur in the normal course of business. We relyThe Company relies on a number of different sources in order to meet ourits potential liquidity demands. The primary sources are increases in deposit accounts, and cash flows from loan payments, commercial paper, and the securities portfolio.
In addition to these primary sources of funds, management has several secondary sources available to meet potential funding requirements. As of December 31, 2017,2020, the Bank had an available borrowing capacity of $56.3$66.1 million with the FHLB of Atlanta, a $115.4$99.7 million line of credit with the FRB and three linesa line of credit with each of three unaffiliated banks totaling $60.0$100.0 million. At December 31, 2017, we2020, the Company had $685.0$475.0 million in FHLB advances outstanding and nothing outstanding under our other lines of credit. Additionally, the Company classifies its securities portfolio as available for sale, providing an additional source of liquidity. Management believes that our security portfolio is of high quality and the securities would therefore be marketable. In addition, we havethe Company has historically sold longer term fixed-rate mortgage loans in the secondary market to reduce interest rate risk and to create still another source of liquidity. From time to time wethe Company also utilizeutilizes brokered time deposits to supplement ourits other sources of funds. Brokered time deposits are obtained by utilizing an outside broker that is paid a fee. This funding requires advance notification to structure the type of deposit desired by us. Brokered deposits can vary in term from one month to several years and have the benefit of being a source of longer-term funding. WeThe Company also utilizeutilizes brokered deposits to help manage interest rate risk by extending the term to repricing of our liabilities, enhance our liquidity and fund asset growth. Brokered deposits are typically from outside our primary market areas, and our brokered deposit levels may vary from time to time depending on competitive interest rate conditions and other factors. At December 31, 20172020 brokered deposits totaled $11.8$4.6 million, or 0.6%0.2% of total deposits.deposits compared to $143.2 million, or 5.1% of total deposits at June 30, 2020.
Liquidity management is both a daily and long-term function of business management. Excess liquidity is generally invested in short-term investments, such as overnight deposits, federal funds, and federal funds.commercial paper. On a longer term basis, we maintainthe Company maintains a strategy of investing in various lending products and investment securities, including mortgage-backed securities and commercial paper.securities. HomeTrust Bancshares on a stand-alone level is a separate legal entity from the Bank and must provide for its own liquidity and pay its own operating expenses. The Company'sIts primary source of funds consists of the net proceeds retained from the Conversion. The CompanyIt also has the ability to receive dividends or capital distributions from the Bank, although there are regulatory restrictions on the ability of the Bank to pay dividends. At December 31, 2017, the Company (on an unconsolidated basis)2020, HomeTrust Bancshares on a stand-alone level had liquid assets of $20.1$5.0 million.
We use ourThe Company uses its sources of funds primarily to meet ourits ongoing commitments, pay maturing deposits and fund withdrawals, and to fund loan commitments. At December 31, 2017,2020, the total approved loan commitments and unused lines of credit outstanding amounted to $178.0$232.8 million and $447.8$465.2 million, respectively, as compared to $202.1$199.4 million and $414.4$398.8 million, respectively, as of June 30, 2017.2020. Certificates of deposit scheduled to mature in one year or less at December 31, 2017,2020, totaled $302.2$460.6 million. It is management's policy to manage deposit rates that are competitive with other local financial institutions. Based on this management strategy, we believe that a majority of our maturing deposits will remain with us.
53

During the first six months of fiscal 2018,2021, cash and cash equivalents increased $11.7$104.7 million, or 13.4%86.1%, to $226.3 million as of December 31, 2020 from $87.0$121.6 million as of June 30, 2017 to $98.7 million as of December 31, 2017.2020. Cash provided by operating and financinginvesting activities was $13.0$185.6 million and $48.3 million, respectively; while cash used in investingfinancing and operating activities was $49.6 million.$49.3 million and $31.5 million, respectively. Primary sources of cash for the six months ended December 31, 20172020 included $19.7a $121.0 million in proceeds from the maturitynet principal repayments of commercial paper, $38.7 million in maturing securities available for sale, $31.9a decrease in loans of $105.2 million, $8.2 million in maturingprincipal repayments from mortgage-backed securities, and $7.0 million in maturities of certificates of deposit in other banks, net of purchases, $10.9 million in principal repayments from mortgage-backed securities, and a $59.8 million increase in deposits.purchases. Primary uses of cash during the period included a net increase$73.7 million in commercial paperpurchases of $48.4securities available for sale, $41.3 million an increase in loans of $65.8 million, and a $11.5held for sale, $42.5 million decrease in borrowings.deposits, $13.4 million in purchases of premises and equipment, $6.9 million in purchases of operating lease equipment, $5.2 million in shares repurchased, and $2.5 million in cash dividends. All sources and uses of cash reflect our cash management strategy to increase our number of higher yielding investments and loans by increasing lower costing borrowings and reducing our holdings inof lower yielding investments.
Off-Balance Sheet Activities
In the normal course of operations, we engagethe Company engages in a variety of financial transactions that are not recorded in our financial statements. These transactions involve varying degrees of off-balance sheet credit, interest rate and liquidity risks. These transactions are used primarily to manage customers' requests for funding and take the form of loan commitments and lines of credit. For the six months ended December 31, 2017, we2020, the Company engaged in no off-balance sheet transactions likely to have a material effect on ourits financial condition, results of operations or cash flows.


A summary of our off-balance sheet commitments to extend credit at December 31, 2017,2020, is as follows (in thousands):
Undisbursed portion of construction loans$146,181 
Commitments to make loans86,648 
Unused lines of credit465,200 
Unused letters of credit7,936 
Total loan commitments$705,965 
Undisbursed portion of construction loans$123,262
Commitments to make loans54,720
Unused lines of credit447,787
Unused letters of credit9,927
Total loan commitments$635,696
Capital Resources
At December 31, 2017, stockholder's2020, stockholders' equity totaled $395.4$404.7 million. HomeTrust Bancshares, Inc. is a bank holding company and a financial holding company subject to regulation by the Federal Reserve. As a bank holding company, we arethe Company is subject to capital adequacy requirements of the Federal Reserve under the Bank Holding Company Act of 1956, as amended and the regulations of the Federal Reserve. Our subsidiary, the Bank, an FDIC-insured, North Carolina state-chartered bank and a member of the Federal Reserve, System, is supervised and regulated by the Federal Reserve and the NCCOB and is subject to minimum capital requirements applicable to state member banks established by the Federal Reserve that are calculated in a manner similar to those applicable to bank holding companies.
Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.
At December 31, 2017, HomeTrust Bancshares, Inc. and the Bank each exceeded all regulatory capital requirements as of that date.December 31, 2020. Consistent with our goals to operate a sound and profitable organization, our policy is for the Bank to maintain a “well-capitalized” status under the regulatory capital categories of the Federal Reserve. The Bank was categorized as "well-capitalized" at December 31, 20172020 under applicable regulatory requirements.

54


HomeTrust Bancshares, Inc. and the Bank's actual and required minimum capital amounts and ratiosare as follows (dollars in thousands):
 Regulatory Requirements
ActualMinimum for Capital
Adequacy Purposes		Minimum to Be
Well Capitalized
 AmountRatioAmountRatioAmountRatio
HomeTrust Bancshares, Inc.
As of December 31, 2020
Common Equity Tier I Capital to Risk-Weighted Assets$384,255 11.86 %$145,826 4.50 %$210,638 6.50 %
Tier I Capital (to Total Adjusted Assets)$384,255 10.52 %$146,128 4.00 %$182,660 5.00 %
Tier I Capital (to Risk-weighted Assets)$384,255 11.86 %$194,435 6.00 %$259,246 8.00 %
Total Risk-based Capital (to Risk-weighted Assets)$410,744 12.68 %$259,246 8.00 %$324,058 10.00 %
As of June 30, 2020      
Common Equity Tier I Capital to Risk-Weighted Assets$374,437 11.26 %$149,614 4.50 %$216,109 6.50 %
Tier I Capital (to Total Adjusted Assets)$374,437 10.26 %$146,047 4.00 %$182,559 5.00 %
Tier I Capital (to Risk-weighted Assets)$374,437 11.26 %$199,485 6.00 %$265,980 8.00 %
Total Risk-based Capital (to Risk-weighted Assets)$402,964 12.12 %$265,980 8.00 %$332,476 10.00 %
HomeTrust Bank      
As of December 31, 2020      
Common Equity Tier I Capital to Risk-Weighted Assets$371,075 11.45 %$145,820 4.50 %$210,629 6.50 %
Tier I Capital (to Total Adjusted Assets)$371,075 10.16 %$146,144 4.00 %$182,680 5.00 %
Tier I Capital (to Risk-weighted Assets)$371,075 11.45 %$194,427 6.00 %$259,236 8.00 %
Total Risk-based Capital (to Risk-weighted Assets)$397,564 12.27 %$259,236 8.00 %$324,045 10.00 %
As of June 30, 2020      
Common Equity Tier I Capital to Risk-Weighted Assets$362,841 10.91 %$149,608 4.50 %$216,100 6.50 %
Tier I Capital (to Total Adjusted Assets)$362,841 9.94 %$146,010 4.00 %$182,512 5.00 %
Tier I Capital (to Risk-weighted Assets)$362,841 10.91 %$199,477 6.00 %$265,969 8.00 %
Total Risk-based Capital (to Risk-weighted Assets)$391,368 11.77 %$265,969 8.00 %$332,461 10.00 %
   Regulatory Requirements
 Actual 
Minimum for Capital
Adequacy Purposes
 
Minimum to Be
Well Capitalized
 Amount Ratio Amount Ratio Amount Ratio
HomeTrust Bancshares, Inc.           
            
As of December 31, 2017           
Common Equity Tier I Capital to Risk-Weighted Assets$354,765
 13.02% $122,649
 4.50% $177,160
 6.50%
Tier I Capital (to Total Adjusted Assets)$354,765
 11.06% $128,323
 4.00% $160,404
 5.00%
Tier I Capital (to Risk-weighted Assets)$354,765
 13.02% $163,533
 6.00% $218,043
 8.00%
Total Risk-based Capital (to Risk-weighted Assets)$376,310
 13.81% $218,043
 8.00% $272,554
 10.00%
            
As of June 30, 2017 
  
  
  
  
  
Common Equity Tier I Capital to Risk-Weighted Assets$342,664
 13.07% $118,024
 4.50% $170,478
 6.50%
Tier I Capital (to Total Adjusted Assets)$342,664
 11.13% $123,149
 4.00% $153,936
 5.00%
Tier I Capital (to Risk-weighted Assets)$342,664
 13.07% $157,365
 6.00% $209,820
 8.00%
Total Risk-based Capital (to Risk-weighted Assets)$364,269
 13.89% $209,820
 8.00% $262,275
 10.00%
            
HomeTrust Bank: 
  
  
  
  
  
            
As of December 31, 2017 
  
  
  
  
  
Common Equity Tier I Capital to Risk-Weighted Assets$318,394
 11.73% $122,157
 4.50% $176,449
 6.50%
Tier I Capital (to Total Adjusted Assets)$318,394
 9.95% $128,038
 4.00% $160,047
 5.00%
Tier I Capital (to Risk-weighted Assets)$318,394
 11.73% $162,876
 6.00% $217,168
 8.00%
Total Risk-based Capital (to Risk-weighted Assets)$339,816
 12.52% $217,168
 8.00% $271,461
 10.00%
            
As of June 30, 2017 
  
  
  
  
  
Common Equity Tier I Capital to Risk-Weighted Assets$305,216
 11.68% $117,560
 4.50% $169,809
 6.50%
Tier I Capital (to Total Adjusted Assets)$305,216
 9.97% $122,453
 4.00% $153,066
 5.00%
Tier I Capital (to Risk-weighted Assets)$305,216
 11.68% $156,747
 6.00% $208,996
 8.00%
Total Risk-based Capital (to Risk-weighted Assets)$326,635
 12.50% $208,996
 8.00% $261,245
 10.00%
In addition to the minimum common equity Tier 1 ("CET1"),CET1, Tier 1 and total risk-based capital ratios, both HomeTrust Bancshares, Inc. and the Bank now have to maintain a capital conservation buffer consisting of additional CET1 capital of more than 2.5% above the required minimum levels in order to avoid limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses based on percentages of eligible retained income that could be utilized for such actions. This new capital conservation buffer requirement has phased in starting in January 2016 at 0.625% of risk-weighted assets and will increase each year until fully implemented to an amount equal to 2.5% of risk-weighted assets in January 2019. At December 31, 2017,2020, the Bank’s CET1 capital exceeded the required capital conservation buffer of 1.25%.was 4.68% and 4.27%for HomeTrust Bancshares, Inc. and the Bank, respectively.
Impact of Inflation
The effects of price changes and inflation can vary substantially for most financial institutions. While management believes that inflation affects the growth of total assets, it believes that it is difficult to assess the overall impact. Management believes this to be the case due to the fact that generally neither the timing nor the magnitude of the inflationary changes in the consumer price index ("CPI")CPI coincides with changes in interest rates. The price of one or more of the components of the CPI may fluctuate considerably and thereby influence the overall CPI without having a corresponding effect on interest rates or upon the cost of those goods and services normally purchased by the Company. In years of high inflation and high interest rates, intermediate and long-term interest rates tend to increase, thereby adversely impacting the market values of investment securities, mortgage loans and other long-term fixed rate loans. In addition, higher short-term interest rates caused by inflation tend to increase the cost of funds. In other years, the opposite may occur.

55


Item 3.Quantitative and Qualitative Disclosure About Market Risk
There has not been any material change in the market risk disclosures contained in our 20172020 Form 10-K.
Item 4.Controls and Procedures
An evaluation of our disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the "Act")) as of December 31, 2017,2020, was carried out under the supervision and with the participation of the Company's Chief Executive Officer, Chief Financial Officerand several other members of the Company's senior management.The Company's Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures in effect as of December 31, 2017,2020, were effective in ensuring that the information required to be disclosed by the Company in the reports it files or submits under the Act is: (i) accumulated and communicated to the Company's management (including the Chief Executive Officer and Chief Financial Officer) in a timely manner and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. In addition, there have beenon July 1, 2020, the Company adopted the CECL accounting standard. In connection with the adoption of CECL, the Company implemented relevant changes and enhancements to its internal control environment and processes related to estimating credit losses in accordance with the standard. There were no other changes in ourthe Company's internal control over financial reporting (as defined in Rule 13a-15(f) of the Act) that occurred during the quartersix months ended December 31, 2017,2020 that have materially affected, or are reasonably likely to materially affect, ourthe Company’s internal control over financial reporting.
The Company does not expect that its disclosure controls and procedures and internal control over financial reporting will prevent all errorerrors and all fraud. A control procedure, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control procedure are met. Because of the inherent limitations in all control procedures, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls may be circumvented by the individual acts of some persons, by collusion of two or more people, or by override of the control. The design of any control procedure also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control procedure, misstatements due to error or fraud may occur and not be detected.
PART II.  OTHER INFORMATION
Item 1.Legal Proceedings
The "Litigation" section of Note 10 to the Consolidated Financial Statements included in Part I, Item 1 is incorporated herein by reference.
Item 1A.Risk Factors
Item 1A.    Risk Factors
There have been no material changes in the Risk Factors previously disclosed in Item 1A of the Company's 20172020 Form 10-K.
Item 2.Unregistered Sales of Equity Securities and use of Proceeds
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
(a) Not applicable
(b) Not applicable
(c) The following table provides information about repurchases of common stock by the Company during the quarter ended December 31, 2017:
Period
Total Number
Of Shares Purchased
Average
Price Paid per Share
Total Number Of Shares Purchased as Part of Publicly Announced Plans
Maximum
Number of
Shares that May
Yet Be Purchased Under Publicly Announced Plans
October 1 - October 31, 2017—
$—
—
443,155
November 1 - November 30, 2017—
—
—
443,155
December 1 - December 31, 2017—
—
—
443,155
Total—
$—
—
443,155
Not applicable
PeriodTotal Number
Of Shares Purchased		Average
Price Paid per Share		Total Number Of Shares Purchased as Part of Publicly Announced PlansMaximum
Number of
Shares that May
Yet Be Purchased Under Publicly Announced Plans
October 1 - October 31, 2020— $— — 851,004 
November 1 - November 30, 202048,242 18.36 48,242 802,762 
December 1 - December 31, 2020228,880 18.76 228,880 573,882 
Total277,122 $18.69 277,122 573,882 
On December 15, 2015April 2, 2020, the Company announced that its Board of Directors had authorized the repurchase of up to 922,855851,004 shares of the Company's common stock, representing 5% of the Company's outstanding shares at the time of the announcement. The shares may be purchased in the open market or in privately negotiated transactions, from time to time depending upon market conditions and other factors. As of December 31, 2017, 479,700 of the shares approved on December 15, 2015 had been purchased at an average price of $18.00.


56
Item 3.Defaults Upon Senior Securities

Item 3.     Defaults Upon Senior Securities
Nothing to report.
Item 4.Mine Safety Disclosures
Item 4.     Mine Safety Disclosures
Not applicable.
Item 5.Other Information
Item 5.     Other Information
Nothing to report.
Item 6.Exhibits
See Exhibit Index.


Item 6.     Exhibits
Regulation S-K Exhibit NumberDocumentReference to Prior Filing or Exhibit Number Attached Hereto
  
3.1(a)
3.2(b)
3.3(c)
4.1(b)
4.2(d)
4.3

(e)
10.110.1
10.2(g)
10.3(g)
10.3A(h)
10.3B(i)
10.4

(g)
10.5(g)
10.6(a)
10.7(a)
10.7A(a)
10.7B(a)
10.7C(a)
10.7D(a)
10.7E

(a)
10.7F(a)
10.7G(a)
10.7H(a)
10.7I(j)
10.8(a)
10.8A(a)
57

10.8B(a)
10.8C(a)
10.8D(a)
10.8E(a)
10.8F(a)
10.8G(a)
10.9(a)
10.10(a)
10.11(a)
10.12(k)
10.13(l)
10.14(l)
10.15(l)
10.16(l)
10.17(l)
10.18Reserved
10.19Reserved
10.20(m)
10.21(m)
10.22(m)
10.23(m)
10.24(m)
10.25(m)
10.26

(n)
10.27(o)
10.28(g)
10.29(p)
31.131.1
31.231.2
3232.0
101The following materials from HomeTrust Bancshares' Quarterly Report on Form 10-Q for the quarter ended December 31, 2020, formatted in Extensible Business Reporting Language (XBRL): (a) Consolidated Balance Sheets; (b) Consolidated Statements of Income; (c) Consolidated Statements of Comprehensive Income; (d) Consolidated Statements of Changes in Stockholders' Equity; (e) Consolidated Statements of Cash Flows; and (f) Notes to Consolidated Financial Statements.101
(a)Filed as an exhibit to HomeTrust Bancshares's Registration Statement on Form S-1 (File No. 333-178817) filed on December 29, 2011.
(b)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on September 25, 2012 (File No. 001-35593).
(c)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on May 1, 2018 (File No. 001-35593).
(d)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on August 31, 2015 (File No. 001-35593).
(e)Filed as an exhibit to HomeTrust Bancshares’s Current Report on Form 8-K filed on August 21, 2018 (File No. 001-35593).
(f)Reserved
(g)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on September 11, 2018 (File No. 001-35593).
(h)Filed as an exhibit to HomeTrust Bancshares’s Current Report on Form 8-K filed on September 25, 2018 (File No. 001-35593.
58

(i)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on October 28, 2020 (File No. 001-35593).
(j)Filed as an exhibit to Amendment No. One to HomeTrust Bancshares's Registration Statement on Form S-1 (File No. 333-178817) filed on March 9, 2012.
(k)Attached as Appendix A to HomeTrust Bancshares's definitive proxy statement filed on December 5, 2012 (File No. 001-35593).
(l)Filed as an exhibit to HomeTrust Bancshares's Registration Statement on Form S-8 (File No. 333-186666) filed on February 13, 2013.
(m)Filed as an exhibit to HomeTrust Bancshares's Annual Report on Form 10-K for the fiscal year ended June 30, 2014 (File No. 001-35593).
(n)Filed as an exhibit to HomeTrust Bancshares's Annual Report on Form 10-K for the fiscal year ended June 30, 2015 (File No. 001-35593).
(o)Filed as an exhibit to HomeTrust Bancshares's Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 (File No. 001-35593).
(p)Filed as an exhibit to HomeTrust Bancshares's Annual Report on Form 10-K for the fiscal year ended June 30, 2018 (File No. 001-35593).


59

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
HomeTrust Bancshares, Inc.
HomeTrust Bancshares, Inc.
Date: February 9, 20185, 2021By:/s/ Dana L. Stonestreet
Dana L. Stonestreet
Chairman, President and CEO
(Duly Authorized Officer)
Date: February 9, 2018By:/s/ Tony J. VunCannon
Tony J. VunCannon
Executive Vice President, CFO, and Treasurer
(Principal Financial and Accounting Officer)


EXHIBIT INDEX
Regulation S-K Exhibit NumberDate: February 5, 2021DocumentBy:Reference to Prior Filing or Exhibit Number Attached Hereto
2.1
Agreement and Plan of Merger, dated as of September 20, 2016, by and between HomeTrust Bancshares, Inc. and TriSummit Bancorp, Inc.

(a)
3.1
Charter of HomeTrust Bancshares, Inc.
(b)
3.2
Articles Supplementary to the Charter of HomeTrust Bancshares, Inc. for HomeTrust Bancshares, Inc.'s Junior Participating Preferred Stock, Series A
(c)
3.3
Bylaws of HomeTrust Bancshares, Inc.
(d)
3.4
Amended and Restated Bylaws of HomeTrust Bancshares, Inc., dated as of January 29, 2018
(q)
4.1
Tax Benefits Preservation Plan, dated as of September 25, 2012, between HomeTrust Bancshares, Inc. and Registrar and Transfer Company, as Rights Agent
(e)
4.2
Amendment No. 1, dated as of August 31, 2015, to Tax Benefit Preservation Plan, dated as of September 25, 2012, between HomeTrust Bancshares, Inc. and Computershare Trust Company, N.A., as successor rights agent to Registrar and Transfer Company
(m)
10.1
HomeTrust Bancshares, Inc. Strategic Operating Committee Incentive Plan
(p)
10.2
Amended and Restated Employment Agreement entered into between HomeTrust Bancshares, Inc. and Dana L. Stonestreet
(e)
10.3
Employment Agreement entered into between HomeTrust Bancshares, Inc. and each of/s/ Tony J. VunCannon and Howard L. Sellinger
(b)
10.4
Employment Agreement entered into between HomeTrust Bancshares, Inc. and C. Hunter Westbrook
(f)
10.5
Employment Agreement between HomeTrust Bank and Sidney A. Biesecker
(b)
10.6
Employment Agreement between HomeTrust Bank and Stan Allen
(b)
10.7
HomeTrust Bank Executive Supplemental Retirement Income Master Agreement ("SERP")
(b)
10.7A
SERP Joinder Agreement for F. Edward Broadwell, Jr.
(b)
10.7B
SERP Joinder Agreement for Dana L. Stonestreet
(b)
10.7C
SERP Joinder Agreement for Tony J. VunCannon
(b)
10.7D
SERP Joinder Agreement for Howard L. Sellinger
(b)Executive Vice President, CFO, Corporate Secretary and Treasurer
10.7E
SERP Joinder Agreement for Stan Allen
(b)(Principal Financial and Accounting Officer)
10.7F
SERP Joinder Agreement for Sidney A. Biesecker
(b)
10.7G
SERP Joinder Agreement for Peggy C. Melville
(b)
10.7H
SERP Joinder Agreement for William T. Flynt
(b)
10.7I
Amended and Restated Supplemental Income Agreement between HomeTrust Bank, as successor to Industrial Federal Savings Bank, and Sidney Biesecker
(g)
10.8
HomeTrust Bank Director Emeritus Plan ("Director Emeritus Plan")
(b)
10.8A
Director Emeritus Plan Joinder Agreement for William T. Flynt
(b)
10.8B
Director Emeritus Plan Joinder Agreement for J. Steven Goforth
(b)
10.8C
Director Emeritus Plan Joinder Agreement for Craig C. Koontz
(b)
10.8D
Director Emeritus Plan Joinder Agreement for Larry S. McDevitt
(b)
10.8E
Director Emeritus Plan Joinder Agreement for F.K. McFarland, III
(b)
10.8F
Director Emeritus Plan Joinder Agreement for Peggy C. Melville
(b)
10.8G
Director Emeritus Plan Joinder Agreement for Robert E. Shepherd, Sr.
(b)
10.9
HomeTrust Bank Defined Contribution Executive Medical Care Plan
(b)
10.10
HomeTrust Bank 2005 Deferred Compensation Plan
(b)
10.11
HomeTrust Bank Pre-2005 Deferred Compensation Plan
(b)
10.12
HomeTrust Bancshares, Inc. Strategic Operating Committee Incentive Plan
(n)
10.13
HomeTrust Bancshares, Inc. 2013 Omnibus Incentive Plan ("Omnibus Incentive Plan")
(h)
10.14
Form of Incentive Stock Option Award Agreement under Omnibus Incentive Plan
(i)


10.15
Form of Non-Qualified Stock Option Award Agreement under Omnibus Incentive Plan
(i)
10.16
Form of Stock Appreciation Right Award Agreement under Omnibus Incentive Plan
(i)
10.17
Form of Restricted Stock Award Agreement under Omnibus Incentive Plan
(i)
10.18
Form of Restricted Stock Unit Award Agreement under Omnibus Incentive Plan
(i)
10.19
Fully Restated Employment Agreement between HomeTrust Bank and Anderson L. Smith
(j)
10.20
Amended and Restated Jefferson Federal Bank Supplemental Executive Retirement Plan
(k)
10.21
Money Purchase Deferred Compensation Agreement, dated as of September 1, 1987, between HomeTrust Bank and F. Edward Broadwell, Jr.
(l)
10.22
Retirement Payment Agreement, dated as of September 1, 1987, between HomeTrust Bank and F. Edward Broadwell, Jr., as amended
(l)
10.23
Retirement Payment Agreement, dated as of September 1, 1987, between HomeTrust Bank and Larry S. McDevitt, as amended
(l)
10.24
Retirement Payment Agreement, dated as of September 1, 1987, between HomeTrust Bank and Peggy C. Melville, as amended
(l)
10.25
Retirement Payment Agreement, dated as of August 1, 1988, between HomeTrust Bank and Robert E. Shepherd, Sr., as amended
(l)
10.26
Retirement Payment Agreement, dated as of May 1, 1991, between HomeTrust Bank and William T. Flynt, as amended
(l)
10.27
Offer Letter between HomeTrust Bank and Keith J. Houghton
(n)
10.28
Form of Relocation Repayment Agreement between HomeTrust Bank and Keith J. Houghton
(n)
10.29
Form of Change in Control Severance Agreement between HomeTrust Bancshares, Inc. and each of Keith J. Houghton and R. Parrish Little
(o)
31.1
Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.1
31.2
Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2
32
Certificate of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.0
101The following materials from HomeTrust Bancshares' Quarterly Report on Form 10-Q for the quarter ended December 31, 2017, formatted in Extensible Business Reporting Language (XBRL): (a) Consolidated Balance Sheets; (b) Consolidated Statements of Income; (c) Consolidated Statements of Comprehensive Income; (d) Consolidated Statements of Changes in Stockholders' Equity; (e) Consolidated Statements of Cash Flows; and (f) Notes to Consolidated Financial Statements.
101
(a)Attached as Appendix A to the proxy statement/prospectus filed by HomeTrust Bancshares on November 2, 2016 pursuant to Rule 424(b) of the Securities Act of 1933.
(b)Filed as an exhibit to HomeTrust Bancshares's Registration Statement on Form S-1 (File No. 333-178817) filed on December 29, 2011.
(c)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on September 25, 2012 (File No. 001-35593).
(d)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on January 29, 2014 (File No. 001-35593).
(e)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on November 27, 2013 (File No. 001-35593).
(f)Filed as an exhibit to HomeTrust Bancshares's Annual Report on Form 10-K for the fiscal year ended June 30, 2012 (File No. 001-35593).
(g)Filed as an exhibit to Amendment No. One to HomeTrust Bancshares's Registration Statement on Form S-1 (File No. 333-178817) filed on March 9, 2012.
(h)Attached as Appendix A to HomeTrust Bancshares's definitive proxy statement filed on December 5, 2012 (File No. 001-35593).
(i)Filed as an exhibit to HomeTrust Bancshares's Registration Statement on Form S-8 (File No. 333-186666) filed on February 13, 2013.
(j)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on June 3, 2014 (File No. 001-35593).
(k)Filed as an exhibit to Jefferson Bancshares, Inc.'s Quarterly Report on Form 10-Q for the quarter ended December 31, 2008 (File No. 000-50347).
(l)Filed as an exhibit to HomeTrust Bancshares's Annual Report on Form 10-K for the fiscal year ended June 30, 2014 (File No. 001-35593).
(m)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on August 31, 2015 (File No. 001-35593)
(n)Filed as an exhibit to HomeTrust Bancshares's Annual Report on Form 10-K for the fiscal year ended June 30, 2015 (File No. 001-35593).
(o)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on January 29, 2016 (File No. 001-35593)
(p)Filed as an exhibit to HomeTrust Bancshares's Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 (File No. 001-35593).
(q)Filed as an exhibit to HomeTrust Bancshares's Current Report on Form 8-K filed on January 30, 2018 (File No. 001-35593)



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